Is Mexico Set for a Gold Rush?Thu, 10/17/2019 - 13:42
Mexico’s abundant resources are no secret and many opportunities remain hidden deep under the ground, says Peter Shortus, General Manager of Landdrill, a Mexican drilling company with headquarters in Hermosillo, Sonora. “There is so much in Mexico that is yet to be explored, including historical mines,” he says. “There are many opportunities to discover good ore bodies, which may not necessarily be high grade but are still of great quality.”
With the price of gold rising in recent months, optimism in the sector is also gaining traction and Shortus says his company is ready to take advantage when exploration bounces back. “With gold prices increasing, there should be more exploration going on in Mexico. We are prepared for this and have refurbished our equipment so that we are ready to start operations as soon as things pick up. The gold boom will start,” he says.
There is also a knock-on effect from gold’s resurgence. “If the price of gold goes up, it takes the price of silver up with it, increasing the value of the Mexican mining industry overall,” Shortus says. In such a scenario, investment tends to return to the country and companies are motivated to spend money.
A key factor to opening hidden opportunities is technology, which the country lacked during previous exploration efforts. Simply put, existing mines were not exploited completely because the companies did not have the technology to do so. “They did not spend enough money in Mexico and therefore only the easy-to-find resources could be found.”
Shortus is hopeful that 2H19 will see the relaunching of operations that were put on standby with the change of government. The larger problem, he adds, is the insecurity sweeping the country. “These issues in Mexico have gotten worse over the years and some projects are having to close down before they even get started. Guerrero and Michoacan are huge problem areas. We try to not get involved with these issues, and whenever we work with a company, we make sure they take care of all of the social issues that may follow,” says Shortus.
Another challenge Landdrill has encountered in its projects is Mexico’s rainy season. He explains that in a project in Michoacan, a project’s entire operations were washed out and half a hill fell into a rig. But these are risks that can be anticipated and Landdrill was able to recover quickly and get the work done
With so much to discover in Mexico, Landdrill is focused on working on different types of projects. “We want to work on deep-hole projects. Fresnillo is drilling some deep holes, but there are no players that truly do this. I would also like to see more reverse circulation in Mexico. It is faster, cheaper and more efficient than other methods,” Shortus says.
“If Canadian investors are involved, they prefer coring and in Australia and Africa, companies tend to work more with reverse circulation. For shallow exploration down to 500m it is the better option. It depends on the rig used, but costs could be reduced by up to 50 percent.”