BMI View: We maintain our positive outlook on Mexico's mining sector, given the country's precious metal reserves, favourable regulatory environment, and minimal resource nationalism. Security or political issues should not prevent the sector from growing and attracting foreign investment in the coming years.
Investment in Mexico's mining sector is reported to reach US$7.6bn in 2012, a 36% increase from 2011 and an all-time high. Industry leaders forecast that investment in 2013 will increase even further despite declines in base metal prices. The country's regulatory environment remains favourable to foreign investment, and the President-elect Enrique Pena Nieto is expected to maintain such policies. As the country is a partner within the NAFTA framework, US and Canadian mining firms are likely to continue investment into Mexico. Canada's Goldcorp maintains the largest low-concentration gold mine in Mexico at its Penasquito site.
|Steady Growth Ahead|
|Mexican Mining Industry Value & Growth|
Exploration Yielding Promising Finds
Given the current pressure on firms' margins due to rising capital expenditures and decreasing ore grades, many firms, particularly those mining for precious metals, are searching for low-cost, high-grade projects. Exploration for such deposits has yielded promising high-grade finds in Mexico's Guerrero Gold Belt. Goldcorp's Los Filos mine in Guerrero produced 330,000 ounces of gold last year. Smaller firms also have a number of active projects in the area, including: Newstrike Capital and its Ana Paula Project; Torex Gold Resources and its Morelos Gold Project; and Oroco Resource Group and its Cerro Prieto Project. The companies have reported a combined 20moz (million ounces) of gold in the region, with more discoveries likely as exploration continues.