DRILLING at Minera IRL's Don Nicolas project, Santa Cruz. Photograph: Minera IRL

DRILLING at Minera IRL's Don Nicolas project, Santa Cruz. Photograph: Minera IRL

Minera IRL's Don Nicolas a 'Showcase' for Santa Cruz

Issue 60, October 2013

Minera IRL is set to become Argentina’s newest gold miner, after closing an $80m financing for its Don Nicolas project in the province of Santa Cruz. “We have a stability agreement with the government and they’re using our project as a showcase,” says president Diego Benavides.

Don Nicolas sits on the Deseado Massif, a bonanza-grade vein complex that Goldcorp bought into in 2010 for $3.5bn. Investment in the district has since slowed however with capital controls levied by President de Kirchner. 

“People are looking for change on the foreign currency rules,” Benavides says. IRL’s financing swaps 45 per cent of Don Nicolas, plus shares in IRL, for $80m from an Argentine group of auto component manufacturers, who under foreign exchange restrictions have funnelled their export revenue into a trust for local investment.

The deal won Kirchner’s personal congratulations and grants IRL the clout of local backers. “It’s not a political issue,” Benavides says, “but you need to have strong partners that know the culture in Argentina to make it work.”

He says elections to Congress next week will determine the strength of the ruling government in its remaining two years. Currency controls “will probably not be taken away whilst Cristina is in government,” he says, “but I believe they will flexibilize them.” One such measure is already being applied to oil contracts, guaranteeing producers the transfer of profits and loans. Benavides expects equal privileges to “drop down into mining” and says provincial levies are “very competitive” with the cost of the company’s concessions in Peru.

Construction at Don Nicolas begins in January and is due for completion in 2014. IRL has budgeted for the unofficial inflation rate of 25 per cent and after payback of 12 months, plans to reinvest in exploring its surrounding land package. “The potential in the Deseado Massif,” he says, “there’s blue, blue sky all over. What was considered a liability, to have property in Argentina, now it adds value.”

Earlier this month IRL said it was in takeover talks, later sunk by a spectacular Singaporean stock market crash. Benavides however expects a resurgence of interest in Argentina. “It’s going to attract a lot of investment. In the meantime, we’re going to start building this project.”

“The potential in the Deseado Massif; there’s blue, blue sky all over.”

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