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.
This year’s ranking of the top ten U.S.-based mid-tier and junior precious metals companies based on market capitalization as of July, features a number of new entrants including i-80 Gold and Gatos Silver. The data was compiled by our sister company MiningIntelligence.
Market Capitalization: $2.1 billion
Coeur Mining (NYSE: CDE) retained its number one spot on this year’s top ten list. The precious metals producer headquartered in Chicago, Illinois, has five mines: the Palmarejo gold-silver complex in Mexico; the Rochester silver-gold mine in Nevada; the Kensington gold mine in Alaska; the Wharf gold mine in South Dakota; and the Silvertip silver-zinc-lead mine in the Canadian province of British Columbia. In addition, Coeur has several precious metals exploration projects, including Sterling and Crown in Nevada, about 185 km north of Las Vegas, and the La Preciosa project in Mexico’s Durango state, about 85 km northeast of the city of Durango.
Production from four of its five mines last year was as follows: The underground Palmajero mine located in the Sierra Madre Occidental mountain range in the western portion of Chihuahua state, produced 6.3 million oz. of silver and 110,608 oz. of gold; the open-pit and heap leach Rochester mine, 42 km northeast of the city of Lovelock, produced 3.2 million oz. of silver and 27,147 oz. of gold; the underground Kensington mine, 72 km northwest of Juneau, produced 124,867 oz. gold; and the open pit and heap leach Wharf mine in the northern Black Hills of western South Dakota produced 93,056 oz. gold.
Mining and processing activities at its underground Silvertip mine, 16 km from south of B.C.’s border with the Yukon, were suspended in early 2020 due to unfavorable market conditions as well as ongoing operational challenges, the company says, noting that exploration drilling and engineering studies are underway to assess a potential restart.
Market Capitalization: $1.1 billion
Gatos Silver (TSX: GATO; NYSE: GATO) is focused on its Cerro Los Gatos mine in Mexico, about 120 km south of Chihuahua City in the heart of the country’s silver belt. Cerro Los Gatos is the company’s first commercially producing mine in the Los Gatos district. The company shipped its first lead and zinc concentrates in September 2019 and the mine achieved commercial production levels by the end of that year. The company sells its concentrate material, which contains zinc, lead, silver and gold, to smelters in Mexico and Japan, as well as to other locations through intermediaries.
The Cero Los Gatos mine has measured and indicated resources of 10.4 million tonnes grading 269 grams silver per tonne, 2.7% lead, 5.5% zinc, 0.34 gram gold per tonne and 0.11% copper along with 3.7 million inferred tonnes grading 107 grams silver per tonne, 2.8% lead, 4.0% zinc, 0.28 gram gold per tonne and 0.14% copper.
In addition to the mine, the company has two other deposits in the district — Esther and Amapola. The Esther deposit contains indicated resources of 0.46 million tonnes grading 0.7% lead, 2.1% zinc, 133 grams silver, 0.04 gram gold, and 0.02% copper, as well as 2.29 million inferred tonnes grading 1.6% lead, 3% zinc, 98 grams silver, 0.12 gram gold, and 0.05% copper. Its Amapola deposit has 0.25 million indicated tonnes grading 0.1% lead, 0.3% zinc, 135 grams silver, 0.1 gram gold and 0.02% copper, and inferred resources of 3.44 million tonnes grading 0.2% lead, 0.3% zinc, 140 grams silver, 0.1 gram gold, and 0.03% copper.
According to the company, there is exploration upside as more than 85% of its land position has yet to be drilled.
In March the company said 2021 will be “a year of optimization” and forecast annual metal production will come in at 7.5-7.9 million oz. silver, 40-42 million lb. lead, and 49-52 million lb. zinc at an all-in sustaining cost of $17-$17.50 per oz. silver.
Market Capitalization: $752.8 million
Canadian gold miner Argonaut Gold (TSX: AR) moved from second place last year to third place this year. The company, headquartered in Reno, Nevada, has assets in Canada, the United States, and Mexico.
