MEXICAN MINING INDUSTRY CONTENT. Legal Framework & Organizational Structure. Economic and financial indicators

Transcripción

1 YOUR BEST MINING INVESTMENT OPPORTUNITY

2 MÉXICO Population, miilion (2009) Density GDP Nominal ((2009)*) GDP per capita (2009)* GDP real growth (2008): Fiscal Balance(2008): Preferential interest rate(2008): Consumer inflation (2009) Canada USA Perú hab/km2 US$885,265 $, millions US$8, % 0.01% PIB 8.0% 3.6% Brazil * Chile Argentina Average Septiembre 2009

3 MEXICAN MINING INDUSTRY CONTENT I Legal Framework & Organizational Structure II Economic and financial indicators III Mexico s mineral potential IV Mexico as destiny for global exploration investment V Why is Mexico the best mining investment opportunity?

4 LEGAL FRAMEWORK & ORGANIZATIONAL STRUCTURE CONSTITUTIONAL ARTICLE 27 MINING LAW MINING LAW SECONDARY REGULATION SECONDARY REGULATION FOR GAS ASSOCIATED TO COAL DEPOSITS SENER

5 LEGAL FRAMEWORK & ORGANIZATIONAL STRUCTURE MINING CONCESSIONS The Mining Law guarantees thru mining concessions (claims) the mineral rights to mexican individuals, and companies established within the country. Companies can be constituted up to 100% with foreign capital. Initially, mining concessions are yielded for 50 years and can be extended for other 50 years There is no limit to concession areal extension. Claims are granted for all mineral rights, excepting radioactive minerals, on the bases of first came first served. Mineral rights can be freely transferred between mexican individuals or companies constituted in Mexico. Mexican government does not charges mineral royalties. Surface and corporate taxes are charged. Foreign investors are considered evenly as national investors. Free access and without restraint thru the web, to all the geological, geochemical and geophysical information from the Mexican Geological Survey

6 ORGANIZATIONAL STRUCTURE OF THE MEXICAN MINING INDUSTRY GOVERNMENTAL STRUCTURE OF THE MINING SECTOR UNDERSECRETARIAT OF INDUSTRY AND COMMERCE States Mine s Bureaus DGM MEXICAN GEOLOGICAL SURVEY MINING GENERAL DIRECTION DGPM GENERAL DIRECTION OF MINING PROMOTION MINING DEVELOPMENT TRUST SALT PRODUCER

7 ORGANIZATIONAL STRUCTURE OF THE MEXICAN MINING INDUSTRY BUSINESS GROUPS CANCHAM Cámara de Comercio de Canadá en México CAMIMEX Agrupaciones de Pequeños Mineros Cámara Minera de México de diferentes e Estados del País PROFESSIONAL SOCIETIES Colegio de Ingenieros de Minas, Metalurgistas y Geólogos de México AIMMGM, A.C. Asociación ió de Ingenieros de Minas, Metalurgistas y Geólogos de México, A.C. a i Academia de Ingeniería SGM Sociedad Geológica Mexicana UMAI Unión Mexicana de Asociaciones de Ingeniería

8 MEXICAN MINING INDUSTRY CONTENT I Legal Framework & Organizational Structure II Economic and financial indicators III Mexico s mineral potential IV Mexico as destiny for global exploration investment V Why is Mexico the best mining investment opportunity?

9 ECONOMIC AND FINANCIAL INDICATORS MEXICO S GROSS DOMESTIC PRODUCT (GDP) % GDP Source: Banco de Mexico, SHCP

10 ECONOMIC AND FINANCIAL INDICATORS ANNUAL INFLATION RATE % Source: Banco de Mexico

11 ECONOMIC AND FINANCIAL INDICATORS INTERNATIONAL MONETARY RESERVES 100, , , ,894 85,274 90,838 70, , ,086 61,496 68,669 67,680 lars Million Dol 50, , , , , Source: Banco de Mexico

12 ECONOMIC AND FINANCIAL INDICATORS ANNUAL EXCHANGE RATE MXP : USD Mexican Pes so Source: Banco de México

13 ECONOMIC AND FINANCIAL INDICATORS VALUE OF MINERAL PRODUCTION Source: Statistics and Geography National Institute (INEGI); SHCP

