Consession Contract Enviromental License Royalty Surface Canon Paramo
Fund Raises Listing Transactions Bolsa de Valores de Colombia Project Acquisition Merges and Acquisitions
AngloGold Ashanti Barrick Gold Yamana Gold Kinross Gold IAMGOLD
Gran Colombia Gold AUX B2Gold Continental Gold Sunward Resources
a Freestone Publishing report
6.0 companies active in colombia 路 6.4 advanced exploration with resource
The Colombia Gold Letter An independent and authoritative monthly publication bringing the latest news in the Colombia gold sector, including analysis of topical issues and regulatory changes, project reports, exploration news, corporate and financial news, stocks and analysis. To subscribe contact paul.corresponsal@gmail.com.
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The Colombia Gold Report 2012 The Colombia Gold Report is published annually. The information contained herein is derived from sources believed to be reliable but no warranty expressed or implied exists between the recipient and the Publisher that this information is accurate. The contents of Colombia Gold Yearbook are intended for information purposes only based on news and information obtained and/or researched by the Publisher and is not intended to be construed as advice to buy or sell shares in any security or asset. The Colombia Gold Report is intended to be authoritative, critical and independent. The author would like to thank all those that contributed material and ideas, provided insights and checked facts that enabled the completion of this work. Published by Freestone Publishing in Bogotá, Colombia February 2012. © 2012 Colombia Gold Report. All Rights Reserved. Unauthorized duplication or distribution of all content herein prohibited. This document is copyright protected and may not be copied, disseminated or distributed without the prior express consent of the publisher.
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5
TABLE OF CONTENTS
1 introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2 HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3
Mining Sector Policy . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1 2001 Mining Code . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.1 Concession Contract . . . . . . . . . . . . . . . . . . . . . . . 3.1.2 Environmental License . . . . . . . . . . . . . . . . . . . . . . 3.1.3 Royalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.4 Administrative Protection . . . . . . . . . . . . . . . . . . . . . 3.1.5 Delegated Authority . . . . . . . . . . . . . . . . . . . . . . . 3.2 2010 Mining Code Amendments . . . . . . . . . . . . . . . . . . . . 3.2.1 Extension for Exploration . . . . . . . . . . . . . . . . . . . . . 3.2.2 Contract Extension and Renovation . . . . . . . . . . . . . . . . . 3.2.3 Integration of Areas . . . . . . . . . . . . . . . . . . . . . . . 3.2.4 Surface Canon . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.5 Traditional Mining . . . . . . . . . . . . . . . . . . . . . . . . 3.2.6 Excludable Zones . . . . . . . . . . . . . . . . . . . . . . . . 3.2.7 Páramo. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.8 Economic Capacity . . . . . . . . . . . . . . . . . . . . . . . . 3.2.9 Area Remains Free Date . . . . . . . . . . . . . . . . . . . . . . 3.2.10 Royalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Administration Issues . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 New Dawn?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Colombia’s Gold Regions. . . . . . . . . . . . . . . . . . . . . . . .
12 13 13 13 13 13 14 14 14 14 14 15 15 15 15 16 16 16 17 18
4.1 Antioquia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Middle Cauca Belt . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Antioquia Batholith. . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Segovia Batholith. . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 San Lucas Gold Belt . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 California-Vetas. . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 Nariño Gold Belt . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 Au-Cu projects . . . . . . . . . . . . . . . . . . . . . . . . . . .
19 19 21 21 21 21 22 22
5 Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.1 5.2 5.3 5.4 5.5 6
Fund Raises . . . . . . . . Listing Transactions. . . . . Bolsa de Valores de Colombia. Project Acquisition . . . . . Mergers and acquisitions . . .
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24 26 27 28 29
Companies Active in Colombia . . . . . . . . . . . . . . . . . . . . . . 30
6.1 Majors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.1 AngloGold Ashanti. . . . . . . . . . . . . . . . . . . . . . . . 6.1.2 Barrick Gold . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.3 Yamana Gold. . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.4 Kinross Gold. . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.5 IAMGOLD. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Juniors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.1 Mineros S.A.. . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.1.1 Alluvial operations. . . . . . . . . . . . . . . . . . . . . . 6.3.1.2 La Yé . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.1.3 Expansion plans. . . . . . . . . . . . . . . . . . . . . . . 6.3.1.3.1 El Bagre. . . . . . . . . . . . . . . . . . . . . . . .
