Nicaragua Feels the Gold Rush

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Nicaragua Feels the Gold Rush

COMMENTARY -- -- In gold we have been witnessing a remarkable, decade-long bubble that has seen prices rise from $300 an ounce to the $1700 threshold we have become accustomed to today. From Brazil to Nigeria, explorers are drilling and companies are rushing to take advantage of the highly profitable, multifaceted commodity. But there are few places that bring as much promise and potential as Nicaragua.

Last year, Nicaragua’s local mining community must have wiped the sweat off their faces when President Daniel Ortega was reinstated for another term in office. Since then, the country has reaped the benefits of his pro-mining policies that have only continued to act as a catalyst to today’s impending production boom. And whilst neighboring countries have already enjoyed full production for a number of years, in Nicaragua the gold rush is only just beginning.

This is a place that was largely overlooked during the initial gold boom, with investors instead opting for neighboring and more developed countries such as Colombia and Peru. In a region that now boasts an established mining community, many are providing Nicaragua with a second glance, and for good reason. Here is a country that sits conveniently along the Central American Gold Belt, stretching from Costa Rica to Guatemala, which boasts a history rich in gold. The “legendary” belt has historically accounted for over 20 million ounces of gold production. And in Nicaragua it holds particular allure because the majority of it is untouched and unexplored. It is by all accounts a proven hotspot for exploration and production.

Much of the exploration in the region has been centered about 3 major project areas, specifically, Nueva Segovia, León and Chontales. In previous publications we talked about several Vancouver-based companies and their presence in these development zones. Vancouver-based Golden Reign Resources Ltd. [GRR – TSX.V] continues to engage in exploring its San Albino-Murra Property and its El Jicaro Property, both of which are located in Nueva Segovia. It has recently completed its drilling program at its San Albino-Murra Gold Property and has reported several new prospects within a 4 kilometer squared area of its Southern District. Its board has also been pleased with the identification of several new drilling prospects within a 4 square kilometer area of its Southern District.

Vancouver-based B2Gold Corp. [BTO – TSX] has continued to rapidly grow in Central America, notably driven by its operations in Nicaragua. The company controls two fully operational mines: Limon Mine and La Libertad Mine. It has continued with its plans to eventually operate 4 more mines and its 2010 drill program remains underway. BTO Shareholders have continued on a rollercoaster of major ups and mild downs. Since the turn of the year the share price has increased steadily and the company looks well poised to expand its operations.

Besides these old faces, there are very few amongst the Nicaraguan gold industries that have made as large a stride as Vancouver-based Cassius Ventures Ltd. [CZ - TSX.V]. In previous publications about Nicaraguan gold developments we advised to keep an eye on this junior. Last year the exploration company took a leap forward in acquiring Nicaragua’s Fortress de Nicaragua S.A (Fortress). At the time of the acquisition, Fortress boasted ownership of four concessions in both León and Chontales, totaling 38,000 hectares and 62,000 hectares respectively. They also owned another 8 concessions in the Nueva Segovia project area to the North of Nicaragua. Thus, the acquisition effectively gave Cassius 16 concessions spanning an area in excess of 137,000 hectares, in what were considered key historical sites. Fortress had previously spent a total of $2.5 million in securing such properties and they are considered some of the best mining areas in the country, taking into account infrastructure, ease of access, power, water and labor supply.

The move has since given Cassius status as a rising player in the region. But few could have predicted there was even more to follow in January of this year. Fortress, by then a fully owned subsidiary of Cassius, had announced it had acquired all of the issued and outstanding shares of Nueva Segovia Mining S.A (Nueva Segovia). Nueva Segovia owns the El Zúngano Concession, an important property located in the Nueva Segovia project area. The El Zúngano concession spans an area of 23,814 hectares, and sits adjacent to the 8 northern concession areas already owned by Cassius. John Thomas, President and CEO of the company, noted, “the acquisition of the El Zúngano Concession represents a significant addition to our existing concession holdings in a highly active gold exploration area in northern Nicaragua.” And so today, one year down the line, Cassius’s Nicaraguan Gold Properties now boast 17 concessions that cover a total area in excess of 160,000 hectares.

In February, John Thomas announced the commencement of their 2,650-meter drill program in lieu of preliminary soil and rock samples. Initial drilling has taken place at two concessions, specifically La Jalapeña and Los Angeles, and the company expects the results to be completed and released by June 2012. According to Mr. Thomas, “the Company has identified a large number of gold anomalies in the Murra Mining District,” the location of both drills.

Drilling has also started on the second target, La Lampara. This target has several old underground workings and hosts a strong soil anomaly. Some of the quartz veins exposed in the old working have been sampled and results will be reported in the coming weeks.

He then added, “Cassius Ventures is very well placed to meeting its objective of developing significant gold resources in Nicaragua, a country that is becoming one of the most prospective and mining friendly destinations in the world.” Results and prospects aside, the latter is equally important. Nicaragua is considered a stable, democratically governed environment. Its gold mining industry has been well established for over half a century, providing an infrastructure that is by no means foreign to such an environment. Randy Martin, chairman of Hemco, went as far as to state, “this is by far – and you can talk to any mining company in Central America – this is by far the best place to operate.”

In Nicaragua, gold is rapidly gaining ground on the country’s number one export (coffee). It has helped the economy grow at the fastest pace witnessed in Central America. And in a country that attempts to counter pervasive poverty and unemployment, it is likely to remain this way for some time. Barring an abrupt end to the global gold rush, Cassius and its partners will likely benefit from a nation that provides nothing but cooperation to its miners.


Jason Staeck