14 ECONOMIC AND FINANCIAL INDICATORS MINING AS PART OF THE GDP % PIB % 1.11% 3.6% % 0.29% % 06% 0.13% 0.07% 0.06% 0.05% Steel Metallic minerals nonferrrous Iron ore Coal and Graphit e Other nonmetallic minerals Quarry, sand and clay Iron Nonferrous metallics Product s Glass, cement and nonmetallic mineral products

15 ECONOMIC AND FINANCIAL INDICATORS TOTAL INDUSTRY AND MINING ACTIVITY MONTHLY INDEXES Industry Activity Index 25.0 Mining Activity Index % / / / / / / / / / / / / / / / / / / / / / / /11 Source: Statistics and Geography National Institute (INEGI)

16 ECONOMIC AND FINANCIAL INDICATORS MINING TRADE BALANCE ,245 Million Do ollars , Imports Exports Balance Source: DGPM, BANCOMEXT and Banco de México

17 ECONOMIC AND FINANCIAL INDICATORS TOTAL FOREIGN AND MINING INDUSTRY INVESTMENTS Million dolla ars % 18% 5% 10% 8% % 3% E2009 Mining Industry Investment Total Foreign Investment E: Estimated investment in 2009

18 ECONOMIC AND FINANCIAL INDICATORS MINING INVESTMENT PROJECTION 4,000 3,500 3,656 USD$ 15,000 million USD D$ million 3,000 2,500 2,000 2,156 2,730 2,245 2,011 1,884 1,500 1, SOURCE: CAMIMEX, DGPM

19 ECONOMIC AND FINANCIAL INDICATORS dollars Prices Au/oz METAL PRICES P Ag Au Cu Pb Zn , Zn/lb dollar rs Prices Ag/oz, Cu/lb, Pb/lb Gold Silver Copper Lead Zinc Fuente: SGM Sistema Integral de Economía Minera.

20 INDICADORES ECONÓMICOS Y FINANCIEROS PRODUCTION CHANGE BY PRODUCT ( % ) Base = % 25% 20% 15% 10% 5% 0% Oro Plata Plomo Cobre Zinc Hierro Fuente: Instituto Nacional de Estadística y Geografía (INEGI)

21 ECONOMIC AND FINANCIAL INDICATORS 2008 NATIONAL MINING PRODUCTION PARTICIPATION VALUE

22 LATIN AMERICA AND MEXICO GOLD PRODUCTION Latin America s gold production grew 3% in 2008 to 15.6 million Oz (20% of total world production), and first-half 2009 production increased a further 3%. Mexico is ranked as the second largest gold producer in Latin America, participating with 10.3% of the total production in the area, and is also considered the second country with the largest Reserves and Resources of gold (91.4 million oz -2,843 ton-) distributed in 43 projects. In 2008, among the list of the 28 largest Latin American gold mines (those producing more than 100,000 oz -3.1 ton-), 6 are located in México, just surpass by Peru with 8 mines. In 2008 and first nine months of 2009 in Latin America, 16 new mines containing more than 27 million Oz ton- of gold in reserves and resources began production Four of them are located in Mexico. In Latin America 16 projects with potential capacity totaling 3.6 Million Oz/Y -112 tonare being built. Seven of then are located in Mexico. To date, 43 largest Latin American reserves development and feasibility-stage gold projects aredocumented. d Nine of them are located in Mexico, totalizing t i 42.5 million gold Oz -1,322 ton-.

23 GOLD CORP INC % MAIN GOLD PRODUCERS 2008 TOTAL PRODUCTION : 1,502,922 OZ = 50 TON = MDD $1,406 Mines State Onzas Ton PEÑASQUITO ZACATECAS 20, EL SAUZAL CHIHUAHUA 274, LOS FILOS GUERRERO 213, TAYOLTITA DURANGO 86, PEÑOLES 19.2 % GAMMON GOLD 10.3 % ALAMOS GOLD 10.0 % NEW GOLD INC. 5.6 % CAPITAL GOLD GROUP 5.6 % TOTAL 594, LA HERRADURA SONORA 218, LA CIÉNEGA DURANGO 117, FRESNILLO ZACATECAS 24, TIZAPA EDO. MÉXICO 21, TOTAL 381, OCAMPO CHIHUAHUA 115, MULATOS SONORA 151, CERRO SAN PEDRO SLP 84, EL CHANATE SONORA 43, THESE COMPANIES REPRESENT 90% OF NATIONAL PRODUCTION

