W G O L D O R L D A S T NALY

WO R L D G O L D
A N A L Y S T
Colombia – 2011
www.gfmsworldgold.com
The Colombian
Gold Mining
Industry
World Gold Analyst Special Report
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The Colombian Gold
Mining Industry
World Gold Analyst
Special Report
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Chapter 1 – Introduction
This report presents a review of current gold
exploration and development initiatives in
Colombia, one of the most active exploration
regions on earth.
Fifteen mining and exploration companies
supported this study and their projects are
discussed in depth in individual reports following
the body of the report. We are grateful all their
support on this project.
In recent years, Colombia has swapped its
somewhat tarnished image for a golden gleam as
those in the mining industry can testament to. It
has become one of the exploration ‘hotspots’ for
gold exploration and development worldwide and
seen many millions of dollars spent as a raft of gold
exploration companies have flocked in through
Bogata international airport.
Approach
Data collected from company presentations and
discussions was augmented by published data
in the form of press releases, financial reports,
presentations and technical reports, the latter,
in the form of NI 43-101 documents, were used
extensively as the main source of independent
information.
This gold rush of foreign companies into the
country started as a trickle in 1995 with Greystar
Resources discovering the Angostura deposit;
gained fresh impetus in 2003 with AngloGold
Ashanti entering and making a major discovery at
La Colosa, and soared to a spectacular peak in late
2010 with the offer from EBX to acquire Ventana
Gold that valued the company at US$1.5 billion.
The report was written by a team of two analysts
and edited by Paul Burton ACSM, MSc, MBA.
The sponsored reports were written independently
and reviewed by the sponsoring companies for factual
accuracy only. All ‘Investment Comments’ were made by
GFMS World Gold.
The aim of this study is to present the investment
community with a review of a selection of the
exploration and development activity being
undertaken on a company-by-company basis, while
at the same time providing an opportunity for a
number of exploration companies to promote the
merits of their projects to investors.
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Scope
Chapter 2 is an Executive Summary detailing
the status of the gold industry in Colombia and
presents a discussion of the economic, political
and mineral law environment.
The chapter concludes with some observations
about the distribution of exploration efforts
around the country and the status of project
development. The status of sponsor company
projects is presented in a summary table at the
end of the section.
Projects are categorised by World Gold Analyst’s
6-D notation, which identifies at which stage
in the mining life cycle a particular project.
The model, in order of decreasing risk, is
shown below.
6-D Model
Description
DetectionReconnaissance mapping,
geochemical and geophysical
work underway
DiscoveryMineralised targets identified
and drilling underway
DefinitionDeposit is being defined
through a resource estimate
and /or a pre-feasibility study
DesignFeasibility study underway
DevelopmentConstruction decision made
Depleting
Mine is producing
Chapter 3 describes gold geology of Colombia.
Finally, there are detailed individual reports on
the fifteen companies who were involved in
sponsoring this major report.
The Editor
Based in London, Paul Burton is Editor of World
Gold Analyst, a position he has held for over
fifteen years.
Before joining the Mining Journal in 1996, Paul
spent over twenty years in various positions
within the mining industry. After initially working
as a mining engineer he spent much of his career
in mineral economics and minerals marketing in
South Africa.
Paul graduated from the Camborne School
of Mines in 1975 as a mining engineer and
subsequently obtained an MSc in Mining
Engineering and an MBA, from the University
of the Witwatersrand, South Africa.
World Gold Analyst
World Gold Analyst has its roots back in the
1950s when its predecessor, the Mining Journal
Gold Service, first started analysing and providing
commentary on South African gold shares.
In the 1970s, a monthly newsletter covering the
activities of gold companies around the world at
all stages was added to complement the quarterly
stock analysis.
In 1998, the current editor redesigned and rebranded the publications under the banner of
World Gold.
In 2002, after a management buyout, World Gold
became an independent publication, and in 2006,
the name was changed to World Gold Analyst to
reflect a more analytical and selective approach
to reporting.
In 2008, World Gold Analyst formed a joint
venture with GFMS, the world’s foremost
precious metals consultancy, to continue to
publish the quarterly publication as well as
the series of regional investment reports. The
new joint venture company is called GFMS
World Gold
World Gold Analyst’s long history of sound
reporting and independent analysis has given it a
reputation as a trusted and expert commentator
of all aspects of the gold industry.
The publications are read throughout the mining
investment world and its subscriber base includes
mining analysts, fund managers, private investors
and mining company executives.
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Chapter 2 – Overview
“Pablo Escobar was Colombia’s most powerful drug
baron. Here, his pet hippo tells the paradoxical story
of the country’s struggle with drug trafficking”.
BBC website, Jan 19 2011
Colombia was 32 t (just over 1 Moz), making it
19th in the world and 5th in South America.
It was not so long ago that Colombia was
famous (or rather infamous) for its drugs trade
and terrorist attacks on oil pipelines. The rather
bizarre BBC headline above is indicative of how
synonymous Colombia and drugs have been
viewed, although the reference to a pet hippo
brings a level of absurdity that helps put the
situation into perspective.
The largest formal producer is Mineros SA,
which mainly extracts gold from alluvial dredging
operations. In 2010, the company produced
around 99 koz of gold, up almost 10% on the
previous year. In 2009, the company sold its
interest in small hard rock producer, National
Mining Company, to Medoro Resources Inc.
In recent years, Colombia has swapped its
somewhat tarnished image for a golden gleam as
those in the mining industry can attest to. It has
become one of the exploration ‘hotspots’ for gold
exploration and development worldwide and has
seen many millions of dollars of inward investment
as a raft of gold exploration companies have
flocked in through Bogata international airport.
