Encouraging exploration results from Central America, particularly Nicaragua, have attracted at least one big player to a region largely ignored by gold producers in the recent past.
The deal is a rich one for Radius shareholders. Meridian must spend at least US$3.5 million on exploration and complete a feasibility study on El Pavon within four years. If the results of the study are positive, Meridian will pay Radius for 60% of the gold resource on a sliding scale starting at US$60 per oz. at gold prices equal to or above US$500 per oz. and bottoming at US$40 per oz. if gold trades under US$400 per oz.
Meanwhile,
And
These deals, motivated by a combination of exploration results and rising gold prices, are occurring against a backdrop of political tension in parts of Central America, a region that hasn’t always been receptive to foreign mining companies.
In Nicaragua, a split within the ruling Liberal party has created a leadership vacuum that could allow the left-wing National Sandinista Liberation Front, which nationalized the country’s mines in the 1980s, to regain power. The infighting has prompted the U.S. State Department to issue a statement “expressing our support for President Bolanos and . . . decrying recent ploys which constitute a serious threat to institutionality, the rule of law, and democratic governance.”
November elections in Nicaragua suggest the Sandinistas are gaining momentum, at least at the local level. They retained power in Managua and won municipal seats in former Liberal strongholds.
But a return of the Sandinistas nationally would not necessarily signal a return to socialism in Nicaragua, says Radius President Simon Ridgway, who has been working in Central America for several years. “I don’t think it will affect mining in any way,” he says. “They are a democratic party that is pro-foreign investment and pro-mining.”
Explorers are having a much tougher time in Honduras, where Glamis Gold’s San Martin mine has become the nucleus of anti-mining protest led by an alliance of non-government organizations and churches opposed to open-pit mining. The group wants the 1998 mining code revamped, including a significant increase in the net smelter return royalty on production. Mining sympathizers are fighting back. Caught in the middle, the government is no longer granting concessions for exploration.
With national elections a year away, Gold-Ore President Robert Wasylyshyn fears the issues may not be resolved any time soon. “The political climate doesn’t allow us to continue working,” he says. “We will wait for the dust to settle.”
Zopilote project
Gold-Ore is joined by Defiance Mining (recently purchased by
But not all of Central America is responding to anti-mining protest in the same way. In Guatemala, where Glamis is building the Marlin mine, protesters have so far been unsuccessful in convincing the local community that the new mine will poison the environment. Other companies active in Guatemala include
“The [Roman Catholic] church has been very vocal against Glamis at the Marlin project,” says Wasylyshyn, “but the government appears to be taking a stance that mining is acceptable and needed. The reaction (to protest) largely depends on how the government deals with it in the early stages.”
By that measure, El Salvador would appear to be safe haven for explorers. Earlier this year, the right-wing Arena party won the election, and President Tony Saca says one of his main priorities is increasing economic development in rural areas. Among Canadian companies looking for precious metals in El Salvador are
Pacific Rim recently launched a program aimed at defining resources on its El Dorado gold project, east of San Salvador. The company is focusing on the South Minita zone, which has a strike length of 750 metres, as well as veins with grades and widths similar to those of the property’s main deposit, Minita. A prefeasibility study to examine the economics of a mine based on the 585,000-oz. Minita resource is ongoing.
San Cristobal
Work at Intrepid’s San Cristobal property in eastern El Salvador is also continuing. Results from a new discovery on the property, including 5.48 grams gold over 5.2 metres and 1.69 grams over 30 metres, have encouraged the company to expand its drilling program.
At the El Zapote silver project in the north, SilverCrest is conducting a feasibility study and attempting to outline a resource of more than 20 million oz. silver. Results of a recent 5-hole program at the Tajado prospect on the property suggest a silver-gold zone may be taking shape there.
And despite the recent political rumblings, Nicaragua remains Central America’s exploration hotspot. Several companies, including Radius,
Radius is focusing on the San Pedro prospect, east of El Pavon, where a regional exploration crew has identified “sufficient smoke” to proceed with exploration permitting.
Glencairn is concentrating on finding new ore near the Limon mine, where reserves stand at less than 150,000 oz. The company has outlined a 125,000-oz. resource at the Santa Pancha vein system, 5.5 km east of the Limon mill, and is intersecting high grades (including 16.5 grams over 36 metres) at the Victoria zone, to the west. The company has optioned two of its nearby exploration properties to Gold-Ore and
First Point has wrapped up a fall drilling campaign at its Rio Luna project, which contains an epithermal gold quartz vein system typical of gold mines in Nicaragua and Honduras. The company will continue mapping and trenching the vein system, most of which is covered in overburden.
And near the Bonanza milling facility, RNC Gold has outlined a bulk-t
onnage gold target by trenching in the Hemco concession, an area of historical gold production. The company plans to launch a drill program to identify the size and grade of the deposit at depth.
— The author is a Toronto-based geologist and freelance writer specializing in mining and the environment.
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