Its primary assets are the open-pit El Castillo and San Agustin mines, which together form the El Castillo complex in Mexico’s Durango state, about 100 km north of the city of Durango. It also owns the La Colorada open pit mine in Sonora state, about 40 km southeast of Hermosillo. In the U.S., it owns the production stage Florida Canyon open-pit mine in Nevada, about 72 km southwest of Winnemucca.
Argonaut also has advanced exploration projects including the Cerro del Gallo open-pit project in Guanajuato, Mexico, about 30 km west of the Guanajuato airport, the Ana Paula open-pit project in Guerrero, Mexico, about 180 km from Mexico City, and the Magino open-pit project in Ontario, Canada, about 40 km northeast of Wawa. In addition, it holds the San Antonio open-pit project in Baja California Sur, about 40 km southeast of the port city of La Paz, and several other exploration stage projects in North America.
The company produced 203,483 gold-equivalent ounces in 2020 at a cash cost of $936 per oz. and ended the year with a cash balance of about $214 million. In January the company forecast it will produce between 210,000 and 250,000 GEOs at a cash cost of between $950 and $1,050 per ounce.
Market Capitalization: $346.8 million
i-80 Gold (TSX: IAU) was created as a spin-out of Premier Gold Mines’ assets in the United States (South Arturo, Granite Creek, and McCoy-Cove). Equinox Gold acquired Premier this year.
The company has a 40% stake in the South Arturo property in partnership with Nevada Gold Mines, a joint-venture between Barrick Gold and Newmont, which owns the remaining 60% stake. The project is located along the northern section of Nevada’s Carlin Trend, and includes both open-pit and underground reserves and resources that are open for expansion.
The El Nino underground mine at South Arturo started commercial production in the third quarter of 2019 and mineralized material is processed primarily at Nevada Gold Mines’ Goldstrike mine about 8 km to the south. The partnership is examining potential development opportunities at South Arturo, including potential heap leach projects.
Granite Creek, in which i-80 owns 100%, is located at the intersection of the Getchell and Battle Mountain Trends near Nevada Gold Mines’ Twin Creeks and Turquoise Ridge mines. The project has open-pit and underground resources that, like South Arturo, are open for expansion, and there is also an underground mine (Pinson) on the property. Pinson is permitted and on care and maintenance. Exploration continues on the project and the company expects to complete a preliminary economic assessment this year.
The company also owns 100% of McCoy-Cove, located on Nevada’s Battle Mountain Trend, near Nevada Gold Mines’ Phoenix operation. According to i-Gold, the project contains “one of the highest-grade undeveloped gold deposits in Nevada.” A PEA was completed in 2020 and the company is working on a decline in order to undertake definition drilling from underground ahead of a full feasibility study.
Market Capitalization: $191.3 million
Gold Resource (NYSE-AM: GORO) ranked third in last year’s top ten list. The company is focused on the southern state of Oaxaca, Mexico. Its flagship project, Aguila, hosts the Arista underground polymetallic deposit (gold, silver, copper, lead and zinc). Initial production from the Arista mine began in March 2011. Ore is trucked to the El Aguila mill about 2 km away, where it is processed into three separate concentrates: copper/gold, lead/silver, and zinc. The company continues to drill the extensions of the Arista deposit, which it discovered in 2007.
Its second operating underground mine, Mirador, is situated on the company’s Alta Gracia project, and mineralization is sent to the Arista mill.
The company controls about 684 sq. km in Oaxaca, and its four exploration properties are all within trucking distance of the El Aguila mill.
Last year marked ten years of production, and the company produced 20,473 oz. of gold, 1.2 million oz. of silver, 1,593 tonnes of copper, 7,725 tonnes of lead and 19,696 tonnes of zinc.
Market Capitalization: $167.1 million
Hycroft Mining (NASDAQ: HYMC) is a gold and silver producer that operates the Hycroft mine in Nevada. According to the company’s president and CEO, Diane Garret, who joined the company last year, Hycroft “is a top 20 global gold deposit and it is the second-largest global silver deposit located in the world-class mining region of northern Nevada.”
The mine, about 87 km west of Winnemucca, straddles the counties of Humboldt and Pershing, and started production from sulphide ore in 2019. It has an estimated mine life of 34 years.