The company will invest around US$25 million
in 2011 in exploration in seven projects in the
departments of Antioquia, Caldas and Tolima.
This gold rush of foreign companies into the
country started as a trickle in 1995 with Greystar
Resources discovering the Angostura deposit; gained
fresh impetus in 2003 with AngloGold Ashanti
entering and making a major discovery at La Colosa,
and soared to a spectacular peak in late 2010 with
the offer from EBX to acquire Ventana Gold that
valued the company at US$1.5 billion or over
US$350/oz of Inferred resource in the ground.
In this chapter, we discuss why foreign gold
companies have been attracted to the country
and summarise the findings of this report into
the activities of fifteen of the most important
players there.
Colombian Gold Production
Colombia has a long history of gold production
that stretches all the way back to 1500s and, in
fact, up until 1937, Colombia was the largest gold
producer in the Americas.
According to figures from GFMS, in the last
10 years production has edged up from 21 t in
2000 to 27 t in 2009.
In 2010, GFMS’s estimate of gold production in
Much of the country’s gold production comes
from informal, often illegal mining.
Mineros SA recently opened the La Ye mine,
which is projected to add about 30 koz to 2011
production of 120 koz.
Another of the country’s principal mines,
Frontino, was acquired in 2010 by Gran Colombia
Gold, which is listed on the TSX. The three
Gran Colombia underground mines produced
58 koz of gold in 2009. Gran Colombia restarted production in early September 2010,
with an initial aim of restoring production to the
100 koz/y level.
The minerals industry in Colombia
Although gold may have grabbed many of the
headlines in the past year or so, the country is
rich in natural resources and has an established
minerals mining industry. It is a major producer of
emeralds, platinum, silver and coal and possesses
substantial oil reserves.
Colombia is the world’s leading producer of
emeralds, and South America’s second largest
gold producer and only platinum producer.
Colombia also boasts the largest coal reserves,
second largest oil, and third largest natural gas
reserves in South America.
The coal producer, Cerrejón, demonstrates the
commitment of some of the world’s largest
mining company. This private company is a joint
venture in which BHP Billiton plc, Anglo American
plc and Xstrata Coal each own a one third stake.
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Colombia has a skilled workforce and a mining heritage
Located in North-East Colombia, it produces high
quality thermal coal favoured by the US power
generation market due to its low ash content,
low sulphur dioxide emissions profile and high
calorific value.
BHP Billiton is also invested in base metals in
the country, through its Cerro Matoso nickel
laterite mine.
The Attractiveness of Colombia
In this section we consider the factors that make
Colombia a favourite destination for exploration
dollars and the recipient of US$3.24 billion of
foreign direct investment in mining in 2009.
Stable government
Politics of Colombia take place in a framework of
a presidential representative democratic republic,
whereby the President of Colombia is both head
of state and head of government, and of a multiparty system. Executive power is exercised by
the government. Legislative power is vested in
both the government and the two chambers of
congress, the Senate of Colombia and the House
of Representatives of Colombia. The Judiciary is
independent of the executive and the legislature.
In 2010, the U Party was elected for its third
consecutive term of office, with President Santos
newly elected to continue the work of his
predecessor President Alvaro Uribe.
Business Environment
The business climate in Colombia is stable and
friendly to foreign investment. The country is
classed as one of the emerging countries of
the world and is a member of the new BRIC
economies, the so-called CIVETS (Colombia,
Indonesia,Vietnam, Egypt, Turkey and South Africa).
During the past five years, the Colombian
economy grew by 4% per year. In 2009,
Colombia’s GDP registered an increase of 0.4%, a
positive growth during global recession.
As the oldest and most stable democracy in
South America, Colombia has never defaulted on
a foreign loan or expropriated foreign assets.
In the 2011 “Doing Business Report”, The World
Bank ranked Colombia as the third most business
friendly country in Latin America and the first
country in the region that best protects investors
and its rank fifth worldwide.
Educated workforce
Colombia’s population of 43 million has a welleducated and growing middle class. According to
the IMD, Colombia’s labour regulations hinder
business activities in Latin America the least, the
lowest Index on rigidity of employment in Latin
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America and the second most qualified labour
available in the region.
Personal safety
The country has witnessed a huge improvement
in personal safety since President Alvaro Uribe’s
election in 2002.
Geological prospectivity and mining
culture
The country has good gold geology with
numerous occurrences of epithermal and coppergold porphyries. It has a long mining history and
a modern Mining Act promulgated in 2001 with
30-year renewable mining concessions.
Geological Context
Colombia’s geological history has been controlled
by its tectonic location, on the northern edge
of the subduction boundary between the Nazca
oceanic plate and the South American continental
plate, with the Caribbean plate lying close to
the north.
The western third of Colombia is therefore
underlain by accreted oceanic terranes; while the
bulk of the country sits mainly on continental,
cratonic terrane of the Guiana Shield. A long
geological history of subduction has given
rise to numerous and extensive phases of
magmatic intrusion and regional deformation
and metamorphism. Major, crustal- scale faulting
is prevalent throughout the north and western
portions of the country, with regional faults
breaking the continental plate into a series of
tectonic blocks; most notably the North Andes
block and the Maracaibo Block.
Metallogenic belts
Four major gold belts or districts are recognised
in the northern Colombian Andes, trending north
to north-easterly. From west to east, these are:
Choco belt, Middle Cauca belt, Segovia belt and
the California-Angostura district.
The Choco belt is a zone of predominantly placer
deposits formed from erosion of the epithermal
and porphyry related gold mineralisation in
the Western Cordillera. The most significant
Colombian placer deposits occur, however, to the
east of this belt, along the Rio Nechi river system.
