EXPLORATION ’94 — Cuban mineral wealth attracts Canadian

Stalled since the 1960s, Cuba’s mining industry is now gaining momentum as Canadian explorers venture to the island in search of mineral wealth.

At last count, eight resource companies had signed agreements with the Cuban government, giving them the exclusive right to explore and develop deposits on what is thought to be one of the most geologically prospective islands in the Caribbean.

Cuba is a good example of a mature (that is, well-exposed) island arc terrain. The country can be divided roughly into two broad structural provinces that follow the elongation of the island. The northern province consists mostly of shallow to deep-water marine sedimentary rocks which host most of the known oil reserves. The south-central province consists essentially of a northern belt of mafic to ultramafic rocks (ophiolite-type assemblages) juxtaposed against a southern area of thick sequences of Cretaceous, volcanic-arc and sedimentary rocks intruded by granitic bodies. Areas of complexly deformed metamorphic rocks are also exposed in the southern province.

Metallic and industrial mineral deposits are widespread in Cuba and occur in a variety of geological settings.

The first mining activity dates back to 1512 and was related to asphaltite (a pitch-like substance used to caulk boats). This was followed closely by the discovery of gold and later copper in 1534, at a mine known as El Cobre, near Santiago de Cuba.

In the 1800s, deposits of magnetite, manganese, barite, zinc and salt were discovered and subsequently exploited. Although a variety of mineral deposits were known during the colonial period, which lasted about 380 years, production of metals was low.

During a period of American control, from 1889 to 1902, the mineral resources of Cuba were re-evaluated and laws were established to allow mining concessions. As a result of these new laws, the Cuban mining industry, up until 1959, was largely financed and controlled by foreign capital and interests.

Prior to the 1940s, most of the focus was on manganese, iron and chrome production. Since the Second World War, attention was concentrated on developing the nickel industry, first with American capital and technology and subsequently with the support of the Soviet Union in the 1960s. At present, Cuba produces nickel, copper and a small variety of industrial mineral products. Mining activity is now at quite a low level, largely because of severe oil shortages and a lack of investment capital. Cuba has been a single-party communist state since 1959, governed by Fidel Castro and an elected legislative body known as the National Assembly. A council of ministers, appointed by the National Assembly, is the highest executive and administrative body in the country. An executive committee of the council of ministers is generally the entity which regulates foreign enterprise operations.

The Ministry of Basic Industry is responsible for the exploration and production of minerals and oil. Within the ministry, the organization known as Union de Empresas Geologo-Mineras has the mandate to develop the country’s mining sector, with the exception of nickel.

Cuba has a centrally planned economy and until recently relied heavily on trade with and assistance from the former USSR and Eastern European countries. With the collapse of the Soviet Union, Cuba has been turning to Western countries to obtain technical assistance, technology and equipment. To achieve these aims, Cuba has actively promoted the development of joint ventures with foreign companies.

In 1982, to help promote foreign investment, the Cuban government enacted Law 50 which provides a number of incentives to business, such as: absence of gross revenue taxes; absence of restrictions on repatriation of profits; and taxes of 30% on net annual profits.

Cuba’s efforts to obtain foreign investment have proved highly successful, such that by the end of 1992, more than 275 foreign businesses were operating in the country.

All mining joint ventures come under the auspices of Geominera S.A., a state-owned entity. In general, Geominera holds a half-interest in all mining concessions granted to foreign companies.

In August, 1993, Joutel Resources (TSE) became the first Canadian mining company to ink an exploration agreement with Geominera. Joutel holds three concessions covering 4,662 sq. km: Santa Clara, Camaguey and Sierra Maestra. The junior plans to spend US$2 million on its holdings before the end of August. Fixed-wing geophysical surveys are nearly complete on Camaguey and Santa Clara, and a helicopter-borne electromagnetic survey is expected to begin shortly in the Sierra Maestra region. This year’s program also includes ground geological and geophysical surveys and 5,200 metres of diamond drilling.

Caribgold Resources (TSE), which has one of the largest land positions on the island (more than 5,500 sq. km) is trenching on its Camaguey concession and soon hopes to be drilling in the Santa Clara region. The company, which is focusing on gold, is headed by David Bell, a key figure in the famous Hemlo gold discovery in northwestern Ontario.

In December of last year, Holmer Gold Mines (ASE) and Republic Goldfields (VSE) each signed deals with the Cubans.

Holmer, which initiated Canadian exploration in Cuba, can earn a half interest in two properties: San Fernando in central Cuba, and Candida Francisco in the west.

Republic’s agreement covers the 100-sq.-km Gaspar concession in the centre of the island and the 2,010-sq.-km Purial property in the east. MacDonald Mines Exploration (CDN) is the most recent company to sign a deal with Geominera. Its agreement covers 2,000 sq. km in Camaguey province, including the Florencia gold mine.

Vancouver-based Miramar Mining (VSE) hopes to be the first Canadian mining company to bring a Cuban deposit into production. The company has carried out extensive development work on the Delita gold project on the Island of Youth and the Mantua copper deposit in western Cuba.

Among the majors with an interest in Cuba, Sherritt (TSE) has a nickel-cobalt feed supply contract with Cubaniquel, the state-owned nickel company, as well as interests in leases off the Cuban coast.

Teck (TSE) has entered an agreement to earn a half interest in three of Joutel’s properties. To do so, the major must complete a formal feasibility study and provide financing to bring the properties into production.