24 FRESNILLO PLC MAIN SILVER PRODUCERS 2008 SILVER TOTAL PRODUCTION: 3,241 TON = MDD $1,252 THESE COMPANIES REPRESENT 70% OF NATIONAL PRODUCTION MINE STATE PRODUCTION/TON % FRESNILLO ZACATECAS 1, PAN AMERICAN SILVER GAMMON GOLD GOLD CORP INDUSTRIAS PEÑOLES FIRST MAJESTIC SILVER MINAS DE BACIS ENDEAVOR SILVER GREAT PANTHER NEW GOLD IMPACT SILVER ALAMO DORADO SONORA LA COLORADA ZACATECAS OCAMPO CHIHUAHUA TAYOLTITA DURANGO TIZAPA EDO. DE MÉXICO NAICA CHIHUAHUA LA PARRILLA DURANGO LA ENCANTADA COAHUILA SAN MARTÍN JALISCO EL HERRERO DURANGO GUANACEVI DURANGO TOPIA DURANGO GUANAJUATO GUANAJUATO CERRO SAN PEDRO SAN LUIS POTOSÍ ZACUALPAN EDO. DE MÉXICO AMONG THE LIST OF THE WORLD S LEADING SILVER MINES, 4 ARE LOCATED IN MEXICO AND REPRESENT 4.5% OF THEIR TOTAL PRODUCTION

25 GRUPO MÉXICO % MAIN COPPER PRODUCERS 2008 TOTAL PRODUCTION : 292,006 TON = 643,763 Pounds = MDD $2.03 Mine State Ton* Pounds* LA CARIDAD SONORA 118, ,114 CANANEA SONORA 6,165 13,591 SUBTERRANEAS VARIOS 5,420 11,949 TOTAL 130, ,657 PEÑOLES 5.37 % GRUPO FRISCO 7.19 % MILPILLAS SONORA 8,400 18,519 OTRAS MINAS VARIOS 7,289 16,069 (Sabinas, Bismark, Fco. I. Madero, Tizapa y Naica) TOTAL 15,689 34,588 MINA MARIA SONORA 21,000 46,297 FRONTERA COPPER 5.78 % CAPSTONE MINING 4.09% AURA MINERALS 0.65 % PIEDRAS VERDES SONORA 16,874 37,201 COZAMIN ZACATECAS 11,962 26,372 CONCEPCIÓN DEL ORO ZACATECAS 1,916 4,224 THESE COMPANIES REPRESENT 68% OF NATIONAL PRODUCTION AND THE REMAINDER IS THE COPPER REFINERY OF MEXICO * Metallic content

26 MAIN IRON PRODUCER 2008 TOTAL PRODUCTION: 7,725,959 TON ARCELORMITTAL % Mines State Ton LAS TRUCHAS MICHOACÁN 1,332,512 PEÑA COLORADA (50%) COLIMA 1,331,693 TOTAL 2,664, GRUPO ACERERO DEL NORTE (GAN) % HÉRCULES COAHUILA 1,717,125 CERRO DE MERCADO DURANGO 473,126 LA PERLA CHIHUAHUA 381,661 TOTAL 2, 571,912 TERNIUM % LAS ENCINAS MICHOACÁN 1,158, PEÑA COLORADA (50%) COLIMA 1,331,693 TOTAL 2,489,842

27 MEXICAN MINING INDUSTRY CONTENT I Legal Framework & Organizational Structure II Economic and financial indicators III Mexico s mineral potential IV Mexico as destiny for global exploration investment V Why is Mexico the best mining investment opportunity?

28 MEXICO S MINERAL POTENTIAL National territory displays metallogenetic provinces of a wide variety that includes among others: gold, silver, copper, zinc, lead, molybdenum and iron. Cu,Au Fe Cu,Au Salt II Cu,Co, Mn F Fe Sr C P Cu,Au F Mn Fe Au, Ag Ti S Source: Mexican Geological Survey

