Major gold companies such as Barrick Gold are exploring Japan in an effort to rejuvenate the country’s gold mining industry.
Major gold producers in Japan are securing partnerships in order to explore the country’s rich resources.
Over the last decade, the Japanese mining industry has seen a resurgence in foreign investment as companies seek to take advantage of adjustments made to Japan’s Mining Act. Originally established in 1951, the Japanese Mining Act was designed to protect Japan’s national interests, barring foreign companies from investing in its resource industry. Decades later, improvements in mining technology and increased interest in Japan’s domestic resources helped to encourage the Mining Amendment Act of 2012, enabling new potential for resource exploration and development. Recently, major gold producers and junior explorers alike have shown interest in Japan’s revitalized resource industry.
Japan’s Mining Amendment Act of 2012
One of the major updates included in the amended Mining Act of 2012 involved the protection of so-called “unconventional” resources, including those that can only be accessed offshore. While previously inaccessible in 1951, technological improvements over the decades have transformed what is possible in resource exploration, incentivizing the Japanese government to modernize its policies. The interest garnered from international resource companies has also helped to drive the modernization of Japan’s mining industry, with major miners and junior explorers coming together to explore for resources previously restricted from foreign entities.
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Major Gold Producers Exploring Japan
Following decades of inaction from international companies, the entrance into Japan’s mining industry by top gold producers such as Barrick Gold (TSX:ABX, NYSE:GOLD) and Newmont (TSX:NGT, NYSE:NEM) has signaled a new era in Japanese resource development, with companies from around the world coming together to collaborate on the fresh opportunities in Japan.
For example, Barrick has signed a countrywide strategic alliance with junior explorer Japan Gold (TSXV:JG, OTCQB:JGLDF) to jointly explore, develop and mine certain gold mineral properties and mining projects in Japan. “For decades, Japan has been mostly closed to foreign mining companies, which were unable to get exploration licenses. It was only in 2012 that the Japan Mining Act was amended for the first time allowing foreign mineral companies the ability to hold exploration and mining permits. These government restrictions have really preserved this wonderful endowment for future generations,” said Japan Gold CEO John Proust.
Under the terms of the alliance, Barrick Gold is expected to fund a two-year initial evaluation phase on 28 of Japan Gold’s 30 properties, with the ability to fund a second evaluation phase on projects that meet Barrick’s standards. Barrick must fund the completion of a pre-feasibility study to earn a 51 percent interest in a property and then is required to fully fund a bankable feasibility study to earn a 75 percent interest in a property. “We are pleased to partner with Japan Gold, who has assembled an impressive portfolio of exploration tenements within the renowned epithermal gold provinces of Japan. We look forward to advancing our partnership by combining Barrick’s technical and financial resources with Japan Gold’s first mover advantage, to deliver new world-class gold discoveries,” said Barrick Gold CEO Mark Bristow. Moving forward, projects acquired by Japan Gold are also expected to be offered to the Barrick Alliance at the company’s discretion.
In addition to Japan Gold’s 28 properties under its strategic alliance with Barrick, Japan Gold is also developing the Ikutahara Project in the northern Japan island of Hokkaido and the Ohra-Takamine Project in the southern island of Kyushu. The company intends to continue to develop these projects itself and has received help in the form of investment and technical support from Newmont. Newmont currently holds a 13 percent strategic investment in Japan Gold, giving Newmont exposure to Japan’s rejuvenated gold industry.
Newmont has also made investments in Irving Resources (CSE:IRV) is working to develop the high-grade Omu epithermal gold project, located on Japan’s north island of Hokkaido. Newmont has invested US$10 million to date for a 9.31 percent stake in Irving, under a strategic alliance, which Irving is putting towards exploration at their Omu property. Under the terms of the agreement, Newmont and Irving are expected to work together on both the Omu project and additional exploration opportunities throughout the country.
Major Gold Producers in Japan
Sumitomo Metal Mining’s Hishikari gold mine is the lone gold producer in Japan. Hishikari is the only domestic metal mine being operated on a commercial scale, producing approximately six tons of gold per year. Like Irving Resources’ Omu epithermal gold project, Hishikari hosts epithermal vein-type deposits that have produced some of the highest grades in the world. Between 1985 and 2019, the Hishikari mine produced approximately 7.8 million ounces of gold at an average grade between 30-40 g/t gold.
Japan Gold believes the involvement of major gold producers such as Barrick and Newmont speaks to the potential of Japan’s rich resources. “Japan is an ideal underexplored setting to make new large low sulfidation epithermal gold discoveries, building on the great success of the Sumitomo Metal Mining’s Hishikari gold mine. Barrick’s global experience of operating 15 mines on four continents combined with Japan Gold’s in-country knowledge and operational expertise make an ideal partnership to advance the gold mining industry in Japan,” said Proust. “Our portfolio of 30 Projects was the basis of the Barrick Gold Country-Wide Alliance and our first-mover advantage has secured Newmont as a significant shareholder, validating our thesis that there are major gold deposits yet to be discovered in Japan.”
Amendments to the Japanese Mining Act have enabled a new era of foreign investment and development, with major corporations and junior gold companies working together to explore the nation’s rich resources. Following years of limited exploration, significant partnerships and alliances could play a critical role in the future of Japan’s gold industry.
This article was originally published by the Investing News Network in June 2020.
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