Last year the mine produced 27,392 oz. of gold and 178,836 oz. of silver. The company forecasts run-of-mine production in 2021 of 45,000 to 55,000 oz. of gold and 400,000-450,000 oz. of silver using conventional cyanide heap leach methods.
The company describes 2020 as a “year of change” as it brought in a new senior executive management team in early September, which then set up a technical team with skills “for implementing complex processing technologies.” The team then began a review of the mine and started to cut costs and improve “operational shortcomings.” Hycroft has also been looking at ways to improve “operating parameters for the two-stage sulfide heap oxidization and leach process.”
In addition, the company has earmarked about $10 million for drilling and additional metallurgical and mineralogical studies this year. The plan for 2021, the company says, is “designed to enhance its understanding of gold and silver recoveries across the ore body as it sets the stage for the future ramp-up to full-scale mining and production” at Hycroft. The mine plan has also been designed to “maximize cash flows by optimizing a conventional run-of-mine cyanide heap leaching operation to treat oxide and transitional ore using its existing leach pads while also efficiently sequencing pit development that positions the company to access sulphide ore.”
Market Capitalization: $163.8 million
Ranked fourth in the 2020 top ten list, Gold Reserve (TSXV: GRZ; US-OTC: GDRZF) owns a 45% interest in the Siembra Minera gold-copper project in Venezuela’s Km 88 district. The government of Venezuela owns a 55% stake.
The company is working on collecting payments under a settlement agreement for its Brisas gold and copper project, also in Venezuela’s Km 88 district. In 1992, the company started developing Brisas, and invested about $300 million in the project. But in April 2008, the government revoked a previous authorization to proceed with construction.
In 2009, the company sent the case to international arbitration and in June 2017, signed a settlement agreement with the government. Under the agreement, Venezuela agreed to pay Gold Reserve $792 million to satisfy the award and another $240 million to buy the company’s technical mining data, for a total bill of $1.03 billion.
As of December 2020, Gold Reserve had received cumulative payments of $254 million (for the technical data) and is still owed about $900 million (including interest of about $122 million).
In a statement, Gold Reserve noted that “existing conditions in Venezuela, along with Sanctions, are expected to continue, in the foreseeable future, adversely impacting our ability to collect the remaining amount owed to us by Venezuela…and obstruct our ability to develop certain gold, copper, silver and other strategic mineral rights contained with Bolivar state comprising what is known as the Siembra Minera project.”
Market Capitalization: $135.4 million
Comstock Mining (NYSE: LODE) has been acquiring gold and silver properties in Nevada’s Comstock district since 2003. Its top project is Dayton Resource and the adjacent Spring Valley exploration project in Lyon County, about 10 km south of Virginia City. Dayton includes the historic Dayton, Kossuth and Alhambra patents, and the old Dayton Consolidated mine workings. The historic Dayton underground mine closed in October 1942. The company plans on completing a resource estimate and follow up with additional drilling and technical work leading to an economic study. Future work will include exploration and definition drilling and magnetic, IP and resistivity geophysical surveys. Exploration at Spring Valley will involve phased drill programs.
In September 2020, the company closed the sale of Comstock Mining LLC, which owns the Lucerne project, about 5 km south of Virginia City and 48 km southeast of Reno, to Tonogold Resources (US-OTC: TNGL). Under the agreement, Comstock retains a 1.5% net smelter return (NSR) royalty on all of Lucerne’s mineral properties, and will receive about $2 million per year from a lease option agreement for future processing of Lucerne mine ore. Comstock also entered into a renewable mineral lease with Tonogold for some of its other properties, including the Occidental and Gold Hill group of exploration targets, which contain historic mining operations. Tonogold also received a 20-year lease to use, operate and manage Comstock’s processing facilities, plant, infrastructure and mining claims (known as the American Flats properties).
In February 2021, the company acquired a majority equity stake in LiNiCo Corp., a lithium-ion battery recycling company, which recently acquired a battery metal recycling facility in Storey County, Nevada from Aqua Metals (NASDAQ: AQMS).
In 2019, the company signed a mercury remediation pilot, investment and joint-venture agreement for a stake in MCU. Comstock also has a stake in MCU-P, an international mercury remediation joint-venture in the Philippines. The facility started processing during the first quarter of this year in the province of Davao de Oro in Mindanao.
