Mexico
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Mexico miners push ahead with US$7.45bn project pipeline

Bnamericas Published: Thursday, May 28, 2020
Mexico miners push ahead with US$7.45bn project pipeline

Mexico’s mining companies are pushing ahead with projects that have combined capex of US$7.45bn despite disruptions from the COVID-19 pandemic.

A total of 24 projects are expected to boost annual production by 1.15Moz gold, 33Moz silver and 247,000t copper by 2026, according to data compiled by BNamericas.

The properties are also forecast to produce 101,000t/y zinc, 13,000t/y lead and 35,000t/y lithium carbonate.

Only projects for which companies have provided an estimated date for initial production are included.

NEW ADDITIONS

The pipeline has been swelled by the addition of Minera Alamos’ Santana and La Fortuna gold projects.

Alamos began construction at Santana in January, with company president Doug Ramshaw signaling in April that first gold production is likely in 1Q21, one quarter later than previously expected due to coronavirus-related delays.

Production is expected at 25,000-30,000oz/y initially, with capex at US$7.3mn.

The company plans to get its US$26.9mn La Fortuna asset into production within three years, Ramshaw added.

The project has a 12-month build period, with scheduling expected once Santana is complete. BNamericas forecasts first production in 2022. Output is estimated at 43,000oz/y gold, along with silver and copper byproducts.

ON TRACK

Fresnillo is on schedule to finish the second phase of its US$155mn pyrites plant project this year, with a US$30mn optimization of its namesake mine also due to conclude by end-2020.

The company also said its US$440mn Juanicipio silver-gold asset, a JV with MAG Silver, is on target for completion in 2021.

No changes have been confirmed to the scope or schedule of the company’s US$430mn Orisyvo gold project or US$55mn Cíenega optimization.

Fresnillo said in 2018 it is evaluating a possible US$490mn expansion of its Herradura asset.

MINOR DELAYS

Two projects previously forecast for initial production in 2020 are now expected to come on stream next year.

McEwen Mining’s US$41mn Fenix project, which involves extending the life of the El Gallo gold and silver assets, is now scheduled for 2021 production at the earliest, with a study due in H2.

Telson Mining expects to conclude construction at its US$20mn Tahuehueto primary gold asset 6-8 months after securing financing.

With financing not currently in place, first production looks likely in 2021.

Bacanora Lithium said a review of its Sonora lithium project by strategic partner Ganfeng Lithium is now scheduled for Q3, compared to the previous estimate of H1.

While this delay may not impact the overall project timeline, the timing of an engineering, procurement and construction proposal for the production of downstream battery-grade lithium products from the Sonora plant by Ganfeng is also under review.

SilverCrest Metals now expects to conclude a feasibility study for its US$100mn Las Chispas silver-gold asset in Q4, compared to mid-2020 previously forecast.

The timing of the development of Endeavour Silver’s US$76mn Terronera silver-gold mine is also in doubt after an updated PFS showed less robust economics compared to a prior study.

The company is conducting an internal review of both studies to decide how to proceed.

SCOPE CHANGES

Southern Copper significantly lowered its annual production forecast for the El Arco project in its Q1 results report.

Copper production is now expected at 135,000t/y, down from 190,000t/y, with gold at 64,000oz/y, down from 105,000oz/y.

The company did not update its capex estimate of US$2.90bn in its Q1 results. First production is expected in 2025, according to the latest estimate.

Southern’s US$413mn Buenavista Zinc, US$159mn Pilares and US$310mn El Pilar projects remain unchanged.

OUTLOOK

The COVID-19 pandemic had only modest impacts on the Mexican mining project pipeline, according to Q1 results reports.

Mining companies in Mexico are now beginning to restart production and exploration activities following a suspension of nearly two months due to lockdown measures.

But it may be too soon for the full impacts of the pandemic to be known, with further delays possible.

A slump in demand for industrial metals such as copper and zinc could also result in projects being postponed unless markets rebound in the near-term.

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