Exploration in Colombia leads to a number of new discoveries and mines


After delays and several false starts, the Colombian gold mining segment gained momentum in 2016 with the awarding of environmental permits for four gold mines. This follows the March 2015 permit given to Canada-based Red Eagle Mining, which, little more than a year later, became the first medium-sized gold mine to enter into production in Colombia for 50 years. When these four projects enter into operation in the early 2020s, following combined investments of $1.7bn, Colombian legal gold production will jump from under 300,000 oz a year to over 1.1m oz. Beyond the additional jobs, taxes and royalties these projects will generate, their biggest contribution will be to demonstrate that successful greenfield gold projects can be developed.


In November 2016 Red Eagle Mining made its first pour from the San Ramón gold project, 70 km north of Medellín in Antioquia department. Although the project is relatively small, with an initial production of 70,000 oz of gold per year, the speed of its development demonstrates what is possible for Colombian mining given the right conditions and approach. Only five years lapsed between the first gold discovery at San Ramón and the first pour, an exceptionally short time by mining standards. Construction of the $74m mine, which processes 1000 tonnes of material per day, was completed in just 14 months. Full commercial production from San Ramón began in April 2017.

The next gold project to enter production will be the underground Cisneros mine, owned by Canada’s Antioquia Gold. Having received its environmental licence in November 2016, work on underground ore extraction systems had advanced on schedule by the end of the third quarter of 2016, with first production, at a rate of 30,000 oz of gold per year, set to begin in mid-2017. Production is set to double at the mine after two years, as increased capacity is added.

Big Boys

Both projects are dwarfed, however, by the other two gold mining projects that received environmental licences in 2016. Canada-based Continental Gold’s Buriticá gold project, two hours north of Medellín, is one of the world’s major undeveloped underground mines. Comprising two major veins, the project has 4.71m oz of measured and inferred gold resources at an average grade of 11.4 grams per tonne, and an additional 4.8m oz of gold in the inferred category at an average grade of 9.5 grams per tonne. The project costs an estimated $389m and involves tunnelling a vertical strike zone of 600 metres, but once in production in 2020 the project will have a low, all-in sustaining cost of $492 per oz and will produce around 250,000 oz of gold per year. “Once active the mine will be the first large-scale mechanised underground mining project in the country, which is expected to produce more than 250,000 oz of gold per year, doubling the production of legal gold in Colombia,” Mateo Restrepo Villegas, president of Continental Gold, told OBG.

Further to the east of both San Ramón and Buriticá, the Gramalote project is the fourth undertaking to have received its environmental licence. Owned in a 51:49 partnership between South Africa’s AngloGold Ashanti and Vancouver-based B2Gold, the open-pit mine is slated to begin production in 2020 at a rate of 350,000-450,000 oz of gold per year. “Receiving an environmental licence is a victory for any mining company,” Ken Kluksdahl, former senior vice-president of Colombia AngloGold Ashanti, told OBG. “The recent announcement of approval of a number of projects represents a significant step forward and shows that the Colombian authorities are betting on big and modern mining projects that meet the highest social and environmental standards.”

Path To Success

Since the opening up of the Colombian mining sector under the presidency of Álvaro Uribe, when improved security conditions and rising gold prices made exploration possible and profitable in the country, an estimated 90m oz of gold have been discovered in Colombia, according to local mining publication The Colombia Gold Letter. However, of the hundreds of exploration projects staked by foreign junior mining companies over the last 15 years, the aforementioned projects are the only ones to have developed to construction phase. The reasons are both global and local. Many of the projects discovered during the exploration boom were high-tonnage but low-grade targets. Their relatively high production costs meant that they were sensitive to the gold price. When gold dropped from its peak of over $1800 per oz in late 2011, many of these projects became uneconomical and were mothballed or returned their exploration licences to the state.

Community Relations

However, many more projects have stalled due to environmental licensing problems, poor community relations, or disagreements between central and regional governments. Three high-profile cases demonstrate the levels of legal and regulatory risk firms can face. In February 2016 the Colombian Constitutional Court confirmed that there would be no exceptions to a law forbidding mining and oil activities in the páramos, high-altitude moorlands that provide water to 70% of the population, essentially putting an end to the Angostura gold project owned by Canada’s Eco Oro. Although mining in páramos has long been forbidden, the geographical perimeter of these moorlands was not defined until 2014. By that time Eco Oro, which previously operated under the name Greystar Resources, had already spent $150m on exploring the mining title it had legally acquired.

In October 2007 Cosigo Resources was awarded the Taraira gold concession by state regulators, only for a national park to be established over the vast majority of their licensed areas shortly afterwards. In February 2017 the Constitutional Court ruled that 5000 families undertaking artisanal mining on concessions owned by Gran Colombia Gold were there legally, preventing the firm from removing them and ordering that a consultation with communities be completed before the project could continue. In all of the three cases above, the mining companies have announced their intentions to file arbitration notices against the Colombian state for breach of investor protection clauses under the Colombia-Canada free trade agreement. Another major gold project, La Colosa, owned by South Africa’s AngloGold Ashanti, faces an uncertain future, after residents in the local town voted against developing the mine.


When mining executives with operations in Latin America are challenged about the costs and benefits of the industry on local people, they often cite the example of Chile, where state and private investment in copper projects made it the world’s largest producer. But while Chile’s deposits often lie in uninhabited areas, in Colombia the warmer climate means that much of the Andean mountain chains are dotted with towns and villages. Many of these villages are home to artisanal miners, who fear being forced from their land by incoming foreign firms with titles. Elsewhere, the almost total absence of formal, large-scale mining means that the potential benefits in terms of local economic development, infrastructure and employment are not yet understood. Likewise, the lack of large mines working with high environmental standards, makes it more difficult to allay fears that mining causes irrevocable damage to water sources.

It is notable, therefore, that three of the mines that received licences are underground projects, which have a far smaller footprint than open-pit mines. The plant and tailings facilities at Red Eagle Mining’s San Ramón project occupy just 16 ha and are hidden behind a ridge to minimise disturbance to local communities. Community relations are of vital importance for companies looking to gain the social license needed to operate. Red Eagle’s strategy has been to strengthen local institutions in the region in which it operates, rather than looking to replace the state as a provider of services. Projects include IT training programmes, education schemes for adults who did not complete basic primary and secondary schooling, a gastronomy school set up in partnership with the National Learning Service (Servicio Nacional de Aprendizaje, SENA), and sponsorship of sports teams and cultural events. Continental Gold has invested $3.3m in similar activities between 2010 and 2015. It also operates training schemes in partnership with SENA, and in October 2016, 55 residents of Buriticá received mining-related training, and 16 pupils who had received basic mining training in 2015 went on to become employees of Continental Gold.

Looking Ahead

The start up of the San Ramón mine has the potential to be a game-changer for the Colombian gold mining industry. Having so far avoided the pitfalls experienced by other junior mining companies during the development stage, a well-run and environmentally responsible mine providing benefits to local communities could have the potential to soften hostility to mining in other regions. It may also encourage investors to reassess the type of projects they support. Projects with huge mineral resources requiring major investments look less feasible than modest underground operations in the current climate, and a firm’s community relations may be just as important, if not more, than their geologists and engineers.


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