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Precious metal producer Hochschild Mining (LON: HOC) will invest about $200 million to build the Posse gold mine in Brazil, a project added to its portfolio last year through the acquisition of Amarillo Gold.
Speaking at a mining conference in Peru, chief executive officer Ignacio Bustamante said the company expects to start production at the mine, located in Brazil’s central state of Goías, in the first half of 2024.
“It’s the most important project we have to date,” he said, adding that Posse is part of the Mara Rosa property, which also hosts several advanced drill targets.
During its first four years of operations, Posse is expected to produce 102,000 ounces of gold per year, dropping to 84,000 ounces in the six remaining years of mine-life.
The asset hosts proven and probable reserves of 23.8 million tonnes grading 1.18 grams per tonne for 902,000 ounces. The combined measured and indicated resource stands at 32 million tonnes grading 1.1 gram per tonne for 1.2 million ounces of contained gold.
Hochschild said it has identified near-mine and regional exploration opportunities, including multiple potential satellite deposits.
The Latin America-focused miner, which operates Peru’s Inmaculada and Pallancata gold and silver mines, faced an impasse last year after local Andean communities demanded the closure of their operations on environmental grounds.
The claims were rejected, and Hochschild Mining expects the Peruvian government to grant it permission to extend the productive life of its flagship Inmaculada mine until 2042.
“Whilst we never stopped operating, this crisis exemplifies the country’s current heightened political, regulatory and social risk,” the company said in February.
Bustamante said the process is underway, adding an answer should be coming as early as the end of the second quarter of the year.
Hochschild estimates it will invest $4.4 billion over twenty years in Inmaculada, which currently represents more than 60% of its cash flow.
Peru is the world’s no. 2 copper producer and mining is a key source of tax revenue.
Mining is concentrated in the country’s historically impoverished Andean region. Local communities there, many of them indigenous, have long complained they have not benefited from its mineral riches.
Two of Peru’s largest copper mines have suspended production so far this year amid escalating conflicts with nearby indigenous communities. They account for a combined 1.5% of the country’s gross domestic product.
