At night, the locals know that the old man living by trench PM1-A8 turns into a pig. No one, not even the witches, dare go near there after dark. By daylight, trench PM1-A8 lies at the northwest end of the PM1 gold trend, which so far occurs as a northwest striking intermittent epithermal vein set that can be traced for about 1.8km. Trench PM1-A8 returned 12.9g/t over 2.5m while other trenches along the PM1 trend returned chip-channel results between about 1 and 14 g/t gold.

PM1 is part of a much larger area of newly discovered mineralization that Radius Gold is hoping will turn into a new gold district in central Nicaragua. The old man; well I don’t think he really turns into a pig, despite local lore, but he does have a larger-than-life reputation, a contrary disposition, and must be consulted when important decisions are to be made.

As you have probably gathered, Radius and the old man have become cohorts of sorts since a ragtag bunch of prospectors showed up on his doorstep explaining their rather eccentric interest in rocks. In Radius’ own words, “our current working hypothesis at San Pedro is that the gold mineralization occurs within a roughly 8km diameter caldera-like volcanic structure that contains a number of rhyolitic to dacitic volcanic flow domes. The domes seem to be responsible for pumping the auriferous hydrothermal fluids through northwesterly and conjugate structures”.

The old man is dubious to say the least.

The presence of hot spring sinter and low-temperature quartz lends credence to the speculation that very little erosion has occurred on these 12-million-year old hot springs and volcanoes. Gold grades are quite impressive despite the apparent high level in the hydrothermal system, assaying up to 38 g/t in reconnaissance samples. Although the sampling is admittedly somewhat selective, the consistently good grades bode well for such an early-stage virgin property. For the old man’s part, he is starting to suspect his new friends may have gone “tropo”.

(Red, orange and yellow are good gold rock results on this map from Radius)

Rather than boring y’all with the geologic minutiae and gold potential of San Pedro (we cover the good, the bad, and the ugly of the junior exploration market in the newsletter available at www.paulvaneeden.com), let’s look at the exploration process that lead Radius to this particular piece of terra firma that, until now, was better known for its unfortunate pig man.

The San Pedro prospect was discovered by Rodrigo Matias early last year with little more than a gold pan and rock hammer as he was following up on rumors of gold in the area and chasing southeasterly trending structures heading out of El Pavon. Rodrigo is a Guatemalan geologist with one of the best noses for gold that I have come across. While working his way up the Radius “corporate ladder” he consistently turned up new gold showings. His persistence is also largely responsible for the El Pavon discovery in Nicaragua that is the focus of a major exploration drill campaign by Radius’ partner, Meridian Gold.

(Rodrigo Matias sees gold in this rock from San Pedro)

Rodrigo is part of a team of ex-pats and local geologists/prospectors working throughout Central America under the Zen management of Jock Slater, VP Exploration for Radius. Philosophically, the team’s single focus is to find gold, evaluate the potential as rapidly as possible and move on, leaving the place in better shape than they found it. Good boy scouts one and all. Unlike most normal people doing normal things all week (that would be you and me), this questionable pack of scouts spend the week tramping through the hills and jungles looking for gold and staying clear of pigs.

Very generally, here’s how the treasure hunt works, and how this brings measurable and immediate benefits to the local communities.

Discovery is a long process that rarely leads to a mine. It starts when the advanced exploration team heads into a new area. Initially they contact the local landowners and pick up a few guides to help with basic sampling and trailblazing. Panning for gold in streams and walking the countryside with a rock hammer, an educated eye, land-sat imagery and an idea provide a good first impression of the area’s potential to host gold mineralization. If the team is able to find indications of gold or favorable geology, as was the case at San Pedro, more detailed sampling occurs. Concurrent with the increased exploration more locals are hired to assist in the sampling, etc. and the team becomes more a part of the community.

At San Pedro, Radius is now working out of three base camps and employing between 20 and 50 local people depending on the workload. Although base salaries are low by our standards, Radius is paying two to three times the standard Nicaraguan rate of ~$2.00/day, which for reference, is slightly more than the folks who made your sneakers pull in. Since establishing the San Pedro camps Radius has also provided supplies to refurbish the local school, work books for the children and medical supplies for the clinic. The “leave a place better than you found it” attitude includes useful courses in health and safety, new baseball equipment and friendships. In all, Radius is pumping about $9,000 a month into the local community through jobs and local purchases. The immediate plan is to continue the work program at least through the year, expanding it if warranted by results.

About 70 km to the northwest, at El Pavon, exploration is much further along. Radius’ joint venture partner, Meridian Gold, currently provides jobs to about 70 to 100 people supplied by the community leaders. They also have committed to upgrading the community health and education through various improvement projects. In all, Meridian Gold is pumping roughly $40,000 per month into the local community through wages and projects; not by way of handouts and welfare. Remember, these are predominately sustenance-level people with no real outside source of cash and hence the money is quite meaningful to the wealth and health of the community. These expenditures and improvements are all before any economic mineral resource has even been defined and long before a dollar of profit is generated. Meridian and Radius are not unique in this respect, nearly everywhere I go exploration and mining companies are providing similar, much-needed benefits to local communities.

