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Premier Provides Update on Mercedes Mine Reopening

By Alejandro Ehrenberg | Wed, 07/22/2020 - 16:57

Premier Gold Mines provided an update on the reopening of its Mercedes mine located in Sonora. Mining activities recommenced in June at Mercedes, with development ore stockpiled prior to 3Q20 processing. Furthermore, a reduced through-put production plan for 2H20 has been initiated at Mercedes.

The company stated that Mercedes was placed into care and maintenance due to the COVID-19 pandemic during 1Q20 and remained in that status for most of 2Q20. The mine was able to restart gradually during the latter part of the period, with activity on site initially limited due to sanitary measures required for the safety of mine personnel, the company reported. Ore that was produced upon start up remained in stockpile until processing resumed in early July.

“Mercedes has accumulated ore stockpiles to be processed during 3Q20. Also, a modified mine plan, designed to increase mining efficiency and expand operating margins, has been implemented at Mercedes,” stated CEO Ewan Downie.    

Premier Gold Mines noted that during the two-month shutdown, extensive technical work was carried out at Mercedes to assess alternative mine plans with renewed attention to increasing production margins. A plan was developed to restart operations with a strategy limiting mining and development activities to the Lupita and Diluvio zones. This realignment recognizes the need to optimize Mercedes production to its current reserve base rather than its processing capacity, the company pointed out.

The company underscored the following three key elements of the optimized plan:

  • Consolidating production to one mine portal from five
  • Reduce mining rate to 1,200 tons per day from 2,000 tons
  • Operating the processing plant on a campaign basis in alignment with the plan and crew rotations

The restructuring has resulted in a reduction of 40 percent of the employees required to operate the mine and 75 percent of mining-related contractors, the company reported. The plan focuses on enhancing underground operating efficiencies and supervision to minimize dilution and improve ore quality.

“A new vision for success was required to ensure the mine's long-term viability. Our team has developed a focused and achievable plan that will lead to future growth of production at Mercedes,” stated COO Peter Van Alphen. “We do not take lightly our decision to reduce the number of employees at the mine and must acknowledge the hard work, dedication and support of our Mercedes employees and nearby communities impacted,” he added.

Premier Gold Mines explained that a phased restart of the mine will ensure the safe and successful implementation of the plan and meet sanitation requirements required by COVID-19 protocols. The initial focus prioritizes, first, completion of key access ramps to the Diluvio West and Lupita Extension stopping areas. Second, delineation and definition drilling in the property. Third, start processing in early 2H20.

The updated plan for Mercedes is in line with Premier Gold Mines’ long-term strategy. During an interview with Mexico Business News, Van Alphen said that one of the project’s main challenges is that, even when there is a lot of gold in the ground, it is low-grade. “We need to continue to work to understand the geology better and then mine it in the smartest and most productive way. At Mercedes, we not only have a challenge with the grade but we also have some poor ground conditions to mine in. These make for challenging conditions to work in. We need to continue to work to make the mine more productive and reduce ore dilution by not mining too much waste. Our costs will improve dramatically when we increase productivity,” he explained.

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Alejandro Ehrenberg Alejandro Ehrenberg Journalist and Industry Analyst