Adrian Juarez Pineda
CEO
CTA Consultoría y Tecnología Ambiental
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Expert Contributor

The Camino Rojo Mine and the Town of San Tiburcio

By Adrián Juárez | Wed, 07/06/2022 - 10:00

At the end of last year, a gold and silver mine began operating next to a small town, San Tiburcio, in the northeast of the state of Zacatecas. The Camino Rojo mine entered into operation in December 2021 and in March 2022, declared that it entered commercial production, for which several years of investment in exploration were first needed to define the mineral resource and to establish the feasibility of the operation. The effort to put this project into operation came from its shareholders and a loan of US$125 million. Additionally, the mining company reached an agreement with Fresnillo (a Mexican company with several mines in operation in Mexico and affiliated with Peñoles) in December 2020, in exchange for a payment of US$ 62.8 million, since part of the mineral deposit is within its concession.

This mineral deposit was acquired by Goldcorp in 2010, the company that operated the Peñasquito mine in the municipality of Mazapil. Goldcorp was purchased by Newmont in 2019. Around 2017, Goldcorp sold the Camino Rojo project to Orla Mining, a newly formed company of experienced mining executives who had worked with Goldcorp for many years (Chuck Jeannes and Tim Haldane) and with a copper-gold project in Panama.

According to recent data, the deposit has reserves of 1.6 million ounces of gold, measured and inferred resources of 9.5 million ounces of gold and a concession area of ​​163,000ha to continue exploring. The mine is expected to produce 120,000 ounces of gold per year, during the first five years, and to produce a cash flow of US$100 million per year. The oxides are currently being mined and it has the potential to later operate with the sulfide ore. According to data from Q1 of 2022, the gold grade of mined ore is 0.68 g/t and 1.8 million tons have been mined. The mine life is expected to be a little over 10 years. The mine is an open pit and the extracted ore is placed on a surface prepared to prevent infiltration and sprayed with a cyanide solution to finally extract the metals by the ADR method.

In 2013, when Goldcorp wanted to develop this project and turn it into a mine, our company CTA had the opportunity to prepare some components of the environmental baseline, we bought and installed a network of equipment to continuously measure the air quality, we connected the existing weather station to a data transmission network, carried out the first study of flora and fauna, and prepared the plan to collect other baseline data, among other things. This work stopped when Goldcorp decided to suspend its activities on this project. At the time, Goldcorp planned to process the oxides at the mine site and move the sulfide-bearing ore via a new rail line to the Peñasquito mine and take advantage of the facilities.

San Tiburcio (with about 1,000 inhabitants) is a two-hour drive from the city of Zacatecas. It is a semi-desert plain, sparsely populated, and is a poor area in socioeconomic terms. I remember when I first arrived in 2015 in San Tiburcio, I thought what a blessing to have the expectation of having a mine practically on the other side of the paved road (Zacatecas-Saltillo), the project office was on the outskirts of San Tiburcio and they had already hired at least 10 local people. We stayed in a hotel on the highway, where there was no internet and no mobile phone signal. On the other side of the road, there was an Oxxo store, a gas station and nothing else. Fortunately, the project had a cafeteria.

In addition, we visited other neighboring communities, such as El Berrendo (200 inhabitants) and San Francisco de los Quijano (50 inhabitants). During the work we carried out for almost two years, we met several people from the community because they helped us as guides or field assistants, served in a dining room, in the lodging, or as co-workers in other activities/departments of Camino Rojo. We interacted with various people and we remember everyone fondly.

This area has low vegetation, with a predominance of cacti (such as the biznaga), and other abundant species, such as la gobernadora, yucca and mesquite, and the main activity of the communities is livestock and agriculture (low-scale) for which the federal government built earthen dams to store rainwater. The area has no surface water bodies (lakes/rivers), so it depends mainly on rain and groundwater.

The mine is operated by the Canadian company Orla Mining, which is listed on the Toronto Stock Exchange. Orla Mining defines itself as “The emerging Gold Company.” The CEO is Jason Simpson, who is a seasoned mining executive, having developed Torex Gold's Morelos mine in the state of Guerrero and previously worked for Vale in Canada, and is surrounded by an experienced executive team. Orla Mining is backed by recognized investors in the mining market, such as Newmont, Pierre Lassonde, known as “the legend,” and Agnico Eagle Mines, which operates three mines in the state of Chihuahua. One of the people who led the local team to put the mine into operation is Sergio Sáenz, whom I met when he was manager of the Marlin mine and Goldcorp's Cerro Blanco project in Guatemala, where our company (CTA) was involved in 2002 for the first time in mining.

Orla Mining awarded the company M3 Engineering the contract to develop the engineering, purchase the equipment, direct the construction, and manage the entire process. It was all a success in terms of having completed the construction and commissioning of the mine on time and within budget. The Mexican government played an important role by issuing the permits required to start the construction and operate the mine.

Camino Rojo is an exceptional mine in a jurisdiction, Zacatecas, that is also exceptional. The state has great potential, large mines are located in this state, and it is the only state in the federation where world players are present, such as Newmont, Teck Resources with its San Nicolas project, Fresnillo, Capstone Copper's Cozamin mine, Aura Minerals’ Aranzazú mine, and other companies, such as Pan American Silver, First Majestic Silver, Minera Frisco, and other junior companies that want to become the next operating mine. During the exploration of Camino Rojo, around 30 local employees were required and in the operation an estimated 450 jobs were created.

Zacatecas is blessed and its treasures are buried, waiting to be discovered and extracted; Mining is the industry that can take advantage of these treasures and improve the lives of neighbors along the way. San Tiburcio will be proudly shown on the maps as a mining town.

Photo by:   Adrian Juarez Pineda