Many Australians researching travel to Latin America no doubt come across warnings on the federal Smartraveller website about regional terrorism threats, corruption, and potential civil and political unrest.
One country routinely battling negative stereotypes – instead of positive news of its mining assets and potential – is Mexico, due to drug cartel-related violence in states including Baja California, Chiapas and Sinaloa.
But what about Argentina, Brazil, Colombia, Ecuador or Peru? Too far away? Significant potential for corruption or political instability? Not a risk worth taking?
Despite these perceptions about the region, a growing number of listed juniors from Western Australia – including Challenger Gold, EV Resources and St George Mining – are defying these stereotypes to tap the region’s vast resources and prosperous orebodies.
Speaking from the Peruvian capital of Lima, EV Resources managing director Hugh Callaghan’s passion for mining and people in the region is clear.
Subiaco-based EV has applied substantial focus to its Parag copper-molybdenum project in Peru and recently acquired a 70 per cent stake in the Los Lirios antimony mine, located 318 kilometres south of Mexico City in the state of Oaxaca.
“The reason why we’re here [Latin America] is that I don’t think there’s a better location in the world to find very good orebodies,” Mr Callaghan told Business News.
“Whether you’re a junior or a bigger company. [This is also] coupled by outstanding skills, both at a worker and professional level.
“I also find it a very good place to work from a regulatory point of view. We’ve managed to get community agreements and licences at record speed.
“Because if you do it properly in a sincere and diligent way, it’s a very quick place to work compared to say Australia, Canada, US or other countries.
“I just think it’s the quality of the orebodies that is the differentiating factor.”
Another keen to make develop opportunities in the region is Kris Knauer-led Challenger Gold, which is targeting production at its Hualilan gold project in San Juan, Argentina.
The West Perth-based junior also has a series of copper-gold interests in Ecuador.
Mr Knauer said recent changes by Argentina’s president, Javier Milei, who was elected in 2023 when the country’s annual inflation rate was around 211 per cent, had enhanced Challenger’s operations.
“In terms of operating as an explorer, when we first started … what you really had in Argentina was a controlled currency regime where there’s two exchange rates,” Mr Knauer told Business News.
“You’ve got the official and the non-official, and there was a fifty to sixty per cent spread.
“For us, we were bringing in US dollars, converting them into [Argentine] pesos at the non-official [rate] and effectively your exploration dollars go fifty per cent further, which is great.
“The challenge when you get into operation is, under the old regime, you had to convert and hold your gold sales into pesos.
“That’s why a lot of Argentinian miners for the past two or three years haven’t had a great time of it, but that’s all changed now.
“You’ve got a new president. He’s cut a lot of red tape and actually introduced a new incentive regime for larger mining projects and other projects, where you no longer have to convert your sales into pesos, which is helpful.
“The other thing is, because he’s fixed up the economy, they are not running 100 per cent inflation, that spread between the official and non-official has got right down to ten to fifteen per cent.
“So, as someone that is about to be producing, it’s a pretty good operating environment.”
Operating within a pro-mining jurisdiction has also paid off for St George Mining at its recently acquired Araxá niobium-rare earth elements project in Brazil.
“The fact that it’s in Minas Gerais, the best mining state in Brazil and one of the top mining jurisdictions in the world, is extremely helpful,” St George executive chair John Prineas told Business News.
“We’ve signed a cooperation agreement with the state government to expedite our project approvals, so [it’s been] a very refreshing approach from government.”
Staffing
One of the biggest challenges in South America can be in operating in a jurisdiction with little or no local knowledge.
This is why Challenger, EV and St George have taken steps to hire experienced local personnel with extensive experience for work on the ground.
“Yeah look, you know, we did make a couple of mistakes at the start,” Mr Knauer said.
“We had a team in Ecuador and we brought them up to do some initial exploration work in San Juan.
“We very quickly worked out that you don’t bring expats in. You’ve really got to use locals and they can be supervised by expats.
“The government would like eighty per cent local employment from the province of San Juan, which, as we sort of got into it isn’t actually that onerous, because there’s some top-quality mining people.
“The National University of San Juan runs a pretty good course. We’ve partnered up with them, so we’ve got most of our senior geologists now come out of there, and we trained them when they were students.”
On February 27, Challenger announced the appointment of Bira De Oliveira as general manager of operations at Hualilan; a move Mr Knauer said would get the project heading in the right direction.
“[Y]ou need experience to manage a team like that,” he said.
“He’s owner-operated, he’s contract mined, he’s run mines for some of the biggest companies in the world, including AngloGold Ashanti and First Quantum Minerals.
“But he’s also run smaller owner-operated mines in Uruguay and a couple of other locations in South America, including Brazil.
“He’s fluent in Spanish, which you need to be, so Bira’s a key appointment. He’ll work with Sonia Delgado, who is our executive director based in Argentina. Together they will do everything we need to do to get up, running, and delivering ore on trucks by [the] end of the third quarter.”
Mr Knauer is also in good company at board level.
EV Resources is showing there’s a lot more to Mexico than cactus plants and cartel wars. Photo: Andrés Sanz
Alongside non-executive chair Eduardo Elsztain, one of Argentina’s wealthiest people, are executive vice-chair Sergio Rotondo and Ms Delgado, who has a masters degree in labour law.