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32 32 32 32 32 33 33 33 33 33 34 34 35
6.3.1.3.2 Nechi. . . . . . . . . . . . . . . . . . . . . . . . . 6.3.1.3.3 Remedios . . . . . . . . . . . . . . . . . . . . . . . . 6.3.2 Gran Colombia Gold . . . . . . . . . . . . . . . . . . . . . . . 6.3.2.1 Segovia. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.2.2 Marmato. . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.2.3 Zancudo. . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 Advanced Exploration with Resource . . . . . . . . . . . . . . . . . . . 6.4.1 Anglogold Ashanti. . . . . . . . . . . . . . . . . . . . . . . . 6.4.1.1 La Colosa . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.1.2 Gramalote . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.1.3 Quebradona . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.2 AUX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.2.1 La Bodega . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.2.2 La Baja . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.2.3 La Mascota. . . . . . . . . . . . . . . . . . . . . . . . . 6.4.3 B2Gold. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.3.1 Gramalote . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.3.2 Quebradona . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.3.3 Mocoa. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.4 Bellhaven Copper & Gold. . . . . . . . . . . . . . . . . . . . . 6.4.4.1 La Mina. . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.5 Continental Gold . . . . . . . . . . . . . . . . . . . . . . . . 6.4.5.1 Buriticá . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.5.2 Berlin. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.5.3 Dominical. . . . . . . . . . . . . . . . . . . . . . . . . 6.4.5.4 Dojura . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.6 Eco Oro Minerals. . . . . . . . . . . . . . . . . . . . . . . . 6.4.6.1 Angostura. . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.6.2 Mongora . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.6.3 Los Laches. . . . . . . . . . . . . . . . . . . . . . . . . 6.4.7 Seafield Resources. . . . . . . . . . . . . . . . . . . . . . . . 6.4.7.1 Miraflores. . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.7.2 Other Targets. . . . . . . . . . . . . . . . . . . . . . . . 6.4.8 Sunward Resources. . . . . . . . . . . . . . . . . . . . . . . . 6.4.8.1 Titiribí-Cerro Vetas . . . . . . . . . . . . . . . . . . . . . . 6.4.8.2 Chisperos . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.8.3 Virgen. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.8.4 Margarita, Porvenir and La Candela. . . . . . . . . . . . . . . . 6.4.8.5 Mando Norte. . . . . . . . . . . . . . . . . . . . . . . . 6.5 Advanced Exploration Without Resource . . . . . . . . . . . . . . . . . 6.5.1 Antioquia Gold. . . . . . . . . . . . . . . . . . . . . . . . . 6.5.1.1 Cisneros. . . . . . . . . . . . . . . . . . . . . . . . . . 6.5.1.2 Blue sky. . . . . . . . . . . . . . . . . . . . . . . . . . 6.5.2 Galway Resources. . . . . . . . . . . . . . . . . . . . . . . . 6.5.2.1 California. . . . . . . . . . . . . . . . . . . . . . . . . . 6.5.2.2 Vetas . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5.3 Colombian Mines. . . . . . . . . . . . . . . . . . . . . . . . 6.5.3.1 Yarumalito. . . . . . . . . . . . . . . . . . . . . . . . . 6.5.3.2 El Dovio . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5.4 Batero Gold. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5.4.1 La Cumbre. . . . . . . . . . . . . . . . . . . . . . . . . 6.5.4.2 Dos Quebradas . . . . . . . . . . . . . . . . . . . . . . . 6.5.4.3 El Centro . . . . . . . . . . . . . . . . . . . . . . . . . .
36 36 36 37 38 39 39 40 41 42 43 43 43 44 44 44 45 45 45 46 46 46 47 48 49 49 49 50 51 51 51 51 52 53 53 54 55 55 55 55 55 56 56 57 57 58 58 58 59 59 59 60 60
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TABLE OF CONTENTS 路 1 INTRODUCTION
6.5.4.4 Matecana . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5.4.5 Blue sky. . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 Early Stage Exploration: Drilling . . . . . . . . . . . . . . . . . . . . . 6.6.1 Bandera Gold . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6.2 Colombia Crest Gold . . . . . . . . . . . . . . . . . . . . . . . 6.6.2.1 Arabia . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6.2.2 Blue sky. . . . . . . . . . . . . . . . . . . . . . . . . . 6.6.3 CB Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6.3.1 Vetas . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6.4 Quia Resources. . . . . . . . . . . . . . . . . . . . . . . . . 6.6.4.1 San Lucas . . . . . . . . . . . . . . . . . . . . . . . . . 6.6.5 Touchstone Gold. . . . . . . . . . . . . . . . . . . . . . . . . 6.6.6 Solvista Gold. . . . . . . . . . . . . . . . . . . . . . . . . . 6.6.6.1 Caramanta. . . . . . . . . . . . . . . . . . . . . . . . . 6.6.6.2 Guadalupe. . . . . . . . . . . . . . . . . . . . . . . . . 6.6.7 Cuoro Resources . . . . . . . . . . . . . . . . . . . . . . . . . 6.6.7.1 Santa Elena . . . . . . . . . . . . . . . . . . . . . . . . . 6.6.8 Calvista Gold . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6.8.1 California. . . . . . . . . . . . . . . . . . . . . . . . . . 6.6.9 Red Eagle Mining. . . . . . . . . . . . . . . . . . . . . . . . 6.6.9.1 Santa Rosa. . . . . . . . . . . . . . . . . . . . . . . . . 6.6.9.2 Pavo Real . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6.9.3 Cajamarca . . . . . . . . . . . . . . . . . . . . . . . . . 6.6.10 Mercer Gold. . . . . . . . . . . . . . . . . . . . . . . . . . 6.6.10.1 Guayabales. . . . . . . . . . . . . . . . . . . . . . . . . 6.7 Other Companies. . . . . . . . . . . . . . . . . . . . . . . . . . 6.7.1 Alder Resources. . . . . . . . . . . . . . . . . . . . . . . . . 6.7.2 Ashmont Resources . . . . . . . . . . . . . . . . . . . . . . . . 6.7.3 Atico Mining. . . . . . . . . . . . . . . . . . . . . . . . . . 6.7.4 AuRo Resources . . . . . . . . . . . . . . . . . . . . . . . . . 6.7.5 Arcturus Ventures. . . . . . . . . . . . . . . . . . . . . . . . 6.7.6 Cabia Goldhills. . . . . . . . . . . . . . . . . . . . . . . . . 6.7.7 Caerus Resource . . . . . . . . . . . . . . . . . . . . . . . . . 6.7.8 Cordillera Gold. . . . . . . . . . . . . . . . . . . . . . . . . 6.7.9 Midasco Capital . . . . . . . . . . . . . . . . . . . . . . . . . 6.7.10 Orofino Gold . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7.11 Red Rock Resources . . . . . . . . . . . . . . . . . . . . . . . 6.7.12 Rio Novo Gold. . . . . . . . . . . . . . . . . . . . . . . . . 6.7.13 Rugby Mining. . . . . . . . . . . . . . . . . . . . . . . . . . 6.7.14 South American Gold. . . . . . . . . . . . . . . . . . . . . . . 6.7.15 Samaranta Mining. . . . . . . . . . . . . . . . . . . . . . . . 6.7.16 Stoneshield Capital. . . . . . . . . . . . . . . . . . . . . . . . 6.7.17 Tolima Gold. . . . . . . . . . . . . . . . . . . . . . . . . . 6.7.18 Trident Gold. . . . . . . . . . . . . . . . . . . . . . . . . . 6.7.19 Wesgold Minerals. . . . . . . . . . . . . . . . . . . . . . . .