If Meridian is successful in delineating an economic deposit at El Pavon over the next few years, we can look to Glamis Gold’s activities in Guatemala to see how the process evolves. In western Guatemala, near San Miguel Ixahuácan, Glamis Gold is in the process of building a gold mine where numerous, very small supplemental subsistence-level farms existed. In 2004 roughly $2.4 million was paid out to residents of the local communities and $33 million went to purchases from Guatemalan companies. So far Glamis has invested $2.5 million into community development and infrastructure and they are funding a local foundation dedicated to improving the health and education of the local community. Over the life of the mine Glamis expects to employ 400 people, mostly from nearby communities, and contribute roughly $500 million to the Guatemalan economy through development of the Marlin mine.

Is it any wonder that some Canadian, Swedish, Finnish, Spanish and Australian provinces offer a variety of financial incentives hoping to attract minerals investment to their less developed regions?

The projects we’ve touched upon San Pedro, El Pavon and Marlin, occur in rural Central America which like most of Latin America, is dirt poor. In rural Nicaragua more than 25% of the population struggles to survive on less than $1 per day and feed an average of 6 children per household. Illiteracy is over 30% and basic water and sanitation infrastructure is often non-existent. The typical rural family’s only means of survival is scraping some sort of a living off the land. Given the high birth rate and poor education, slash-and-burn subsistence-level farming and ranching is virtually the only means available to feed an ever increasing, undereducated population. If you want to delve into a root cause of poverty and rainforest destruction (about 40 million acres per year) throughout Latin America, start with the Catholic church and its archaic dogma regarding human reproduction and the virtues of suffering.

(Jock Slater and Nancy Reardon Surveying Recent Burn; “We didn’t do it”)

Far from the image portrayed in tourist brochures, Guatemala’s rural population is also in dire straights. The average indigenous family of about seven struggles to survive on increasingly small plots of ground averaging less than 2 hectares, whilst supporting increasingly large families. Nearly 50% of the rural population is considered poor, earning less than $250 annually. The shortage of land and rampant population growth force a large portion of the poor to travel the country chasing $3-to-$5-per-day migrant worker jobs picking coffee. Alternatively, they can move to the city slums hoping for work or, if they can save enough money to pay a “coyote” to smuggle them into America.

In the face of this extreme poverty in rural Central America, minerals exploration and the associated jobs and money it brings, has effectively been shut down in Guatemala and Honduras and is being challenged elsewhere. Foreign NGO’s and other global organizations, for reasons beyond the scope of this article, have come out against exploration and mining, attempting to halt what often amounts to the only chance for advancement these exploration activities offer the indigenous people. Local representatives of global organizations have stated that “mining is bread for today and hunger for tomorrow”, even though the obvious reality staring these people in the face is one of “hunger today and tomorrow”. Does it not make sense that, given the sorry state of rural Latin America, a little bread today should be viewed as beneficial? Is hunger and suffering the only path to salvation available to these people?

(Typical Rural Nicaraguan Family. What chance do these children have of a better life without education and health?)

This article is not intended as a PR piece for the big mining companies who, if truth be told, are being such good and benevolent corporate citizens largely due to international pressure. But that pressure, in part, is bringing clear and immediate financial, educational and health improvements to some of the poorest people in the world. I have seen this over and over. Even though the mining company may never build a mine, and if they do, the mine may only last 10 years, the opportunities for advancement far surpass the prospect of “bread today and hunger tomorrow” for the local populations. It represents the chance for better education, health and life for some.

The real crime being perpetuated is the apparent complicity of these global institutions in opposing financial, health and educational improvements offered by companies willing to invest in the natural and human resources of these rural areas. Worse, the anti-mining and exploration faction are employing outright deception to thwart the possible opportunity for some of the indigenous population to get ahead. They are spreading tales regarding mining and exploration that literally play on the indigenous population’s ignorance and distrust of science and outsiders. The disingenuous tactics being employed do not stand up to scrutiny and serve as a blunt implement for their fear. Fear, I suspect, that a better-educated and prosperous population may stop believing that a man can turn into a pig and that they are helpless to determine their own fate.

(The old man in daylight)


K Brent Cook
Exploration Analyst

Website: www.paulvaneeden.com

Disclaimer: Brent Cook owns shares of Radius Gold.

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Brent Cook is an independent Minerals Exploration Analyst and Advisor to funds, high net worth individuals and a select group of junior exploration companies. He has over twenty-five years of experience focused on the economic evaluation of minerals exploration, development and mining properties in over 50 countries and encompassing virtually all geological environments. Brent has worked with Casey Research on numerous projects and currently also works with Paul van Eeden and writes a column for his investment letter.