The Middle Cauca belt is characterised by
porphyry gold deposits, most significantly La
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Colosa (AngloGold Ashanti); although associated
intermediate epithermal gold deposits also
occur, as at Marmota (Medoro Resources).
Mineralisation is closely associated with finegrained, porphyritic diorite and dacite stocks of
Miocene age (7-26 million years old).
Oxidised, pluton-related gold deposits define
the Segovia belt in the northern part of the
Central Cordillera, although a significant
proportion of historic gold production has
also come from placers derived from these
deposits. The late Jurassic age (c.150 million
years old) Segovia batholith is of calc-alkaline
composition, dominated by hornblende diorite
and tonalite intrusives.
In the California-Angostura district, a number of
high and intermediate -sulphidation epithermal
deposits occur in the Santander Massif of the
Eastern Cordillera. The northeast trending Rio
La Baja fault zone is considered to be a splay of
the crustal-scale Rio Cucutilla fault and is the
principal control on alteration and mineralisation
at Angostura (Greystar), La Bodega (Ventana) and
Norte de Santander (CB Gold).
Mineralisation styles
Porphyry gold, porphyry copper- gold, highand intermediate-sulphidation epithermal and
placer gold deposits are all significant types of
mineral deposits in Colombia; as are oxidised
pluton-related vein deposits. As a group, the term
oxidised, pluton-related deposits includes porphyry
and high-sulphidation mineralisation, but it also
encompasses skarn, manto and mesothermal vein
styles of mineralisation that are spatially, if not
temporally, related to intermediate-felsic (calcalkaline) porphyritic intrusions
Unlike some of its South American neighbours
to the south, Colombia has yet to fully explore
its porphyry potential. There is strong geological
evidence that Colombia may host porphyry gold/
copper deposits similar in grade and size to those
found in Chile and Peru
Fraser Institute findings
One of the most authoritative reports on mining
investment moods each year is conducted by
Canada’s Fraser Institute. The Fraser Institute
surveys companies worldwide and compiles a
“Policy Potential Index”, which, as the Institute
explains, serves as a report card to governments
on how attractive their policies are from the
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Colombian Gold Belts
C O L OM B I A
point of view of an exploration manager.
The Policy Potential Index (PPI) is a composite
Miocene belt in Colombia’s central
index that measures the effects on exploration
cordillera policies including uncertainty
of government
concerning
the administration,
interpretation,
Major gold
deposits include
La
andColosa
enforcement
of existing regulations;
& Marmato
environmental regulations; regulatory duplication
only just
andCountrywide
inconsistencies;exploration
taxation; uncertainty
concerning
native land claims and protected
beginning
areas; infrastructure; socioeconomic agreements;
political stability; labour issues; geological
database; and security.
As the Institute notes in its introduction, “In
today’s globally competitive economy where
mining companies may be examining properties
located on different continents, a region’s policy
climate has taken on increased importance in
attracting and winning investment”.
N
PANAMA
Segovia Belt
VENEZUELA
Buriticá
Marmato
Antioquia
Batholith
Choco Belt
COLOMBIA
Middle Cauca Belt
La Colosa
Western edge of the craton
METALLOGENIC BELT AGE
Jurassic
Late Cretaceous Early Tertiary
Eocene (?)
Miocene
DEPOSIT TYPE
Porphyry Gold
Intermediate Sulfidation
Oxidized Pluton Related
In the 2010/11 survey, released at the beginning
of March 2011, in the composite index scoring,
0
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Colombia came 40 th out of 72 countries, and
Kilometres
the third most attractive country in Latin America
ECUADOR
(behind Chile, which ranked 7th worldwide, and
The main metallogenic belts of Colombia (Courtesy of Continental Gold) 8
www.continentalgold.com
Mexico). This marks a significant improvement
on 2009 when the country was ranked 48th
worldwide and it is noteworthy that it has
overtaken such notables as Peru and Brazil.
•
INGEOMINAS (Instituto Colombiano de
Geología y Minería): The MME has delegated
Breaking down the PPI into its component factors
the
administration of mineral resources to
reveals some interesting observations.
INGEOMINAS and some Departmental
The Current Mineral Potential Index is based
Mining Delegations. INGEOMINAS has two
on respondents’ answers to the question about
departments, the Geological Survey (Servcio
whether or not a jurisdiction’s mineral potential
Geológico), and the Mines Department
under the current policy environment encourages
(Servicio Minero) responsible for all mining
or discourages exploration. Colombia scored high
contracts except where responsibility for
– 16th out of 79.
the administration has been passed to the
Departmental Mining Delegations.
The area where Colombia’s case is not seen as
strong concerns the security situation (includes
•
Departmental Mining Delegations
physical security due to the threat of attack by
(Gobernaciones Delegadas). It administers
terrorists, criminals, guerrilla groups, etc.), where
mining contracts in the Departments with
82% of respondents stated that it was a mild,
the most mining activity, including Caldas
strong deterrent or total deterrent.
and Antioquia.
Mining Legislation
Mining authorities
The main mining authorities in Colombia are:
•
Ministry of Mines and Energy (Ministerio de
Minas y Energia, MME): The highest mining
authority in the country.
•
Mining Energy Planning Unit (Unidad de
Planeación Minero Energética, UPME):
Provides technical advice to the MME
regarding planning for the development
of the mining and energy sector and
maintains the System of Colombian Mining
Information (Sistema de Información
Minero Colombiano, SIMCO).
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Mining Law
Mining in Colombia is governed by Mining Law
No 685, adopted in 2001. Under this Mining
Law all mineral resources belong to the state
and can be explored and exploited by means of
concession contracts granted by the state.
