Hot Gold: Mining company opts to stay in the hot water it keeps finding

For Canadian gold mining company Radius Gold Inc., whose interests are primarily in Latin America, hot water is two things: an indicator of potential gold deposits or an impediment making those deposits impossible to exploit.

And now a third. The company intends to use its extensive knowledge of geothermal resources, and Guatemalan geology in particular, to identify and acquire potential geothermal resources. And it has been granted its first license in the country and has applications for six others pending. The total area granted or under application is nearly half a million acres.

Radius has more than 10 years of mineral exploration experience in the Central American country. When Radius first entered Guatemala, its gold exploration programs were guided in part using the presence of hot springs as an indicator of potential gold-related hydrothermal activity. Large quantities of hot water and steam escaping from active drill holes, indicative of very high geothermal gradients, halted the company’s drilling programs on more that one occasion.

With the renewed interest in geothermal resources for power generation, Radius took a new look at its own database of hot springs in Guatemala and noted a number of active geothermal systems that may have power generation potential.

And it is also looking for help. The company knows a geothermal resource, but has no experience tapping one. So while it identifies and procures geothermal concessions, Radius is in tandem, actively looking for potential joint venture partners with the experience to investigate and develop its geothermal licenses.

A 2003 study published in International Geothermal Development found that geothermal resources in Guatemala are most likely around 1,000MW. In that year the country’s total generating capacity was 1,700MW, and expected to grow 8% per year through 2015. Guatemala had managed to harness 46 MW of geothermal energy in the fields of Zunil and Amatitlan, both owned by Ormat Technologies. Radius intends to be a player in the development of the remaining resources in the country.

We’ve seen oil companies re-examining hot wells for their potential power development. We’ve reported on mining companies looking for rare earth metals in waste geothermal brines. Now we have a mining company looking to exploit its knowledge to benefit the power industry. If it needs a vote of confidence, we’d like to through our support behind those who recognize the potential of what they have that lies somewhat outside their scope – and doing something about it.