MINING IN MEXICO — Noranda boosts its Mexican effort

Last year, Noranda Minerals closed four exploration offices in Canada and the U.S. and opened two new foreign offices in Chile and Mexico.

More recently, the base metal miner announced that it would be pulling out of Wisconsin, where it has maintained an office for more than 20 years.

Noranda’s decision to channel more of its exploration funds south of the Rio Grande is a direct reflection of an improving regulatory environment for mining in Latin America relative to Canada and most of the U.S. “Our decision (to close the Wisconsin office) is part of an overall effort to focus our exploration activities on those states with a proven and predictable permitting environment and regions that encourage mineral development,” explained Mike Donnelly, U.S. exploration manager. Although Noranda was active in Mexico before the country relaxed its mining laws and lowered its top tax rate, Clarence Logan, director of International Exploration, says those initiatives as well as plans for a North American Free Trade Agreement boosted Noranda’s confidence in the country. “We’re very bullish on prospects for that part of the world,” he says. “We want to be competitive — and that is getting harder and harder to do in Canada.”

Noranda now has a staff of 10-15 manning its office at Hermisillo, capital of the northwestern Mexican state of Sonora. Under the leadership of Bob Page, former senior geologist for Noranda’s exploration office in Reno, Nev., the staff is working with an exploration budget of $1.4 million, up from $800,000 in 1991. This represents more than a third of Noranda’s Latin American budget. “We’ve identified a number of attractive geological environments that we want to spend more time and money exploring,” says Logan. “We’re now into the project generation (as opposed to pure acquisition) stage. That is a very significant step forward for us.”

He says the Mexican office is actively pursuing 8-10 projects after sifting through 200-300 property proposals from across the country.

Although exploration activity has traditionally focused around known producers in Sonora, Noranda is also looking at other mineralized belts in the country’s southern and eastern parts.

About half of the budget is allocated to base metal, particularly copper, exploration. Mexico has had a history of production from porphyry copper-gold and copper-molybdenum deposits, but many of these mines were rendered uneconomic with the introduction of net smelter royalty tax. That tax has since been removed.

Bulk-tonnage gold deposits, similar to those now being mined along the Carlin trend in Nevada, are also a high-priority target. As part of a joint venture with Jonpol Explorations (TSE) and T & H Resources (TSE), Noranda is earning an interest in a low-grade gold-silver prospect in Sonora state. “We have to be looking at large deposits,” says Logan. “I don’t think 100,000 oz. would cause a lot of arm-waving in the Noranda group.”

Although the Mexican office has yet to announce a significant discovery, Logan believes the budget for Mexico will likely remain steady into 1993. Noranda has a 40% interest in Minera Las Cuevas, the mining arm of a large Mexican industrial group called Camesa. After the market for fluorite, Las Cuevas’ main commodity, dwindled in the late 1980s, Noranda inherited most of its Mexican partner’s exploration staff.

“Las Cuevas was our window on Mexico,” remarked Logan.