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Mexicos mining companies reported progress in the countrys US$7bn-strong project pipeline, with key steps in development, financing, permitting and technical studies.
The advances, outlined in Q2 results, come amid significant improvements in gold and silver prices and forecasts for rising investment in the sector in 2019.
PROJECT PIPELINE
Mexicos mining pipeline boasts at least 22 projects with combined capex of US$7.3bn due to begin production by 2025, according to figures compiled by BNamericas (only assets with an estimated start date are included).
This compares to 23 projects and US$7.6bn at the same point last year.
The projects have the potential to boost Mexicos mining output by about 1Moz/y gold, 36Moz/y silver and 326,000t/y copper, along with 142,000t/y zinc, 13,000t/y lead and 35,000t/y lithium carbonate.
2019 PROSPECTS
Just two projects, Industrias Peñoles US$303mn Minera Capela and Southern Copper‘s US$87mn San Martín restart, are due to begin production in the remainder of the year.
At Capela, Peñoles reported significant advances in construction in Q2, with first production expected in the current quarter, and with Southern on the verge of initial operations at San Martín, a zinc-silver-copper-lead mine which had been suspended due to a long-running strike.
Telson Mining‘s US$20mn Tahuehueto and Candelaria Mining‘s US$13.5mn Pinos primary gold properties – previously earmarked for 2019 output – are now likely to begin production next year.
KEY UPDATES
Leagold Mining began work on its US$180mn Los Filos expansion in July, which is due to boost output by around 193,000oz/y gold by end-2021.
Fresnillo – which has six projects on the list with combined capex of US$1.56bn – reported construction advances at Juanicipio in Q2.
The US$395mn silver-gold project, a 56:44 JV with MAG Silver, received board approval in April, with first output due by end-2020.
The Mexican miner also upped its capex estimate for the Orisyvo gold project by US$80mn to US$430mn, without giving further details. The project remains on track for 2022 production.
In addition to San Martín, Southern is pushing ahead at its US$159mn Pilares copper project, with environmental permits obtained and additional land being acquired ahead of a 2H20 startup.
The company is also concluding a PEA on the US$310mn El Pilar copper project, and advancing its Buenavista zinc project, expected to begin output around end-2021.
No changes have been reported at Southerns US$2.9bn El Arco copper-gold asset, the biggest capex project on the list.
STUDIES, PERMITTING
Orla Mining reported results of a feasibility study for the Camino Rojo oxide project, which indicates a US$123mn price tag for a mine producing 97,000oz/y gold and 511,000oz/y silver over 6.8 years, broadly in line with the figures of a 2018 PEA.
The company is currently investigating financing for the project, with construction scheduled to begin in 1H20, for first production the following year.
Torex Gold is eyeing a feasibility study at its US$496mn Media Luna gold-silver-copper project after securing an amended credit facility in July.
Endeavour Silver received a final permit for its Terronera silver-gold project in June, with a final PFS expected in Q3.
The company is seeking financing which could lead to construction start in early 2020 and first production the following year, COO Godfrey Walton told the Q2 earnings call.
McEwen Mining plans to complete a feasibility study on its Fénix project, which aims to extend the life of its El Gallo mine, in Q3.
The projects economics will be boosted by a shift to gas from diesel generated power, and recent gold and silver price improvements, COO Chris Stewart told a call.
HOPE FOR ESPERANZA
Alamos Gold is in discussions with political leaders in Morelos state with the aim of getting the ball rolling at Esperanza, which has been held up by local opposition, with CEO John McCluskey encouraged by feedback to date, he told a call.
The project is not on the list as no estimated start-up date has been given.
Meanwhile, Bacanora Lithiums aim to put Mexico on the map as a lithium producer was boosted by a planned strategic investment by Ganfeng Lithium, announced in May.
OUTLOOK
With construction going on at a string of projects, the remainder of 2019 will see several technical studies concluded.
These studies could see a number of projects gain board approval, particularly in light of recent gold and silver price gains and rising investment in the sector, suggesting fears over policy changes under President Andrés López Obrador are easing. |
