Mining in Colombia

Exploring the last Andean frontier

TABLE OF CONTENTS

Introduction ...... p80 This report was researched and prepared by Creating Institutions of Strength ...... p87 Global Business Reports (www.gbreports.com) for Engineering & Mining Journal. Gold ...... p90 Editorial researched and written by Thomas Willatt, Coal ...... p104 Sarah Timson, Sidonie Pichard, Madeleine Furuvald Other Commodities ...... p110 and Liliana Ávila Sánchez. For further information, Environment and Community ...... p111 contact [email protected] Services ...... p114 Cover photo: Cerrejón’s world-class Colombian coal mining operations (Courtesy of Cerrejón)

A REPORT BY GBR FOR E&MJ

DECEMBER 2011 Mining IN COLOMBIA Mining IN COLOMBIA

Security as a basis for prosperity One of the things Colombians are most ea- Introduction to ger to tell you is how much their country has changed in the past 10 years. Although international news agencies often seem cu- Colombian Mining riously insistent on maintaining the country’s dangerous reputation, the eight year A new opportunity based on political leadership of former President Álvaro Uribe stability and increasing security utterly transformed Colombia. The security situation in Colombia cannot be generalized, nor even considered on broad regional basis. The serious risk exists in small pockets in distinct parts of the country. The government, through the Colombia’s armed forces have made enormous improvements to in-country security. army, has shown its keenness to collaborate with the private sector and has expressed Despite calls to amend the Colombian der Santos’ stewardship, greatly curtailed the belief that the mining industry can help constitution in order to stay in office, Uribe the size, scope and impact of both the left- them maintain security in rural areas. made the decision instead to name his ist guerrillas and the right-wing paramilitary Exploratory drilling in Colombia’s spectacular, but challenging, Andean topography (Photo courtesy of Logan Drilling) “The government has the political will to Defence Minister, Juan Manuel Santos, as groups. However, beyond this, the closely support investment and a clear understand- his successor. Santos was the individual tied leaders should equally be remembered ing that mining and oil can create the con- widely credited with taking on the criminal for their pro-business stance. Both realized On arrival in Colombia, Spanish conquista- in terms of the legislation that was put in steady stream of big-name acquisitions in ditions in the remote parts of the country elements in the country side, and pushing that the fate of the country revolves around dors heard tales of a fabulously wealthy king place and created the parameters for de- the resource sector. “If you go to Toronto, that will allow them to maintain the level them out. the ability to attract foreign investment and that would cover himself in gold leaf and velopment,” said Jeff Stufsky, global sector Colombia is perhaps the single hottest story of security that has been achieved. We all Given the outgoing president’s popu- develop industry. throw enormous quantities of gold and pre- managing director – metals and mining, BNP right now. The gating issue has been security want jobs, medical care for our children and larity, it was no surprise to see his Social Colombia is now the fourth largest cious stones into the depths of a sacred lake. Paribas corporate and investment banking. and, while it’s not entirely solved, it’s been the lights to stay on. This occurs through Party of National Unity (UP) candidate, economy in South America, with a GDP of The Spanish called this king El Dorado, the However, the absolute absence of de- greatly improved. There is now a tremendous economic development and commercial ac- Juan Manuel Santos, win a landslide vic- US$240 billion, and the central bank ex- gilded one, and Colombia attracted genera- velopment in much of the country has led intersection of security, geology, gold price tivity,” said Timothy Russell, president and tory, with 69% of the votes. History will pects the Colombian economy to expand tion after generation of explorers that sought others to see Colombia as a distinct and pos- and equity availability. It’s just being brought CEO of Trident Gold Corp., a Canadian-listed likely remember the Uribe-Santos era for its around 4.5% this year after growing an es- his lost treasures. sibly much greater opportunity. “We all know to bear right now in Colombia,” said Stufsky. resource development company. “Democratic Security” campaign that, un- timated 4.1% in 2010. Even today, the first thing that will greet there hasn’t really been exploration here for Among them has been Eike Batista, CEO many foreign visitors on arrival in the country more than 40 years. It’s not like when Peru of MPX and Brazil’s richest man, who made will be Bogotá’s El Dorado airport. This is not opened up or Chile opened up and there his first gold mine acquisition at the age of only a reminder of the nation’s mythical past, were 2 or 3 million oz known deposits that 24. He acquired Ventana Gold earlier this but a hint towards the potential that still ex- just required ownership resolution. That year for a rumoured US$1.5 billion. This ists for the discovery of great fortunes. does not exist here. It is a grass roots coun- deal in particular has trained a great deal In recent history, Colombia gained a try,” said Ari Sussman, president and CEO of more investors’ eyes on Colombia. much less welcomed international fame. Its Continental Gold, a company that is aiming However, concerns have been raised after long history of civil unrest had led to such to be first to bring a large modern gold mine Greystar, having invested heavily in the ex- deterioration in security that its population into operation in Colombia. ploration and development of its Angostura lived in fear and its economy was utterly While its nearest neighbors are now suf- mine, have been stalled in development due crippled. fering increasing critical or negative atten- to environmental concerns. Some investors However, Colombia has undergone a re- tion, Colombia has been making headlines now fear the growing environmental lobby naissance over the last 10 years in political for its vast mineral resources, fast-growing and the deteriorating reputation of the min- stability, safety and security. It is now ranked economy, relatively stable politics and a ing industry may derail the boom. as the third most attractive investment destination in Latin America, according to the Fraser Institute, and is quickly becoming one of the more desirable destinations for mining investment worldwide. For the past 15 to 20 years, mining companies have rotated into Chile, then Peru and now finally into Colombia. It is the last An- dean frontier, largely untouched by modern exploration. It has been compared with Peru in the early 1990s; excellent mineral potential but under explored due to the adverse security situation of the past. “Colombia reminds me of Chile or Peru 20 years ago. I think there is a lot that Co- Jeff Stufsky, global sector managing director – lombia can learn from both of those markets Ari Sussman, president and CEO, Continental Gold metals and mining, BNP Paribas

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In addition, the country’s 12-month run- union organization, for that reason the com- ning inflation rate is nearly 2% and it’s very panies created a new Colombian Chamber likely that the central bank will be able to of Mining. maintain its current benchmark lending rate “Cámara Colombiana de Minería is an of 3%. organization that unionized the companies As the oldest democracy in South Amer- of the mining industry in Colombia and our ica, Colombia has never defaulted on a for- main objective is to defend and promote eign loan or expropriated foreign assets. It is responsible mining,” said César Díaz Guer- the most business friendly country in Latin rero, executive director of the chamber. America according to the World Bank and it “In this country, despite a lot of big proj- recently achieved investment grade from the ects that started many years ago, like Cer- three major agencies; Standard and Poors, rejón or Cerro Matoso, there is a new gen- Fitch and Moody. eration of companies in the mining industry A recent World Bank “Doing Business” and our purpose is to ensure that these new firms work with the best social, environ- report said that: “Colombia has been one Colombian underground gold mining operations (Photo courtesy of Mineros) Luc Gerard, president, Tribeca Eduardo Chaparro, president, ASOMINEROS of the top 10 reforming economies for three mental, corporate and security practices,” consecutive years: 2008, 2009 and 2010.” clearly expressed his desire to support that Of the 79 global jurisdictions covered in tors in Colombia. “The next boom of foreign “We were the first association estab- said Díaz. Colombia’s international ranking has im- development. the Fraser Institute Annual Report, Colom- investment into Colombia over the next five lished and have represented small, medium Last year, Colombia’s large scale min- proved by 42 positions from 2007 to 2010. According to the Fraser Institute Annual bia is currently rated as the third highest in or six years will be through the mining sec- and large size companies that are mining ers decided that their issues are suffi- Survey of Mining Companies 2010/2011 terms of mineral potential. Vast tracts of the tor,” said Gerard. He feels that this sector for coal, gold, nickel, cement and other ciently distinct from those of small scale, The mining locomotive (released March 2011), a benchmark for country have not been thoroughly explored could one day outstrip the current high levels materials. Behind ASOMINEROS is a long artisanal miners and established the So- In 2010, President Santos laid out his vi- gauging global mining risk, the main posi- using modern exploration techniques. of oil investment. “The difference between history of cooperation, respect and honest ciedad de Minería a Gran Escala (SMGE). sion of how Colombia can continue its prog- tive improvement within Latin America is This has not gone unnoticed by the ex- oil and gas and mining is that Colombia will communication between the private sector The SMGE is headed by Claudia Jiménez, ress from “Democratic Security” to “Demo- the emergence of Colombia as an attractive ploration community. From 2002-2010, never become a world leading oil and gas and policy makers,” said Chaparro. a close ally of Uribe and former ambas- cratic Prosperity”. His plan was founded on investment destination. areas with mining titles boomed from 2.8 power. We can be significant and it can be ASOMINEROS is part of the ANDI, the sador to Switzerland. the encouragement of five economic loco- In the 2006/2007 Fraser Report, Colom- million acres to 21 million acres. of huge benefit to the country, but we sim- association of the industries in Colombia “SMGE is the result of the need for an motives; housing, infrastructure, mining, bia was ranked seventh within the region be- According to ANDI, the National Busi- ply do not have the geological potential to be that is divided into 22 chambers by sec- association that could represent the large agriculture and innovation. hind Chile, Mexico, Brazil, Argentina, Ecua- ness Association of Colombia, the Colom- world leading. However, experts agree that tors. Five years ago, when some of the scale mining companies in a collective way In this way, the potential for Colombia dor and Peru. The 2010/2011 report ranks bian mining industry contributed 2.2% to Colombia could become one of the world’s mining companies that had left returned to and that could communicate their needs, to benefit from its vastly unexplored mineral Colombia in third place in South and Central GDP growth and represented 23.7% of the key players in mining alongside Canada, the country, the industry considered that in results and their opinion about the national wealth has been recognized and Santos has America, obehind only Chile and Mexico. country’s exports. Legal mining operations Chile and Australia,” he said. Colombia there should be an independent mining policies,” said Jiménez. also create an estimated 300,000 jobs for Colombians. “We are important to Colom- Uniting a budding industry bia’s economy, but we want to have a big- Colombia has been mining since pre-Co- ger role in the next years. We think that in lombian times, but the current influx of in- the short time the mining industry may have vestment and activity is a relatively recent over a 5% share of Colombia’s GDP through phenomenon. As such, the mining sector is the beginning of the operations of almost undergoing the typical challenges of finding 10 mining projects as big as the ones that a united voice, obtaining clear guidelines are already working in the country,” said and regulations, and communicating its said César Díaz, executive director of the benefits to a public that is concerned for its Cámara Colombiana de Minería (Colombian people and its environment. Chamber of Mines). “We need to understand that we will not In the international race by majors to re- survive if we do not act together. There are place their reserves, Colombia represents a several mining associations that do exist true elephant hunting opportunity. Several here and that we believe have an impor- major companies have offices and explo- tant role to play. Some of the issues can- ration or mining operations in Colombia, not be, and should not be, transmitted by including BHP Billiton, Vale, AngloGold individual companies, but really through the Ashanti, Drummond Coal, Glencore and An- associations that represent the industry as a glo American. whole,” said Rafael Herz, president of An- Luc Gerard is CEO of Tribeca, a firm that gloGold Ashanti Colombia. he established in order to bring the first in- Three main institutions support the min- ternational standard private equity firm to ing industry in Colombia. ASOMINEROS was Colombia. The fund is backed exclusively founded in 1932 to represent the organized by Colombian pension funds and Colombia mining industry. It has 36 member compa- currently accounts for 65% of the firm’s nies and its president is Eduardo Chaparro. investment. Tribeca initially focussed their “Our main purpose is to promote and main- investments in the oil and gas sector but, tain an optimum business environment, in 2010, launched Brexia as a vehicle for through participation with the public sector, mining investment. Gerard believes this will for the sustainable development of Colom- be the newest wave of opportunity for inves- bia’s mining industry,” Chaparro said.

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International interest to dominate the junior sector in Colombia, gives Colombia access to another financial ment has two more years to pass new laws As discussed previously, the pro-business Australian companies are beginning to ap- market. Coal is a very strong commod- before it reverts back to the old code. mentality of the government has brought in pear in ever greater numbers, particularly in ity and a lot of ASX junior companies are Pérez says there is no doubt the Min- a new wave of foreign investment into the coal projects. doing very well with coking coal projects. ing Code remains in transition. “There is no country. According to Proexport, the min- “We are seeing a lot of junior exploration The access to capital is, therefore, excel- question of this. We know the government ing industry provided US$2 billion in FDI in companies coming into Colombia from Aus- lent on the ASX and they understand bulk has already engaged an international con- 2010 and Colombian policymakers are keen tralia who are responsible miners. We have commodities as well as any market in the sultancy firm to analyze what is the best to continue to encourage foreign companies a good reputation and we are not scared world,” said Fietz. way to proceed.” that have the expertise and capital required of going into greenfield exploration, which The Australian Government recently an- to exploit the country’s mineral resources. requires a lot of upfront capital and risk,” nounced the opening of a Consulate General Tenement costs, tax and royalty As with the whole of Latin America’s said Daniel Sullivan, Latin American mining in Colombia, a reflection that it believes the framework mining development, and indeed many trade leader, Austrade. commercial outcomes and the deepening According to Proexport, the mining sec- other regions across the world, it has been While there are more than 200 Austra- of the economic relationship will be well tor contributes 2.3% of Colombia’s gross companies backed by Canadian capital that lian companies currently exploring in Africa, served by the upgrading of its presence in domestic product and US$852 million in have entered this market first and in the in Latin America there are just 30 Austra- Colombia. “We focus on attracting Austra- Claudia Jiménez, president, SMGE Luis Gabriel Perez, partner, Brigard & Urrutia royalties and another US$908 million in greatest numbers. There are certain bars lian companies, half of which only arrived in lian investment into Colombia and actively taxes. There is a current debate on wheth- “The companies in our association need and restaurants in Medellín where Canadi- the last 12 months. At the same time, there assist junior miners and other companies the project as they see fit for that area. The er the amount of return that the country is to have the best practices in the industry, an accents are more likely to be heard than are 300-400 Canadian companies active. who are looking to set up a presence here as role of the government is only to ensure that receiving from the mining industry is ap- environmental programs and sustainability Colombian. One of those recent arrivals is New Age we believe that trade follows investment,” the terms of agreement are being complied propriate. operations that can guarantee that compa- According to the Mining Association of Exploration, an Australian listed company said Sullivan. with, specifically payment of royalties and The country’s tax code has stayed nies are committed to the development of Canada, Latin America is the largest recip- whose key focus is to build a portfolio of environmental protection,” Pérez said. mostly unchanged since 1974. The code Colombia and its economy.” ient of Canadian direct investment abroad coal projects in Colombia. The company Colombian Mining Code However, changes to the country’s min- compares favourably to other Latin Ameri- “We want people to know our sector in mining, which in 2008 was valued at represents one of the first ASX listed juniors Outside of a few operations, large scale ing act in 2010 (Law 1382) were recently can jurisdictions, with a corporate income and our market as a different thing from US$57 billion. Free trade agreements to enter this market but, the company’s modern mining is relatively new to Colom- ruled unconstitutional in court; the govern- tax rate for miners of 33%, and royalties oil and gas. Mining is not as developed have strengthened ties with Latin Ameri- president, Gary Fietz, believes that more bia. This has forced a period of transition in as oil and gas and there are still a lot of ca, which translates into jobs and oppor- could follow as the Colombian story gains policy as decision makers struggle with the things to do in this industry. Now we are tunities for Canadian miners and mining traction in Australia. desire to attract investment while ensuring Insights into Recent Regulatory Restructuring focusing our agenda on things that mat- service suppliers. Fietz believes this trend could open up a that Colombians take maximum benefit. By Luis Gabriel Pérez, Partner, Brigard & Urrutia ter to the sector such as taxation and the Australian companies are now also whole new source of investment for Colom- Colombia’s constitution, written in The mining industry has new challenges on the regulatory side. As a result of some new mining institution and vice ministry,” awakening to the Colombian mining oppor- bian projects. “Australian investors are turn- 1991, established that the state is the own- powers granted to the National Government by the Congress through Law 1444 of said Jiménez. tunity. Although Canadian companies seem ing around to the opportunity here and that er of the subsoil and non-renewable natu- 2011, the National Government issued on November 3rd, 2011 a number of De- ral resources. Colombia’s Mining Code crees whereby it reforms the structure of the administration with a significant impact (Law 685) was put into place in 2001, on the mining industry. with the aim of encouraging sustainable First and foremost, the National Government created the National Mining Agency exploration and mining. This was further (“ANM”) to substitute Ingeominas in most of the relevant activities concerning the amended in 2010 (Law 1382) to enhance exploration and production of minerals in Colombia. Ingeominas remains as a techni- productivity and competitiveness. cal body in charge of producing, storing and processing mining information. ANM as- The great strengths of the code are that sumes, therefore, the responsibility of granting mining areas and keeping the record the same rights are granted to national of the mining property in Colombia. The National Government has high expectations and foreign investors, as well as the pre- that this new organization will emulate the experience of the National Hydrocarbons dictability of the ownership of mining titles Agency (“ANH”) created in late 2003 and will produce astonishing results similar to and the long tradition of Colombia in re- those produced by ANH in the hydrocarbon sector. It is also expected that the Gov- specting contracts. It is practically impos- ernment with withdraw most of the delegations given to the provincial governments sible to find a case in Colombia in which to grant mining areas. the government has breached or ignored a Secondly, the National Government has announced that it will take additional contract or obligation in concession agree- regulatory measures to ensure a greater degree of professionalization in the mining ments of any type. activity. For instance, it has announced that it will reject a number of mining appli- Luis Gabriel Pérez is a partner at lead- cations that are pending for study and do not comply with the requirements of law. ing Colombian law firm Brigard & Urrutia In the current system, the mere application by a person for area has the effect of and an expert on the mining code devel- precluding other parties to apply for the same area and a granting process may take opment. He feels that these recent chang- several months if not years with the effect of “freezing out” areas. Thus, the current es have allowed the country to take the system does not encourage the competition for the assigning of areas. The Govern- best elements of a more mature market’s ment has identified this as a major weakness for the granting of mining properties in regulations. Colombia. It is expected that new regulation will be issued to move towards a system “The set of rules that deal particularly of competition or “rounds” as it is now the practice of ANH. with mining contracts and mining conces- Thirdly, the National Government recreated the Ministry of Environment as an au- sions is very modern. It was enacted no tonomous entity. In 2002 the Government decided to merge the Ministry of Environ- more than 10 years ago and allows for great ment into the Ministry of Housing and Land Development. The rebirth of the Ministry flexibility in terms of transferability of min- of Environment will promote specialization hopefully bringing a better predictability ing properties and in the independence of to the mining industry particularly in the design of the national environmental policy the operator. The owner of a mining title has and the granting of environmental licenses. total independence and autonomy to develop

