Editorial: Mexican staking in turmoil

The risky business of mineral exploration is full of surprises, and the week ended Sept 8, the 36th trading week of 2007, gave us a big one.

* The Mexican government fessed up that it had secretly staked mineral claims covering 3.2 million sq. km, effectively closing off any new claim-staking over half the country until at least the new year.

With Vancouver being home base for many of Mexico’s foreign mineral explorers, Mexican mines minister Norberto Roque made the extra effort to fly up to Howe Street on Sept. 6 to personally explain the government’s staking rush.

The government believed it had no choice but to move quickly and surreptitiously with its staking in order to close off a new loophole in Mexican mining law. This loophole was created last year with the inclusion of methane gas as a substance that could be extracted under a mineral concession. With a little sober second thought, the Mexican government realized that oil and gas companies could stake vast mineral claims across Mexico for future gas exploration, tying up the mineral rights for years to come and thus starving the country’s burgeoning mineral exploration scene.

It’s a most convoluted way to patch up bad legislation, but the Mexican government does seem to have the mineral exploration community’s best interests at heart, as enormously frustrating as this move is to would-be claim-stakers in the short term. Mexico is still an excellent jurisdiction for mining compared with its global competitors; today it’s just less so.

The minister plans to return to Vancouver in early October, and we hope then to learn more about the government’s plans to study its vast new claims and systematically release properties with no gas potential back to the public for restaking.

* With prices for base metals and uranium slumping over the past month, gold has re-emerged as the metal with the best upward momentum and it’s taking the rest of the precious metals along for the ride. This past week, gold smashed through some longstanding technical trading barriers in the high US$600s and ultimately popped up above US$700 per oz. as the U.S. dollar faded in response to continued problems in the low-quality credit market. The autumn has taken on a more sombre tone for traders because of the late summer’s broad market declines, but it has probably opened a few more ears to the gold bugs’ “gospel of gold,” that the yellow metal is a great safe haven in times of trouble for fiat currencies.

* The hostile, all-share takeover bid for Katanga Mining by Central African Mining & Exploration Co. (Camec) lasted barely a week — one of the fastest bid withdrawals we’ve ever seen — with Camec pulling its offer on Sept. 5 owing to what it called the “uncertainty relating to the mining licence regime” in the Democratic Republic of the Congo.

That’s the polite way of saying that the DRC government appears to have been adamantly against the deal, and was ready and willing to play rough. It did so by calling into question some of Camec’s existing, key licences in the country only a couple days after the bid’s launch — a move that swiftly chopped Camec’s stock price in half and strangled the bid in its cradle.

* The decade-long drama of Gabriel Resources trying to bring its Rosia Montana gold project in Romania into production in the face of stiff NGO opposition took a turn for the melodramatic, with the company posting a news release entitled “Gabriel Exposes the Secrets of Rosia Montana Opposition” to accompany a major speech by Gabriel CEO Alan Hill in Bucharest. In his speech, Hill outlined for the umpteenth time the overall benefit of the project, but this time he explicitly tried to stoke Romanian patriotism by suggesting that much of the opposition to Rosia Montana comes from Hungarian sources that still consider western Romania to be Hungarian territory, as it was once part of the Austro-Hungarian Empire.

By the standards of our blunt industry, it’s a very sophisticated public relations game Gabriel has been playing since Hill and his ex-Barrick Gold associates came on board two years ago. We’ll see if his management team is successful in reframing the Rosia Montana debate within Romania so that the project going forward becomes a sign of Romanian sovereignty, or whether the whole approach will come across to Romanians as manipulative and phony.

Send your Letters-to-the-Editor and other op-ed submissions to the Editor at: tnm@northernminer.com, fax: (416) 510-5137, or 12 Concorde Pl., Suite 800, Toronto, ON M3C 4J2.