Chile gold boom attracts Canadian firms

Favorable foreign investment laws combined with attractive gold potential have convinced some Canadian mining firms that risk taking in the mountains of Chile is bound to pay off.

Currently the third largest gold producer in Latin America, Chile has the potential for large expansion, mining analysts say.

Since 1980, Chile has tripled its gold production and a recent forecast shows production could increase to double its present level by 1992.

Chile’s foreign investment regulations have been described as the most attractive in Latin America. Notwithstanding its record on human rights issues, the country’s economic system has been maintained over time, which has won the confidence of investors.

At least five major Canadian mining companies are now actively exploring for gold in Chile, and a mining boom there could have important implications for Canadian equipment suppliers, contractors, and consultants looking for international opportunities.

Last year, LAC Minerals (TSE) made its first investment outside North America in Chile, acquiring 85% interest in the El Toqui zinc- silver mine and two gold properties. On one of the gold properties, known as Apolinario, located 500 km north of Santiago, drilling is under way to test high grade gold showings which have assayed up to 31 g gold per tonne with associated silver, zinc, and lead values.

LAC’s 18,000-hectare Apolinario property is reported to host geological formations similar to those of St Joe Gold’s El Indio deposit, which is located 30 km away. The El Indio mine is described by Shearson Lehman Brothers as one of the largest gold mines in the Western hemisphere, and one of the most important gold finds of recent times. The majority of Chile’s gold production comes from the El Indio mine.

Toronto-based Consolidated TVX Mining Corp. (TSE), well known for its Brazilian connection, has joined the race to cash in on the Chilean mining boom by investing in the La Coipa mining venture, a large gold-silver orebody located 800 km north of Santiago. La Coipa is reported to be the largest undeveloped gold-silver reserve in South America and is estimated to contain over four million oz of gold (including silver credits). Consolidated TVX has a 49% interest in the venture. To finance La Coipa, a $60-million(US) loan was arranged earlier this year with Placer Dome (TSE).

“The north of Chile, where La Coipa is located, is very similar geologically to the state of Nevada,” says Eike Batista of Consolidated TVX. “Several orebodies discovered in Nevada since 1980 are now producing 100 tons of gold per year. The heap leaching technique has helped to make these operations highly profitable, and the north of Chile could offer similar potential because of lower operating costs and higher average grades.”

Cominco Resources International (TSE) is involved in the Marte (26%) and Lobo (50%) gold projects where reserves of 34 million tonnes and 30 million tonnes respectively have been outlined at a grade of 1.5 g gold per tonne. Westfield Minerals (TSE) has a 30% interest in the Choquelimpie mine, which hosts reserves of six million tonnes grading 2.2 g gold and 90 g silver per tonne.

The Trade Commission of Chile says it is planning to bring a trade mission composed of managers of small to medium-sized mining operations from Ch ile sometime in early 1989 to meet with Canadian suppliers of mining equipment, engineering and geological services. The purpose of the mission will be to facilitate joint venture formation and technology transfer.