Mining News
About a hundred kilometers south from Purmamarca in the Province of Jujuy, in the solitude of the Puna, there is a district called Susques. This area, inhabited by some 300 persons, was turned into Lithium Americas’ base of operations. Lithium Americas is listed on the Toronto Stock Exchange and has 43,400 hectares in an area named Cauchari, 8 kilometers from Susques. As its name indicates, the company, mainly owned by Canadian capitals, searches for lithium. Car-parts maker Magna, which bought the Oppel trademark from Volkswagen, and Japanese-giant Mitsubishi are partners of Lithium. They are all interested in guarantying that key supply. They have already collected US$ 65 million for the first 40 drill-holes, and Cauchari gave them a pleasant surprise. In the beginning, a 5 million tons production was estimated, and it quickly rose to 8.7 million tons of almost pure lithium, ready to be marketed. In this way, Cauchari became the world’s third deposit. The Puna area has 83% of the world’s lithium, another 15% is in the Tibet and a mere 2% is in Nevada, USA.
Patagonia Gold has pointed out that “exceptionally high grade gold and silver continues to be encountered on the COSE project located 2 kilometers along strike from the Cap Oeste gold and silver resource”. On drill hole CSE-047, 5.00 meters with an average of 162.78 g/t of gold and 8,622 g/t of silver were intersected. “The central mineralized breccia zone of COSE continues to report exceptionally high grade gold and silver, and has been delineated within an area 75 meters down dip by 25 meters along strike with a true width of 3.5 to 4.5 meters”, indicated the document. The mineralization remains open in all directions. Patagonia Gold has contracted independent Mining Engineers to provide a detailed preliminary mine design together with a timeline and financial model for the development of a decline access and an underground mine for the COSE project.
“Minera Andes invierte otros U$S 30 millones en el proyecto de cobre Los Azules”, published in “El inversor energético & minero – Newsletter diario” (City of Buenos Aires) on 11/05/2010
Minera Andes plans to drill 30,000 meters in Los Azules copper project this season, located in the Department of Calingasta in the Province of San Juan, with the aim of achieving pre-feasibility stage. That amount of meters is the same that was executed during the past six years, and three times as much as in last campaign. The program will demand an investment of nearly 30 million dollars. Jim Duff, Minera Andes´ Chief Operating Officer (COO), pointed out that the pre-feasibility study is a major task that will require much more drilling and engineering testing. For the time being it is not possible to say exactly when such survey will be finished, but it will extend beyond the end of the year”, he stated. “Los Azules” is located in the high mountain, 125 kilometers west from Calingasta and 10 kilometers from the border with Chile. For the first time, the company is making a winter monitoring of the access, because the idea is to extend the fieldwork season.
The representatives of the Province of San Juan have made progress with two mining issues: they approved the granting of two areas for exploration and they presented a bill to set up a mining suppliers’ registry. According to Diario de Cuyo, Javier Ruiz (Partido Justicialista), submitted an initiative to create a Sole Registry of Mining Companies Suppliers (RUPEM, in Spanish), in which registration will be mandatory and public, with the intention of making transparent the mining activity. The measure, which promotes hiring local suppliers, had the support of the Mining Chamber of the Province of San Juan and the Mining Services Chamber of the province. At the same time, it was rejected by some legislators that considered it unconstitutional, as they understood that a company may not be forced to contract a certain person or entity. In addition, the provincial legislative body decided to pass the bill submitted by the Executive Power, by which it approves the Economic and Work Offer made by Minera Anglo American Argentina for the mining area named “Vanesa I and II” in the Department of Calingasta. Such offer had been ratified by Decree No. 1316/2010, which authorizes the Instituto de Exploraciones y Explotaciones Mineras [Mining Exploration and Exploitation Institute (IPEEM)] to enter into an exploration agreement with option to exploitation with Minera Anglo American Argentina.
