Colombia , Peru , Chile , Argentina , Ecuador and Dominican Republic

Rocky road ahead for LatAm's mega gold projects

Bnamericas Published: Wednesday, February 09, 2022
Rocky road ahead for LatAm's mega gold projects

Mining firms are facing a string of challenges at Latin America’s biggest capex gold projects.

The region hosts nine US$1bn-plus gold megaprojects, with a combined capex of around US$16.6bn, according to the BNamericas projects database.

But companies are grappling with significant obstacles at many of the assets, including political and permitting uncertainty, community opposition and doubts over their economic viability, despite the recent improvements in gold prices.

Production estimates were available for six of the projects, which put aggregate potential output at around 2.7Moz, although some figures were for gold equivalent output.

The assets are spread across Chile, Peru, Argentina, Colombia, Ecuador and the Dominican Republic.

While the list has been swelled by new projects compared to 12 months ago, Chesapeake Gold's Metates asset in Mexico has dropped from the rankings after a significant downsizing.


1. Norte Abierto, Chile

Capex: US$6bn

Production: Unknown

Barrick Gold and Newmont are focused on project optimization at Norte Abierto, LatAm’s biggest primary gold project by capex, which combines the Cerro Casale and nearby Caspiche deposits.

The companies also need to re-evaluate a prospecting campaign at Caspiche after a ruling in the Chilean courts, relating to potential impacts on nearby indigenous communities.

The US$6bn price tag is based on estimates in a 2019 report by Chile’s mining council (Consejo Minero) and has not been updated by the companies, which have yet to report production metrics.

2. Yanacocha Sulfides, Peru

Capex: US$2.5bn

Gold equivalent output: 525,000oz/y

Newmont is pushing ahead with its Yanacocha Sulfides project, despite postponing a construction decision to 2H22 due to COVID-19 impacts.

The project aims to extend the life of the Yanacocha mine into the 2040s.

Newmont’s latest total investment estimate for Yanacocha Sulfides is US$2.5bn, up from US$2.1bn, with production averaging 525,000oz/y gold equivalent over the first five full years from 2027 to 2031, according to a December presentation.

This compares to a previous 500,000oz/y estimate for 2026-30.

Newmont struck a deal to acquire Buenaventura’s 43.65% stake in Yanacocha earlier in February, and is targeting full ownership, with Sumitomo considering selling its 5% interest.

3. Pueblo Viejo Expansion, Dominican Republic

Capex: US$1.3bn

Production: 800,000oz/y

Barrick and 40% JV partner Newmont’s Pueblo Viejo Expansion is Latin America’s largest gold project by production capacity.

The US$1.3bn project aims to extend operations at Pueblo Viejo, currently the region’s top gold producing asset, into the 2040s, maintaining production at around 800,000oz/y.

Barrick expects to complete the processing plant expansion element of the project by end-2022, but the timing of an expansion of tailings capacity remains in doubt, with a permit held up following local opposition to a proposed tailings dam.

The government and Barrick have agreed to an independent environmental assessment of the tailings options in an attempt to win community backing.

4. Inmaculada Optimization, Peru

Capex: US$1.3bn

Production: 250,000oz/y

Hochschild Mining plans to invest in an optimization and expansion of its Inmaculada operation in Peru, which would add around 20 years to the mine life, currently due to end in 2023.

An executive told BNamericas in November that this would involve an investment of around US$1.3bn in the construction phase, with US$3.12bn spend during operations.

The optimization is expected to deliver around 250,000oz/y gold.

5. Lama, Argentina

Capex: US$1.2bn

Production: Unknown

While Chilean courts have ordered the definitive closure of the US$8.5bn Pascua-Lama project, Barrick is continuing to re-evaluate the asset, with a focus on options to develop the Lama portion in Argentina.

CEO Mark Bristow has said a decision will be made in 2024 on whether Lama meets the company’s investment criteria for development.

6. Soto Norte, Colombia

Capex: US$1.200bn

Production: 430,000oz/y

Minesa suffered a major setback at Soto Norte in 2020, after Colombian environmental authority Anla shelved a mining license application, saying it had been unable to reach a decision on the information provided.

But the company has gone back to the drawing board.

“Minesa is in the process of further detailed engineering of some of the items requested by the authorities, which will support another application,” senior project manager Mick Gold told BNamericas in November.

If approved, the company expects to start construction around mid-2024.

7. Lobo Marte, Chile

Capex: US$1.080bn

Gold equivalent output: 293,750oz/y

A new entrant on the list, Kinross Gold took a significant step forward at Lobo Marte when it completed a feasibility study in late 2021 – but production is not due to start for another five years.

The study pegged initial capex at US$1.1bn for an open pit mine producing 4.7Moz gold equivalent over 16 years, an average of 293,750oz/y.

The project is expected to deliver a post-tax IRR of 13% at US$1,500/oz gold prices.

“The [feasibility study] estimates construction beginning in 2025 at the earliest, with first production expected in 2027, subject to a positive development decision,” Kinross said in November.

A go-forward decision will depend on factors including the gold price outlook, permitting and wildlife habitat considerations.

8. Cangrejos, Ecuador

Capex: US$1bn

Production: 366,000oz/y

Lumina Gold is aiming to get the ball rolling on a pre-feasibility study (PFS) at Cangrejos, more than 18 months after filing a PEA.

The company appointed Ausenco Engineering Canada to lead the PFS earlier in February, which will seek to identify optimization and cost improvements over the 2020 PEA.

Lumina is continuing to drill at Cangrejos, with four rigs working on site, it said in a release.

9. Volcán, Chile

Capex: US$1bn

Production: Unknown

After years of inactivity, Hochschild is getting to work on Volcan this year, with prospects for development buoyed by the recent rise in gold prices.

The company is developing a 2022 work program for the Chilean asset, and has appointed Greg McCunn to lead the project.

“We believe that [the] current context in the world, with current gold prices, is very favorable to look again at the possibility of developing the Volcan project going forward,” Hochschild CEO Ignacio Bustamente told a conference call in January.

The plan will be discussed at a board meeting in February.

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