Argentine government agency woos Canadian mining companies

Mining companies may be familiar with the competitive nature of business, yet many governments are not. However, this would appear to be changing, as an increasing number of countries are now competing for the attention of foreign investors in order to generate much-needed revenue and strengthen their industries.

Witness the Provincial Mining Exploration and Exploitation Institute of San Juan, Argentina, also known as IPEEM. Rather than wait for mining companies to come calling, this state-run organization has staged a series of “road shows” in foreign cities. The purpose? To attract bids for eight mining reserve areas which it holds in the province of San Juan.

In Toronto, representatives of both IPEEM and the Argentine Consulate recently met with executives from several of Canada’s senior mining companies to discuss the merits of mining in the South American country. In addition to gaining information on the bidding process, the executives learned about the geological potential of the province.

Four of the eight reserves, comprising 27,400 hectares in total, are in the Iglesia district in northwestern San Juan.

The Jaguelito I and II, Los Despoblados, La Ortiga and Arroyo Los Amarillos mineral reserves lie within a north-south-trending valley known as the Valle del Cura. The valley lies 3,000-4,500 metres above sea level, east of the Chilean border and within the same structural setting as Barrick Gold’s (TSE) El Indio and Tambo copper-gold deposits.

According to IPEEM, the Valle del Cura is underlain by areas of hydrothermal silicic, argillic and propylitic alteration and, together with deposits on the Chilean side of the border, represents a distinct geological province with potential for hosting large, epithermal gold deposits.

The Rio Cenicero A and B, Rincones de Araya, Calderon Calderoncito and Cerro Mercedario reserves cover about 22,000 hectares in the Calingasta district, in the southwest. These reserves are also near the Chilean border at elevations as high as 4,800 metres above sea level.

Limited geological work by the government indicates that the region is underlain by areas of intense, hydrothermal alteration associated with Tertiary-aged hypabyssal bodies. As such, the properties are thought to have excellent potential for hosting porphyry copper and molybdenum deposits.

Other properties being explored in the area include the Pachon copper project, where Cambior (TSE) has outlined a mineral inventory of 429 million tonnes averaging 0.76% copper at a cutoff grade of 0.5%. Cambior will complete a $5-million exploration program at Pachon this year and expects to have a feasibility study finished by the end of 1996.

IPEEM was established to transfer titles on the remaining eight regions to third parties for the exploration and exploitation of mineral deposits. Originally, the organization controlled 10 areas of mineral reserves, including the Carmen, now being explored by Barrick Gold, and the Veladero, currently under investigation by Argentina Gold (VSE).

To take part in the bidding process, companies must ante up US$5,000 for a bidding form and be willing to pay a monthly fee of US$2,500 per 5,000 hectares. A company may choose to bid on one of the reserve areas. A winning bid will result in an exclusive 5-year exploration contract followed by a 30-year or life-of-mine exploitation contract.

In addition to carrying out exploration and investment, companies must prove themselves capable of completing such work. The critical factor for IPEEM is the net smelter return royalty payable by the company. IPEEM has asked for a minimum 3% royalty.

The bidding process is expected to be completed before September, and titles should be granted by November.