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About Dominican Republic

The Dominican Republic Mining Potential

The Dominican Republic is the largest economy in the Caribbean and Central America. It is an upper middle-income developing country primarily dependent on agriculture, trade, and services, especially tourism. Tourism accounts for more than $1 billion in annual earnings. Both by area and population the Dominican Republic is the second largest Caribbean nation (after Cuba), with 48,442 square kilometres (18,704 sq mi) and an estimated 10 million people.

The Dominican Republic has the most advanced telecommunications networks in Latin America. The telecommunications system is fully digitized with more than 650,000 lines. Services include global direct-dialing, cellular, pager, Internet and special data transmission lines.

GOVERNMENT AND POLITICAL CONDITIONS

The Dominican Republic is a representative democracy with national powers divided among independent executive, legislative, and judicial branches. The president appoints the cabinet, executes laws passed by the legislative branch, and is commander in chief of the armed forces. The president and vice president run for office on the same ticket and are elected by direct vote for 4-year terms. Legislative power is exercised by a bicameral Congress--the Senate (32 members) and the House of Representatives (178 members).

ECONOMY

After a decade of little to no growth in the 1980s, the Dominican Republic's economy boomed in the 1990s, expanding at an average rate of 7.7% per year from 1996 to 2000. Tourism (the leading foreign exchange earner), telecommunications, and free-trade-zone manufacturing are the most important sectors, although agriculture is still a major part of the economy. The Dominican Republic owed much of its success to the adoption of sound macroeconomic policies in the early 1990s and greater opening to foreign investment.

MINING HISTORY

Like the economy at large, the mining industry enjoyed extraordinary growth in the 1970s, when the country's major ferronickel and doré (gold and silver nugget) operations were inaugurated. Mining's contribution to GDP rose from 1.5 percent in 1970 to 5.3 percent by 1980, where it remained in the late 1980s. Although the mining sector employed only about 1 percent of the labor force throughout this period, it became a major foreign-exchange earner, increasing from an insignificant portion of exports in 1970 to as much as 38 percent by 1980, then leveling off at approximately 34 percent in 1987. Nonetheless, mining companies struggled in the 1980s because of low international prices for the island's key minerals--gold, silver, bauxite, and nickel. In the late 1980s, the government strove to tap new resources and to strengthen export diversification by actively seeking foreign investment in mining.

Gold and silver doré, which occur naturally in the Dominican Republic, played a central role in the rapid emergence of mining. Although the Spanish mined gold on the island as early as the 1520s, gold production in the Dominican Republic was insignificant until 1975, when the private firm Rosario Dominicano opened the Pueblo Viejo mine, the largest open-pit gold mine in the Western Hemisphere. In 1979 the Dominican government, then owner of 46 percent of the shares of Rosario Dominicano, purchased the remaining equity from Rosario Resources, Inc., a New York-based company, thereby creating the largest Dominican-owned company in the country. Rosario's huge mining infrastructure, with an annual capacity of 1.7 million troy ounces of gold and silver, impelled by rapidly increasing international prices for gold, had nearly succeeded in pushing doré past sugar as the country's leading source of export revenue by 1980. From 1975 to 1980, gold and silver skyrocketed from 0 percent of exports to 27 percent. Declining prices for gold and silver during the 1980s, however, curtailed the extraordinary growth trend of the 1970s, and by 1987 doré exports represented only 17 percent of total exports (one percentage point above ferronickel exports, and one percentage point below sugar exports). Declining reserves also limited doré production. Japanese and United States companies actively explored new gold reserves on the island, but gold mining was shifting away from the search for oxide ores, supplies of which were dwindling, toward the more expensive process of exploiting sulphide ores. There were some alluvial gold deposits as well.

Ferronickel also contributed to the mining prosperity of the 1970s. From 1918 to 1956, the United States Geological Survey performed a series of mineral studies in the Dominican Republic. These studies encouraged the Canadian firm Falconbridge to undertake its own nickel testing starting at the end of that period. Falconbridge successfully opened a pilot nickel plant in 1968, and by 1972 the company had begun full-scale ferronickel mining in the town of Bonao. In the late 1980s, the Bonao ferronickel mine was the second largest in the world. Buoyed by high international prices, nickel exports rose from 11 percent of total exports in 1975 to 14 percent by 1979. Although nickel exports, as a percentage of total exports, continued to climb in the 1980s, reaching 16 percent by 1987, lower world prices for nickel and a lengthy dispute between the government and Falconbridge over tax payments hampered output throughout the decade. Unlike gold, nickel had been proven to exist in large reserves in the Dominican Republic, which meant bright prospects for mining.

