PORTUGAL COULD be the next unlikely location for a mini gold rush following tests by a Canadian company.
The Vancouver-based mining company Colt Resources Inc has invested 70,000 euros in buying up the concession of an abandoned series of mines in the north of the country at Penedono above the Rio Douro valley.
The company says that full scale exploration would depend on there being enough gold to make it commercially viable, 50 years after the mines were closed. However, new technology means that access to 13 veins could soon become a reality. So far, only three have been mined.
The concession to mine has been bought from the Spanish company which previously held the license, Rio Narcea Gold Mines S.A. This concession, granted in October 2004, is still in the preliminary research and development phase.
The total investment in the acquisition, according to the President of Colt, Bedo Kalpakian, and published in Sunday’s Lisbon daily Diário de Notícias, is 100 million Canadian dollars. However, the mining company is to sink a further 200,000 Canadian dollars into research and exploration using industrial diamond tipped drills.
The conditions stipulated in the agreement with Rio Narcea, which has sold its holdings in Portugal, counts on one per cent of the receipts up to a million Canadian dollars (745,000 euros) represented as royalties should the mine’s development advance to gold production.
The contract with the Portuguese government, which ends in October 2009, equally stipulates that the Portuguese state will receive a four per cent stake in the eventual receipts from the mine and a guaranteed 50,000 euros a year from the sale and renewal of licences.
Negotiation
Colt, which is considered a small player in the gold exploration industry, is also examining other mineral prospecting opportunities in Portugal including silver, copper, zinc and lead.
The company is just one of several Canadian metal and mineral exploration companies that have entered the Portuguese mining market in recent years.
Negotiations for the purchase of Rio Narcea Gold Mines Portugal S.A. began earlier this year – negotiations which the company stresses had nothing to do with Rio Narcea’s buyout by Lumin.
Gold exploration returns to the 205km2 Penedono concession around half-a-century after the mines were abandoned and, according to Colt, hold 13 veins of which only veins two, three and six have been exploited so far.
Now, the Canadian company intends to concentrate its investigations on vein number five that has never been examined and, to this end, has acquired three diamond drill bits capable of drilling to a depth of 1,000 metres.
Crisis
A second Canadian company, Redcorp Ventures, is also showing an interest in buying up concessions and licenses from the Portuguese government for gold exploration. However, gold prospecting can be a risky business and a long term proposition rather than a get-rich-quick scheme.
The recent crisis in the financial markets and the fall in the dollar provoked by the collapse of the sub prime housing credit market in the US have seen many investors taking refuge in gold which has risen over two per cent in value in the past fortnight.
The price of gold on the commodities markets is now trading at 663 dollars a troy ounce or at 16 euros a gramme, making gold exploration in Portugal a viable proposition.
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