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84 E&MJ • DECEMBER 2011 www.e-mj.com www.e-mj.com E&MJ • DECEMBER 2011 85 Mining IN COLOMBIA paid on the value of production at rates that vary between 3% and 12%, depend- Creating Institutions of Strength ing on the product. All royalties are paid at the federal level only. Ernst & Young, the global accountancy A period of transition for Colombia’s mining sector regulators and management consultancy firm, has been active in Colombia for more than 25 years and, beyond that, some of the Colombians need to strengthen their regu- sented the bare minimum of information; companies that merged to create Ernst & latory institutions. The Ministry of Mines presumably with the sole intention of sell- Young have a much longer history here. and Energy is the main central government ing them on to other companies. “Here in Colombia, we are 700 people mining authority. The Ministry shoulders “At the moment, there are people that out of 140,000 globally. We are signifi- the responsibility for both the mining and have held mining concessions for two or cant in terms of Latin America because of the oil and gas industry. three years without paying anything to the the growth in the economy being experi- A number of observers believe that the government or developing their property at Ricardo Andrés Ruíz, senior manager, Ernst & enced and, in particular, the growth in the Joss McGregor, partner, Ernst & Young Colombia Young Colombia Mining Code that the ministry has put in all and they are now asking for millions oil and mining industries here,” said Joss place is strong and improving but feel that of dollars for them,” said Alejandro Mesa, McGregor, a partner at Ernst & Young Co- As the debate moves forward, with in- potential, but we must be seen as a coun- it has been the implementation of this partner, Baker & McKenzie Colombia, an lombia. creasing rumblings of mining tax increas- try that has stability in the rules. At the framework that has begun to constrain Co- international law firm that is well estab- The international firm believes there es, Ruiz advises caution to policymakers. same time, the people of Colombia must lombia’s mining industry. lished in Colombia. are very positive elements in this frame- “The government wants to be well edu- be convinced that we are getting a reason- “It was said that a lot of corruption and “It has been said by a number of lead- work for international mining investors cated before taking its first moves on this. able return for the state,” Ruiz said. inefficiency had crept into some institu- ing players that the mining institutions have Alejandro Mesa, partner, Baker & McKenzie “The government has reined in some of They want to know what the potential con- Ernst & Young now employs more than been exposed to the typical vulnerabilities tions. If the country is able to clear that Colombia the tax benefits over the last year but that sequences are, where we are on the com- 700 people in-country and has the goal up, it will have achieved a great deal,” in the market regarding the leakage of in- has been necessary for the government petitiveness standpoint and how they can of doubling in size in three years, mostly said Carlos Gustavo Arrieta, partner, Ar- formation and potential corruption and col- 19,629 concession requests. This was then to balance its books. There is still a fis- move to a system that is investor friendly based on oil and mining client growth. rieta Mantilla & Asociados, a local law lusion. Even though we have a good set of extended further, provisionally until Febru- cal deficit that the government needs to while ensuring the country takes legiti- “Our mining practice is second in size firm that specializes in the resources and rules, they have not so far been applied ef- ary 2012, to give the state geological sur- fix and it’s trying to do that without hit- mate gains from its resources. Accurate only to oil and gas. We want to be seen infrastructure sectors. fectively by Ingeominas,” said Luis Gabriel vey Ingeominas additional time to clear this ting the foreign investors too hard, but it is figures are absolutely vital in this debate.” as a specialist in the mining sector and Pérez, partner at law firm Brigard & Urrutia. backlog of requests. a delicate balance,” said Ricardo Andrés “This is the most critical moment for we have created a specialist team that is The decline and fall of A moratorium on applications was en- “I think that the moratorium on new Ruíz Cabrera, a senior manager at Ernst & the mining sector here. There is a great going to attend to the mining companies,” Ingeominas acted for a six-month period on February titles was necessary. I don’t think that the Young Colombia. deal of interest in investing in our mineral said McGregor. Ingeominas was originally founded in 1, 2011, to clear a massive backlog of legal system can work without a good re- 1916 as a geological institution to oversee the mapping and exploration of the country’s mineral wealth. Several restructurings increased the scope of its initial responsi- bilities, which were to perform geological mapping, exploration of mineral resources and the study of groundwater. In 2004, its role adapted to that of delegated mining authority in relation to royalties, promotion of the mining industry and management of the mining cadastre. It was also given the responsibility of granting and controlling the performance of concessions. In the past few years, the level of interest and activity has overwhelmed In- geominas. According to the news weekly, Semana, a government study found that on average, as a result of the systemic faults in Ingeominas, concession requests took 600 days to be awarded, represent- ing a bureaucratic nightmare for explorers. Such delays and uncertainty also became a fertile breeding ground for corruption as Ingeominas officials are widely believed to have sold privileged information, allowed concessions to be granted in protected areas and offered speedy expedition of titles for a fee. In addition, Ingeominas had allowed substantial in- creases in land speculation by awarding concession titles to individuals that pre-

86 E&MJ • DECEMBER 2011 www.e-mj.com www.e-mj.com E&MJ • DECEMBER 2011 87 Mining IN COLOMBIA paid on the value of production at rates that vary between 3% and 12%, depend- Creating Institutions of Strength ing on the product. All royalties are paid at the federal level only. Ernst & Young, the global accountancy A period of transition for Colombia’s mining sector regulators and management consultancy firm, has been active in Colombia for more than 25 years and, beyond that, some of the Colombians need to strengthen their regu- sented the bare minimum of information; companies that merged to create Ernst & latory institutions. The Ministry of Mines presumably with the sole intention of sell- Young have a much longer history here. and Energy is the main central government ing them on to other companies. “Here in Colombia, we are 700 people mining authority. The Ministry shoulders “At the moment, there are people that out of 140,000 globally. We are signifi- the responsibility for both the mining and have held mining concessions for two or cant in terms of Latin America because of the oil and gas industry. three years without paying anything to the the growth in the economy being experi- A number of observers believe that the government or developing their property at Ricardo Andrés Ruíz, senior manager, Ernst & enced and, in particular, the growth in the Joss McGregor, partner, Ernst & Young Colombia Young Colombia Mining Code that the ministry has put in all and they are now asking for millions oil and mining industries here,” said Joss place is strong and improving but feel that of dollars for them,” said Alejandro Mesa, McGregor, a partner at Ernst & Young Co- As the debate moves forward, with in- potential, but we must be seen as a coun- it has been the implementation of this partner, Baker & McKenzie Colombia, an lombia. creasing rumblings of mining tax increas- try that has stability in the rules. At the framework that has begun to constrain Co- international law firm that is well estab- The international firm believes there es, Ruiz advises caution to policymakers. same time, the people of Colombia must lombia’s mining industry. lished in Colombia. are very positive elements in this frame- “The government wants to be well edu- be convinced that we are getting a reason- “It was said that a lot of corruption and “It has been said by a number of lead- work for international mining investors cated before taking its first moves on this. able return for the state,” Ruiz said. inefficiency had crept into some institu- ing players that the mining institutions have Alejandro Mesa, partner, Baker & McKenzie “The government has reined in some of They want to know what the potential con- Ernst & Young now employs more than been exposed to the typical vulnerabilities tions. If the country is able to clear that Colombia the tax benefits over the last year but that sequences are, where we are on the com- 700 people in-country and has the goal up, it will have achieved a great deal,” in the market regarding the leakage of in- has been necessary for the government petitiveness standpoint and how they can of doubling in size in three years, mostly said Carlos Gustavo Arrieta, partner, Ar- formation and potential corruption and col- 19,629 concession requests. This was then to balance its books. There is still a fis- move to a system that is investor friendly based on oil and mining client growth. rieta Mantilla & Asociados, a local law lusion. Even though we have a good set of extended further, provisionally until Febru- cal deficit that the government needs to while ensuring the country takes legiti- “Our mining practice is second in size firm that specializes in the resources and rules, they have not so far been applied ef- ary 2012, to give the state geological sur- fix and it’s trying to do that without hit- mate gains from its resources. Accurate only to oil and gas. We want to be seen infrastructure sectors. fectively by Ingeominas,” said Luis Gabriel vey Ingeominas additional time to clear this ting the foreign investors too hard, but it is figures are absolutely vital in this debate.” as a specialist in the mining sector and Pérez, partner at law firm Brigard & Urrutia. backlog of requests. a delicate balance,” said Ricardo Andrés “This is the most critical moment for we have created a specialist team that is The decline and fall of A moratorium on applications was en- “I think that the moratorium on new Ruíz Cabrera, a senior manager at Ernst & the mining sector here. There is a great going to attend to the mining companies,” Ingeominas acted for a six-month period on February titles was necessary. I don’t think that the Young Colombia. deal of interest in investing in our mineral said McGregor. Ingeominas was originally founded in 1, 2011, to clear a massive backlog of legal system can work without a good re- 1916 as a geological institution to oversee the mapping and exploration of the country’s mineral wealth. Several restructurings increased the scope of its initial responsi- bilities, which were to perform geological mapping, exploration of mineral resources and the study of groundwater. In 2004, its role adapted to that of delegated mining authority in relation to royalties, promotion of the mining industry and management of the mining cadastre. It was also given the responsibility of granting and controlling the performance of concessions. In the past few years, the level of interest and activity has overwhelmed In- geominas. According to the news weekly, Semana, a government study found that on average, as a result of the systemic faults in Ingeominas, concession requests took 600 days to be awarded, represent- ing a bureaucratic nightmare for explorers. Such delays and uncertainty also became a fertile breeding ground for corruption as Ingeominas officials are widely believed to have sold privileged information, allowed concessions to be granted in protected areas and offered speedy expedition of titles for a fee. In addition, Ingeominas had allowed substantial in- creases in land speculation by awarding concession titles to individuals that pre-

86 E&MJ • DECEMBER 2011 www.e-mj.com www.e-mj.com E&MJ • DECEMBER 2011 87 Mining IN COLOMBIA Mining IN COLOMBIA thinking over the way that mineral titles are granted so that speculators can be taken out of the system,” said Mesa. Beyond the moratorium, the Ministry of Mines has undertaken a profound review of the system for assigning acreage and recently decided to take the authority away from Ingeominas to a special agency.

Applying an oil industry model The government is creating a National Min- erals Agency (ANM) to regulate the sector similar to the way the National Hydrocar- bons Agency (ANH) regulates Colombia’s Carlos Gustavo Arrrieta, partner, Arrieta, Mantilla Tamara Romero Restrepo, general manager, the oil sector. The ANH has been lionized & Asociados Alianza W.J. in Colombia for how the oil and gas sector has blossomed under its regulation in the However, some concerns have been rather than the agency itself. A few figures past seven years. raised about whether this is an adequate interviewed for this report feel that respon- “We have seen what can happen when model for the mining industry. “The oil sibility for the corruption that crept into In- the institution is strong from the example of sector is a much more sophisticated world geominas must be placed on a lack of policy the ANH. From the end of the nineties until than the mining sector. If you are going to clarity. “I think the corruption problems will 2004, we saw very few contracts, but once concentrate your mining agency for major not disappear by changing Ingeominas, they an effective agency was put in place we saw international investors it might work. But, will only change when we have the needed the industry really take off,” said Mesa. I don’t think that is where the problem policy clarity. The government must real- The new ANM is expected to try and lies. I don’t know how the mining agency ize that, if it is serious about encouraging replicate how the ANH awards the titles is going to cope with the social problems foreign investment, the politics must be based on competitive rounds of bidding associated with small miners,” said Carlos clear and mining must be supported by an processes where a company must show Gustavo Arrieta, of law firm Arrieta, Man- efficient, competent and legal model,” said that it has financial capability and make tilla & Asociados. Tamara Romero Restrepo, general manager an offer based on the work that you will do In addition, the concerns of some relate at Alianza W.J., a law firm and consultancy to develop a property. more to the system Ingeominas works in group based in Medellín.

88 E&MJ • DECEMBER 2011 www.e-mj.com www.e-mj.com E&MJ • DECEMBER 2011 89 Mining IN COLOMBIA Mining IN COLOMBIA thinking over the way that mineral titles are granted so that speculators can be taken out of the system,” said Mesa. Beyond the moratorium, the Ministry of Mines has undertaken a profound review of the system for assigning acreage and recently decided to take the authority away from Ingeominas to a special agency.

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“Colombia is the long term play for AngloGold Ashanti in the Americas. We are in the exploration phase in Colom- Colombian Gold bia, without any operations as of yet, but some of the exploration projects here are Project development and exploration investment extremely interesting for the company and could represent a substantial increase of the region’s production from the middle of this decade and into the following decade,” said Herz. AngloGold Ashanti is now concentrating on systematically exploring and developing its tenements, which total more than 1.5 million hectares. “The company was the first big exploration player in-country and has systematically explored a substantial amount of tenement holdings here, either through initial prospecting or physical exploration. Given our first mover status, we feel that we are already in the areas that are most interesting to us,” said Herz. AngloGold is working in joint venture with B2Gold on a number of land holdings and Clive Johnson, B2Gold’s CEO, agrees that early foresight on Colombia will now A current view of AngloGold Ashanti’s potentially huge La Colosa project (Photo courtesy of AngloGold Ashanti Colombia) represent a great coup for the international major. “AngloGold did a very bold thing by going into Colombia several years ago, A visit to Bogotá’s Museo del Oro (gold Colombia. That level of investment, com- bia since arriving in 2003 and plans to in- when it was still a very dangerous place. museum) has been described as a cultural bined with the known reserves, should invest US$110 million this year and US$100 They were able to tie up so much ground highlight of Latin America. Its collection of crease production significantly and make million annually in 2012 and 2013. because many other companies feared to many thousands of indigenous gold arte- Colombia a globally significant producer “Around 10 years ago, AngloGold tread there. I tip my hat to them for that.” facts includes the famous “balsa de guata- once again. Ashanti decided to increase its exploration The initial strategy of the company was vita”, a pure gold depiction of the El Dorado Most of Colombia’s current gold produc- focus in Colombia as it was the unexplored to search for larger porphyry type projects. ceremony that caught the imagination of so tion is produced from alluvial operations, frontier of the Andes. When we arrived, not But, now that it has a presence in-country many treasure hunters. In the museums’ mostly by local artisanal miners. Gold recov- many companies were willing to invest in and two advanced projects at the pre- dark passages, the cultural significance of eries from these operations are poor, with the country because of the security prob- feasibility stage, it has reached the criti- gold in Colombia is obvious and clearly pre- recoveries of less than 60% being reported. lems that existed,” said Rafael Herz, presi- cal momentum that allows it to consider dates the Conquistadors’ arrival. The real gold potential to be observed in dent of AngloGold Ashanti Colombia. projects of the smaller sizes that could be Colombia has the longest and most pro- modern-day Colombia is that which remains AngloGold Ashanti conducts an extensive developed faster. ductive history of gold exploitation in South in the country’s relatively un-tapped hard greenfield program across the Americas, “The leading characteristic is no longer America, dating from both the pre-Colom- rock or in situ resources spread throughout most notably in Colombia, where it holds a size but profitability, and whilst there is bian period and Spanish colonial times. Up the Andean region of the country. significant land position and has made two a minimum size required for a company until the 20th century, 30% of the world’s greenfield discoveries at Gramalote and La of our scale, I can now see us potentially gold came from Colombia and the coun- AngloGold Ashanti – the major Colosa which together account for 13.5 mil- developing smaller, profitable projects,” try was the largest gold producer in South that dared to stay lion oz of mineral resource. said Herz. America until 1937. As described earlier, in the last few years The South African company’s main Although it has estimated reserves of Ingeominas has been so overwhelmed with project in Colombia is the La Colosa proj- more than 25 million oz, officially Colombia applications for concessions that it is cur- ect in the central state of Tolima, which is in the second tier of world gold producers, rently in a moratorium for new applica- contains 12.8 million oz of gold according with an output of 1.57 million oz in 2009. tions while the entire system is redesigned. to early estimates. While the real figure is higher, as much Therefore, although many opportunities “It is a substantial focus as it is a sub- gold mining has long been undertaken by continue to emerge, those that are already stantial project for this company. It is a unregulated miners, the capacity for expan- well established in Colombia can enjoy a project that in terms of size, location, sion is enormous and the majority of mining significant advantage and are in high de- technological and environmental issues investment is flowing into gold exploration. mand for partnership. poses significant challenges and therefore Production rose more than 30% in 2010 The South African based international is a challenging opportunity for the com- and ASOMINEROS expects production to mining house AngloGold Ashanti has been pany that we are putting most of our re- reach 3 million oz/y by 2015. credited as one of the earliest and most ex- sources in-country into from all points of By 2020, ASOMINEROS expects that tensive of the international gold companies view. It has all the elements to become an US$4.5 billion will have been invested to invest in Colombia. The company has important project not only for the company in gold exploration and development in spent more than US$250 million in Colom- Rafael Herz, president, AngloGold Ashanti Colombia but also for the country,” said Herz.

