Bear Creek Mining has reported that new methods and technologies at the Mercedes mine in Sonora have resulted in significant savings. However, external factors such as inflation and declining gold grades have hindered new opportunities.
During 2Q23, the company announced that it had made radical changes at the Mercedes operations to bring new technical talent. In addition, it implemented more productive methods that are better adapted to the geological and structural characteristics of the project. The company stated that the new methods have significantly reduced mining costs by 23%, allowing the cost to drop from US$80.84/t in the first four months of 2023 to US$61.96/t in June 2023.
The company also reported that development metrics improved by 30% in 2Q23 compared to the previous quarter. The company noted that while productivity has improved, external issues and low gold grades have hampered production. As a result, Bear Creek is conducting a geological reinterpretation of the Mercedes mine to better understand the predictability of ore grades and increase the grade of ore sent to the mill. This review is expected to provide better plans for the mine and verify whether its 2023 production forecast of 45,000-55,000oz of gold production is viable.
“During the past second quarter, the company felt the impact of development work delays, operational performance challenges, inflationary pressures and foreign exchange factors that occurred during the first quarter. While our timeline to achieve the production levels and cost structure we originally envisioned for Mercedes has taken longer than anticipated, we remain very excited about the potential we see at Mercedes to increase annual production, discover new ore bodies and expand existing ones," said Eric Caba, President and CEO, Bear Creek.
In April 2022, Bear Creek announced that it acquired the Mercedes mine, formerly owned by Equinox Gold. The project was acquired for a cash payment of US$75 million, the issuance of 24,730,000 Bear Creek shares, a deferred cash payment of US$25 million due in six months and a 2 percent net smelter return on Mercedes’ production. Equinox explained that it decided to sell the mine because it did not consider it to be a key asset, as it only represented 5 percent of its production guidance and 2 percent of its resources in 2021. However, Bear Creek believes that the acquisition of the Mercedes mine has taken the company to the next level, enabling it to transition from a development-stage company to a precious metals’ producer.