Robert Eadie
President and CEO
Starcore International Mines
View from the Top

Altiplano Plant to Ramp up Production

Sat, 10/28/2017 - 10:37

Q: What strategies helped Starcore International’s stock price jump by over 100 percent during 2016?

A: First and foremost, precious metals prices were on the rise, which rapidly adds to our profitability. We were also careful to keep costs for development, drilling and production stable. For us, 2016 was a building year. We installed a carbon-in-leach (CIL) plant at San Martin, allowing us to treat carbonaceous ore, which required a substantial amount of work, as well as an investment of US$1.6 million.

Then in March 2016 we opened and commissioned the Altiplano processing facility at Matehaula, two hours north of San Luis Potosi, which was also capital intensive. This plant is designed to process 48t/d, although our initial target is 25t/d. The facility still has not been tested to its full capacity but the target is around 30,000oz/y. This will double total production for the company so in time it will become a significant boost to our bottom line and our balance sheet.

Q: What was behind the 16 percent year-on-year slide in production at San Martin during 3Q16?

A: We reached carbonaceous ore that we were unable to treat until we installed the CIL plant. Now that the plant is installed and fully operational, we predict production will rise and we are aiming for 18,000 equivalent gold ounces in 2017.

Another reason for the fall in production is that we are beginning to focus on exploration at the mine again. We completed 14,000m of drilling in 2016 and our target for 2017 is 18,000m, which should add considerably to our reserves. We have not uncovered any significant veins but it is important to remember that San Martin is a complicated mine. It is heavily fault controlled, making the veins distinctly unpredictable and hard to track. That said, the factors that attracted us to the mine when we purchased it from Goldcorp in 2007 remain. The concession is almost 13,000 hectares and is an epithermal deposit, which means it has potential to grow into a huge mine. Grupo México’s Cananea project started life as a small gold mine and emerged as one of the biggest copper mines in the world.

Q: What inspired the company to move away from contractors and operate the mine almost singlehandedly?

A: Put simply, we do not feel that contractors add any value to the company. We feel that our full-time employees have more of a vested interest in doing the best possible job than part-time contractors. If we ever need a particularly specialized service, we would bring in a contractor. For example, we recently hired a company to help us with renovation work and electrical fitting on a building but anything related to mining is done internally. This gives us complete control over the operational side of the project.

Thanks to the added cash flow from the Altiplano project, we will have enough liquidity to finance exploration projects internally, which will save both time and money. We financed the recent drilling program in Nevada ourselves and this will be the business model for the company going forward.

Q: What is the issue that is holding up progress at El Creston and what are your plans for that property?

A: Two members of the local ejido signed a deal with the previous owners of the project that was illegal. We are trying to nullify that agreement and then renegotiate with the ejido. There is already a positive PEA on the project but we do not intend to put it into production and for that reason it is available for sale. Moreover, it is a molybdenum deposit so we are waiting for the price of that particular commodity to increase. We expect that by the end of 2017 or early 2018 the price will have risen sufficiently for it to make economic sense for a buyer. One of the advantages of the project is location and low strip ratio. In addition to this, the Creston Main deposit is located within a 5.5km trend of mineralization that ultimately provides exploration upside.