Resource World Magazine

a p r i l / m a y 2 0 1 5 www.resourceworld.com 25 T he past year has been one of further belt-tightening for almost all South America-focused mining and explo- ration companies. Impairments continued to crop up, while the performance of prices remained muted. The lack of liquidity and financing continues to haunt the junior sec- tor, with many just managing to hang on; some falling by the wayside. Thankfully, plenty of other companies have swum against the tide, divested non-core projects and advanced flagships where possible. Many have succeeded doing more with less, while others have used alternative finance, such as streaming deals, as a means to push forward. And this is good news, because match-fit companies strengthen confidence and widen the industry's appeal with the markets. But in South America it is also essen- tial companies and investors pay close attention to legislative and political risks. Chile and Peru remain the most mining- friendly jurisdictions on the continent, both blessed with long-established mining codes and stability in relation to contracts, licences and permitting. "Successive gov- ernments in Chile and Peru, whether right or left, have understood that mining is a business," Control Risks managing direc- tor for global client services department in South America, Daniel Linsker, told Resource World. "They appreciate that companies need to make money so that they will remain and invest more." By contrast, the excitement that sur- rounded Colombia a few years ago has lost some of its steam, Linsker noted. While general contractual and tax stability exists, so do serious issues surround timelines associated with government permitting and licensing. "This creates uncertainty, making it harder for companies and inves- tors to plan accordingly and make their business case," Linsker said. However, Colombia's difficulties pale in comparison with Argentina's, the country continuing to weather national-level, economic and political storms. "But Argentina has a lot of potential and there are some fantastic projects there," Linsker said. "You might see a number of mining projects moving forward again if there's a change in govern- ment and if there's a transition towards a more open business environment." Brazil's potential has always been immense, but this is frequently offset by its notorious levels of red tape. However, the bureaucratic pitfalls are navigable for savvy companies, those ones with essen- tial, in-country experience and proven management teams. There are some other, less-publicized clouds on the Brazilian horizon, including energy shortages that might have implications for mines or proj- ects linked to the national grid. At a broader level, and a fillip for the industry, South American governments are stepping back from their earlier bids to increase mining royalties and tax rates. However, the issue is a latent one and likely to be revived once the cycle turns and the industry returns to general profit- ability. Companies can expect consultation in countries like Chile and Peru. "But in places like Argentina, Colombia and Ecuador, where you are trying to kick-start a whole sector, governments need to be more benign towards investors. The dan- ger is that they might move in too quickly [to raise royalties or tariffs] and nip these nascent sectors in the bud," Linsker noted. Given the sheer size and scale of South America as a region for mining and exploration it is impossible to consider all jurisdictions, sectors and companies. Listed below are just some of the interest- ing names focused on the region. Columbus Gold [CGT-TSXV; CBGDF- OTCQX] is advancing the Paul Isnard gold project located in northwest French Guiana. Current work is focused on the Montagne D'Or gold deposit, which hosts 140.1 mil- lion tonnes inferred, grading 1.0 g/t gold for 4.3 million oz contained. On March 10, the company announced results from an additional seven holes from its Phase II drill campaign. Highlights included hole MO-14-230, which returned 2.16 g/t gold from 60.7-94.8 metres, and hole MO-14- 231, which returned 1.2 g/t gold from 163.5-217.4 metres. The 126-hole Phase II campaign was completed in November 2014, the data will be used to help com- pute an updated resource. On March 3, Columbus also reported encouraging met- allurgical test work results. Project ore was shown to be amenable to three metallurgi- cal processes, with gold recoveries ranging from 95% to 97%. Continental Gold Ltd. [CNL-TSX; CGOOF-OTCQX] is focused on the Buriticá gold project in Antioquia, near Medellín, Colombia. The project covers two major Exploration and mining in South America by Simon Rees ThE wESTErn hEmiSphErE'S SOUThErn cOnTinEnT OFFErS bOTh challEngES and a hUgE UnTappEd pOTEnTial

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