29 MEXICO S MINERAL POTENTIAL WORLD CLASS ORE DEPOSITS IN MEXICO GIGANTS San Felipe Soledad-Dipolos Milpillas Bizmark Ag Cananea L La Maria Herradura La Caridad El Arco San Mulatos Exportadora Francisco La Encantada La Colorada Dolores de Sal Santa Eulalia Pinos altos Naica Hercules Ocampo p Cu La Perla El Sauzal Sta Au, Cananea Au San Dimas Au Guanajuato Au PachucaReal del Monte Au Au, El Arco La Herradura Au Au El Sauzal Ag La Colorada Ag, Zn Charcas Ag Pb Ag, N i Naica Ag Sombrerete Santa Eulalia Ag, Zn Ag Dolores Ag Guanaceví A C Campo M Morado d Ag Ag, Zn San Nicolás Cu Milpillas Cu La Caridad Mn Molango CaF2 Las Cuevas Zn San Martin Ag Tizapa Francisco I. M. Zn SUPER-GIGANTS Barbara Parral Palmarejo San Francisco del oro Piedras Verdes Topia Alamo Dorado La Cienega La Platosa Roca Fosforica Tayoltita Basis Guanaceví El Castillo Cerro de Mercado San Dimas El Triunfo Ti f Concepcion del Oro Sombrerete Fresnillo Francisco I. Madero La Colorada Nuestra señora San Dimas Guanajuato Pachuca-Real del Monte Fresnillo Cananea Peñasquito Peñasquito San Nicolás Charcas Las Cuevas Las Truchas Guanajuato San Martín Molango Peña Colorada El Cubo Caballo Blanco PachucaTizapa Real del Monte Los Filos El Aguila Ixhuatan Natividad N ti id d Campo Morado Source: Mexican Geological Survey Ag Ag Ag Ag Cu Zn

30 MEXICO S MINERAL POTENTIAL MAJOR MINING COMPANIES 2009 * * * * * * * * * * * * * FIERRO Peña Colorada AHMSA Ternium * *

31 MEXICO S MINERAL POTENTIAL MEXICAN SHARE OF THE WORLDWIDE MINING PRODUCTION METAL GLOBAL POSITION PRODUCTION metric tonnes SILVER 2 3,236 LEAD 5 141,173 ZINC 7 453,588 GOLD COPPER ,593 FROM 2003 TO 2009 MEXICO INCREASED IT S GOLD PRODUCTION BY 175% During the last 6 years, Mexican silver production has been above 2,500 tons, ranking the country as the second worldwide producer. Source: INEGI y SGM

32 MEXICAN MINING INDUSTRY CONTENT I Legal Framework & Organizational Structure II Economic and financial indicators III Mexico s mineral potential IV Mexico as destiny for global exploration investment V Why is Mexico the best mining investment opportunity?

33 MEXICO AS DESTINY FOR GLOBAL EXPLORATION INVESTMENT WORLDWIDE EXPLORATION BUDGETS According to Metals Economics Group's of Corporate Exploration Strategies, worldwide nonferrous exploration budgets keep on growing until Source: Metals Economic Group; Corporate Exploration Strategies Report 19th Edition, November/December 2008

34 MEXICO AS DESTINY FOR GLOBAL EXPLORATION INVESTMENT EXPLORATION BUDGETS FOR THE TOP TEN COUNTRIES Mexico currently ranks on the 1st position in Latin America and the 4th worldwide position. This upgrade is remarkable, taking into account that t in 2003 Mexico was ranked in the 8th position below Brazil, Peru and Chile, and grow in 2008 jumped from the 5th to the 4th worldwide position. Source: Metals Economics Group

35 MEXICO AS DESTINY FOR GLOBAL EXPLORATION INVESTMENT FOREIGN COMPANIES WITH MINING EXPLORATION PROGRAMS

36 MEXICO AS DESTINY FOR GLOBAL EXPLORATION INVESTMENT CANADIAN COMPANIES REPRESENTS 77 % OF THE TOTAL FOREIGN INVESTORS IN MEXICAN MINING EXPLORATION Switzerland Peru Luxemburg Italia India Holand Chile Korea China Japan Australia England USA % % % 1 038% 0.38% % % % % % % 4 154% 1.54% % 38 15% Canada % Source: General Direction of Mining Promotion

37 MEXICO AS DESTINY FOR GLOBAL EXPLORATION INVESTMENT FOREIGN MINING PROJECTS BY MINERAL GOLD AND SILVER REPRESENTS 66% OF ALL PROJECTS FINANCED WITH FOREIGN CAPITAL POLIMETALLIC, % IRON 22 OTHERS 3% 6 1% COPPER 86 13% GOLD AND SILVER % Source: General Direction of Mining Promotion

