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Colombia mining investment is 'going to explode'

Major miners have not shied away from backing Colombia-focused juniors in the past year, suggesting their appetite for new developments and discovery in Colombia may be picking up.

"I think it's going to explode over the next two or three years," Continental Gold Inc. CEO Ari Sussman said. "We're seeing the beginning stage of an influx of large companies into Colombia."

In the past year or so, there have been notable financings of Colombia-focused juniors. In May 2017, Continental Gold got the backing of Newmont Mining Corp. as part of a US$134 million financing to help fund the construction of its Buritica gold property, slated for production in 2020. More recently, Barrick Gold Corp. funded explorer Royal Road Minerals Ltd. as part of a C$5.4 million financing.

Royal Road President and CEO Tim Coughlin was more reserved than Sussman about Colombia's prospects, but agreed that majors are taking greater interest in the country. "My sense is that the majors get the feeling they need a toe in the water without committing themselves fully," Coughlin said, adding that he would do the same if he were in their shoes.

Sussman compared Colombia today to Peru as it emerged in the 1990s from internal conflict to peace after years fending off communist militants known as the Shining Path. Eventually, larger companies moved in, helping pave the way for booming development.

"And we're at that point now in Colombia where we're seeing the smart money come in," he said.

Continental Gold has fully permitted its Buritica project, and Sussman said the process — if not without hiccups — was fair and transparent, which bodes well for future discoveries that may be made in the country.

"And it is the last frontier with infrastructure to find large scale deposits," he said.

Discovery potential

Coughlin also points to Colombia as ripe for discovery, especially in areas that are slowly beginning to open up for exploration. Royal Road plans to explore concessions in the Nariño province in southern Colombia in an area that was long held by the Revolutionary Armed Forces of Colombia, or FARC, a rebel group.

Colombia and rebel groups made peace in 2016, and since then, Royal Road signed agreements with Economías Sociales del Común, or Ecomún, which is a group including ex-rebels that plays a role in planning economic development in the area. "We've broken that ice with Ecomún," Coughlin said.

The agreement opens the door for Royal Road to start initial field exploration in an area that major have long eyed for discovery, Coughlin said. "Because it's really the missing gap in the whole Andes," referring to promising rock formations that may yield base or precious metals discoveries. "It's almost indisputable that there's massive potential for porphyry copper and gold projects in that area."

He takes a cautious view of how quickly exploration progress may come in post-FARC Colombia. "It's going to be slow, and I've always been fairly open with the guidance on that," he said.

For Royal Road, that means drilling in the area will not come until 2019 after the junior defines targets, Coughlin said. Meanwhile, Royal Road is doing more advanced-stage exploration in Nicaragua.

Coughlin also noted that Colombia has yet to permit a major new discovery. "It still has to prove itself as a place where someone can make a discovery — and certainly you can — and turn it into a mine. That's my message to the Colombians more than anything else."

Sussman is optimistic and said that if a project owner has security and good relations with local communities and strong socio-economic programs, discoveries will get to production. "I think you can do it."