Local Talent for Silver ExcellenceThu, 10/17/2019 - 16:18
Q: What are First Majestic Silver's main priorities to boost production at its existing mines?
A: Our experience operating six mines in Mexico has led us to the conclusion that local talent is key for First Majestic's success. We identify, hire and develop the best of what is available, favoring local workers over expats. We will continue strengthening this aspect of our operations, while also focusing on exploration and investment in new innovative technologies to lower costs and grow production. An example of these innovative technologies is the recent installation of a high-intensity grinding (HIG) mill at the Santa Elena mine. These key principles have led us to become one of the top silver producers in Mexico.
To keep positioned our mines among the best, the company will continue to focus on growing organically, as well as through a number of acquisitions. We want to become the world’s largest primary silver producer. An additional pillar of our strategy is strong investment in IoT and automation. In 2019, First Majestic’s capital allocation to corporate projects is estimated to be US$29 million. This capital will be spent, among other improvements, on innovative technologies such as automated lime feeds, mill and grind optimization, microbubbles and fine grinding.
Q: What has been First Majestic’s experience with the government and what advice would you give to Canadian or international companies looking to invest in the Mexico?
A: First Majestic has a strong relationship with the government thanks to its position as the second-largest silver producer in Mexico, operating across nine states. Canadian companies wishing to do business in Mexico should expect a government system similar to Canada's. The key to a company’s success is to act like a good corporate citizen and be mindful of what it is to do business abroad.
Q: What is the state of the Santa Elena, San Dimas and La Parrilla mines and what new projects are on the pipeline?
A: Our 2Q19 reports indicate that San Dimas and Santa Elena account for 80 percent of our overall production. This is linked to the installation of a new HIG mill at Santa Elena. This mill is a tall cylindrical unit that stands vertically as opposed to a traditional horizontal ball mill. Within its housing, the mill has a series of disks that spin at high speeds, similar to how a typical household blender works. This movement, combined with ceramic beads, helps grind ore to under 50µm and improves recoveries by 5 to 10 percent on average.
San Dimas is the cornerstone asset in our portfolio. As of May, 2018, we reached a new streaming agreement and the operation is now generating significant cash flows. Our strategy is to implement a series of projects to optimize its operation, including implementing high-intensity grinding technology, lime automation and pH control and upgrading the tailing filtration plant.
We took the decision to suspend our La Parrilla operations at the end of 2019 due to low silver and lead prices. The rationale behind this was to improve the company's margins and profitability. Unfortunately, commodity prices are all over the map and out of our control. That is why it is important to continually invest in new innovative technologies and be mindful of costs. First Majestic has doubled the exploration plan at La Parrilla to approximately 24,000m to test near-mine targets in an effort to develop new resources necessary to justify preparing the site for a potential reopening in the future. This, however, will depend on a significant improvement in commodity prices.
An exciting project in the pipeline is the Ermitaño silver-gold project, where we made a significant discovery in late 2016. The Ermitaño project is located 4km southeast of the Santa Elena mill. With a number of drills on site, the company is working on completing over 32,000m of infill, step out and metallurgical drilling. In the coming months, the company will begin working on the mine portal. Mining operations are expected to commence in early 2021.