38 NEW MINES 2008, 2009 y 2010 PROJECTS 2008 STATE MINE SUBSTANCE COMPANY INVESTMENT USD$(Million) NUESTRA SEÑORA Sinaloa Underground Au, Ag, Zn, Pb Escorpio Minerals 52 FILOS Guerrero Open pit Au Gold Corp. 100 CAMPO MORADO Guerrero Underground Zn, Au, Ag, Cu, Pb Farallon Resources 52 EL CORONEL Zacatecas Open pit Au Frisco 60 PROJECTS 2009 STATE MINE SUBSTANCE COMPANY TOTAL 264 INVESTMENT USD$(Million) DOLORES Chihuahua Open pit Au, Ag Minefinders 300 EL TRIUNFO BCS Open pit Au El Triunfo S.A. 23 PINOS ALTOS Chihuahua Open pit Au, Ag Agnico Eagle Mines 240 EL CASTILLO Durango Open pit Au, Ag Castle Gold 20 LA ENCANTADA Coahuila Underground Ag, Zn, Pb First Majestic 20 SAN JUAN BCS Underground P Rofomex 75 JALTIPAN Veracruz Leaching S MexiChem 240 PALMAREJO Chihuahua Open pit Au, Ag Coeur d Lane 300 PROJECTS 2010 STA. ELENA Sonora Open pit Au, Ag Silver Crest Mines 20 PEÑASQUITO Zacatecas Open pit Au, Ag, Zn, Pb Gold Corp Inc. 1,490 EL AGUILA Oaxaca Open pit Au, Ag, Cu, Zn Gold Resources Corp. 25 SOLEDAD-DIPOLOS Sonora Open pit Au Fresnillo-Newmont 70 SAN FRANCISCO Sonora Open pit Au Timmins Gold 35 Source: Mexican Geological Survey TOTAL 2,733

39 ADVANCED PROJECTS PROJECT STATE MINE SUBSTANCE COMPANY INVESTMENT USD$(Million) EL BOLEO BCS Underground d Cu, Co, Zn Baja Mining i Corp. 767 LA VERDE Michoacán Open pit Cu Teck-Cominco 250 EL CRESTON Sonora Open pit Mo, Cu Creston Moly Corp. 200 MINA EL PILAR Sonora Open pit Cu Stingray Copper Inc. 186 MONTERDE Chihuahua Open pit Au, Ag Kimber Resources 50 SAN ANTON Guanajuato Open pit Au, Ag, Cu Kings Minerals NL 265 IXHUATAN Chiapas Open pit Au Linear Gold/KinRoss 200 METATES Durango Underground Au, Ag American Gold 392 EL ARCO Baja California Open pit Cu Grupo México 1,500 BAHUERACHI Chihuahua Open pit Zn, Ag Jinchuan-Tyler 619 TERRAZAS Chihuahua Open pit Zn, Cu Constellation 500 SAN NICOLAS Zacatecas Open pit Zn Teck-Gold corp 246 BUENA VISTA Sonora Open pit Zn, Cu Grupo México 500 SIERRA MOJADA Coahuila Underground Zn Metalline 250 LAS MERCEDES Sonora Underground Zn Yamana Gold 152

40 MEXICAN MINING INDUSTRY CONTENT I Legal Framework & Organizational Structure II Economic and financial indicators III Mexico s mineral potential IV Mexico as destiny for global exploration investment V Why is Mexico the best mining investment opportunity?

41 WHY IS MEXICO THE BEST MINING INVESTMENT OPPORTUNITY? Mexico s legal security, strong economics and stable political system are a guarantee for safe investments Under the country classification Mexico is considered the seventh best destination for mineral exploration investment, accordingtothecurrent Mineral Potential Index of the 2008/2009 Fraser Institute Report Mexico occupies the 1st position in Latin America, and the 4th position in the list of the 10 top receiver countries of global exploration investments, as is indicated by the 2009 Metals Economics Group s Corporate Exploration Strategies analysis. Mexico occupies the 5th position, just below Canada, Australia, Chile and USA, as lower risk countries, according to the 2009 Behre Dolbear Group s, Ranking of Countries for Mining Investment study, highlighting the fact that the Mexico accounts the best tax mineral regime. Mexican gold production has been duplicated in the past five years and with startup of Pinos Altos and Peñasquito gold production will increase 40 % In the past 4 years, an average of 3 new major scale mining projects have been brought into production every year. In 2010, seven new mines will start commercial production

42 YOUR BEST MINING INVESTMENT OPPORTUNITY THANK YOU