Investing In Panama: Mining in Panama
Panama was the main route for shipping precious metals from Latin America to Europe after the Spanish conquest, but little of it came from the country itself. Panama's mining sector, nonetheless, has the potential for substantial growth and it is one of the most promising new areas of the economy. The country has two of the largest undeveloped copper deposits in the world. Other minerals with commercial potential are gold, silver and manganese. Mining investments are aided by a favorable mining law, which encourages foreign investment.
Until recently, Panama's mining sector was best known for the hugely ambitious Cerro Colorado project, 250 km west of Panama City near the Gulf of Chiriquí. This project still has mineable reserves of 1.4 billion tonnes grading 0.7 per cent copper. Rio Tinto Zinc transferred its 49 per cent holding to the government in 1994 and the state now fully owns Cerro Colorado. The government wants private mining companies to exploit the richest and most accessible part of the area which has estimated reserves of 60 million tonnes of 0.9% grading.
Producing gold mines were Santa Rosa and Remance which were shut down after the gold mining scandals in Indonesia and Canada stock markets in 1996 and later both suffered multiple litigation problems.
The largest project is Cerro Petaquilla, 120 km west of Panama City and close to the Caribbean coast. An expanding mining district embracing at least eight separate deposits, Petaquilla and its satellites rank as the third largest copper and gold ore complex in the world.
Since 1992, exploration and drilling have been in the hands of Canada's Adrian Resources which has a 52 per cent interest in the Petaquilla Mining Consortium. The other 48 per cent is in the hands of Metall Mining Corp of Canada. Teck Corporation of Canada has an option to earn in a substantial percentage from Adrian Resources Ltd. By putting. Petaquilla's reserves were discovered at the end of the 1960s during a United Nations program. The Japanese company Mitsui explored the area in the 1970s and abandoned it in 1980.
Adrian's finds attracted the interest of a Who's Who of international mining majors. Canada's Teck Corp signed an agreement with Adrian in November 1994, whereby Teck will become the operator. Teck has an option to buy half of Adrian’s interest in Petaquilla, by completing the project financing required and placing Petaquilla into production.
According to Canadian investment banking reports, the Petaquilla and Botija mineable reserves still have room to grow through exploration. Both deposits cover surface areas of around one mile by half a mile. The deposits contain uniform, blanket like mineralization averaging in excess of 500 feet of thickness with very low anticipated stripping ratios. The actual thickness of large portions of the two deposits is not yet defined as certain drill holes terminated in strong copper mineralization that was in excess of 800 feet in thickness. Work on the other copper deposits is intended to both expand resources and attempt to link all the deposits together into potentially one large deposit. The feasibility study only looked at the Petaquilla and Botija pits, but there is the possibility that some of the other exploration areas may be linked with these two pits.
The Petaquilla project is protected by a special investment agreement which became a law, entered and approved by the government of Panama, and contemplating multiple tax and investment incentives for this project.
Panama still presents many opportunities in mining exploration. There are many greenfield properties and local groups looking for partners.
The Business Panama Group can represent you, or find you local partners, or provide consulting in different areas of a project, or raise equity capital, or recommend you to the leading lawyers in Panama.
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