Letters to the Editor (April 23, 1990)

I read with interest your editorial “Focus on Canada’s potential” (March 19/90) and the coverage of the Prospectors and Developers Association of Canada’s Latin American push. With the recent push toward Latin America at the PDAC convention in Toronto, many Canadian and U.S. companies seem ready to invest and, of course, this will attract individual investors as well. The individual investor will hear all about low operating costs, co- operative and “stable” governments willing to do all they can to help and the low capital requirement to begin production.

These types of advantages make Latin American properties attractive acquisitions to junior companies because they promise quick cash flow at a low capital cost.

Well, before you join the gold rush south of the border, read this.

My broker recommended that I purchase shares in Anchor Gold on the Vancouver Stock Exchange and be patient. Its main asset was a gold-platinum placer prospect concession good for 30 years located in southwestern Colombia. I knew that Colombia was the most stable democratic country in South America and also the most capitalistic, very similar to Costa Rica in Central America.

In January, 1989, Anchor announced proven reserves and began shopping the property around for a joint venture production agreement. Basically, the property was deemed ready for production. On June 16, 1989, Anchor signed a joint venture with a Colombian corporation effective Aug. 16, 1989. The minimum monthly production was to be 100,000 cubic metres and would cost the Colombian corporation US$3 million to build the production plant. It looked as though my patience had paid off. All I had to do was wait for the first earnings.

On Aug. 18, 1989, a presidential candidate was killed by members of the cocaine cartel that set off a drug war. On Oct. 1, 1989, the Colombian company pulled out of the joint venture.

Several major companies say the property has merit, but due to the political situation in Colombia they’re not interested.

Meanwhile, I will lose everything I invested in Anchor, and the gold and platinum will remain buried for who knows how many years.

Perhaps that is Anchor’s fault. However, for those of you investing in Latin America or any Third World country, remember this letter and be aware of the risks. James Gerber Lansing, Mich.