Argentina digs for gold with Canadian help

April 18, 2011 at 4:53 PM
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BUENOS AIRES, April 18 (UPI) -- Argentina has secured $850 million of Canadian private sector investment in an ambitious plan to develop its gold reserves and turn gold production into a major earner for the country.

Argentina traditionally has been a medium-scale gold producer, compared with Latin America's top producer Peru, but is seeking change in an overall plan to turn around its mineral development and production. The strategy has also focused on what industry sees as metals of the future, such as lithium.

The Planning Ministry said the contract with Canada's Goldcorp Inc. will bring substantial investment into getting the Cerro Negro gold project in Santa Cruz Province up to speed with plans for stepped up exploration and production through the coming two decades.

Gold prices have been on the rise worldwide amid continuing uncertainties over both stock markets and the U.S. dollar. Last week gold prices added $19.50 on the Comex division of the New York Mercantile Exchange to $1,475.10 per troy ounce.

Argentine Planning Minister Julio De Vido said the Canadian deal "consolidates Argentina as a destination for long-term investment as the Cerro Negro project has a useful life of 20 years."

Argentina has been fighting for more investment into its ambitious industrial and mineral development projects but has faced reluctant investors discouraged by its bureaucratic processes and squabbling between President Cristina Fernandez de Kirchner and her political foes. The government's stance toward independent media has also dismayed international observers representing investors.

Officials said De Vido met with GoldCorp Inc. Vice President for Central and South America Eduardo Villacorta in Mexico City as plans for development of the gold mine gained momentum.

GoldCorp said it expects to start producing gold at Cerro Negro in mid-2013 -- an average of 550,000 ounces a year during the first five years of production.

Goldcorp estimates a mine life of approximately 12 years with total proven and probable gold reserves increase 100 percent to 4.3 million ounces. Argentine official comments indicate a more optimistic outlook.

Goldcorp President and Chief Executive Officer Chuck Jeannes said the company's feasibility studies "confirm our expectations that Cerro Negro will contribute tremendous value for shareholders as Goldcorp's next cornerstone gold mine." The company expects average cash costs of less than $200 per ounce of gold during the first five years.

"This is an extremely robust project as now configured," Jeannes said in a statement. "However, with all of the identified veins remaining open and numerous additional veins already identified, we are excited by the potential for future expansion of gold reserves and near-term upside to the production profile. Cerro Negro will be a key driver of Goldcorp's peer-leading low cash cost profile and 60 percent gold production growth over the next five years."

Goldcorp says it is "the fastest growing, lowest-cost senior gold producer with operations and development projects in politically stable jurisdictions throughout the Americas. Our strong project pipeline is positioned to drive long-term, sustainable growth."

The company has headquarters in Vancouver, British Columbia, and operates mines in Canada, Mexico, Guatemala and the United States and employs more than 11,500 people worldwide.

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