Clarity Will Lead to InvestmentThu, 10/17/2019 - 14:11
Mexico could be a mining paradise for foreign investors, but the uncertainty that has settled over the industry threatens to do great damage. “By not issuing new concessions, this administration is eliminating the entrance of mining companies coming with risk capital. Most of them will fail, but the few successes are what will keep the mining industry moving,” says Jason Reid, CEO of Gold Resource Corporation. If uncertainty continues, he adds, investors are going to look elsewhere and current concessions will not sustain Mexico as a top mining producer.
Gold Resource Corporation has operations in Mexico and the US. The Oaxaca mining unit consists of six potential high-grade gold and silver properties in the southern state of Oaxaca, including El Rey, El Chamizo, Alta Gracia, El Fuego, El Aguila and Las Margaritas. The Nevada mining unit has four potential high-grade gold properties in the Walker Lane Mineral Belt in western Nevada. Like others operating in Mexico, the company is seeking clarity before executing further investments. “We will continue to explore in our producing assets, but less exploration will take place in our other concessions until we see clear, positive signals from this administration,” Reid says.
If the right signals come from the administration, the company will be more apt to further invest in Mexico. “Our recent focus has been on constructing and commissioning our first mine in Nevada. Now with Nevada commissioning complete and the project ramping up, we will turn additional attention back to Mexico if this administration’s policies encourage more investment,” Reid says. Gold Resource Corporation trades on the New York Stock Exchange.
Despite the geopolitical red flags across the globe, Reid says the company is determined to let efficiency determine its profits rather than global events. “The only way we can protect ourselves is by running as efficiently as possible. We cannot control what China does or what kind of tariffs may be imposed in the future. The best strategy is to remain profitable, and that is what we have done for the last eight years,” he says.
The company achieves its goals by remaining true to its business plan. “Mining companies need to be a positive influence with regard to the surroundings in which they operate. We have been able to successfully work in southern Oaxaca, a region that is known for its social conflict around infrastructure projects,” says Reid, adding that he is confident about the positive investments the company has made in local communities.
“Since day one, we have made a strong impact by allocating many resources to the regions in which we operate. If you visit the local towns near San José de Gracia, you are going to see paved streets, public lighting and access to water services, among many other positive contributions. Under the potential requirements of the proposed Mining Law, I believe the company will outshine its peers given our previous and ongoing partnerships with communities.”
Attracting the best possible talent is also part of this plan. “This is a difficult industry for attracting and retaining talent, as it is very competitive. Our competitors approach our people and we approach our competitor’s employees in search of talent. Hence, one of the primary ways we retain talent is to treat our people with respect,” says Reid. The company primarily focuses on Mexican nationals, but also has some expats working on day-to-day activities. “We bring experienced miners from other areas, and then train our people to become experienced miners as well,” he says.