MINING IN MEXICO — Placer Dome no stranger to Mexico

A new gold rush is on, not in the storied mines of the Klondike but south of the Rio Grande, in Mexico’s mineral-rich ground.

Thanks to a dramatic liberalization of Mexico’s policies on the mining sector that pre-date the North American Free Trade Agreement, the field is open to explorers, mining engineers and extractors. Canadian firms are actively prospecting for promising lodes.

Placer Dome (TSE) is one Canadian mining company whose ventures into Latin America have been increasingly important to its business in recent years. While it is interested in copper, notably at the Zaldivar mine in Chile, it also has a 50% interest in Chile’s La Coipa gold-silver mine. Placer, which defines itself as “a gold company,” is among some 150 companies currently active in the metals-rich hills of Mexico.

The company has been in Mexico since the mid-1970s. Its assets included an ownership interest in a silver mine, Minera real de Angeles, which has since been sold.

More recently, under the name Can-Mex since 1991, Placer has been engaged in gold exploration at the Mulatos property in Sonora state. The exploration is at an advanced state, with the company spending US$2.5 million in the current fiscal year, after investing US$1 million last year.

Placer has a 70% interest in Mulatos, where it has identified a geological resource of 1 million oz. gold.

“It is a long-term project,” says company spokesman Hugh Leggatt. “We are determining how much we can mine through a feasibility study, which should be started next year — it will take about two years. It will take about two more years to build a mine. We do see it as one of the best possible prospects around in mining.”

Placer became interested because the area was “geologically very promising for precious metals,” Leggatt says. (The area of known mineralization is a small portion of the total land position of 33,000 hectares, and further drill targets are being considered.)

“Also, the changes in the Mexican mining laws and in the tax structure combined to make mining in Mexico a more attractive venture than it had been previously.”

In 1992, Mexico revised its mining law to open up large concessions and guaranteed to both domestic and foreign companies 100% ownership of anything they were able to dig up.

As far as gold goes, Mexico’s annual production has risen to almost 400,000 oz. per year. These are not finds in the league of South Africa or Russia, but the Mexican undersecretary of mining recently said that he anticipates growth of 20-30% in the extraction of gold over the course of the next decade. Mining activity is exploding in Mexico, with much of the principal investment, development and extraction being done by domestic companies. But there are many foreign companies in the burgeoning mining market, either alone or in ventures with Mexican or other partners.

— From a recent issue of “Access,” the newsletter of the Access North America Program of the Department of Foreign Affairs and International Trade, Ottawa.