TNM Panel: Argentina a ‘playground for geologists’

Industry experts weighed in on Argentina’s Deseado Massif region, Barrick Gold’s (TSX: ABX; NYSE: ABX) recent spill at the Veladero gold mine, and the country’s nuclear capabilities during a panel discussion at The Northern Miner’s “Focus on Argentina” event, held at PwC’s office in Toronto in late September. John Cumming, the publication’s editor-in-chief, moderated the panel.

“There’s a lot of potential there,” said Rob McEwen, McEwen Mining’s (TSX:MUX; NYSE:MUX) chairman and chief owner. The mining magnate has spent over a decade working in the Deseado Massif in the southern Patagonia region with McEwen Mining and his previous firm Goldcorp (TSX: G; NSYE: GG). “We have to get over some other issues like labour— they are overstaffed there. But it’s a very prospective area,” he commented.

“When Goldcorp bought Cerro Negro for $3.6 billion [in 2010] that woke up our partners. They said maybe we should spend some money on exploration and quickly upped the exploration budget and started mining swarms of veins,” McEwen revealed.

Located in the Deseado Massif of Santa Cruz province, Cerro Negro is a low-sulphidation, epithermal gold-silver mine, which reached commercial production last January. It sits 20 km south of McEwen Mining’s 49%-held San Jose gold-silver mine, where Hochschild Mining (LON: HOC) owns the remainder. The high-grade mine started commercial production in January 2008.

The Deseado Massif is a young, budding region, with enormous exploration potential at surface and at depth. “The granddaddy mine of the area is AngloGold’s Cerro Vanguardia mine,” Cumming said. It began as an open-pit mine in 1998, with shallow underground mining starting in 2010.

The first underground mine in the camp is San Jose.

At The Northern Miner’s “Focus on Argentina” symposium at PwC Canada’s offices in Toronto in September, from left: Ricardo Martinez, director and partner at Argentina Minera SA; Richard Spencer, president and CEO of U3O8 Corp.; Rob McEwen, chairman and CEO of McEwen Mining; France M. Tenaille, partner, co-Leader for Latin America at Gowling WLG; and John Cumming, editor-in-chief of The Northern Miner. Photo by Salma Tarikh.

“It’s a playground for geologists and investors,” Ricardo Martinez, director and partner at Argentina Minera SA, said of the relatively underexplored camp.

He believes the recent shift in the country’s investment climate under President Mauricio Macri will help attract more foreign companies, previously wary of the country’s currency restrictions and export taxes.

All the discoveries made in the late 1990s and early 2000s have been “piling up” because of the previous government’s restrictions “without major developments in the last few years,” Martinez revealed. “So, everything that is producing gold, copper, whatever now was discovered 25, 30 years ago. Nothing new has been built in the last six to seven years.”

Some development projects include Yamana Gold’s (TSX: YRI; NYSE: AUY) Cerro Moro gold-copper asset in Santa Cruz and Agua Rica copper-gold-silver-molybdenum deposit in Catamarca as well as Golden Arrow Resources’ (TSX: GRG) Chinchillas silver-lead-zinc project in Jujuy.

Advanced exploration projects include Hunt Mining’s (TSXV: HMX) La Josefina and La Valenciana gold-silver project in the Deseado Massif region of Santa Cruz, Austral Gold’s (ASX: AGD) Pinguino silver-lead-zinc project, also in Santa Cruz, and First Quantum Minerals’ (TSX: FM) Taca Taca copper-gold-molybdenum deposit in Salta.

Salta and Jujuy, both in the northwestern corner, are two of the most promising lithium provinces in the country.

According to United States Geological Survey, Argentina churned out 3,800 tonnes of lithium last year, ranking as the world’s third largest producer, after Australia and Chile, which are in first and second place. It also holds the third largest lithium reserve at 2 million tonnes, behind Chile’s 7.5 million tonnes and China’s 3.2 million tonnes.

