March 6, 2013 (Investorideas.com Mining stocks newswire) Why Mexico? Mexico is one of the world's leading venues for mineral potential and has a 500-year history of mining. Mexico, the world's main silver producer, is quickly becoming a key player in the gold market driven mainly by an exploration boom at the Guerrero Gold Belt, an emerging gold mining district in the south of the country. Relatively high gold prices during 2012 compelled companies to start mining more aggressively in the challenging terrain of Mexico's mountainous areas.
The Fraser Institute's 2011/2012 Mining Survey ranked Mexico ninth out of 64 worldwide venues for composite policy and mineral potential. Mexico ranks among the easiest countries to do business in Latin America according to the World Bank's Ease of Doing Business 2013 report thanks to its stable economic environment and growing GDP. During the years 2010-2012 the mining industry is expected to invest US$13.8 billion in the country, which combined with previous investment dating back to 2007, the mining industry will have invested US$21.75 billion by the end of 2012; an incredible and historic amount for this sector of the Mexican economy.
With a strong mining tradition, over the years, Mexico has developed genuine expertise in mining. Labor costs are still – in comparison to other stable countries – very competitive. Furthermore, it is far quicker for a company to obtain an operating license in Mexico than in other countries.
Unlike other Latin American jurisdictions such as Chile, Peru and others, Mexico does not currently have any mining taxes. We have seen proposals in the early stages of discussion for a new mining tax in Mexico; however these have not passed the initial stages. These initiatives in the Mexican Congress ask for 4% on gross revenue, 3% on EBITDA, and also an unassigned rate to the total mineral sales based on an average market price. We do expect these new taxes (royalties) to be implemented in the coming years, though more at the lower end of expected rates. Impact on the mining companies is therefore foreseeable and limited.
Company Overview
The following companies represent an extract of the junior precious metals mining companies we follow with operations in Mexico.
CREATING THE NEXT MID-TIER GOLD PRODUCER: 120'000 OUNCES IN 2013. TO GROW TO 500'000 OUNCES OF GOLD EQUIVALENT BY 2018.
Business Summary
Argonaut Gold is a Canadian gold company engaged in exploration, mine development and produc-tion activities. Its primary assets are the El Castillo Mine in Durango, Mexico, and the La Colorada Mine in Sonora, Mexico (both in the production stage), the advanced exploration stage San Antonio project in Mexico, the recently acquired advanced exploration stage Magino project in Ontario, Canada and several exploration stage projects, all of which are located in North America.
Its subsidiaries include Castle Gold Corp., Pediment Gold Corp, Argonaut Gold U.S. Corp. and Compania Minera Pitalla. In January 2011 the company acquired Pediment Gold Corp. and in December 2012, it acquired Prodigy Gold Inc.
Argonaut Gold has shown impressive production and earnings growth. We expect the company to continue this growth path and to double its gold production within the next three years. With the addition of the Magino mine production, Argonaut Gold plans to produce over 500'000 ounces.
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