There is a single type of concession contract
covering exploration, construction, and exploitation,
which is valid for 30 years. Up until 2010, this could
be extended for a further 30 years but the passing
of amendments in Law 1382 of 2010, the extension
period is now reduced to 20 years.
The concession contract has three phases:
Exploration Phase.
This starts once the contract is registered in
the National Mining Registry (Registro Minero
Nacional, RMN) and is valid for three years, with
an option to extend for eight years (increased
from two years in 2010).
That to ensure equal access and transparency
to stakeholders, through Decree 2345 of
June 2008, the Government adopted the
technology platform called the Colombian
mining cadastre as one of the mechanisms for
submitting proposals concession contracts by
mining proponents, which has been operating
since then. In February 2011, the MME passed
a resolution temporarily suspending cadastre
applications for six months while it audits and
updates the database.
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The Mining Law 685 of 2001 requires an
Environmental Mining Insurance Policy for each
concession contract. In addition, the Law states
that a Social and Environmental Impact Study
(EIS) has to be presented at the end of the
Exploration Phase if the concession is to proceed
to the Construction Phase.
Review of gold activity in Colombia
In this report we describe in some detail the
activities of fifteen of the most prominent foreign
players in Colombia’s gold mining industry.
These range across the spectrum of our 6D
model, from those that are already in production,
such as Gran Colombia Gold and Red Rock
Resources, to those that are at the detection
stage, like Miranda Gold.
Also, this report considers some of the very
largest companies, such as AngloGold Ashanti
with a market capitalisation on tens of billions, to
small cap companies such as Colombian Mines
and Mercer Gold.
Colombian Gold Rush
As mentioned earlier, the gold rush of foreign
companies into the country started as a trickle
in 1995 with Greystar Resources discovering
the Angostura deposit but became a fullyfledged rush in 2009 and 2010 with a number of
new entrants.The timeline of the rush is shown
below.
Construction Phase.
1995 – Greystar
Permission under this phase is valid for three
years, with a 1-year optional extension. An
Environmental Licence is issued on approval of
Environmental Impact Study.
2003 – Anglogold
Exploitation Phase.
Valid for 30 years minus the time taken in the
exploration and construction phases, which
means that it is 21 to 24 years, and is renewable
for 20 years.
Annual Environmental Mining Insurance Policy
required.
Royalty payments to the state are 4% of gross
value at the mine output for gold and silver, and
5% for copper (Law 141 of 1994 modified by Law
756 of 2002).
C O L OM B I A
2006 – Sunward,Ventana, Colombia Mines,
Continental
2009 – Galway, Medoro, Miranda
2010 – Batero, Seafield, C8 Gold, Eaglecrest,
Gran Colombia, Mercer, Red Rock
6D Model Status
The 6D model of Colombia’s gold industry
exhibits the classic resource pyramid with
many projects at the early stage and fewer
making though the rigorous process to the
Development stage. The diagrams on the next
page show the 6D model triangles, in terms of
number of projects and then in terms of the
companies themselves.
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The mountain at Marmato, which hosts a 6.6 Moz resource on one side and an earlier stage exploration project on the other side.
depleting
Gran Colombia
Red Rock
design
Greystar
definition
Anglogold, Batero, Continental,
Medoro, Sunward, Ventana
discovery
CB Gold, Colombian Mines,
Eaglecrest, Mercer, Galway
detection Miranda
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Definition projects
One notable observation from this report is the
large size of gold resources that those companies
that advanced to the Definition stage have been
able to delineate.
The following chart shows total resources, all
categories, for the main projects in Colombia.
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Silver
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Gold
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C O L OM B I A
One event reinforces the attractiveness
and prospectivity of gold in Colombia, but
unfortunately the other may have rung certain
alarm bells with international investors.
The first event involves Ventana Gold. In midNovember, the EBX Group, already a 20%
shareholder in Ventana, made an unsolicited,
all-cash offer for the rest of the company
at C$12.63/share, which represented a 30%
premium over Ventana`s 30-day volume-weighted
average trading price and valued the company
at C$1.3 billion (C$1.5 billion on a fully diluted
basis). In February 2011, EBX increased its offer
to C$13.06/share in cash and this was accepted
by shareholders.
This acquisition highlighted the value that could
be attributed to gold resources in Colombia and
excited management of those other companies
exploring in the vicinity of Ventana’s La Bodega
project with its 3.5 Moz gold resource.
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La Colosa Angostura Marmato La Bodega
Titribi
Titiribi
The only Design project included in this report is
Greystar Resources’ Angostura project, more of
which later.
In the Definition phase, as can be seen in the chart
above, there are a number of projects with significant
resources. However, there is only one project which
has undergone an independent evaluation and that
is the La Bodega project, until recently owned by
Ventana Gold, which was the subject of the recent
takeover by EBX (see next section).
In November 2010,Ventana published a scoping
study based on an Inferred resource containing
3.5 Moz gold, 19 Moz of silver and 85 Mlb of
copper. The scoping study assumes a capital cost
of US$297 million for a mine life of 14 years at
a production rate of up to 7.5 kt/d, with annual
production of 347 koz/y AuEq for the first 6
years, at a cash cost of US$322/oz gold net of
by-product silver and copper.
Recent events
In recent months, two companies whose core
activities are focussed in Colombia, have hit
the headlines and raised the profile of gold
in Colombia.
However, any excitement that neighbour
Greystar Resources may have experienced
would have been short-lived as the completion
of the acquisition of Ventana coincided with an
acknowledgement by Greystar that it would be
very difficult to progress its open pit plan to
exploit the almost 9 Moz of gold resources at its
Angostura project.
