Veins Expand in Juanicipio

Q: What are the latest developments at MAG Silver’s Juanicipio project?

A: Construction at Juanicipio is coming along well and there is a lot of positivity around the development. The company keeps in close contact with Fresnillo plc and there is a close relationship between the working teams of each company. MAG work with Fresnillo on to help where we can with engineering and geological expertise, and we are provided with regular updates as to the progression of the mine. MAG is not the mine’s operator, we have a 44 percent stake, so while we are not leading the operation, we are part of the discussion around changes within the mine.

Exploration continues to produce positive results. As we explore further, our teams are finding new veins that are deep and wide. The veins are yet to be defined fully – but they continue to grow – and so we look forward to developing one of the largest silver deposits in the world once it reaches production in 2021.

Q: What do you consider the main ingredient in the sound relationship between MAG Silver and Fresnillo at Juanicipio?

A: The open lines of communication are key to the strong working relationship we enjoy, as well as the understanding between each company’s CEO. There are mutual working groups that work to resolve issues, oversee progress and communicate issues that need to be addressed, such as prioritizing high potential exploration targets and the focus of bringing the project into production

Q: What does the mining industry require from Mexico’s administration for the growth of the industry, and how would you characterize mining’s relationship with the administration?

A: All foreign investments look for predictability and continuity from a government. Obviously, the industry saw tax hikes in 2014, and these have been absorbed and accepted. But foreign investors want to be confident about what they are putting money into. They want certainty that their projects will not suffer any type of unknown stoppage or any factor that could make shareholders nervous. So far, signs are positive, and the industry is moving forward. The MORENA administration is offering more and more communication with the industry and it is considering positive changes to the Mining Law, including consultations over indigenous protocols. Having this law defined would be greatly appreciated and would provide greater confidence over security issues.

At present, the government seems to be reviewing regulations from the previous administration that they do not agree with and changing policy where necessary. A great help would be to release the 9,000-plus concessions that are still on the books, which would be considered brownfield projects but need to be re-sold or put back into the system for bidding. They can then be occupied and benefit both Mexico and the mining companies.

Overall, the relationship between the government and mining companies is excellent. It has been very easy to contact officials, including Deputy Minister of Mining Francisco Quiroga, when we need to. That accessibility has stretched to his entire team and we appreciate their willingness to talk. The same holds true for the Ministry of Economy. We have not had any need to contact the Ministry of the Interior of late, but similarly, we feel openness and accessibility on their part.

Q: How will the ratified T-MEC impact mining trade in Mexico?

A: At the moment, it is business as usual for the mining sector. While T-MEC will undoubtedly bring about changes, the mining sector has its own lifeblood. There is nothing in the new agreement that would necessarily harm or damage mining in Mexico. Rather, it is positive for business between the two nations.

From an industry point of view, internal policy within Mexico is more likely to impact the health of mining than the T-MEC. Examples of this are the outsourcing proposals that are before Congress. These are serious issues that must be addressed maturely and that require proper studies to be fully defined. The changes to the union law could also be impacted by T-MEC, though these changes appear to be positive for unions and workers here in Mexico. This is assuming the regulation is followed.

There is constant communication between mining bodies, various groups and the federal government. This fosters understanding and helps all sectors of the industry understand the important themes. This is no different from other major industries in Mexico, like the oil industry that would like to bring back farmouts. Working groups within the Senate and Congress are meeting on a regular basis to iron out the kinks that are still causing concern to industry players.

Q: What are MAG Silver’s goals in the next two years?

A: Continue working with Fresnillo to successfully construct and commission the Juanicipio project in a safe and environmentally responsible manner. Once we have the mine commissioned, pursuing the vast exploration potential on the property will be top priority as well as working towards the potential of further expansion.  Pursuing and achieving these goals should make all of our stakeholders substantially better off.

MAG Silver is a Canadian company that holds a 44 percent stake in Mexican-incorporated JV company Minera Juanicipio. The company owns the Juanicipio property, located in the Fresnillo District, Zacatecas, operated by Fresnillo plc