60 60 61 61 61 61 61 62 62 62 62 63 63 63 63 64 64 64 64 65 65 65 65 66 66 66 66 67 67 67 68 68 68 68 69 69 69 69 69 70 70 70 70 71 71
7 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 8
Glossary of Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
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1
introduction
This report aims to give an overview of Colombia’s emerging gold sector, a general outline to public mining policy, the main gold exploration and production regions, the main stock-market listed companies involved and their projects. Mineral exploration is a dynamic process with decisions to start or stop projects being taken on a weekly basis. As such, some of the information contained in this report will date quickly, particularly with regard the projects of the smaller junior exploration companies. Mineral exploration is also high risk and costly, and the progress of the projects identified have been selected based upon the amount of exploration work they have done to date. Those included can be said to have started exploration on their projects rather than having only announced the acquisition of concessions or the signing of an option agreement. A handful of projects have an initial resource estimate which combined represent over 50.9 Moz Au to date, although this figure is expected to increase significantly over the next year as at least five companies expect to issue initial resource estimates for their projects in addition to increases in the resources found at projects that already have an initial resource figure. It is estimated by the local authorities that the resources for gold exploration in Colombia will rise +20% for 2011 with at least US$125m forecast to be spent on exploration. The modern gold sector in Colombia is still in its infancy, in the discovery stage. As such the overall focus is on drilling rather than project development. That said, a couple of projects have advanced to the development stage and have begun to test the legal and regulatory framework for mining established by the government at the turn of the century. The results to date have been frustrating for the companies concerned which, together with other process shortcomings, has prompted the government to undertake reforms in the sector that are in progress as we go to press. Colombia’s gold sector has a bright and growing future ahead of it and this annual report aims to provide a record of that growth.
Paul Harris, Director of Research
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2 HISTORY
2
HISTORY
Colombia has a long history of gold production dating back to pre-colonial times. Gold rapidly became a focus for the Spanish Conquistadores in the sixteenth century, particularly in Antioquia department, and gold exploitation has continued ever since. Colombia has the longest and most productive history of gold exploitation in South America, stretching from the pre-Colombian period to recent times. Emmons, in Gold Deposits of the World, published in 1937, estimated that some 49 Moz gold were produced between 1492 and 1937. Approximately two-thirds of all the gold produced in Colombia during this time period came from placer deposits. Records available through the Colombia’s Banco de La Republica document production of an additional 40 Moz since Emmon’s publication, thus a total estimate approaching 95 Moz of known production is observed (Table 2.1). Unreported production means the actual figure is likely to be in excess of this. Table 2.1 Colombia’s Gold Production C1500-2011 Era
Moz Au
Ca. 1500 – 1934
49.0
1934-1987
23.8
1990-1999
10.2
2000-2011
12.6*
Total
95.6
Source: Banco de la República, MinMinas, Minercol Ingeominas. *Through 2Q11
Colombia’s gold production since 1985 has averaged ca. 800,000 oz/y, and peaked at 1.7 Moz in 2010 (Table 2.2). Present production generally shows a growth and decline curve which parallels that of fluctuations in the price of gold, and hence production waned noticeably in 1998, picking up again from 2003 and again in 2008 to the present day. Table 2.2 Colombia’s Gold Production 2001-2011 Year
Oz Au
2001
701,290
2002
669,488
2003
1,495,478
2004
1,213,325
2005
1,150,554
2006
504,214
2007
497,743
2008
1,103,446
2009
1,538,019
2010
1,723,461
Source: UPME - Ingeominas
Gold production was initially alluvial and colluvial prior to the exploitation of veins, which gathered pace in the eighteenth century, particularly as mining technology improved. The nineteenth century saw the first golden age of Colombian gold production as an influx of mining technology and engineers from France, Germany and the UK brought modern mining practices. Colombia has various active gold mining operations that date back over one hundred years such as the mines of Segovia gold mines that were formerly Frontino Gold Mines and now owned by Gran Colombia Gold. Colombia’s gold production was principally exported to London and to a lesser extent France, which helped establish London as the centre of the gold trade.
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The 1930s and 1940s saw Colombian gold production at its zenith with foreign companies developing mines such as Berlin, Frontino and Zancudo in Antioquia. The Second World War followed by the start of Colombia’s civil disturbances in the 1940s and 1950s saw investment fall away, and the growth of the cocaine trade with related violence in the 1980s and 1990s resulted in mining companies abandon Colombia in their entirety. While a new mining code published in 2001 (see section 3.1) set the regulatory framework to attract mining investment, this did not materialize in the gold sector until after the election of President Alvaro Uribe in 2002 which marked a watershed for Colombia and the mining sector as he vowed to improve security, combat the guerrilla and drug cartel elements and reassert state control over the country. The success of his first term improved safety in Colombian cities and on intercity highways, paving the way for a return of foreign mining and exploration companies. The door to mining investment was opened wide in 2005 through the publication of a national mining development plan and the inauguration of an international mining fair in Medellin. Since 2005, the number of junior exploration companies active in Colombia has increased significantly from less than ten to over 70 at the time of writing due to the country’s geological potential, improved safety, and ease of working in country, and of course, the dramatic increase in the gold price over and above US$1,000/oz. President Uribe understood that mining can be a development tool that creates jobs, provides an economic stimulus for the state to reassert its control over territory that had been controlled by the guerilla forces, provide the state with funds to undertake social programmes and develop related business sectors. The administration of President Juan Manuel Santos who took office in August 2010 promises to maintain the commitment to mining and includes it as one of his government’s the five motors of development.
