A recent study revealed that six countries in South America are included in this year’s top 25 countries with the lowest risk for mining investments.
Behre Dolbear, a well-known advisory firm in the mining industry, published a study titled 2015 Where to Invest in Mining that saw Chile, Mexico, Peru, Colombia, Brazil, and Argentina join the roster of giant mining countries such as Canada, Australia, and the United States.
The ranking was based on seven criteria: political system, currency liability, economic system, social license issues, permitting, competitive taxation, and corruption.
Governments under pressure
“There is now a realization that governments must be more accommodating to remain competitive internationally. Lower export-related tax receipts are putting pressure on governments to adapt more austere budgetary measures,” the study said.
Canada and Australia topped the list again this year, with the United States, Chile, and Mexico trailing behind. The report dubbed these five countries the Endurable Top Five as they always strive to perform well with their mining sectors representing a big chunk of their respective economies.
The report noted that the recent slump of the mining segment largely affect the investors’ confidence.
“Low investor confidence has interrupted mineral exploration and development. In particular, junior companies have not had access to funding, while large firms have adapted austere budgets that aim to lower operating costs.”
Goldcorp’s El Morro copper-gold project has a proven and probable reserve of 560,000 pounds of gold and 6.5 billion pounds of copper.
Meanwhile, Teck’s Relincho project has a proven and probable reserve of 10.1 billion pounds of copper and and 464 million pounds of molybdenum.
These two mining sites, situated at the Huasco Province in Chile’s Atacama region, are 40 kilometers apart.
The resulting Project Corridor will contain 16.6 billion pounds of copper reserves and 560,000 pounds of gold reserves. The $3.5 billion invested into the project is less than the El Morro and Relincho’s individual development costs, amounting to $3.9 billion and $4.5 billion, respectively.
“Combining these two neighboring assets is a common sense approach that allows us to consolidate infrastructure to reduce costs, reduce the environmental footprint, and provide greater returns over either standalone project,” said Don Lindsay, Teck’s president and CEO.
The two companies are still mulling over shipping ore from El Morro mine via a conveyor to a single mill at the Relincho site. The single line mill has the capacity to produce 90,000 to 110,000 tons per day, averaging an output of approximately 190,000 tons of copper and 315,000 ounces of gold during the mine’s first 10 years of operation.
Should the single line mill starts operation, Project Corridor will have a higher metal production than the two projects individually.
“The combination of El Morro and Relincho is consistent with our focus on maximizing value from our asset portfolio,” said Chuck Jeannes, President and CEO of Goldcorp.
The companies said that the 50/50 joint venture will reduce infrastructure requirements. Project Corridor will use one port, one desalination plant, one concentrator, and a common tailings facility at the Relincho site.
Economic benefits include the creation of 4,000 jobs during construction and subsequently, 1,400 jobs during operation. As Project Corridor has an expected mine life of 32 years, possibly more, thus ensuring secure employment opportunities for workers.
Project Corridor will also work hand-in-hand with the community to “work collaboratively to define the project’s engagement model.”
“We will work to establish meaningful relationships with the community, Indigenous Peoples, and other stakeholders that will help guide the project’s development and create greater value for all parties,” said Lindsay.
To make the merge possible, Goldcorp bought the shares of New Gold Inc. (NYSE: MKT NGD) worth $90 million, and granted the firm a four percent share of El Morro’s future gold production.
“This transaction makes strategic sense to all of the parties involved. Goldcorp has been an excellent partner at El Morro over the last five years and we look forward to Goldcorp and Teck progressing Project Corridor for the benefit of all stakeholders,” Randall Oliphan, New Gold Executive Chairman, said in a statement.
Russia may have ranked 23rd in the list this year, but junior mining companies are ready to propel it up.
The Kun-Manie mine owned by Amur Minerals Corporation (OTC: AMMCF) sits atop the Amur Oblast region in Russia’s far east. It is touted as one of the top 20 nickel-sulphide projects in the world with a projected 90 million tonnes of nickel ore that will be put on the global market in 2016.
Growth in the company is snowballing after it secured its long-awaited pre-production license in May. The license will ensure Amur’s transition from an exploration company to a production company, and is valid until July 2035. The terms also dictate the company’s 100 percent ownership of the recovered minerals.
“We have considerable flexibility to advance the project as swiftly as possible. Our push to accelerate toward a production decision is in the interests of our shareholders as well as the Russian Government. Kun-Manie has now become a key driver for economic growth in the Far East of Russia,” Amur CEO Robin Young said in a statement.
Moreover, Amur recently inked a Financial Advisory Agreement with the Far East and Baikal Region Development Fund, established by President Vladimir Putin to attract investors into the region.
The company aims to obtain financing, especially from the China and India, for the development of its flagship Kun-Manie project.
“Sign-off of this Financial Advisory Agreement provides Amur with substantial momentum as we shift from exploration to preproduction development. As our Kun-Manie nickel sulphide project is located in the Far East, this agreement places Amur in a position to access a broader global reach for funding and financing of the project,” said Young.
“The capital available for development of resource projects in Russia, India and China is considerable, and Amur views this as an excellent form of collaboration as we move the project forward,” he added.
The agreement did not only gave Amur wider access to Asian markets, it will also receive assistance from SP Angel Corporate Finance LLP, a brokerage company that cover markets in the United Kingdom and other parts of Europe.
“We are pleased to begin co-operation with Amur Minerals and are looking forward to supporting the Company in the development of Kun-Manie. Amur Minerals boasts a world-class team and an exceptional asset. Strategically located in proximity to the world’s most dynamic economies, the Company presents a robust investment case,” said Alexei Chekunkov, CEO of Far East and Baikal Region Development Fund.
The fund is also set to deploy federal financing earmarked for infrastructure development, in line with Amur’s plan to build its own smelter in an attempt to slash production costs.