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their mine to production and most majors to announce a much larger resource by the don’t make discoveries, although AngloGold end of this year. We are well into pre-fea- is one of the exceptions as we’ve seen at La sibility. The study will be finished in June Colosa,” he said. 2012, and together we are spending US$ Currently, the most exciting of their joint 38 million this year in order to do the ex- venture projects is Gramalote, a project that ploration drilling and infill drill the main de- continues to show encouraging drill results posit and final feasibility study is scheduled and may represent a relatively challenge for completion at the end of 2013. Recent free opportunity. “We are very fortunate that results have led us to see the opportunity of the deposit lies in one of the most desirable now of building a mine that could produce areas in the country to build a gold mine.” in excess of 400,000 oz/y,” said Johnson. It is at a low altitude, there is not a great deal of agriculture or population in Early movers now reaping the the area and it’s in a very business friendly rewards Clive Johnson, CEO, B2Gold district. While La Colosa project is perhaps Robert “Bob” Allen, founder of Grupo de a long term proposition for AngloGold due Bullet has been staking mineral rights B2Gold and AngloGold Ashanti– Partners to its size and the drilling and permitting and properties in Colombia since the early in Gramalote required, Gramalote presents a more near 1980s. Grupo de Bullet S.A. is now a pri- B2Gold was formed by the management of term opportunity. vate Colombian company with an incred- Bema Gold, a company that was acquired “It’s a great place to have one of the first ibly extensive portfolio of gold, copper, and by Kinross at great profit to their sharehold- significant gold mines in Colombia. It will polymetallic mineral projects totalling more ers. The team is now looking to replicate be important, not only for AnlgoGold and than 1 million hectares. their success with a continued Latin Ameri- ourselves, but also for the whole industry “We’ve been in Colombia for 25 years can focus that includes producing mines to demonstrate how an environmentally a and basically our goal has always been to in Nicaragua. B2Gold and AngloGold Ash- responsible mine can be built that is a great discover and develop mining projects. We nati now have a number of joint ventures in benefit to the country and the local popula- are a private company that specializes as various stages of development in Colombia. tion. As this project is getting larger than we project generators but we have been able Clive Johnson, CEO of B2Gold, believes thought, we had a 2.4 million ounce gold to find joint venture partners to develop our that both joint venture partners are fairly resource but the recent exploration results projects and eventually bring the properties unusual among mining companies. “Most and positive metallurgical test results are into production. We have done deals with juniors that make discoveries don’t take showing it to be a lot bigger. We are looking AngloGold Ashanti, B2Gold, Antioquia Gold and Colombia Crest. We were one of the founders of Continental Gold and Solvista,” said Allen. Allen is considered by many to be a father figure for gold exploration in Colombia. Upon investigating the emerging Colombian gold mining sector it becomes apparent that most projects have the fingerprints of Grupo de Bullet on some point of their development. In the course of our research, many interviewees commented that a trip to Co- lombia in pursuit of concessions is wasted unless Grupo de Bullet is consulted. Allen emphasizes that it has been very important for the company to build and maintain a good local reputation. “We’re not a big company by any means but we have a very good name here. Our most important asset has been our reputation. That’s what people have to consider when they come here; if you can maintain good ethics throughout all phases then you will be able to operate,” he said. Grupo de Bullet remains open to partnerships in developing their projects but Allen pointed out that staying ability and the ability to work in Colombia is what they look for in new partners. “A lot of people have come to Colombia over the last 20 or 30 years. They come in and do a stock promotion, and then, due to

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In its current portfolio, Minatura is potential for growing Minatura in Colombia. managing around 380,000 hectares with “We’re building value both for the people potential that includes from copper, gold, and for the shareholders. There is no better platinum and other metals. Minatura, as a feeling than that. I expect us to be one of holding company, is now an incubator that the leaders in the country. We are on our will be spinning off a number of projects. way to being a world class exploration com- “We are planning on taking around four pany and eventually a world class alluvial projects to the market over the next 12 mining company. I think that Colombia’s months. We are looking to invest around potential could supersede that of many Lat- US$15 million in exploration across our in American countries. The Andes has not projects this year,” said Dias. really been investigated in Colombia. We’ve In addition to its many hard rock as- seen some early successes, but I think it’s sets, Minatura is also looking to create a going to surprise a lot of people.” paradigm shift in alluvial. “We feel we have Paul Dias, CEO, Minatura found a much more efficient method of es- Mid-Cauca Belt tablishing a resource in alluvial. It takes an The mid-Cauca belt is currently attracting a dot com bubble burst or a world economy extensive amount of time to do that and the the most interest from gold explorers in crash, they’re gone and we’re liable to clean methods are old and out-dated.” Colombia. Its porphyry potential has held up after them. We’re looking for people that Dias has found technology that Minatura the attention of exploration companies both are quality and people that have not only have helped develop with Dutch and Ameri- large and small and is likely to be the first the economic capacity but the know-how in can partners. “The technology has never region to enter large scale gold production. order to operate in Colombia,” said Allen. before been used for mining but it allows us Minatura is another company that now to drill 30 m in around four hours, where it Continental aiming to be first commands a very large land package in would take a week before,” he said. Continental Gold Ltd. is an advanced-stage Colombia. The company’s CEO, Paul Dias, The company has already drilled some exploration and development company with first invested in Colombia at the end of areas and found some resources. “Alluvial nine gold projects covering over 197,000 2001: “From the period up until 2006 it is expensive but it is the shortest way to hectares in highly prospective areas of known was very quiet. There was not a lot of ac- production. You don’t hear a lot about historical gold production in Colombia. tivity. You had to travel very carefully and these projects, because most of the com- “AngloGold was the first in the country needed to know the areas you were in very panies are private, but it can be achieved in modern times, but their model was to well due to the social issues of the time,” in an eco- friendly manner. We are not an look for porphyry style targets. They know he recalled. “In 2001, I came to start one alluvial company but we have a hybrid those structures very well,” said Continen- mine, but organically the operation grew. model. Our long term interest and big val- tal’s CEO and President Ari Sussman. “Our I learned the country through osmosis. I ue is going to be in hard rock structures, model is to look for other things. We are didn’t arrive with a grand scheme, but real- but alluvial has mind blowing short term looking for high grade vein systems primar- ized its potential day by day. “Wow, there’s possibilities,” said Dias. ily, of various styles, and we have a way of nobody here!” I was in one little area and it Now that Dias is well entrenched with targeting them from a very broad base. This grew from there,” Dias explained. the first mover advantage, he sees great allows us to start from a satellite image and then focusing down once we find the suitable targets.” Continental’s cornerstone project is at Buriticá, where they see great potential for low cost, high grade gold vein production. Continental has undertaken a policy of very aggressive drilling and has an approximate budget for the calendar year of 2011 of around US$30 million. “It’s really a state- ment of ambition,” said Sussman. “We are going to drill and we are not going to stop drilling here. It’s our view that we are going to build the first modern day gold mine in this country.” Continental is aiming to be in production at Buriticá sometime in 2014. Sussman sees the project as being a relatively straight forward underground mine. “It has simple metallurgy and there is a very clear path on how to get to production. To do that we just need to drill and drill hard.” Sussman is aiming for a 2.5 million oz Continental Gold staff handling some of the result of their aggressive drilling campaign (Photo courtesy maiden resource but believes that Buriticá of Continental Gold) may hold much more. “A resource is just a

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94 E&MJ • DECEMBER 2011 www.e-mj.com www.e-mj.com E&MJ • DECEMBER 2011 95 snapshot in time and we believe there are a lot more ounces than for ages, so we are working with a commu- that held in the project, perhaps over 5 million oz, but getting nity that understands mining or that wants them into a 43-101 or JORC compliant category is important. to learn more about it,” he said. By that time we will have drilled over 100,000 m of diamond Sunward has also acquired the Man- drilling,” he said. de Norte project in northern Colombia, Continental are keen not to be mistaken for a one-property which it considers to be one of the best junior explorer as their extensive land holding includes several undrilled porphyry copper prospects in properties with potential for providing additional discoveries. In South America. addition, through an option agreement with Grupo de Bullet, the company has sustainable growth potential via a unique project Solvista – bridging Colombian and portfolio in key Colombian gold districts. Toronto expertise Sussman feels this is what really sets Continental apart. Solvista Gold currently owns two explora- “We’ve got the deepest portfolio in country of projects and the tion projects in the northwest Colombian ability to generate more. We have a dedicated team whose sole department of Antioquia: Guadalupe and Brad Van Den Bussche, vice president of function is to evaluate new opportunities in the 4 million plus Caramanta. Solvista Gold Corp. was incor- exploration at Anitioquia Gold hectares of property that we have a right of refusal on. That is porated in Ontario, Canada, in 2010 as ongoing and we continue to generate more projects as well as a result of a joint venture agreement be- The Antioquia batholith ways to extract full value from our portfolio.” tween Toronto-based Norvista Resources Away from the mid-Cauca belt, Antioquia Corp. and Grupo de Bullet. While Grupo also offers a great deal of exploration op- Gran Colombia de Bullet has unmatched Colombian ex- portunities on its batholith, an intrusive 2011 saw the merger of two of Colombia’s most promising gold perience and contacts, Norvista provides body of granodiorite to quartz diorite mining companies to create a major new player.In June, Gran Co- the finance and capital market experience. composition. A number of companies are lombia Gold announced the completion of its merger with Medoro “There are 2,000 or so listed explora- developing projects in this region that show Resources, which created the largest underground gold and silver tion companies in Toronto. You have to early signs of becoming world class deposits. producer in Colombia with six underground mines in operation. do something a little bit special to raise The company expects to grow its combined gold production from yourself above the crowd,” said Solvista’s Antioquia Gold – backed by Peruvian 120,000 oz/y in 2011 to over 600,000 oz/y by 2016. CEO, Miller O’Prey. “I think we have a expertise A key part of the new group’s portfolio is the famous Frontino very strong group of people within Solvista Antioquia Gold has been exploring for pre- gold mine in Segovia, Antioquia, which has been in operation for and from our partners at Grupo de Bullet cious metals in Colombia since 2007. The more than 150 years. During this period the mine has produced and Norvista. I don’t think there are many company has a land package of close to over 4.5 million oz of gold using relatively unsophisticated min- companies in Colombia that have access 40,000 hectares located throughout Co- ing technology. to that level of expertise both at a local lombia. Antioquia Gold’s principal asset Another highlight of Gran Colombia’s portfolio is the Marmato and at a corporate financial level.” is its 5,630 hectare Cisneros project, lo- project. An underground operation at the mine has been produc- The geological models of Solvista’s two cated 55 km northeast of Medellín. ing intermittently since 1900. The company are now reviewing projects are quite different. While they are The Cisneros project is considered a a long term open-pit development at this project. Gran Colombia both gold focused, Caramanta is more a structurally controlled vein gold deposit Gold’s website states that the project contains 10 million oz of bulk tonnage, low grade, open-pit style and it is critical to concentrate effort into gold and an estimated 64 million oz of silver in the Measured and of mineralization and at Guadalupe, the understanding the structural geology and Indicated categories. present thinking is of a more structurally its control on gold mineralization. We have The company commenced pre-feasibility on this project this controlled, higher grade deposit that is done this and it is paying off with con- year, in the hope of going into production in 2015. more amenable to underground mining. tinuous drilling success states Van Den However, the plan would require the town of Marmato to be Both projects are being advanced joint- Bussche, Vice President of Exploration at moved from its present location and has yet to gain full support ly, although it is fair to say Guadalupe, for Antioquia Gold. from the community. logistical reasons, is a little more devel- “This is a tremendous project and I oped. It is a little easier to access and the think we will get recognised for our poten- Sunward – targeting large porphyries geology is a little more straight-forward. tial when we define a significant resource Sunward Resources Ltd. is focused on the exploration of large “We are in the permitting process at Gua- to demonstrate that there are real oppor- porphyry gold-copper projects in Colombia. “We are looking for dalupe right now. We expect to start drill- tunities there,” he said. At the Cisneros large and long life gold and copper projects. Our strategy for our ing by November. The campaign will be a project, the company is currently in the acquisitions is the previous mining history in the areas of our minimum of 4,000 m but hopefully that third year of drilling and by the end of the interest. The areas that we own right now have had mining op- will grow on the back of some good re- program will be over 32,000 m. erations since 1990, and it was definitely a good title, it had all sults,” said O’Prey. “The exploration focus is to finish the the licenses, an initial resource, and it became a part of a large O’Prey feels that operating in Antioquia current drilling program, which is concen- production,” said CEO Colin Andrew. is a great advantage for the project. “It was trated on multiple structural zones in the Its core asset is the Titiribi project, which hosts 3.7 million oz a conscious decision on various levels. An- core of the project area and work towards of gold in a 43-101 compliant resource. Sunward believes Titiribi tioquia is the home of mining in Colombia. defining a resource in the near future. ,” is the most accessible of all the Au-Cu porphyry projects being It has the most mining experience in terms said Brad Van Den Bussche. The company investigated in the mid-Cauca belt. of finding people to explore and mine but is also continuing to aggressively explore re- The company currently has seven drill rigs on site and An- also in terms of management of the regula- gional targets throughout the property and drews has been encouraged by the welcome reception from the tions. It has less social issues and a local continues to define additional drill targets. community to date. “I think that an advantage for our project is environmental authority that seems more A lot of the finance and support for Antio- that it is located in an area where there has been mining activity in-tune with the needs of the region.” quia Gold comes from Desafio Minero.

96 E&MJ • DECEMBER 2011 www.e-mj.com www.e-mj.com E&MJ • DECEMBER 2011 97 snapshot in time and we believe there are a lot more ounces than for ages, so we are working with a commu- that held in the project, perhaps over 5 million oz, but getting nity that understands mining or that wants them into a 43-101 or JORC compliant category is important. to learn more about it,” he said. By that time we will have drilled over 100,000 m of diamond Sunward has also acquired the Man- drilling,” he said. de Norte project in northern Colombia, Continental are keen not to be mistaken for a one-property which it considers to be one of the best junior explorer as their extensive land holding includes several undrilled porphyry copper prospects in properties with potential for providing additional discoveries. In South America. addition, through an option agreement with Grupo de Bullet, the company has sustainable growth potential via a unique project Solvista – bridging Colombian and portfolio in key Colombian gold districts. Toronto expertise Sussman feels this is what really sets Continental apart. Solvista Gold currently owns two explora- “We’ve got the deepest portfolio in country of projects and the tion projects in the northwest Colombian ability to generate more. We have a dedicated team whose sole department of Antioquia: Guadalupe and Brad Van Den Bussche, vice president of function is to evaluate new opportunities in the 4 million plus Caramanta. Solvista Gold Corp. was incor- exploration at Anitioquia Gold hectares of property that we have a right of refusal on. That is porated in Ontario, Canada, in 2010 as ongoing and we continue to generate more projects as well as a result of a joint venture agreement be- The Antioquia batholith ways to extract full value from our portfolio.” tween Toronto-based Norvista Resources Away from the mid-Cauca belt, Antioquia Corp. and Grupo de Bullet. While Grupo also offers a great deal of exploration op- Gran Colombia de Bullet has unmatched Colombian ex- portunities on its batholith, an intrusive 2011 saw the merger of two of Colombia’s most promising gold perience and contacts, Norvista provides body of granodiorite to quartz diorite mining companies to create a major new player.In June, Gran Co- the finance and capital market experience. composition. A number of companies are lombia Gold announced the completion of its merger with Medoro “There are 2,000 or so listed explora- developing projects in this region that show Resources, which created the largest underground gold and silver tion companies in Toronto. You have to early signs of becoming world class deposits. producer in Colombia with six underground mines in operation. do something a little bit special to raise The company expects to grow its combined gold production from yourself above the crowd,” said Solvista’s Antioquia Gold – backed by Peruvian 120,000 oz/y in 2011 to over 600,000 oz/y by 2016. CEO, Miller O’Prey. “I think we have a expertise A key part of the new group’s portfolio is the famous Frontino very strong group of people within Solvista Antioquia Gold has been exploring for pre- gold mine in Segovia, Antioquia, which has been in operation for and from our partners at Grupo de Bullet cious metals in Colombia since 2007. The more than 150 years. During this period the mine has produced and Norvista. I don’t think there are many company has a land package of close to over 4.5 million oz of gold using relatively unsophisticated min- companies in Colombia that have access 40,000 hectares located throughout Co- ing technology. to that level of expertise both at a local lombia. Antioquia Gold’s principal asset Another highlight of Gran Colombia’s portfolio is the Marmato and at a corporate financial level.” is its 5,630 hectare Cisneros project, lo- project. An underground operation at the mine has been produc- The geological models of Solvista’s two cated 55 km northeast of Medellín. ing intermittently since 1900. The company are now reviewing projects are quite different. While they are The Cisneros project is considered a a long term open-pit development at this project. Gran Colombia both gold focused, Caramanta is more a structurally controlled vein gold deposit Gold’s website states that the project contains 10 million oz of bulk tonnage, low grade, open-pit style and it is critical to concentrate effort into gold and an estimated 64 million oz of silver in the Measured and of mineralization and at Guadalupe, the understanding the structural geology and Indicated categories. present thinking is of a more structurally its control on gold mineralization. We have The company commenced pre-feasibility on this project this controlled, higher grade deposit that is done this and it is paying off with con- year, in the hope of going into production in 2015. more amenable to underground mining. tinuous drilling success states Van Den However, the plan would require the town of Marmato to be Both projects are being advanced joint- Bussche, Vice President of Exploration at moved from its present location and has yet to gain full support ly, although it is fair to say Guadalupe, for Antioquia Gold. from the community. logistical reasons, is a little more devel- “This is a tremendous project and I oped. It is a little easier to access and the think we will get recognised for our poten- Sunward – targeting large porphyries geology is a little more straight-forward. tial when we define a significant resource Sunward Resources Ltd. is focused on the exploration of large “We are in the permitting process at Gua- to demonstrate that there are real oppor- porphyry gold-copper projects in Colombia. “We are looking for dalupe right now. We expect to start drill- tunities there,” he said. At the Cisneros large and long life gold and copper projects. Our strategy for our ing by November. The campaign will be a project, the company is currently in the acquisitions is the previous mining history in the areas of our minimum of 4,000 m but hopefully that third year of drilling and by the end of the interest. The areas that we own right now have had mining op- will grow on the back of some good re- program will be over 32,000 m. erations since 1990, and it was definitely a good title, it had all sults,” said O’Prey. “The exploration focus is to finish the the licenses, an initial resource, and it became a part of a large O’Prey feels that operating in Antioquia current drilling program, which is concen- production,” said CEO Colin Andrew. is a great advantage for the project. “It was trated on multiple structural zones in the Its core asset is the Titiribi project, which hosts 3.7 million oz a conscious decision on various levels. An- core of the project area and work towards of gold in a 43-101 compliant resource. Sunward believes Titiribi tioquia is the home of mining in Colombia. defining a resource in the near future. ,” is the most accessible of all the Au-Cu porphyry projects being It has the most mining experience in terms said Brad Van Den Bussche. The company investigated in the mid-Cauca belt. of finding people to explore and mine but is also continuing to aggressively explore re- The company currently has seven drill rigs on site and An- also in terms of management of the regula- gional targets throughout the property and drews has been encouraged by the welcome reception from the tions. It has less social issues and a local continues to define additional drill targets. community to date. “I think that an advantage for our project is environmental authority that seems more A lot of the finance and support for Antio- that it is located in an area where there has been mining activity in-tune with the needs of the region.” quia Gold comes from Desafio Minero.

