The pipeline starts to fill

This week we’re telling the stories of several mineral exploration and development projects in Latin America, but on their own they don’t quite convey the incredible upswing in activity by North American-based companies in Latin America these past couple of years, particularly in the gold sector.

Some statistics recently compiled by Halifax, N.S.-based Metals Economics Group give a better view of the startling big picture for gold: in Latin America in 2004, not including reserves or resources at producing mines, there were 77 gold exploration projects containing a whopping 230.7 million oz. gold — the highest number since MEG started doing the survey in 1985.

Almost half of these 77 projects contain more than 1 million oz. gold, and 11 contain more than 4 million oz. The eight largest projects each boast more than 9 million oz., or 137 million oz. in total, representing 59% of the total gold resources being developed.

Exploration budgets targeting gold in Latin America increased by 50%, year over year, to US$376 million in 2004, including US$121 million earmarked for late-stage gold projects.

While Mexico, Chile and Venezuela remain destinations of choice in Latin America for North American gold explorers, Peru has re-emerged as desirable, despite some strong political opposition to mining, most notoriously expressed in the neutering of the 14-million-oz. Tambo Grande project. Some bright new lights on the Peruvian scene include Galaxy Minerals at Culebrillas and Andresmin at Winicocha.

More broadly, MEG notes that Latin America ranked as its number-one region for non-ferrous exploration dollars in 2004, accounting for 22% of the US$3.55 billion spent last year by 1,138 companies. Of this US$3.55 billion, gold was the target for half the money.

But it’s not just exploration that’s hot: new gold-production capacity coming on-stream in Latin America in 2004 totalled almost half a million ounces per year from three mines: Cambior’s Rosebel in Suriname, Glamis Gold’s El Sauzal in Mexico, and Yamana Gold’s Fazenda Nova in Brazil.

But even this is just a taste of what’s to come by year-end, when a stunning 2.2 million oz. of new annual gold-production capacity will have started up, at a combined capital cost of US$1.4 billion.

Roughly half of this production and cost total will come from Barrick Gold’s Lagunas Norte mine in Peru and its Veladero mine in Argentina. Other companies opening gold mines in Latin America this year include Alamos Gold, Bolivar Gold, Desert Sun Mining, Glencairn Gold, Goldcorp, Kinross Gold, Newmont Mining, China’s Shandong Gold, and Yamana Gold.

Farther ahead lie the development in Latin America of some truly giant gold deposits: Cerro Casale in Chile, tipping the scales at 28 million oz. gold; Pascua Lama in Chile, at 24 million oz.; Las Cristinas in Venezuela, 21 million oz.; Pueblo Viejo in the Dominican Republic, 18 million oz.; Minas Congas in Peru, 13 million oz.; Brisas del Cuyuni in Venezuela, 9 million oz.; and Angostura in Colombia, 8 million oz.

One mining veteran has quipped that this is the only industry that can point to any element on the periodic table and quickly turn the market for it into a vast oversupply.

That hasn’t quite happened in gold, but it’s clear that North America’s miners have pointed to gold on the periodic table, picked out Latin America on the map, and are making big things happen.