Interest in Colombia’s mining industry is growing, partly due to the rising price in gold and the exploration potential of the Upper Miocene Belt.
The rising price of gold has helped draw attention to mining jurisdictions with the potential to provide future supply like Colombia’s Upper Miocene Belt.
The global economy’s reaction to the COVID-19 pandemic has caused governments around the world to take unprecedented measures in order to balance economies and avoid longterm damage. In North America, economic measures including significant instances of quantitative easing by the US Federal Reserve have helped to drive the economy forward in the face of widespread unemployment and economic uncertainty. Despite this economic turmoil across the world, the precious metals markets have responded strongly in the face of this turmoil, with the price of gold reaching a seven year high in early July. In pursuit of the strong gold price, a number of junior mining companies are beginning to target known mining jurisdictions across the world with a history of production.
Economic measures impacting the gold price
A number of financial analysts have pointed to the recent economic measures put into place as one of the many forces driving the gold price in 2020. According to Bank of China International analyst Xiao Fu, quantitative easing and the uncertainty regarding the future of the global economy have combined to help maintain the latest highs. “Central bank easing policies and uncertainty surrounding the second wave (of COVID-19) are sustaining gold prices,” he told Reuters. Gold is commonly recognized as a safe investment during times of economic uncertainty, which OANDA senior market analyst Jeffrey Halley believes has helped to contribute to the commodity’s latest rise as well. “Some haven-directed buying of gold is definitely evident,” said Halley.
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In conversation with the Investing News Network, Sprott (TSX:SII,NYSE:SII) CEO and President Rick Rule echoed the sentiment of his fellow analysts, suggesting that a collection of economic conditions could combine to drive the price of gold moving forward. “If the combination of quantitative easing, artificially low-interest rates, debt and deficits did in fact put some wind in gold’s sails, which I believe they will, the base from which we expand is very low,” said Rule. As the gold price continues to improve the economics of gold exploration and production around the world, a number of resource companies are beginning to target proven jurisdictions with potential exploration upside.
For example, junior explorer FenixOro Gold (CSE:FENX) is working to develop its Abriaqui gold project in Colombia’s Upper Miocene Belt, which the company believes offers potential upside. “Relative to the rest of Latin America, Colombia is historically underexplored and boasts some of the highest-grade exploration potential in the world,” said FenixOro Gold CEO John Carlesso.
Mining in Colombia’s Upper Miocene Belt
Colombia’s Upper Miocene Belt has been home to approximately 80 million ounces of new gold discoveries made since 2007. The Upper Miocene, which is a rich stretch of mineralization located approximately 150 kilometers northwest of Medellin, is also home to Continental Mining’s Buritica gold project, which includes measured and indicated mineral resources of 5.67 million gold equivalent ounces. In March 2020 Zijin Mining Group acquired Continental Gold along with the Buritica project for C$1.4 billion. Zijin intends to put the Buritica mine into production in 2020, targeting an annual production rate of approximately 250,000 ounces of gold per year.
Like Zijin, gold explorer FenixOro Gold is exploring opportunities in Colombia’s Upper Miocene Belt, including the Abriaqui gold project. Based on initial exploration on the property, FenixOro believes the Abriaqui project has a number of similarities to the Buritica project, which is the closest nearby mine located only 15 kilometers away. “The geological setting has many similarities – the age, the host, mineralogy, mineralization style and similarities of the vein system, particularly the vertical continuity and depth, all point to the probability that Abriaqui has the potential to be very similar to Buritica,” said Carlesso. “Importantly, the individual making these determinations on the comparison, FenixOro VP Exploration Stuart Moller, is responsible for the discovery of the Buritica deposit while at Continental Gold.”
FenixOro Gold Corp recently began the preliminary portion of Phase 1 of a US2.9 million exploration program at the Abriaqui project. The company is following up on the discovery of Buritica-style mineralization found on the property in June 2020, which included high-grade gold veins, some of which assayed greater than 20 g/t gold.
The emergence of the COVID-19 pandemic and gold’s role as a common economic save haven in times of uncertainty have put the spotlight on gold production across the world. Resource exploration companies of all sizes have reacted to these market trends, working to develop future gold supplies by targeting proven jurisdictions with exploration upside. In Colombia’s Upper Miocene Belt, a number of gold exploration companies are working to develop projects in the region, targeting areas of mineralization that have revealed previous gold discoveries thanks to modern exploration.
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