MAC: Mines and Communities

Canadian Firms Begin Uranium Explorations In Guatemala

Published by MAC on 2006-03-03

Canadian firms begin uranium explorations in Guatemala Central American Report (CAR)/Inforpress Centroamericana

Edition: 1646

3rd March 2006

On January 16, 2006, the Guatemalan Ministry of Energy and Mines granted two concessions for mining exploration in contiguous areas making up 32% of the land in Esquipulas, Chiquimula, covering 169 square kilometres. Canada-based mining firm Gold-Ore Resources Ltd, which now owns the concessions, announced in a press release that it has created a syndicate with two other Canadian firms, Pathfinder Resources Ltd and Santoy Resources Ltd, to carry out the explorations.

Although the concessions allow for the exploration of gold, silver, copper, iron, lead, zinc, molybdenum, antimony, manganese and magnesium, the syndicate has been specifically formed in order to explore for uranium. While municipal government officials from Esquipulas told CAR that they were unaware of any authorization being granted for the exploration of uranium in their municipality, mining experts say that the proposed method for extracting the mineral - "in situ leaching" - could be highly damaging to the environment. Nevertheless, Guatemala lacks any specific legislation to regulate the extraction of the radioactive material.

Three Year Licenses

According to a press release issued on February 16, 2006, the Canadian mining firms, Pathfinder Resources Ltd, Gold-Ore Resources Ltd and Santoy Resources Ltd, have commenced a joint uranium exploration program in Guatemala.

Under the terms of the syndicate agreement, Santoy and Pathfinder can each earn a 33.33% interest in the property by spending 500,000 Canadian dollars (CDN) each over a four year period. Gold-Ore holds 100% interest and is carried until the CDN$1,000,000 is spent and then a joint venture will be formed. Gold-Ore is operator for the syndicate and all programs are subject to approval by a management committee.

The vice-minister of Energy and Mines, Jorge Garcia, told CAR that he had heard nothing about the prospective uranium exploration projects, but upon being shown a copy of the concessions, he expressed his concern.

CAR obtained copies of the two concessions granted by the Ministry of Energy and Mines (MEM), which are under the name of Sammy González Buezo.

Representatives from the Canadian syndicate said that González is its local operator. The concessions were granted on January 16, 2006, for exploration in the areas of El Rincón and El Incienso. González Buezo requested a further concession for the same activity in the community of El Jiote.

CAR tried to contact González Buezo to confirm the information supplied by the Canadians, but received no reply.

The concessions granted last three years from their issue date and cost a total of Q65,813.

John Gómez, head of investor relations at Pathfinder, told CAR that the Phase I program is underway and consists of prospecting and geochemical sampling in areas of known uranium mineralization. The firm hopes the project will bear fruit later this year or in 2007.

The syndicate has approved a program that will allow a geological prospecting team to carry out a first pass review of the known showings and prospect for new occurrences. Fieldwork by the syndicate in 2005 verified the location of some of the documented occurrences of uraniferous outcrops and boulders.

Gómez said that the syndicate had anticipated receiving the go-ahead for exploration in 2005, but believes that the mining conflict in San Marcos led the MEM to postpone the granting of concessions until this year.

According to MEM representatives, this is the first request for uranium exploration in the country.

Nevertheless, international companies have been researching the presence of uranium in the country since the 60s. These studies revealed the strong possibility of uranium deposits in the departments of Huehuetenango, Altaverapaz, but mainly in Chiquimula.

Indeed, the prospective areas within the concessions have seen two uranium exploration programs starting with the United Nations Development Program (UNDP) in 1966, 1970 and the early 1980's. During the period 1987 to 1991, the Mining Technical Mission from Taiwan completed detailed programs that culminated in the drilling of five diamond drill holes.

A number of uranium occurrences were located, particularly within a 500 square kilometer area of Chiquimula. The regions of Esquipulas and Chanmagua were found to have especially rich deposits of the mineral.

However, world uranium prices at the time meant it would have been economically unviable to invest in the necessary exploration program.

The current international market price of uranium varies between US$35 and US$40 a pound, six times greater than that in 2001.