The Aluminum Company of America (Alcoa) began bauxite mining in the southwest province of Barahona in 1958. Bauxite output peaked in 1974 when Alcoa surface-mined nearly 1.2 million tons; exports totaled as much as US$22 million as late as 1979. As with other minerals, however, the international recession of the early 1980s caused bauxite prices to topple, as world supply outpaced demand. Alcoa closed its Dominican bauxite operations in 1982 and its small limestone mine in 1985. The Barahona mine remained closed until 1987, when the government purchased Alcoa's facilities and recommenced bauxite mining, selling the red ore to Alcoa for processing in Suriname.

The government increasingly favored greater participation by the private sector in mining, so that the state's resources might be combined with the technology and the capital of foreign firms. Mining's promoters also sought to diversify the economy's export basis and to improve its international credit worthiness. Through Decree 900 of March 1983, the Jorge government further defined and limited the role of government in mining, by providing broader incentives for private involvement. Nonetheless, the state retained exclusive rights to mine gold, gypsum, and marble. United States, Japanese, Australian, and European firms explored Dominican soils after 1987, when the government opened up areas previously closed to foreign investors.

PUEBLO VIEJO MINING OPERATION

In modern times, the Dominican government extracted 5.5 million ounces of gold from the Pueblo Viejo deposit between 1971 and 1984. They mined only the oxide facies of this 30 million ounce gold resource and when the sulfides were encountered, were unable to extract the gold. The deposit is presently owned by Barrick and Goldcorp (60/40). On February 27/08, Barrick submitted a feasibility to the Dominican government, for the development of this gold resource. They projected 20.4 million ounces of gold, 117.3 million ounces of silver, 423.6 million pounds of copper and 2,700 million pounds of zinc to be mined over a 25 year mine life. The mine will create approximately 3,500 jobs and have a capital cost of 2.7 billion dollars.

Pueblo Viejo deposit is expected to produce 1 million ounces of gold per year for the first 5 years. Mines of this calibre can essentially be counted on 1 hand: Grasberg, Indonesia; Muruntau, Uzbekistan; Goldstrike, Nevada; and Yanacocha, Peru.

The Pueblo Viejo deposit is the largest capital development project in the DR. It has a net present value of approximately 20 billion dollars.

As a result of the plan to accelerate the expansion in processing capacity, a previously disclosed expansion capital of $0.3 billion will be brought forward such that pre-production capital is expected to be about $3.0 billion (100% basis).


For a slideshow on the development of the Barrick/Goldcorp Pueblo-Viejo mine development please visit http://www.barrick.com/Theme/Barrick/files/pueblo-viejo/01.html

CERRO DE MAIMON MINING OPERATION

GlobeStar began construction of the Cerro de Maimón mine and processing facilities, in December 2006 and all construction was completed by December 2008. The sulphide flotation plant was brought into production in September 2008 and the oxide gold plant was commissioned in December 2008. The 2010 forecast production of the sulphide flotation plant is 24 million pounds of copper, 6,000 ounces of gold, and 380,000 ounces of silver in concentrate. The 2010 forecast production of the oxide gold plant is 9,000 ounces of gold and 100,000 ounces of silver. The current mine plan extends to 2017 and the existing resources and prospective exploration targets near to the Cerro de Maimón property have the potential to extend the life of the operation. The Cerro de Maimón massive sulphide body contains 4.8 million tonnes of proven and probable ore grading 2.54% copper, 0.96 grams per tonne gold and 34.9 grams per tonne silver. The oxide body contains 1.2 million tonnes of proven and probable ore grading 1.86 grams per tonne gold and 34.5 grams per tonne silver.

On October 6, 2010 Globestar announces proposed CDN.$1.65 per share cash offer by Perilya - Globestar Mining Corp. has entered into a binding agreement with Perilya Ltd., pursuant to which Perilya has agreed, subject to the satisfaction of certain terms and conditions of the letter agreement, to enter into a further definitive support agreement and make an offer to acquire all of the outstanding common shares of Globestar by way of a takeover bid for $1.65 per common share in cash. The offer represents a 29.9-per-cent premium to the closing market price on the Toronto Stock Exchange of Globestar common shares on Oct. 6, 2010, and a premium of 36.5 per cent to the 20-day volume-weighted average price of Globestar common shares on the TSX. 

SOURCES 

http://countrystudies.us/dominican-republic/
http://en.wikipedia.org/wiki/Economy_of_the_Dominican_Republic
http://dominicanrepublic.com/index.php
http://www.state.gov/r/pa/ei/bgn/35639.htm

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