Prior to its acquisition of Araxá in February, St George finalised a series of key appointments for its in-country team, with many of them possessing extensive experience from time with Companhia Brasileira de Metalurgia e Mineração (CBMM).
Among those appointments was Ricardo Maximo Nardi, a former head of mineral processing at CBMM.
“Mr Nardi is one of, if not the most, knowledgeable and experienced engineers in the world in processing niobium ores,” Mr Prineas said while announcing the hire.
CBMM, located adjacent to Araxá, is the world’s largest producer of niobium.
In August last year, St George also appointed Adolfo Sachsida, Brazil’s former minister of mines and energy, as an adviser to its board.
Money talk
Aside from the challenges of raising capital, Mr Callaghan said there was often another important hurdle to overcome.
“Convincing investors Latin America is low-risk, low-cost and a very good place to work,” he said.
“There’s an immense ignorance about it. And coupled with this phrase I somehow keep hearing that it’s too far away; I’m not sure what that means, it doesn’t make much sense to me.
“I see the biggest simple challenge is actually raising capital, to be honest.
“Which is silly, because if you look at [the] orebodies of quality that are accessible, high grade and are able to be developed, it’s a truly marvellous environment.”
Mr Prineas said St George had been able to minimise some of its challenges to date in Brazil due to the pro-mining nature of Minas Gerais.
“Everywhere has got challenges to mining I suppose,” he said.
“The area we’re in is actually an established mining region, so a lot of the impediments to establishing a mining operation have already been dealt with by others.
“It’s not like we are in the middle of the Amazon or some other pristine environment, so we really got a head start there.
“Nevertheless, like any jurisdiction, you have to do your environmental studies and whatnot, so they are really the biggest hurdle we have.
“It’s not a big hurdle, but that’s really the only thing that we need to deal with before we can get our mining licences approved.”
Late last year, China announced a series of restrictions on the US in relation to the export of critical minerals, including antimony and tungsten, which are used in the manufacture of bullets and other military equipment.
In February, it added molybdenum – which can be used to strengthen iron and steel – to this list.
With countries such as the US now looking for alternative sources of critical minerals outside of China, EV appears to have an opportunity to meet the demand for molybdenum and antimony; both at Parag, located 350km north of Lima, and Los Lirios.
In May 2023, EV filed documents to secure a 70 per cent stake in Parag, with Mr Callaghan appointed managing director a few months later.
Its 70 per cent stake in Los Lirios was secured on January 28 this year and contains four mining licences across 1,652 hectares.
“Parag has unequivocally been our focus; it’s an outstanding copper-molybdenum-silver-porphyry system,” Mr Callaghan.
“The drilling to date has been wonderful. It’s exceeded our expectations and we think it’s a far better project than we hoped for.
“The difficulty has been that market support for this kind of exploration just hasn’t been there over the last year or so, which has been quite distressing.
“Our second copper project – Don Enrique [260km east of Lima] – is drill ready. We’re intrigued by it, as everything looks right. It just needs drilling.”
The EV boss said the company’s push into the antimony market also had upside.
“I know Mexico well,” Mr Callaghan said.
“I’ve built mines there in the past. I know the country very well and I’ve lived there twice.
“The reason why we took the antimony is because we see an opportunity to get into production very quickly on antimony, which is obviously in a remarkably odd demand-supply conundrum at the moment.
“It’s genuinely unusual and we can exploit that and get into production very quickly on a small-scale basis, using mines that are an order of magnitude higher grade than anything open in Australia.”
He said the opportunities available to the company in Mexico were too good to pass up.
“What really caught my attention in Mexico when we went back to our sources was the number of opportunities and the quality of those opportunities,” Mr Callaghan said
“For us, the antimony is unashamedly a way to exploit a very unusual market and also look to generate cash flow, which we can use to apply to our copper portfolio in Peru.”
Challenger Gold is making strides in Argentina. Photo: Nicolas Gutierrez-Cervetto
Challenger, which secured 100 per cent ownership of Hualilan in 2021, is about to take its next step towards production.
“We went through the dream exploration period, where we took a project from nothing to almost three million ounces [of gold],” Mr Knauer told Business News.
“Then you went through that really challenging eighteen months to two years when no capital was available and there was no interest in juniors.
“In the middle of that, we changed focus to go toward how we could go into production cheaply.
“And, luckily enough, there was a toll-milling option. We’ve wrapped up a contract to toll mill at a plant which is about 170 kilometres down the road. We only toll mill three per cent of our ore.
“That agreement was signed in January and we expect to be processing our ore in the fourth quarter of this year.
“Right now, the focus is on making sure we can pop that high-grade ore into trucks and get it up to Casposo.”
Meanwhile, over in Minas Gerais, Mr Prineas said St George was getting right down to business.
“It’s an advanced project with a deposit already there, so it is pretty easy to start planning your development studies,” he said.
“You’re not drilling away to try and find things. You’ve already got enough drilling to come up with a drill resource.
“We’ll be pumping out later this month [March] and then it’s a matter of getting on the ground, doing more drilling to expand the resource.
“Only ten per cent of the project been closely spaced drilled, so there’s great potential to increase the resource.”
Over the past few months, St George has signed multiple offtake agreements for Araxá, including a deal with major Chinese steelmaker Liaoning Fangda Group in January.
