Mining in the Dominican Republic: a mining investment destination in the Caribbean

mining-in-the-dominican-republicSanto Domingo – The Dominican Republic occupies the eastern two thirds of the island of Hispaniola, which it shares with Haiti. The arrival of the Spaniards in 1492, as part of Columbus first expedition to the Americas, marked the beginning of the exploitation of the island’s rich gold and silver reserves. However, these reserves were soon depleted and other goods such as sugar began to shape the Dominican Republic economy until the 1950’s, when large scale exploitation of ferronickel and gold began again, with the opening of the first open pit gold mine in 1975.

Today, the Dominican Republic is consolidating its position as a leading mining investment destination in the Caribbean. Global mining giants such as Barrick Gold and Xstrata are shaping the modern mining history of the country and raising its international status. Also new players like PanTerra Gold, Perliya and GoldQuest entered the scene proving that persistence and long-term vision lead to success stories in the Dominican Republic.

The country’s GDP was worth $59.13 billion at current prices in 2012, up from $55.61 billion in 2011. Mining remains a cornerstone of the country’s economic growth, with the sector’s contribution to GDP rising 74% in 2011. The positive outlook and strong economic performance resulted in Fitch ratings reaffirming the country’s B rating in 2012. In particular, Fitch cites the Dominican Republic’s improving prospects for export earnings as a result of the development of its mining sector and increased availability of external and domestic financing sources.

Although the mining industry in the Dominican Republic currently faces some challenges, like the growing negative public perception, the general view is that, if managed correctly, the country’s mining sector could prove to be one of the great success stories of the Caribbean islands.


The Dominican Republic produces gold, copper, silver and nickel from four operating mines.

In particular, Pueblo Viejo achieved commercial production status in January 2013 and is expected to ramp up to full capacity in the second half of the year. Barrick Gold holds a 60% interest in the project and is the project operator with Goldcorp holding the remaining 40%.“Pueblo Viejo represents the largest foreign investment in the Dominican Republic with over $4 billion invested. Our economy depended mostly on the tourism industry that generated approximately $2.4 billion in recent years; Pueblo Viejo now nearly doubles that figure. It is the company’s long-term interest to support the economic stability and development of the country from where we will be operating for the next three decades,” said Jorge Esteva, communication manager at Pueblo Viejo Dominicana Corporation, the local entity that manages the operation.

Annual output from Pueblo Viejo is expected to reach more than 1 million oz of gold during the first five years of production at a cash cost of less than $350/oz with copper and silver also being produced.

PanTerra Gold, through its wholly owned subsidiary Envirogold, operates the Las Lagunas gold and silver retreatment project that entered in production in August 2012. The project involves the reprocessing of high gold silver and refractory tailings from the Pueblo Viejo mine and is expected to produce approximately 60,000 oz/y of gold and 600,000 oz/y of silver over the next five years. The process adopts Xstrata’s Albion process of ultrafine grinding and oxidative leaching to recover the precious metals from the sulphide tailings, with expected recoveries of approximately 60% of gold and silver and is now progressing towards its target performance after experiencing design issues with the Isa Mill and the agitators in the Albion tanks. “In the precious metals sector, PanTerra was the first company to adopt the Albion Oxidation process commercially. There are only two other Albion circuits in operation today, both for zinc refineries owned by Xstrata and the installation of the process within a standard CIL circuit has not lived up to its expectation unfortunately. However, we are now optimizing gold and silver production as deficiencies with design and mechanical equipment are resolved”, said Brian Johnson, chairman and CEO at PanTerra Gold.

Xstrata Nickel Falcondo instead resumed operations at the Falcondo nickel laterite mine at 50% capacity in 2011. “Falcondo is currently a fourth quartile producer, but the potential is there to transition into a second quartile producer and increase our profits substantially,” said Darren Bowden, president and general manager of Xstrata Nickel Falcondo. Bowden insisted that the decision in August 2008 to temporarily discontinue operations was due to a combination of low nickel prices and record high oil prices that were making the company’s power plant uneconomic to run. “Falcondo is a cyclical operation and in the last 20 years it has alternated between profit and non-profit situations. After having restarted operations in March 2011 we are now connected to the local grid and are negotiating the terms of our commercial agreement to increase our power consumption,” he said.

Completing the list of producers in the country is Perilya’s Cerro de Maimón mine that in the first three months of 2013 produced 2,573 mt of copper, 4,193 oz of gold and 97,930 oz of silver.

