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Pinellas group to mine Colombian gold

For years, political violence kept foreign investors at bay, but it's safer now.

By DAVID ADAMS, Times Latin America Correspondent
Published August 15, 2007

A miner hand-sluices for gold at the Hojas de Maiz deposit in northern Colombia. Gold mining may be a good alternative to wean farmers away from coca plants, used to make cocaine.
	[World Mining Corp.]

ADVERTISEMENT [David Adams | Times] Anori Mayor Rodrigo Mejia says, "There's still gold here, we just need investment to exploit it." Bob Ulrich is a World Mining Corp. director.

ANORI, Colombia — The two gold-plated church bells of this old colonial town testify to past riches.

It used to be that gold, not cocaine, was the most productive livelihood in this remote mountainous region of northern Colombia.

But for many years political violence and kidnappings made the mineral-rich Andean foothills too treacherous for foreign mining companies.

Now a degree of security is returning, and a St. Petersburg company is hoping to cash in on what it thinks are some of the richest gold deposits in Latin America.

"The area is much safer now and we plan to go into operation by the end of the year," said James Vesey, president of World Mining Corp., which has a small office above an art gallery in downtown St. Petersburg and boasts former St. Petersburg Mayor Robert Ulrich as one of its directors.

World Mining is one of several foreign gold companies banking on the return of relative peace to this region, once gripped by fighting between right-wing paramilitary gunmen and left-wing guerrillas.

It's not exactly a gold rush, but companies are suddenly showing new interest in Colombian gold, according to Alex Turkeltaub, a mining analyst with the Massachusetts-based Frontier Strategy Group.

"The security situation has improved. Companies are investing and in general people are very optimistic," he said. "I think Colombia will be an important producer in the next few years."

A Miami company, Gemini, has announced it plans to open a small mine in the same region. Other bigger firms, such as Canadian-based Greystar Resources, and South Africa's AngloGold Ashanti, have also recently announced major new investments in Colombia.

One major Colombian company already operates in the Anori area, though its workers recently went out on strike.

Local residents are excited by the resurgence of mining.

"We were the biggest miners in the country," said Anori's mayor, Rodrigo Mejia. "There's still gold here, we just need investment to exploit it."

Mejia thinks gold could provide a lucrative alternative to the planting of coca used to produce cocaine. American and Colombian development experts have struggled for years to come up with alternative sources of rural income to compete with coca, which is worth $500 a kilogram when processed into coca paste.

Still a long shot

World Mining says geological surveys of its 34-square-mile concession near Liberia on the River Nechi, show $5.8-billion worth of gold reserves. Vesey says with gold currently fetching $680 an ounce on the world market, conditions are ideal. He estimates production costs will be only $70 an ounce.

The company is looking to raise $1.2-million in order to begin operation this year. So far it has raised $600,000 from American, Canadian and European investors.

The company plans to start by mining about 60 acres at a former mine, Hojas de Maiz, with a crew of 10 to 15 local workers. A second phase involves opening up half a dozen other areas.

"Statistically the odds are largely against them," said Turkeltaub. "They are going to have to end up raising a lot more money to have a reasonably-sized exploration."

He added that the company needed someone with "top-notch technological expertise" in order to attract major investment. "If they are novices in mining, it's going to be very difficult for them."

A graduate in both chemical and metallurgical engineering, Vesey worked in the phosphate business before starting his own consulting firm. He shares an office with Ulrich who was mayor of St. Petersburg from 1987to 1991. The company has 150 shareholders, and includes several local businessmen on its board of directors.

One of earliest to join the board in 1996 is Ranald "Ron" Stewart Jr., a business graduate of the University of Florida. Stewart has had his ups and down in the business world. He was a major investor in ValuCar, a company that was raided by the FBI in 2000 and went bankrupt soon afterward.

"Ron had nothing to do with that. He was just an investor," said Vesey, who added that he has known Stewart for 35 years and considers him to be "very honest." Stewart was never charged.

Rich past, poor roads

The Anori area was first opened up by European miners in the mid 19th century. It boasted one of the first roads in the province of Antioquia. But political violence forced many to leave the region, and the local economy never recovered.

Local transport is so bad World Mining Corp. says its gold will have to be flown out by helicopter. It plans to ship $350,000 worth of excavating and processing equipment by river from the nearest main town.

While the area is less violent these days, left-wing FARC Revolutionary Armed Forces of Colombia guerrillas are still active. One candidate for mayor of Anori in the coming election was kidnapped by guerrillas last month. He was released after nine days. Guerrillas ambushed a Colombian military patrol near Anori in June, killing four soldiers and wounding eight others.

World Mining bought the concession in 2001 for $600,000. Vesey was introduced to the region in 1980 by an American friend. "I kept in touch because it was such an extraordinary property," he said.

The Hojas de Maiz mine was operated on and off for 22 years between 1940 and 1981. Locals used primitive hydraulic water cannons to break down the rock, as well as hand-operated sluices and small dredges to sift alluvial river deposits. Vesey says his company will use an excavator to mine the rock, and modern mining equipment to sift and separate the gold.

Residents in the area still work the rivers. After a recent dredging expedition on the Porce river, Mauricio Rodas, 28, unwrapped a neckerchief to reveal gold flakes in the palm of his hand. In two days work he and two friends panned about $200 worth of gold.

"We were miners before," he said, "and we can be miners again." 

Times researcher Caryn Baird contributed to this report. David Adams can be reached at dadams@sptimes.com.

Fast Facts

Directors of World Mining 

James Vesey: president/CEO/chairman

Kenneth Parvin: co-founder, former Pinellas municipal judge

Paul Oren: owns Oren Construction Co., specializing in land development.

Paul Paluzzi: founder and co-owner of Zons Development L.L.C.

Ranald Stewart Jr.: 35 years experience in retail, manufacturing, pharmaceuticals

Robert Ulrich: former president/chairman/CEO of Bankers Insurance Co.

Paul Wintrode: former Price Waterhouse accountant, corporate controller VIACOM Subsidiaries.

[Last modified August 15, 2007, 01:53:29]