BALTIMORE, MD-As many of my regular readers know, Mexico is without a doubt my favorite country in the world right now for precious metal exploration. The country has everything going for it. The economy is strengthening, mineral development has very strong government support, and, best of all, the country is still teeming with undiscovered gold and silver deposits after 500 years of mining history.
Two months ago I flew down to Durango, Mexico to visit a Canadian junior explorer that’s currently drilling for silver in the middle of the Sierra Madre Occidental Mountains.
While there, I learned that the City of Durango was once known as the "Hollywood of Mexico". During the 1950s and 60s, hundreds of wild west movies were filmed in the area. These include some of John Wayne’s classics like Chisum and, my personal favorite, True Grit, the story of a rugged, boozed-up U.S. Marshal with rough-and-tumble temperament that stares you in the eye and says, ‘Try me.’ And what’s not to love about that?
The Durango trip is just one of many that I’ve taken recently. So far this year I have been to cities like Hermosillo, Caborca, La Paz, Puerto Vallarta, and Tepic to see other mineral prospective properties. So I can tell you this first hand: It’s time to completely disregard everything you’ve seen on TV and re-assess Mexico.
Today, Mexico has a modern emerging middle-class that is underpinned by spectacular economic growth and dynamic social change. Combined with ultra contemporary mining and tax laws that are inviting to any level of mineral firm, there’s simply no better place for mineral exploration right now.
Mexico has a free market economy and was a signatory of the North American Free Trade Agreement (NAFTA) in 1994 which has opened the flood doors for exports to the United States and Canada.
According to the International Monetary Fund, Mexico now ranks 12th in the world in regards to GDP and has the fourth largest per-capita income in Latin America, following only Argentina, Chile and Costa Rica. In fact, by most estimates, Mexico’s GDP is larger than Canada’s.
Since the economic crisis of 1994-1995, the country has made an impressive economic recovery. The World Bank calculates that the population below the poverty level decreased from 24.2% to 17.6% in the general population and from 42% to 27.9% in rural areas from 2000 to 2004. This is complemented by the rise in the Mexican peso, which has nearly doubled in value over the past decade.
Mining Legislation and Laws
Mexico is extremely welcoming to foreign investment, and mineral development has very strong federal support. In fact, under the Mexican constitution, minerals are part of the national patrimony. The exploration, exploitation, and beneficiation of the minerals will have preference over any other use for the land.
New laws now permit foreign companies to own up to 100%in equity exploration, development, and production of mineral substances.
Mexico is a virtual candy shop for gold and silver explorers. Mexico is actually the world’s second largest silver producer accounting for 14% of global production. Production in 2006 totaled 96.4 million ounces and over 10 billion ounces have been produced to date. Last year, Industriales Penoles’ Proano (Fresnillo) Mine ranked as the world’s largest primary silver mine, producing 33.49 million ounces.
Mexico’s largest gold mine La Herradura (Newmont Mining 44%, Industriales Penoles 56%) produced 180,000 ounces of gold last year. La Cienega, another significant gold mine, produced 150,000 ounces in 2006.
Last year, Mexico produced a total of 1.12 million ounces of gold, a 30.8% increase over 2005. And as new investment continues to be poured into the country, production figures will likely see further increases in 2007.
Today there are over 250 foreign publicly-traded companies involved in exploration and mining activities in Mexico, the majority of which are Canadian-based. There are also several private companies operating exploration or development properties with a hefty pipeline of precious and base metal projects.
The end game here is simple: Mexico really is without a doubt the best place to explore and ultimately develop gold and silver properties. And even though there has already been plenty of cold hard cash made in Mexican exploration stocks, I think the upside potential for the companies working down there is still tremendous. For investors, the opportunities for profit are almost guaranteed.
Click here to learn more about public Mexican mining companies: http://www.angelnexus.com/o/web/2827
Until next time,