Energy & Mining

The Gold Rush

Gold

Strategically located in the center of the Americas, the Dominican Republic is the second largest and most diverse Caribbean country. Becoming one of fastest growing economies in the region, thanks […]

Strategically located in the center of the Americas, the Dominican Republic is the second largest and most diverse Caribbean country. Becoming one of fastest growing economies in the region, thanks to its strong tourism sector, it has recently commenced developing other industries as well. Several dynamic, foreign-operated enterprises support the country’s efforts to further develop the mining industry and boost and diversify its tourism-dependent economy.

The history of mining in the Dominican Republic, began with the arrival of the first Spaniards to the New World, who initiated gold mining in the 1500s. By 1980 gold had approached sugar as the second largest Dominican Republic export commodity. Currently, the gold reserves in other Latin American countries, including Chile and Peru, dwarf the Dominican Republic’s deposits, but the country’s mining potential has just begun to be exploited. The Dominican Republic is ranked sixth largest gold producer in Latin America and 20th globally, and its mining industry stands to become a primary contributor to the local economy, as well as a major export vehicle. The Mining Management Office of the Dominican Republic estimates that the country has $60 billion in mineral and metal reserves, including 40 million ounces of gold.

PUEBLO VIEJO MINE

The Pueblo Viejo Mine is located approximately 100km northwest of the capital city of Santo Domingo. Barrick Gold acquired a majority interest in this mine in 2006 and manages operations through Pueblo Viejo Dominicana Corporation (PVDC), a joint venture, in which Barrick Gold holds a 60% stake, with Goldcorp holding the remaining 40%. The $4 billion investment that these two Canadian companies have poured into developing the mine amounts to the largest single FDI in the history of the Dominican Republic. The mine, which commenced commercial production in January 2013, had proven gold reserves of 9.7 million ounces and a mine life of 25 years and beyond (as of December 31, 2013). In 2013 alone the mine produced 488,000 ounces of gold.

CLEAN-UP EFFORTS

Since 2006, Barrick Gold has been correcting significant environmental damage left by a previous mining operator at the site, which closed its activity in 1999 without proper environmental reclamation. Since acquisition of the Pueblo Viejo Mine, PVDC has re-vegetated 3,500 hectares of land, built a large water treatment plant to treat water resources on site before discharging it into the local river, and removed 180,000 cubic meters of contaminated soil left behind by a prior operator. PVDC has also agreed to provide $75 million to finance the clean-up of historical liabilities that are the responsibility of the Dominican Republic’s government. The management plan for this clean-up phase is still awaiting government approval.

NEW DISCOVERIES

The gold exploration industry, although active for many years, heated up in 2012, due to the truly remarkable GoldQuest Romero discovery, which has drawn attention to an underexplored belt in the western part of the Dominican Republic known as the Tireo.

GoldQuest (another Canada-based mineral exploration company), focused on gold and copper development in the Dominican Republic, commenced its exploration activity in May 2001. Currently, it is the leading explorer, with marked success in discovering not only gold, but also other metals. GoldQuest is developing its 100%-owned Romero Project and has initiated the 2014 exploration program for its Tireo Project. 2012 was its pivotal year due to the discovery of Romero in May, as well as the closing of a several million dollar deal totaling Ps22.8 million. In 2013 GoldQuest continued to grow the Romero mineralization, and by year-end had completed a maiden NI43-101 mineral resource estimate comprised of an indicated resource of 2.4 million ounces of gold. Throughout 2013 the company expanded the ground IP coverage, identifying new targets in the area of Romero. In early 2014, GoldQuest initiated a Preliminary Economic Assessment (PEA) for the Romero Project, and completed an extensive airborne electromagnetic (ZTEM) survey over the Tireo formation. In May 2014 the company announced the results of the Romero Project PEA and commenced a 10,000m regional exploration drill program.

Yet despite significant investments and robust production of two by the world’s largest gold mining companies, the development of the Dominican Republic’s mining industry is still hampered by bureaucracy and protests over environmental contamination. The Dominican government already understands that in order to fully exploit the country’s mining potential, its bureaucratic burden will have to be reduced. In July 2013, the Dominican Congress passed a law to create a new Ministry of Energy and Mines. Besides that, in order to improve public perception of the mining industry, the government launched an awareness campaign highlighting the benefits of mining, such as job creation in economically depressed regions.

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