Image credits: MAG Silver
News Article

MAG Silver Announces First Production at Juanicipio

By Alejandro Ehrenberg | Tue, 10/27/2020 - 09:34

MAG Silver announced that development material from the Juanicipio project commenced processing at the Fresnillo beneficiation plant (owned by Fresnillo plc) during 3Q20. The project is a joint venture between Fresnillo plc (56 percent) and MAG (44 percent). Fresnillo plc’s board approved the project in April 2019, with a US$395 million investment.

Fresnillo plc, which operates Juanicipio, reported that 42,476 tons were processed in 3Q20. Total production amounted to 394,000oz of silver, 610oz of gold, 138 tons of lead and 174 tons of zinc. The lead (silver rich) and zinc concentrates were treated at market terms under off-take agreements with Met-Mex Peñoles. Revenue from this production (net of processing and treatment costs) will be used by the joint venture to offset cash requirements of the initial project capital.

“This first production from Juanicipio is a major milestone for MAG. The successful processing of development material not only provides cash flow to offset CAPEX but also further de-risks the project as it heads toward commercial production. We are looking forward to the first production stope coming online in 4Q20. The goal is to continue to produce cash while we complete the process plant construction,” said George Paspalas, MAG Silver’s President and CEO. 

Fresnillo plc said it expects to process an average of 16,000 tons per month of mineralized material from the joint venture through its processing facility until mid-2021. At that point, the Juanicipio beneficiation plant is scheduled for commissioning. Development continues on site and the final preparation of the first production stope was concluded in 3Q20. Also, progress was achieved on the construction of the Juanicipio processing plant. 

Juanicipio is among the most important projects in Fresnillo plc’s pipeline. During an interview with Mexico Business News, Octavio Alvídrez, the company’s CEO, explained that Juanicipio shares many traits with the Fresnillo and Saucito mines: high grade, wide veins and low costs. Alvídrez went on to say that these characteristics will result in a silver production average of 11.7Moz and a gold production of 44,000 oz. The initial expected mine life is 12 years, with good potential to expand the project’s reach and lifespan.

Alvídrez also stated that joint ventures like the one with MAG are part of his company’s growth strategy. “We are working jointly with MAG Silver, our partner in the Juanicipio project. It was the original owner of an exploration concession in that area and was already exploring around 12 years ago when we approached the company for an exploration agreement. We committed to some initial investment, which allowed us to earn the 56 percent share we now have,” he said.

Alvídrez pointed to the joint venture Fresnillo plc undertook previously with Newmont in the Herradura district. He said that it was successful experience and, after many years of operation, the Mexican silver producer ended up buying Newmont’s share in 2013, making the project 100 percent Fresnillo-owned. “Our approach to joint ventures is to create synergy: value must be generated that otherwise would be impossible or very time-consuming to generate if we did it alone. In the case of Herradura, we benefited from Newmont’s exploration experience in deposits similar to Herradura. We are open to those sorts of alliances,” Alvídrez elaborated.



Photo by:   MAG Silver
Alejandro Ehrenberg Alejandro Ehrenberg Journalist and Industry Analyst