As envisaged as an open pit, Angostura contains
one of the largest resources yet defined in
Colombia and could support one of the world’s
largest gold mining operations, according to the
pre-feasibility study. However, the project has
encountered local opposition to an open pit
mine, ostensibly on concerns over mining within
the high-altitude PARAMO ecosystem.
In mid-March, the company released an
alternative underground plan, which is very much
a sub-optimal plan for exploitation of the in-situ
resources but is a serious alternative, which the
company has clearly considered for some time as
its fallback plan. It could still result in a long term
profitable gold mine at Angostura.
As Greystar continues to try to resolve matters
concerning the opposition to the open pit plan,
and progresses its underground plan, the other
international companies developing projects
within Colombia will, no doubt, be following
events with great interest.
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The proximity of the Greystar, Ventana and Galway properties suggest that some rationalisation of this camp is on the cards
The future
The gold mining industry worldwide lacks good
projects and quality resources. So, when a country
such as Colombia ‘opens up for business’ and
exploration companies start to define world-class
resources, the major players in the industry sit up and
take note.The successful acquisition of Ventana Gold
may be the first salvo in a stream of M&A activity.
Certainly, in the short term there may well be
some rationalisation and consolidation of the
concession areas around the La Bodega project. In
addition to the EBX property, Galway Resources
is next door and CB Gold’s properties are nearby
in the California-Vetas locality.With uncertainty
surrounding Greystar’s project there may be a
solution to exploitation of Angostura through
cooperation in the area, either through a joint
venture arrangement with its neighbours or through
the amalgamation of properties and companies.
Further south, in the Mid-Cauca gold belt, there
is a situation where two companies – Medoro
Resources and Mercer Gold – are exploring the
same geological deposit either side of an artificial
property boundary down the middle of a mountain.
There will surely be a rationalisation here in future.
Concluding Remarks
Summing up the potential for investment in gold
in Colombia:
The country:
•
Has a good investment climate
•
Is highly prospective and underexplored
•
Is ‘Elephant country’ for gold deposits
•
Has some established projects with large
resources which are undervalued
•
Is host to many foreign explorers at early
stage getting good results
•
Has investment opportunities at all
6D levels
References:
1 Batero Technical report, Christopher Baldys & Darren Anderson, December
14, 2009; Guayabales Project Technical Report, Dean Turner, Exploration
Geotechnologies Inc, June 17, 2010.
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Comparative market data for Colombian companies
(excludes AngloGold Ashanti and Ventana Gold)
Shares issued (millions)
800
700
600
500
400
300
200
100
0
CMJ
BAT
MAD
CLB
MRGP
GWy
GSL
CNL
CBJ
SWD
MRS
GCM
RRR
MAD
GWy
CBJ
RRR
SWD
BAT
GSL
MRS
GCM
CNL
MRGP
CLB
GCM
GWy
CNL
SWD
BAT
CBJ
RRR
Mkt Cap (US$ million)
1000
800
600
400
200
0
MRGP
CMJ
CLB
6-mth share performance (%)
400
350
300
250
200
150
100
50
0
-50
GSL
CMJ
MAD
MRS
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Chapter 3 – Geological Overview
of Colombia
by Paul Wheeler, BSc ARSM
Colombia’s geological history has been controlled
by its tectonic location, on the northern edge of the
subduction boundary between the Nazca oceanic
plate and the South American continental plate, with
the Caribbean plate lying close to the north.
Changes to the position of the subduction zone,
formed as the Nazca plate slides under the
South American plate, have resulted in a complex
accretion of terranes onto the north western edge
of the Guiana Shield which have been continually
deformed to create the succession of mountain
chains that define the northern portion of the
Andes. Terrane accretion occurs when material is
attached to one plate by the scraping of oceanic
crustal rocks and sediments off another.
The western third of Colombia is therefore
underlain by accreted oceanic terranes; while the
bulk of the country sits mainly on continental,
cratonic terrane of the Guiana Shield. A long
geological history of subduction has given
rise to numerous and extensive phases of
magmatic intrusion and regional deformation
and metamorphism. Major, crustal-scale faulting
is prevalent throughout the north and western
portions of the country, with regional faults
breaking the continental plate into a series of
tectonic blocks; most notably the North Andes
block and the Maracaibo Block.
The Guiana Shield is made up of highly deformed
and regionally metamorphosed granitic gneisses
and granitoids, largely of early Proterozoic age
(c. 1640-2390 million years old).Younger (midPalaeozoic) formations of dioritic gneiss are
exposed in eastern Colombia. The age of the Shield
terrane means that these basement rocks, which
originally formed in the root zones (basement) of
mountains, have been uplifted and deeply eroded
to produce the current levels of exposure.
The North Andes block can be subdivided into
three major mountain ranges, the Cordillera
Occidental (Western Cordillera), Cordillera
Central (Central Cordillera) and the Cordillera
Oriental (Eastern Cordillera). Where these three
mountain ranges converge, near the border with
Ecuador, they form the Colombian Massif (Nudo
de Almaguer).
The varying formation and age of each mountain
range gives rise to distinct differences between
them. They are divided from each other by
deep intermontane basins; formed along major,
crustal- scale fault zones; which are filled with
a mix of siliclastic and calcareous sedimentary
rocks, including erosional products from the
surrounding mountains.
The Central Cordillera is thought to have formed
from the deposition, in the Lower Palaeozoic, of a
volcano-sedimentary complex of rocks onto the
basement complex of the north-western margin
of the Guiana Shield. This package of rocks was
subjected to orogenic uplift, deformation and
regional metamorphism during the Caledonian
orogeny (Mid-Palaeozoic) which represented the
onset of the predominantly compressional tectonic
regime which persists to this day.