“Catamarca evalúa ir a la Corte Suprema para ejercer la potestad sobre sus recursos naturales”, published in “Diario La Unión” (Province of Catamarca) on 11/12/2010
After the enactment of the Federal Law on Glaciers last month, the province is evaluating taking legal actions regarding the application of this law and the province’s powers on its natural resources. According to the Government and Justice Minister, Javier Silva, the Province of Catamarca would file a claim with the Corte Suprema de Justicia de la Nación [the highest court on constitutional and federal matters] because this law not only affects the mining activity but also “the development of the province in all its aspects”. The minister explained that the provincial technical experts, mainly from the Secretariat of State, are working and looking for different alternatives to ensure the province’s rights, evaluating what is more convenient to find a legal answer. In contrast with the precedents from the Province of San Juan before a federal court, this action would be initiated directly before the Corte Suprema because, as the Argentine Constitution says, it is competent to solve controversies between the provinces and between the provinces and the federal government. What is worrying is, according to Silva, that in case of implementing the law in its original version it would affect “not only the mining sector but also any other kind of initiative in infrastructure and living conditions of the communities, especially the ones in the Andean area”.
“Para estudiar la factibilidad de un proyecto minero invertirán 60 millones de pesos en el NOA”, published in “Diario La Unión” (Province of Catamarca) on 11/12/2010
The mining company Lithium1 will initially invest 60 million pesos, during what remains of 2010 and 2011, to perform in the provinces of Catamarca and Salta the feasibility study of the “Sal de Vida” mining project, which plans to produce lithium, a strategic mineral mainly destined for the production of rechargeable batteries that do not affect the environment. The study will comprise an advanced drilling program over almost 300 square kilometers in the salar, brine evaporation testing in labs, evaporation assays in the pilot plant, and resource estimations, among other activities, which currently generate 100 jobs directly and indirectly in the Puna area of the country. The “Sal de Vida” project is located in the Department of Antofagasta de la Sierra, in the Province of Catamarca, and the Department of Los Andes, in the Province of Salta.
“Cerro Vanguardia incrementa su producción”, published in “El inversor energético & minero – Newsletter diario” (City of Buenos Aires) on 11/12/2010
The gold and silver project in the Province of Santa Cruz, Cerro Vanguardia, is making progress in the works to increase the deposit’s production and, at the same time, extend the lifespan of the undertaking, as was informed by the mining company’s executive, Jorge Palmés, during a meeting with the National Mining Secretary Jorge Mayoral. On this matter, Palmés detailed the works on the galleries that will allow extending the productivity of the mine and the processing plant of this project located in the locality of Puerto San Julian, which generates more than 2,000 jobs directly and indirectly. On this occasion, the businessman also explained the scope of the social program that finances projects of San Julian’s Development Agency for the development of works destined to the community of Puerto San Julian, which this year would total around 3 million pesos. The project, located in the outskirts of San Julian, a locality of the Province of Santa Cruz, since 1999 –the year when production began– has left more than 1,500 million pesos in the province. Of this amount, $1,020 million were paid for items such as salaries, royalties, dividends and usufruct to Fomicruz (the provincial state-owned company) and works for the community, among others, as was indicated by the company, controlled by the South African company Anglo Gold Ashanti.
“Proyecto Navidad: Empresa canadiense espera nueva ley minera después de las elecciones”, published in “Diario El Chubut” (Province of Chubut), on 11/14/2010
“The growth of Panamerican Silver depends, especially, on the Navidad project”, stated the general manager of the Canadian mining company Pan American Silver, owner of one of the largest silver and lead deposits, which is in the plateau of the Province of Chubut. Burns explained to the company’s shareholders that, since recent conversations held with authorities of the government of Chubut, he may assure that after the elections of March 20 the treatment of the mining zoning law will be promoted, which will allow the exploitation of the Navidad deposit. The company informed that in the exploration stage that is currently being performed by Pan American Silver in the deposit, near the rural communities of Gan Gan and Gastre, 178 people work, directly and indirectly. In the past year, the company claims to have invested 29 million dollars in the development of the mining project located in Chubut. Pan American Silver expects to have the Environmental Impact Report completed by the end of 2010 or the beginning of 2011. Silver, lead and pyrite in different concentration levels are the minerals found in the samples obtained. From the mineral distribution assays the technical experts expect to have the mining plan and the economic model of the future exploitation of the deposit defined by the end of 2010.
