An Introduction to Mining Investments in Argentina

Written by Nick Hodge
Posted September 11, 2017

Publisher's Note: Joseph Grosso is one of the early pioneers of the mining industry in Argentina. Below, he shares his story with our own mining expert, Gerardo Del Real. A new bull market in precious metals is beginning. Much new wealth will be made. Joseph's story of breaking into Argentina is a great lesson for us all. It's about risk, partnerships, new networks, and capital management. Keep an eye out for Part II tomorrow, which will focus on Joseph's current Argentinian mining company, Golden Arrow Resources (TSX-V: GRG)(OTC: GARWF), and the project it's working on. 

To your wealth, 

Nick Hodge Signature

Nick Hodge
Publisher, Outsider Club

Gerardo Del Real: This is Gerardo Del Real with the Outsider Club. Joining me today is Executive President, CEO, and Chairman of Golden Arrow Resources, Mr. Joseph Grosso. Joseph, thank you for joining me today.

joseph GrossoJoseph Grosso: Gerardo, great pleasure. Great pleasure. I've been looking forward to this.

Gerardo Del Real: Well, I appreciate the correct pronunciation of my name. It's rare that people get it right. I imagine your years in Argentina obviously help with that. You are one of the early pioneers of the mining sector in Argentina. You have several decades there. I'd love to know, what first led you to Argentina?

Joseph Grosso: It's coming up to a quarter of a century. We got there in 1993, which is 24 years ago. We have been, constantly and without any breakage, we have been active in Argentina in the mining industry. We're definitely very flattered, but it's a good flattery. It's a deserving flattery when they call us the "pioneers" of mining in Argentina. It's an incredible, incredible story. Incredible story. If that is going to be one of the first questions, I enjoy recollecting with you, but before, I would like to start with my background. It's all part of it.

My family was, since 1782, in the clothing manufacturing business in Italy. What happened is that my grandfather Joseph, Joseph Grosso, in 1912 emigrated to New Jersey, and he took a couple of sons with him, Dominic and John. They've been in that business in United States. Much later, almost 45 years later, I decided to leave Rome, where I grew up, and come to Canada. The reason why Canada is that my sister, which is my immediate family, was living in Canada, and they were my sponsor. So, I sold the Canadian part of the Grosso Group clothier, or tailors, in the late 1980s, 1985, 1987, and I had to sign a non-compete agreement, which made me really immediately need another industry for me to go in.

Because I had some time on my hands, I went with my wife, Evelyn, to Argentina to visit our family in Argentina. I was absolutely flabbergasted at... when I found out, being interested in looking for my next project in a new industry in Argentina. I discovered that Argentina was sharing the border with Chile, Chile being one of the most developed mining countries in the world per capita, per hectares, and their borders stretched 5,300 kilometers from north to south. What an incredible distance. As far as the difference in size of Chile and Argentina, it was that Argentina is the eighth-largest country in the world, with 2.7 million square kilometers, making them the eighth-largest country in the world. It was astounding to see that a very narrow strip called Chile had operated and become one of the most efficient mining countries in the world, and Argentina didn't even know how to spell "mining." It's an incredible thing.

But the only way that they spelled "mining" in those days is that the young girls were referred to as "la mi mina," My mine. Girlfriends, not wife. But girlfriends were known as "minas." But nothing to do with metals or mining. Well, that was an incredible thing for me. I said, "My goodness, there's got to be an opportunity here." To confirm my suspicion, I sought an appointment with a professor of geology, Dr. Vicente Méndez. Dr. Vicente Méndez was an extremely well-known, top professor at University of Buenos Aires, and when I met him, he was a very frustrated man. With a red face, he said, "Joe, I cannot understand why a country so close to Chile, and with so much geology, that we're not in the mining business." "Well," I said, "I suspected that. But you're confirming it, and coming from you makes it the opportunity that I've been looking for."

Therefore, Gerardo, I became very quickly from the Grosso Group of manufacturing clothing to the Grosso Group of mining management. This is how I got started in Argentina, because I commissioned, and I asked Dr. Méndez if he could adapt to consultation. Because he knew, being a professor and understanding the mining industry, he picked our property portfolio contiguous to mining and production in Chile, and in very close proximity, and he put together 350,000 hectares of property of the best location anybody can dream of east of Chile, which became immediately my new challenge.

I turned automatically into a pioneer. The oldest pioneer of new mining in Argentina. There was some activity in mining, but very negligent. It could not be called an organized industry.

So, I started with Vicente Méndez being my base, the property portfolio being an exciting location and having a unique opportunity right at the very beginning of our going to Argentina. The rest, this is basically to answer to you the transition from Grosso the tailor to Grosso the miner, and I was a very excited person. We're talking from having doll manufacturing in several parts of Canada and Europe, and when I was in Argentina I was dreaming of the outdoors, the rivers, the mountains, the beauty of that country that covers, like I said, 5,300 kilometers north-south. It starts from the south, as you can appreciate it being the coldest part, being the icebergs and everything else, and going all the way north, where you've got tropical temperature, and easy to work year-around.

