A Prime Destination for Gold & REE Mining: Dominican Republic's Streamlined Regulations

• The Dominican Republic boasts significant mineral resources, including Latin America's largest gold mine, Pueblo Viejo, operated by Barrick Gold
• The Dominican government recently established a state mining company, Empresa Minera Dominicana SA (Emidom), to oversee strategic projects and manage the Avila mining reserve, which has been identified for potential rare earth exploration.
• GoldQuest Mining's stock price rose following news of favorable changes to environmental regulations, which are expected to benefit the advancement of its Romero gold-copper project.
• As DR continues to reform its mining legislation and improve transparency, the country is poised for growth in its mining sector, with opportunities in gold, silver, nickel, copper, bauxite, and emerging rare earth minerals.

Mining in the Dominican Republic

The Dominican Republic (DR) presents a mixed landscape for mining investment. Its mineral wealth, regulatory framework, and proximity to key markets like the U.S. make it an attractive destination. Dominican Republic has a rich history of gold and mining that continues to the present day. The country is home to one of Latin America's largest gold mine, the open-pit Pueblo Viejo gold and silver mine in the Sánchez Ramírez Province of the Dominican Republic owned by two mining giants - Barrick Gold (60% ownership) and Newmont (40% ownership).

Both companies are well-equipped to navigate the evolving regulatory and social landscape in the Dominican Republic. The companies' stake in Pueblo Viejo provide source of low-cost, long-life gold production, while the recent streamlining of environmental permitting processes in the country bodes well for the advancement of new projects. Their experiences and scale position it well to benefit from the Dominican Republic's ongoing support for the mining industry, including the government's establishment of a state mining company to explore and develop the country's mineral resources, particularly rare earth elements.

Geology and Exploration Potential

The Dominican Republic is situated on the island of Hispaniola, which has a complex geological history involving island arc formation and plate tectonics. The most prospective rock units for gold and base metals are the Los Ranchos, Maimon, Tireo and Duarte Formations.

The under-explored Tireo belt, where GoldQuest made the significant Romero discovery in 2012, has attracted attention from multiple companies. The increasingly favorable stance towards the mining industry in DR is evidenced by the company's successful C$8.7 million private placement with prominent local investors. This strong show of support from the Dominican business community underscores the confidence in GoldQuest's flagship Romero gold-copper project and the company's exploration potential along the highly prospective Tireo Formation.

Strategic Location‍

The DR boasts significant deposits of gold, silver, nickel, copper, and bauxite. Notably, the Pueblo Viejo mine, operated by Barrick Gold, is one of the largest in the Americas, highlights the country’s potential for large-scale operations

Proximity to the United States and trade agreements facilitate access to North American markets. This logistical advantage is a key benefit for export-driven mining companies.

State-Owned Miner Established

In a major development, the Dominican government recently established a state mining company, Empresa Minera Dominicana SA (Emidom), to oversee strategic projects, including rare earth exploration. Emidom will manage the Avila mining reserve in the southern Pedernales province, an area identified for potential rare earth projects.

Improved governance and transparency in the mining sector could increase investor confidence and attract more foreign investment. This initiative underscores a focus on maximizing national benefits while balancing investor interests.

Stable Economic and Environmental Safeguards

The Dominican Republic is currently discussing reforms to its Mining Law, which will include provisions regulating beneficial ownership transparency.

The Dominican Republic has witnessed substantial economic growth over the past decade, with the extractive sector's contribution to the national economy increasing from 0.7% to 4.2% between 2010 and 2018, and accounting for 46% of the country's exports in 2020, despite the government not being dependent on extractive revenues, which made up only 3.7% of total government revenue in 2020.^[3]

The DR enjoys political stability and sustained economic growth, providing investors with confidence. A well-established Ministry of Energy and Mines regulates the sector, ensuring transparency and fair practices. Environmental impact assessments are mandatory, aligning with international standards. While these measures ensure sustainability, they increase the initial costs and timelines for project approval.