“Continúa con buen ritmo la exploración de uranio”, published in “El inversor energético & minero – Newsletter diario” (City of Buenos Aires) on 11/18/2010
The Geology Manager of the National Commission for Atomic Energy (“Comisión Nacional de Energía Atómica – CNEA”), Roberto Bianchi, provided details about the advances in the exploration of uranium in Argentina, specifically in the province of Santa Cruz, as well as the prospects of reaching self-sufficiency in this material in the country. Bianchi assured that 2010 has been an important year because “we have been able to increase the number of exploration permit areas (áreas de cateo), that reaches up to 47, today; distributed in the provinces of Salta, Catamarca, La Rioja, Mendoza, Río Negro, Chubut and Santa Cruz, and we also have the idea of taking up again zones in San Juan that had been studied by the Commission in the 70’s, as well as others in Nuequen”. Respecting self-sufficiency, the public official determined that, with the knowledge we have of the mineralized areas in the “Sierra Pintada” deposit (in Mendoza, still on stand-by) it would cover up to the 50% of the need for nuclear reactors Atucha I, Atucha II (which will be inaugurated in 2011), the nuclear plant Embalse and two more plants to be built. “With this we would be reaching the year 2090. There is 45% of the material missing to supply the total amount of resources. We have 47 areas under exploration, exploration permit areas that are being studied. With these it is very likely that we will be able to obtain the total amount of resources to supply our needs and fulfill our internal requirements”.
“Santa Cruz: avanza la construcción de un proyecto de oro”, published in “El Inversor Energético & Minero – Newsletter diario” (City of Buenos Aires) on 11/18/2010
The Argentine mining company Patagonia Gold informed that the advances in their auriferous project of “Lomada de Leiva”, located approximately 40km south of the Perito Moreno Glacier, continue within the expected terms. According to the information provided by the company, “the construction of the platform for the lixiviation process in 50,000 ton heaps in the “Lomada de Leiva” project continues to progress according to what was planned, with the movement of soils being finished in due time as well as the termination of the civil works. At the same time, Patagonia Gold has begun a landfill sounding and an extension of the consistent resource in 38 diamond-core drilling holes, for the purpose of confirming the inferred and peripheral mineralization in “Lomada de Leiva” and its surroundings. The gold lixiviation project of “Lomada de Leiva” is located in “La Paloma” property block, in “El Deseado” massif. Today it has a resource of 161,346 ounces of gold certified in the indicated and measured categories with 73,725 ounces of additional inferred gold. The first stage of the Lomada project consists in the construction of a platform for metal leaching in heaps of 50,000 tons that is estimated to give approximately 2,200 ounces of gold for the first pile of 6 meters, based on a 70% recovery rate. The construction of the platform started at the end of September. The platform’s base, the pools, the site for the metal testing equipment and the emergency dike have been completed. The platform base, as well as the pools, has been water-proofed with high-density PVC geo-membrane. Filtered material has been spread out over the base of the lixiviation platform, with a height of 30 centimeters, and is ready for loading the mineral. The drilling and blasting of the first package of 20,000 tons of mineral is programmed for mid November; and immediately afterwards mining, transport and loading of the mineral on the platform will begin, which is estimated to be finished by the end of the year.
