Panama Investor Blog

Panama in Seach for Oil & Gas

I have posted on Panama's search for  oil in the past year and although much was made of reports of oil literally pouring out of the ground in the Darian, nothing more has been made public. According to this article in La Prensa, the government has hired a company to do some exploration in a number of areas around the country. It certainly would be interesting if Panama were to make a significant discovery in oil deposits to add to their other 'in the ground natural resources', copper and gold.

Machine translated from La Prensa;

Search for oil and gas in Panama

Roberto González Jiménez Roberto González Jiménez
roberto.gonzalez@prensa.com roberto.gonzalez @ prensa.com

The National Secretariat of Energy contracted the OTS Latin America to identify potential areas for hydrocarbon exploitation.

The state will spend $ 90,000 for this study, while the Andean Development Corporation will contribute $ 476 000 through a non-reimbursable fund.

The Minister of Finance Alberto Vallarino said that studies are carried out throughout the country, and mentioned areas in Bocas del Toro, on the border with Costa Rica, south of Chiriqui, in the Gulf of Panama in the Gulf of Urabá , among other locations.

 The study will shed which would have greater chances of success in exploration, he added.

 The National Economic Council yesterday also approved the purchase of land for $ 1.8 million to build a new hospital that will serve the districts of Chilibre, Las Cumbres and Mayor Diaz.

 The hospital will be built with a donation of $ 25 million from the Government of Taiwan.

 

 

Panama copper mine project submits 15,000 page environmental study

Contrary to what many believe, the recent changes in the law did not do away with the need for environmental impact studies for mining operations. What it did do is to prevent environmental activists from holding up project with court actions when the project is of state interest. The Inmet mining company is the major player in the development of what is believed to be one of the largest copper deposits in the world. It really is a game changer for Panama who up until this major discovery had very little exportable resources. Lets hope that they will comply with the environmental regulations and do as little harm to the country as possible. There is no doubt that there will be negative effects from this kind of exploitation, but if it is balanced against the benefits it can bring to Panama it should be more than worth it. To those who say that the mine will leave huge scars on the land, I can only reply that so do meteorites.

Inmet Mining Announces Submission of the Cobre Panama Environmental and Social Impact Assessment to the Panamanian Environmental Regulatory Authority

TORONTO, ONTARIO, Oct 04, 2010 (MARKETWIRE via COMTEX) -- Inmet Mining Corporation ("Inmet") /quotes/comstock/11t!e:imn (CA:IMN 58.72, +1.90, +3.34%) announced that its wholly owned subsidiary, Minera Panama S.A. (MPSA), has submitted the environmental and social impact assessment (ESIA) for the Cobre Panama copper project to the Autoridad Nacional del Ambiente (ANAM), the Panamanian environmental regulatory authority. The submittal of the ESIA is a significant milestone in the development of the project.

The ESIA was prepared by Golder Associates and describes the existing socio-environmental conditions in the project area, the likely impacts and benefits that will result from the project and the commitments that MPSA will undertake to minimize such impacts and enhance such benefits. It represents one of the most intensive studies ever undertaken of the socio-environmental context of the Atlantic slope of Panama. During the past 42 months, more than 40,000 person-hours of field time were recorded, involving more than 100 Panamanian and international experts in the preparation of the document. Three rounds of public consultation were undertaken in local communities. The ESIA document consists of 14,913 pages in 40 volumes.

The ESIA technical Executive Summary (in English and Spanish) and a plain language ESIA summary (in English) are available on Inmet's website (www.inmetmining.com). Electronic copies of the entire ESIA document (in English and Spanish) will be available on request by October 31.

Panama oil exploration news

According to a recent article in LA Prensa, The government of Panama has hired a company out of Venezuela to search for oil and a contract has been given for a bit over 3/4 of a million dollars. Of course the environmentalists don't like it. Lets hope they find some and that that Venezuela has little more to do with this project than finding the black gold.

Machine translated from La Presna

ARCIA OHIGGINIS JARAMILLO
oarcia@prensa.com

Directly, the Cabinet approved it to the Secretary of State Energy hiring a company that will explore the existence of oil fields in Panama for a total of $ 765 476 000.

The company was designated OTS, an organization of workers and former employees of Petroleos de Venezuela SA, a specialist in oil data collection. At the moment, the Government is in the process of hiring firms to OTS.

Berta Burgos, head of Public Relations of the Ministry of Energy, confirmed that handles the organization of a database on the location of hydrocarbons in the country, then explore and exploit these places.

