ANALYSIS -- ProspectingJournal.com -- Local protestors have stalled Newmont Mining’s [NMC – TSX] $4.8 billion Minas Conga project in Peru over environmental concerns. Unfortunately, this is a situation that the international mining community is quite familiar with.
Peru’s mining industry must constantly balance wealth-creation with community relations. This rapidly developing Andean nation derives 50% of its tax revenue from mining, which also represents 60% of export earnings. An impressive 7% of global mining occurs in the mineral-rich and diverse landscapes, which have made Peru the largest silver producer in the world, as well as the sixth largest gold producer.
Yet with such intensive mining activity comes consequences. The recent Newmont demonstrations, focussed on water concerns, had a spillover effect among a handful of miners. Southern Copper [NYSE – SCCO], Anglo American [L-AAL] and Bear Creek Mining [TSX.V – BCM] have all reported community relations issues in certain of their operations.
As we noted earlier, one company that has caught on to the importance of building a strong foundation with the local community is Coronet Metals [CRF – TSX.V].
With a strategically placed property and substantial funding, Coronet is well-placed to develop its Yanamina Gold Project. Yanamina is a planned open pit, heap leach operation with an initial NI 43-101 inferred and indicated resource of approximately 210,000 ounces of gold and 1,400,000 ounces of silver. Already in the advanced stage, Yanamina is on the same trend as Barrick’s Pierina gold mine and has a projected cash-cost for production of $271 per ounce.
And on top of this advanced project, which you can read more about here, Coronet is looking into the possibility of re-processing up to 950,000 tonnes of gold tailings just 16km south of Yanamina. Indeed, Coronet looks like a well-placed junior, advancing towards success.
However, the Newmont protest has shown the mining community that without ‘local support’, even the most promising projects are only as good as the relationships that bind them. Coronet management has thus initiated a number of community relations projects that will strengthen ties between the Company and locals.
The recent appointment of Mr. Miguel Aramburu to the board is the first step in fostering a crucial relationship between Coronet and the community. Having acted as the General Manager of Mining at Hochschild Mining, which has three producing mines in Peru with a strong community relations record, Aramburu brings the common sense and relationship-building skills needed. And with Hochschild’s track-record of training indigenous people into management positions and generating strong profits, Coronet is set to benefit.
Coronet is studying the possibility of creating scholarships for students to attend trade schools and universities. “Coronet Metals is not selling dreams,” said CEO Joel Dumaresq. “We are building a portfolio of gold projects which are either in production or close to it. We have a veteran management team on the ground in Peru that is focussed on the needs of the local community.”
The challenge for Dumaresq is ensuring that he builds the Yanamina project while engaging and fostering growth within the local community. Coronet has definitely adopted the right attitude: that without local support, mining projects run the risk of serious blowback. In this regard, Newmont’s situation is a blessing in disguise for companies like Coronet, who have seen how important it is to not only build a strong portfolio of gold projects, but also how crucial it is to develop rapport among those whose lives are directly affected
Chris Devauld
ProspectingJournal
Disclaimer: The author does not currently hold any shares of any of the companies mentioned in the article. However, some members of Cordova Media Inc., which owns the ProspectingJournal.com, may or may not have interests in one or more of the companies mentioned at the time of publication. Staff members from the Prospecting Journal reserve the right to acquire interests in any of the companies mentioned after 36 hours have elapsed upon initial publication of this article. Coronet Metals is a sponsor of ProspectingJournal.com.