Gold Mining: Is Turkey a Model Country?
Why is this important?
Two of the mines, including the largest Turkish mine in operation, called Kisladag, are owned by Canadian-based Eldorado Gold Corp. A third is owned by Australian company Alacer Gold. These foreign miners have successfully built mining operations in a country that is relatively new to modern-day mining.
Our in-house geologist, Andy Jackson, believes Turkey could hold many other economic gold deposits, and the country could continue to be a very positive contributor to the mining industry going forward.
The geology of the country makes it very appealing, because Turkey is located at an area of stress between tectonic plates – specifically, the African plate is being over-ridden by the Eurasian plate. Especially in the Biga Peninsula, in Western Turkey, prolific volcanism gave rise to a host of epithermal gold deposits, a number of which are in production.
Andy spent time in Turkey in the early 1990s, working as a regional exploration manager prior to joining Sprott Global Resource Investments Ltd.. He recently returned from Turkey – and told me about how it had gone from staunchly anti-mining to relatively mining-friendly as a country.
“The attitude to foreign miners has changed drastically. When we were exploring in Turkey twenty years ago, we frequently faced blockades being put in front of us. They didn’t consider it gold that we were looking for; they considered it ‘Turkish gold.’ And nobody was going to take ‘Turkish gold’ out of Turkey. There was a very nationalistic attitude to gold.
“Environmental groups also attacked potential mining projects. They spread concern among local villages about cyanide use to extract gold. They told villagers in places around the potential mine site that 100 percent of the people in these villages would die as a result of cyanide poisoning.
“But, of course, mines have now been in operation for fifteen years, and people know that this doesn’t hold water anymore.”
The government has also embraced mining. As Umit Akdur, head of the Gold Miners’ Association of Turkey noted, gold exports reduced the current account deficit of Turkey by $1.9 billion in 2012, around 3% of the current account deficit for that year.** As a result the political environment is positive for gold mining.
The NSR entitles the authorities to take a share of the gold after it has been processed. In Turkey, the government royalty comes before the added expense to the mining company of processing the ore, and thus the amount of profit taken from the miner depends on the profitability of the mine.
Are there problems nonetheless?
International relations are difficult, says Andy.
“The government doesn’t get along particularly well with the Armenians, the Shi’ite Syrian government, or the Iranians.” Tense relations with its neighbors could make trade more difficult.
“Unemployment, I’d say, is their biggest problem right now. They need to reduce it.
“But apart from that, it’s a great exploration venue. There is new mineralization being discovered in areas that had previously been looked at fairly well, because of improved ability of exploration geologists to find gold that is under cover.”
An area of particular interest is the Biga peninsula, which is an area near the Adriatic Sea coastline, in Western Turkey.
“I think Turkey is a very good place to go do exploration right now.”
Andrew Jackson joined Sprott Global Resource Investments Ltd. in 2006, and has a background of 35 years in the exploration and mining industry. He holds an M.Sc. in economic geology, is a Fellow of the Society of Economic Geologists and is Series 7 licensed.
Andrew spent 12 years with Billiton / Gencor, becoming Exploration Manager for Southeast Asia, Turkey and North America from 1991-1996. He joined Placer Dome in 1996 and over a period of 10 years with Placer, held the positions of Exploration Manager for Canada, Exploration Manager for North and Central America, and Manager Global Near-Mine Exploration (covering 17 mines worldwide). He also headed a specialized target generation team that targeted very large gold deposits worldwide using advanced geological concepts.
This information is for information purposes only and is not intended to be an offer or solicitation for the sale of any financial product or service or a recommendation or determination by Sprott Global Resource Investments Ltd. that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on the objectives of the investor, financial situation, investment horizon, and their particular needs. This information is not intended to provide financial, tax, legal, accounting or other professional advice since such advice always requires consideration of individual circumstances. The products discussed herein are not insured by the FDIC or any other governmental agency, are subject to risks, including a possible loss of the principal amount invested.
Generally, natural resources investments are more volatile on a daily basis and have higher headline risk than other sectors as they tend to be more sensitive to economic data, political and regulatory events as well as underlying commodity prices. Natural resource investments are influenced by the price of underlying commodities like oil, gas, metals, coal, etc.; several of which trade on various exchanges and have price fluctuations based on short-term dynamics partly driven by demand/supply and nowadays also by investment flows. Natural resource investments tend to react more sensitively to global events and economic data than other sectors, whether it is a natural disaster like an earthquake, political upheaval in the Middle East or release of employment data in the U.S. Low priced securities can be very risky and may result in the loss of part or all of your investment. Because of significant volatility, large dealer spreads and very limited market liquidity, typically you will not be able to sell a low priced security immediately back to the dealer at the same price it sold the stock to you. In some cases, the stock may fall quickly in value. Investing in foreign markets may entail greater risks than those normally associated with domestic markets, such as political, currency, economic and market risks. You should carefully consider whether trading in low priced and international securities is suitable for you in light of your circumstances and financial resources. Past performance is no guarantee of future returns. Sprott Global, entities that it controls, family, friends, employees, associates, and others may hold positions in the securities it recommends to clients, and may sell the same at any time.
Thursday, June 23, 2016
Seabridge: Building Out An Optionality Company
Saturday, June 18, 2016
Back to Basics with Doug Casey and Rick Rule
Tuesday, June 14, 2016
The Technical Case for the New Gold Bull Market
Friday, June 10, 2016
Gold versus Inflation, other Commodities, and the NYSE: It’s not what you expected.
Tuesday, June 7, 2016
Rick Rule Interview Series Part V - The Difference Between Being Wrong and Being Early
Friday, June 3, 2016
On The Macro: Gold Leading Up to the Fed Meeting
Wednesday, June 1, 2016
Rick Rule Interview Series Part IV - The Current State of the Oil & Gas and Uranium Markets
Friday, May 27, 2016
Factors that Favor Gold in the Current Environment
Tuesday, May 24, 2016
Rick Rule Interview Series Part 3 - The Nature of the Extractive Industry
Friday, May 20, 2016
“It’s the inherent inefficiencies of the capital market system that create these opportunities.”
Tuesday, May 17, 2016
Rick Rule Interview Series Part 2 – "Lessons Learned from My First Major Cyclical Downturn"