“El mayor productor de cobre y platino desembarcó en Calingasta”, published in “Cuyo minero – Diario de Cuyo (Province of San Juan) on 11/18/2010
During the session on November 4, the House of Representatives of the province of San Juan approved the agreement signed by the Executive Branch and the company Anglo American Argentina S.A. to begin the exploration of mining areas “Vanesa I” and “Vanesa II” in Calingasta, with an exploitation option. The firm is the biggest producer of platinum in the world, with operations based in South Africa. It also produces diamonds and metals such as copper, an area in which it is also a world leader. The offer consists of exploration works during five seasons, in identical terms as to the proposal presented last December to the president of the Instituto Provincial de Exploraciones y Explotaciones Mineras [Provincial Institute of Mining Explorations and Exploitations (IPEEM)], Oscar Azcurra. It is worth mentioning that the Institute is in charge of granting the concessions of the mining areas and to charge the annual fee. The agreed investment for the five stages is of 13,500,000 dollars. Minera Anglo American Argentina S.A. is a subsidiary of Anglo American PLC.
“Según Mayoral, la minería argentina captará inversiones por más de U$S 30.000 millones”, published in “El Inversor Energético & Minero – Newsletter diario” (City of Buenos Aires) on 11/19/2010
The National Secretary of Mining, Jorge Mayoral predicted that Argentina will become, towards the second half of the 2020 decade, a great player in world mining. When speaking in the Chinese city of Tianjin, at the “III Congress of Argentine Mining: Investment Opportunities”, the public official said that “Argentina is expected to receive investments for over 30 billion dollars that will make the realization of new productive projects possible”. As he anticipated, the country will transform into a big world player in copper, silver and gold, and will be a leader in lithium and borates. He also pointed out that “for the first time in history, Argentina will be one of the most important countries in potassium production and export, destined to satisfy the demand of fertilizers in the agricultural world. Organized by the National Mining Secretariat, the event gathered more than 200 public officials, investors, businessmen and Chinese investment analysts, according to a press release.
“Glaciares: apelarán a la jurisprudencia”, published in “Cuyo minero – Diario de Cuyo (Province of San Juan) on 11/20/2010
The province of San Juan will search for all the case law available, in the Justice system as well as the Executive Branch, to use it as an argument to convince the National Supreme Court of Justice (“Corte Suprema de Justicia de la Nación” – CSJN) to declare the unconstitutionality of the Federal Law on Glaciers, considering that it advances over the powers of the provinces over their natural resources. In order to complete the strategy, the province will show in its presentation the local laws that regulate the mining activity and at the same time take care of its natural resources. This was confirmed by Guillermo De Sanctis, Chief Advisor and in charge of the judicial strategy on this matter, announcing that yesterday the Province received a summons from the Lower Court on Federal Matters No. 1, of Miguel Angel Gálvez, to take part as an interested and necessary third party in the three unconstitutionality declaration cases presented by private parties. The government had already announced that it was going to take part in the process, and so, once it presents its arguments it will go on to the Supreme Court.
“Casposo, la primera mina en producir lingotes de plata”, published in “Cuyo minero – Diario de Cuyo (Province of San Juan) on 11/20/2010
Capsoso mine in Calingasta, which will be producing next month, will be the first in the province to make silver bars as wells as the dore bars (a gold and silver fusion), as confirmed by the mining company Troy Resources. With this intention, they will build a refinery that will obtain a mineral of 99.9% purity. It will be ready in 6 months and the reserves are estimated to be 11,194,300 ounces of silver, in 6.5 years of mine life. In contrast to other projects in San Juan, in Casposo the silver recovery is up to 15 times larger. Silver is starting to be very attractive for investors and only in this year, the ounce of silver went from 16.66 dollars in January to 28.55 this month, increasing in only 11 months to 71.37 per cent. According to the manager of the project, Eduardo Machuca, at first dore bars will be extracted, and in 6 more months bars of non-refined gold of a 97 per cent purity (which should be taken abroad for the final process of refinery) and 99.9 per cent silver bars. In this way, Casposo has reserves for 463,500 ounces of equivalent gold, that is to say, 363,000 ounces of gold plus what is represented in the “equivalent gold” of the 11,194,300 ounces of silver, Machuca explained. He also said that “in the country there are a few mine deposits that refine silver. For example in the South there is Mina Martha, in the Province of Santa Cruz. In contrast to a gold refinery, which demands an investment that is only justified in case it is a large project, the silver refinery, when there is a good recovery of the mineral, is perfectly viable”. Even though the mine life is estimated, at first, in 6.5 years, that time may be extended to “10 or 12 years”, because there are indications that there are more reserves deeper towards the southeast.
