Gold for a New Year: Darwin Resources and Sustainability
Gold is considered a safe haven from the fiscal cliff and while there are some questions over demand in the short term, with India (the world’s biggest market for gold) expected to remain flat, senior and junior mining companies alike will be eagerly developing new resources in 2013. Peru, which derives over 60% of its income from gold and has some of the largest gold resources in the world, especially in its northern areas, will continue to be one of the most important areas for new gold projects. Newmont Mining and Barrick Gold, two of the largest gold producers in the world, are pursuing important projects in Peru. Adjacent to some of the large gold projects in northern Peru are some junior exploration companies such as Darwin Resources (‘Darwin’, TSX.V: DAR). Nevertheless, while the mining majors have access to larger properties, the minors have certain advantages over them in a politically and socially complex environment as the High Andes mountains of northern Peru can be, particularly when they are well managed.
Good management much more than the availability of high caliber professionals and the latest technologies. In northern Peru, good management includes an understanding of the need for companies to contribute to the living conditions of the people who live and work there. It means employing locals as much as possible, sharing equipment, services and facilities with the community in the towns near the mining operations. In such conditions, locals no longer see gold mining as the most enduring trapping of ‘colonization; they start to see the benefits that can reach the community in the form of direct and indirect jobs and in the form of funds to finance improved health and education services, roads, water and power generation. This ensures that local communities, rather than being suspicious of foreign miners, will be welcoming and willing partners in the process.
Junior companies like Darwin are better able to hold a rapport with the local community and they are more flexible because of their smaller size. They can accommodate and react to changes in the social environment, hearing what the communities’ concerns are, more effectively and promptly, which ensures their long term viability. As for environmentally sound operations, gold is extracted through the use of cyanide; well intentioned companies understand how to do this within a well planned, which is environmentally manageable.
In December, Darwin announced that its Suriloma property in northern Peru consists of a 2,400 hectares area featuring an intermediate-sulphidation epithermal gold and silver mineralization where at least five prospect areas have been identified so far. Diamond maiden drilling at the La Puerta claim at the Property is expected to start in Q1 2013. Darwin has also acquired two new claims (Edelmira and Santa Felicita) totaling 800 hectares, which enables the Company to consolidate the Suriloma project in a large area (8km x 3km) of exploration. Channel sampling at La Puerta has identified gold-silver mineralization along 500 meters of strike, which Darwin believes could extend for at least one kilometer. The good relations that Darwin has established with the community – surprisingly good given tensions surrounding other mining operations in the Andes – will facilitate the drill permit process.
The Peruvian government of President Humala, meanwhile, has been very supportive of gold mining efforts. Gold has helped generate GDP rates for Peru that rival the Asian Tigers and the government is keen to sustain a pro-foreign investment path alongside counties like Colombia or Chile. The Peruvian government is also adopting a more sustainable course itself, encouraging local authorities to use mining revenues to improve social and physical infrastructure rather than devoting large sums to prestige projects. In order to benefit from Peru’s resources, mining companies must be part of such a process and Darwin Resources has embarked on such a course.
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