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Mining Sector Policy
Mining sector policy in Colombia is guided by the national mining and energy development plan 2019 and regulated by the 2001 Mining Code that established an administrative structure as shown in Figure 3.1. Together with an improving security situation, Colombia was seen to be making great strides in improving the mining and exploration administration system as evidenced by the perceptions of the industry as presented in the annual Fraser Institute Survey (Figure 3.2). The Mining Code was amended by Law 1382 in 2010, but this fell foul of constitutional safeguards and was struck down. A new bill has been drafted and is being circulated for comment to amend the 2001 Mining Code and improve sector administration. This section discusses the 2001 Mining Code, the 2010 Amendments and anticipates some of the changes the new bill will seek to make. Figure 3.1 Mining Sector Administration 2001-2011 Ministry of Mines & Energy
Delegated Authorities
Ingeominas
Geological Service
Mining Service
Antioquia, Bolivar, Boyac谩, Caldas, Cesar & Norte de Santander Departments
Figure 3.2 Mining Policy and Mineral Potential Indices 2007-2011 70 60 50
Public Policy Index
40 30
Mineral Potencial Index
20 10
3.1
11
10
20
09
20
08
20
20
07
0
20
3 MINING SECTOR POLICY
3
2001 Mining Code
In 2001, the promulgation of Law 685 established a new Mining Code in Colombia that made significant changes in the administration of the sector. It removed the state from being a mining operator in favour of private persons, and gave a focus on foreign natural persons and corporate persons as proponents or contractors of mining concessions, with the same rights and obligations as Colombians. Mining titles granting the right to explore and exploit had to be via a mining concession contract duly awarded and registered in the National Mining Register. It also contained provisions for hardships and force majeure to help deal with the realities of traditional miners and issues relating to the security situation.
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3.1.1
Concession Contract
Law 685 stated that all mineral resources belong to the state and can only be explored and exploited by means of concession contracts granted by the state. The Mining Code established a concession contract that can progress from exploration through construction to exploitation for a total period of 30 years, extendable by 20 years (Law 1382). Foreign companies must establish a corporate entity such as a subsidiary or local branch in order to be granted a concession. Mineral rights are usually granted for specific minerals within the concession areas. However, if other minerals are found, these can be added to the concession contract. A concession contract for exploration begins once it has been registered in the National Mining Register, which gives an explorer three years to explore, which is extendable to five years. The construction phase is a three-year period, extendable by one year to build a mining operation. The exploitation phase is for 30 years less the time taken in the exploration and construction phases, which will effectively correspond to 21 to 24 years. The exploitation phase is extendable for 20 years.
3.1.2
Environmental License
The Mining Code states that companies must present an Environmental Impact Study of its mining project before project construction is authorized and be awarded an Environmental License for the construction, erection, the exploitation that is the object of the contract, the ore dressing and additional tasks of exploration during the exploitation stage, valid from its issue up to the definite expiration of the mining concession.
3.1.3
Royalty
The law established that gold production is subject to the payment of a 4% royalty calculated on the basis of 80% of the average LME gold price for the period, which is equivalent to a gross 3.2% royalty.
3.1.4
Administrative Protection
Explorers and miner scan seek administrative protection before the Mayor of a municipality that is a provisional protection in order to immediately suspend the occupation, disturbance or plundering of third parties that carry out suc h action in the area object of the title. In practice, this mechanism worked ineffectively in part due to the reluctance of local authorities to use it for fear of causing social disturbance, hence the 2010 amendments put the onus on explorers to legalize informal miners operating on their concessions.
3.1.5
Delegated Authority
An important aspect for exploration companies is that the law allowed the central mining authority to delegate authority to the regions. Thus Colombia has six autonomous mining regions (Antioquia, Bolivar, Cesar, Norte de Santander, Caldas and Boyaca) that are authorized to administer mining activity and the associated environmental aspects.
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3 MINING SECTOR POLICY 路 3.2 2010 MINING CODE AMENDMENTS
3.2
2010 Mining Code Amendments
The 2001 mining code was amended by Law 1382 that became effective in February 2010. This contained many factors, positive and negative, that affected companies investing in exploration and mining in Colombia. While the 2001 Mining Code was a practical document prepared by technicians, the 2010 amendment is widely seen as prepared for political ends, such as to close loop holes that allowed companies to commence exploration work while a exploration license request was still under application. As such, it reduced clarity in certain areas and increased uncertainty as certain ill-defined concepts were applied, particularly regarding environmental aspects. Law 1382 contained many positives for exploration and mining companies, as follows:
3.2.1
Extension for Exploration
A concessionaire can request an extension for a total for four years to continue exploration for a total term of eleven years.
3.2.2
Contract Extension and Renovation
Mining companies can request the extension of a mining concession contract for twenty years if it shows that this is of benefit to the interests of the State.
3.2.3
Integration of Areas
Mining companies with areas corresponding to various titles for the same mineral that are contiguous or non-joining that pertain to the same deposit, that will have a unified exploration programme with objectives and goals of unified production, can be integrated into one single contract.
3.2.4
Surface Canon
The surface canon has been modified to a single figure rather than scaled according to concession area, as per the 2001 Mining Code. However, the fee per hectare is high compared to other countries in the region such as Peru and Chile, and is equivalent to a minimum effective daily legal salary (SMDLV) by hectare per year, for the first to fifth year, that is around US$9 per hectare. The canon will be increased every two additional years thus: for years 6 and 7 it will be 1.25 SMDLV per hectare per year; for year 8 onwards, 1.5 SMDLV per hectare per year. A major change is that the canon now has to be paid annually in advance with the first payment to be paid within the three days following the moment that the Mining Authority, through an administrative act, determines the free area available to contract. This change aims to take speculators that hold land without the means or intent to undertake exploration work out of the game in order to free up land for those with a serious interest in exploration. Negatives for the exploration and mining sector include the following:
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3.2.5
Traditional Mining
Applicants for concession contract proposals must indicate if there exists any type of mining exploitation within the area requested such as illegal, informal or traditional mining activity. Failure to do so will result in applications being rejected or concessions cancelled. On larger concession areas this places an onerous burden in terms of time and resources on the exploration team. Further, traditional miners that exploit mines without any title registered in the National Mining register and can accredit that the mining works have been performed in a continuous form for five years, through commercial and technical documentation, and a minimum existence of ten years prior to the validity of this law can claim a concession for the area of their operations. The amendment essentially forces exploration companies to seek to legalize traditional miners they find on their concessions. If traditional miners can show greater antiquity than the concession and has been in continuous exploitation for five years the mining titleholder will have to carve out that part of its concession for them.
