Innovative System Has Game-Changing Potential

Q: What is the state of the El Limón Guajes complex and what are the main challenges and expectations that you have for this project?
A: The El Limón Guajes complex (ELG) is a company building asset. There are not many gold properties in the world that can produce more than 13,000 metric tonnes per day of ore, through open pit mining, at a grade of 2.7 grams of gold per tonne of ore mined. ELG also has two small, higher grade underground deposits, which enhance the production potential of the complex. Looking to the future, the property has the potential for further production from deposits which have not yet been discovered or have been discovered and are not yet in production, such as the nearby Media Luna Project.
As with any business, there are always challenges, and ELG is not an exception to this rule. The ores in ELG have some metallurgical challenges, as the ore contains soluble copper and soluble iron, which have a negative impact on the cost to process the ores. The site team has done an excellent job in finding ways to control these high cost elements.
Another challenge with mining is the relationship with surrounding communities. Mining always brings change. Communities will like some of the changes and not like others. It takes time for miners and communities to understand each other’s needs and interests for ‘today’ and into the future. Together, we have made considerable progress in understanding each other. There is a good community relationship foundation in place now. As we continue to work together and support each other, this foundation has the potential to support further investment in order to extend the mine life of the property.
Q: What progress has been made at Media Luna, given the effects of the late 2017 blockade?
A: Media Luna is the deposit that has the most potential to extend the life of the ELG complex, once the open pits are mined out. It is a large deposit which has the potential to be mining for decades. As, with all deposits, Media Luna has its challenges as well. It has a lot of gold, but the grade of gold per tonne is at the lower end of the range that can be mined profitably with conventional underground mining techniques. We are working hard to find efficient ways to mine this deposit, so it is worth it for shareholders to invest the approximately US$500 million that it will take to build the mine.
The blockade was a devastating blow to investor confidence in Mexico in general, and Guerrero in particular. Investors need to have confidence that a mine they have financed will be allowed to operate continuously in order to pay back their investment with an adequate return on that investment. If they are not confident, investors will take their money elsewhere, and the communities in those locations will be the beneficiaries of such investments. Fortunately, the communities around ELG and Media Luna understood this risk and brought the blockade to an end. Looking forward, we need to continue to operate without blockades to win back investor confidence, as well as deliver the generation of jobs an investment in Media Luna could potentially bring.
Q: The Muckahi Mining System is expected to significantly lower costs at underground mines. How was this innovative system developed and what is its potential in underground operations?
A: I have been working on Muckahi for over 30 years. It is a system that can work at any underground mine except block cave mines. The problem being solved through this technology is that underground mining, and mining in general, is a material-handling and logistics business. We drill and blast and do ground support, everything else is moving materials/supplies. We are the only logistics business in the world that operates on single lane roads.
The thought was, “what if we could make two-lane traffic in a tunnel that is half the current size?”
Solving this problem became my hobby for three decades and today, after solving the initial problem and all the subsequent hurdles, we have a logistics system that moves material on overhead monorails, in a drift half the size, and with two-lane traffic. The ore moves on conveyors right from the face/brow, without touching the ground again until it reaches the surface.
The Muckahi Mining System has the potential to lower underground mining costs by approximately 30% and will play an important part in making deposits with lower gold grades, profitable to develop and mine. Media Luna fits into this category. On the safety and environmental front, a Muckahi mine will be safer, produce less waste rock, and is expected to significantly reduce the production of greenhouse gases during the mining operation. The mining system uses a lot of ‘old school methods’ that are made practical once again through the addition of modern technologies. We are testing Muckahi within our El Limón Deep underground deposit and expect to have proven the key components of the system by the end of 2019.
Q: How does Muckahi impact your company strategy and how will it be implemented in Mexico?
A: Muckahi opens a completely new set of strategic options for the company. With ELG as a foundation, we can use the social and commercial competitive advantages we expect Muckahi to provide, to grow the company into a world class major mining company. These are exciting times for our team members and investors as we look to build a major mining company, all from a foundation in Guerrero State in Mexico!