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Van Den Bussche sees this as a hugely sulfide lens was discovered, surrounded tionship with the communities and fortu- California Mining District mental licenses by the end of 2012 in or- Norte de Santander in June 2009. Upon ar- important strategic partner. “They have a by an unknown type of mineralization that nately most of the area’s illegal mining is Outside of the Mid-Cauca belt develop- der to start the construction stage, which riving at the site, Fabio Capponi, CB Gold’s very similar project to Cisneros, at Parcoy, carries high zinc and gold grades outside outside of our properties,” he said. ments, a lot of gold exploration attention might take one or two years. CEO, was immediately impressed by the Peru, and when their Vice President of Ex- of the massive sulfide body. has centred on the California gold play potential of the area: “Vetas is a mining dis- ploration came to Cisneros he said it was Over the last few years the gypsum Cordillera gold in the district of Santander. Although the AUX – Batista’s big bet trict where mines have legally been in op- very similar to what they saw in their Pe- mine changed into two underground Cordillera entered the market in November area is not as familiar with mining as An- In March 2011, Eike Batista acquired eration for more than 60 years and gold has ruvian mine 25 years ago. They saw really mines, separated by a river. So, there are 2010, and made its initial acquisitions and tioquia, it is quickly becoming a second control of Canadian gold-mining com- been produced for over 400 years. The po- good potential.” two interesting elements; one is the mas- is now conducting initial exploration in the hard rock mining hub for Colombia. pany Ventana Gold in a deal valued at tential was obvious and so we established Desafio has participated in two financ- sive sulfide, which is polymetallic, but hope of building a 43-101 in order to list. US$1.5 billion. Ventana’s flagship project ourselves there and never left.” ings and currently hold about 35.5% of also the region has a lot of gold deposits The company controls more than 21,000 Eco Oro – the rebirth of Greystar was La Bodega, which is located in the Although mines were in operation on the Antioquia Gold Inc. Desafio produces ap- being worked by artisanal miners. hectares in the Antioquia Batholith. The Greystar story was one of the most Calfornia district Santander. site, CB Gold has suspended them in order proximately 200,000 oz/y of gold and has There was a group of several title hold- “Our strategy was basically to get prop- promising gold plays in Colombia, whose EMJ reported in December 2010 that to focus on their exploration. “These mines 32 years of experience in the exploration, ers on the original gypsum mine and Con- erties in the Antioquia district; we were Angostura project showed enormous prom- Ventana had released a 43-101 with an have only been mining visible gold and they development and operation of underground tinental Gold and Grupo de Bullet owned interested in that region because there is ise. However, after a significant invest- inferred mineral resource of 3.5 million oz never felt the need to drill a single hole. As narrow-vein deposits. “We have been able some of the surrounding properties. Sev- a high level of data on the area that geo- ment in exploration and development, the of gold, 19.2 million oz of silver and 84.6 a professional mining company that wants to get some valuable training from this eral companies became involved between logically points towards a lot of opportuni- company’s plans for a large open-pit mine million lb of copper. The scoping study to achieve its 43-101, we have to operate company and there’s a plan to send some 2007 and 2008 to look at Anzá but Way- ties,” said managing director Robert Fia. was undone by public concerns over the outlined 14 years of underground mine in a different way,” said Capponi. of the local people from Cisneros to take mar was able to secure its deal in 2010. Cordillera’s key project is Guatape in socio-environmental impact of the project. life at a planned production rate of up to Capponi has been very much encour- mining training in Desafio’s world class “We came in and consolidated and San Francisco, made up of two conces- The company is now aiming to undergo 7,500 mt/d. aged by its exploration results so far. “We project,” said Van Den Bussche. ended up buying the properties of Conti- sions. The company has completed its a renaissance under a new name, Eco Oro, Batista said that he bought Ventana be- spent the first year and a half mapping nental and signing a three year option over ground exploration program of soil, stream and a completely redesigned mine plan. cause he believes that the assets are three and sampling the entire area, both un- Waymar ‒ a gypsum to VMS story all of the central properties that constitute and rock sampling. Angostura is now to be mined under- times bigger than what people who owned derground and at surface. At the surface, Waymar Resources Ltd. is a Canadian the gypsum mine and the sulfide finds,” After combined analysis with aeromag ground instead of the open-pit project that it thought it was. He also stated a plan to the visible gold samples reached grades mineral exploration company with an op- said Pablo Marcet, president and CEO of and radiometric surveys, several targets was first proposed and the company hopes invest a further US$100 million in Ven- of 667 g/mt of gold and over 3,000 g/mt tion to buy 100% interest in the Anzá proj- Waymar. will be identified for drilling in the near to project a complete fresh start and will tana’s assets, consider acquiring further of silver. From the 2,000 plus samples ect located in the west of the Antioquia. Marcet has found the presence of the future. Although still at an early stage, Fia place a much stronger emphasis on social assets and then listing them together in that we took, on average the underground Anzá used to be an open-pit gypsum mine, gypsum mine has been hugely beneficial. has high hopes for their operations. “We and environmental issues. Bogotá, London and Sao Paulo under the grade is around 7 g/mt gold and about 75 within which miners started to encounter “There was already a camp onsite which hope that in five years we have found de- Angostura will remain the flagship proj- banner AUX this year. g/mt of silver. On surface, the average is sulfide, which they were treating as waste. we initially shared and locals have been posits with 1 or 2 million oz of gold in ect. If the results from the drilling opera- about 1 g/mt gold and 6.7 g/mt. There- As the amount of sulfide increased, some- trained and working in mining there for this area and with some other exploration tion and some other studies confirm their CB Gold – rich veins at Las Vetas fore, the ratio is around 10:1 silver/gold.” one decided to have a look at it. A massive some time. There is already a good rela- projects.” estimates, they hope to have the environ- CB Gold started with a greenfield project in CB Gold started drilling in December

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98 E&MJ • DECEMBER 2011 www.e-mj.com www.e-mj.com E&MJ • DECEMBER 2011 99 2010: “We started with a plan to drill Galway Resources over contact with the paramos. However, After the investors looked at the opportunities that Colom- 25,000 m by the end of the year but we Galway Resources is focused on develop- since the problems of Greystar’s Angostura bia offered, the company, founded in November 2010, started have extended that to 30,000-35,000 m ing both coal and gold in Colombia. As the project, all companies have realized the working in three different projects in Choco, Cordoba (El Alacran by the end of the year. The drilling pro- company’s coal assets are currently mired need to be proactive about changing the mine), Bolivar (Santa Cruz mine) and three other properties. The gram has become more targeted since we in approvals processes, the core focus is perspective that mining has in the region. company took the decision to work in areas where there was not completed the geophysical survey in May gold exploration in northeast Colombia, “The problem now is that there is not much activity but with potential opportunities as well. “What we 2011,” he said. with drill programs occurring at the Cali- much real information about the tradition- saw in Antioquia is that a lot of companies were going for the One concern of investors was that, like fornia and Vetas gold projects. al economical activities developed in those same assets. Besides that, we wanted diversification, because Greystar, CB Gold’s properties are also “We saw the gold potential of Santand- areas, and in all cases mining may not be our objective was not going just for gold, and the only mine with at high altitude. The project’s altitude er and specifically California, and we feel the worst or best option. That’s why the positive results in copper was El Alacran,” said Mario Escobar, extends from 2,800 m to a maximum of proud for being the first company that has government and companies are studying president of Ashmont Resources. 3,500 m. However, Capponi does not see put together several concessions in the more the economical and cultural condi- Choco is a Pacific coast region that still suffers a lot of so- this as a constraint and is keen to differ- area,” said Robert Hinchcliffe, president tions in the areas with mining potential, to cial issues and where there has been some history of mining entiate the situation from that of the Grey- and CEO at Galway. “We focused on this know if the project is socially and environ- project failures. However, Escobar is prepared to face that. “In star’s. “We have had no issues with the al- region and in this area we have Vetas and mentally viable,” said Hinchcliffe. Choco, we are going to develop our project in a special way, in a titude. Our operations are checked by the California. We expect that these projects long term strategy. Because of its transportations issues, guerrilla environmental bodies every 15 days and may be able to produce 1 million oz of Los Mates and trafficking problems, we must be careful and work in a well we have been complimented more than gold,” said Hinchcliffe. Los Mates is a Colombia-based gold pro- planned project,” said Escobar. once on our performance,” he said. Galway has secured a significant land ducer, founded as a private company in “It is not an open-pit project, but un- position in California. Galway’s California 2009, with primary projects in the miner- Cordoba Minerals derground and so the issue is very differ- concessions are located adjacent to AUX’s al-rich Senderos de Oro region that neigh- Paul Dias, CEO of Minatura, also thinks that more and more op- ent because the surface is not touched La Bodega and Eco Oro’s Angostura proj- bors California and Vetas. “Senderos de portunities are to be found in new mining provinces. “Antioquia where it is not needed. The mine mouth ects. This year, Galway plans to invest Oro is a project composed by two of our is rich in mining history, but other districts are improving rapidly. is expected to be at 3,300 m and at that US$13 million in both projects. “In Vetas four licenses and it is more than 1,300 It’s just a matter of time before they catch up,” he said. point we are below the paramos line. None project, we plan to drill 10,000 m in the hectares, so it has a lot to be explored,” In Cordoba, for example, his company has been finding ex- of our land holding has been defined as first stage and in California we keep hav- said Ary Marquis Pernett, president and tremely high prospectivity in base metals. “It is right next to Cerro paramos and activities have been taking ing better results every week, so we are CEO of Los Mates. Matoso, Minera El Roble and Carbones del Caribe. I also expect place at these altitudes in this area long going to have to change some things in the The company have budgeted to spend Sur de Bolivar to emerge as a world class region for large gold before CB Gold. The town of Vetas itself project,” explained Hinchcliffe. no less than US$5 million on exploration deposits. These are areas that are unexplored and undeveloped is at 3,200 m. Mines have been operating The project is well under 3,000 m alti- this year and are using technology and but you’ll be hearing a lot about soon,” he said. here legally for 60 years or more.” tude and so should not have any concerns consulting from Canadian companies to Dias plans to spin out the Cordoba assets into Cordoba Miner- assist them in the early stage of explora- als Corp., a copper gold play. “The outcrops in this region are tion. “Right now we are preparing more monstrous; they range from 3 m in width to 200 m in width geophysical field work and more surface in structures that extend for kilometers. We have approximately studies, but I think that at the end of this 26,000 hectares there and have some very interesting partners.” year beginning 2012 we will be able to start drilling,” said Pernett. Los Mates has Cosigo - Colombia’s Witwatersrand - The Taraira gold belt a stated aim of becoming a 100,000 oz/y Well away from other developers, Cosigo have been trying to gold producer from its first mine within open a new Colombian exploration province well south of the five years of formation. Despite its already Andes, deep in the Amazon rainforest. significant landholding, in order to achieve The company’s flagship project is its 100% owned Machado that, the company continues to look to project in the Taraira gold belt of south eastern Colombia, along acquire other mining assets. “Right now the border between Colombia and Brazil. Cosigo’s ongoing work we have 5,000 hectares of mining license on the 9,973 ha. Machado project is the first modern exploration but we are looking for larger titles,” said program in an area known to have hosted more than 100 historic Pernett. gold mining operations. This area is underlain by rocks that have similarities to the Opening new districts world famous Witwatersrand complex in South Africa where ap- In addition to these gold mining provinces proximately 40% of all gold in the world has been mined. Colom- that are becoming better known internation- bian government geologists first worked on the Machado Project ally, other highly prospective areas are also in the late 1980s. “The government did 12-13 holes in this area. now opening to exploration companies. They found an interesting deposit in the area that they estimate to be around 40 mt. This is of course not viable for a 43-101. Ashmont in Choco Our intent is to get in and add to that understanding,” said Andy Ashmont Resources is a private Canadian Rendle, vice president of South American operations at Cosigo company based in Vancouver. This com- Resources Inc. pany is the result of the initiative of two Cosigo has completed an extensive soil geochemistry survey Canadian firms that had some mining and, together with geological mapping, has identified large anoma- activities in Africa, and a Colombian in- lous targets for the two reverse-circulation drills that are already vestment banking firm, which entered the onsite. The company is currently awaiting a Forestry Reserve Sub- mining sector by capitalizing two mining traction permit from the government in order to proceed with their companies in Colombia. drill program.

100 E&MJ • DECEMBER 2011 www.e-mj.com www.e-mj.com E&MJ • DECEMBER 2011 101 2010: “We started with a plan to drill Galway Resources over contact with the paramos. However, After the investors looked at the opportunities that Colom- 25,000 m by the end of the year but we Galway Resources is focused on develop- since the problems of Greystar’s Angostura bia offered, the company, founded in November 2010, started have extended that to 30,000-35,000 m ing both coal and gold in Colombia. As the project, all companies have realized the working in three different projects in Choco, Cordoba (El Alacran by the end of the year. The drilling pro- company’s coal assets are currently mired need to be proactive about changing the mine), Bolivar (Santa Cruz mine) and three other properties. The gram has become more targeted since we in approvals processes, the core focus is perspective that mining has in the region. company took the decision to work in areas where there was not completed the geophysical survey in May gold exploration in northeast Colombia, “The problem now is that there is not much activity but with potential opportunities as well. “What we 2011,” he said. with drill programs occurring at the Cali- much real information about the tradition- saw in Antioquia is that a lot of companies were going for the One concern of investors was that, like fornia and Vetas gold projects. al economical activities developed in those same assets. Besides that, we wanted diversification, because Greystar, CB Gold’s properties are also “We saw the gold potential of Santand- areas, and in all cases mining may not be our objective was not going just for gold, and the only mine with at high altitude. The project’s altitude er and specifically California, and we feel the worst or best option. That’s why the positive results in copper was El Alacran,” said Mario Escobar, extends from 2,800 m to a maximum of proud for being the first company that has government and companies are studying president of Ashmont Resources. 3,500 m. However, Capponi does not see put together several concessions in the more the economical and cultural condi- Choco is a Pacific coast region that still suffers a lot of so- this as a constraint and is keen to differ- area,” said Robert Hinchcliffe, president tions in the areas with mining potential, to cial issues and where there has been some history of mining entiate the situation from that of the Grey- and CEO at Galway. “We focused on this know if the project is socially and environ- project failures. However, Escobar is prepared to face that. “In star’s. “We have had no issues with the al- region and in this area we have Vetas and mentally viable,” said Hinchcliffe. Choco, we are going to develop our project in a special way, in a titude. Our operations are checked by the California. We expect that these projects long term strategy. Because of its transportations issues, guerrilla environmental bodies every 15 days and may be able to produce 1 million oz of Los Mates and trafficking problems, we must be careful and work in a well we have been complimented more than gold,” said Hinchcliffe. Los Mates is a Colombia-based gold pro- planned project,” said Escobar. once on our performance,” he said. Galway has secured a significant land ducer, founded as a private company in “It is not an open-pit project, but un- position in California. Galway’s California 2009, with primary projects in the miner- Cordoba Minerals derground and so the issue is very differ- concessions are located adjacent to AUX’s al-rich Senderos de Oro region that neigh- Paul Dias, CEO of Minatura, also thinks that more and more op- ent because the surface is not touched La Bodega and Eco Oro’s Angostura proj- bors California and Vetas. “Senderos de portunities are to be found in new mining provinces. “Antioquia where it is not needed. The mine mouth ects. This year, Galway plans to invest Oro is a project composed by two of our is rich in mining history, but other districts are improving rapidly. is expected to be at 3,300 m and at that US$13 million in both projects. “In Vetas four licenses and it is more than 1,300 It’s just a matter of time before they catch up,” he said. point we are below the paramos line. None project, we plan to drill 10,000 m in the hectares, so it has a lot to be explored,” In Cordoba, for example, his company has been finding ex- of our land holding has been defined as first stage and in California we keep hav- said Ary Marquis Pernett, president and tremely high prospectivity in base metals. “It is right next to Cerro paramos and activities have been taking ing better results every week, so we are CEO of Los Mates. Matoso, Minera El Roble and Carbones del Caribe. I also expect place at these altitudes in this area long going to have to change some things in the The company have budgeted to spend Sur de Bolivar to emerge as a world class region for large gold before CB Gold. The town of Vetas itself project,” explained Hinchcliffe. no less than US$5 million on exploration deposits. These are areas that are unexplored and undeveloped is at 3,200 m. Mines have been operating The project is well under 3,000 m alti- this year and are using technology and but you’ll be hearing a lot about soon,” he said. here legally for 60 years or more.” tude and so should not have any concerns consulting from Canadian companies to Dias plans to spin out the Cordoba assets into Cordoba Miner- assist them in the early stage of explora- als Corp., a copper gold play. “The outcrops in this region are tion. “Right now we are preparing more monstrous; they range from 3 m in width to 200 m in width geophysical field work and more surface in structures that extend for kilometers. We have approximately studies, but I think that at the end of this 26,000 hectares there and have some very interesting partners.” year beginning 2012 we will be able to start drilling,” said Pernett. Los Mates has Cosigo - Colombia’s Witwatersrand - The Taraira gold belt a stated aim of becoming a 100,000 oz/y Well away from other developers, Cosigo have been trying to gold producer from its first mine within open a new Colombian exploration province well south of the five years of formation. Despite its already Andes, deep in the Amazon rainforest. significant landholding, in order to achieve The company’s flagship project is its 100% owned Machado that, the company continues to look to project in the Taraira gold belt of south eastern Colombia, along acquire other mining assets. “Right now the border between Colombia and Brazil. Cosigo’s ongoing work we have 5,000 hectares of mining license on the 9,973 ha. Machado project is the first modern exploration but we are looking for larger titles,” said program in an area known to have hosted more than 100 historic Pernett. gold mining operations. This area is underlain by rocks that have similarities to the Opening new districts world famous Witwatersrand complex in South Africa where ap- In addition to these gold mining provinces proximately 40% of all gold in the world has been mined. Colom- that are becoming better known internation- bian government geologists first worked on the Machado Project ally, other highly prospective areas are also in the late 1980s. “The government did 12-13 holes in this area. now opening to exploration companies. They found an interesting deposit in the area that they estimate to be around 40 mt. This is of course not viable for a 43-101. Ashmont in Choco Our intent is to get in and add to that understanding,” said Andy Ashmont Resources is a private Canadian Rendle, vice president of South American operations at Cosigo company based in Vancouver. This com- Resources Inc. pany is the result of the initiative of two Cosigo has completed an extensive soil geochemistry survey Canadian firms that had some mining and, together with geological mapping, has identified large anoma- activities in Africa, and a Colombian in- lous targets for the two reverse-circulation drills that are already vestment banking firm, which entered the onsite. The company is currently awaiting a Forestry Reserve Sub- mining sector by capitalizing two mining traction permit from the government in order to proceed with their companies in Colombia. drill program.