3.2.6
Excludable Zones
The amendment states that mineral exploration or exploitation tasks cannot take place in natural national parks, regional natural parks, protected forest reserve zones and other forest reserves zones, páramo ecosystems and the wetlands designated within the list of international importance by the Ramsar Convention. However, forest reserve areas and the regional forest reserve areas can be withdrawn by the competent environmental authority. A contentious issue here is what comprises a páramo, a debate that hindered the development of an open pit at Eco Oro’s Angostura project (see section 6.1.6).
3.2.7
Páramo
Páramo’s were loosely and unsatisfactorily defined in Law 1382 that stated that a paramos will be as defined in a report made by the Humboldt Institute. A páramo is a high mountain plateau eco system that features water resource generation that typically exists between 2,500m and 3,800m above sea level. The Humboldt study broadly says that paramos typically exist at an elevation of 3,200m above sea level, and so this seems to have been established as an altitude ceiling. The Humboldt report was not written for the purpose of regulating the mining sector, and was in fact was mentioned by Eco Oro early in its project development to provide guidance as to what a páramo is. The mining sector is unhappy with this definition because páramos in Colombia occur at different elevations and not all terrain over 3,200m is páramo. The sector would like to see a technical study undertaken to define the characteristics of each of Colombia’s páramos to thus prevent projects being faced by the application of general rules. The mining sector is concerned that it will face a blanket ban based on elevation rather than individual project characteristics even though experience elsewhere in South America has shown that many large-scale base and precious metals deposits exist at altitudes of over 3,000m and that these are being exploited with rigorous environmental safeguards.
3.2.8
Economic Capacity
With projects of more than 150 hectares, an applicant will have to demonstrate its economic capacity to advance the mining project. Again, this move is aimed to remove speculators that tie up land.
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3 MINING SECTOR POLICY 路 3.2.9 AREA REMAINS FREE DATE
3.2.9
Area Remains Free Date
The areas that have been subject to a mining title or request and that for whatever cause becomes free can only be subsequently applied for via a new concession proposal 30 working days after the definitive administrative acts that imply such freedom are signed. However, in practice this remains imprecise as delays for various motives can mean a title is not published as being free to contract.
3.2.10 Royalty The government has no plans to increase the 4% royalty payable on gold production despite calls to do so amongst some senators, in order to maintain the competitiveness of the country. However, the taxation burden faced by miners in Colombia is one of the highest in the continent at around 50% (34% tax on profits, 4% royalty, 16% IVA on purchases [reclaimable]).
3.3
Administration Issues
The 2001 Mining Code had various issues and the sector suffered from institutional frailty due to an inadequate level of resources being made available to handle the surge in exploration interest that Colombia received in the first decade of this century. The government hopes to address many of these issues through a new bill and the implementation of a new institutional framework to administer the sector. Unfortunately this system has not worked well under the volume of applications and gradually ground to a halt. Ingeominas was unprepared and under-resourced to cope with the flood of mining concession applications that resulted from Colombia opening its doors to foreign investment in the mining sector. As a consequence, a six-month moratorium on the processing of new concession applications came into effect in March 2011, which was extended for an additional six months until February 2012 to allow Ingeominas to clear a backlog of some 20,000 applications. Of 19,029 title applications pending in February 2011, as of August 2011 Ingeominas had resolved some 3,000 with some 17,000 still under evaluation. At the centre of the administrative gridlock is the failure to develop a workable and efficient National Mining Cadastre, the database of mineral concessions in Colombia. In theory an exploration company should be able to access the database on line, identify the concessions in its area of interest, locate the concession numbers, find out if they are available, or who owns them, and make an online application for those in which they are interested. Since 2005 Colombia promoted the fact that it would have a digital concessions database that would make the application process agile and user-friendly. In practice there have been systemic failings in the cadastre since before the 2001 Mining Code was enacted that were never rectified and that were exacerbated as the system was stressed with an ever increasing number of applications. This has resulted in excessive application processing times, up to several years in some cases, and a database whose accuracy and timeliness of information could not be relied upon by the state or explorers. The failings with the digital database meant that Ingeominas personnel processing concession applications also used the former paperbased cadastre system resulting in extended processing times. The receipt of concession applications was suspended in February 2011 in order for Ingeominas to clear its backlog and resolve other issues. Minminas is understood to be working with international consultants that are specialists in creating mining concession database systems to finally implement a workable digital system.
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Under the 2001 Mining Code, Delegated Authority was given to six departments to administer mining in their territories: Antioquia, Bolivar, Boyaca, Caldas, Cesar and Norte de Santander. Delegated authority has been a frustrating mess for explorers as the six departments with this privilege have applied rules and regulations in different ways and have resourced this administrative function to different degrees. As a result, the effectiveness and efficiency of delegated authority has varied widely, working relatively well in Antioquia where it was adequately resourced and poorly in Bolivar for example. The difference in how each department resourced its delegated administration resulted in variance in how the rules were applied by the different authorities. Lack of adequate supervision has meant that concession holders have not been held to task when not in compliance with their contractual obligations and has allowed abuse and corruption to enter the system, with officials allowing titleholders to continue to hold their concessions even though they do not meet their commitments to keep them in good standing. In some cases canons have not been paid for several years yet titleholders have maintained valid concession contracts effectively denying the Colombian state of millions of dollars of revenue. Junior explorers seeking to obtain concessions in departments where the quality of administration is low – such as Bolivar - are often faced with considerable costs to bring the concessions they are interested in into good standing, over and above what the titleholders ask as deal terms.
3.4
New Dawn?