Subduction of the Nazca plate under the
North Andes block, initiated in the Cretaceous,
ultimately led to the accretion of the Western
Cordillera terrane, thought to represent a former
subduction-related island arc, in the Lower
Tertiary. This accretion process was accompanied
by development of the Romeral Fault Zone,
the associated Cacau-Patia basin and extensive
emplacement of calc-alkaline magmatic bodies.
During the Andean orogeny the Western
Cordillera was uplifted and intruded by further
phases of calc-alkaline andesitic intrusive and
volcanic activity. This volcanic activity has continued
to the present day and is associated with porphyry
copper and epithermal mineralisation throughout
the Andes.
The Eastern Cordillera is the most recently
formed mountain range and developed towards
the end of the Tertiary as a result of uplift and
deformation of a pelagic, sedimentary dominated
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assemblage overlying Precambrian
basement rocks.
The Eastern Cordillera bifurcates
at a point south of the Maracaibo
Basin in north-eastern Colombia.
The eastern branch maintains a
northeast trend and continues as
the Sierra de Merida in Venezuela,
to the east of the Maracaibo Basin,
while the western branch swings
to the northwest. This western
branch of the Cordillera includes the
Santander Massif, which is comprised
of Precambrian gneisses, schists,
quartzites and migmatites of the
Guyana Shield; with intermediate
(diorite) to granitic intrusives
emplaced during a period of uplift
in the Jurassic-Triassic. Numerous
younger porphyries are also found in
the region.
Within the Massif, regional faulting
parallels the crustal-scale northwest
trending Bucaramanga-Santa Marta
fault and the northeast trending
Rio Cucutilla fault zone. Tectonic
reactivation has continued to the
present and the intense faulting in
the area has had a long and complex
history. The emplacement of
intrusives, with associated epithermal
gold mineralisation, appears to have
been controlled predominantly by
these faults and north/northeast
trending splays off them.
Moving away from the Cordillera
regions of Colombia, much of the
south and east of the country
is comprised of the undulating
topography of the Llanos plains.
These regions, and the lower-lying
coastal regions, are underlain by
Tertiary sediments, with extensive
alluvial and colluvial deposits formed
from the continued uplift and
erosion of the Andes throughout the
Quaternary.
Metallogenic belts
Four major gold belts or districts
are recognised in the northern
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Colombian Andes, trending north to northeasterly. From west to east, these are: Choco belt,
Middle Cauca belt, Segovia belt and the CaliforniaAngostura district.
The Choco belt is a zone of predominantly placer
deposits formed from erosion of the epithermal
and porphyry related gold mineralisation in
the Western Cordillera. The most significant
Colombian placer deposits occur, however, to the
east of this belt, along the Rio Nechi river system.
The Middle Cauca belt is characterised by
porphyry gold deposits, most significantly La
Colosa (AngloGold Ashanti); although associated
intermediate epithermal gold deposits also occur,
as at Marmota (Medoro Resources). Mineralisation
is closely associated with fine-grained, porphyritic
diorite and dacite stocks of Miocene age
(7-26 million years old).
Oxidised, pluton-related gold deposits define the
Segovia belt in the northern part of the Central
Cordillera, although a significant proportion of
historic gold production has also come from
placers derived from these deposits. The late
Jurassic age (c.150 million years old) Segovia
batholith is of calc-alkaline composition, dominated
by hornblende diorite and tonalite intrusives.
In the California-Angostura district, a number of
high and intermediate-sulphidation epithermal
deposits occur in the Santander Massif of the
Eastern Cordillera. The northeast trending Rio
La Baja fault zone is considered to be a splay of
the crustal-scale Rio Cucutilla fault and is the
principal control on alteration and mineralisation
at Angostura (Greystar), La Bodega (Ventana) and
Norte de Santander (CB Gold).
Significant gold deposits also occur outside
these main gold belts. The Colombian Massif,
Western Cordillera and western flank of the
Central Cordillera are host to porphyry copper
and porphyry copper-molybdenum deposits,
which contain variable quantities of by-product
gold. Examples include the copper-gold porphyry
deposits at Mazamorras (Gran Colombia) and
Cerro Vetas (Sunward Resources).
Mineral Deposit Types
Porphyry gold; porphyry copper-gold; high-and
intermediate-sulphidation epithermal ; and placer
gold deposits are all significant types of mineral
deposits in Colombia; as are oxidised plutonrelated vein deposits.
G O L D
A N A L Y S T
C O L OM B I A
As a group, the term oxidised, pluton-related
deposits includes porphyry and high-sulphidation
mineralisation; but it also encompasses
skarn, manto and mesothermal vein styles of
mineralisation that are spatially, if not temporally,
related to intermediate-felsic (calc-alkaline)
porphyritic intrusions.
Although very similar in nature to porphyry style
mineralisation, the mesothermal veins appear to be
related to later tectonic and thermal re-mobilisation
of gold-bearing fluids i.e. they post-date the main
phases of pluton intrusion and cooling. In the
Segovia district, gold mineralisation is associated
with lead-zinc-copper sulphides in quartz-pyrite
veins, vein swarms and stockworks that crosscut granodiorite-tonalite intrusives and other
host rocks.
Porphyry deposits are generally large tonnage,
low- to medium-grade deposits in which primary
ore minerals have a direct spatial and genetic
relationship to felsic-intermediate porphyritic
intrusions. Multiple intrusions are common, and
the boundaries between magmatic phases are
commonly brecciated. Mineralisation is predominantly structurally controlled; with styles
varying from veins, sheeted vein systems and
breccias to stockworks. In most deposits, the bulk
of the mineralisation is hosted in stockworks and
often extends into the host rocks into which the
porphyritic stocks have been intruded.