According to Burgos, the Corporación Andina de Fomento (CAF) and the Inter-American Development Bank (IDB) will provide $ 420 381 000, while the remaining 95 000 $ 345 will be provided by the Department of Energy.

THE ENVIRONMENTAL DEBATE

The reports of the Secretariat realize that the scans will have the endorsement of the National Environmental Authority and the IDB.

However, environmentalists are wary that activity, then claim to be held in areas near large concentrations of forest.

The executive director of the National Association for Conservation of Nature (Ancona), Alida Spadafora, believes that "the exploration and possible exploitation of Darien and other areas involve many dangers for Panama. We've never done such work. "

Coincides with the environmental Spadafora Raisa Banfield, who holds that "this investment is a step backwards and sends a bad message, then we should invest in clean technologies such as solar, wind and waves." According to Banfield, "the oil industry is one of the most destructive to the environment, demonstrating that the State does not have a vision of development with conservation."

The issue of oil exploration became important when in April, when inaugurating the Annual Conference of Business Executives, President Ricardo Martinelli pointed to the existence of oil in Darien.

Another gold mine to start operations in 2012

Although this mine has announced commencement of operations in the past without follow through, the price of gold has probably influenced its recent announcement to take action. The Cerro Quema mine in Los Santos Azueros, has a concession for about 5000 hectares and studies show reserves in excess of 500,000 ounces of gold that can be extracted over the next 6 years. Even at $1000 an ounce (current about $1200) the half billion dollar gross income should generate over $20 million for the state.

Gas and Oil in Panama

I posted last April about oil bubbling from the ground in the Darian jungles and this weeks La Prensa reports that a company is being hire to do a bit of exploration to determine just how viable gas and oil exploitation may be in Panama. I say LETS GO FOR IT!

La Prensa excerpts; The Department of Energy (ie. I did not know they had one) has hired an exploratory study to confirm the existence of oil and natural gas in  Panama and the commercial viability of their holdings.

Frank De Lima, Vice Minister of Economy, at the conclusion of the National Economic Council (Dinner), said the study will cost $ 476,000, of which $ 381,000 will be provided by the Corporacion Andina de Fomento (CAF) through fund non-refundable.

The objective of the analysis, which will run for eight months, to identify possible areas of the country that have deposits of oil and natural gas.

 So far, there has been talk of the Atlantic and Pacific coasts of the border between Panama and Colombia as potential locations of reserves.  De Lima said Friday that it could also be in the Azuero Peninsula and along the border between Panama and Costa Rica.

 "This is the first step in the possible establishment of the oil production business in the country," said the official.

Petaquilla mine extracted 6000 ounces of gold per month

Most countries have some natural resources that they exploit to bring in revenue to the state and Panama has become more successful of late in doing the same. The real important thing to consider is the fact that Panama is a small country with only 3.25 million people and those resources can go along way to helping the country move into a brighter future. I understand that there are environmental concerns from any kind of resource exploitation and we can only hope Panama leadership takes these matters seriously, but in my opinion Panama needs to take advantage of every opportunity it can to improve its balance sheet. Panama's people for the most part are not highly educated or entrepreneurial and when you have neither of these qualities you need something like natural resources in order to have the funds to improve infrastructure, education and health care. So you will see me posting discoveries and announcements of natural resources, usually in a positive light as I view it as an important way to fund Panama's future.

The Petaquilla Gold is a producing gold mine and as can be seen from a recent brief in La Prensa, they are averaging 6000 ounces a month in production. Panama is increasing their revenues from 2% to 4% of the production according to another article about mining in general last week.

Excerpt:

Source: Prensa.com
Wednesday, July 7, 2010

Modifications planned to the Mining Resources Code also include requirements for environmental studies.

In addition to the increase in royalties from 2% to 4%, the reforms to the Mining Resources Code that the Panamanian government is working on will include the payment of taxes as soon as companies generate revenue, as well as the requirement for environmental impact assessments (EIAs).

The precise content of the reforms is unknown but the minister for Industry and Commerce, Roberto Henríquez, commented that mining companies will have to pay the same percentage as levied on Petaquilla Gold, which was increased by the current administration from 2% to 4%.

Panama do$e have one of the large$t known copper depo$it$ in the world!

Several months ago I posted about Panama having one of the world largest copper deposits. I was a bit skeptical about such a grandiose claim but, after reading this report from Inmet mining it seems that indeed it is true and they are preparing to go after it. I know many people are justifiably concerned about the environmental impact of such an operation. After all, these are open pit mines and one would think they will leave great scars on the countryside along with the pollutants that typically accompany mining. Many people are dismayed at a recent law that allows the government to circumvent certain environmental studies if it is deemed of strategic importance. On the surface it looks like the government just wants to rush in and start laying waste in their efforts to profit from such a find.

