Project to Create and Operate

A
SERVICE COMPANY FOR THE ARTISANAL
MINING INDUSTRY IN NICARAGUA

Executive Summary

INTRODUCTION
NICARAGUA
Nicaragua borders both the Pacific Ocean and the Caribbean Sea and is located
between Costa Rica and Honduras. In terms of land area, it is the largest
country in Central America with a land surface of 130,370 sq. km. Of the total
land area, 14.75% is arable land.

Lago de Nicaragua is the largest

freshwater
body
in
Central
America.
Nicaragua is rich in mineral
resources, with deposits of gold,
silver, copper, tungsten, lead and zinc but, as a result of the nationalization of
the mining industry in the late 1970s, the contribution of the mining sector to
the national economy felt to less than 2% of the PIB in the 1990s.
The estimated population in Nicaragua is in the order of 5.88 million with
growth rate of 1.02%. About 57% of the population lives in urban centers
distributed along the country. Managua, Capital City of Nicaragua, is the
largest populated center with about 1 million habitants.
Nicaragua, the poorest country in Central America and the second poorest in
the Western Hemisphere, has widespread unemployment and poverty. The
CAFTA-DR has been in effect since 2006 and has expanded export opportunities
for many agricultural and manufactured goods.
Textile and agriculture
combined account for nearly 50% of Nicaraguas exports. In 2013 the Gold and
Silver exports represented alone nearly 20% of the exports value, making the
mining sector the Number One economic activity contributing to the GDP.
Nicaraguas GDP has been determined to be in the $ 27.7 billion range (2013).

During 2013, GDP growth rate was estimated at 4.6%.

production growth rate is estimated at 3%.

The industrial

PRECIOUS METALS MINERAL RESOURCES

The following map shows the known occurrences of precious and base metals
in Nicaragua (Nelson, 2007).

The start of the mining industry in Nicaragua can be set in the early 1900
reaching its highest during the 1940 1950s when intensive gold and silver
exploitation of high grade ores took place along with concentrates of lead,
copper and zinc. During those years the economic value of the mineral exports

accounted for 60% of the total exported goods and Nicaragua was the 14 th
world gold producer.
During the decade of the 1960 and 1970s, the mineral production of the
country provided more than 100 Million US dollars a year, of which 43 million
came from gold production. The Siuna and Bonanza districts produced 28
million tons of gold bearing ore with an average content of 0.18oz/t.
The Nicaraguan Energy and Mines Ministry has estimated that there are
gold/silver reserves for the next 40 to50 years, as an estimated 14.5 million
tons of gold bearing ore has been determined through the studies performed
by scientific missions from Sweden and the former Soviet Union. These studies
also determined the presence of important ore bodies containing polymetallic
deposits.

GOLD/SILVER MINING DISTRICTS

The following map shows Nicaraguas Gold Mining Districts, a brief description
follows the figure.

Fig. 1. Nicaragua Mining Districts (after Darce, 1993).

BONANZA
Located 450 km NE of Managua and 138 km W of Puerto Cabezas, the Bonanza
mining district is known to have been producing gold since 1880. Between
1934 and 1962 production from the Bonanza district reached 715,000 oz of
gold and 11,1 oz of silver. During the 1960 to1970 700,000 oz of gold were
produced.
The Bonanza mineralized body is estimated to have at least 70 sq. km. of
widely distributed veins of gray to white quartz with chlorite and pyrite. The
veins may reach 12 m in width and 1.6 kms in length and are emplaced on
adesites showing sulfide mineralization.

SIUNA LA LUZ
The Siuna and La Luz district is located about 340 kms NE of Managua Gold
production is said to have started around 1896. By 1928 500,000 tons of gold
bearing ore had been produced with about 0.1 oz/t.
A regional survey of about 500 sq km, performed during the 1990s, identified
8 anomalous areas with gold and suggests the presence of a polymetallic ore
body. Alluvial gold is found in the area and currently accounts for the gold
production from the Siuna and Kuikuinita rivers.
Other known ore deposits include copper and gold skarn of the Cerro Potosi and
it is believed that there are 6 Million tons of ore in the Siuna area.
Also
indicated by the geochemical sampling is a possible copper-moly ore body.
ROSITA
Located at about 110 km W of Puerto Cabezas and 410 km NE of Managua lies
the Rosita Ore body, a skarn deposit with gold and copper mineralization that
occurs as lenses and massive sulfides (Santa Rita Hill). Veins and breccia of
banded quartz bearing gold and silver occur n adesites. Placer gold deposits
are also known to occur.
Monte Carmelo is a mineralized skarn body of magnetite and copper. A 1957
resource estimation indicates 8 Million tons of iron.
LA LIBERTAD SANTO DOMINGO
This district is located at 140 km E of Managua and 25 km NE of Juigalpa. The
first mines to open were Santo Domingo and El Jabali in the 1850s. The district
covers a surface of about 150 sq km that includes the La Libertad on the west
and Santo Domingo to the east.
The mineralization is an epithermal banded quartz vein system trending NE-SW
within a faulted basaltic andesite of Tertiary age. The quartz veins range in
width from 0.6 to 15 m and may reach 4 km in length. Gold mineralization is
erratic and is present in the form of electrum.

