From Greenfield Projects to Highly Profitable Mining OperationsBy Paloma Duran | Mon, 03/29/2021 - 08:50
Q: How does the company choose greenfield projects and turn them into highly profitable mining operations?
A: IMR is a private company with several teams, including one focused on technical study and exploration. We acquire projects that have some drill samples and surface samples that demonstrate the presence of minerals. In addition, a preliminary study has to be conducted. After finishing preliminary technical studies, if the project is acquired then we go for geophysical and geochemical explorations followed by drilling programs to prepare a detailed technical study. If the project is feasible, we can turn it into a profitable mining operation in three years for small and medium mines (100,000 to 200,000oz).
Q: Why did IMR choose Mexico and what are the company’s plans in the country?
A: Our first objective was to enter the iron ore mining market. Due to the fact that IMR global is primarily a steel and raw materials trading company, in Mexico, we saw the opportunity to extract iron ore. However, iron ore prices are not very stable and that is why we began to participate in the precious and base metals markets as well. In Mexico, we first started a small mining operation in Sinaloa, which we completed after two and a half years. We later acquired a new iron mine in Michoacan, which lasted for three and a half years until iron ore prices dropped. As a result, we decided to look for gold and silver mines.
Currently, We are exploring two projects and developing a mine. Our goal for this year is to further develop the mine and start production in July. In addition, we will complete exploration and technical studies in other two projects. By the end of 2021, we expect to have a producing mine and two projects ready for development.
Q: Why did the company decide to stop working in Michoacan?
A: When we started the project, its production was around 70,000 tons per month and after three and half years of intermittent operations, we produced around 1.5 million tons of minerals that we exported to China. Our biggest problem was the high cost of transportation. As the iron ore prices went down, the company decided to change the geographic location and buy a project in South Africa instead, as it is easier to transport and less expensive.
Q: How has the development of the company’s La Perla project advanced?
A: La Perla is a large project where we have several mines. We expect to start production in one of these mines, while exploring others. When we acquired the project, it was mostly new and it had very few drill holes and studies. Starting with a small mine was very important to us because we were entering the precious metals market for first time and we did not want to take big risks. Later, we began to explore the rest of the area and found better mines.
One of its advantages is that La Perla is very close to the city of Hermosillo, which is located a couple of hours away. From a logistical point of view, it has been a strategic location since there is a skilled workforce available close by. In regard to the disadvantages, when we started working, we thought we would find similar mineral resources in the rest of the area; however, this was not the case and we were not able to use our processing plant. The new areas require a different processing plant. Besides this issue, we have not seen any other disadvantages. Only time will tell how big the mines will be. One of our main investment requirements for this project is the processing plant that is being installed in small mine called Oro Fino in La Perla, and, of course, the investment required to finish exploration in other areas.
Q: How does the company mitigate social risk?
A: Before we acquire a project, we want to learn everything about the community. If the probability of having a negative impact to the community is high, we do not proceed for acquisition. For example, La Perla and Tarachi are located in very remote areas and are on private land, so we do not have a direct negative impact on the community.
Moreover, we have a policy of hiring only skilled workers from abroad if not available in the nearest community, while trying to cover all the positions with local population. In addition, we have supplied masks, hand soaps, and antibacterial gel to communities since the COVID-19 pandemic began. Since we are a small company, we cannot offer big projects like building schools; however, we always seek opportunities to support the communities. Right now, we are allocating a good part of our budget to the communities for every project we have.
Q: What are the company’s goals for 2021?
A: Apart from the previously mentioned goals, we want to acquire a new project. We are looking for precious metals or polymetallic mining project, preferably in Sonora because that is where our offices are located, and makes it much easier to operate. However, we know that most of the polymetallic underground mines in Mexico are located in Zacatecas, Chihuahua, Durango and San Luis Potosi. For this reason, we are also looking for small and medium-sized projects in the north central part of the country, which we hope to find in 2021.
IMR Bonanza is a leading partner of global resources in the international steel and energy industry.