Mexico gold miners gearing up for strong H2

Bnamericas Published: Monday, May 04, 2020
Mexico gold miners gearing up for strong H2

Gold miners in Mexico are gearing up for post-lockdown restarts, with operations primed for profitable production amid multi-year high prices.

With the vast bulk of mines halted under a coronavirus-related suspension, mining companies are readying assets for quick ramp ups when they obtain the green light.

Mexico’s lockdown measures – which did not deem mining essential – are scheduled to end on May 31, but miners are looking to take advantage of rules allowing restarts from May 18 in areas with little or no spread of the virus.

While there is broad acceptance among industry leaders that pandemic-related protocols are likely to remain in place for much of the year at least, current high gold prices are providing a strong incentive to ramp up operations.

The yellow metal averaged US$1,680/oz in April and has stayed around those levels in the first days of May, up around US$100/oz in Q1 and around US$300 higher than in April 2019.

“A lot of the protocols and measures that we've put in place will likely have to continue for many months into the future,” Agnico Eagle Mines CEO Sean Boyd told the Q1 earnings call.

“But we think as an industry, the gold industry is better positioned than most in terms of managing and in terms of getting back to a situation closer to normal where we can take advantage of a price deck for our product that's as strong as it's been in 7-8 years. So that provides certain advantages and also dictates the strategy,” said Boyd.

Agnico’s three Mexican mines are all in areas which have not seen significant numbers of COVID-19 cases, which could allow for a May 18 restart, he added.

The company continued to address operational issues during Q1, which could lead to a strong H2, Boyd told the call.

Agnico expects to produce 480,000-500,000oz gold per quarter in H2, with 2020 guidance lowered to 1.63-1.73Moz from 1.875Moz.

Newmont, whose Peñasquito mine ranks among Mexico’s biggest gold, silver, lead and zinc producers, is also enlisting stakeholder support – including from the US government – to press for protocols to allow the mine to open, CEO Tom Palmer told Kitco News.

The company has learned from its experiences of being forced to suddenly put operations on care and maintenance, including through two blockades at Peñasquito last year, and should be able to get mines running again in a matter of weeks, Palmer said.

"We're taking a very conservative approach, ensuring we've got the health and safety of our workforce, along with local communities, front and center," he added.

Alamos Gold is also hoping to restart operations at its Mulatos mine (picture) in Sonora state from May 18.

The company has continued to recover gold from the leach pad from material stacked in Q1, COO Peter MacPhail said.

“We are well positioned to restart mining, crushing and stacking ore when the government suspension is lifted,” he told the Q1 earnings call.

While the plan is for a swift return to full operations, the company also has the option of a staged restart involving stacking stockpiled material to the pads, MacPhail added.


The comments follow data showing a pick-up in Mexican gold production in early 2020.

Yellow metal production was 6,035kg (194,000oz) in February, up 3.1% on the same month last year, according to statistics agency Inegi, with output up 1.6% in January-February.

Midpoint guidance and BNamericas estimates for 20 companies previously pointed to a 12% uptick in output to around 3.46Moz gold this year, although most miners have withdrawn their forecasts due to pandemic-related uncertainty.

Overall mining output was up 1.5% in February, with lead seeing the biggest rise, up 19.7%, with non-coking coal, copper and silver also registering increases.


Mexico’s gold miners are looking to salvage something from what will go down in history as the year of the COVID-19 pandemic.

With operations set to restart in May, mining companies are well placed to cash in on healthy yellow metal prices, although social distancing measures are likely to weigh on productivity and costs.

The timing and success of the planned restarts will depend in large part on how the pandemic progresses, with deaths and confirmed cases mounting and warnings that the peak of infections is yet to pass.

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