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4/27/2016 Argentina coming back into play as elections loom. Mining Journal. March 2015 Synergy Resource Capital
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Argentina coming back into play as elections loom. Mining Journal. March 2015
December 22, 2015 | Articles,Latin American Mining,Synergy in the news | 0 Comment
In this article, Paola Rojas, Business Development Director of Synergy, was interviewed about mining in Argentina.
Argentina coming back into play as elections loom
by Paul Harris 24 Mar 2015
Argentina is moving back into view as a destination for mining investment as the presidential term of Cristina Fernandez de Kirchner draws to a close
Portfolio of prospective explorationprojects in Argentina – AR01 THE OPPORTUNITY The company, aprivate firm, has assembled a portfolio ofprospective exploration projects, located ...
4/27/2016 Argentina coming back into play as elections loom. Mining Journal. March 2015 Synergy Resource Capital
http://synergyresourcecapital.com/argentinacomingbackintoplayaselectionsloomminingjournalmarch2015/ 2/11
with elections in October.
Silver Standard, which has the Pirquitas mine in Argentina, anticipates ‘improving business environment postelection’
Fernandez de Kirchner, who first came to power in 2007, oversaw the implementation of fiscal policies including capital controls and an export dutypayable on the sale of mineral concentrates, whilst the country has experienced inflation and an overvalued official exchange rate, all of which haveimpacted mining investment and resulted in various mining development projects being shelved.
With six months to the presidential elections there is a feeling that whoever the next president is, from whatever part of the political spectrum, will bemore positive for the mining sector. “Politically, Argentina has received, rightly or wrongly, a bad reputation as a place to do business, but thisperception is rapidly changing. This Fall a new president will be elected and we are advised that the three leading candidates are all probusiness,”said John Hite, president of Marfil Mines.
“The deterioration of business conditions are by now evident to everyone and more so to the presidential candidates,” Paola Rojas, directorbusiness development of Synergy Resource Capital, told Mining Journal.
“The next government has a substantial task ahead, to turn around this negative tendency that has been worsening for over three years.Argentina is such a rich country that if they have the courage to make some tough calls, and it seems most of the candidates do, they will beable to pull it off. Among those running for presidency only the least popular candidate has expressed a negative position towards mining.”
Since October 2011, when the first capital control measures started to be imposed, which placed restrictions on the ability to repatriate profits, mininginvestment in Argentina began to dry up and new companies stopped arriving.
4/27/2016 Argentina coming back into play as elections loom. Mining Journal. March 2015 Synergy Resource Capital
http://synergyresourcecapital.com/argentinacomingbackintoplayaselectionsloomminingjournalmarch2015/ 3/11
“Argentina is challenging because of the cost structure there,” John DeCooman, VP corporate development at Silver Standard Resources told MiningJournal.
Silver Standard is one of several existing producers in Argentina looking to leverage its local presence and knowledge through operating the Pirquitassilver mine in Jujuy and possibly acquire other assets.
Pan American Silver is one company that put the brakes on in the face of uncertain changes to mining regulation and taxation in Argentina,suspending work on the feasibility study and environmental impact assessment for its 750millionoz Navidad silver project in Chubut in 2012. At thetime the provincial government proposed regulations including a new 5% NSR for the province in addition to the 3% NSR that already exists, plus arequirement for Chubutprovince owned resource company Petrominera, to receive 4% of total sales, although these never made it into law.
Now, in 2015, and presumably with the promise of a new government and a change in policies and the economy, explorers are again starting to reviewprojects and discuss investments, and producers are looking to build mines.
“We started observing interest in Argentina increase 1824 months ago and people are now less frightened by it as a jurisdiction. People anticipate thatthe next president will be more market friendly,” DeCooman said.
“The explorers contemplating Argentina are mainly those who know the country well and can thus significantly derisk the move, and/orthose who have identified an asset that is of interest and good value, that can be acquired inexpensively. They are betting on the imminentchange, and they want to get in now to avoid costly acquisitions once things are more stable,” said Rojas.
She expects interest and investment to flow back first to jurisdictions that strongly support mining such as Salta, San Juan, Catamarca,Jujuy, La Rioja and Santa Cruz. “One would expect a significant rise in exploration and investment in those provinces first. Other resourcerich areas such as Chubut and Mendoza, need to work a bit more to help the general community understand the opportunities available to allin mining,” she said.
Argentina has several large projects in development and has the promise for discovering large orebodies.
“Yamana is developing the Cerro Morro gold mine, Glencore is developing the giant El Pachon porphyry copper deposit, Yamana is conductingfeasibility studies on the giant Agua Rica porphyry copper deposit, and Chevron and other major oil companies are developing large shale oil projectsin the Neuquen Basin,” said Hite.
Yamana Gold, a company with a long history of operating in Argentina, sees that better days are to come having recently announced that it will build agoldsilver mine at Cerro Moro in Santa Cruz Province, Argentina before year end. The US$398 million capex project will to produce 135,000oz ofgold and 6.7Moz of silver a year during its first three years and annual life of mine production (LOM) estimated at 102,000oz gold and 5Moz silverfrom 2H17. “Argentina has an improved socioeconomic and political state,” said chairman and CEO Peter Marone during the company’s 2014 resultsconference call.
4/27/2016 Argentina coming back into play as elections loom. Mining Journal. March 2015 Synergy Resource Capital
http://synergyresourcecapital.com/argentinacomingbackintoplayaselectionsloomminingjournalmarch2015/ 4/11
Yamana also signed a definitive agreement in March with Catamarca province mining company, CAMYEN, for cooperation that may eventually ledto the creation of a mining district in which CAYMEN will have a 5% participation that encompasses Yamana’s Agua Rica copper, gold, silver andmolybdenum deposit and Cerro Atajo prospect. The agreement includes a plan to train the existing workforce in Catamarca to ensure localcommunities have the opportunity to benefit directly from planned economic activity in the area. Yamana also has operations at Gualcamayo and a12.5% stake in Alumbrera.
There are several projects on standby for construction such as Goldrock Mines’ Lindero project in Salta province that is fully permitted and at projectfinance stage.
However, while the sentiment towards the country is improving, exploration funds remain hard to come by at the moment, leading some explorers towait until tangible change is a reality before committing to expenditure.
“We are watching but not willing to take an option on Argentina at this stage. Bigger players like Lukas Lundin can afford to take an option oncountries and sit on projects, but we cannot take on projects that we cannot develop,” said Alex Black, CEO of Rio Alto Mining.
“At Argentex we are on hold mode until we see how the elections go,” director Rick Thibault told Mining Journal. Argentex has identified a resourceof 26.7Moz silverequivalent at its polymetallic Pinguino project in Santa Cruz province.
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