Emerging exploration companies

One unique aspect of the Dominican Republic is that companies with exploration concessions do not have a right to access the concessions lands before coming to an agreement with each individual landowner. However, while this might seem onerous, companies like GoldQuest and Everton Resources have not encountered any problems. “Everton has not been hindered by the requirement to reach agreements with all individual landowners. We employ people specifically to take care of these communications and spend as much time with the landowners as it takes for them to be completely comfortable with us,” said Hugo Domínguez, exploration manager at Everton Minera Dominicana.

In particular, GoldQuest, a name now held in reverence by aspiring juniors throughout the country, commenced exploration in the Dominican Republic in 2001, when it unveiled a large program that was initially financed by Gold Fields and has now staked close to the Dominican Republic’s maximum concession allowance per company of 30,000 ha.  “With the ground secured, we initiated more detailed mapping, rock and soil sampling and drilling. This led to our first discovery, Escandalosa, in 2004. More drilling followed until 2011, when a geophysical program in the area uncovered many new anomalies, including Romero, which includes some of the best interceptions ever drilled in the Dominican Republic,” said Espaillat of GoldQuest.

GoldQuest’s discovery at the new Romero Zone at Las Tres Palmas was significant, returning a drill intersection of 231m grading 2.4g/t gold including 160.3m grading 2.9 g/t Au and 0.62% Cu in hole LTP-90. Despite the importance of the discovery at Romero, Espaillat insisted that to understand the potential of the company’s properties you have to consider them as a whole, rather than looking at individual discoveries like La Escandalosa and Romero at Las Tres Palmas. “These are tiny spots within the big land package we hold […]. Parallel to Romero is the new Guama trend where geophysical results are even more interesting and may prove to be bigger than Las Tres Palmas,” said Espaillat.

In January 2012, Everton Resources released an NI 43-101 mineral resource estimate for the La Lechoza deposit on the Ampliacion Pueblo Viejo, adjacent to the northern edge of the Pueblo Viejo mine. “We hope to expand the resource and have good reason to believe this will be possible. There is not yet a resource in the southern part of the block, but the signs are encouraging,” said Domínguez. “The company’s second priority is the Loma Hueca (Ponton) project, an area that includes volcanic clastic rocks and intercalated carbonaceous units similar to the Pueblo Viejo deposit.”

André Audet, chairman of Everton Resources said: “Everton is targeting the type of small, profitable operations that are the future of mining and we seem to be in the right place at the right time. Pueblo Viejo is the second biggest gold deposit in the Western Hemisphere, and glitches with the government have recently been resolved”.

Other companies currently advancing exploration projects in the country include Nevada registered Santo Mining and Unigold, that continues to explore on the Candelones area and the nearby Candelones extension at Neita. “While we are working on obtaining a NI 43-101 compliant resource, we are simultaneously drilling for new discoveries beyond Candelones and seeking to advance our metallurgical studies,” said Andrew Cheatle, president and CEO at Unigold.

The service and support sector – heavy equipment providers

The expansion of the mining industry in the country has worked as a catalyst for some of the world’s largest mining equipment suppliers. Caterpillar, Komatsu, Atlas Copco and Volvo are all well established for instance, mainly through local distributors.

Heavy equipment providers in the Dominican Republic are at an advantage due to the country’s geographical location, with quick access to the east coast of the United States, as well as the Caribbean and Central American regional markets. Its location on route between Latin America and Europe also lowers freight costs and enables rapid responses for capacity orders.

“Today, the growth of the mining industry is giving us the opportunity to invest further in technology and human resources and is also allowing us to bring our controls and financial statements in line with international standards. IMCA relied substantially on the growth of the mining industry deciding to invest in its facilities before the real opportunities came,” said Pedro T. Esteva, president at Implementos y Maquinarias (IMCA), Caterpillar machinery, Mobil lubricants, Michelin tyres and Kenworth trucks distributor in the Dominican Republic.

Esteva raises an important point. Investing in the employees of the future to generate employment will be indispensible for the country’s continued economic growth. “Our vocational schools offer good graduates, however the technology has improved considerably in terms of the overall efficiency of the machines, the engines, the hydraulics and the electric systems and our standard technicians’ have to undertake substantial training to meet our customers’ needs,” said Esteva. “IMCA therefore entered into association with other leading companies in the Dominican Republic and founded the Business Initiative for Technical Education (BITE). BITE works with the country’s largest vocational school, Politécnico Loyola, to transform and create the technical workforce of the future and hired the US-based Center for Occupational Research and Development, which works with vocational schools worldwide to align their curriculums with employer demands. Our vision is to raise the overall quality of the country’s technical schools to support the country’s sustainable economic and social development. Our technicians today are the single most important differentiator serving the local mining industry in a professional manner and this is making our customers very pleased.”

