Gold in Brazil has a long history stretching as far back as the 1700s, when a gold rush in the then-Portuguese colony opened the country up to the major gold-producing region of Ouro Preto — Portuguese for “black gold.”
Since those early days, mining has continued to be an important driver of the Brazilian economy, which is the largest in Latin America and the ninth largest in the world.
Brazil is the world’s third-largest producer of bauxite and second-largest exporter of iron ore, accounting for just over 18 percent of the world total. Minerals including iron, bauxite, copper and gold accounted for roughly 20 percent of Brazil’s exports in 2016.
Mining gold in Brazil is a significant source of revenue, but the nation is not one of the world’s largest gold producers — it put out only around 80 MT of the precious metal last year. However, it does hold significant reserves, making it an important destination for gold explorers.
Gold in Brazil: Mining reforms
Resource nationalism has never been a major concern for investors Brazil, but many were worried when new mining reforms were suggested in 2009; among other things, they would have increased royalty rates from 2 to 4 percent. However, the reforms were stalled due to political unrest and the impeachment of former Brazilian president Dilma Rousseff.
A new bill was sent to Brazilian Congress earlier this year, and it sets royalty rates by commodity, increasing gold’s rate from 1 percent to 2 percent. It also seeks to establish a new regulator and widen requirements for mineral extraction. Even if royalties increase, Brazil’s rates are considered low by international standards — Australia, for example, charges anywhere from 2.5 percent to 7.5 percent depending on the mineral mined.
Brazil ranks in the middle of the pack of jurisdictions considered friendly to mining investment, according to the latest Fraser Institute survey. It is sandwiched between Serbia and New South Wales, yet is far above South American mining laggards Venezuela and Uruguay.
Gold in Brazil: Producers
The US Geological Surve reports that Brazilian gold production fell to 80 MT in 2016 compared to over 81 MT in 2015, a slight decline of 1.2 percent. Still, there are many major and intermediate-tier companies currently mining for gold in Brazil. Below are some of the most important producers:
- AngloGold Ashanti (NYSE:AU) has two gold-producing complexes in Brazil. They are called Cuiaba and Corrego do Sitio; the former includes the Cuiaba and Lamego mines in addition to the Cuiaba and Queiroz plants. AngloGold also has three underground mines at its Serra Grande operation in the state of Goias. Total gold production from all the company’s Brazilian operations amounted to 539,000 ounces in 2016.
- Kinross Gold (TSX:K,NYSE:KGC) has a large open-pit gold mine near the city of Paracutu, about 230 kilometers from the capital of Brasilia. The Paracutu mine produced 480,014 gold equivalent ounces in 2016 from proven and probable reserves of just over 9 million ounces. The mine is expected to temporarily reduce operations early in Q3 2017 due to below-average levels of rainfall in the area. Kinross is aiming to address the issue by drilling more groundwater wells and acquiring additional water rights.
- Yamana Gold’s (TSX:YRI,NYSE:AUY) Chapada open-pit gold-copper mine in Goias started production in 2007. In 2016, the mine produced 107,301 ounces of gold and 115 million pounds of copper. Meanwhile, development continues on the Suruca gold deposit, located 6 kilometers from Chapada. The deposit is expected to contribute 40,000 ounces of gold annually over a five-year mine life. Yamana also owns the Riachos dos Machados gold mine, which it bought from Euro Sun Mining (TSX:ESM) (formerly Carpathian Gold) in a $51-million deal.
- Other producers in Brazil include Jaguar Mining (TSX:JAG), whose Turmalina and Caete mines produced a combined 96,608 ounces in 2016, and Trek Mining (TSXV:TREK), whose Aurizona mine cranked out 329,042 ounces over five years before being put on care and maintenance in 2015.
Gold in Brazil: Explorers
As noted above, Brazil’s relatively unexploited gold reserves make the country an attractive jurisdiction for gold juniors. Here are some for investors to keep an eye on:
- Amarillo Gold (TSXV:AGC) is a gold exploration company focusing on its Mara Rosa gold project in Central Brazil. The company has filed a prefeasibility report for the project and expects average annual gold production to be 140,000 ounces over the first four years of operation.
- Anfield Gold (TSXV:ANF) is focusing on developing its Coringa project in the Tapajos gold district. The project was obtained through Anfield’s acquisition of Magellan Resources in 2016. The project’s indicated resource stands at 726,000 tonnes at 195,000 ounces of contained gold.
- Belo Sun Mining (TSX:BSX) completed a feasibility study for its Volta Grande project in 2015; its proven and probable reserves stand at nearly 3.8 million ounces of gold. However, the project has been held back by several court suspensions due to environmental issues and risks to local indigenous communities. Belo Sun has had one of its suspensions lifted by Brazil’s Agrarian Court, but is awaiting a decision on another related to the indigenous population.
- GoldMining’s (TSXV:GOLD) key project is Cachoeira, which it acquired from Luna Gold in 2012. At that time, the project had an indicated mineral resource of 446,000 ounces of gold and an inferred resource of 221,300 ounces of gold. The company has since updated the resource to 786,737 ounces of gold in the indicated category and 563,200 ounces inferred. GoldMining was previously known as Brazil Resources, but changed its name in 2016.
- Lara Exploration (TSXV:LRA) holds exploration licenses for its Tocantins project in Central Brazil as well as the Seritta project in the northeast. Lara holds an agreement with Brazil Americas Investments & Participation Mineracao to pay 50 percent of any proceeds from the eventual sale of the project to a third party.
All companies listed in this article had market caps of over $15 million as of July 17, 2017. If you think we missed a company that should be included, please let us know in the comments. And don’t forget to follow us @INN_Resource for real-time updates!
This is an updated version of an article originally published by the Investing News Network in 2013.
Securities Disclosure: I, Sivansh Padhy, hold no direct investment interest in any company mentioned in this article.