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.
Sierra Metals (TSX: SMT) announced on Tuesday updated mineral resource and reserve estimates for its two polymetallic mines: Yauricocha in Peru and Bolivar in Mexico. Sierra currently owns 82% of Yauricocha and 100% of Bolivar.
Measured and indicated resources at Yauricocha totalled 10.4 million tonnes grading 1.3% copper, 2.19% zinc, 42.28 g/t silver, 0.48 g/t gold and 0.55% lead. Its inferred resource was 13.2 million tonnes grading 1.3% copper, 1.59% zinc, 34.42 g/t silver, 0.43 g/t gold and 0.49% lead.
Proven and probable reserves for the underground mine are approximately 6.4 million tonnes at 1.02% copper, 1.83% zinc, 34.43 g/t silver, 0.36 g/t gold and 0.43% lead, for 142.7 million lb. of copper, 255.7 million lb. zinc, 7.03 million oz. silver, 70,000 oz. gold and 59.9 million lb. lead.
Resource totals for Bolivar amounted to 18.4 million tonnes grading 0.76% copper, 15.29 g/t silver and 0.25 g/t gold in the measured and indicated portion, and 12.1 million tonnes grading 0.72% copper, 12.21 g/t silver and 0.19 g/t gold inferred.
Bolivar’s total reserves are roughly 5.6 million tonnes at 0.77% copper, 16.83 g/t silver and 0.28 g/t gold, containing 94.7 million lb. copper, 3.02 million oz. silver and 50,000 oz. gold.
According to Ernesto Balarezo, Sierra Metals’ CEO, these updated NI 43-101-compliant mineral reserves and resources confirm the long production history of both assets.
“We have a clear path forward and the foundation in place to enhance and to maximize the returns of the growth initiatives that we have planned at our mines,” Balarezo said.
Life of mine (LOM) is estimated at five years for Yauricocha and three for Bolivar from the new reserve base. LOM would expand to eight and 10 years respectively if M+I resources are used, and 10 and seven years respectively when using inferred resources.
At Bolivar, the company replaced and increased mineral resources mined in 2023, and with over 8,000 metres of mine development planned in 2024, it expects to continue to replace mineral resources mined through exploration activities.
At Yauricocha, mine development is currently underway below the 1120 level, with full production targeted by the fourth quarter of 2024. Sierra expects to replace and increase mineral resources once it begins mining activities in that portion of the ore body with systematic infill drilling efforts.
Acquired in 2011, Yauricocha represents Sierra Metals’ flagship operation, with over 70 years of continuous production. Bolivar is a much newer operation, recording its first full year of commercial production in 2012.
Shares of Sierra Metals were down 1.1% at C$0.85 apiece by 11:00 a.m. ET Tuesday, giving the Toronto-based copper miner a market capitalization of C$177.9 million ($130m).
