LATIN AMERICA SPECIAL — Canyon, Battle Mountain in joint

The Centenario gold deposit announced last year is the first discovery made by Minera Hispaniola S.A., a company formed by joint venture partners Canyon Resources (NASDAQ) and Battle Mountain Gold (NYSE) to pursue exploration potential in the Dominican Republic.

Canyon began exploring the country in 1987, after being active in the Caribbean for some time. In 1988, Battle Mountain was brought in as a joint venture partner. The major now owns 60%, while Canyon owns 40% of Minera Hispaniola.

William Walker, Canyon’s vice-president of exploration, said the companies were attracted to the Dominican Republic by the Pueblo Viejo mine, a world-class gold deposit operated by the government-owned Rosario Resources. Minera Hispaniola is looking for economically minable orebodies, primarily for gold. However, it has not limited exploration to one model and continues to search all possible environments for economic mineralization. Walker says Minera Hispaniola holds several exploration concessions that are in ground believed to be favorable for massive sulphide mineralization, particularly ones with the possibility of gold credits.

Minera Hispaniola capitalized quickly on exploration concessions granted to it in 1991, and announced reserves for the Centenario gold deposit located on its El Higo concession in early 1992. Walker says negotiations are under way between the company and a negotiating team from the Dominican Republic government to have the exploration concession converted to an exploitation concession necessary for further development.

The Centenario deposit, located in the Central Cordillera, was a purely grassroots target with no previous record of mining. No obvious mineralization is readily seen at the surface. Nevertheless, beneath surficial cover, mineralization is hosted in basic-to-intermediate volcanic rocks, and characterized by silicified rock cut by gold-bearing quartz veins. To date, total reserves(from 30 core holes) are estimated at 2.5 million tons averaging 0.15 oz. gold per ton. The deposit has not been completely drilled out.

Walker envisions the operation probably will require its own cyanide mill. The partners will not be shipping concentrates, and plan to produce dore on the property.

The government of the Dominican Republic under President Joaquin Balaguer is democratic and considerably more stable than its island neighbor, Haiti. Walker says there is a strong desire by the country to develop additional sources of export revenue, as it is basically in a deficit position at the moment.

To accelerate this new policy, the mining laws of the Dominican Republic were recently revised. Decree No. 13-87, passed in early 1987, eliminated the previous policy of fiscal reserves which effectively closed areas of mineralization to everyone except the government or those with a special contract; it now allows for renewed exploration and exploitation by foreign companies.

New tax laws and labor laws, effectively amending parts of the mining law, have further enhanced the climate for foreign investments, says Fred Reisbick, Battle Mountain’s vice-president of exploration.

Walker says the maximum corporate tax rate has been pegged at 30%, and decreases to 25% during a 3-year period. No government ownership is required by the Dominican government, though it does require ownership by a Dominican-based subsidiary such as Minera Hispaniola. Walker also says that the government allows for offshore trusts, making for the relatively free transfer of funds on and off the island.

Hispaniola is within a mature island arc setting. The Dominican Republic, dominating two-thirds of the island, contains a number of favorable geologic environments for bulk-tonnage mineralization. There is the Pueblo Viejo mine, a diatreme-hosted gold deposit with sulphide reserves, still awaiting development. Nickel laterite and bauxite mines have been active for years. All of which makes the country, though limited in size, a worthy candidate for exploration.

International mining companies such as Toronto-based Falconbridge and Alcoa (NYSE), active in the country for many decades, are continuing to take advantage of the favorable climate for foreign investment. The island is also attracting various Canadian and American mining companies.

Recent exploration and mining developments are reported in The Hispaniola Report, a periodically published newsletter which promotes investment opportunities on the island of Hispaniola.

Walker says of the Dominican Republic: “It is an island with a finite size, but obviously we think there is good geological potential, or we wouldn’t still be there.”

— Ted Worthington is a Colorado-based geologist and recent graduate of the MacKay School of Mines in Reno, Nev.