Safety Culture and Productivity Turn Low Grade into Gold

Q: How do you apply your international experience to make your operations in Mexico more efficient?

A: I started my career in South Africa, where mining was an intensive industry. This was driven primarily by the fact labor was far less expensive there and the nature of the gold ore bodies. While working in Canada, I learned a lot more about mechanization. Productivity was through the roof, but labor was far from cheap. Mindsets between South Africa and Canada were quite different. Mexico, however, surprised me. As a company, you need a delicate balance between driving productivity resulting in employing fewer people and but at the same time providing work for surrounding communities. When I first went to the Mercedes mine, I was very impressed by the quality of people at our mine in Mexico. Housekeeping was excellent and I don’t think I have ever seen equipment cared for like you see there. The safety at Mercedes is very good. The accident frequency rate for Mercedes is the lowest I have been involved in. Initially, I believed accidents were being kept hidden and not reported, but that was not the case. Mexico’s technical skills are strong and the people we have, work exceptionally hard at all levels. Furthermore, they are always open to suggestions and willing to learn. Recently Mercedes Mine has been struggling to produce its targets, but the people give me confidence and hope. There are certain preconceived notions about how mines operate in places like Mexico, I had my own preconceived ideas going into this position, I assumed Ontario had better miners, equipment and plant operators and technical people, I turned out to be wrong.

Q: How are you planning to sustain this positive performance?

A: One has to understand what drives performance. Everybody has contributed to this and it is part of the operations culture. You also cannot buy culture; it evolves over time, influenced by subtle actions. For instance, the safety meetings at the Mercedes Mine are all about engagement and experience, this is used to explain and discuss issues. It is in the culture. There is a book called “Tribal Leadership,” which suggests that leadership is simply about the group, not an individual leader. Once the group is engaged, it becomes a people’s movement, where people remind each other of their responsibilities without a leader even present. Our equipment, for example, is very well taken care of as well because people respect it. What we need to do is encourage this culture, as well as nurture and maintain it. At the same time, we try to increase productivity, which is needed for a low grade mine such as ours. A mentor once told me that high grade makes you look smart, whereas low grade makes you work hard. Great culture and hard work are needed to make Mercedes a success. Considering this, the mine has a great future.

Q: What needs to be done at Mercedes, and how can you turn it into a success story?

A: When you look at ore bodies, we have been blessed with a lot of gold in the ground, but the grade is low. We cannot change that. 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 the dilution of the ore by not mining too much waste. Our costs will improve dramatically when we increase productivity.

The processing plant has a capacity of more than 2,000 tons a day. The ultimate objective will be to make sure we can fill the mill with ore. The metric we need to focus on is our cost per ounce. Our target is 65,000 to 75,000 ounces of gold. We need to achieve cash costs of around $900 per ounce and All-in sustaining costs of around $1,150 per ounce. Although it is difficult with low grade, we are aiming to get these costs lower. Gold prices might not be always this high. Even though the gold price is currently high, there is no change in philosophy due to high gold prices at this moment.

Q: What role do women play at Premier Gold?

A: While we don’t have any women underground at Mercedes, they are an important part of our administration and technical staff. From my limited experience so far in Mexico, mining seems to still be a bit of a man’s world in Mexico, so we have a way to go before real changes occur. It will come in time. If you want a sustainable, diverse workforce you need to go to high schools and start encouraging it there with the young people that are starting to think about their future careers. Always hire the best person for the job.

Q: What do you want to achieve after being on the job for one year?

A: To see Mercedes being successful again. We have 493 people doing an exceptional job and I hope I can be there to help the Mercedes team and guide it along. Success will be a mine that is profitable and sustainable. Costs lower, productivity higher and dilution well controlled.

Premier Gold Mines is a former exploration company that graduated to producing. It focuses on North America. One of its main projects is the Mercedes mine, with McCoy-Cove and Greenstone showing promise as well.