Beyond Copper: Gold

Chile’s precious metals potential

Gold mining in Latin America tends to be associated with Peru, Mexico, Brazil and Argentina. While the industry in Chile is relatively smaller, ranked 25th in the world according to the World Gold Council, it is one that holds great potential and has been recently attracting attention. The country's renowned reputation as a mining jurisdiction coupled with the precious metal's bullish price projections puts the Chilean gold mining industry in the spotlight.

"2020 proved a record-breaking year for the gold price, spurred by low interest rates and government stimulus packages used to mitigate the impact of Covid-19," explained Alastair McIntyre, CEO of Canada-based Altiplano Metals, a junior resource company with interests in near-term production assets in Chile. "Massive amounts of USD stimulus put pressure on the dollar and with gold priced in USD, it has a natural tendency to rise. As economies need to reflate to get back to post COVID-19 employment and GDP levels, I see the outlook on gold remaining positive."

According to Cochilco, Chile produced 1.33 million ounces of gold in 2019, representing a 4.7% year-on-year increase. Gold mining in the country dates back to the end of the sixteenth century, and was encouraged later on with the establishment of the royal mint in Santiago. Gold reserves in Chile can be found in sub-volcanic epithermal deposits and porphyry sporadic deposits, as a by-product of copper and molybdenum. The industry has significant potential and is expected to grow in size by 42% by 2023 according to local newspaper El Mercurio.


Northern Chile is home to exceptional gold vein deposits by the coast, which is where Gold Fields' open-pit Salares Norte is located. Construction of the project began in February 2021. The US$860 million operation has an initial mine life of 11.5 years and should produce 450,000 ounces of gold annually for the first seven years. "Production is scheduled for early 2023, not considering any significant Covid-related delays, as announced before the outbreak," confirmed Max Combes, country manager of Gold Fields in Chile. "By next winter, we will have 1,400 workers on-site, therefore, if we encounter further logistical delays, the expected production may change."

Meanwhile, Yamana Gold, one of the biggest gold producers in Chile, operates the underground operations El Peñón and Minera Florida. El Peñón saw its production increase in 2020 to 162,000 ounces of gold, from 159,515 ounces in 2019. After drilling from Q4 2019 to Q1 2020, the Toronto-based company reported significant exploration results in March 2020, supporting further mine life extension at El Peñón. Minera Florida also witnessed a successful drilling campaign that led to discovery in 2020, providing flexibility to the operation, expanding the mineral resource base as well as life of mine.

"2020 proved a record-breaking year for the gold price, spurred by low interest rates and government stimulus packages used to mitigate the impact of Covid-19."

Alastair McIntyre, CEO, Altiplano Metals

Another significant gold producer in Chile is Kinross, who announced in February 2020 to move forward with the La Coipa Restart Phase 7 project, which will require a US$225 million investment. In addition to generating 700 jobs, the asset is expected to produce 690,000 oz of gold from 2022 to 2024. Kinross is also proceeding with the feasibility study for the nearby Lobo Marte project in the Marincuga strip, after the pre-feasibility study estimated a total mine production life of approximately 4.5 million oz of gold.

On the other hand, Chile's environmental court ordered the definitive closure of Barrick's Pascua-Lama in September of 2020 over environmental concerns. Located in the Andes on the border with Argentina, the project has been on hold since 2013 and was one of the largest Chilean gold projects, with probable reserves of 17.8 million ounces. “Work is under way to re-evaluate Pascua-Lama’s potential through a comprehensive internal review of its technical, economic, and social aspects and different approaches to permitting,” highlighted Marcelo Alvarez, executive director of Barrick in Chile and Argentina. “As our president and CEO Mark Bristow has pointed out, it appears that combining Lama with Veladero and looking at Pascua separately may make more sense. We are looking closely at this and all other options.”


"The exploration ground in the known gold regions of Chile are dominated by the majors and mid-tier mining companies. In the south of Chile, there are some good underexplored opportunities, although we would consider opportunities in the north, depending on availability."

Tony Harwood, President and CEO, Montero Mining

Chile reached its peak of gold production 20 years ago, at 1.74 million ounces. By 2028, the entry of new projects into operation as mentioned above, namely Salares Norte, La Coipa and El Peñón, will add US$1.2 billion in investment into the sector and approximately 900,000 ounces to national production.

Exploration: a gold rush

Given the precious metal's exceptional performance in 2020, global gold exploration budgets were higher than for other commodities. However, S&P Global Market Intelligence reports that the gold exploration budget in Latin America and Chile decreased by 14% and 35.8%, respectively, between 2019 and 2020. Nonetheless, the region still had the highest budget, totalling US$858 million in 2020 and accounts for the largest share of the global grassroots stage budget.

Over the course of 2020, Cochilco identified 234 exploration projects being undertaken in Chile, of which 28% were gold-related. Gold trumped copper, silver and zinc as the target mineral for last year, as it represented 48% of holes drilled in 2020.

The country is increasingly attracting juniors who are finding access to finance easier than other commodities and focusing on brownfield exploration. According to S&P, fundraising by junior and intermediate companies for gold projects hit a record high from January to September of 2020, amounting to a total of US$4.05 billion.

"Majors can hold on to claims for long periods of time relatively cheaply without the need to conduct a minimum amount of work or expenditure."

Damien Koerber, COO and Executive Director, Equus Mining

"The exploration ground in the known gold regions of Chile are dominated by the majors and mid-tier mining companies," explained Tony Harwood, president and CEO of Montero Mining, a new junior player in the Chilean gold mining industry. "In the south of Chile, there are some good underexplored opportunities although we would consider opportunities in the north, depending on availability."

Montero Mining was focused on battery metals in Africa before acquiring the Isabella gold-silver project, for which the drilling program should be complete in 2021. Due to the lack of claims available in northern Chile, new junior companies tend to acquire assets in the south, which is more under the radar of major companies. For example, Australian junior company Equus Mining is to acquire the Cerro Bayo epithermal deposit from Mandalay Resources, where it plans to explore for brownfield and greenfield targets. "We have been exploring throughout the Cerro Bayo mine district for approximately 18 months and have already established an inferred mineral resource of approximately 302,000 ounces of gold equivalent at the Taitao Pit, of which two thirds is potentially open-pitable," commented Equus' COO and executive director Damien Koerber.

Meanwhile, Mirasol Resources, project generator and explorer, resumed exploration at the Inca Gold gold-silver project, on the Paleocene belt, after a brief suspension in 2020. The ongoing 1,500 m diamond drill program should be complete by Q2 2021. If exploration demonstrates significant potential for discovery, Newmont agreed to reimburse Mirasol 70% of their costs and invest in additional exploration.

On the other hand, Astra Exploration is exploring for gold at Pampa Paciencia. Managing director Brian Miller highlighted that the property was first held by B2Gold, who were exploring for copper. "It is located approximately 10 km north of Sierra Gorda and the mineralization consists of outcropping silica caps, quartz veins and sub cropping angular quartz fields that align with east-west to west-northwest lineaments. SQM has a 20% interest in the project and Arena Minerals will also be a major shareholder," he added.

Image courtesy of Barrick Gold