Bright prospects in Argentina

Already home to mining giants Rio Tinto, Xstrata and Anglo Gold Ashanti, Argentina is considered to be Latin America’s next worldclass mining region, after Chile and Brazil, with its relatively underexplored but highly prospective gold and silver resources.

Fremantle-based gold explorer Andean Resources Ltd, which is listed on both the Toronto and Australian exchanges, has been operating in Argentina for almost four years, after buying the Cerro Negro gold deposit from Australian-based Xstrata subsidiary, MIM Holdings, in January 2004.

The project sits on a 25,000- hectare parcel of land in the southern Argentinean province of Santa Cruz, and is located close to infrastructure that services the onshore oil fields.

This week, the company announced it had selected six contractors for its pre-feasibility study, including three Argentinean companies, to assist with geotechnical, environmental and hydro-geological studies.

If all goes to plan, the pre-feasibility study should be completed by the end of June.

A bankable feasibility study will take up to nine months, with a view to start construction in the second quarter of 2009.

Andean executive director Morrice Cordiner said Argentina had been a major growth area in global mineral exploration during the past decade, with the mining activity in its resource-rich neighbours setting a precedent for the region’s prospects.

“Over the last decade, Argentina has had a huge influx of companies and investors looking at it from a geological and mining perspective like they looked at Australia 50 years ago,” he said.

“It comes down to risk and reward.

If you’re looking at a new gold project in Australia, a lot of projects have already been found and drilled.

Argentina is comparatively virgin territory.” Mr Cordiner said while the business environment in Argentina was “different”, the company has not encountered any administrative, cultural or political roadblocks with the project.

He believes part of the company’s success had been due to the employment of local staff, from field crews to geologists, support staff and project managers, and the opening of an office in the local provincial town of Caleta Olivia.

“We have found that, in the past four years, we’ve had nothing but cooperation and support at a local community and provincial level,” Mr Cordiner said.

“As an exploration company, the approvals have been fine, the support has been fine providing we employ and use local contractors as much as we can.

“We still have to do everything to a very high standard.” The project’s location was isolated enough not to have competing land uses, while still being close enough to supporting infrastructure.

“It’s a good mixture, we have the infrastructure in place while the area is quite remote so the mining has less of an impact and interference on local communities,” Mr Cordiner said.

Mr Cordiner expects labour will be a challenge once production commences, with the majority of the workforce requiring training.

Another potential issue for miners in the country is the introduction of new duties on mineral exports by the Argentinean government.

Miners Rio Tinto and Xstrata are reported to have sought an injunction to stop the changes, saying the move violates a law which freezes rates for existing projects.

Austrade chief economist Tim Harcourt said the situation in Argentina had improved since the economic crisis of 2002, with good niche export opportunities now available to WA exporters.

In particular, mining and mining services companies can take advantage of the growing investment in mineral exploration.

Other WA companies which have operated in Argentina, according to Austrade, include mining services companies Surpac Minex Group, Immersive Technologies and Essa Australia.

Opportunities also exist in the areas of wine and agribusiness, particularly in the region of Mendoza.