Mike McAllister
Vice President
Corporate Development at Sierra Metals
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View from the Top

Cusi Drill Program set to Double Production

Mon, 10/22/2018 - 13:21

Q: How has the growth in demand for zinc affected Sierra’s business strategy for the Cusi mine and what do you predict will happen to zinc prices in the years to come?
A: The epithermal zinc vein was found at surface and now we have focused more at depth and we have found higher-grade silver. We underwent a geological re-interpretation this year and found a new area that could be mined called Santa Rosa de Lima. It starts at around 350m below surface and we are finding very good, 4m-average widths, with a much higher grade of about 370g/t of equivalent silver. We have already progressed to this new zone and we are ramping up our mill just to process the ore from this deposit. We are processing about 400t/d and we will be up to the mill capacity of 650t/d by April 2018. This represents a big step because our original target measured 700m strike and 400m in depth, and we have already extended that to 1.7km of strike. We know this is part of a larger system that occurs along the Cusi fault, and we have 12km of the Cusi fault on our property.
We are drilling a lot more this year to extend the zone and we plan to ramp up production a great deal. We have also purchased a used ball mill, which we hope to have installed by the end of the year, and this will double production to about 1,200t/d at the mine in January 2019. In terms of CAPEX at Cusi, we will be spending about US$9 million in total, which includes expenditure on the new mill, work on tailing facilities and on exploration drilling costs.
Q: What have been the main advancements at the Bolivar mine?
A: We had some equipment issues at Bolivar that we corrected last year and we have also worked to improve our recovery at the mill. We brought in 13 pieces of new, larger-scale equipment and we can now process about 3,000t/d. Similar to Cusi, we will install a used ball mill, which will give us greater flexibility in terms of tonnage and grind size. By the end of 2018, Bolivar will be processing 3,500t/d. Bolivar is not only growing in terms of production; we are also carrying out exploration work there. A survey of the property indicated a higher-grade material at the Bolivar West and Northwest zones and we are working to build ramps and stopes there as we speak, so there is a lot of new opportunity.
Q: Sierra was the first operator in Latin America to use battery power. What spurred your decision to become a pioneer in this area?
A: The more battery equipment being used underground, the less pollution there is, so it saves on certain costs such as ventilation. The benefits are twofold: one is that the air quality is better for the workers and the other is that ventilation costs are reduced. As well as having a social benefit, it benefits the bottom line of the operator.
Q: What cost-cutting strategies did you employ to halve your net losses in the first nine months of 2017 compared to the same period in 2016?
A: We went through a period of maintenance in 2016. We replaced a lot of outdated equipment, we improved the grade and the amount of ore processed through the mill and we have used more modern methodologies. A lot of it comes down to the fact we are processing much more material more efficiently with improved recoveries, which lowered operating costs.
Q: What is your view of Mexico’s political climate and the availability of financing for mining?
A: There is some nervousness about the upcoming political changes but overall, I think the climate is good. When speaking to the institutions that understand the industry, there should be no trouble getting financing. For us, FIFOMI’s funding has been sufficient and has helped us with our working capital, but there are always complaints about the level of funding being constrained. I think a big company that is looking for much more financing may feel it is not enough. That being said, there are always alternative funding options available.