Decentralized Permitting Process Can Boost IndustryBy José Escobedo | Fri, 02/28/2020 - 12:36
Q: How is Orla Mining advancing in the permitting process for Camino Rojo?
A: Camino Rojo is projected to start open-pit operations in the municipality of Mazapil, Zacatecas, in June 2021, creating jobs and providing an economic spillover in one of the most marginalized areas of the state. The process for obtaining permits has been normal and in accordance with the law. We have not experienced any problems or intentional delays from the surrounding communities or authorities. At the federal level, the approval of our Environmental Impact Statement (MIA) is pending and following the normal procedures. e are not late, but additional information was requested from us, which has already been provided and the process continues its course. Overall, there have been no abnormalities in the process and we hope to have the government approval on time. Although the project is still in the exploration stage, the company has already launched its social responsibility strategy to create good relationships with the local communities surrounding the project: San Tiburcio, with just over 1,000 inhabitants; El Berrendo, with 200 and San Francisco de Los Quijano, which has approximately 52 residents.
Q: What were the main challenges you had to overcome when generating your Environmental Impact Statement?
A: Elaborating an Environmental Impact Assessment is a time-consuming process. It is necessary to have at least one year of historical environmental data for the environmental base line. However, the process has not been any different from others and we have not faced any extraordinary challenges. Everything has gone according to plan. Fortunately, when we acquired the project, there was already a great amount of environmental information from the previous owner. The site already had wells that allowed us to monitor and analyze the water, and that provided us with a much more extensive environmental-baseline. It has not been difficult to comply with the regulation, but it takes time to elaborate a good study.
Q: How should the permitting process in Mexico be changed to make it more efficient?
A: The General Directorate of Mines (DGM) and SEMARNAT have offices in every state. With this distribution, they could decentralize processes, even for high-risk projects. This change could be managed with the support of technical and managerial personnel from Mexico City. The change would greatly speed up processes because officials in their own states already know the mining regions while in Mexico City, they do not know whether the project is located in a desert, forest or mountainous regions A great deal of time is wasted in understanding the concept and the environment in which each project is developed.
Q: What kinds of discussions take place between the public and private sectors to improve processes?
A: We have very fluid communication with the DGM. They are greatly open to supporting the sector. SEMARNAT has been a different case and I think that is due to the government’s view of corruption, as they have implemented rules and procedures to eradicate corruption, and these changes have made it more difficult to have fluid communication with them. The level of communication between the company presenting the study and the agency granting the permit has decreased.
Q: What factors led you to choose M3 for project EPC management?
A: We considered five engineering companies, international and national, to develop the project. An evaluation was conducted with the help of an independent party, which received the bids and conducted the first review, removed all references to the economics of the proposal as well as the name of the company that submitted it before it was presented to us. This process allowed us to focus on the proposals without the risk of any bias towards any particular company. M3 presented the most complete and comprehensive proposal, obviously they dedicated the time and effort to the elaboration of their proposal, and at the end they also had the best economic offer, which made our decision quite easier. The decision to have an independent party helping us review the proposals gave us the peace of mind that we chose the best proposal for the development of the Camino Rojo Project.
The investment needed to build the mine and begin production, is US$133 million dollars, including working capital. The average gold production for the life of the mine is just under 100,000 ounces per year and about 60,000 in the first year of operation. The target for silver is a total of 3.5 million ounces over the life of the mine.
Orla Mining has a successful development and operating track. In Mexico, it is developing the Camino Rojo project, a high-quality, advanced oxide heap leach project in a low risk jurisdiction. It emphasizes a systematic approach to project development and strong shareholder returns.