Altaley Mining's Restructuring Unlocks Its True PotentialBy Paloma Duran | Wed, 08/04/2021 - 13:35
Q: How does the company ensure a strong operating performance throughout the year?
A: At Campo Morado, we are undertaking different initiatives to achieve better metallurgical recoveries. Some of these are a pilot plant that will enter the site soon and a three- to four-month program regarding extensive metallurgical test work, which is expected to increase the recovery of base and precious metals. In addition, there is a flotation circuit built by the mine’s former owners and that was 80 percent complete when the mine closed.
So, all the infrastructure and equipment are available and we need to have them online. If we finish the construction of that flotation circuit and put it into operation, it could allow us to increase production by 1000 tons per day. We are targeting this project for next year.
In addition, there is always the possibility to drill and explore more. The exploration potential at Campo Morado is very good. The former owners developed numerous property-scale surface targets and carried out underground work. Considering all these factors, we are confident we will increase our reserves once we start drilling, which will probably be next year.
Q: Why did the company choose the Maelgwyn Mineral Services' Leachox process and Core Group's Albion process and what do you hope to achieve in the second testing phase?
A: Campo Morado has a particularly difficult metallurgical deposit. It has refractory precious metals, which are hard to recover along with base metals, since they can be fine grain, or have a verifying size that we have to micro fine grind to get the best recoveries. Currently at our mill, we are grinding 40 to 50 microns. Traditional flotation cells do not do a good job on micro fine grinded material. Therefore, when we need to micro fine grind, we need to use different flotation methods that are called pneumatic flotation methods.
We are going to test at least two of these pneumatic test processes. We are bringing one to the site that is specifically designed for the use of micro fine grain. We hope to obtain better recoveries of base metals and produce a pirate concentrate. If we succeed, we could sell a pirate concentrate with high gold values.
The alternative is to leach or force oxidation of a portion of the tailings to liberate the gold with oxygen or with leaching. We have used two methods: the Leachox process from Maelgwyn Mineral Services and the Albion process from Core Group. They are competitors to each other but both have gone through the first phase of testing at Campo Morado by Nyrstar, the former owner of the mine. In 2013, Nyrstar conducted the first phase of testing using the Albion process, which provided very good results. Meanwhile, with the Leachox testing, it was able to increase gold recoveries to 60 percent and silver recoveries to 80 percent.
We have also increased our recoveries. Previously, we had 15-18 percent gold and a 30-40 percent recovery. In the last month, we have been improving and now we are getting recoveries of 25 to 30 percent in gold and up to 50 percent in silver. We believe there is still a lot of room for improvement using these two technologies. We expect to achieve an increase in recoveries. This is a possible new source of income and an opportunity to transform Campo Morado from a zinc mine to a silver mine.
Q: Why is the closing of the Nyrstar Campo Morado Variable Purchase Price Royalty a driving factor for Altaley and its Campo Morado mine?
A: Because it means more income in our pockets and Nyrstar's pockets as well. The variable purchase royalty was a sliding royalty based on the price of zinc. So, if the price was low, we would pay no royalty and if the price was high, we would pay a significant royalty. It made perfect sense to us, so we purchased it and paid for it with equity. At that time, the stock was trading at US$0.20 and we negotiated the price at US$0.34- US$0.35, which is an excellent deal. However, the stock is now trading between US$0.60 and US$0.70, and this makes a big difference.
Q: What are some environmental aspects in Campo Morado that the company seeks to improve?
A: One of the most important environmental aspects at Campo Morado is that we do not have carbon emissions for power generation. We are investigating the possibility of adding some green energy, either purchased from a power producer or by installing solar panels at the mine site. Furthermore, we are always trying to improve the environmental aspects of our project. We are always monitoring and taking care of our tailing’s facilities. We hope that with the metallurgical tests we can reprocess the existing tailings and clean much of the metal they contain.
Q: How important are local people and communities for the company and its projects?
A: At Campo Morado, we hire locals as much as possible. We have training programs to teach them about mining and various aspects of a project. We also buy local to help the community.
For example, we have been working for a long time in Tahuehueto and we hire locals as much as we can. Tahuehueto is in a remote area so the local population is not that big. Nevertheless, we consider them to be an important pillar for us. We have improved their sanitation, accessibility, infrastructure and access to water. Additionally, we provide medical care to the communities through a clinic and we also built a school.
In addition, we have good social license agreements and a great relationship with the communities and we have not had any real problems. We had some small issues at Campo Morado in 2019, largely because zinc prices were low, so we were not making any money and we could not really comply with our social licenses. However, that has been fixed and we are now having great social success in our two projects.
Q: The company will receive a US$25 million financial injection from Empress Royalty, Endeavour Financial and Accendo Banco. What makes this the best option to continue developing the Tahuehueto project?
A: Basically, this solution has fully funded us. We just received the first US$2 million from Empress Royalty. The remaining US$3 million of the US$5 million silver stream is scheduled for when we close the Accendo Bank’s loan facility. With this finance solution comes a total restructuring of the Trafigura and Nyrstar loans. We owe a substantial amount to those two companies and they agreed that if we found a solution that fully financed our Tahuehueto project they would allow us to continue working and restructure their loans. Once we have completed all the documentation, we will be fully funded. This gives us the opportunity to unlock the true value of the project.
Q: How will the capital from Empress Royalty be used to develop the project?
A: The project is already 60 percent built. The funding will help us finish the construction. We also have a filter press for the tailings as we will be doing dry stock tailings, so we have to remove the water and build a water line from the river and a pump station to bring it in. Finally, we are developing an energy solution for Tahuehueto, although we have a group that is going to build and operate the power plant, so we are not investing capital for that. Since Tahuehueto is remote, it will have a self-generating power plant. We are going to use gas generators to be more ecological and efficient. We expect to have everything completed by the end of this year so that the mine can operate at half of its capacity, at least. We expect to bring the mine to full production next year.
Q: Why did the company decide to change its corporate name?
A: The name change was to align it with the recent success we have been achieving. The Telson Mining name was pretty good, I always liked the name and the logo. Nevertheless, Telson Mining had some difficult years and the board decided that it would be a good time to change it and market it under the name Altaley Mining Corporation, which is more in line with our projects.
Q: What impact do you think the midterm election results will have on Altaley’s projects?
A: It depends. If the new state governments are more favorable to mining, then we will be very happy and if not, it becomes a little more difficult. At the end of the day, I see politics as temporary. The mining industry is extremely important for Mexico as it provides significant social and economic benefits for the country, and most importantly for our communities. Therefore, I believe that mining will continue, no matter which party is in power.
Altaley Mining Corporation is a Canadian-based mining company with two 100-percent-owned Mexican gold, silver and base metal mining projects: Tahuehueto in Durango and Campo Morado in Guerrero.