Over 10,000 years ago, migrating Native Americans settled in the long and narrow coastal strip of land wedged between the Andes mountains and the Pacific Ocean in South America, which is now known as the Republic of Chile (República de Chile).
These Native Americans lived isolated from the outside developing world until the mid-15th century when the Spanish conquistadors took possession of the region in search of gold and silver, which had previously bedeviled them in Peru. Unfortunately for the Spanish, however, the conquistadors did not find the extensive precious metals they sought. And it wasn't until three centuries later that metalliferous mining would become important to Chile.
After Chile gained its independence from Spain in 1818 -- and after severals years of severe political and social problems -- commercial relations with the the rest of the world were established and the exploitation of minerals, mainly silver and copper, grew significantly during the mid-18th century.
With the advent of modern exploration, development, and production techniques, Chile has today become the world's 5th largest silver producer and top copper producer accounting for over a third of the world's copper production.
Gold is mainly produced as byproduct from the many copper mining operations that form the backbone of the country's mining industry. According to the most recent estimates, Chile currently produces under 1.5 million ounces of gold per year, pushing it out of the top ten gold producers in the world. However, there are several new gold mining operations being explored and developed today.
Chile Gold Mining Developments
Most notable of Chile's development projects is without a doubt Barrick Gold Corp.'s (NYSE: ABX, TSX: ABX) Pascua-Lama project. Pascua-Lama is the Don of Chilean gold projects right now with proven reserves of 17 million ounces of gold and 525 million ounces of silver. The project is currently under development by Barrick and is expected to produce 750,000-775,000 ounces of gold and 20 million ounces of silver per year making it one of South America's largest gold mines once everything is up and running.
Other significant mines in Chile include La Coipa silver/gold mine. After an asset swap transaction with Goldcorp Inc. (NYSE: GG, TSX: G) in December 2007, Kinross Gold Corp. (NYSE: KGC, TSX: K) acquired a 100% ownership in La Coipa, which produced 155,000 ounces of gold-equivalent ounces in 2006 and is said to still have excellent exploration potential.
Kinross and is also developing the Atacama Cerro Casale deposit with joint-venture partner Barrick Gold. Cerro Casale has reserves of 23 million ounces of gold and 6 billion pounds of copper and is reputedly one of the largest undeveloped gold/copper deposits in the world. Once in operation, Cerro Casale is expected to produce 1 million ounces of gold and 150,000 tons of copper annually.
Kinross also owns a 100% interest in the Maricunga mine, located in the Maricunga gold belt in central Chile. Commercial production at Maricunga began in1996. However, in 2001, due to low gold prices and operational difficulties, mining activities were suspended and the operation was placed on care and maintenance.
The mine resumed commercial production in the fourth quarter of 2005 and achieved its average targeted production rate of 40,000 tonnes per day in November 2005. The recommissioned mine is capable of producing approximately 230,000 to 260,000 ounces annually and produced 233,736 ounces of gold in 2006.
Yamana Gold Corp. (NYSE: AUY, TSX: YRI), a much smaller company compared to Barrick or Kinross, expects to increased production at its El Peñón deposit, located in the Atacama Desert in Region II of northern Chile, to 425,000-435,000 gold equivalent ounces for both 2008 and 2009. At the end of 2006, El Peñón deposit boasted 2 million ounces of gold and 82 million ounces of silver reserves plus 1.5 million ounces of gold and 44 million ounces of silver resources.
US-based Coeur D'Alene Mines Corp. (NYSE: CDE, TSX: CDM, ASX: CXC), another mid-sized company, produced approximately 2.3 million ounces of silver and nearly 41,000 ounces of gold in 2006 from the company's Cerro Bayo mine in southern Chile Cerro Bayo comprises a high grade gold and silver underground mine and processing facilities and is among the lowest cost silver mines in the world.
Other Chilean Gold Mining Prospects
Other Chilean gold projects that are currently being explored and developed by junior firms include the:
- Guanaco gold/copper project -- owned by Austral Gold Ltd. (ASX: AGD, Pinksheets: AGLDF);
- El Toqui zinc/gold/silver project -- produced over 30,000 tonnes of zinc, nearly 100,000 ounces of gold, and over 40,000 ounces of silver last year and is owned by Breakwater Resources Ltd. (TSX: BWR, OTC BB: BWLRF); and
- Caspiche gold project -- owned by Exeter Resouce Corp. (AMEX: XRA, TSX-V: XRC).
One recent Chilean gold exploration project that has caught by attention is Volcan gold project, owned by Andina Minerals Inc. (TSX-V: ADM). Andina's Volcan project is located in Chile's Region III approximately 170 kilometers east of Copiapo and 23 kilometers northeast of Kinross' Maricunga gold mine.
Andina Minerals is currently in the midst of its fourth phase of exploration at Volcan. This phase of exploration includes a large $15.5 million, 50,000 meter drill program along with geological mapping, prospecting and geophysics.
In October 2007, Andina reported an updated resource estimate which incorporated approximately 15,000 meters of drill data resulting in a 48% increase to measured and indicated resources to 2.93 million contained ounces of gold (115.1 million tonnes grading 0.79 g/t of gold) and a 188% increase to the inferred resource to 4.20 million ounces of gold (170.3 million tonnes grading 0.77 g/t of gold) at a 0.5 g/t gold cut-off.
New drilling results from the company's large ongoing exploration program include amazingly wide intercepts of low-grade gold mineralization such as:
- 260 meters of 0.68 g/t gold;
- 404 meters of 0.48 g/t gold;
- 192 meters of 0.57 g/t gold;
- 252 meters of 0.46 g/t gold; and
- a whopping 836 meters of 0.64 g/t gold.
In November 2007, Andina released the results of preliminary metallurgical testing which returned recoveries from 57% (at 0.45 g/t) to 77% (at 1.17 g/t) for an average projected recovery of 67% at a resource grade of 0.78 g/t gold. This confirms the heap leach potential of the project and is similar to recoveries at the Maricunga mine.
Andina Minerals' Volcan gold project looks quite interesting. There is still a large resource that's in the inferred category. With the company's large, ongoing 50,000 meter drill program, I expect that many of those inferred ounces will be moved to the measured or indicated category in the next resource estimate. And with drill results like we've seen in the first couple holes, the Volcan project looks set to only grow further.
Until next time,
Luke Burgess
www.GoldWorld.com
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