Gold Carpet Treatment Promised for Miners in the Dominican Republic: Alexander Medina
Source: Peter Byrne of The Gold Report (1/25/13)
The Gold Report caught up with Alexander Medina, the newly appointed director of mining for the Dominican Republic. With gold discoveries popping up all over Hispaniola—the country shares the metal-rich island with Haiti—Medina is a very busy government minister. But he was happy to spare a little time to talk to The Gold Report about what his office is doing to ensure that mining companies get the gold carpet treatment under the new administration.
The Gold Report: What is the main job of the director of mining management?
Alexander Medina: I oversee all the mining policies of the Dominican Republic. And I am in charge of granting mining permits and licenses to explore for precious and base metals and minerals.
TGR: What experience do you bring to this job?
AM: I have worked in mining operations, mineral processing and management for 35 years. As a chemical engineer, my background is in precious minerals and metals. I worked in the nickel business here in the Dominican Republic, first with Falconbridge then Xstrata Plc (XTA:LSE) when it took over Falconbridge.
TGR: Does the new administration of the Dominican Republic support responsible exploration and mining development?
AM: Investors and explorers in the Dominican Republic have the full support of the Dominican government. Actually, we are currently improving our processing methods in order to speed up the permitting of mining ventures. I am intent that exploration permits be granted within a few months of application, instead of a couple of years, as has often been the case, unfortunately.
TGR: Will it be easier for junior mining companies to get permits to conduct exploration and then to open up mining operations?
AM: It will be easier for exploration permits. The new president of our country, Danilo Medina, has instructed my office to speed up the permitting process for exploration. But licensing a mine for production can be much more complicated than exploring for resources. An environmental permit is required for going onto production, and that can take some time. There are many complex issues involved in making sure that the mines are environmentally safe and sound.
TGR: Can you briefly explain the permitting process, and what a firm has to do to be permitted to explore for metals and minerals?
AM: According to Dominican law, all foreign companies must have a local representative, an arrangement with a local company. And that local company can take charge of meeting with mining officials and submit a request for mining exploration license, providing the information necessary to obtain a permit from the government. We go over all of the data presented before determining if the project is a fit.
Under Mining Law 146, the terms of the formal arrangement between the foreign company and the local company must be legally registered with our office, because the venture is subject to taxation. In order to get the concession, the principals in the venture must declare what kind of minerals and metals they are searching for. They must describe in detail the geological features of the geographical area that they wish to explore. That's about it.
TGR: It is estimated that the Dominican Republic has $58 billion (B) in metal and mineral reserves. Can you talk about what firms are leading the way to develop this resource?
AM: The largest mining operation in the country today is Barrick Gold Corp.'s (ABX:TSX; ABX:NYSE) Pueblo Viejo deposit. It's an investment of $4B. It's a world-class deposit containing more than 24 million ounces (Moz) gold. It's a polymetallic deposit. Pueblo Viejo includes gold, silver, zinc and copper. All of these metals are going to be recovered in the life span of the mine. In addition to the proven reserves, it has now been inferred that there is another 10 Moz gold in the Pueblo Viejo deposit, which needs to be confirmed. That means that the operational life span of the mine could easily increase from 25 to 35 years.
"We are currently improving our processing methods in order to speed up the permitting of mining ventures."
The second largest operation is Xstrata's nickel property. It's a 40-year-old mine. It can produce 30,000 tons of ferronickel. It may be old, but it still has enough in proven reserves to operate for 20 years or more.
The third largest property is Perilya Ltd.'s (PEM:ASX) Cerro de Maimón mine. This operation has 10 years of reserves and produces copper, gold and silver. The fourth largest property is PanTerra Gold Ltd.'s (PGI:ASX) Las Lagunas mine. This operation recovers gold by processing tailings. It will take about seven years to recover 75,000 ounces of gold and 0.5 Moz of silver.
There is also a very promising exploration project run by GoldQuest Mining Corp. (GQC:TSX.V). That is the Romero project in the southwest of the country in San Juan Province.
Unigold Inc. (UGD:TSX.V) has a very promising exploration project too, located in the northwest of the country.
And Everton Resources (EVR:TSX.V; ERV:FSE; EVRRF:OTCQX) is doing successful exploration in an area close to the Pueblo Viejo mine.
In addition to these metal mining ventures, the Dominican Republic has an excellent deposit of bauxite. This mineral can be exported to China or the United States, dependent upon market prices and the terms of the sales contract.
TGR: Do these mining firms have all of the permits that they need?
AM: They already have all the permits and licenses that they need for exploration.
TGR: What happens when they are ready to go into production?
AM: My office will support them to get any permit they need in order to advance their projects. An application for an exploitation license should be submitted, including a feasibility study proving economics and feasible and proven operations for the proposed project.
TGR: Are there environmental issues? Some local groups are objecting to problems that occurred with Barrick's operation at Pueblo Viejo. How are you dealing with those issues?
AM: All of the environmental issues at the Pueblo Viejo deposit have been addressed by the new operation. The operation is now on the right path.
TGR: What is the difference between the previous administration and the new administration regarding mining?
AM: The largest difference is the interest that the new president has in providing full support to investors. We wish to have a transparent permitting and licensing process so that foreign firms and their local partners receive all the help and cooperation from the mining department that they need.
TGR: Are there any new rules and regulations for mining waiting in the wings?
AM: There are no new regulations up to now, just a clear attitude to help investors.
TGR: Given some of the historical problems with natural and manmade mining disasters, why should foreign investors feel safe putting their money into firms working in your country?
AM: First of all, the Dominican Republic is a very quiet and peaceful country. It is very well organized politically and economically. It has proven time and again that it's a safe place to invest. The Dominican government is very conscientious about protecting foreign investments. We will provide full support to any investor putting capital into the mining sector, or tourism or any other economic area.
TGR: Does the government take a cut of the mining proceeds?
AM: We partner with mining firms when the deposits are government-owned. But there is no interest from the Dominican government to partner with investment in the private mining sector. We believe in free enterprise and we have mining laws that protect investors and tax mining the same as any other investment venture in the country.
We are very optimistic about our future, because even though we are a small island, there is lots of mining potential in the Dominican Republic. The ongoing operations that we have talked about have really proved that future is very exciting.
TGR: Thank you for taking the time to talk with us, Mr. Medina.
Alexander Medina is the new director of the Mining Management Office of the Dominican Republic. Trained as a chemical engineer, he was an executive with Falconbridge and Xtrata for many years before assuming his new role officially overseeing the exploitation of metal and mineral resources estimated to be worth $58 billion.