Giustra-backed mining firm teams up with informal miners in Colombia

me-metals: Colombia’s artisanal miners are helping a Canadian precious metals producer backed by Frank Giustra navigate the country’s illicit gold boom via some unusual agreements.

According to me-metals cited from mining.com, Aris Mining Corp. has signed partnerships with about 2,500 small-scale miners who now account for 45% of the gold that comes out of its Segovia mine in Antioquia department, according to chief executive officer Neil Woodyer.

Typically, established mining companies look to expel informal miners from their properties. Instead, the Canadian firm is helping them with financing, planning and safety and then buys their gold.

Woodyer’s team is expanding the partnership program at Segovia and its other Colombian mine, Marmato, where some small-scale miners are even using the company’s own tunnels. At a new project, the company estimates 20% of capacity will be dedicated to such partnerships, which may help the company exceed its goal of doubling output to 500,000 ounces a year.

“We add our skills and our technical knowledge, and we pick up their local knowledge and community support,” said Woodyer in a recent interview with Bloomberg. “We enhance our social license and at the same time we get additional production.”

Informal mining in South America from Bolivia to Peru is on the rise driven by record-high bullion prices. Aris isn’t immune from the surge in activity by illegal armed groups in Colombia, and a booming illicit gold trade is estimated to generate more money for organized crime than the cocaine industry. Management has been working with police to shut down illegal groups.

Aris’s approach — to work with local miners who may lack permits but aren’t explicitly banned or inherently criminal — contrasts with that of Zijin Mining Group, a Chinese group grappling with violent conflicts since buying the Buritica underground mine in Antioquia five years ago.

“The partners we have are against the bad guys,” Woodyer said. “So they actually are a defense and help us because it undercuts the bad guys.”

Though infrequent, partnerships with artisanal miners are not unheard of as similar agreements exist in Ghana.

Woodyer founded Aris along with strategic investor Giustra three years ago with the merging of Aris Gold and GCM Mining. Ian Telfer, the architect of Goldcorp, is chairman, while Mubadala Investment Co. is an investor. In the past six months, Aris shares have jumped 91%, the biggest gain among peers tracked by Bloomberg, taking its market value to $1.5 billion.

source: mining.com