Once considered a pariah, Bolivia is quickly gaining a reputation as an exciting jurisdiction for mineral exploration.
First in was New Pacific Metals (TSXV: NUAG) which acquired the Silver Sand project in 2017 and signed a first-of-its-kind mining production contract with state mining firm Comibol for the surrounding 56-sq.-km land package. The company is now advancing the project in central Bolivia’s silver-tin belt to production and exploring several promising satellite targets.
But since New Pacific Metals pushed the door open five years ago, half a dozen more listed companies have entered Bolivia, attracted by its huge and largely untapped geological potential.
Backed by Yamana Gold (NYSE: AUY) chairman Peter Marrone, among others, Eloro Resources (TSXV: ELO) is exploring the Iska Iska polymetallic deposit, close to Pan American Silver’s (TSX: PAAS; NASDAQ: PAAS) San Vicente mine. Silver Elephant (TSX: ELEF) is also exploring the Pulacayo project, 139 km north of San Vicente.
As multinationals pull out of the country, juniors are seeing opportunities in operating assets which could then provide a platform for exploration.
Last March, Santacruz Mining (TSXV: SCZ) completed its acquisition of three mines from Glencore (LSE: GLEN), which announced plans to sell the mines after beginning arbitration proceedings in 2019 against Bolivia over the 2007 nationalization of the Vinto smelter). and is preparing to explore its largely ignored claims portfolio. Andean Precious Metals (TSXV: APM) is exploring a couple of sites after buying the San Bartolome silver mine in 2017 from Coeur Mining (NYSE: CDE), which pivoted to a focus on North America.
More juniors are jostling to come in.
“Requests for work from mining companies have doubled. We have three or four projects in the pipeline,” says Pablo Ordoñez, a lawyer advising mining companies at PPO Abogados in Santa Cruz.
Stuff of legend
Bolivia’s geological wealth is the stuff of legend. Silver mined from Cerro Rico from the 1500s onwards bankrolled the Spanish Empire, supercharged the European economy, and turned Potosi into one of the world’s largest cities. In the 20th century, it dominated tin production.
But political instability (it has suffered more coups than any other country in the world since 1950) and nationalizing policies have stymied foreign investment in recent decades.
“It just hasn’t seen, for various reasons, some of the modern exploration approaches that are being taken now,” says Peter Megaw, a technical advisor to New Pacific.
Bolivian politics remain rough and ready. In 2019, long-time president Evo Morales fled the country after a disputed election triggered nationwide unrest. In June, his successor Jeanine Áñez was jailed for allegedly orchestrating a coup against him. Her supporters have vowed revenge.
But with mining powerhouses Chile and Peru facing their own political turmoil and Colombia electing its first ever left-wing president, Bolivia looks less of an outlier than it once did.
The country’s unorthodox economic policies (a fixed exchange rate, energy subsidies) have proved an effective antidote to the rampant inflation roiling the region. Consumer prices rose by just 1.8% in the year to June, compared to 12.5% in neighbouring Chile and 64% in Argentina. As the rising cost of living heightens discontent through Latin America, Bolivia appears relatively calm.
“There is a climate of stability in Bolivia, and this should reduce the potential for social conflict,” predicts Ordoñez.
Meanwhile, as Bolivia’s natural gas reserves decline, mining is regaining its central role in the economy. Mineral exports during the first five months of the year rose 19% to US$1.3 billion, helping Bolivia to its largest trade surplus in almost a decade.
The current government, led by Morales’ former Finance Minister Luis Arce, is beginning to look more warmly on the benefits that foreign investment in the mining sector could bring. A recent tax reform eliminated value added tax on capital goods imports, an important benefit for mineral exploration companies in the country.
Arce’s Mining and Metals Minister Ramiro Villavicencio, an engineer who previously worked at Sumitomo Corp.’s San Cristobal zinc mine, the country’s largest mine operation, has met with mining companies and foreign ambassadors to discuss the challenges facing the sector.
After state-led development failed, the administration is trying to attract foreign investment to launch lithium production in the giant Uyuni salt-flat (potentially the world’s largest source of the mineral). In June, state lithium company YLB unveiled a shortlist of companies (four Chinese, one Russian and one American) to partner on investment in a commercial-scale lithium facility.
“They encourage private investment in the country, especially in the mining industry,” says Alex Zhang, New Pacific’s vice-president, exploration. President Arce has said that he wants to see five or six new mining projects built and operating by the time he steps down in 2025. Silver Sand could be among them.
To meet that goal, New Pacific has stepped up exploration work at the site both at the core deposit and outlying targets. By the fourth quarter of this year, the company aims to complete an updated mineral resource estimate which would inform a preliminary economic assessment scheduled for the end of the year.
It has also begun drilling additional targets north of the core of Silver Sand, under private concessions in hopes of finding the source of the mineralization.
At the same time, the company is pursuing a major new opportunity in western Bolivia’s epithermal belt. Mined since colonial times and explored more recently, New Pacific had originally seen Carangas as comparable to Silver Sand, with the potential for shallow but extensive silver mineralization.
However, initial drilling quickly identified huge intervals of gold mineralization at depth underlying the silver.
“Once the drilling program started, we just couldn’t stop because every drill hole was interesting and the mineralization was getting better and better,” Zhang explains.
The company now has five rigs turning at the site, part of its 40,000-metre campaign to assess just how big the deposit could be.
In July, the company released the first results from this year’s drilling, including a 500-metre interval grading 1 gram gold per tonne and 11 grams silver. Above that interval was a near-surface zone that included a bonanza interval of 5 metres of 6,236 grams silver.
While the limit of the mineralization is not yet defined, Zhang expects to continue drilling well into 2023 before it can produce the maiden resource estimate.
“Naturally, we don’t know yet because we just made the discovery, but it’s going to be very exciting, a big one,” concludes Zhang.