Dominican Republic's Mining Advancements

Precipitate Gold

Precipitate Gold is another junior explorer active in the Dominican Republic, with a focus on its Juan de Herrera and Ponton projects. The company recently announced the signing of an Earn-In Agreement with Barrick Gold, demonstrating the potential of its landholdings to host significant gold-copper mineralization. Precipitate also stands to benefit from the recent amendments to the Dominican Republic's mining law that aim to clarify and streamline the permitting process, reducing uncertainty for exploration and development projects.

Antilles

Antilles Gold is an Australian gold exploration and development company with a portfolio of projects in the Dominican Republic. The company's flagship asset is the La Demajagua gold-silver deposit on the Isle of Youth, for which it recently updated the mineral resource estimate and announced plans to commence a feasibility study. Antilles Gold also holds a 50% interest in the Reina exploration concession, where it is targeting epithermal gold-silver mineralization. With a focus on advancing its projects through exploration and development in a jurisdiction with increasing government support for mining, Antilles Gold offers exposure to the growing gold mining sector in the Dominican Republic.

Unigold

Unigold is a junior gold exploration company focused on its Neita concession in the Dominican Republic, which hosts the Candelones gold-copper deposit. The company recently updated the mineral resource estimate for the oxide portion of the deposit and released a positive feasibility study for a standalone oxide gold project. Unigold is also engaged in exploration activities aimed at expanding the sulphide resource at Candelones, which represents a potential second phase of development. With a high-grade gold resource, promising exploration upside, and a clear path to production in a mining-friendly jurisdiction, Unigold offers an attractive investment opportunity.

Socioeconomic Benefits and Challenges

Economic Contributions: Mining contributes significantly to the DR’s GDP through job creation, infrastructure development, and foreign currency inflows. Local supply chains also benefit, creating a ripple effect in small and medium enterprise.

Social Opposition: Despite the favorable geology and government support, mining companies face community relations challenges in the Dominican Republic due to environmental and social concerns. Communities near the Pueblo Viejo mine have called on the government to relocate them away from the operation, citing environmental and health concerns. Effective community engagement and responsible mining practices will be key for companies operating in the country.

The Dominican Republic presents an attractive jurisdiction for mining investment, with its prospective geology, established mining industry, and government support through the creation of a state mining company and streamlined environmental regulations. Successful capital raises, such as GoldQuest's, from local investors highlights the potential for mining projects to gain community backing. However, companies must navigate community relations challenges and demonstrate responsible mining practices. As the country continues to reform its mining legislation and improve transparency, the Dominican Republic is poised for growth in its mining sector.

Investment Thesis for the DR Mining Sector

• Rich Natural Resources: The Dominican Republic holds significant reserves of gold, silver, nickel, copper, and bauxite. Prominent mining operations like the Pueblo Viejo mine by Barrick Gold underscore the viability of these resources
• Proactive Government Support: The Dominican government actively promotes foreign direct investment (FDI) and has created favorable policies, such as the establishment of a state-owned mining entity to oversee strategic minerals
• Strategic Location: Proximity to the United States and trade agreements provide a logistical advantage, facilitating exports and access to a large market.
• Stable Political and Economic Environment: A history of steady economic growth and political stability enhances investor confidence, alongside a robust regulatory framework for mining.
• Focus on Sustainable Development: Recent policies emphasize environmental sustainability and socially responsible mining practices, which align with global environmental, social, and governance (ESG) standards.
• Emerging Opportunities in Rare Earth Minerals: The government has identified rare earth elements as a new area of focus, offering diversification opportunities for investors in high-tech and renewable sectors.

References:

1. Reuters (August 2024). Dominican Republic creates state miner to explore for rare earths
2. GoldQuest Mining Corp. (November 2024). GoldQuest Completes C$8.7 Million Private Placement
3. EITI (July 2024). Dominican Republic 2021-2022 EITI Report
4. Gobierno de la Republica Dominicana. Media Release. (August 2024). Res. No. 0038-2024 Which issues the Management Policy for Environmental Impact Assessment and the Regulations of the Environmental Impact Assessment Process