Saudia Arabia an oasis of exploration

Saudi Arabia is known primarily for three things oil, sand and petro-dollars. The Saudis want to add metal mining to that list.

Few people regard the desert kingdom as holding out much hope for base or precious metal deposits. But the Saudis are out to convince Canadian explorationists that its Precambrian rocks could host deposits and that its Shield rocks are not buried under mounds of desert sand.

Its a geological setting which cries out to be tested, said Robert Ginn, who has worked with Watts Griffis McQuat (WGM) in Saudi Arabia. He offered his assessment to a mining crowd in Toronto recently.

For would-be explorationists, the country is not without geological data. Indeed, the U.S. Geological Survey, the French agency BRGM and WGM have worked extensively to develop and compile information. The Shield area has been mapped on the scale of 1:100,000. A computerized database of 5,000 mineral occurrences is available for inspection.

WGM reviewed 700 prospects that included a full range of metals, including tin-tungsten, industrial minerals, rare earths, uranium, gold and base metals in volcanic massive sulphide settings.

An exploration licence gives a company the right to explore in a licensed area of up to 10,000 sq. km. for an initial five years. The company must post a bank guarantee for 10% of the expected cost of the work program. When exploration yields to exploitation, a mining lease gives a company the exclusive right to mine in a given 50-sq.-km. area for 30 years. (This is renewable after the 30-year period.)

Environmental regulations specific to the industry are being drawn up. The income tax rate can be as high as 45%, but mining companies are offered a 5-year exemption period. As well, during the negotiations for a mining lease, companies can opt either to share profits with the state or pay income tax. All enquiries are processed through the kingdoms directorate-general of mineral resources (DGMR). An initial reconnaissance permit allows a company to review existing data on mineral occurrences and prospects and to visit sites. Later, the company negotiates the terms of its exploration licence. Saudi Arabia offers a stable currency, well-developed infrastructure, plenty of exposed rock, few environmental difficulties and a politically stable, free market economy.

The Saudi Industrial Development Fund offers medium- and long-term loans at a 2% service charge per year. The Public Investment Fund charges 3-6%. In the past, social and economic growth was founded on oil exports. Now, diversification is the goal. Gold is priority No. 1, but both industrial and base metals are targeted commodities in this drive for a diverse economic structure.

Two gold mines exist in Saudi Arabia. In mountainous terrain, 350 km northeast of Jeddah, the Mahd Ad Dahab mine produces 160,000 oz. per year. It has been in production for five years and is owned by a government company called Petromin.

The other mine is a smaller producer with private-sector involvement. Boliden of Sweden is a joint-venture partner with Petromin in the 50,000-oz.-per-year producer.

Feasibility studies are under way on two other mines.