Jody Kuzenko
COO
Torex Gold Resources
/
View from the Top

Deep Commitment with Guerrero’s Mining Sector

By Alejandro Ehrenberg | Fri, 04/24/2020 - 11:55

Q: What are the main elements of the company’s plan for developing the Media Luna deposit?

A: Development of Media Luna is key to sustaining operations at our Morelos property. The existing El Limon Guajes open pits will be depleted in 2023, at which time we will transition to processing lower grade stockpiles. We are targeting initial production from Media Luna in early 2024. Over the last couple of years, we have carried out a number of trade-off studies as we gear up to complete a feasibility study for Media Luna in 2021.

One of the key outcomes of this work was the decision to excavate a 7 km long tunnel under the Balsas River. The tunnel will connect Media Luna on the southside of the river to the existing processing plant and site infrastructure on the north side of the river, effectively making Media Luna an extension of our current operation. We believe this is the best option for accessing the ore body as it will allow us to minimize surface disturbance on the south side of the river. Also, this will provide for a more efficient operation than other options evaluated.

Another key element associated with developing a new mine is financing. We believe we are well-positioned on this front. Given our current forecasts, we expect to be able to fund the US$500 million project through cash flow generated from El Limon Guajes. The projected cash flow is expected to allow us to both meet our debt obligations and strengthen our cash position ahead of commencing the bulk of construction activities in 2022 and 2023.

Q: How will the company bring local talent into Media Luna?

A: Our goal is to maintain high levels of local employment as we transition from open-pit operations at El Limon Guajes to underground operations at Media Luna. Approximately 70 percent of our employees are from the state of Guerrero, with 45 percent of them coming from communities in the mine’s direct area of influence. In total, 99 percent of our direct workforce is from Mexico.

The transition of our workforce from open-pit operations to underground operations will take time. Excavation of the 7 km tunnel along and development of the El Limon Deep deposit on the north side of the river, provide the opportunity to train our future underground workforce. By providing the experience and skills needed to operate underground, we can ensure our local workforce plays a similar role in Media Luna as they do today at El Limon Guajes.

Q: Some 75 percent of the Media Luna property is unexplored. What is the company’s strategy to expand its knowledge of the asset?

A: The exploration focus is primarily on two fronts at this moment. The first is continuing to add to resources and reserves from the El Limon Underground by targeting extensions of the Sub-Sill and El Limon Deep underground deposits. The last round of drill-holes released in November 2019 highlighted the ongoing exploration success at both deposits, which has the potential to bode well for future resource and reserve growth.

The second key area of focus is at Media Luna. We are currently carrying out an infill drill program to upgrade resources from the Inferred confidence category to the Measured and Indicated confidence categories. The infill program completed in 2019 was successful in upgrading over 12 million tonnes of Inferred resources to the higher confidence categories. The 2020 infill program is targeting to upgrade an additional 7 to 9 million tonnes of Inferred resources.

With the potential to keep the mill full for more than a decade, regional exploration has not been a high priority. However, we are conducting grassroots level work to identify and prioritize future targets. Once Media Luna is up and running, the exploration focus is likely to expand in order to test high priority regional targets on the broader land package.

Q: Torex Gold is dealing with elevated soluble iron levels that increase reagent costs. How will the company reduce these costs for greater fiscal efficiency?

A: Mineralization at El Limon Guajes contains various levels of copper and iron, levels that impact the ability to cost-effectively extract gold within the leach circuit. Both metals preferentially consume oxygen and cyanide, which requires a higher level of reagents to maintain gold recoveries at design levels.

The development of a SART plant in 2018 has been successful in dealing with the soluble copper. The SART plant, however, is not a solution to dealing with soluble iron. In order to address the soluble iron challenge, we have begun adding oxygen into the leach circuit to “rust” the iron in solution. The results to date have been very encouraging and we expect to continue this strategy given the associated reduction in reagent consumption (a direct benefit to costs) and moderately higher recoveries (a direct benefit to revenue).

Q: What are the company’s plans to bring innovative technology into its operations?

A: Innovation has played a key role in our success to date and we expect innovation to play a key role in our future success. Over the last 10 years, we have utilized innovative solutions to successfully address technical, commercial and social challenges.

Given open pit mining at El Limon Guajes is expected to finish in 2023, the benefits of deploying innovative technologies in our open pit fleet do not warrant the investment required. However, we do plan to embrace innovative technology at Media Luna. The key element will be the use of our Muckahi Mining System.

Muckahi is a proprietary mining system we are currently testing at our El Limon Deep deposit. A complete re-think of underground mining, Muckahi has the potential to reduce the capital costs of developing an underground mine by up to 30 percent, reduce underground mining operational costs by up to 30 percent, speed up the time to first production by up to 80 percent, and as an all-electric mine, reduce greenhouse gas emissions by up to 95 percent.

When combining Muckahi with other design elements, we see the potential for Media Luna to be one of the greenest mines in the world.

Q: How is Torex Gold meeting environmental regulations in regard to the tailing system used at the El Limon Guajes Complex?

A: El Limon Guajes employs filtered tailings, which significantly reduces the operational and legacy risks relative to operations that employ conventional wet tailings.

When the solution leaves our process plant it travels through a series of filters that squeeze the moisture from the tailings, reducing the moisture content to around 17 percent. Tailings are conveyed to the storage facility, spread out using mechanical equipment and further dried by the sun and wind. After a suitable period of natural drying, tailings are mechanically compacted into place, and the cycle repeats with the next layer of tailings placed above the previous layer. As further protection, a rock buttress has been established on the downhill side of the storage facility.

The process is carried out in a closed-loop system so the extracted moisture can be reused in the process plant. We do not discharge water, even when we have the permit for doing it. This makes El Limon Guajes virtually a zero-emission site with respect to water and air.

Torex Gold is an intermediate gold producer based in Canada. It is engaged in the exploration, development and operation of its 100 percent-owned Morelos gold property, an area of 29,000ha in the highly prospective Guerrero Gold Belt.

Alejandro Ehrenberg Alejandro Ehrenberg Journalist and Industry Analyst