By bringing forward the start-up of the underground mine to June 2020, the JV Partners are securing a number of positive outcomes for the project
Fresnillo and MAG Silver provide a Juanicipio project update now that construction is well underway, detailed engineering is nearing completion and all major process equipment has been purchased and received on site.
Juanicipio Project Status Update
· Underground mine will commence production ahead of schedule in mid-2020, realising commercial and operational de-risking opportunities for the joint venture.
· Over 25 km of underground development has been completed to date on the project.
· Based on detailed engineering, actual equipment purchases and construction contracts, pre-operative capex, from 1st January 2018, has increased by 11.4% from US$395 million to US$440 million also reflecting expenditure incurred on underground development, supporting infrastructure, and bringing forward some sustaining capital to facilitate the early underground start.
· Mineralised material from development and initial production stopes to be processed at the Fresnillo beneficiation plant from June 2020 pending completion of the Juanicipio plant.
· Juanicipio now expected to reach 85% name plate capacity in Q4 2021 (previous guidance 65%) and 90-95% in 2022 (in line with previous guidance). Commissioning of the flotation plant will be underway mid-2021.
· Access to the upper portion of the resource has been achieved. Initial development indicates that the grade and width of the vein is in line with previous estimates.
· Exploration is ongoing on the property with the intention to increase the deeper resources and targeting new veins.
By bringing forward the start-up of the underground mine to June 2020, the JV Partners are securing a number of positive outcomes for the project:
· Improved cash flow by deferring capex spend and accelerating income from the new production ahead of plan.
· De-risking the metallurgical process allowing a quicker and more certain ramp-up to 4,000 tonnes per day.
· Increased certainty around the geological block model prior to start-up of flotation plant.
Mine development continues to advance, reaching over 25 km by the end of January 2020. Development activities will continue in the next few months and we anticipate the first stope being fully prepared by 3Q20.
The schedule for the construction of the flotation plant has been adjusted to enable the most efficient use of contractor labour, and commissioning is now anticipated by mid-2021 (previous guidance was construction completion by the end of 2020 with commissioning early 2021).
In the interim, mineralised material from development and initial production stopes will be processed at the Fresnillo beneficiation plant from June 2020. The Fresnillo plant is expected to have spare capacity as the mine continues its operational recovery.
With detailed engineering almost complete, major equipment purchases completed, and a number of significant construction contracts awarded or under review, the JV Partners are also updating the capex required for the project. The pre-operative capital cost of US$395 million, from 1st January 2018, has been revised to $440 million (which is within the expected range of variance as engineering was advanced) to reflect additional actual expenditure incurred by the JV Partners on the underground project more recently, and bringing forward the full construction costs for two large life of mine ventilation shafts, plus some sustaining capital to facilitate the early underground start.
Octavio Alvídrez, Chief Executive Officer of Fresnillo plc, said:
“Juanicipio is an outstanding project which will generate strong returns for our shareholders, and significant benefits to the region. We continue to de-risk and refine the best construction plan that will drive the most value and ensure we capitalise on the opportunity that Juanicipio presents. I am pleased to confirm we are accelerating development of the underground mine and as a result, I expect the mine will be producing silver and gold ahead of schedule in 2020.”
George Paspalas, Chief Executive Officer of MAG Silver, said:
“We are very excited about the decision to bring forward the underground mine development of the Juanicipio project. Producing quantities of saleable mineralisation provides a very beneficial de-risking opportunity that gives confidence to both partners that the originally envisioned plant production ramp up may be improved.”
Juanicipio Project Highlights
· Fresnillo plc is the operator of Juanicipio and holds a 56% majority stake in the Joint Venture, with partner MAG Silver Corp. owning the remaining 44%.
· Total average annual anticipated production of 11.7 moz silver, 43.5 koz gold, with an initial life of mine (based on Indicated Resources only) of 12 years.
· Additional years of production expected to be supported by the current Inferred Resources, which are being converted into the Indicated category. Further exploration opportunities exist in the JV license area with potential to scale-up operations in the future.
· Juanicipio development expected to create approximately 2,750 jobs during construction and 1,720 jobs once at full production.
The information contained within this announcement is deemed by Fresnillo plc to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain. The person making the notification is Carlos Ortiz Mena, Head of Legal, Fresnillo plc. The time of the notification is 7:00 am UK time.
Source: Company Press Release