Posted by: ProspectingJournal on Nov 16, 2011
COMMENTARY—ProspectingJournal.com—For those who read our previous article on Nicaragua, it’s a predictable surprise that, thanks to foreign investment, this tiny nation has reported an economic surge for 2011. And having recently won yet another election, President Daniel Ortega has promised to create a more accepting environment for miners. His continued role in the country thus comes as a relief, as Nicaragua’s role in the modern gold rush has likely just begun.
As we noted back in June, mining development in Nicaragua is well underway, with the junior, mid-tier and senior companies all competing for a slice of the country’s mining-friendly jurisdiction along the Central American Gold Belt. This legendary “belt,” which stretches from Costa Rica to Guatemala with a total of more than 20 million ounces of historic gold production, is largely unexplored and has become a hotbed for exploration and production. To date, a mere handful of companies are chipping away at the underground wealth, with several on our watch-list leading the charge:
B2Gold Corp. [BTO – TSX] shareholders have taken quite a nice ride since our June article, as great news of production and exploration targets have propelled the Company into the spotlight.
Having just acquired an interest in Auryx Gold Corp’s Namibia projects, BTO is rapidly expanding its reach, which rests on its increasing gold production in Nicaragua. The Company’s two Nicaraguan mines—Limon and La Libertad—have contributed greatly to a strong Third Quarter Report, illustrating adjusted net earnings for the quarter of US$18.3 million ($0.05 per share) compared to $8.8 million ($0.03 per share) in the same period last year. Cash flow from operating activities was $20 million (up 48% from 2010), placing the Company in a strong position with $73.6 million in cash as of September 30, 2011. Consolidated gold production for the third quarter was 34,303 ounces at $529 per ounce: the La Libertad open pit mine (100% owned) produced 24,227 ounces at an average grade of 1.72 grams per tonne; the Limon open pit and underground mine (95% owned) produced 10,076 ounces.
The La Libertad mine is scheduled to produce approximately 80,000 to 90,000 ounces of gold annually at an estimated cash cost of $500 per ounce, with the property’s currently planned open pits, situated along a 20 kilometre belt of mineralization, creating excellent potential to increase the reserves and mine life.
More information on the Limon mine and other projects is available here.
Golden Reign Resources
Not to be outdone, shareholders of Golden Reign Resources [GRR – TSX.V] have witnessed a similar roller coaster of profits and subsequent buying opportunities as GRR’s stock follows the volatile gold price and the flow of positive news.
GRR’s flagship project—the San Albino-Murra Gold Concession— has undergone an extensive 2011 drilling program that consists of 70 drill holes totaling approximately 16,000 metres. Highlights of the 2010 exploration program include 3.83 metres of 24.98 g/t Au and 17.65 g/t Ag, with 2.0 metres of 39.30 g/t Au and 21.0 g/t Ag. Early highlights of the 2011 program include 12.0 metres of 16.37 g/t Au and 23.45 g/t Ag, with 7.0 metres of 22.92 g/t Au and 32.43 g/t Ag.
With the 2011 drill program designed to expand on the highly successful 2010 program, GRR has gained considerable attention and has recently mobilized a third drill to test the San Pablo and Las Conchitas areas of the Southern (San Albino) District. With a property including a major concession of 87 square kilometres valid for 25 years, the buzz surrounding this junior is clearly growing.
Corazon Gold Corp.
Another exploration company to keep an eye out for is Corazon Gold Corp. [CGW – TSX.V], whose Santo Domingo concession places the company in fresh drilling territory, surrounded by B2Gold, with promising drilling results thus far.
Located 125 kilometres northeast of Managua and 10 kilometres east of B2Gold Corp.’s La Libertad Mine, Santo Domingo’s exploration data is impressive. Mapping and drilling have recorded the following: “bonanza”-grade gold veins and a cumulative 15 km of major quartz veins with composite vein widths in excess of 3 metres, surface veins generally oxidized to a depth of 70 metres, and extensive sampling of ‘mill feed’ revealing values up to 38.45 g/t Au and 577.90 g/t Ag.
The Phase 1 drilling program finished recently, with 34 exploratory holes revealing grades as high as 27.50 g/t Au at 0.3 metres, 17.47 g/t Au at 1.25 metres and 16.81 g/t Au at 0.35 metres. Highlights from the program are as follows:
A recent news release highlights the discovery of a new high-grade mineral structure, known as El Portillo vein, which cuts 0.45 metres grading 21 g/t gold and returning a drill intercept of 2.85 metres of 7.89 g/t gold. With the Phase 1 drilling program now completed and Phase 2 just underway, we are intently listening for more news from this promising structure.
Click here for a map showing the current drill holes and vein structures.
Although President Ortega is widely known for his anti-capitalist views, Nicaragua’s mining potential is strong. Ortega has been careful to encourage foreign investment, resulting in the economy growing 4.5% last year with expected growth of 4% next year. Producer B2Gold has generated a strong business model from its two mines, while exploration companies such as Golden Reign and Corazon have capitalized on under-explored regions and historically sound concessions, thus far producing excellent results and catching the attention of many investors. A handful of other juniors, such asCalibre Mining Corporation [CXB – TSX.V], Cassius Ventures [CZ – TSX.V], FDG Mining [FDG – TSX.V] and Caza Gold Corporation[CZY – TSX.V] are also on the ground, with many more hoping to enter the game. Going forward, expect to hear more about this little-known Central American country, as the modern gold rush takes debt-ridden nations back to the conquest for precious metals.
Disclaimer: the author does not own any shares of the mentioned companies. Corazon Gold Corp. is a sponsor of ProspectingJournal.com.