EnviroGold outlook brightens as Latin Americans, Chinese boost mining prospects

This morning he announced that EnviroGold had reached advanced negotiations for a Latin American group to take a placement of 100 million shares in a deal that, if it comes off, will not only provide useful money but give the junior more clout in that region. The outcome, said Johnson, would make possible further gold mining moves in the Dominican Republic.

This comes just hours after a piece of overnight news out of South America that has significant implications for the company's other project area, Ecuador.

Two Chinese companies, Tongling Nonferrous Metals Group and China Railway Construction, have agreed to pay $US653 million ($730m) to acquire Toronto-listed Corriente Resources. The buyers want to get their hands on the huge Corriente copper deposit in Ecuador, which the Canadian company describes as the only major new copper discovery made in South America over the past two decades.

This should add some lustre to EVG which has staked its future on gold projects in Latin America. Apart from its gold project in the Dominican Republic now in development and exploration in Peru, EVG has invested heavily in Ecuador.

In recent months we have seen political uncertainty in that country subside, along with the introduction of a new mining law that has added stability to mining company concession rights there. Back in September, EVG expanded its ground holdings in the country and is now targeting gold production there of 100,000oz a year from 2013.

This is not to say that wheels might never come off again in Ecuador, or that a government could push around an Australian junior while leaving a powerful Chinese entity alone, but overall the news of the Corriente acquisition is a big plus for EVG.

Which allows us an almost seamless segue into Part 2 of the "Great Pure Speculation Postscript" -- begun yesterday in an effort to use this quiet holiday interlude to bring to your attention announcements that were swamped or ignored in the lead up to Christmas.

And talking of South America, Guyana seems the new frontier for Australian juniors. First we had Epsilon Energy(EPS) moving into this former British colony looking for uranium and gold. Back on October 12, you might recall, Pure Speculation reported that Epsilon’s share price had that morning leapt by 80 per cent on news that some ground prospective for uranium had been acquired in Guyana, and that gold targets were also involved.

We pointed out that Guyana is the only English-speaking country within South America and there is a large geological belt that runs through several countries, but is accessible by foreign companies only in Guyana. Venezuela is no place to invest (as EVG has recently confirmed by scrapping exploration there due to unreasonable government demands) and Brazil will allow only state-owned companies to be involved in uranium exploration.

Now we see Uramet Minerals(URM) joining Epsilon, but only for gold. Uramet has not had a happy year. After the collapse of share prices just over a year ago, the company set about trimming its sails. First, it sold assets and rationalised tenements. Then the managing director was made redundant and directors took a 40 per cent cut to their fees.

But it has managed to keep $2.3m in the bank, and can now earn a 50 per cent stake in a Guyana project by spending $US1m over the next two years. The positive aspect is that this an advanced project and the owner already has machinery on site.

Once the deal is finalised, drilling will begin.

Still, we have seen great plans from Uramet before: in May 2008, its shares soared one day by 250 per cent (to 31c) on news that sampling at its Georgina Basin tenements had identified phosphate. The stock last traded at 5.3c.