That was my beginning 24 years ago. Everything that I needed to develop the mining business, which was piece by piece, it had to be imported. There was nothing in existence in Argentina that you can go into a shop and say, "I'm going to be buying a cabinet for the geology maps," and everything else. There was absolutely nothing there. Even a three-way ring puncher had to be imported.

In those days, to get a three-ring puncher, which was in '93, was costing, like, $125.00 U.S., because the peso at that time was equal with the American dollar.

That was my beginning. It was a challenge, and I enjoy the challenge, and the dream of organizing the exploration activity in the high altitudes. You must remember that in those days, the motors were not equipped to staying... to be reignited once the motor goes off. You're in an area where there's no way that a motor would go on. There is no oxygen. Just imagine the activity of having to rent or hire 94 mules, and organizing groups of 21 or 22 people, between geologists, drivers, cooks, those were barely a number for early-stage exploration, 21, 22, 23. We went with motorized vehicles up to a certain height, and then the mules were waiting. We had to find out what kind of risk we were taking. What kind of crevices, where would be some pasture for the mule to eat, etc.

Gerardo Del Real: That's absolutely fascinating. Obviously, in 24 years or so, a lot has to have changed as far as doing business in Argentina. You pioneered a lot of those changes, and having that first-mover advantage obviously helped you put together a pretty impressive team, and an amazing portfolio that Golden Arrow has been able to benefit from. How has mining changed in Argentina, and how has doing business changed since you first arrived?

Joseph Grosso: First of all, how. How did I do it? How did I do it… the main tools that I used was that I understood the Argentinian, because we had at that time a 39% contents of Italian extraction. So, with a Grosso last name, I found an instant brotherhood, a very keen friendship.

But I found out that they were extremely arrogant at the same time. They did not like mining. They didn't understand mining. They feared mining. You simply do not buy your way out of their fear. You've got to take the time, sit down with them, and being... While, yeah, they were arrogant, I had to be extremely humble. Grateful for sitting down with me, grateful for me trying to explain how we could overcome their fears, and materialize their dreams in a very realistic way. We told them we were partners in trying to find new values. Once the values would not be there, that unfortunately, don't open restaurants, or don't build hotels, because a mining company's here. Because the only time you can do it, when resources are found, when discoveries are made.

So, I had to go through the very initial part of... psychologically attract their desire of saying, "Yeah, I think you're a good guy, and we have a lot of answers, and you're here to explain to us and work with us." That became really the Trojan Horse that I stayed there for 24 years. Humility, and... We went in the most impossible, litigious provinces. Chubut, Rio Negros, and so on and so on. Governments were elected to be anti-mining, and basically, we had to explain to them that if the reason why they were elected to be anti-mining, it was also their duty to find out that... For what they knew about mining, being elected was okay. But to stay on that topic in office, when you know that your people need the discovery, the value found there that they were sitting on... That they were going be brought to the attention, it was what the economy needed.

It's amazing. I remember in Rio Negro, where the minister of mines said "No, I'm quite comfortable being the Minister of Mining, and I have a mandate." "Well," I said, "I'll tell you what we'll do. If you don't want to see how your constituents can improve, I'm going to vote your opposition, because they would like to be in your place." And the guy said, "Wait a sec. Wait a sec. Wait a sec. Now, let's make a condition that you report it to me every day if you have to, but let's go." And it has been a joy to develop provinces, relationships of varying degrees, and negative and turned them positive. In 24 years, we have been in dozens of provinces where we have had no rejection, and full cooperation to start our mining activity.

Now, this was really a base that was very often emulated and copied, and I am very happy with the question in saying, "Where is Argentina today?" I would like to explain it to you, Gerardo, with your culture, and my culture of mining. Argentina, it's at its very infancy right now, has made huge advances, and there is a struggle between the people that understand, and knows of the psychology, and knows the impact that mining has on communities, and it does. And is able to negotiate with the people that fear that impact successfully.

Unfortunately, the people that came into Argentina were big companies. Big companies that wanted to go there and start operating, although there were no discoveries. They were very arrogant, and those people did not get along with the Argentinians. Some remained, and I think I counted something like 28, 29 major companies which are operating today in Argentina and producing in Argentina, which are quite a sizable and welcome change towards the inception of a world-standard mining country.

There are people who left Argentina because they couldn't bridge the characters... and they probably won't go back. But Argentina has the geology to attract the exploration, which is needed first, and the producers are at about 28 or 29 of various sizes in different parts of Argentina.

Stay tuned for Part II tomorrow, in which Gerardo and Joseph discuss Golden Arrow Resources and its partnership with SSR Mining (NASDAQ: SSRM)(TSX: SSRM) (formerly Silver Standard). 

For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Resource Stock Digest Premium, and Junior Mining Trader. For more about Gerardo, check out his editor page.


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