As this report is published, Minminas – the Ministry of Mining and Energy – is circulating a draft of a bill that aims to implement various changes to improve sector administration in the face of severe regulatory shortcomings and under-resourced administrative capacity. This will replace Law 1382 that was struck down by the Constitutional Court in May 2011 as being unconstitutional for the government’s failure to undertake prior consultation with indigenous and black communities when preparing a law that would affect them. Since its enactment in February 2010, Law 1382 was unpopular with miners and explorers because it left various technical questions with poorly defined answers. As companies advanced their projects they increasingly ran into problems due to the lack of precision of Law 1382 (and Law 685). Eco Oro and AngloGold Ashanti in particular experienced such problems. Lack of definition in key concepts, such as what a páramo is, gave lower government agencies room to interpret regulations as they sought fit. Explorers require clarity and certainty about critical decisions as to where they can develop mining and exploration activity, what kind of permits they need and how such permits are to be obtained. The Constitutional Court decided that the effects of its ruling would not be applied for two years, in effect maintaining the status quo while giving the government two years to consult with the various community groups to be able to present a new bill to Congress. Until then, the 2001 Mining Code remains in effect together with some aspects of the 2010 amendments such as the need to make advance surface canon payments. The bill is due to go to Congress before the end of 2011 with the sector looking to the government to put an administrative system into place that will allow explorers to turn discoveries into mines. However, for every element in the bill that could make things easier for an explorer is counterbalanced by those that make things more onerous. Please note that the following information is taken from the draft bill and may change substantially before the final bill is sent to Congress, and may change substantially before it is passed by Congress. The government seems intent on shaping the mining sector into an oil and gas administration institutional framework so the National Mining Agency (NMA) will be created and based on the
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3 MINING SECTOR POLICY · 3.4 NEW DOWN?
National Hydrocarbons Agency for the oil sector, which has worked well in attracting exploration and development investment. Figure 3.3 shows the new administrative structure that is to become effective from February 2012. Under the proposed structure, the NMA will be responsible for supervising the sector and authorizing concessions and mining titles, while Ingeominas will return to its role of being a state geological survey. Figure 3.3 Mining Sector Administration 2012 Ministry of Mines & Energy
Ingeominas
Geological Service
National Mineral Agency Mining Service and Concession Administration
The oil and gas theme will extend to the concessions system where the government is looking to adopt a grid-based system to replace the current irregular polygons. While the irregular polygons defy logic and have resulted in companies obtaining splinters within the concessions of other explorers, implementing a block system fairly over the tens of thousands of concessions and applications that already exist will be a challenge. The exploration period is to be extended for up to 11 years from the current five (three years plus two extension). However, it will increase the surface canon fee from an already high US$9 per hectare by 0.25% every two years after the third year of exploration. Another positive is the intention to create the Vice Ministry of Mines and the Sustainable Mining National Agency. The MinMinas preference was to have three vice ministers - mining, energy and hydrocarbons - but due to budgetary and tax reasons, there will only be two. Hence there will be a deputy minister responsible for mining and one – the Deputy Minister of Energy - will deal with oil, gas and energy. Another item of concern are the rules about to whom one can cede a concession title. The draft proposes that the grantee has equal technical and economic capacity as the grantor, which would potentially restrict juniors doing deals with majors and majors doing deals with juniors, a tenet of exploration. The most absurd item is that force majeur will be for a maximum of 18 months. The administrative changes also include the creation of a Vice Minister of Mines that will also include an environment and community’s directorate to better coordinate mining themes relating to these aspects. Regulatory changes have also been implemented to allow the ministry to obtain more financial resources from the state and remove budgetary restrictions.
4
Colombia’s Gold Regions
Colombia hosts the northern part of the mineral-rich Andes mountain chain that extends from Chile and Argentina in the south, and up through Bolivia, Peru and Ecuador, hosting extensive precious and base
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metal deposits throughout its extension. Colombia has two extremely main geological environments: the Guyana System in the eastern flatlands of the country and the Andean System in the western mountainous region. The Colombian Andean System is shaped by three mountain ranges that host gold-bearing mineral deposits. In metallogenesis, both the western and central mountain ranges stand out in the Mesozoic and Cenozoic periods, a common situation in the Chilean, Peruvian and Mexican Andes. Colombia hosts gold bearing hydrothermal systems ranging from high-level, low temperature epithermal types to deep, high temperature mesothermal types are all exposed due to the very rapid tectonic uplifts. The extent and history of Colombia’s gold provenance can be seen in the thousands of gold workings that can be seen throughout the country, the vast majority of which are artisanal scale traditional workings. Most of the gold mines that juniors have been acquiring consist of small hand excavated pits or tunnels following narrow yet high grade quartz veins, with little formal exploration or sampling. In essence, miners follow the veins until they pinch out and not to any great depth. In geologist’s parlance, these are referred to as Small High-Grade Irregular Type (SHIT) veins, which may be suitable for artisanal scale production but that may not be wide enough or high enough grade for modern mechanized production. The exceptions are the more formal mines developed in the 1800s and 1930s. Colombia also hosts gold-copper porphyry deposits that are low grade but can be quite large, as evidenced by AGAs La Colosa deposit. While boasting large mineral resources, their low grade (<1g/t) means they will always be highly sensitive to the gold price and will often face resistance on environmental grounds due to the open pit mining method that will be necessary for their exploitation. Figure 4.1 shows the main gold districts in Colombia from geological perspectives which are those that have received the bulk of exploration attention to date. It should be noted that gold-bearing mineralization can be found throughout much of the cordillera from Nariño in the south to Cordoba and Bolivar in the north, and to Norte de Santander in the east, and the border region with Venezuela and Brazil.
4.1
Antioquia
Antioquia means mountain or land of gold in the Catió language and has been the heart of Colombia’s gold production for over 500 years. Medellin, the department capital is where the majority of junior exploration companies are based and the local government is working for the city to become the home of a mining cluster, efforts that include opening a mining business park in a special duty free zone in 2011. Antioquia is perhaps Colombia’s most famous historical gold producing region with a gold endowment that extends through its length and breadth, and encompasses, high grade veins, alluvial and disseminated deposits given that it straddles several of the geological environments identified by Sillitoe and shown in Figure 4.1 including the Middle Cauca Belt, the Antioquia Batholith and the Segovia Belt. Antioquia continues to be a centre of gold production, both from small traditional miners, illegal miners and the sole listed gold producer on the Colombian stock exchange, Mineros SA. The other main gold production centre in Colombia are the Segovia mines now owned by gran Colombia Gold. It is estimated that over the last 50 years more than 16 Moz have been produced in the state from all sources, with current production levels estimated to be approaching 1 Moz/y.