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Goldplata Peru, will produce gold, silver, and zinc, and lead concen- trates; additionally the exploration team will assess the real potential of this 20,000 Ha tenement package. Also, Brexia is currently closing a deal in a very attractive gold/copper porphyry resource with about 12,000 m of drilling, in the Cauca state in Colombia. More recently, Brexia is in negotiations in Brazil for the development of a 43,000 Ha package with already defined 300,000 oz of gold at the inferred resource level and a large exploration potential. In summary, Brexia Resources’ strategy is based on a balanced portfolio of options near to or in production with large exploration potential, ensuring a promising development horizon for the fore- seeable future by mixing organic growth with M&A.

Latam Resources – providing partnership and finance Latam Resources is a newly formed company of Grupo InterBol- Beatriz Uribe, president, Mineros An aerial view of Mineros’ ever expanding operations (Photo courtesy of Mineros) sa, the leading financial group in Colombia’s capital markets. Cosigo is having to work in a triangle the BVC, Colombia’s stock exchange and is Gerard, backed mainly by Colombian pen- Latam is focused on the purchase and sale of mining assets in between themselves, the native groups and backed entirely by Colombian capital. sion funds. With that significant financial Colombia. It has more than 100 projects under review that it is the NGOs to come to a resolution in order As the leading producer, Mineros’ goal for backing and private equity fund mentality, able to technically evaluate to TSX ready standard. to best help the area. However, Rendle sees this year is to produce over 120,000 oz/y of Brexia is acquiring suitable projects both in As InterBolsa saw the mining sector becoming increasingly im- this as not just a challenge to be overcome gold. 80% of this production will come from Colombia and across Latin America. portant to their investment banking business, Latam was created as but part of the overall ethos of the com- alluvial mining and the other 20% from un- The company is particularly looking for a means of connecting with future clients early on. “One of the most pany. “Our dream is that the native tribe derground mining, all from producing mines early stage exploration near to production important sectors for capital raising is natural resources. We saw in the Taraira South area could be one of in the department of Antioquia. projects with high upside. “We are look- that there would be more opportunity for us to be more pro-active the wealthiest tribes in the world. If Cosigo “Thanks to the growth campaign that ing for that hidden value. These things are in the process and that there would be benefits for us to go in as is only known for one thing, we want it to we started four years ago, our production not evident to everyone. It is very easy to early players,” said Latam CEO, Leonel Narea. be that. We are helping them in their own has been increasing and we expect it to value a property when you have 20,000 m Through InterBolsa, Latam can aid financing and enter into joint projects and showing them that mining can keep rising. Right now, we have exploration of drilling completed. However, when there ventures with natural resource companies in the exploration and be done in a way that is safe and does not activities in Antioquia and in some other are none, what do you do to value and see discovery phase of a project. harm the environment.” regions of Colombia,” said Beatriz Uribe, the real potential of that property? What “Our package is to create enough information to attract inter- Cosigo wants indigenous communi- president of Mineros. we do is to apply the best practices for re- national juniors. We will then provide financing with our invest- ties from the U.S. and Canada to come For the last four years, Mineros have sources evaluation,” said Alexey Duarte, ment banking arm and we are able to provide other services such down and act as a sort of mentor to the worked in a joint venture with AngloGold president of Brexia. as the management of assets,” said Alejandro Ochoa, director local tribes they are working with. One ex- Ashanti to explore some of their proper- The company has already started its of Latam Resources. “The investment banking side of InterBolsa ample is the BC Aboriginal Mine Training ties. “I think these kinds of partnerships exploration and development activities in can help to raise capital. We are in a better position than most Association (BCAMTA), which has worked are really good because they help both Colombia through its Brexia El Bagre gold competitors because we have the largest broker dealer in a market with a lot of different companies and they parts to share, learn and improve their project, a vein type resource, located in the like Colombia. We offer more of a turn-key operation,” said Narea. help bring the native youth up to a techni- practices, just as we have done with An- northwest of the department of Antioquia. Latam is now looking for partners to take its project portfolio cal standard so that they can work with a gloGold,” said Uribe. “El Bagre is the starting point for this com- forward. “We are looking for companies who can take projects to mining company. This enables small min- Mineros now has plans to expand be- pany, where we expect to start production the next level. We want to enable these companies to access these ing companies with small budgets trust the yond Colombia into a major regional min- in the third quarter 2012,” said Duarte. assets,” said Ochoa. local community with expensive equipment ing force. In addition to exploration targets Brexia Resources is currently starting opera- that requires proper training. around the country, it is also considering tions on a gold/silver/copper/zinc porphyry Caramante Conde exploration activities in Ecuador and Peru. deposit and a gold/silver vein type deposit Ezequiel Llanes is a Colombian mine engineer that has been involved Colombian participation in gold “In five years, we want to be an internation- in the south of Peru, near Tintaya and the in many of the country’s most famous projects, such as Frontino and exploration al company with activities in at least three Antapaccay project. This operation, Brexia Providencia. Together with partners, Llanes recently acquired a new In addition to the excited interest from the countries of Latin America and duplicate project called Caramanta in the south west of Antioquia that is being international community, Colombian capital the production that we have right now,” developed under the company name Caramante Conde. is also being employed in the exploration said Uribe. The project includes more than 480 hectares in a highly pro- and development of the country’s gold re- spective region that has been mined in an artisanal fashion for over source. While Colombia may not have the Brexia –a private equity fund’s mining 100 years. “We believe Caramanta may be one of the most impor- deep pockets of Toronto, locally backed vehicle tant mining projects in Colombia in the short term,” said Llanes. companies have the in-country expertise Brexia, a subordinate of the private equity Llanes concedes that if the project meets his expectations, they that can provide an edge. fund TRIBECA, aims to turn assets with hid- will require a partner. “We have the logistics needed for an explora- den value into large scale, profitable and, tions project but not for the building of a mine. I think that once Mineros – Colombia’s major gold house most importantly, sustainable operations. this project starts to show some good results, a big international With more than 35 years of experience in With projects and operations in Colombia, company would like to have a partnership with us.” the Colombian mining sector and currently Peru and Brazil, the firm is looking to make However, at this stage, the company is considering its options. the largest gold producer in the country, an impact on the regional stage. Brexia Re- “Once we know exactly the reserve of this project, we might think Mineros can perhaps be considered the sources is the mining investment vehicle about the possibility of listing the company. Once we are sure about most established gold player in Colombia. It of Tribeca, Colombia’s first international the value of the company and the project we would also be inter- is the only gold developer currently listed on standard private equity fund led by Mr. Luc Alexey Duarte, president, Brexia Resources ested in hearing proposals on potential partnerships,” Llanes said.

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At the second Coaltrans Colombia Since that acquisition, the company conference in September 2011, Augusto has invested heavily in efficiency improve- Jimenez, Colombia CEO for Drummond, ments to increase production. “We brought Colombian Coal outlined the increasing role that the compa- new equipment and installed a new sys- ny sees Asian exports having for Colombia. tem to load the coal in the train in order Project development and exploration investment He also laid out Drummond and Itochu’s to improve the techniques and operations new growth vision. in the mine. This year we decided to re- Drummond International plans to raise vise the production goal to 4 million mt/y, coal production by 10 million mt/y to 35 but we are still working on the expansions million mt/y by 2014. Itochu said 70% of we need,” said Marco Puccini, operational that 10 million extra coal output will be general manager for Vale Colombia. sold to Asia, especially to China, India and Japan, though Europe will remain the key MPX- seeking the Carajas of coal market for Colombian coal. MPX is the energy wing of Eike Batista’s Leonardo Pires, general manager for coal EBX Group. In Colombia, the company operations at Vale Colombia Glencore’s Prodeco owns 68,000 hectares in La Guajira Prodeco, 100% owned by Glencore, the where it is currently undertaking an ex- Carajas is one of the world’s best iron world’s largest commodity trader, consists ploratory campaign in the hope of start- ore deposits that has been developed with of two open-pit mine complexes (Calenturi- ing production in 2012 on two open-pit enormous success in Brazil and Gomez tas and La Jagua) in the department of Ce- mines at Canavaerlaes and Papayal, to be feels the Guajira shows all the character- World class facilities at Cerrejon have contributed greatly to Colombia’s reputation as a global coal exporter. (Photo courtesy of Cerrejón) sar; export port facilities (Puerto Zuniga and followed by a large underground operation istics to be equally significant to coal as Puerto Nuevo) and a 39.76% share in the that it hopes to have in operation in 2015. Carajas has become to iron ore. Fenoco concession operating the railway In total, the company hopes to have its Gomez also said subject to the markets, Colombia has the largest coal resource base ment and anything that we start now is a It is this significant backing that has al- which links mines to the ports in Colombia. integrated mining project, inclusive of its MPX sees the possibility for significant ad- in South America, estimated in excess of brownfield expansion rather than a green- lowed Cerrejón to continue its ambitious The mines supply U.S.-compliant thermal own port and railroad, that will produce ditional expansion in Colombia beyond 6.4 billion mt and is the world’s fifth larg- field start-up. This is a great head start on growth path. “Although Cerrejón is a large coal and high volatile metallurgical coal 35 million mt/y of high quality thermal the 35 million mt/y production currently est coal exporter, exporting 68 million mt those companies that are only now enter- cash producer itself, we also have access to (PCI) to Europe and the Americas. coal. At the second Coaltrans Colombia stated. in 2010. In 2010, coal taxes and royalties ing Colombia.” some of the most capitalized companies in Prodeco has a total 337 million mt of conference in September 2011, Gustavo The infrastructure that they are putting amounted to COP$931,428 million ($484 Teicher plans to use that advantage to the world in order to continue our growth. A coal JORC reserves and total coal resources Gomez, COO of mining and gas for MPX, in place will be designed with duplication million). According to Proexport, the coun- continue Cerrejón’s growth. “Expansion is company culture and wealth of experience of 540 million mt (inclusive of reserves). termed the Guajira basin as “the Carajas in mind as Batista wishes to take every try plans to increase its production to 200 part of our DNA. In terms of road, rail and that has been built up over the past 30 Prodeco forecasts a mine life of 30 years of coal”. advantage of Colombia’s coal potential. million mt/y by 2020. port, our mine’s infrastructure was origi- years is complemented by the deep mining for Calenturitas and 20 years for La Jagua, The majority of thermal coal resources nally designed for 15 million mt/y of coal knowledge of our owners,” said Teicher. based on reserves and the assumption that are located in the Guajira and Cesar prov- exports. At the time, that was the largest Cerrejón plans to start upgrades this some of the existing resources will be con- inces, and the majority of the coking coal operation in the world.” year, with completion expected in 2013 verted at Calenturitas. resources, estimated to be in excess of 1.4 Through successive expansions, Cerre- and ramp-up to 40 million mt/y by the end Prodeco is going through a period of billion mt, are located in the North Santand- jón have reached the level where today it of 2015. The key element is the creation of significant expansion, as coal production er, Santander, Cundinamarca and Boyacá can export 32 million mt/y and we have a new berth and direct ship loader at the is planned to increase from 10 million mt/ provinces. recently approved an expansion to 40 mil- Puerto Bolivar port, but the company are yin 2010 to 19.9 million mt/y in 2013 and lion mt/y. also investing in new equipment at the mine to 20.7 million mt/y by 2015. This expan- Cerrejón leading the coal expansion The mine is owned by a consortium of site and at the railroad. sion has an estimated capital cost of ap- Cerrejón is the country’s largest producing tier one mining companies; namely BHP proximately US$2.6 billion of which ap- mine and one of the world’s largest open- Billiton, Anglo American and Xstrata. There Drummond looks to Asia proximately US$1.5 billion has been spent pit thermal coal mining operations. It is is no over-riding control from any one of The second largest coal mine in Colombia on mining concessions, mining equipment, an integrated mine and transport complex them and, as the operator, Cerrejón is a self is owned by Drummond. During the late transport, port and other infrastructure as situated in the department of Guajira that contained autonomous company. 1980s, Drummond Ltd. acquired the min- end of 2010. currently has an export capacity of 32 mil- ing rights to significant coal reserves located lion mt/y. in northern Colombia. Drummond coal is Vale – Brazilian giant participates The company is the largest private em- one of the lowest sulfur and ash coals cur- Vale is now one of the world’s most diversi- ployer, the largest private tax payer and rently exported from Colombia. fied and successful mining companies and one of the largest payers of royalties in the The Drummond Ltd. Colombian opera- the global player has also not failed to ap- country. The project is seen as a leader in tion includes the Mina Pribbenow and El preciate the potential that lies in Colombia. the country. Descanso open-pit coal mines located in Vale acquired the El Hatillo mine in 2009 Long standing CEO of Cerrejón Leon Tei- the Cesar Coal Basin near La Loma; Puerto in the department of Cesar for US$300 mil- cher is now leaving his post to spend more Drummond, a deep-water ocean port on the lion. “Colombia is the major coal producer time with his family but said, “Cerrejón has Caribbean Sea near Santa Marta; and coal in the Atlantic market and supplies the U.S. been a pioneer in terms of serious large transportation and handling facilities. and a lot of European countries. We saw an scale mining. The operation started around Japan’s Itochu Corp has teamed up with opportunity, we came and knew and under- thirty years ago. We have an advantage U.S. Drummond Coal in a US$1.5 billion stood the market and evaluated the chances in that we have been here for a long time deal under which it will take a 20% stake in we may have,” said Leonardo Pires, general and know the country very well. We have the Drummond’s Colombian subsidiary and manager for coal operations at Vale Colom- already enjoyed good returns on our invest- Leon Teicher, former CEO, Cerrejón market its coal in Asia. bia and an architect of the acquisition.