Exploration consultancies

The recent expansion of the mining industry is also promoting the expansion of local companies that compete to develop technologies aimed at overcoming the challenges present for mining companies in the country.

Rocas y Minerales Dominicanos is an example of a company that is working to develop sustainable solutions for the wide range of environmental concerns that mining companies face. The Dominican Republic is subject to the Environmental Impact Assessments (EIA) Technical Review Guidelines that were developed by the United States Environmental Protection Agency in collaboration with partners from the Central American and Dominican Republic Free Trade Agreement to strengthen EIA’s in the region.

Rocas y Minerales Dominicanos, based in Santo Domingo, primarily offers consultancy services relating to such EIA’s. “Environmental impact assessments determine the type and level of effects that a proposed mining operation would have on its natural environment and are therefore key to the sustainable development of any mining operation in the Dominican Republic,” said Alberto Holguin, manager at Rocas y Minerales Dominicanos.

Rather than only providing services to the mining industry, Rocas y Minerales also owns two concessions in the country, Dajabon and Rio San Juan, and is currently looking for joint venture partners to proceed with its ongoing exploration activities. “The Dominican Republic is a friendly country, with excellent natural resources and an open culture. Currently, there are great opportunities to work on both metallic and non-metallic projects. Pueblo Viejo, for instance, is the second largest high sulphidation gold deposit in the world and the country does not discard the possibility of finding other deposit of similar size. In particular, there are two places in the country where prospectors should focus: one is to the north of Santiago, in San José de Las Matas. The other is in the area of the northeastern coast, also known for being gold-bearing,” said Holguin.

Drilling companies

The drilling industry in the Dominican Republic is dominated by Geocivil and Energold drilling.

In particular, Geocivil offers diamond core drilling in several diameters and to depths in excess of 1000m. “As geologists want a more detailed evaluation of the deposits, our clients have recently been requesting deeper drilling depths and Geocivil is, to my knowledge, the only company in the Dominican Republic with the capability to drill at depths in excess of 1000 meters,” said Alejandro Gil, executive director at Geocivil SA. “One of the advantages of diamond core drilling relates to the quality of the soil samples that our customers end up with. This technique is used by the local mining industry to test the contents of known ore deposits and potential sites. By withdrawing a smaller diameter core of rock from the ore body, geologist can analyze the core by chemical assay and conduct petrologic, structural and mineralogic studies of the rock samples.”

On the geotechnical side, Geocivil offers in situ testing, ground improvements and remediation services. Gil also explained that one of the biggest challenges that mining companies currently face in the country consists in overcoming the general negative public perception. “The general perception in the Dominican Republic is that mining companies are not here to spread the wealth. Mining exploration companies must work hard to explain to the surrounding communities that they are also here to bring prosperity,” he said.


The mining market in the Dominican Republic is one of vast potential. Some of the challenges of operating from the country are similar to the challenges of some of the world’s leading mining economies: skilled labor shortages and lack of reliable energy sources. However, the Dominican Republic also faces more unique challenges, such as those presented by the growing tension between the government and mining investors and the general negative public perception. In this regard, it is worth noting that Barrick Gold and the government recently reached an agreement in principle concerning amendments to the Pueblo Viejo Special Lease Agreement. Currently, it is anticipated that there will be an approximate 50/50 split of the expected cash flows from the mine between Pueblo Viejo Dominicana Corporation and the Government over the years 2013-2016.

Also the permitting process has been criticized for having become increasingly lengthy over time. “In the current volatile market, it would be a great help if the government was to expedite the permitting process. In spite of the world-class mines here, and the huge investment made by Barrick, the Dominican Republic does not have a mining tradition. The economy is mainly focused on tourism and services, with mining as an afterthought. It is an ongoing effort to educate the public and the authorities on the potential for development that the mining industry is presenting the country with,” said Domínguez.

Despite this, prospects for growth remain good. “The mining sector contribution to GDP is expected to increase to 2.0% in 2013 with the coming on-line of Pueblo Viejo and Las Lagunas tailings facility and this figure should increase to approximately 3.0% in coming years as other promising projects are developed,” said Alexander Medina Herasme, director general of mines at the Ministry of Industry and Commerce in a recent statement.

It will however be important for mining investors and government officials to continue working together and for the mining industry in the country to change its generally negative public perception.