POLITICAL ECONOMY

Colombia to attract $4.5 billion for gold mining over 10 years

Colombia in Latin America is a new gold exploration hotspot with gold companies due to invest $400 million in 2010

Author: Diana Delgado
Posted: Monday , 19 Apr 2010

BOGOTA (Reuters) - 

Gold mining companies will invest as much as $4.5 billion over the next ten years in Colombia, attracted by rich unexplored areas and soaring prices, the head of the country's Asomineros miners group told Reuters.

Gold companies are expected to invest as much as $400 million in exploration and production this year, up from $300 million in 2009, Arturo Quiros, executive director of Asomineros said on the sidelines of a mining seminar in capital city Bogota.

Areas of exploration have opened up in Colombia under President Alvaro Uribe, who is popular for increasing security with his U.S.-backed crackdown drug-running guerrillas.

"The gold boom has continued due to high prices of the metal," Quiros said.

"Improved security conditions and relatively unexplored areas compared to other countries in Latin America explain why there is such a high interest to explore in Colombia," he said.

In all, Colombia will double its gold production over the next five years. The Andean country could produce around 3 million troy ounces of gold in 2015, twice as much as the 1.57 million troy ounces produced last year and much higher than the 501,500 troy ounces produced in 2006, Quiros said.

Colombia attracted a record $3.24 billion in foreign direct investment (FDI) in mining last year, compared with $2.11 billion in 2008. Of that amount, the coal sector saw the biggest inflows, Silvana Giaimo, vice minister of mines and energy, said.

Mining weighted 40 percent of the country's total foreign direct investment last year, much higher than the 19 percent in 2008.

"Foreign direct investment in mining will continue. The potential is huge," Giaimo said, noting that Canadian companies are especially interested in exploring precious metals in Colombia.

Canadian Greystar Resources (GSL.TO) plans to invest about $39.3 million this year in its Angostura gold and silver project, more than double the $19.6 million invested last year, Geoff Chater, vice president of corporate development told Reuters.

Of the total, Greystar has allocated approximately $24.5 million for infrastructure related to the Angostura project. The remaining $14.7 million will be used to complete the feasibility study and exploration drilling, Chater added.

Greystar plans to begin the construction of the mine in 2011, Chater noted.

The company plans to invest $600 million at its Angostura gold and silver mine with output beginning in the second half of 2012, Frederick Felder, Greystar's executive vice president had said.

Angostura is expected to produce an average of 2.3 million ounces of silver per year over the expected 15-year life of the mine.

Canadian Medoro Resources (MRS.V) plans to invest about $100 million in exploration, production and related activities this year at its recently acquired gold companies Frontino, Mineros Nacionales, Colombia Gold PLC and Colombia Gold.

AngloGold Ashanti's (ANGJ.J) is also expected to invest $100 million in exploration at its La Colosa mine in Tolima province, where the company announced it had found unproven reserves of 12.3 million ounces. (Reporting by Diana Delgado; Editing by Marguerita Choy)