The mineralogy and hence metal content of
porphyry deposits is diverse and reflects a wide
spectrum of sub-types, although pyrite is typically
the dominant sulphide mineral. In Colombia, gold
may simply be a by-product of porphyry copper
production but, more significantly, there are
also porphyry gold deposits in which gold is the
primary metal of interest.
In porphyry copper-molybdenum-gold and
copper-gold deposits the principal ore minerals
are chalcopyrite, bornite, chalcocite, tennantite,
molybdenite, native gold and electrum. In porphyry
gold deposits native gold, electrum and gold-silver
tellurides are the predominant ore minerals;
chalcopyrite, bornite, and molybdenite may also be
present but only in minor amounts.
Hydrothermal alteration in porphyry systems is
extensive and typically zoned on a deposit scale
as well as around individual veins and fractures.
Alteration assemblages are controlled both by
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the composition of the host rocks and by the
composition of the mineralising fluids.
In many porphyry deposits, the typical, deposit
scale alteration zones consist of an inner potassic
zone (characterised by K-feldspar ± biotite) and an
outer zone of propylitic alteration (quartz-chloriteepidote). Zones of phyllic alteration (quartzsericite-pyrite) and argillic alteration (quartz-illitepyrite±kaolinite and other clays) may overprint
parts of the potassic and propylitic zones.
In a number of the porphyry gold deposits in
Colombia’s Middle Cauca belt, a significant role
is played by early phases of sodic-calcic wall-rock
alteration, which results in albite-actinolite-quartz
assemblages.
Epithermal gold deposits are commonly
characterised as belonging to one of three subtypes:
high sulphidation (alunite-kaolinite), intermediate
sulphidation or low sulphidation (adularia-sericite).
Although the latter type undoubtedly occurs in
Colombia, most recorded epithermal deposits are
of the high- or intermediate-sulphidation type.
In high-sulphidation (HS) deposits, native gold
and electrum are typically associated with pyrite,
enargite, covellite, bornite and chalcocite. In
addition to sulphosalts and base metal sulphides,
tellurides and bismuthinite are present in some
deposits. Total sulphide contents are generally
higher in HS than intermediate-sulphidation
deposits. Where base metals are present in
HS deposits, the copper abundance can vary
significantly (<0.1-5%), and typically dominates that
of zinc. Principal gangue minerals include quartz
(‘vuggy silica’), alunite and barite.
Many HS deposits are associated with large volumes
of advanced argillic wallrock alteration, which formed
pre-mineralisation through the mixing of acidic
magmatic fluids and groundwater above mineralised
porphyry intrusives.The variable nature of the host
rocks produces variations in alteration assemblages
and zoning patterns; but typically, the characteristic
zoning ranges from proximal vuggy silica through
advanced argillic assemblages (alunite-pyrophyllitedickite-kaolinite) to distal argillic alteration.
High sulphidation epithermal gold-silver deposits
predominate in the Santander Massif , Eastern
Cordillera. Gold mineralisation occurs in sheeted,
steeply-dipping quartz-pyrite veins, anastamosing,
en echelon vein zones, and hydrothermal breccias
hosted in pervasively sericitised and argillised
intrusive rocks and basement gneiss.
Mineralisation is characterised by the association
of gold with silver, copper, arsenic, molybdenum,
and tellurium. Economic gold grades are generally
associated with the presence of disseminated, finegrained pyrite and chalcedonic or microcrystalline
quartz, with variable amounts of alunite and vuggy,
hydrothermal brecciation.
Intermediate sulphidation deposits occur mainly in
volcanic sequences of andesite to dacite composition
within calc-alkaline volcanic arcs. Mineralisation
occurs in veins,stockworks and breccias; repeated
phases of brecciation are common. Gold is present as
native metal and as tellurides, typically associated with
banded or crustiform quartz, manganese-carbonates
and adularia.
Base metal sulphides and sulphosalts are often a
significant component of the ore, mainly comprising
chalcopyrite, tetrahedrite-tennatite, sphalerite and
galena. Alteration minerals are zoned from proximal
quartz-carbonate-adularia-illite through illitesmectite to distal propylitic alteration.
Porphyry and epithermal deposit types can
display spatial-temporal relationships between
each other, with epithermal mineralisation
stratigraphically above or over-printing porphyry
style mineralisation.
Across many of these different deposit types,
supergene weathering and oxidation, often to
considerable depths in permeable silicified rock,
generates oxide gold mineralisation amenable to
recovery by direct cyanide leaching in CIP/CIL or
heap leach processing plants.
Where basement complex rocks of the Guiana
Shield are exposed there is the potential for
greenstone-belt, orogenic type gold mineralisation
to occur. Known deposits are poorly documented
in Colombia, however, although placer gold in the
southeast of the country may be derived from
such sources.
Placer deposits are widely distributed across
Colombia, reflecting the widespread geographic
location of primary gold deposits, and there are
a large number of artisanal workings and small,
mostly privately owned, mining companies.
KEY REFERENCES
INGEOMINAS Colombian Institute of Geology and Mining, 2010.
http://www.ingeominas.gov.co/ (Government site, in Spanish).
Sillitoe,R.H. 2008. Major Gold Deposits and Belts of the North and South American
Cordillera. Economic Geology,Vol.103, pp.663-687. Society of Economic Geologists.