“Anuncian inversión de U$S 150 millones para producir sales de litio y potasio en Olaroz”, published in “El inversor energético & minero – Newsletter diario” (City of Buenos Aires) on 11/25/2010
Marcelo Sanchez, who represents the company “Sales de Jujuy”, revealed that the company is planning to invest US$ 150 million over the next two years in the production of potassium and lithium salts in Olaroz. The announcement was made within the Local Suppliers Development Plan promoted by the Ministry of Production to position the small and medium sized enterprises (PyMES) as suppliers of goods and services in the regional market, through management tools and training, technical and financial assistance and commercial connections.
“Seguros ambientales mineros”, published in “Diario Minero” on 11/26/2010
The National Mining Secretary, Jorge Mayoral, met with the National Insurance Superintendent, Francisco Durañona, and the Vice-Superintendent of the entity, Juan Bontempo, to analyze the implementation of the mining environmental insurance. After the meeting, the authorities attended the Meeting of the Consejo Federal Minero [Federal Mining Council], which brings together the provincial mining authorities, to present the scope of the environmental insurance provided for in the General Environmental Law, to be implemented in the provinces. The regulation was detailed and the specific requirements for each mining production zone in the country were evaluated.
“Banco Comafi: Presentó línea de crédito minera”, published in “Diario El Zonda” (Province of San Juan)
Even though mining is a high-risk activity, this financial entity has launched a product intended mostly to small and medium miners of the province. The leasing and a line of medium-term credit are the alternatives that were presented as a valid choice when assessing indebtedness. Mining is one of the sectors with more trouble to obtain financing. This shows clearly when investors have to go public to look for investors for this kind of activity. However, the costs are high and one out of every 100 projects becomes a mine. “As a bank we see a strong potential growth of the mining sector and, although we have been on the local market a long time, we want to synergize our presence through instruments that are new”, said Sergio Calderon, General Manager of The Capital Corporation. From COMAFI, they state that leasing is a way of capitalizing the mining companies and its suppliers. “Leasing is a long-term capitalization instrument that does not require additional guaranties”, stated Calderón. Leonardo Myskow, Manager of COMAFI’s PyME (small and medium sized enterprises) banking, explained that “we saw that suppliers for the mining industry needed financing that covered working capital”. After a market research survey they detected that “with this product the supplier may get together with the funds on ground zero. We thought at first the advance should be 50% of the purchase order but this may be flexible. The terms are up to 180 days, at a 12.5% rate”.
“China buscará oro en La Rioja”, published in “Clarín” (City of Buenos Aires) on 11/30/2010
China’s largest gold mining company, Shandong Gold, will land in Argentina, together with the government of the Province of La Rioja. The object is to search for the precious metal in the El Oro mine, located in Famatina hill, 30 km away from the city of Chilecito, in the north of the province. Governor Beder Herrera was recently at Shandong’s head office located in the Chinese province of the same name. The agreement signed with Shandong Gold anticipates that, besides the 3% in royalties that the Argentine law established, the company will pay an additional 12% to the Province of La Rioja, as it will associate with the mining company through the provincial state-owned Energía y Minerales Sociedad del Estado (Emse). A Chinese private company will also be associated, but the largest percentage as well as the direction of the exploitation is held by Shandong. Shandong Gold is among the four largest mining companies in the world, it handles 40% of the gold produced in China and is listed in Shanghai’s gold stock exchange. China is the world’s main producer of gold and the second consumer. Shandong Gold is a member of Shandong Group, which has interests and companies in different areas.
This insight is a brief comment on legal news in Argentina; it does not purport to be an exhaustive analysis or to provide legal advice.