Below is an excerpt from “Mining Markets” written by Virginia Heffernan.
“There is support for mining politically, the geology is excellent, the people are incredibly friendly, and the food is delicious.”
With these superlatives, consulting geologist Peter Megaw sums up why he is still working in Mexico after almost four decades, despite frequent drug-related violence and anti-mining protests. Megaw, president of International Development and Exploration and co-founder MAG Silver (MAG-T, MVG-X), is an expert on Mexican geology and has been instrumental in the discovery of several silver deposits there.
And in the Guerrero gold belt, an emerging gold mining district in the south, exploration is booming. Expanding gold deposits along the 55-km belt include: Esperanza Resources’ (EPZ-V) Cerro Jumil deposit; Newstrike Capital’s (NES-V) Ana Paula project, Torex Gold Resources’ (TXG-T) Morelos deposit; and Goldcorp’s (G-T, GG-N) Los Filos mine, which became the first deposit along the belt to go into production in 2008.
How did a country with such a rich mineral endowment and 500-year mining history remain so underexplored for so long? Mexico’s approach to foreign investment during the second half of the 20th century is largely responsible. From 1961 to 1991, the mining law stipulated that mineral assets must be at least 50% owned by Mexican companies. At the same time, there was little incentive to explore because of low landholding fees and rich, long-lived deposits that just kept on churning out metals.
When the law changed to allow 100% foreign investment and a sliding scale of land payments to encourage exploration, Canadian companies flocked back to Mexico. “The new law caused a substantial liberation of property,” says Megaw. “(Foreign) companies came back to the outcrops they’d been thrown off of — metaphorically speaking — thirty years before. But for the first five years, people were going back and knocking on the same outcrops.”
Read the entire article here.