Market Capitalization: $132.4 million
Ranked seventh last year, Vista Gold’s (TSX: VGZ; NYSE: VGZ) flagship project is Mt. Todd, about 250 km southeast of Darwin in Australia’s Northern Territory. Since acquiring the open-pit project in 2006, the company has invested over $100 million in the project, including 60,000 metres of core drilling, and describes it as the largest undeveloped gold deposit in the country.
In September 2019, Vista Gold updated its prefeasibility study, which outlined a 50,000 tonne per day project with a mine life of about 13 years and annual production of 413,400 oz. of gold over the mine life. (During the first five years, the mine would produce about 495,100 oz. of gold.) Life-of-mine average all-in sustaining costs were pegged at $746 per ounce (and $688 per oz. during the first five-year period.)
The study estimated initial capex of $826 million, an after-tax net present value at a 5% discount rate of $823 million and a post-tax internal rate of return of 23.4% at a gold price of $1,350 per ounce. At a gold price of $1,750 per oz., the NPV grows to $1.5 billion and the IRR to 35.1%.
Commercial production could begin after a two-year construction period followed by six months of commissioning and ramp-up.
The project has measured and indicated resources, which include proven and probable reserves, of 299.09 million tonnes grading 0.82 gram gold per tonne for 7.87 million oz. of contained gold, and inferred resources of 65.30 million tonnes grading 0.77 gram gold per tonne for another 1.61 million oz. of gold.
The company’s mine management plan was approved in June.
In addition to Mt. Todd, the company has 1,501 sq. km of contiguous exploration licenses that could yield satellite deposits.
Market Capitalization: $98 million
Golden Minerals (TSX: AUMN; NYSE: AUMN), ranked in eighth spot last year, transitioned from an exploration company to a gold and silver producer in January, and poured first gold in February at its Rodeo open-pit mine in Mexico’s Durango state.
The mine, 80 km from Velardena, produced 3,452 oz. of gold and 12,323 oz. silver in the second quarter (3,634 gold-equivalent ounces). The average grade during the quarter was 3.6 grams gold per tonne. The company is targeting plant throughput of 550 tonnes per day during the third quarter. Ore is trucked to the company’s oxide mill at its Velardena properties, about 115 km away. Golden Minerals forecasts Rodeo will produce a total of 12,000-14,000 oz. of gold and 25,000-30,000 oz. silver this year.
Based on a preliminary economic assessment in April 2020, Rodeo has an expected mine life of two and a half years and the company is conducting expansion drilling to extend the life of mine.
Assays from near-pit exploration drilling at Rodeo released in June included 14.7 metres of 3.94 grams gold per tonne and 8 grams silver per tonne starting from 14.7 metres downhole and 13.75 metres of 2.64 grams gold per tonne and 10.5 grams silver from 13.8 metres.
Its Velardena property, about 140 km northeast of the city of Durango, contains two past-producing underground silver and gold mines and two mills (oxide and sulphide). Mining was suspended in 2015 due to a combination of low metal prices, dilution and metallurgical challenges. (It leased one of the two mills to Hecla from late 2015 until November 2020.)
The company updated a preliminary economic assessment in April 2020 that incorporated refinements to the resource model and bio-oxidation processing technology to enhance gold recoveries. The study outlined a mine life of ten years with life of mine contained metal of 12.3 million oz. silver and 188,000 oz. gold. Pre-production capital costs were forecast to run to $10.3 million. This year the company intends to optimize the mine plan with the view to potentially restarting mining and flotation processing later this year or in early 2022.
The company’s other projects include El Quevar, in Argentina’s Salta province; and Santa Maria and Yoquivo in Mexico’s Chihuahua state. The company released assay results in January from a 15-hole drill program at Yoquivo, with highlights of 1.3 metres grading 5.69 grams gold per tonne and 223 grams silver per tonne from 114 metres; and 0.2 metres grading 15.4 grams gold per tonne and 1,150 grams silver per tonne starting from 131 metres.
(This article first appeared in The Northern Miner)