4.2
Middle Cauca Belt
The Middle Cauca Belt has been the focus of a great deal of exploration activity since 2005 and has resulted in a number of significant Greenfield and Brownfield discoveries. The belt is
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4 Colombia’s Gold Regions · 4.1 Antioquia
Figure 4.1 Colombia Gold Belts
Source: Sillitoe 2008
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the most prolific in Colombia with the potential to host over 30mn oz Au. The bulk of gold resources discovered by the modern wave of exploration have been found in this belt that includes La Colosa (AngloGold Ashanti), Marmato (Gran Colombia Gold), BuriticĂĄ (Continental Gold), Titiribi (Sunward Resources ) and Quinchia (Seafield Resources). Up and coming projects include Quebradona (AGA/B2Gold), La Mina (Belhaven), Yarumalito (Colombian Mines) and Quinchia (Batero Gold). The belt counts with excellent infrastructure with Pan American highway access and three international airports.
4.3
Antioquia Batholith
The Antioquia Batholith covers an area of 7,221 km2 and is in center and eastern part Antioquia department hat is characterized as having lithologic homogeneity of granodiorite to quartz diorite or tonalite composition with little variation from one place to another. The Antioquia Batholith has not been one of the higher profile historical gold mining districts. The area is thought to have high potential and a number of juniors have targeted this area looking for large-scale disseminated ore bodies in addition to high grade veins. The most advanced property is Gramalote (AGA/B2Gold) that contains a published resource of 2.4Moz Au.
4.4 Segovia Batholith The Segovia Batholith is named after the town of Segovia at its southern extension that has been the home of the Segovia mines of Gran Colombia Gold (formerly Frontino Gold Mines) for more than 150 years. The batholith granite hosts mesothermal veins which are predominantly composed of quartz, pyrite, sphalerite, galena, gold and silver, wih veins striking north-south or northeast. The Segovia Batholith is exposed in surface outcrops over an area of approximately 270 km N-S by 50 km E-W and is limited by the Otu fault on the west and the Nus fault to the east. It is also intruded by basic dikes that are used as guides for exploration of mineralized structures. This district is believed to have produced at least 25 Moz Au from both hard rock and alluvial sources, with an estimated production of 8-9 Moz Au from the Segovia-Remedios region alone.
4.5
San Lucas Gold Belt
The San Lucas Gold Belt is an historical mining district that extends from the Segovia Batholith near Segovia in Antioquia at its southern end northeast and into southern Bolivar department. It is part of the northern portion of the Central Cordillera but geologically belongs to the western portion of the Chibcha terrane which constitutes the Eastern Cordillera basement. The geology of the San Lucas Belt is poorly known with little ground work carried out by government geologists. The metamorphic rocks which represent the basement in this zone are known as San Lucas gneiss. The district is a centre of historical traditional gold production and shows high potential for high grade gold veins. In the past the area has suffered from security issues that were exacerbated by a lack of infrastructure, the latter factor which persists to this day. However, the security situation has improved and junior explorers are beginning to work in the area, in part because it is getting more difficult to find projects in Antioquia and other more accessible areas of the country.
4.6
California-Vetas
The California district in Santander department is one of Colombia´s famous historical gold producing regions. This is a region where the Colombian gold miracle is being played out with
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4 Colombia’s Gold Regions · 4.6 california-vetas
Galway Resources, Calvista Gold, Ventana Gold and Eco Oro, all active along a simple road that leads from California up the La Baja River, which is dotted with water mills used by artisanal miners to grind mineral. The district already boasts about 18 Moz Au of official resources in all categories and several companies continue to drill and discover more. The district is in the eastern cordillera, a 50 km2 district around the towns of California and Vetas which has been one of the hottest addresses in world gold exploration in recent years. Reportedly discovered in 1549 during a Spanish military action though it had already been the site of mining by the indigenous Sura people in Pre-Colombian times. In 1820, the Colombian Mining Association, an English company directed by Robert Stephenson, the son of the inventor of the locomotive, opened the Pie de Gallo mine in that part of the district known as La Baja. In 1918, the Moreno family discovered what would eventually become the largest producing mine in the district, the El Volcan mine. More recently, Eco Oro, Ventana Gold and Galway Resources sitting on adjacent properties have had exploration success in a district that is thought could contain 20-30 Moz/Au. One of the questions hovering over this district is whether there will be a consolidation play at some point that seeks to unify the projects of AUX with either or both of Galway Resources and Eco Oro.
4.7
Nariño Gold Belt
The Nariño Gold Belt is an historical mining district at the extreme south of the country that is where the Andes mountain chain enters Colombia from Ecuador. The belt trends northeast and passes through the eastern part of Nariño department. The district is a center of historical traditional gold production and shows high potential for high grade gold veins. In the past the area has suffered from security issues but as the security situation has improved junior explorers are beginning to work in the area, in part because it is getting more difficult to find projects in Antioquia and other more accessible areas of the country.
4.8
Au-Cu projects
Many junior exploration companies are drawn to Colombia seeking gold, the yellow metal. However, the red metal, copper, in the form of Au-Cu porphyries is drawing increasing interest due to a copper price over US$3/lb, which makes it a valuable byproduct in a gold project, and also because of the increasing improbability and difficulty of major gold producers finding large-scale pure gold deposits. The search for large-scale porphyry Au-Cu deposits is generally taking place in the 300 km long Middle Cauca Belt, which is producing interesting finds, such as the June 2011 announcement of Colombia Crest’s discovery of multiple porphyry Au-Cu systems at its Arabia target that is part of its Venecia project in Antioquia. As exploration drilling reaches a critical mass resource statements are being issued for various projects in the Middle Cauca Belt that include potentially recoverable byproduct copper. Sunward Resources has 0.1% copper content in its 8.3 Moz Au Titiribí project in Antioquia and Bellhaven Copper & Gold has 0.31% Cu it its 1Moz Au at its La Mina project in Antioquia. Copper is not a new story in Colombia as it has long been thought that it must host large copper deposits given the large copper projects hosted by its neighbour Ecuador, to the south. Various government sponsored exploration programmes in the 1970s and 1980s found copper including the Mocoa and Mande Norte projects. Indeed, copper it has been produced in small quantities since the 1990s at the El Roble mine in Chocó.
