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Antioquia Gold Drilling Colombian Assets

Commodities / Gold & Silver Stocks Sep 01, 2009 - 10:17 AM GMT

By: Midas_Letter


Best Financial Markets Analysis ArticleColombia has emerged as a prolific source of new gold deposits during the last several years, and Antioquia Gold Inc. (TSX.V:AGD) is the latest TSX Venture listed company to begin exploration there. Antioquia (pronounced An-tee-oh-¬kwee-ah) controls a 100% interest in 6 mining concessions covering a total of 279 hectares (Guayabito) and a 90% interest in 2 additional and adjacent mining concessions that cover 5,243 hectares, both in the department (province) of Antioquia, 70 kilometres northeast of Medellin, the regional capital.

The Cisneros Project, as it has come to be known, has been subject to over 100 years of small scale artisinal mining, and it is that activity that drew the attention of geologists. Within the larger project area is the Guayabito property, where the western slope of the mountainside on that property was mined hydraulically for placer gold. Since then, several shafts and adits have been used to access the underground lode source of that placer gold.

The exploration target on the Guayabito project is orogenic lode gold deposits also known as mesothermal vein deposits. Numerous examples of this type of deposit are known throughout the world including the Campbell Red Lake deposits in Ontario and the Bralorne deposit in British Columbia. To date, exploration studies have demonstrated that the Guayabito vein systems have all of the attributes of the orogenic vein gold deposit including, but not limited to association with major structural break, quartz-carbonate vein association, low-sulphide assemblage with pyrite, chloritic and sericitically altered wall rocks.

A 3,000 metre phase 1 drill program will test targets identified through the evaluation of grab and chip samples gathered from the historic mine workings and other surface exploration data.

“We have a drill program that is starting this week, we plan to drill 3,000 metres where we have identified 3 drill targets that we want to drill about 1,000 metres each, so 10 holes averaging 100 metres in depth initially,” said Vice President of Exploration Brad Van Den Bussche. “ We will also conduct ground magnetometer work to trace the mineralized sheer zones along surface, and we’re going to continue structural and surface mapping of the newly acquired additional adjacent zones.”

Mr. Van Den Bussche has over 20 years experience in the resource industry where he has worked mainly as a geologist and project manager. Most recently he has focused on exploration and new business development as a consultant. He has worked on numerous feasibility studies, exploration programs, due diligence evaluations and project assessments of both minerals and energy projects in Canada, the United States, Asia, Latin America, and the UK.

“Although we’re at the early stage of systematic exploration on this project,” he continued, “we’ve got over 100 years of artisinal mining in the area that suggest a significant amount of gold on the exploration area we hold. Over the last two years of exploration we’ve put together a nice model of the property that is analogous to some very significant deposits we see here in Canada, particularly in Red Lake, ON and Bralorme, BC. These are thermal lode gold systems and we’re not starting from a point where there’s no information. We already have the significance presence of gold and have coincidentally developed a model that gives me a lot of confidence in the upside of this project.”

Antioquia recently completed a finance round of CA$250,000 to cover the costs of exploration in this first phase drill program. The company plans to raise additional funds in the near future with which it will expand on the theoretical success of this initial drilling.

Mining in Colombia began in the 1500’s. Although significant in the colonial economy, it never commanded a large portion of Colombia's GDP in modern times. With the discovery and exploitation of large coal reserves, however, the role of mining in the national economy expanded in the late 1980s. Precious metal and stone mining was still carried out in the late 1980s. Gold was the most important metal in terms of short-term revenues. Other important metals included platinum and silver, which were extracted in much smaller quantities. Colombia also produced 95 percent of the world's emeralds.

Other metals common to Colombia included nickel, small amounts of iron ore, copper, and bauxite. Nickel deposits, estimated at 25 million tons, were exploited through a joint venture program between the government and a subsidiary of Shell Oil Company. Nonmetallic mining produced salt, limestone, sulfur, gypsum, dolomite, barite, feldspar, clay, magnetite, mica, talcum, and marble. Despite the variety of minerals available for exploitation, Colombia still had to import substances such as iron, copper, and aluminum to meet its industrial needs.

Government efforts to expand mining in Colombia were needed to encourage private sector investment. In the late 1980s, much of Colombia remained inadequately charted, and reserve estimates were considered only marginally reliable. The government set a policy of developing infrastructure (roads, electricity, and communications), providing technical assistance, and encouraging sound credit and legal policies to minimize problems with land titling. Through joint ventures and the promotion of small mining companies, government officials believed that the mining sector could contribute more to national employment, income, and wealth.

Currently there are over 50 foreign companies actively exploring for all minerals in the country’s rich geology. Despite the fact that no major precious metals mines are in operation presently, there are a few companies who are close to feasibility on several multi-million ounce projects.

South African mining company AngloGold Ashanti (ANGJ.J: Quote) is going ahead with exploration of what could be a major gold deposit in Colombia despite virulent opposition from local environmentalists.

The project would provide 4,000 jobs in Cajamarca, a farming town of about 20,000 residents during the 20-year life of the operation, if its 12.3 million ounces in unproven reserves are confirmed and the project goes forward.

Between 38% and 42% of net sales would go to the Colombian government in taxes and royalties. The company has invested $35 million in the project so far.

Greystar Resources (TSX: GSL) based in Vancouver is developing the Angostura project in Colombia, with current resources of 11,549,000 ounces of gold and 61 million ounces of silver.

And BHP Billiton (NYSE:BHP) has been mining the Cerro Matoso Nickel Laterite deposit since 1982. Cerro Matoso employs approximately 950 people and 1,000 contractors., making it a vital contributor to the local economy.

Cerro Matoso is located near the town of Montelíbano, in the province of Córdoba in northern Colombia. An integrated nickel mining and smelting operation, Cerro Matoso combines one of the richest lateritic nickel deposits in the world with a low-cost ferronickel smelter. Cerro Matoso is one of the world's lowest cost major ferronickel producers.

The CEO of Antioquia is Rick Thibault, a graduate of Queen's University and a registered mining engineer (P. Eng.) with 29 years of engineering, operations, management and consulting experience in North and South America. Over the past seven years, Mr. Thibault had been providing mining engineering services to international clients through a base in Santiago, Chile where he was the general manager of a Canadian consulting firm's subsidiary. Before becoming a consultant, Mr. Thibault worked for a major western Canadian coal company in progressively responsible positions: as the Vice President and general manager of a junior exploration company based out of Buenos Aires, Argentina; as the managing director of an operating industrial minerals company in northwestern Argentina; and as the Vice-President, Minerals of a junior mining company responsible for the exploration, development and commercialization of its industrial mineral properties situated in the United States. He serves as a director of Argentex Mining Corporation. He is fluent in English, Spanish and French. He is the Chairperson of the Industrial Minerals Society of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM). He is also the recipient of the CIM's District 5 Distinguished Service Award.

By James West

© 2009 Copyright Midas Letter - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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