Company Buoyed by Producing Mine

Goldgroup is a publically traded mining operator listed on both the Toronto Stock Exchange (TSX) and Mexican Stock Exchange (BMV), as well as trading shares on the Over-The-Counter (OTC) exchange. However, just a few years ago, Goldgroup’s Cerro Prieto mine was the only asset in operation, and during 2014 it was a high cost, low recovery property. “In 2015, we invested in a process to increase our fine crushing capacity and agglomeration, which improved our operations considerably,” he explains. In 2014, Goldgroup’s gold recovery per month was a negligible 400 ounces on average, and the company doubled this figure in 2015 to 800oz/m. In 2016, Piggott aims to increase gold production to 1,50oz/m. “We are finalizing this optimization process and we also underwent a major management analysis to further reduce costs,” he comments. “Our current sustaining cost is around US$850/oz and we can maintain that production.”

Given the limited amount of resources Goldgroup had access to, the company was forced to invest out of cash flow. Recovery was carefully studied so the operator opted for very fine crushing and agglomeration, which provides higher recovery. “In 2014, our recovery was below 50 percent, in 2015 it reached 60 percent, and now we expect our recovery to be in the 65-70 percent range,” Piggott clarifies. “I do not believe we will be able to go far beyond that due to the way gold liberates from leaching operations. However, with careful metallurgy we are increasing our results.” Goldgroup also studied the mining circuits to ensure optimal rock was sent to the crushers but recovery had to be addressed first. Now, producing between 350-400oz/w Goldgroup has a healthy cash flow

In order to optimize operations the company recruited an international management company to analyze how the business was run from top to bottom. Areas of opportunity were identified mainly in communication and now Goldgroup uses superior reporting techniques, therefore creating a more accurate analysis. “When metal prices were high a great deal of companies put cost control aside,” Piggott comments. “Operation costs were important but production took center stage during that era. Therefore, when prices dropped, we had to react to the situation by improving our processing techniques.” From a technical point of view, Goldgroup uses fine crushing and agglomeration, as well as a high pressure grinding roll, and is one of the few companies in the world using this for heap leach extraction, making Cierro Prieto heap leaching extremely innovative.

Piggott shares that the company is currently in the midst of an ongoing dispute with a US enterprise over a project called San Jose de Gracia in Sinaloa, a property 50 percent owned by Goldgroup. “We spent US$18 million for half ownership of the property, which is inferred to have 1.1 million ounces of resources, and where we drilled 299 holes,” Piggott asserts. “Unfortunately, the company with which we are involved is attempting to take the concession through subversive means. We have since been working with the Mexican legal system, which is relatively slow, and in the end we believe we will prevail. When we obtain that property again, which has incredible potential if worked properly, Goldgroup will take a significant step forward.” The company is also looking for other operations in Mexico, mainly brownfield assets due to the prevailing trend of small exploration projects being picked up by large companies as small operators lack the necessary financial capacity