Crime, corruption, violence and unrest are putting the state of Guerrero in the limelight. But shift that limelight slightly and something else is going to stand out, and with a brilliant shine.
The Guerrero Gold Belt is described by one of the many mine operators there as the real El Dorado, a veritable gold mine, where the biggest challenge is security, in light of the situation in that state. Indeed, one of the major mines is just 50 kilometers from Iguala, scene of the tragic violence that occurred on September 26 and 27.
But the potential, according to one analyst, is huge.
The geology of the area is such that the gold is easy and relatively cheap to mine. A lot of it can simply be dug up and dumped on a leach pad with very little milling or chemical use to extract the metal, analyst Merrill McHenry said in an interview last year with The Gold Report.
All this means that the gold comes out of the ground at a much lower cost than elsewhere. McHenry said last year the region’s production costs run about US $325 an ounce, compared to an industry average of about $600.
“It gives us some of the cheapest gold production costs in the world,” said the metals and mining analyst with the Canadian firm Industrial Alliance Securities, who believes Guerrero could become one of the largest gold districts in the world.
Estimates put the total gold reserves in the gold belt, which is located north of Acapulco and extends for more than 55 kilometers from southeast to northwest, at more than 31 million ounces.
As with a number of other Mexican mining projects, Canadian companies such as Goldcorp, Newstrike Capital, Alamos Gold and Torex Gold Resources have a strong presence in Guerrero.
Newstrike believes its Ana Paula mine “is one of the best development-stage gold projects in Mexico,” with high gold grades, low capital requirements and low operating costs. Reserves are estimated at a total of 5.2 million ounces, which includes the zone’s surrounding area.
The company anticipates annual production of 116,000 ounces of gold and 239,000 ounces of silver, and a mine life of 8.2 years.
Gold was first discovered in the area in 1924.
Source: Gold Investing News (en)