104 E&MJ • DECEMBER 2011 www.e-mj.com www.e-mj.com E&MJ • DECEMBER 2011 105 Mining IN COLOMBIA Mining IN COLOMBIA

Many more projects emerging represented only a small proportion of ex- that we can control the quality of the mines NAE - Exploring international New Age Exploration’s model is to find In addition to these projects, a number of ports. The majority of these mines are semi- that supply us. Our coking coal quality has partnerships two or three good coking coal projects that other expansions are two words, from lo- manual or manually mined. been accepted by the most demanding steel New Age Exploration is an ASX listed explo- they can mechanize and produce around cal and foreign groups alike. Exploration These inland coal seams have been af- mills in the world,” said Camacho. ration company that is focused on becoming 500,000 mt/y of clean coal from each mine outside of these main projects is also be- fected by the Andean geology into relatively a significant player within the Colombian with a 10 to 20 year mine life. “Coking coal ing undertaken by a number of international thin, steeply dipping seams of very high Milpa – A local leader in modernisation coal industry. The company has European is such a great commodity today that it’s firms. For example, Anglo American, Gold- quality coal. It’s been mined for many hun- Milpa is a family company that was founded partners with abundant underground min- very feasible. These projects are not of the man Sachs, Argos and Mitsui have large dreds of years, but on a very small scale and in 1983 and operates three different mines, ing expertise and New Age have the access size that would interest the blue-chip com- land holdings under development. proper mechanization is still to be achieved. transport activities and a port company on to Australian capital markets. In addition, panies, but, for a company of our size, it’s a Not all coal projects are being developed However, small quantities of coking coal the Magdalena River, close to Barranquilla. the company has formed a partnership very good model and we’ve found a number by foreign companies, Carboandes was have been exported. It has been noted for Milpa develops all of the stages needed for with Aurora, a leading supplier of mining of these opportunities,” said Fietz. founded as a family company in 1987. The its high quality and accepted by internation- the coking coal production, including coal and processing equipment and consultancy New Age believes that the potential of company was the original developer in La al steel mills. Camco was founded in 1976 washing and coking. The company’s current services within the Colombian coal sector. mechanization could make a major impact Jagua, later sold to Prodeco. Since 2007, in Bogotá as a trading operation that origi- reserves are around 100 million mt of cok- “We have looked at other commodities on these mines: “If you’ve been to any of ing coal, spread over four mines. Carboandes started to increase its coverage nally supplied steam coal from the center of and projects in other parts of the world, but the coking coal mines here in Colombia, Gary Fietz, managing director, New Age Exploration in the country with mining titles in different the country to its plants as combustion fuel. Carlos Enrique Parra is general manager as of the end of February of this year, the they are using primarily hand labor and are regions. The most important coal project for In 2002, it began exporting coking coal. of the company and explains it is the chal- Colombian coal opportunity has become restricted in the depth that they can go to sar, it’s not going to happen. Everything has the company now is La Rondon in Boyacá. “We have since designed a blend to lenging geological conditions of Colombia’s our focus. We have far greater access to op- as they are basically hauling one ton skips been taken by the big guys. You have to go “It is in the exploration stage and so far it comply with the needs of the steel industry, metallurgical coal deposits that have con- portunities than we do in other parts of the via tractors or trucks. We feel that there is underground. We are targeting underground has had really good results. We already first with the technical aid of the Turkish strained large scale projects. “The geology of world,” said Gary Fietz, managing director an opportunity to come in and demonstrate operations that have so far been left behind. have the environmental license for early steel mills ISDEMIR-ERDEMIR group. This the center of the country is really hard, which at New Age Exploration. how to mechanize and go deeper. The dips Ten years ago, these areas were not so in- mining which means that we can continue opened the European market to us and we has limited the development of big mines The groups formalized a joint venture here are 20-30 degrees plus and the seam teresting but, at current prices, they certain- with the exploration operations and at the have since started to supply some of the big- with a production of 1 million mt/y. But we agreement whereby anything that is ac- thicknesses are 2-2.5 m, but we believe ly are interesting. But yes, it is difficult to go same time we can have some production,” gest steel mills in the world,” said Guillermo have seen that with the mining blocks that quired is 90% New Age Exploration and that by using our skills in short haul min- to Cesar or Guajira where the major players said María Victoria Saade Mejía, general Camacho Fajardo, president of Camco. we have in the region we have proved that 10% Aurora. This year, the company has ing and wash backs that we can make it are that have unlimited financial capabili- manager of Carboandes. Camco has since sought to try to build a a medium mining can be developed there.” rapidly built a substantial portfolio of Co- viable,” said Donald Garner, vice president ties. But, if you look close enough, opportu- brand for their Colombian coke blend. “We To overcome this challenge, Milpa have lombian coal assets which now include for business development at New Age. nities still exist,” said Carlos Felipe Barrera, Metallurgical coal have focused our efforts into producing the investigated all available techniques. “We hard coking coal concessions 40 km north- Their partner in this operation believes project manager, Aurora Energy. Despite Colombia’s exceptionally high qual- best possible blend of coal from the pro- have been working really hard to modern- east of Bogotá in the district of Cundina- this type of opportunity is what is most re- Fietz feels the partnership with Aurora ity deposits of metallurgical grade coal, to ducing areas of Cundimarca, Boyacá and ize the entire production process in our marca and export thermal coal concessions alistically available to new entrants. “If you has been critical to their success to date in date, coking coal and coke production has Santander. We have proven with our blend company. The first thing we started to work in the Cesar Basin. are thinking about open cast mining in Ce- Colombia and that finding the right partner on was changing the exploitation methods, with a stronger hydraulic support, and better exploration processes. We also replaced the washing plants which are now more efficient,” Parra said. The budget for the modernization process is US$120 million, distributed in the improvement of mining, coal washing, coking and the port. Right now, the company exports 500,000 mt/y of coke and 200,000 mt/y of coking coal. In 2012, Milpa expects to be able to produce an additional 240,000 mt/y of coal. When all of the announced investments come into fruition, Milpa wants to reach a production of 1 million mt/y of coke and 500,000 mt/y of coking coal. Parra feels that as these techniques become more com- mon in Colombia, the metallurgical coal industry may become increasingly significant. “We believe this is going to be a big industry, but it may not equal the coal production from the north region of the country. We are sure that the coking coal has an important growth potential,” he said. The company continues to be open to new advances and to consider partnerships where it could benefit their company. “We are definitely interested in a partnership with companies that can work with us for the development and improvement of our operations,” said Parra.

106 E&MJ • DECEMBER 2011 www.e-mj.com www.e-mj.com E&MJ • DECEMBER 2011 107 Mining IN COLOMBIA Mining IN COLOMBIA

106 E&MJ • DECEMBER 2011 www.e-mj.com www.e-mj.com E&MJ • DECEMBER 2011 107 Mining IN COLOMBIA Mining IN COLOMBIA is vital to operating effectively here as a “Colombian coke is not sold on the inter- to build a second railroad line, parallel to sive but also has environmental effects that answer to the delays that Colombia has. foreign resources company. “The network national market in a big way and its price the one that already exists. The objective should be considered,” said Carlos Gustavo I think that once our project is ready and of contacts that Aurora has across all of is usually discounted heavily,” said Carlos of this project is to provide all shareholders Arrrieta, former attorney general and current other infrastructure projects begin, there are Colombia’s coal basins, through its mining J. Soto, president of Colombia Clean Power from the coal industry the service needed to partner at Arrieta, Mantilla & Asociados, a going to be more investments in the Colom- equipment business, has been an enormous SAS, CERX’s operative company in Colom- transport their production. law firm that specializes in oil and gas, min- bian mining sector,” said Fernando Sancle- bonus for us. They know the people and bia. “One of the issues that Colombia’s coke Expansion of the Fenoco railway capac- ing and infrastructure issues. mente Alzate, president of Puerto Brisa. have relationships and have pointed us to industry has suffered from to date is that ity from the current 45-50 million mt/y to In addition to rail investments, many He feels projects like Puerto Brisa are a number of good opportunities. Their repu- the quality is very variable. Producers are 80 million mt/y is expected to be completed companies are also investing in river barg- critical for the future of the mining sector. tation has allowed us to close negotiations using antiquated technologies and the qual- by 2012. The cost of expanding the capac- ing operations. As the Magdalena River is “Colombia has big and important mining re- very quickly,” said Fietz. ity of input is not well controlled. What we ity will be shared pro-rata by shareholders. navigable by barge well into the country’s serves and the only way to promote invest- plan to do is to bring in a system that is Fenoco has spent US$120 million to date, interior, there is the possibility of barg- ments in exploration operations is to have CERX - Building Colombia’s first modern more sophisticated, efficient and quality with total costs expected to be US$250 ing operations that are far more economic the right infrastructure,” he said. coking plant controlled than current standards. It will million. “In five years, we want to have than trucking. International trading houses Boris Cordovez is a well known and re- Colombia Energy Resources, Inc. (CERX) is give us a significant advantage.” the double line of the railroad finished and such as Mercuria and Trafigura see this as spected figure in the Colombian mining sec- an emerging coal mining and clean energy CERX is expending significant amounts of maybe we will be thinking of a third. We a useful entry point for investment into the tor, having played a role in a number of the Jaime Olivella, president, Fenalcarbon technology company. They currently control capital this year and next to develop metal- also would have investments for US$60 to Colombian market. In addition, many local country’s mining operations. With his son, just under 12,000 hectares in Colombia lurgical coal reserves and begin operations at was forced to abandon most of its internal US$80 million in technology, train man- and international investors are developing Camilo Cordovez, Boris founded C&ENER and hope to be operating in two main loca- multiple mines. Within the next two years, infrastructure around forty years ago. This agement and railway maintenance. We also dry bulk port facilities along the length of SA as a holding company that has explored tions; Santander and Boyacá. CERX’s intention is to have their first coke is a particular constraint to its coal export would like to double our transport capacity the river. more than 800,000 hectares of Colombia In Boyacá, CERX is in the process of plant up and running and to have their mines ambitions. to 96 million mt/y,” said Burrowes. joint ventures with large and small compa- defining large resources at Otanche and filling its capacity. “The next stage that we Fenalcarbon is Colombia’s National Fed- Adding port capacity nies, including Vale and options agreements Rukú and is simultaneously developing sev- envision for the long term, is to develop an eration of Coal Producers. Its president, Jai- Carare conundrum Colombian ports are also nearing capacity. with Votorantim and Rio Tinto among others. eral mines that are going into operation by energy park to process both thermal and me Olivella, fears that infrastructure could One project that is most of interest to Co- Aware of this opportunity, a number of for- C&ENER is developing gold opportuni- the end of the year on these properties. In coking coal into other products like metha- be the one Achilles’ heel in the way of Co- lombia’s metallurgical coal miners is the eign and domestic developers are trying to ties and moving forward on the flotation of addition, CERX is developing a third prop- nol, urea, or electrical power,” said Soto. lombia’s enormous export potential. Carare line. This, long proposed, rail de- get port projects off the ground. However, their coal exploration vehicle, Colombian erty, Boavita, that will be operative early “Infrastructure is not just a problem for velopment will connect the Andean interior like in rail, securing the finance for multi- Mineral Resources Ltd. Colombian Mineral in 2012. These mines will supply coal to Infrastructure constraints – mining; it is an issue for all economic sectors with its Caribbean ports. user ports is difficult. Resources Ltd. has a total of 25 mining Colombia’s first modern coking plant, at Coal’s Achilles’ heel because it is delaying the development of in- The project aims to link the Carare rail Obtaining the necessary permits in a titles in Colombia where an initial 604 mil- 200,000 mt/y, that CERX hopes to have in While Colombia sits in an enviable location, dustries. I think it is the biggest challenge network with the Ferrocarril Central rail- country that is keen to protect its coastal lion mt of coal in a resource category were operation within two years. CERX controls with port access to both Pacific and Atlan- that Colombia has for the near future to sup- way, forming a network that would trans- tourism is also a challenge. A new govern- estimated, including steam and coking coal. more than 160 million mt of coal resources. tic oceans, the reality is that the country port the exportation of the mining production port an estimated 30 million mt/y of coal. ment regulation requires direct loading into However, C&ENER are also advancing of the center of Colombia,” he said. The rail line will start in central Cundina- ships and eliminating the usage of barges to their own infrastructure project. “Through my Currently, infrastructure costs in Colom- marca department, pass through Boyacá limit the environmental impact. This means father’s experience in a number of projects bia can exceed the market price of coal. and Santander departments, and eventually many ports need to modify their port facili- in Colombia, we are well aware of the in- Naturally, this is a major deterrent to devel- reach the south of Cesar department before ties. This is an expensive investment and frastructure constraints that endanger future opment, particularly for low-value thermal connecting with the northern coast. it must be made by 2014 or the ports will coal development in Colombia. Because of coal projects. Santos has stated his intention It has been a complex project that was probably face a large nmber of legal issues. that we began to explore possible solutions to invest US$55 billion in infrastructure over first proposed in the early 1980s. The cen- Puerto Brisa is one of the largest and and opportunities and developed the Puerto the next ten years. However, the question is tral part of Colombia is very important for most ambitious port projects in Colombia Sinu and La Prosperidad rail corridor solu- where such investment is best placed. future coal production, but even though it is right now. It is being developed in the north tion,” said Camilo Cordovez. “Puerto Sinu significant, it is not currently large enough region of the country in a town called La Dib- will bring Post-panamax capacity to Colom- Getting the rail network back on track to justify the level of investment required. ulla in the department of La Guajira in an bia’s Atlantic coast, with excellent inland The once extensive Colombian rail network is “If you look at the levels of current pro- area of 1.363 hectares. The first stage of the connectivity, including our proposed La now all but extinct. Major coal projects near duction in the Andean range, there is simply project should be ready in the second quarter Prosperidad rail line. This will travel 422 km the coast, such as Cerrejón and Drummond, not enough to finance on reasonable terms of 2012. With this first platform the port will inland to the heart of Antioquia and the coal invested in their own rail and port infrastruc- a train like Carare. However, the alterna- be able to transport 30 million mt/y. producing interior which is crying out for in- ture. Other coal mines in the north of the tive, transport by road, is not only expen- “We think Puerto Brisa is an immediate frastructure solutions.” country are served by Fenoco, which runs from Chiriguana to Santa Marta. Fenoco was created as an administrator of the railroad system of the north of Colom- bia in 2000. The company is owned by a consortium of coal producers from the region that includes Drummond, Prodeco, Vale and Carboandes. “Our transport capacity is growing every year thanks to more efficient processes and the best technology. This year we could transport 48 million mt of coal, which is really close to our total capacity,” said Pe- ter Burrowes, president of Fenoco. In 2006, the company agreed with the government to invest US$250 million Cerrejón invested in its own rail infrastructure. (Photo courtesy of Cerrejón) Camilo & Boris Cordovez, founders, C&ENER SA

108 E&MJ • DECEMBER 2011 www.e-mj.com www.e-mj.com E&MJ • DECEMBER 2011 109 Mining IN COLOMBIA Mining IN COLOMBIA is vital to operating effectively here as a “Colombian coke is not sold on the inter- to build a second railroad line, parallel to sive but also has environmental effects that answer to the delays that Colombia has. foreign resources company. “The network national market in a big way and its price the one that already exists. The objective should be considered,” said Carlos Gustavo I think that once our project is ready and of contacts that Aurora has across all of is usually discounted heavily,” said Carlos of this project is to provide all shareholders Arrrieta, former attorney general and current other infrastructure projects begin, there are Colombia’s coal basins, through its mining J. Soto, president of Colombia Clean Power from the coal industry the service needed to partner at Arrieta, Mantilla & Asociados, a going to be more investments in the Colom- equipment business, has been an enormous SAS, CERX’s operative company in Colom- transport their production. law firm that specializes in oil and gas, min- bian mining sector,” said Fernando Sancle- bonus for us. They know the people and bia. “One of the issues that Colombia’s coke Expansion of the Fenoco railway capac- ing and infrastructure issues. mente Alzate, president of Puerto Brisa. have relationships and have pointed us to industry has suffered from to date is that ity from the current 45-50 million mt/y to In addition to rail investments, many He feels projects like Puerto Brisa are a number of good opportunities. Their repu- the quality is very variable. Producers are 80 million mt/y is expected to be completed companies are also investing in river barg- critical for the future of the mining sector. tation has allowed us to close negotiations using antiquated technologies and the qual- by 2012. The cost of expanding the capac- ing operations. As the Magdalena River is “Colombia has big and important mining re- very quickly,” said Fietz. ity of input is not well controlled. What we ity will be shared pro-rata by shareholders. navigable by barge well into the country’s serves and the only way to promote invest- plan to do is to bring in a system that is Fenoco has spent US$120 million to date, interior, there is the possibility of barg- ments in exploration operations is to have CERX - Building Colombia’s first modern more sophisticated, efficient and quality with total costs expected to be US$250 ing operations that are far more economic the right infrastructure,” he said. coking plant controlled than current standards. It will million. “In five years, we want to have than trucking. International trading houses Boris Cordovez is a well known and re- Colombia Energy Resources, Inc. (CERX) is give us a significant advantage.” the double line of the railroad finished and such as Mercuria and Trafigura see this as spected figure in the Colombian mining sec- an emerging coal mining and clean energy CERX is expending significant amounts of maybe we will be thinking of a third. We a useful entry point for investment into the tor, having played a role in a number of the Jaime Olivella, president, Fenalcarbon technology company. They currently control capital this year and next to develop metal- also would have investments for US$60 to Colombian market. In addition, many local country’s mining operations. With his son, just under 12,000 hectares in Colombia lurgical coal reserves and begin operations at was forced to abandon most of its internal US$80 million in technology, train man- and international investors are developing Camilo Cordovez, Boris founded C&ENER and hope to be operating in two main loca- multiple mines. Within the next two years, infrastructure around forty years ago. This agement and railway maintenance. We also dry bulk port facilities along the length of SA as a holding company that has explored tions; Santander and Boyacá. CERX’s intention is to have their first coke is a particular constraint to its coal export would like to double our transport capacity the river. more than 800,000 hectares of Colombia In Boyacá, CERX is in the process of plant up and running and to have their mines ambitions. to 96 million mt/y,” said Burrowes. joint ventures with large and small compa- defining large resources at Otanche and filling its capacity. “The next stage that we Fenalcarbon is Colombia’s National Fed- Adding port capacity nies, including Vale and options agreements Rukú and is simultaneously developing sev- envision for the long term, is to develop an eration of Coal Producers. Its president, Jai- Carare conundrum Colombian ports are also nearing capacity. with Votorantim and Rio Tinto among others. eral mines that are going into operation by energy park to process both thermal and me Olivella, fears that infrastructure could One project that is most of interest to Co- Aware of this opportunity, a number of for- C&ENER is developing gold opportuni- the end of the year on these properties. In coking coal into other products like metha- be the one Achilles’ heel in the way of Co- lombia’s metallurgical coal miners is the eign and domestic developers are trying to ties and moving forward on the flotation of addition, CERX is developing a third prop- nol, urea, or electrical power,” said Soto. lombia’s enormous export potential. Carare line. This, long proposed, rail de- get port projects off the ground. However, their coal exploration vehicle, Colombian erty, Boavita, that will be operative early “Infrastructure is not just a problem for velopment will connect the Andean interior like in rail, securing the finance for multi- Mineral Resources Ltd. Colombian Mineral in 2012. These mines will supply coal to Infrastructure constraints – mining; it is an issue for all economic sectors with its Caribbean ports. user ports is difficult. Resources Ltd. has a total of 25 mining Colombia’s first modern coking plant, at Coal’s Achilles’ heel because it is delaying the development of in- The project aims to link the Carare rail Obtaining the necessary permits in a titles in Colombia where an initial 604 mil- 200,000 mt/y, that CERX hopes to have in While Colombia sits in an enviable location, dustries. I think it is the biggest challenge network with the Ferrocarril Central rail- country that is keen to protect its coastal lion mt of coal in a resource category were operation within two years. CERX controls with port access to both Pacific and Atlan- that Colombia has for the near future to sup- way, forming a network that would trans- tourism is also a challenge. A new govern- estimated, including steam and coking coal. more than 160 million mt of coal resources. tic oceans, the reality is that the country port the exportation of the mining production port an estimated 30 million mt/y of coal. ment regulation requires direct loading into However, C&ENER are also advancing of the center of Colombia,” he said. The rail line will start in central Cundina- ships and eliminating the usage of barges to their own infrastructure project. “Through my Currently, infrastructure costs in Colom- marca department, pass through Boyacá limit the environmental impact. This means father’s experience in a number of projects bia can exceed the market price of coal. and Santander departments, and eventually many ports need to modify their port facili- in Colombia, we are well aware of the in- Naturally, this is a major deterrent to devel- reach the south of Cesar department before ties. This is an expensive investment and frastructure constraints that endanger future opment, particularly for low-value thermal connecting with the northern coast. it must be made by 2014 or the ports will coal development in Colombia. Because of coal projects. Santos has stated his intention It has been a complex project that was probably face a large nmber of legal issues. that we began to explore possible solutions to invest US$55 billion in infrastructure over first proposed in the early 1980s. The cen- Puerto Brisa is one of the largest and and opportunities and developed the Puerto the next ten years. However, the question is tral part of Colombia is very important for most ambitious port projects in Colombia Sinu and La Prosperidad rail corridor solu- where such investment is best placed. future coal production, but even though it is right now. It is being developed in the north tion,” said Camilo Cordovez. “Puerto Sinu significant, it is not currently large enough region of the country in a town called La Dib- will bring Post-panamax capacity to Colom- Getting the rail network back on track to justify the level of investment required. ulla in the department of La Guajira in an bia’s Atlantic coast, with excellent inland The once extensive Colombian rail network is “If you look at the levels of current pro- area of 1.363 hectares. The first stage of the connectivity, including our proposed La now all but extinct. Major coal projects near duction in the Andean range, there is simply project should be ready in the second quarter Prosperidad rail line. This will travel 422 km the coast, such as Cerrejón and Drummond, not enough to finance on reasonable terms of 2012. With this first platform the port will inland to the heart of Antioquia and the coal invested in their own rail and port infrastruc- a train like Carare. However, the alterna- be able to transport 30 million mt/y. producing interior which is crying out for in- ture. Other coal mines in the north of the tive, transport by road, is not only expen- “We think Puerto Brisa is an immediate frastructure solutions.” country are served by Fenoco, which runs from Chiriguana to Santa Marta. Fenoco was created as an administrator of the railroad system of the north of Colom- bia in 2000. The company is owned by a consortium of coal producers from the region that includes Drummond, Prodeco, Vale and Carboandes. “Our transport capacity is growing every year thanks to more efficient processes and the best technology. This year we could transport 48 million mt of coal, which is really close to our total capacity,” said Pe- ter Burrowes, president of Fenoco. In 2006, the company agreed with the government to invest US$250 million Cerrejón invested in its own rail infrastructure. (Photo courtesy of Cerrejón) Camilo & Boris Cordovez, founders, C&ENER SA

