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About Mexico
- Endowed geographic location: rich subsoil and large proven mineral deposits, second largest gold producer in Latin America
- Mining-friendly history that spans almost 500 years
- Political stability, independent judicial system
- Tax, accounting and trade regimes comparable to those in USA and Canada
- Supportive legal framework: Mexican legislation encourages foreign investment in the mining sector. The 1993 Mining Law enabled companies to be established with 100% foreign investment
- No mining royalties
- Free access to geological, geochemical and geophysical information from the Mexican Geological Survey
- Experienced professional and technical mining workforce at competitive labour costs
Geographic Location and Population
Mexico enjoys an endowed geographic location: with an area of 1,964,375 km2, it is located just south the US, with active trading ports on the Pacific Ocean, the Caribbean Sea, and the Gulf of Mexico. The country has a large free market economy ($1.185 trillion GDP in 2011). Recent government efforts have expanded competition in seaports, railroads, telecommunications, electricity generation, natural gas distribution, and airports. The transportation networks, enable trade for a population of approximately 115 million, and more than US$20 billion of imports from the US alone (2011).
The country's 500-year mining history has resulted in a highly skilled labour force which provides a competitive advantage. Moreover, labour costs in the sector can be significantly lower than the corresponding costs in other jurisdictions.
Legal System and Mining Law
The Mexican Mining Law was changed in 1993. The new law (Ley Minera) unlocked new areas to foreign investment which were previously limited to Mexican ownership. Combined with the Law on Foreign Investment, the new law allowed for 100% foreign investment in exploration and production. Article 6 of this Law stipulates that the exploration and exploitation of minerals will have priority over any other use of the land, including agriculture and housing. The modifications removed the barriers to private sector participation in mineral production that was previously reserved to the government (e.g., coal and iron).
The 1994 North American Free Trade Agreement (NAFTA) further enabled land privatization and foreign investment. The modification of Article 27 allowed for the sale of "ejidos" (communal lands) to private owners -- government or third parties including foreign multi-nationals.
Mining concessions are given for 50 years and can be extended for an additional 50 years. The concessions can be freely transferred between Mexican individuals or companies incorporated in Mexico pursuant to Mexican Law. Compared to processes in other jurisdictions, applying and obtaining an operating license can be a straightforward process (requiring months instead of years).
All these developments make the Mexican mining sector an attractive target for investment.
Financial and Investment Rankings
According to the Fraser Institute Annual Survey of Mining Companies 2010/2011, representing answers from 494 exploration, development and other mining related companies,
- 72% of the companies answered 1 (Encourages Investment) when asked about Policy/Mineral Potential, assuming no land restriction in place and assuming industry "best practices".
- 35% of the companies answered 1, and 49% answered 2 (Not a deterrent to investment), when asked about the quality of geological data base.
- 48% answered 1, and 26 answered 2, when asked about uncertainty concerning the administration, interpretation and enforcement of existing regulations.
Behre Dolbear Group ranked Mexico as 5th in 2011, as the best destination for investment in mining projects, considering economic, political and social factors, corruption, financial stability and tax structure.
Prospectivity
Mexico is one of the world's largest metal producers. It is best known for its production of silver with over 10 billion ounces mined; however, the country is also rich in quantities of gold, copper, lead and zinc. The majority of gold production in the nation comes from mines where gold is obtained as a co-product of silver and copper operations or as a by-product to polymetallic deposits.
The main mining producing States in Mexico are Sonora, Chihuahua, Coahuila, Durango, Zacatecas and San Luis Potosí.
Mundoro's projects are located in the States of Durango and Chihuahua. In 2010, Chihuahua and Durango produced 23% and 9% of the total gold production in Mexico, respectively.
Mundoro has duly incorporated a 100% owned Mexican subsidiary, Mundoro de Mexico S.A de C.V, with offices in the city of Durango, State of Durango.
Sources:
Mexican Geological Survey: http://www.sgm.gob.mx
http://www.nafta-mexico.org
The World Factbook: https://www.cia.gov/library/publications/the-world-factbook/geos/mx.html
http://www.dolbear.com/announcements/asdf
http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/mining-survey-2010-2011.pdf
PRO MEXICO Trade and Investment: http://negocios.promexico.gob.mx/english/02-2012/art01.html