Barrick Gold's Pascua-Lama property straddles the frontier between Chile and Argentina.
Thanks to legislation that favours exploration and development in the region, Argentina has become the third largest gold producer in the Americas and, with Barrick Gold’s Pascua-Lama project, the country and its neighbour, Chile, are hosts of the first bi-national gold project.
Pascua-Lama is located between the Argentine province of San Juan and the Atacama region in Chile. About 75 per cent of the ore body is located in Chile, while the remaining 25 per cent is in Argentina. According to Barrick Gold, the project is currently under construction and on schedule. It will demand an investment of approximately $3 billion and is among what Barrick counts as its next generation of larger, lower cost mines.
The firm expects to obtain an average annual production of between 21.26 and 22.68 tonnes of gold and 992 tonnes of silver in the first five years. Studies have estimated 504 tonnes of proven and probable gold reserves, containing 20,354 tonnes of silver, with the mine life projected to be 25 years. According to the latest available data, the project’s construction will be finished by 2012, with production beginning in the first quarter of 2013.
“Argentina has a very important expansion field for the gold business,” says Jorge Mayoral, the country’s mining secretary. “It already produces more gold than Chile and Brazil. It’s the third major producer of gold in the Americas and the fifteenth in the world.” What’s more, “we are going to change our positioning among producing countries to become the fourth or fifth mining country in the world,” he adds.
The mining integration treaty signed by Argentina and Chile in 1997 supports that ambition. The treaty establishes the joint use of the resources that extend to both sides of the border to generate rational and integrated exploration and exploitation. It constitutes a legal framework that assures investors the same conditions in both countries for projects on the frontier. Pascua-Lama is one of five projects located in the territory that is included in the treaty. The other four — the Amos Andrés and Las Flechas gold and copper projects; the La Vicuña gold, copper and silver project; and the El Pachón copper project — amount to an investment of $8 billion.
Also, last January, the Argentine Federal Planning, Public Investment and Services Ministry signed an agreement, in cooperation with the Chinese Natural Resources Ministry, in which companies from China would invest US$36 million to explore and develop projects in the Argentine territory. For this agreement, the Chinese Metallurgical Construction Group Corporation would invest in exploration studies in the free reserve areas of San Juan, searching for gold and silver, in association with the Provincial Institute of Mining Exploration and Exploitation.
Currently, there are eight gold projects already in production in Argentina and more than 15 projects in exploration, including the Cerro Moro project, managed by Fomicruz and Exeter Resource, and the Navidad project. At Barrick’s Veladero gold and silver project, the company invested US$70 million in 2009 to increase its crushing capacity from 50,000 to 85,000 tonnes per day.
The Argentine mining secretary also recently approved plans by Andean Resources to develop the Cerro Negro gold and silver project in the Santa Cruz province. The company, listed on both the Toronto Stock and Australian Security exchanges, has invested over US$200 million to develop the project, which is expected to yield 8.5 tonnes of gold and 85 tonnes of silver annually.