Martín Aguilar
Mexico Country Manager
Primero Mining
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View from the Top

Long Term Ambitious of a Canadian Operator

Wed, 10/19/2016 - 12:40

Q: What are the primary advantages and disadvantages you have seen as a foreign operator working within the local mining industry?

A: Although Primero Mining is based in Canada, its focus has always been in Mexico. The company was formed in August 2010 with its acquisition of the San Dimas mine on the border of Sinaloa and Durango, followed by the purchase of Cerro del Gallo in Guanajuato in 2013. Mining is always a risky activity, whatever the country, but I believe that Mexico offers a number of opportunities for foreign mining companies despite the challenges. First and foremost, it has a vast array of mineral reserves, which is always the most important and decisive factor for exploration companies. Our mine at San Dimas is located in an area that is accustomed to mining activities since operations have been ongoing for over 100 years, so we have experienced remarkably few challenges from local communities.

Q: What technology is in place at San Dimas to make the mine more sustainable and environmentally friendly?

A: A total of 75 percent of the energy used at San Dimas is generated by a hydro-electric plant owned by the company. We redirect water from a jungle river 45km away from San Dimas into a dam, which is 700m above the plant, and we then use the difference in elevation to generate vast quantities of clean electrical power. Between the hydroelectric plant and the mine there are a number of indigenous communities with whom we share this energy. Indeed, were it not for Primero Mining these people would not have access to any electricity. Another important factor of our environmental work is our tailings handling philosophy. At San Dimas, we have invested approximately US$25 million over the last 10 years to fund construction of a dry stack tailings storage facility in order to protect the surrounding ecosystems. This is state-of-the-art technology using belt filtration to ensure that waste produced from the mine is fully dried when it is deposited, and therefore drastically limiting the impact of our mining activity on the environment.

Q: What did the company do differently to achieve the increase in production at San Dimas?

A: In 2014, San Dimas produced 2,460t/d of gold ore, with that figure rising to 2,720t/d in 2015. Over the course of the past two years we have updated and improved the processing plant, adding new tanks, an extra mill, and a new filter. These developments all contributed to the increase in production in 2015 to 2,720t/d, and we want to further build on that success by achieving 3,000t/d in the near future. Of course, in order to accomplish this goal we depend on the results of our exploration projects. One development that should enable the company to increase expansion is the acquisition of the Expanded Lechuguilla, to the south of San Dimas, which was completed in June 2016. We recently came across topography in this previously unexplored area that suggested that there were further mineral veins, so we decided to buy the mineral concessions and we expect to begin more thorough exploration work before the end of 2016. Progress will take some time because the geology makes drilling complicated and time consuming but the underground infrastructure is already in place, which is a solid start. Exploration will be crucial to continuing the momentum we have created at San Dimas, because we mine our reserves down continuously.

Q: What have been the latest developments on the Cerro del Gallo project?

A: It is now in the advanced development phase, and we are currently in the process of obtaining permits to continue work on the project. In addition to permits, we are waiting for gold prices to increase further before proceeding with drilling work on the 18,000ha we own there. However, Cerro del Gallo is a well-known mineral deposit with potential for both underground and open pit mining development, so we are excited for what the future holds for that particular project. Our principal focus will continue to be San Dimas, and more specifically we will concentrate on developing the 30,000ha we have recently acquired at Expanded Lechuguilla. By continuing to invest in Mexico, Primero Mining hopes to become a mid-sized operator in the medium to long term, and with optimization and expansion of our existing mines and potentially even further acquisitions our goal is to be producing 400,000oz/y between our operations in Canada and Mexico.