So on with the show, and I've identified four basic problems that will need to be overcome by DRI.v if the project is ever to get off the ground. There may, of course, be other specific problems to add to this list and do not include any of the global issues that affect all mining companies at present. Click on any photo, map etc to enlarge if necessary.
1) Terrain and infrastructure
To say it's difficult working terrain is an understatement. Here are a few maps of the area that give you an idea of the lack of basic infrastructure. There are no roads at all on the Peruvian side of the border.
The nearest main road lies between at least 60km and up to 120km from the concession areas.
And as this map shows, rivers and their tributaries severely restrict possible travel routes.
Rivers such as the Cenepa are not navigable with heavy transport craft...
.... and are totally innavegable even in canoe for around 1/3rd of their length.
Therefore any plans to move equipment in and large production tonnage out by water would seem far-fetched. It goes without saying that power supply to the region is virtually non-existent, which would be a serious and expensive issue to overcome if mine construction were ever considered. This satellite photo of the central ground area taken during the Cenepa war of 1995, although not very clear, shows the homogenous nature of the tropical jungle
Note: To help with location, note Falso Paquisha marked on this satellite and compare to the first map in the post above.
2) Logistics and Exploration Costs
By looking at the budget for this year's exploration program at Dorato Resources, we can get an idea of just how expensive this project is likely to become. The phase one and phase two plans that combines exploration work, mapping geological discovery programs and a 14 to 24 hole drilling program have been budgeted at U$4.46m.
Transport to and from the area is a major problem and adds significant cost. At U$1.685m budget, just paying for the helicopter support adds 42% of the total cost of phases I and II (which includes for example salaries for project manager, geologists and support personnel, explorations, steam samplings, IP resistivity surveys, the drilling program, laboratory expenses, construction and running costs of a 20 person camp, and the thousand other things not mentioned here that make up a field project).
It therefore goes without saying that if the area is considered sufficiently prospective and the project moves forward towards the construction of a mine, costs for the mine will have to include a very expensive road. As already mentioned, power supply to the area will also be a major cost problem.
Even when on site, the terrain is not easy. This photo of the Tambo target (number 1 in maps featured in part 4 of the series)....
.....shows artisan mining works in the side of the steep hill. This kind of terrain makes simple drilling preparation and execution tricky, let alone actual mining.
3) Environmental Issues
There is no doubt that, if this project has initial success in the discovery of sufficient gold grades and orebody tonnage/area, that the project will come under intense environmental scrutiny. Not only is the area home to many rare species of flora and fauna, but the area also drains through the lower-lying jungle areas to the East and into the Amazon river. There are many consequences to this, but as just one thought amongst many the construction of any local tailings facility would be both expensive compared to peers and technically very challenging.
4) Land Mines
Yes, land mines. In 1995, the region was the scene for the so-called "Cenepa War" between Peru and Ecuador. The fighting was short-lived but hot, and many land mines were laid by both sides.
In April 2007, the gov't of Peru estimated there were over 30,000 land mines laid in 35 areas designated 'dangerous zones'. Two of the three main regions for these dangerous zones lie inside the DRI.v concession areas. As well as posing a direct threat to those exploring the area for prospective sites, the land mines will cause headaches galore if the moment comes to construct better communications roads between the site and the outside world.
The land mines issue also partially explains why using the Ecuador road system and infrastructure to service any potential mine is not feasible. The two countries may be at peace with each other now, but it is unlikely (to say the least) that Ecuador would start lending a helping hand to Peru in a micro-region so politically sensitive.
These are just four problems that Dorato Resources will have to overcome if it is ever to make a viable case for large-scale mining in the area. I've chosen these four because potential investors in DRI.v need to see the advantages and disadvantages of any project as soon as possible, and it is unlikely that the company itself would voluntarily bring these issues to the public eye.
It is, of course, perfectly possible that the company has good answers and clear solutions to all the problems mentioned. But the potential investor now has a better idea about what to ask the company before considering an investment.
So that wraps it up for an overview of problems and issues for the Cordillera del Condor project itself. In part 6 I'll start looking at the structure of the company, and we'll begin to see how the track records, backgrounds and people involved are important to the future of the stock promotion.
Anatomy of a Canadian Stock Promotion (part 1)
Anatomy of a Canadian Stock Promotion (part 2)
Anatomy of a Canadian Stock Promotion (part 3)
Anatomy of a Canadian Stock Promotion (part 4)
Disclosure: I would like to remind you that at no point will I make any sort of recommendation to buy or sell any DRI.v securities. I would also like to make it clear that to the best of my knowledge the promotion techniques used and to be used by Dorato are totally legal. Finally, I would like to make it clear that I am not passing any moral judgement on Dorato Resources, and will try to avoid any insinuation of judgement in future posts in this series. The aim is to educate readers about some of the ways promotion campaigns are used and the company structures behind them.