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El Roble began operations in 1991 as a JV between Japanese companies Nittetsu Mining and Itochu, and Colombian partners, producing about 14,000 tpy of copper contained in concentrates that were exported to Japan. The Japanese companies left in 1998 leaving Minera El Roble with 100% Colombian ownership and that’s how things stayed until March 2011 when Peruvian company Atico Mining signed an option to buy 90% of Miner (El Roble Mine) after a twoyear evaluation period that includes commencing exploration of the El Roble Mine 10 km2 of surrounding areas. Atico is in the process of listing on the TSXV and raising US$6m to fund exploration and development. When former President Alvaro Uribe opened the doors to the international mining and exploration sector in 2005, copper companies were some of the first to enter. Phelps Dodge (now Freeport McMoran) and Aur Resources (Teck Cominco) both had a look but it was Antofagasta Minerals that committed to explore southern Colombia in July 2006 under a joint venture agreement with AGA. Antofagasta eventually withdrew from Colombia, but the main project of that JV – Mocoa in Putumayo where drilling in the 1970s and 1980s defined a resource of 306 Mt at 0.37% Cu and 0.061% Mo – was acquired by B2Gold. B2Gold has drilled the molybdenum-rich copper porphyry and is in the process of completing a NI 43-101 technical report to spin it out into a new company. To the north of Mocoa is Gran Colombia Gold’s Mazamorras project in Nariño that has been subject to a 12,000m drilling campaign. However, despite initial optimism as the drill bit confirmed anomalies as being copper porphyries, the company has yet to publish drill results, which may suggest that the results are not as positive as one would hope they would be. Other initial efforts to find copper focused on the northern end of the Middle Cauca Belt and east of the Cauca River. This zone hosts El Roble, Carla Resources’ Urrao, Rugby Mining’s Comita and Sunward Resources’ 100% owned Mando Norte that has been referred to as “one of the best undrilled copper prospects in the world”. Chip and channel sampling by Cyprus Mines in 199596 returned average values of 0.94% Cu and 0.39 g/t Au over an area of 1,400m x 800m. Rio Tinto has a back-in right to obtain 70% the project by paying Sunward US$60m at any time until Sunward spends US$20m on the project. Exploration is prolific in Antioquia but stops abruptly when one arrives at the border with Chocó. Despite acknowledged high mineral potential Chocó is one of the most underdeveloped departments of Colombia and is a forgotten land in many ways, with limited state presence, very basic infrastructure and few roads. Projects in Chocó have been beyond the pale for explorers as the historical lack of state presence means it has been a refuge for various Amerindian and Black Communities, that have various constitutional protections, and in more recent times, criminal and guerilla groups involved in drug trafficking. All such factors mean that Chocó is one of the more complicated areas in Colombia for explorers to work in, which has effectively paralyzed efforts to explore Comita and Mando Norte, and Dojura, a JV between AGA and Continental Gold. Copper is also found in the eastern Cordillera in Santander, as shown by the resource statements released by AUX with 0.12% Cu in its 3.5 Moz Au La Bodega project, while neighbour Eco Oro
5
Finance
Following the financial crash of late 2008 investment in exploration in the Colombia gold sector took off. With the gold price rising above US$800/oz the exploration sector entered a golden window with Canadian capital markets willing to lend to exploration projects, with Colombia being one of the destinations of choice. The appetite of Bay St and the Canadian financial markets
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For much of 2011, a deteriorating world economic environment saw the price of gold increase to over US$1,900/oz before falling back to US$1,650/oz causing many investors to move into the yellow metal. This saw a reduced appetite by the financial sector to invest in early stage exploration projects and new companies. The preference for gold rather than mining and exploration has seen a value gap open between the underlying commodity and its producers and explorers with many stocks seeming to be undervalued against the high gold price. A limited financing window was expected to open for Colombian gold exploration in the October to December 2012 period, with several private companies seeking to list on the TSXV.
5.1
Fund Raises
Since January 2010, at least US$947.1M has been for exploration and development on the back of Colombian projects (Figure 5.1 & Table 5.1). This figure does not include the money companies obtain when warrants are exercised, which can also be substantial, particularly as deal terms have included a full warrant. Fund raising for projects in Colombia has been driven by a handful of Canadian investment banks including Canaccord-Genuity, GMP Securities and Raymond James, often as part of a consortium of other financial institutions, as seen in Table 5.1.
Figure 5.1 Cumulative funds raised for Colombia exploration 2010 - 2011 1000 800 600 400 200
11 3Q
11 2Q
11 1Q
10 4Q
10 3Q
10 2Q
10
0
1Q
5 finance
to provide finance for explorers in Colombia saw investment banks and funds eager to find projects and participate in the new opportunities that Colombia represented. This window lasted until late 2010/early 2011 and resulted in a number of new listings of companies on the Toronto Venture Stock Exchange (TSXV). The April/May 2011 period saw several companies list including Solvista Gold, Calvista Gold, Quia Resources and CuOro Resources.
Source: Colombia Gold Report
Table 5.1 Fund raises for explorers in Colombia 2010-2011 Date
Company
Raise (M) Price
Unit (share: warrant)
Warrant price
Nov 2011
Wesgold Minerals
10.0
Oct 2011
Cabia Goldhills
3.0
Oct 2011
Tolima Gold
20.0
Brokers
1.00
1:0.5
1.25
Non-brokered
0.40
1:0.5
0.75
Mackie Research Capital
0.65
1:0.5
0.85
GMP Securities, Clarus Securities, Canaccord Genuity, Cormark Securities & Fraser Mackenzie
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