Uranium is widely considered to be a metal of strategic value because of its use in nuclear energy plants. According to a report by the International Atomic Energy Agency, uranium has the same chemical, geological and geometric characteristics as most metals, but is the only metal that can be used as a fuel.

Sandra Cuffe, of the human rights organization Rights Action (Derechos en Acción), told CAR that the issue of uranium exploration had provoked fierce opposition in Canada, the US and Australia because extraction of the mineral is highly damaging to the environment and human health.

According to the Canadian syndicate's press release, "the uranium occurrences in Guatemala belong to the class "sediment-hosted" uranium, similar to the Blizzard deposit in southern British Columbia and the Honeymoon deposit in South Australia. In this model, ground waters leached uranium from surrounding and overlying uranium rich volcanic rocks and deposited it in porous and permeable sedimentary units, where a reducing environment was created by organic material. Deposits formed by these processes are often amenable to in-situ leaching (ISL) which significantly decreases the cost of production and the environmental impact of mining."

However, a 1998 report into uranium extraction in Australia published by ISL specialist Gavin Mudd, points out that in-situ leaching leads to serious water contamination. This is due to the high probability of the mineral solution dissolving and spreading across large distances, thus contaminating underground water sources.

Mudd also carried out environmental impact studies regarding the ISL method in other countries and established that for every ton of extracted uranium, 7.3 million liters of water ended up being contaminated. Furthermore, only a third of the affected terrain was able to restored to its former state.

Vice-minister García insisted that, following his conversation with CAR about the "unknown concessions", he would carry out inspection visits of the areas involved. "If uranium extraction were ever to take place in Guatemala, the MEM and the Ministry of the Environment and Natural Resources would have to intervene owing to the fact that we are talking about a mineral with radioactive properties," said the official.

However, García said that the exploration phase does not represent a threat to the environment as it is generally carried out through aerial reconnaissance or the removal of rocks which are then inspected in the laboratory.

Nevertheless, the concessions granted to the Canadian syndicate do authorize the use of local water sources, as well as the requisite excavation and perforation of rocks, in accordance with the corresponding technical studies.

The concessions also oblige the companies involved to carry out a "mitigation study" prior to the start of any mining operations. Mitigation studies are normally carried out in order to minimize the environmental damage entailed by a project.

Although García believes that the exploration phase does not represent an environmental risk, he expressed concern regarding any later project developments. "We don't have any problems with the exploration phase. but if the project enters the extraction phase then we would obviously need to be prepared, as it involves a mineral with which we don't have the necessary experience," he said.

The government official explained that the MEM only trains its staff to become specialists in a particular mineral once it becomes clear that that mineral has the potential to be extracted in Guatemala.

"We really have very little experience of the mineral; uranium has never been extracted from Guatemala, and while that remains the case. we are not going to start training people in that area. we will only strengthen our understanding of the issue when it is proved that a deposit exists." he added.

The MEM's General Mining Directorate is obliged to notify the local authorities as to where the mining project will be carried out. According to the MEM's legal department, the concession warrants were mailed out by national mail to the Ministry of the Interior and the municipal government office in Esquipulas last week. However, spokespeople from the latter told CAR that they were oblivious to the projects' existence.

While Guatemala's Mining Law covers all minerals found on national territory, the country lacks any specific law to regulate uranium extraction - or to differentiate the amount payable in royalties for the extraction of different minerals. Although MEM officials insist that exploring for uranium implies no environmental risks, the government is implicitly committed to assisting in any future extraction phase, especially after such a big investment in the exploration phase.

If consultation with the affected local communities and authorities only takes place once the mineral's existence has been firmly established, the case of the Glamis project in San Marcos shows that it could be too late to effectively intervene in a similar investment.

The news of "the Canadian concessions" coincides with a breakdown in negotiations between social organizations and the government, meeting at the High Level Mining Commission. The Commission's member organizations have criticized the government for reforming the national Mining Law without taking into account their own alternative proposals.

The Executive is proposing royalties of 1% to 3% on the value of any mineral extracted from Guatemalan soil.

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