LATIN AMERICA SPECIAL — Venezuela a `hot spot’ for Canadian

Canadian companies are leading the rush to Venezuela’s Kilometre 88 district where Placer Dome (TSE) is exploring a gold deposit which, according to the speculation of mining analysts, has multi-million-oz. potential.

This rush reflects a growing trend of mining companies pursuing opportunities in unexplored countries eager to develop a modern mining industry.

Analysts speculate the Kilometre 88 camp could emerge as the gold mining story of this decade, just as Nevada’s Carlin Trend did in the 1980s when it epitomized the shift to lower-cost bulk tonnage operations from traditional underground mines that once dominated the North American gold industry. Like many other South American nations, Venezuela is embracing free-market policies in order to revive an economy stifled by excessive government intervention and by entrenched interests wary of openings to competition. In 1991, perhaps spurred by the mining boom in Chile, the Venezuelan government lowered taxes and changed laws to attract investment in mining. More positive changes are expected in the next year or so as a new mining law streamlining and simplifying the granting of concessions works its way through the legislature.

The most advanced project in the Kilometre 88 district is Placer Dome’s Las Cristinas prospect, where an aggressive drilling program is planned for this year. The concession was traditionally worked for alluvial gold in saprolites, and an estimated 1.6 million oz. is reported to have been removed by individual miners using primitive techniques.

Last year, 120 wide-spaced holes totalling about 28,000 ft. were drilled within an area three miles by one mile, most to a depth of 160-200 ft. Unconfirmed reports estimate the resource to be 200 million tons grading about 0.07 oz. gold per ton, while others estimate the deposit could contain between 12-30 million oz. gold. Placer Dome calls the latter estimates “wildly optimistic,” and insists it is too early to make a reserve calculation.

In 1993, Placer intends to drill closer-spaced holes in its main target, one of many defined so far by geochemical and geophysical surveys. The company expects to release a gold resource for the main deposit by mid-year, and then advance drilling on other areas of the concession.

Most concessions surrounding Las Cristinas in Bolivar state have or are being acquired by junior mining companies, although majors are now reported to be actively investigating the region. In recent weeks, it has become more apparent that ownership and the representation thereof by local interests may require legal due diligence on the part of junior companies seeking to acquire concessions.

This uncertainty is less of an issue with juniors active in the country before the current land rush. Two such companies, Venezuelan Goldfields (VSE) and Queenstake Resources (TSE), will be joint venture partners on the Bizkaitarra concession near Las Cristinas.

Venezuelan Goldfields is emerging as one the largest land holders, and now owns or has the right to acquire interests in the Tapaya, Libertad and Unin concessions. The company recently signed an agreement allowing it to earn interests in concessions held by Carson Gold (VSE), another pioneer junior in Venezuela.

Ownership of the hotly contested Oro Uno concession has not yet been determined. At press time, Venezuelan Goldfields and its proposed partner, International Kengate Ventures (VSE), were at odds as to whether or not a Venezuelan company’s claim to ownership of the concession was valid. Spokane-based Gold Reserve (NASDAQ) is planning a geochemical sampling program at its Kilometre 88 Brisas concession. The program is aimed at establishing and testing surface mineralization known to contain gold and copper. The results will also help determine locations for a shallow 100-to-150 hole drill program expected to begin within several months. Once permits are obtained, Gold Reserve plans to deep drill an geophysical target correlating to the location of a large mineral-rich sulphide outcropping containing gold, copper and molybdenum.

San Fernando Mining (VSE) and Randstrom Manufacturing (VSE) plan to amalgamate, with the merged company holding an option to earn a 100% interest in the San Rafael and El Placer concessions in Bolivar state. These two concessions are reported to host multiple high-grade gold-bearing veins and a shear zone system believed to be the continuation of a deposit being brought into production by Monarch Resources, a London Stock Exchange listed company.

Crystallex International (VSE) and new partner Eurus Resource (VSE) recently started production from the Albino concession at a rate of 150 tons per day using an existing mill. Plans are in the works to build a 400-ton-per-day mill capable of turning out 84,000 oz. gold annually at a cash operating cost of less than US$100 per oz.

At the same time, the partners plan to drill test the La Conductora shear zone described as being similar to major Precambrian deposits in Canada, that is, a major ductile zone cutting altered mafic volcanic rocks. Several of the more recent entrants in Venezuela include Tombstone Explorations (VSE), Canarc Resource (VSE), Consolidated Newgate Resources (VSE) and European Ventures (VSE).