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Yacimientos y $$$$ Como hacemos como geologos para capitalizar de la fiebre de commodities?
Size Matters
14% of total number of deposits
carry
32%
of contained metal
and account for
67%
Size is a useful but imperfect proxy for project economics For any NPV threshold there is usually a minimum size threshold below this size it is unlikely that a deposit will achieve this threshold
2
Environments Of Au Formation
Sediment Hosted
High Sulphidation
Intrusive Related
Low Sulphidation
More on size
Average Au # Deposits > Average Au Content (M oz) of 10 M oz Au Content (All) Giant Deposits 25 22 3 13 33 3 27 27 9 9 28 4 3 37 19 7 13 2 10 25 4
Exploration
Zombie projects
low risk
Operating businesses
High entry cost
Ernst & Young Global Tax Guide Royalties factored in assuming 100% margins
Suriname
Peru
Panama
Mexico
Honduras
Guyana
Colombia
Chile
Brazil
Bolivia
Argentina
USA
Canada
% Maximum Points
15 years ago Lower Capex and operating costs Lower taxes Shorter time to permit mines & exploration programs Region was adopting free market practices low risk of goverment interference
Today Escalation of Capex and Opex due to dollar weakness Taxes are higher Permitting times increasing dramatically Several countries have adopted policies that constraint private property of natural resources
Permitting becoming an issue Taxes are not lower Taking into account efficiencies and exchange rates costs are quickly rising even though labor in theory is cheaper
So far
Peru has higher taxes than even canada and the US Peru has times to permit of projects that begin to approach North America Social issues and local opposition to mining scares investments
Canada
Peru
Mexico
Brazil
Chile
USA
M oz Au
M oz Au
Resources Reserves
Peru
Canada
Mexico
Brazil
Chile
M oz Au
0
USA
M oz Au
Peru
Canada
Mexico
Brazil
Chile
Thousands of projects
6 5 4 3 2 1 0
Early Stage Projects Resource Projects
Peru
Canada
Mexico
Brazil
Chile
USA
Gold production and hence taxes will drop steadily in the next decade We have not analyzed other metals but the situation may well be similar
The easier to discover projects have been found Increasing delays in permitting exploration programs due to increased regulation and social unrest Uncertainty over permitting of new mines somewhat mitigated but unless exploration jumpstarts at a faster pace the situation will be hard to revert Due to regulation and social unrest an increasing % of exploration dollars does not go to the ground hence exacerbating the issue
# companies
0
USA
Billion USD$
Peru
Canada
The difference
The capital markets related to metal mining in Canada probably represent a tax revenue even greater than mining itself A lot of good paying white collar jobs are created into the mining related finance sector
Well regulated yet open capital markets A private equity culture used to invest in risky ventures A pool of enetepreneurial minded geologists involved in forming juniors Flow through financing: The exemption of taxes of funds that are invested in Juniors for exploration in Canada Provincial funding of exploration projects (1 dollar for every dollar invested in Quebec for example)
YES, but
Need to deregulate exploration and speed up permits Need to provide tax incentives to local private equity funds and individuals to fund risky investments in exploration Provide a mechanism similar to flow through financing to companies primaryly listed in the Lima exchange Allow AFPs to invest in risky ventures locally on companies primarily listed in the Lima exchange MILA is an important key to provide investors in Chile and Colombia an oportunity to invest in mining Improve the level of Peruvian geologists via better funding to geology programs in state universities Foster a culture of risk taking and angel financing to allow for the creation of local exploration companies that eventually will also explore outside Peru creating more wealth for Peruvian investors