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Colombia’s Other Commodities Environment and Community Project development and exploration investment Protecting and enhancing Colombia’s natural world Nickel mining in Colombia. “Because of the secu- lombia is now a significant part of its port- Colombia has six nickel deposits with mea- rity issues, we had a lot of delays compared folio: “While uranium mining is not going and unique cultural mix sured reserves totalling 37.8 million mt and with the rest of the region, but now that to reach the scale of coal and gold projects indicated reserves of 46.48 million mt, ac- things are better, I think we have a great in Colombia, I think that there is certainly cording to the government. BHP Billiton’s scenario and a good future,” he said. the potential for uranium mining to play a Cerro Matoso mine, which is located in the “The deposit that we are exploiting right significant role in the mining sector. I do department of Cordoba, is the only produc- now is roughly 1.5 million mt. We own think there is the potential for world class ing nickel operation in Colombia. Cerro Ma- 8,000 hectares and we think that in our uranium discoveries in Colombia,” said Dr. toso has the highest grade lateritic nickel properties there is a lot of potential to find Richard Spencer, CEO of U308 Corp. deposits in the world and produces around many more new deposits. We are investing Berlin was originally explored in the 4% of the world’s nickel and 10% of the in a new exploration program in our prop- 1970s and 1980s. The available historical world’s ferronickel. erties with a Peruvian-Canadian company information was a huge advantage to U308 The operation is the largest nickel mine called Atico,” said Gabriel Ramírez, techni- in indicating what to expect and highlight- in Latin America and combines a later- cal manager at Minera El Roble. ing some of the points to concentrate on. itic nickel ore deposit with a low-cost fer- CuOro is a base and precious metals ex- “Although this data couldn’t be used in a ronickel smelter. High-purity, low-carbon ploration and development company whose 43-101, it was still very important in our Ashmont Resources president, Mario Escobar, interacts with a children from Colombia’s Pacific coast. (Photo courtesy of Ashmont Resources) ferronickel granules are produced by the flagship Santa Elena copper project is a por- decision to go ahead with the project and, to smelter. Mining commenced in 1980 and phyry and poly-metallic deposit located in some extent, guiding our exploration,” said nickel production started in 1982, peak the Antioquia Batholith district. It has the Dr. Hugo Bastias, executive vice president Despite its relatively small size, Colombia is people and the government just wouldn’t and Brazil that have shown that extractive production of 50,800 mt/y of contained option to earn 100% on the project, which at U308. The company is now focused on ranked among the most biologically diverse support activities that put in danger the industries can not only live alongside agri- nickel was achieved in 2007. comprises more than 1,200 hectares. producing the 43-101 for the project this countries in the world. Its rich ecosystems sustainability of the country,” said César culture, but can complement agro-industry Cerro Matoso employs more than 900 The initial drilling program has been year. They have two drill rigs onsite and will range from tropical rainforests to high-alti- Díaz, executive director of the Cámara Co- growth dramatically. “Chile’s agribusiness Colombians and the mine is estimated to started and returned near surface high be conduct more than 30,000 m of infill tude moorlands to the open sabana, valley lombiana de Minería. success is based on the fiscal resources, have a 42 year reserve life. BHP Billiton grade VMS mineralization in the first six drilling. Trenching has verified the historic of ponds and wetlands. Although Colombia’s large coastal coal the technological developments and the in- is confident that it can expand this signifi- diamond drill-holes. “Before the main drill data and highlights the upside of the project As with many nations, two industries operations and nickel mine at Cerro Matoso frastructure improvements provided by their cantly through the building of a third and rigs came on site we had a held unit to get beyond the historic resource. that Colombians hold close to their hearts are well established, there is still a feeling copper industry. In terms of biodiversity, fourth processing line and a heap leaching an understanding of some of the geology. Beyond uranium, the sediment-hosted are agriculture and tourism. A balance that Colombia is not a country accustomed mining and environmental development can operation. We found very interesting results with some deposit also has the strength of being a needs to be struck between the need of the to mining. “We don’t have a mining culture and will successfully co-exist..,” he said. After extensive negotiations, in 2005 core sections running up to 9.5% copper,” mixture of commodities such as vanadium, country to exploit its natural resources and or a mining language. The international in- “This perception that the country needs BHP Billiton renegotiated the original con- said Robert Sedgemore, president and CEO phosphate and rare earth mineralization. the obligation to protect the environment. terest is now huge and is coming in volumes to decide whether to go for mining or ag- tract to explore and exploit the resources at of CuOro. These represent very interesting options for It is now globally recognized that HSE that have never come before. It is coming to riculture; mining or water; mining or sus- Cerro Matoso. However, that contract ex- One of the features that excites Sedge- co-products and by-products that could rep- and community relations have gone from vulnerable ecosystems and vulnerable com- tainable development is absolutely wrong. pires in September 2012. The company has more about Santa Elena is its fantastic resent a basket of green commodity devel- soft issues to a reliable indicator of project munities and a country in conflict,” said Mining can be an ‘addition to’, and not an requested a 30 year extension, but as the infrastructure, which would be of huge opment. Being the first and mining a new success. “The environmental protection Felipe Arango, director of BSD Consulting. ’instead of’. Mining is not there to compete sole producer of nickel in Colombia, nego- benefit were it to go into production. ”We commodity for the country, always has its and the community relations are keys for BSD Consulting is sustainability man- with other vocations for Colombia but to tiations over the royalties and the rent that have a paved road right to the gate of our associated challenges acknowledges Dr. the development of mining activities in agement consultant firm for various sectors, compliment them,” said Herz. BHP Billiton should now pay has now been property. In the area we have a switch Spencer. “I certainly expect challenges will Colombia. Without good practices in this focused on providing knowledge and solu- settled, clearing the way for a renewal of the yard and power through two nearby hy- arise as we move forward, but I don’t see industry it would be impossible to think of tions for sustainable development. The firm Communication between company’s contract to operate. droelectric plants. Water supply is within anything insurmountable.” future opportunities in this sector because has prioritized mining because it is a sector ministries 5 km,” he said. which hasn’t always fitted comfortably with Decisions regarding factors critical to the Copper The first stage-drilling program is sustainable development. continued success of Colombia’s mining Although gold is obviously a much higher 25,000 m and the company to date has “We have to work on the image of min- sector involve the Ministry of Transport, the priority for most explorers, Colombia also completed a total of twenty drill holes for a ing in Colombia because right now, must Ministry of Defence, the Ministry of the Inte- offers exceptional copper development op- total of more than 4,000 m. With approxi- Colombians don’t think it is a good indus- rior and Justice, the Ministry of Social Pro- portunities. mately US$20 million in the treasury, the try for development. What they don’t know tection and the Ministry of the Environment. Minera El Roble is a private company company has also expressed an interest to is that companies like us are not illegal Colombia’s mining sector has com- that has been producing copper concen- look for additional opportunities. and are not using the techniques that have plained over the slow decision-making trates since 1990. The mine is located in hurt the environment in the last years,” process for licenses and, at times, mis- the department of Choco, near to the border Uranium said Mario Escobar, president and CEO of communication between Ministries has with Antioquia. It has an installed capacity In addition to its better known assets, Co- Ashmont Resources, a developer that is been blamed. “There is currently a lot of of 96,000 mt/y and 6,000 mt of concen- lombia also holds promise as a source of working in some of Colombia’s most deli- confrontation between the Environmental trates per month. uranium. U308 Corp. is a Canadian explo- cate communities. Minister and the Mining Minister about the Guillermo Gaviria, president of Minera ration company that bases its strategy on Rafael Herz, president of AngloGold legislation and the objectives that need to El Roble, is a legendary industry figure that Latin America’s potential as an untapped César Díaz, executive director, Cámara Ashanti Colombia, believes Colombia should be shared. But so far, there has not been has no doubt that this is the moment for source of uranium. Within that strategy, Co- Robert Sedgemore, president and CEO, CuOro Colombiana de Minería look to countries like Peru, Chile, Argentina much discussion and the victims in this

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110 E&MJ • DECEMBER 2011 www.e-mj.com www.e-mj.com E&MJ • DECEMBER 2011 111 Mining IN COLOMBIA Mining IN COLOMBIA conflict are the companies, because they becoming more active and so communi- “If you have the community support, this “The artisanal miners get stuck in the middle of this process and cating effectively with these groups will be will lead to local government support and are a challenge for Colom- their environmental licenses become in- key to obtaining a license to operate in the so on up the chain of governance. The com- bia. Wherever we step, or creasingly difficult to acquire. It is another long term. A government license can be munity has to welcome you in order to be wherever we begin develop- example of the need for clear policies for lost in a moment if a society decides to successful and sustainable. We’ve benefited ment, we see ourselves as the sector,” said Tamara Romero Restrepo, mobilize against a project. Forward look- tremendously from this emphasis; wherever a small part of the solution. general manager of Alianza, a Medellín ing investors should be worried about what we go, people welcome us and the opportu- Artisanal miners use a very based law firm and consultancy that spe- kind of social and environmental manage- nity to work with us,” he said. low level of technology and cializes in the mining industry. ment systems projects have,” he said. “It a high level of mercury. I’ve Environmental protection laws need to is vital to be honest with communities and Incorporating illegal miners heard a statistic that one be more clearly developed. Confidence was only offer the truth at all times, even if At least one third of the country’s gold fifth of the world’s mercury shaken in 2010, when changes to the min- it is unpopular,” said Antioquia’s former production comes from illegal operations. consumption is in Colom- ing code appeared to ban mining in the coun- secretary for mines, Nicolás López Correa. With roughly 3,600 illegal mines operat- bia, and that’s all in the try’s Paramos ecosystems. These are high- “If you are acquiring land that will impact ing nationwide according to an official es- processing of alluvial and Nicolás López Correa, Antioquia’s former secretary elevation valleys of wet grasslands in the for mines communities you must offer them viable timate, 70% of Colombian gold production vein gold-hosting rock. All of Andes that contain high levels of biodiversity alternatives, otherwise you may damage is informal and causes major environmental the mercury ends up in the Drill equipment being delivered by mule to reduce environmental with locals to maximize local employment, and are home to various endangered species the overall economy of the region. This is damage. Illegal mining accounts for nearly water system, in the creeks, footprint (Photo courtesy of Trident Gold) as well as flora and fauna found only in that provide proper compensation for displaced in no one’s interest.” 1 billion pesos (US$600,000) in lost royal- rivers and food chain. This area. This prompted shares of Vancouver- peoples, and diminish the impact of baleful López also emphasizes the importance ties and tax revenue in Colombia, reported has devastating effects on the health of the are and what our way of working is. It’s im- based Greystar Resources to plummet, as damages to the area. of following the correct procedures and Portafolio. people,” said Timothy Russell, president possible to say that we won’t change a com- much of Greystar’s flagship Angostura gold Felipe Arango, of BSD consulting, sees working closely with the authorities. “Re- Colombia has always had an informal and CEO of Trident Gold Corp. munity, that’s inevitable, but the challenge project is in one of these paramos. this as a means of adding value. “It is a way gional and local authorities have their own gold sector, but because of the incredible in- Trident Gold was founded in June 2010 is to make a positive, lasting change that of creating value. If you have established plans for how to best develop an area and crease in the price of gold, it now has illegal as a gold exploration company sourc- fits in with the specific needs and wants of Community relations good relations with your stakeholders and mining companies must work within that. groups using the small miners for finance ing quality early stage projects in Colom- the community,” Russell said. Colombia sometimes gives the impression you are adding environmental and social If you work together the results can be on and to launder their money. “It would be bia. Trident has in excess of 50,000 Ha of Russell believes Trident is extremely well of a country that is trying to decide whether value, you will have more stable operations, a shorter timescale and a larger benefit for senseless and naïve to try to eradicate small highly prospective tenements within some placed to take advantage of the opportuni- or not it wants to become a mining country. access to more markets and smarter inves- both parties.” scale illegal mining. It is a social problem of Colombia’s emerging gold zones. ties that exist in Colombia. “We have strong Dialogue is the key to alignment and even- tors that will be analyzing those risks.” It is something that most companies see and you cannot eradicate social problems. Russell sees the involvement of artisanal relationships in government, industry and tual project success. Companies at all stages He emphasizes how stakeholders can as a priority. “We place a major emphasis You have to do whatever is necessary to try miners not as a challenge but rather as a la- the community, and a very strong technical of mine exploration and development must often emerge as a far more important ally on bringing community involvement with to incorporate those people into a more for- bor pool that works hard and wants to work. team. We have the ability to finance and we consider how to develop plans for working than big government. “Stakeholders are mining,” said Paul Dias, CEO of Minatura. mal approach,” said Arrieta. “It’s just a matter of communicating who we look forward to strong sustained growth.”

