Mexico's high-growth silver miners

Monday, November 13, 2017

Three Mexican silver miners are on track for strong production growth in the coming years, driven by new mines and expansions.

The companies are in line for output growth ranging from 22-55% from 2016 levels in the coming years, adding about 20Moz/y of combined production.

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Mexico's top 10 silver miners expect to produce 153Moz of the metal this year, based on original guidance and BNamericas' estimates, up from 142Moz last year.

However, the country's silver output fell 2.2% in January-August, compared to the same period of 2016, according to statistics agency Inegi.


Mexico-focused Endeavour Silver is aiming to bring three projects into production in the next three years, CEO Brad Cooke told BNamericas in September.

If successful, the El Compás, Terronera and Parral projects will boost companywide output to 15Moz silver equivalent by 2020, up 54.6% from 9.7Moz in 2016.

Revised guidance for 2017 is 8.5-9.0Moz silver equivalent at Endeavour's existing operations (El Cubo, Bolañitos and Guanaceví, all located in Mexico).


Mexico City-based Fresnillo expects strong silver growth in 2017, with projects expected to deliver additional output in the coming two years.

Guidance for this year is 58-61Moz silver, up from 50.3Moz in 2016, mainly due to contributions from the new US$515mn San Julián mine, where the Phase 2 flotation plant reached nameplate capacity of 6,000t/d during Q3.

The Phase 1 leaching plant began commercial production in July 2016.

The company's US$155mn pyrites plant, due for initial production in 2018, is expected to deliver an additional 3.5Moz/y silver, coupled with 1.3Moz/y from the US$55mn Ciénega expansion project the following year.

Assuming midpoint output in 2017 of 59.5Moz, these projects could lift Fresnillo's silver production to 64.3Moz/y, or 27.8% compared to 2016 levels.

Further growth projects are planned for 2020-21.


Expansions at Pan American Silver's two main Mexican assets are expected to drive significant production growth.

At La Colorada, a US$164mn expansion is expected to boost silver output to 7.7Moz/y, compared to 5.80Moz in 2016.

A US$112mn expansion at the Dolores mine is also expected to lift silver output to 6.30Moz/y from 3.84Moz last year (as well as boosting gold production).

With both expansions expected to conclude in 2017, this could see the company's Mexican silver output hit 14.0Moz as early as 2018, up from 11.5Moz last year, equating to 21.7% growth, despite Pan American's third Mexican asset, Alamo Dorado, ending production (the mine produced 1.86Moz silver in 2016).