LATIN AMERICAN SPECIAL — Argentina touted as South America’s

With a new mining law and a geological setting similar to that which hosts most of the major copper and precious metal deposits in northern Chile, Argentina is being touted as South America’s “last mining frontier.”

After years of protectionist and socialist policies that effectively stifled foreign investment in the mining industry, the Argentine government has finally passed a new mining investment law. Its fourfold purpose is to: ensure fiscal stability for 30 years; guarantee exemption from import duties; eliminate restrictions on the repatriation of capital and profits; and place a 3% cap on provincial royalties.

Spearheading much of the exploration activity are Canadian juniors, the most prominent being International Musto Explorations (TSE). Musto recently signed a deal with MIM Holdings of Australia to develop jointly the Bajo de la Alumbrera copper-gold deposit in northwestern Argentina. Considered one of the world’s largest undeveloped copper deposits, Alumbrera contains about 494 million tonnes grading 0.53% copper and 0.68 grams gold per tonne. Development of the project will cost US$600 million, 40% of which will be in equity, with the remainder raised through debt financing. The partners hope to be in production by 1997 at 70,000 tonnes per day.

Musto’s sister company, Argentina Gold (VSE), is undertaking an aggressive gold exploration program in the northwestern and west-central parts of the country, along the Argentina-Chile border. The company has active projects in San Juan and Catamarca provinces and is reviewing 12 additional projects in the same region.

Another company focusing on gold is Eldorado (VSE), which has begun exploring a 200-km-long portion of the Maricunga and El Indio gold belts straddling the Argentina-Chile border. Several large anomalies with values up to 1 gram gold and 128 grams silver have been discovered on the 2,590-sq.-km property. With the belief that the copper-gold potential of Argentina may surpass that of Chile, American Resource (USOTC) has amassed a large land position covering several porphyry systems along the western edge of Argentina, bordering Chile.

The company has negotiated joint-venture agreements on two projects (Bajo el Duranzo and Mi Vida) in Catamarca and one (Taca Taca) in Salta province. Late last year, American drilled 1,000 metres on its 30,000-hectare Campana Mahuida project in the southern province of Neuquen.

Elsewhere in Neuquen, partners Sikaman Gold Resources (TSE) and Monk Gold & Resources (ASE), together with privately owned Aldermines International, have begun producing gold at their Cero Mayal placer operation. The US$3.7-million project is expected to yield 25,000 oz. gold in its first year, at an estimated cash cost of US$150-175 (including royalties).

Other junior companies active in Argentina include Crown Resources (VSE), Arauco Resources (VSE) and Pacific Rim Mining (VSE). Majors exploring for copper and gold include Placer Dome (TSE), South African based Gencor and Australian mining giants BHP Minerals and CRA.