Central America has vast gold deposits, but the region is technically challenging for miners. That’s because the geology in Central America is a jumble of gneisses, granites, metamorphic rocks, breccias and schists—all of which are difficult to access. The high cost of labor is another challenge for miners. In addition to paying employees well over the local average salary, mining companies must also account for insurance costs, taxes and benefits in their total investment project. Finally, the mountainous terrain presents logistical challenges that can drive up the cost of building roads and tunnels through difficult terrain. However with so many challenges facing Central American mining companies right now, will they be able to find enough investors to get mines built?
Is Central American Gold Mining Worth It?
For investors who believe they can get a return on their investments in Latin America, the region’s gold mining industry is a compelling investment opportunity. The large deposits and existing mining infrastructure make mining particularly attractive. Central American mining companies have seen mining activity slow in recent years, which has made investing in these assets an even more attractive opportunity. However, these companies continue to look for ways to make their operations more profitable, as gold has become less valuable over time.
How Does a Central American Gold Mine Work?
To access the gold deposits at a Central American mine, companies often use a heap-leach process. The process involves first extracting the gold from ore in refineries where the ore is dissolved. The gold-rich solution is then acidified to make the gold soluble, and the resulting solution is then mixed with water and heated to extract the remainder of the gold. The process is less environmentally damaging than standard mining, and it has the advantage of not requiring large-scale levels of water use. However, the process is less efficient than mining that uses large-scale mining technologies.
The Prospects for Central American Mining
Central American mining companies continue to make efforts to improve their economics and make mining more competitive with neighboring countries. Companies have increased the proportion of their operations that use modern mining technologies. Some have also looked to diversify their operations to reduce the risk of a single type of gold being extracted. Other companies have looked to expand their operations by building gold mines in other parts of the region. Still, for investors looking for a return on their investments in Latin America, the gold mining industry remains a promising opportunity. In fact, some of the larger gold mines in Central America are among the lowest cost producers in the region, making these assets especially attractive for investors.
So, Where Can Investors Find Value in Central American Gold?
While the gold mining industry continues to face challenges in Central America, some of the larger gold mines there offer investors a compelling opportunity. For instance, one of the largest gold mines in Central America is owned by Goldcorp Inc. (Gldcorp). The mine is located in the Central American country of El Salvador. The mine is currently producing 6.5 million ounces of gold per year, and it has the capacity to produce 11 million ounces of gold annually. The El Salvador mine has low operating costs and generates positive cash flow, making it an attractive investment opportunity for investors.
Bottom line
For investors who believe they can get a return on their investments in Latin America, the region’s gold mining industry is a compelling investment opportunity. The large deposits and existing mining infrastructure make mining particularly attractive. Central American mining companies have seen mining activity slow in recent years, which has made investing in these assets an even more attractive opportunity. However, these companies continue to look for ways to make their operations more profitable, as gold has become less valuable over time. With so many challenges facing Central American mining companies right now, will they be able to find enough investors to get mines built? Only time will tell.
