Mexico’s proposed higher mining royalties could block nearly $7bn in investments
The Mexican government proposed raising mining royalties under the argument that metal prices have risen in recent years.
A new reserve estimate for the San Bartolomé silver mine in Bolivia underpins an eight-year extension to the mine plan through 2028, Andean Precious Metals (TSXV: APM) said Wednesday.
The update extends the mine’s life well into 2028, far beyond its original 12-year expectancy that was supposed to end in 2020.
The news pushed the issuer’s stock 5% higher in early afternoon trading in Toronto. Despite the intraday bump to C$0.62 apiece, the stock is down 46% over the 12 months, touching C$0.53 and C$1.24.
Prepared by SRK Consulting, the 2023 mineral reserve and resource estimate now shows measured and indicated resources of 6.1 million tonnes grading 98 grams silver per tonne for 19 million oz. and a recoverable proven and probable reserve of 5.08 million tonnes at 93 grams silver per tonne for 11.95 million oz. metal (as opposed to contained metal of 15.19 million ounces).
In a statement, management explained that in parallel with the updated reserve statement, the operation is shifting from relying on low-grade, high-cost material called ‘pallacos’ to higher-margin third-party sourced ore and FDF (fines deposit facility) material. This shift has led to third-party material comprising a major portion of the mine’s processed tonnes and produced ounces.
Andean has increasingly relied on third-party material for ore processing, with such sources now comprising over 60% of processed tonnes and nearly 70% of produced ounces. In comparison, output from its own lower-grade pallacos has dropped to 30%.
Andean has negotiated agreements for substantial tonnage of higher-grade material for San Bartolomé and plans to continue sourcing from third-party sources in 2024.
The company believes the project has the geological potential to extend the operational lifespan further by improving segments of the high-grade inferred resource. Currently, the inferred resource entails 965,000 tonnes grading 167 grams silver per tonne for 5 million oz. of contained metal.
Andean says it is actively engaged in locating and acquiring new oxidized materials. These materials, typically unsuitable for processing in standard flotation plants in the region, represent an opportunity for Andean to diversify and enhance its mineral processing capabilities.
Earlier in December, Andean reported a fire at its Golden Queen mine in Kern County, California, was contained within an hour at the secondary crusher. There were no injuries, and the company continues investigating the cause and assessing the damage.
Despite the temporary shutdown of the secondary crusher, which affects new ore stacking, Andean on Dec. 14 assured continued metal production through leaching processes. The company is adjusting its short-term mine plans and is backed by insurance, including business interruption coverage.
