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Forest rule to outshine Colombia auction plans

Colombia aims to launch its next mining auction round in February with a pre-qualification process for gold and copper areas from its strategic reserve areas said mining and energy minister Diego Mesa at an industry event, which will follow hot on the heels of a resolution which has facilitated exploration.

 Rugby Mining's Cobrasco location in Colombia

Rugby Mining's Cobrasco location in Colombia

Details of the areas are expected to be made available when the pre-qualification process opens. The government offered five small copper areas for auction in early 2021 resulting in two areas being awarded to local company Carbomas on a 30-year contract in a process which was criticised for the numerous requirements for pre-qualification as well as the small areas offered.

Speaking at the Colombia Gold Symposium in November, Juan Miguel Duran, president of the National Mining Agency, said the areas in the 2022 round will be distributed throughout the country. The government is also planning to auction areas with coal potential later in the year.

However, a resolution published in January may steel some of the government's thunder through its facilitation of exploration in forest reserve areas, which is expected to be a boon to copper and gold explorers in some of the highest potential areas of the country.

Rugby Mining says it will benefit from the January 28 resolution, which means that companies will be able to explore without needing to undertake a forest extraction process, which it said, "amounted to a land use change even before a project had proven to be viable."

The company said it plans to initiate a comprehensive exploration programme at its undrilled Cobrasco porphyry copper-molybdenum system in western Colombia in April and has a community agreement  and water permits in place to proceed with the drilling, which is anticipated to commence in June.

The resolution, which amends Law 2 of 1959, stipulates that as long as exploration does not require forestry use, removal of forest cover or forest fragmentation, then a change of ground use via a forest reserve extraction process is no longer required.

"Rugby acquired Cobrasco in 2013, with the intention to explore and develop it as a world-class copper deposit. The Cobrasco footprint is large, based on the mapping, sampling and geophysics completed historically. [There is] the potential of a large porphyry system, however, it firstly needs systematic ground work ahead of drill site selection," said Rugby Mining chair Yale Simpson.

Colombia's potential to host large porphyry copper deposits has been known since initial exploration efforts led by international government agencies since the 1960's. Rugby's Cobrasco was discovered in the 1980s through a German-Colombian Government regional stream geochemical programme. However, Colombia's internal conflict and periods of low metal prices meant that exploration never advanced here or elsewhere in the prospective belt.

The rule change comes as Colombia sets its sights on becoming one of the regions largest copper producers as it seeks to benefit from the increased demand for copper from the global electrification trend, and as it seeks to replace export income from its oil, gas and coal sectors as the world moves away from hydrocarbon-based energy sources. Other companies such as Minera Cobre de Colombia are also likely to benefot from the new resolution.

"It has been frustrating for Rugby to witness exploration successes outside of Colombia, especially the Warintza (Solaris Resources) and Cascabel (SolGold) discoveries in Ecuador. Rugby has an equally rated porphyry target that has remained undrilled for 30+ years," said Rugby's Simpson.

Rugby said that in 2013, it negotiated  a prior consultation access agreement with the Afro-Colombian Cocomacia community who hold land in the project area, which provides a defined set of benefits including employment, payments during exploration and equity participation at the time of project development.

In 2018, it undertook an environmental evaluation of potential drill sites with an environment technical group from the Department of Forestry during which multiple potential drill sites were relocated to satisfy the Forestry Department.

The company intends to conduct systematic soil/rock sampling and an induced polarisation survey over the stream geochemical anomaly defined by the prior 1980's programme with drilling scheduled to commence mid-year. To minimise site disturbance, it plans multiple drill holes from each drill platform.

Shares in Rugby Mining opened up 16% at C18c, valuing the company at $30 million.

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