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Batero Gold
Project: Batero-Quinchia
6D Status: Definition
Corporate Details
Name
Batero Gold Corp
Registered
Canada
Address
#3703-1011 W. Cordova St
Vancouver, BC, V6C 0B2
Telephone
+1 604 568 6378
Fax
+1 604 568 6834
Email
[email protected]
Website
www.baterogold.com
Share Information (close 14/3/11)
Listed
TSXV
Ticker
BAT
Shares in issue
46.5 million
Share price
C$4.64
52-wk
high: C$6.57
Market Cap
C$216 million
The 100%-owned Batero-Quinchia project covers
1,497 ha and is located at Quinchia, Department
of Risaralda, some 190 km WNW of Bogotá.
Batero acquired the property from a private
Colombian company in July 2010 for 6.7 million
shares (valued at C$3.3 million) and cash of
C$450,000.The company subsequently paid
an additional C$1.7 million (in share units) to
complete the acquisition with no further cash or
work commitments.
The company has agreed to issue an additional
2.0 million shares to the vendor if it establishes at
least 5 Moz of gold in resources.
low: C$0.58
Company Description
• Batero listed on the TSXV in July 2010 after changing its name
from Angus Resources Inc.
• Using four rigs the company is drilling at three previously
defined gold/copper porphyry centres and other developed
targets at its Batero-Quinchia project located in Colombia’s
Mid-Cauca gold belt.
• Initial results from the current La Cumbre drill campaign have
confirmed the tenor of the mineralisation encountered in the
2006 programme and show the potential for mineralisation
to extend between two historical holes to the northwest
and southwest.
Key Officers & Management
President, CEO & Director: Brandon Rook; Director of
Colombian Operations, Exploration Manager, Director: Rafael
Alfonso; Chief Financial Officer, Director: Nick Demare;
Director: Darrell Podowski; Director: James Hutton.
Funding & Financial Position
As at August 31, 2010, the company had cash of approximately
C$4 million after raising C$6.3 million through a short form
offering and two private placements during the financial year.
In October, the company raised an additional C$15.8 million
(gross) through two private placements of share/warrant units at
C$1.60/unit.
As at December 7, the company had working capital of approx
C$17 million.
The project enjoys good infrastructure and
transport links and is located at a relatively low
elevation ranging between 1,600 and 1,950 m.
Geology
The project is located at the south end of the
Mid-Cauca gold belt, along the Romeral Fault
system, which also hosts Medoro’s Marmato
deposit as well as AngloGold Ashanti’s La Colosa
deposit, both multi-million ounce projects.
The property’s gold-copper porphyry gold deposits
are associated with three Miocene intrusive centres
along a N-S trend that have a strike extension of
approximately 3 km.These intrusions comprise
dykes and stocks emplaced in intermediate to felsic
volcanic rocks and in Cretaceous basalts.
Exploration
In 2006-2007, after initial target definition work,
AngloGold Ashanti drilled 15 holes (to an average
depth of 250 m) and defined three gold/copper
porphyry mineralised zones.
Batero’s initial geochemistry and mapping work
identified a number of other targets, recently
confirmed by geophysical surveys consisting of
58 line-km along a 50 m grid, which have also
identified other anomalies.
In October 2010, the company commenced a Phase
1 16,000-m drill programme at the La Cumbre
porphyry, one of several significant mineralised
anomalies, using four drill rigs to test targets and to
generate a compliant NI-43-101 resource estimate.
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MATECAÑA TARGET AREA
A N A L Y S T
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Airborne geophysics clearly identifies
three targets in the south of the property
At the current time Batero has four rigs on site
and in early January had completed eight holes in
its programme (results pending on holes 3-8).Two
rigs are drilling at La Cumbre, a third is drilling at
La Lenguita and the fourth at Matecaña.
•
•
•
•
•
At La Cumbre, historic drilling intersected gold/
copper mineralisation from surface, with the
discovery hole reporting 276 m grading 0.75 g/t
gold and 0.14% copper. La Lenguita (and San Luis)
is located approximately 1 km to the north of
La Cumbre. Matecana is a new porphyry target area
discovered by geochemistry in September 2010 and
is located 1 km southeast of La Cumbre.
Nonetheless, it is exploring in a highly
prospective area and initial drilling results
are very encouraging for a gold/copper
porphyry discovery.
• Results from the current La Cumbre drill
have confirmed
the tenor of the
New porphyry zone discovery made incampaign
September,
2010
Drilling to commence January, 2011
mineralisation encountered in the 2006
programme and show the potential for
mineralisation to extend between two
historical holes to the northwest and
southwest. Hole QAP-DDH-002 intersected
452 m (down hole length) at grades of 0.60 g/t
gold and 0.12% copper starting from surface.
Located approximately 1 km SE from La Cumbre porphyry DDH#8 disco
The company is also continuing to target the
roughly 700 m by 700 m Dos Quebradas area,
which lies to the north. Of the five historic holes
drilled there, hole DDH-6 intersected 216 m at
grades of 0.74 g/t gold and 0.11% copper starting
from surface.
• The company has a tight capital structure with
42.7 million shares issued (59 million fully
Highlights from this sampling programonly
include
with
a weighted
ave
diluted)
and has24m
enough cash
to complete
its
current programme. Options/warrants could
grading 0.812 g/t gold
take working capital up to roughly C$36 million.
• The company has a strong, experienced
management
team, with a keyto
member
Rafael potassic
The mineralization encountered has been
interpreted
be the
Investment Comment
by World Gold Analyst
• Batero represents an early stage investment
opportunity, with all the associated risks.
Alfonso, a former AngloGold Ashanti manager
involved in the La Colosa project.
• News to look for – further drill results and a
resource from La Cumbre.
FOLLOW THE TREND...
find out who’s hitting the seam
with World Gold Analyst
The Gold Mining Industry’s
Leading Independent
Information Source
and Investment Aid
www.gfmsworldgold.com
For more information email [email protected]
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