EL LIMON TALAVERA
El Limon lies 140 km NE of Managua, it is comprised of three systems of gold
bering quartz veins within a radius of 8 to 10 km with center at the El Limon
locality.
The system Limon Panchita has been classified as the most important as
together with the El Limon-Santa Emilia system may contain up to 2 million
tons of ore rated at 6.8 g Au/ton.
The quartz veins may reach up to 5 m in width and up to 500 m in length, most
of them trend N S. The quartz is massive and/or banded ranging in color from
white to gray. Gol is found as electrum within grains of quartz or pyrite.
LA INDIA
The La India mineralized zone located at about 137 km N of Managua can be
reached via paved road which makes it accessible during all year.
The La India mineralization consists of brecciated quartz veins, bearing free
and disseminated gold, which range in width from 0.5 to 3.0m and extend in
length for up to 4 km. Gold content varies from 6 to 8 g/T.
The vein system is associated with two major faults trending NW and NE,
respectively, and also with a collapsed caldera. A survey, over an area of 180
square kilometers, reported 3 Million tons of ore with 6-8 g/T.
From 1936 to 1956 the Canadian company Noranda worked in La India system
and produced 800,000 tons of ore containing on average 9.5 g Au/T and 10.4 g
Ag/T.
QUISALA TOPACIO
Located in the east-center region of Nicaragua and at about 220 km E of
Managua, access is relatively good during the dry season while on the rainy
season access becomes difficult.
The deposits consist of epithermal vein of quartz bearing gold and silver on
andesites and basaltic rocks. A study conducted during the 1982 1984
(CPRM-Brazil) over an area of 15 sq km provides an estimated 5.8 Million tons
of ore with 6 g Au/T.
At Topacio the veins trend NE- SW with widths of between 0.4 to 4.0 m,
extending in length up to 4 km.
LA REYNA
Located at 11 km E of the province of Matagalpa, the system consists of quartz
veins oriented E W within layers of basalt, andesitic conglomerates and
ignimbrites of andesitic composition which are brecciated and faulted.
This ore body consists of mineralization of lead, silver and gold.

CURRENT CONDITIONS
At the end of fiscal year 2013, total production of gold and silver represented
US$ 340 Million, value that represents 20% of all exported goods in 2013. The
total exported precious metals were:

Gold: 200,000 oz.

Silver:300,000 oz.

ARTISANAL MINING
Artisanal in mining in Nicaragua is known to occur since the 1880s, it has been
the main economic activity for some municipalities in Nicaraguas North
Atlantic Autonomous Region (RAAN), but recently has spread around the
country to other locations as people look for sources of income due to the lack
of employment in the country.
It has been estimated that about 30,000 people are involved directly and
indirectly in the artisanal mining operations. According to the President of the
Mining Chamber of Nicaragua (CAMINIC), the number of people directly
involved in mining is as follows:

Villa Nueva District

Bonanza District
La India District
La Libertad

3,000
6,500
500
200

people
people
people
people

Artisanal miners work in groups of 3 to 5people, they are organized into

Cooperatives and as such receive benefits from the Mining Law of Nicaragua.
They are allowed to work on areas of no more than 1% of the total acreage
granted to mining companies, and their production cannot exceed certain
limits. They open tunnels on the ground that may reach up to 25 mts in length.

All of the above listed people bring their raw ore to the rastras (rudimentary
milling) to be processed by using mercury amalgamation. On average the
rastras provide 40% recovery of the gold/silver content.
According to
CAMINICs President the number of rastras has been determined to be as
follows:

Villa Nueva District

Bonanza District
La India District
La Libertad

460
40
15
160

The rastras process on average 1 ton of ore per day.

According to HEMCO, a gold mining company that works closely with artisanal
miners within their concession, the national production of gold produced by the
artisanal mining cooperatives contributed with 44,000 ounces to the total
national production.
The use of mercury in these operations threatens peoples health as traces of
mercury seep into the air, water and soil, thus poising a serious health hazard
throughout the country.