Minera Cuzcatlán Will Invest US$18 million in 2023

Compañía Minera Cuzcatlán, the Mexican subsidiary of Fortuna Silver Mines, will invest US$18 million to extend the useful life of its San José mine in Oaxaca. The company also said it is not interested in participating in the lithium industry.

"The projected US$18 million is for the development of the existing mine. We are always looking for resources to increase the useful life of the mine," said Luiz Camargo, Country Director, Compañía Minera Cuzcatlán.  Regarding the issue of permits, Camargo emphasized that none of the new works require an additional permit.

In addition, the director noted that 2023 may shape up to be a good year for mining as gold and silver prices have risen due to fears of economic recession and a weakening dollar. "The increase in gold and silver commodities will help us. They will allow the company to use this benefit mainly to mitigate the increase in inputs caused by inflation," said Camargo.

Moreover, Minera Cuzcatlán emphasized that although the door has been opened to private investment in the lithium industry, it has no interest in joining. "We are evaluating the issue from afar, but at Fortuna Silver Mines, we are not interested," said Camargo.

The San José mine is located in the Taviche mining district of Oaxaca and has been producing since September 2011. In 2022, the mine produced 5.8 million oz of silver and 34,124 oz of gold, both meeting the expected production levels.

What Has Happened With Minera Cuzcatlán in Mexico?

In recent months, the mining company has experienced problems with its San José mining complex since the Ministry of the Environment and Natural Resources (SEMARNAT) issued a resolution canceling the extension of the former's environmental permit (EIA). The ministry announced that a new analysis of the case will be carried out. SEMARNAT argued that the permit should be ruled invalid since it lacks the authority to grant an extension for more than half of the company's EIA extension request. What is more, SEMARNAT did not sufficiently analyze the company's regulatory compliance.

Jorge A. Ganoza, President and CEO, Fortuna Silver Mines, stressed earlier this month that it is “perplexing” that the company must challenge SEMARNAT's resolution since the authorization was confirmed by a court. Moreover, the company said that the cancellation is unfounded as the ministry does have the authority to grant EIA extensions for 12 years. The EIA extension granted in 2021 confirmed that the company's operations complied with regulations. 

Nevertheless, Fortuna Silver Mines recently reported that a federal court has granted an injunction to Minera Cuzcatlán to continue operating its San Jose mine under the terms of the 12-year Environmental Impact Assessment (EIA) previously granted by SEMARNAT. The company assured that it is in full compliance with environmental regulations. Its authorization should therefore remain in force.