But, after reading the report in its entirety, I find that the issue of environmental impact studies have already been completed to the tune of $15 million. What the government appears to be doing with the new law is mitigating the possibility of lawsuits being filed that could tie up the project in court for many years.

When you look at the benefits to the people of Panama to be able to exploit such a natural resource I believe it is well worth the risks to the environment. When I fly over Panama between Chiriqui and Panama city see a land that has been stripped of just about every tree for cattle ranching. Only the inaccessible land is left with forests. Even the national parks have been encroached upon in the effort to supply one hectare of crazing for each steer. We hear little from the environmentalists about this even though the cattle are always eating and the jungle doesn't get a chance reclaim it. The reclamation of a mine when done properly should leave the land looking like it did when they began. In fact if you just let the jungle here do its thing it will quickly do its own reclamation.

The tailing's and potential pollution of the water table are another issue, but from what I read in the report they are taking significant steps to control this and the kind of technologies used in mining today are significantly more advance than those used in the past. I don't profess to know much about the industry, but I have seen reclaimed open pit mines and from reports of reclaimed land, ground water was not affected adversely.

What's in it for Panama?

First is the over $5 billion dollars in investment going into getting the mine operational over the next five years. This money will be spent on labor and a lot of materials that will be supplied by Panama. I would not doubt that at least 50% of that money stays in Panama and there is a significant multiplier effect that will boost the economy significantly. Then there is 2% that Panama gets of the gross which may represent a very significant portion of the net. It will certainly be in the billions of dollars which if used wisely can really benefit the people of Panama.

Remember that Panama is on an infrastructure spending spree and they are going to need income to repay the debts. I would rather they take out of the ground rather than my pocket in the form of higher taxes. I have not calculated the total expected return, but the company is using rather conservative estimates for the expected prices of metals such a $750 an ounce for gold which is currently trading at over $1250 an ounce.

I am sure this post will get a lot of comments regarding the environment and the potential for the lack of wise uses of funds received, but I would first ask you to read the complete report and do a little google research to see how mining is done today. Here is the report in its entirety.

There's oil in them thar jungles!

Who would have thought that Panama would have huge copper and gold deposits along with black gold? According to the president, it is bubbling right out of the ground in the Darien Jungles, just like it did for Jed Clampett. If this keeps up they should be able to eliminate taxes altogether! This should be very interesting.

La Prensa: Panama City, Apr 21 (EFE) .- President Ricardo Martinelli says there is oil in the Darien jungle and has planned to expand the mining industry in Panama while Protecting the environment.

"Even if you don't believe it, I am going to say something I shouldn't say. Panama has oil in the Darien area. We are doing studies and have confirmed it, that the same veins from Colombia reach Panama," the president said Tuesday.

Martinelli discussed Panama's potential energy resources in an address to the Annual Conference of Business Executives organized by the Panamanian Business Executives Association, or APEDE.

"Mining is important, it has a great future in Panama, there are many companies interested in investing in the country," the president said.

The government will promote responsible mining and oil operations that "pay dividends to the state, respect the environment and have orderly development," Martinelli said.

The president said he planned to visit an area Friday where residents gather oil that bubbles to the surface.
"I have to see it with my own eyes," Martinelli said.
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Panama to become the second largest copper producer in the world

I was amazed to see this report that Panama has such huge copper reserves. Along with copper there is gold and the gold mines in Panama are really starting to produce. The environmentalists are not happy but there needs to be a balance. As long as the mines reclaim the land and control pollution according to laws in place then Panama can benefit greatly and it will reduce the pressure on the public treasury and hopefully the public.

From Panama News room

Panama gold production triples

Petaquilla Gold, which has been a target of  Panamanian environmentalists and indigenous groups, is likely to become one of the darling’s of government. Following the recent statement by President Martinelli that Panama’s doors are open for mining investment and that current laws could be changed comes the government report that Petaquilla’s project in Donoso, Colón, tripled the amount of the the country’s gold production in 2009 over 2008
Panama produced about $16 million worth of gold in 2009, exporting about 1.6 metric tons according to an economic report of the Ministry of Economy and Finance.
The government also expects the country's copper production to rapidly increase with the opening of the Cerro Colorado project in the Comarca Gnabe Buglé, an area with one of the region's largest known copper reserves.

The project is expected to make Panama the second-largest copper producing nation in the world.
Environmentalists and others have expressed concerned about mining impact on the environment.