Gold Prices See Miners Rushing to Mexico, Latin America

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Mining companies are ramping up gold exploration in Latin America as areas before seen as risky, like southern Mexico and Colombia, are now glittering with new projects as precious metals prices soar.

Exploration budgets, the first thing mining companies slashed during the financial crisis, plummeted 42 percent from 2008 to 2009, the largest one-year decline in two decades, according to consultancy Metals Economics Group (MEG).

But the rebound has been quick in mining-friendly countries like Mexico, Chile, Peru and Argentina. The region won 26 percent of global exploration investment last year, the largest slice since 2001, MEG said in a report.

“Latin America is the No. 1 spot for junior companies to be exploring. They have a long mining history … and geologically it’s very prospective ground,” said Brent Cook, a U.S.-based independent mining analyst.

“The gold price changed considerably the perspective of investors in exploration in Mexico,” Arturo Bonillas, president of Canada’s Timmins Gold Corp, told Reuters.

Gold output in Mexico, already a major copper and silver producer, has grown three-fold since 2003 with the country now producing 2 million troy ounces (62.4 tonnes) a year. Mexico has 738 mining exploration projects in operation and more than 60 percent are digging for precious metals.

Much of that growth will be driven by Goldcorp’s massive Penasquito project. Even tycoon Carlos Slim, the world’s richest man, is cashing in on the excitement by expanding mining at his Grupo Carso.

The money is flowing to places considered too risky in the past, including poor states in southern Mexico.

“Chiapas and Oaxaca (in southern Mexico) have historically been underplayed by the exploration community,” said mining expert Peter Megaw. Now some junior exploration companies have found “bonanza grade” gold in the south and others are taking notice, he added.

Investment continues, with exploration spending in Mexico expected to balloon to between $1.2 billion and $1.5 billion over the next three years,.

Source: Reuters

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