LATIN AMERICA — Venezuela attracts gold explorers

Despite two failed coup attempts in recent months, Venezuela is continuing to attract attention from mining companies keenly interested in the South American country’s undeveloped mineral potential.

The Kilometre-88 gold district of southeastern Bolivar state has taken on the most prominence as a result of recent work by Placer Dome (TSE) on the Las Cristinas project, a concession located less than five miles from a paved highway.

Las Cristinas was the subject of a Nov. 16 research report by J.C. Potvin and Felix Freeman of Burns Fry Ltd., who “by pure extrapolation,” estimated that the deposit could host 300-400 million tons or some 12 million oz. gold at a 0.029 oz. gold grade in the first 33 ft. of soil.

The analysts suggest the potential could be in the order of 30 million oz., given the 98-130-ft. thick soil profile and assuming continuous mineralization — without giving credit to the mineralized bedrock. They also reported that extremely high-grade copper (12%) and gold (0.8 oz.) were detected near the southern property boundary.

“The estimate is wildly optimistic,” said Placer Dome spokesman Hugh Leggatt. “We are still drilling and have not done a (reserve) study. It is too early to make that kind of speculation.”

But the major did previously state that Las Cristinas “will enjoy priority” in its international exploration program in 1992. The company has an agreement to explore and possibly develop the deposit with Corporacion Venezolana de Guayana (CVG), a government-owned company.

Venezuela is considered to have the fourth largest probable gold reserves in the world, according to a 1989 report by the U.S. Bureau of Mines. The country’s greenstone belts feature deep tropical weathering, and compare favorably to those hosting mines in the Canadian Shield and in Africa. Venezuela also has undeveloped nickel deposits, and potential for various base metal deposits.

But high taxes and royalties, and muddy rules governing the authority to grant concessions and oversee mining in general, have kept away most mining companies. Activity has been largely confined to independent miners or illegal garimpeiros from Brazil, and much of the gold has been smuggled out of the country.

The recent decline in oil earnings prompted the Venezuelan government to open the doors to foreign investment. In 1991, taxes were lowered and laws changed to attract investment in mining. More positive changes are expected now that an industry chamber has been formed to promote the industry and lobby against laws that hamper growth or threaten security of tenure.

A number of British companies are active, as are a number of Canadian juniors. Carson Gold (VSE), for example, has already acquired an impressive portfolio of projects, including a new gold concession near Las Cristinas. Robert Friedland’s Mt. Grant Mines (VSE) is active. Gold Reserve (NASDAQ), based in Spokane, Wash., owns an interest in the Brisas property in southeastern Venezuela, which contains a massive sulphide deposit containing gold, silver, copper and molybdenum. The company is also involved in producing gold and diamonds from test mining at concessions in central Venezuela.

Queenstake Resources (TSE) recently completed an exploration program on the Bizkaitarra concession, and finalized a positive production feasibility study for an alluvial operation.

A pump mining plan was proposed that would both economically recover gold and reclaim the environmental devastation left by previous small pump miners. The plan was approved by the government, and production is planned for April of 1993.

Crystallex International (VSE) is exploring its Albino concession in the Kilometre-88 district, focusing on the high-grade La Conductora shear zone (reported to have an average true width of 36.7 ft. and grade of 0.66 oz. gold per ton) as well as another target adjoining Placer Dome’s concession. The junior also evaluated tonnages (about 99,000 tons) and grades (0.4-0.5 oz.) of both hydraulic and mill tailings on the property which it believes can be inexpensively processed.

The mineralized greenstone belts also extend east into neighboring Guyana and Suriname, and includes a number of well-known deposits including Omai, a mine in the startup phase, owned by Cambior (TSE) and Golden Star Resources (TSE) in Guyana. Omai is expected to produce 255,000 oz. gold per year at an operating cost of US$185 per oz., or two million ounces gold over a 10-year mine life.