112 E&MJ • DECEMBER 2011 www.e-mj.com www.e-mj.com E&MJ • DECEMBER 2011 113 Mining IN COLOMBIA Mining IN COLOMBIA conflict are the companies, because they becoming more active and so communi- “If you have the community support, this “The artisanal miners get stuck in the middle of this process and cating effectively with these groups will be will lead to local government support and are a challenge for Colom- their environmental licenses become in- key to obtaining a license to operate in the so on up the chain of governance. The com- bia. Wherever we step, or creasingly difficult to acquire. It is another long term. A government license can be munity has to welcome you in order to be wherever we begin develop- example of the need for clear policies for lost in a moment if a society decides to successful and sustainable. We’ve benefited ment, we see ourselves as the sector,” said Tamara Romero Restrepo, mobilize against a project. Forward look- tremendously from this emphasis; wherever a small part of the solution. general manager of Alianza, a Medellín ing investors should be worried about what we go, people welcome us and the opportu- Artisanal miners use a very based law firm and consultancy that spe- kind of social and environmental manage- nity to work with us,” he said. low level of technology and cializes in the mining industry. ment systems projects have,” he said. “It a high level of mercury. I’ve Environmental protection laws need to is vital to be honest with communities and Incorporating illegal miners heard a statistic that one be more clearly developed. Confidence was only offer the truth at all times, even if At least one third of the country’s gold fifth of the world’s mercury shaken in 2010, when changes to the min- it is unpopular,” said Antioquia’s former production comes from illegal operations. consumption is in Colom- ing code appeared to ban mining in the coun- secretary for mines, Nicolás López Correa. With roughly 3,600 illegal mines operat- bia, and that’s all in the try’s Paramos ecosystems. These are high- “If you are acquiring land that will impact ing nationwide according to an official es- processing of alluvial and Nicolás López Correa, Antioquia’s former secretary elevation valleys of wet grasslands in the for mines communities you must offer them viable timate, 70% of Colombian gold production vein gold-hosting rock. All of Andes that contain high levels of biodiversity alternatives, otherwise you may damage is informal and causes major environmental the mercury ends up in the Drill equipment being delivered by mule to reduce environmental with locals to maximize local employment, and are home to various endangered species the overall economy of the region. This is damage. Illegal mining accounts for nearly water system, in the creeks, footprint (Photo courtesy of Trident Gold) as well as flora and fauna found only in that provide proper compensation for displaced in no one’s interest.” 1 billion pesos (US$600,000) in lost royal- rivers and food chain. This area. This prompted shares of Vancouver- peoples, and diminish the impact of baleful López also emphasizes the importance ties and tax revenue in Colombia, reported has devastating effects on the health of the are and what our way of working is. It’s im- based Greystar Resources to plummet, as damages to the area. of following the correct procedures and Portafolio. people,” said Timothy Russell, president possible to say that we won’t change a com- much of Greystar’s flagship Angostura gold Felipe Arango, of BSD consulting, sees working closely with the authorities. “Re- Colombia has always had an informal and CEO of Trident Gold Corp. munity, that’s inevitable, but the challenge project is in one of these paramos. this as a means of adding value. “It is a way gional and local authorities have their own gold sector, but because of the incredible in- Trident Gold was founded in June 2010 is to make a positive, lasting change that of creating value. If you have established plans for how to best develop an area and crease in the price of gold, it now has illegal as a gold exploration company sourc- fits in with the specific needs and wants of Community relations good relations with your stakeholders and mining companies must work within that. groups using the small miners for finance ing quality early stage projects in Colom- the community,” Russell said. Colombia sometimes gives the impression you are adding environmental and social If you work together the results can be on and to launder their money. “It would be bia. Trident has in excess of 50,000 Ha of Russell believes Trident is extremely well of a country that is trying to decide whether value, you will have more stable operations, a shorter timescale and a larger benefit for senseless and naïve to try to eradicate small highly prospective tenements within some placed to take advantage of the opportuni- or not it wants to become a mining country. access to more markets and smarter inves- both parties.” scale illegal mining. It is a social problem of Colombia’s emerging gold zones. ties that exist in Colombia. “We have strong Dialogue is the key to alignment and even- tors that will be analyzing those risks.” It is something that most companies see and you cannot eradicate social problems. Russell sees the involvement of artisanal relationships in government, industry and tual project success. Companies at all stages He emphasizes how stakeholders can as a priority. “We place a major emphasis You have to do whatever is necessary to try miners not as a challenge but rather as a la- the community, and a very strong technical of mine exploration and development must often emerge as a far more important ally on bringing community involvement with to incorporate those people into a more for- bor pool that works hard and wants to work. team. We have the ability to finance and we consider how to develop plans for working than big government. “Stakeholders are mining,” said Paul Dias, CEO of Minatura. mal approach,” said Arrieta. “It’s just a matter of communicating who we look forward to strong sustained growth.”

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“We then opened our current lab in Bar- gies. “Colombia has a huge potential in the ranquilla 15 years ago, and have been development and growth of its mining indus- Colombian Mining Services steadily expanding our capabilities at that try. There is increasing demand for our prod- lab to a full service offering. A few years ucts and we have seen that our local pres- Local and international players see a great new opportunity ago, we opened a preparation lab for hard ence is very well received and appreciated, rock samples in Medellín. In addition, we and our laboratory and mobile solutions are also operate several on-site laboratories for unique, so that is an advantage,” said Patri- Like all countries with an emergent min- The new arrivals are bringing new tech- Drill demand mining companies here. Our mineral divi- cio Jaime, business development manager ing industry, Colombia is keen to develop nologies and new standards that can ben- As an exploration play, with projects that sion represents around half of the revenues for natural resources, South America at FEI. a mining services sector to complement its efit miners and explorers and are forcing are now moving into feasibility phases, the of the company. We are going through an In Colombia, FEI has worked with local resources and broaden its economic bene- local providers to become internationally need for extensive drilling campaigns is amazing period of growth, growing around distributor BEL for more than ten years to fit. As the industry is still relatively young, competitive. “With the arrival of new invest- obvious. A number of internationally recog- 35% a year,” he said. provide the hardware support to their cus- most mining services are not well estab- ments, there are also many services com- nized drilling companies have entered this The company has clearly identified this tomers. Carlos Villamil, manager of the lished; certainly not on the scale prepared panies coming to Colombia. For that reason market including Kluane, Logan, Major and as a major market and is currently investing electron microscopy division at BEL, agrees Globexplore. that the market is in an interesting time: to meet current demand. our main purpose is to improve our services Pedro Cano, president, Kluane Drilling Colombia around US$7 million this year in Colombia. Innovation is one of the five priorities and make them as good as the standards Steve Mundle, of Logan Drilling, first vis- “This will allow us to build two new mineral “There are lots of resources yet to be de- for economic growth expressed by Presi- of international firms. In that way, we are ited the country in September 2009 to see and start drilling again, whereas it can take labs, including a complete gold metallurgi- veloped across the entire country. This is dent Santos. The government is trying to open to work in associations with compa- if potential clients were interested in drilling several days here because everything has to cal lab and another coal lab. We will also the time for mining to grow, and that’s why incentivize technology transfers with tax nies that arrive in Colombia,” said Gonzalo services. “We made the decision to set up be taken apart,” said Mundle. build a new environmental lab. We have we are very interested in being part of this breaks on mining equipment. These incen- Escobar, CEO of Geominas, a local leader in an office in December 2009 and by April While Logan has found that the avail- around 50%-55% of the market share here. industry,” he said. tives only make the appeal of including engineering services. 2010 we had equipment here. There were ability and access to equipment has been a Our main strength is quality. Others may be Colombia in an international mining ser- Daniel Sullivan, Latin American mining 25-30 drills when we entered the country, challenge in Colombia in the past, he feels faster, but everyone knows that our results Surveying systems vice company’s portfolio even more invit- trade leader, Austrade, feels it is an excel- many that did not work. Now there are more that the situation is now improving. “We are absolutely reliable. The clients that we As exploration campaigns become more ing.International service companies are lent opportunity for Australia’s mining ser- than 100 drills in Colombia,” Mundle said. used to ship equipment from Canada but work for understand that we do not take sophisticated, the opportunity for other now pouring into the country in to order to vices. “Our supply industry has grown in a Logan Drilling has been a key part of the cost was very high. As our name spread, shortcuts,” Ivan said. services have also been noticed. “When I take advantage of the opportunity. Medel- very strict regulatory environment and we that increase. Logan has 78 employees in suppliers started to approach us. There is The arrival of these labs is leading to lab- arrived nobody was doing geophysics in Co- lín has emerged as a hub, evident from have some leading suppliers in terms of Colombia and six rigs, and by the end of nothing that you cannot manufacture in Co- oratory equipment providers taking a closer lombia and so I saw an opportunity. But, the astronomic growth of its Feria Minera, environmental and safety technology. We 2012 hopes to have 12 rigs. “Our unique lombia and the quality of the workmanship interest in Colombia. FEI develops software it’s been a struggle for the past few years mining expo, held each year. In 2011, can boast some of the world’s leading engi- strength is that we have the most portable and technology is fantastic,” he said. and hardware and provides the application and now for the first time I am starting to it attracted more than 12,000 attendees neering companies such as WorleyParsons, drills that have the deepest drilling capac- Kluane Drilling entered the Colombian support for Automated Mineralogy Solutions have contracts lined up. This has allowed and 280 exhibitors. SKM and Ausenco.” ity. Our drills only take a few hours to move market because of a request from Anglo- using electron microscopy based technolo- me to reinvest in additional equipment and Gold Ashanti. Kluane now operate 34 rigs in Colombia which represents 50% of their business across Latin America. “For many years, drilling companies haven’t come to Colombia because of the security problems here and the investment risk. Despite this, we decided to enter and to commit to this market. We have had very good results, which has kept our business sustainable and now we are experiencing a great surge in demand,” said Pedro Cano, president, Kluane Drilling Colombia.

International laboratory standards Laboratory services is another area experiencing increasing demand. There are two main coal lab companies in Colombia, with major international players such as SGS and Burea Veritas (through Inspectorate) having a presence. In hard rock, there are also a number of options, including SGS, ALS Group, Acme Labs and most recently ActLabs. SGS started working with the mining sector in Colombia around 20 years ago with a contract for Cerrejón. It imple- mented the first coal lab in Colombia and Ivan Dominguez Villamil, mineral services manager for Colombia and Venezuela, has tracked a continuous growth ever since.

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114 E&MJ • DECEMBER 2011 www.e-mj.com www.e-mj.com E&MJ • DECEMBER 2011 115 Mining IN COLOMBIA Mining IN COLOMBIA build the business,” said Albert Crutcher, managing director of KTTM Geophysics. “I hate to say that a boom has arrived, but yes, everybody seems to have money in the bank and everybody seems to be achieving reasonable results that aren’t affecting their share price much.” MPX Geophysics was formed in Toronto in 2005 to provide airborne magnetic, airborne radiometrics and electromagnetics. It expanded into Mexico in 2007 and had its first project in Colombia later in 2007. “We spoke with a number of other companies like KTTM and Logan Drilling and realized there Nelson Lopez, general manager of Kaeser was a huge opportunity,” explained Daniel Daniel McKinnon, president, MPX Geophysics. Compresores Colombia McKinnon, president of MPX Geophysics. “In Colombia, they now have two L3 Long rangers, one jet rang- potential. Our focus has shifted from Canada to Colombia because er and a Cessna 206 fixed wing and are growing. Along with KTTM, of the opportunity here,” he said. on the ground geophysics, we can offer turnkey solutions. Our main MPX owns and operates all of its own gear and charters heli- focus is the airborne magnetics and radiomagnetics, given the type copters and fixed wing aircraft. In each country where it operates, of geology that we’re faced with,” said McKinnon. it sets-up joint ventures with local aircraft companies, in this case Like Logan Drilling, it took a while for McKinnon’s Colombian Helifly. McKinnon cites that as being key to their success here. business to take off. “There was very little work here in 2009 but “Being a foreigner in this country Helifly provides us with a lot since 2010, we have seen activity dramatically increase, especially more protection. They know the country and how it works. They since interest shifted from Ecuador to Colombia. Patience has paid have contacts in the military and the police and can advise on the off. “When we first starting flying in Colombia, the company was security. Operations, logistics, safety and security are very compli- turning over between US$3 and US$5 million. We are now turning cated here.” over around US$7 million and I expect that to remain steady or grow next year. It takes a little while to establish yourself here, but Equipment needs we haven’t stopped flying since August 2010. With the second and Many small scale mines across the country have been operated third systems coming soon, this shows that we have much further more or less manually. The recent appetite for mechanization has led to many opportunities for suppliers. One example is in the demand for compressed air. Kaeser Compressors are a market leader in Colombia and over the last three years 40% of their revenue has been from the mining and oil and gas industries. Nel- son Lopez, general manager of Kaeser Compresores Colombia, sees further growth potential here as the sector is consistently growing and the technology in the industry has progressed a lot over the last several years. “We are the leaders in the market because our competitors’ approach is different; we have a special tool that allows us to go to our customers’ land and use tools to measure their specific requirements. We analyze the land and apply our knowledge to develop an air station according to our code to enable our clients to conserve energy and our clients trust us. Our secret is that we are not doing business, we are bringing technology into Colombia to allow our customers to improve their services by becoming more cost efficient and more competitive. Many mining companies buy from us and our brand is well known,” he said. Xylem Inc., a global leader in fluid technology, has been in Colombia for five years and currently has around 20 employees based in country. It is the market leader, with around a 20% market share. “The hope is to double that market share in the next three or four years. We have found very basic mining operations in many places. In the past, it has only been the major mining companies that have invested in technology. Now though, we see more small companies looking to invest in technology also. To those small companies, we can offer training, seminars and finance options. We can show them the right way of doing things and how they can improve the safety of their people and the productivity of their mine,” said Alex Eduardo De La Ossa, managing director for Xylem Inc. Colombia.

116 E&MJ • DECEMBER 2011 www.e-mj.com www.e-mj.com E&MJ • DECEMBER 2011 117 Mining IN COLOMBIA Mining IN COLOMBIA build the business,” said Albert Crutcher, managing director of KTTM Geophysics. “I hate to say that a boom has arrived, but yes, everybody seems to have money in the bank and everybody seems to be achieving reasonable results that aren’t affecting their share price much.” MPX Geophysics was formed in Toronto in 2005 to provide airborne magnetic, airborne radiometrics and electromagnetics. It expanded into Mexico in 2007 and had its first project in Colombia later in 2007. “We spoke with a number of other companies like KTTM and Logan Drilling and realized there Nelson Lopez, general manager of Kaeser was a huge opportunity,” explained Daniel Daniel McKinnon, president, MPX Geophysics. Compresores Colombia McKinnon, president of MPX Geophysics. “In Colombia, they now have two L3 Long rangers, one jet rang- potential. Our focus has shifted from Canada to Colombia because er and a Cessna 206 fixed wing and are growing. Along with KTTM, of the opportunity here,” he said. on the ground geophysics, we can offer turnkey solutions. Our main MPX owns and operates all of its own gear and charters heli- focus is the airborne magnetics and radiomagnetics, given the type copters and fixed wing aircraft. In each country where it operates, of geology that we’re faced with,” said McKinnon. it sets-up joint ventures with local aircraft companies, in this case Like Logan Drilling, it took a while for McKinnon’s Colombian Helifly. McKinnon cites that as being key to their success here. business to take off. “There was very little work here in 2009 but “Being a foreigner in this country Helifly provides us with a lot since 2010, we have seen activity dramatically increase, especially more protection. They know the country and how it works. They since interest shifted from Ecuador to Colombia. Patience has paid have contacts in the military and the police and can advise on the off. “When we first starting flying in Colombia, the company was security. Operations, logistics, safety and security are very compli- turning over between US$3 and US$5 million. We are now turning cated here.” over around US$7 million and I expect that to remain steady or grow next year. It takes a little while to establish yourself here, but Equipment needs we haven’t stopped flying since August 2010. With the second and Many small scale mines across the country have been operated third systems coming soon, this shows that we have much further more or less manually. The recent appetite for mechanization has led to many opportunities for suppliers. One example is in the demand for compressed air. Kaeser Compressors are a market leader in Colombia and over the last three years 40% of their revenue has been from the mining and oil and gas industries. Nel- son Lopez, general manager of Kaeser Compresores Colombia, sees further growth potential here as the sector is consistently growing and the technology in the industry has progressed a lot over the last several years. “We are the leaders in the market because our competitors’ approach is different; we have a special tool that allows us to go to our customers’ land and use tools to measure their specific requirements. We analyze the land and apply our knowledge to develop an air station according to our code to enable our clients to conserve energy and our clients trust us. Our secret is that we are not doing business, we are bringing technology into Colombia to allow our customers to improve their services by becoming more cost efficient and more competitive. Many mining companies buy from us and our brand is well known,” he said. Xylem Inc., a global leader in fluid technology, has been in Colombia for five years and currently has around 20 employees based in country. It is the market leader, with around a 20% market share. “The hope is to double that market share in the next three or four years. We have found very basic mining operations in many places. In the past, it has only been the major mining companies that have invested in technology. Now though, we see more small companies looking to invest in technology also. To those small companies, we can offer training, seminars and finance options. We can show them the right way of doing things and how they can improve the safety of their people and the productivity of their mine,” said Alex Eduardo De La Ossa, managing director for Xylem Inc. Colombia.

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International EPCMs pour in projects around the world. We have a long of collaborations. The key goal is to grow our Colombia’s growing mining sector has at- relationship with them as they have experi- office, while working with offices in Peru and tracted the attention of many of the world’s ence which complements ours,” said Fer- Argentina,” said Rafael Bernal, assistant gen- leading engineering houses. Many globally nando García, senior vice president of miner- eral manager for Ausenco in Colombia. recognized names are increasing their pres- als and copper at SNC-Lavalin Chile. To continue that growth, the company is ence in the country. SNC-Lavalin has been doing business in closely following developments in the mining SKM, the Australian engineering house, Latin America since the early seventies. It sector. “Mining is our main focus, although aims to export its expertise in bulk commod- founded its first operation in Chile in 1994, oil and gas have great potential and some of ity projects, specifically related to coal, that through an acquisition, and that remained our other business lines have an interest in it has developed from its Brisbane head of- the only permanent presence in Latin Amer- those markets. We need to find opportunities fice. “We are able to transfer that knowledge ica until 2007. At that time it began organic within mining, but also in other markets and and use our technology in Colombia, which growth in Colombia and this year undertook we have plans to look at infrastructure in the represents a big part of our expansion in an acquisition in Colombia that increased future,” said Bernal. Latin America,” said Jorge Alberta Nemina, its presence in-country to more than 1,000 Other firms are setting up offices with general manager of SKM Colombia. employees. García feels Colombia represents the purpose not only being to serve domes- “We want to expand in Colombia and we an enormous opportunity for companies like tic clients but also to provide engineers for have high expectations for the country as its SNC-Lavalin. “It’s an emerging market in international projects. “We work a lot on a mining industry is increasing in sophistica- terms of mining. Up to now, only coal and work share basis internationally in order to tion and requires a lot of support from an en- nickel have really been exploited. We have spread the work around our global opera- vironmental and infrastructure perspective,” seen the oil and gas sector flourish in Co- tions. This translates to better costs for our said Nemina. lombia in the last few years. It looks like the clients and the benefit of our global experi- One of SKM’s largest projects is the ex- government is very keen on promoting min- ence,” said Juan Llovet, managing director pansion of Cerrejón’s mine. The EPCM con- ing and so there is a political will to create a for Worley Parsons Colombia. Llovet extract is a 50:50 joint venture between SKM stable market,” he said. pects to be strongly established in Colombia and SNC-Lavalin. “It is not the first joint Ausenco is another international player within five years. venture between both companies as we have that is growing in Colombia, but is focus- worked together in Australia. SKM provides ing on an organic model. “Some of the other For additional the engineering management and project larger companies have come here through Mundo Minero and up-to-date controls management,” said Nemina. “We acquisitions whereas we have worked our information on Colombia’s mining industry, visit Colombia’s periodical publication at are working with SKM in Cerrejón and have way into the market slower and have grown http://mundominero.com.co established an alliance with them on other organically and conservatively through a lot

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