Update on Veladero

On Oct. 4, Barrick reported operations resumed at its Veladero gold mine in San Juan. The provincial government had suspended operations in mid-September, due to falling ice that damaged a pipe carrying solution in the leach pad area on Sept. 8.

This is the second incident at Veladero in the past 12 months. In March, the provincial government fined the miner $9.8 million for a cyanide spill that occurred last September, when a pipe valve failed and leaked solution into the Potrerillos River, a waterway near the mine’s leach pad.

McEwen, who attended the inaugural Argentina Business & Investment Forum in Buenos Aires in September, believes the Veladero incidents will have a “big effect” on mining in the country.

Barrick supposedly delayed notifying government officials of the most recent incident because it thought it was “a small problem.” Given last year’s spill, however, it was a hot topic at the forum, McEwen said, adding there could potentially be some “political causalities.”

Andy Lloyd, Barrick’s senior vice-president of communication, said in an Oct. 12 email that the company notified the provincial government authorities on the same day the incident occurred.

“There was some discussion in the local media that we did not notify a group of mining regulators who were at the site during the morning of Sept. 8 for a routine visit. However, the material that left the pad was not identified until late in the afternoon after that group had already departed the mine. So, the ministry was notified by phone that day as per protocol. It’s possible officials from other ministries or the federal government were not aware but that is unrelated to our reporting obligations,” he explained.

The recent incident is not comparable to the prior year’s event, he said. “A small amount of crushed ore saturated with process solution escaped over the leach pad berm.” The company contained that solution in the leach valley, before returning it to the pad, without causing any environmental damage.

To prevent this incident from recurring, Barrick has increased the height of the perimeter berms surrounding the leach pad, he noted. The company also aims to enhance environmental monitoring at the mine by using new digital technology, enabling “authorities and other stakeholders to access real time information in ways that provide greater transparency.”

Nuclear potential

“Argentina is the leader in Latin America in terms of nuclear,” said Richard Spencer, president and CEO of U3O8 Corp. (TSX: UWE). The country has three nuclear reactors, producing about 9% of the country’s electricity, and plans to build two more reactors.

“The Argentinean government is obviously very keen to have its own supply of uranium,” Spencer said. The country has everything in the uranium cycle, from design and enrichment capabilities to long-term storage facilities, except for uranium production.

Spencer believes this represents a unique opportunity for U308 to supply to the local industry when the new reactors come online in the next five to six years.

U3O8 is currently advancing the Laguna Salada uranium-vanadium project in Chubut province. According to Spencer, it is the only uranium deposit in the country with a National Instrument 43-101 compliant resource and economic study.

A 2014 preliminary economic assessment envisions the project could produce 640,000 lb. uranium over a 10-year mine life, at cash costs of US$21.62 per lb., net of vanadium byproduct credits.

U3O8 notes the other uranium deposits in Argentina with completed economic studies are the mined out Sierra Pintada deposit and the Cerro Solo deposit. The latter, owned by Argentina’s National Atomic Energy Commission, is in Chubut.

Another uranium junior is Blue Sky Uranium (TSX: BSK). In 2007, it discovered the Anit uranium prospect in Rio Negro, in the northern portion of the Patagonia.

The Patagonia contains five of Argentina’s 23 provinces, including Santa Cruz, Rio Negro, Chubut, Neuquén and Tierra del Fuego.

RELATED STORY: TNM Panel: Industry leaders are ‘cautiously optimistic’ on Argentina

VIEW & DOWNLOAD FULL 32-PAGE SYMPOSIUM MAGAZINE: Focus on Argentina Mining – An investors’ guide

Northern Miner moderators at the Miner’s “Focus on Argentina” symposium at PWC Canada’s offices in Toronto in September, from left: John Cumming, editor-in-chief; Anthony Vaccaro, publisher; and Trish Saywell, senior staff writer. Photo by Salma Tarikh.