Although the processing plant at their Juanicipio mine won’t be completed until next year, partners Fresnillo (LSE: FRES) and Mag Silver (TSX: MAG; NYSE-MAG) were able to declare first production last month by processing Juanicipio ore at Fresnillo’s nearby facilities.
Initial production from the underground mine, in Zacatecas, Mexico, began in August. Until the new plant is ready, Juanicipio ore will be processed at Fresnillo’s nearby facility at a rate of 16,000 tonnes per month.
Fresnillo is the 56% owner and operator of the joint venture (JV), with Mag Silver holding 44%.
Providing an update on the project in its third-quarter results, Mag Silver noted the processing facility is on track for commissioning in mid-2021, despite a more than one-month government-mandated suspension of construction earlier in the year due to the Covid-19 pandemic. The plant is expected to reach 85% of its 4,000 t/d nameplate capacity by the end of 2021.
The partners began production early using the Fresnillo plant in order to generate cash flow to offset some of the initial capital costs, as well as increase certainty around the geological block model, and allow a quicker ramp-up of the plant.
The JV processed 42,476 tonnes of development material in the third quarter, and produced and sold 394,000 oz. silver, 610 oz. gold, 138 tonnes lead, and 174 tonnes zinc.
“We are very pleased with the progress at Juanicipio,” said Mag president and chief executive George Paspalas, in a statement. “The metallurgical response of the mineralization is correlating well with our expectations. We will start optimizing flotation parameters over the next two quarters, which will significantly de-risk the Juanicipio plant start-up.”
The company reported that construction at the plant continues to advance, with the plant foundations completed and curing, and the prefabricated steel elements now ready for installation.
Underground development at Juanicipio has reached 32 km of workings, with access to the upper portion of the resource achieved. Initial development indicates that the grade and width of the vein are in line with previous drilling-derived estimates, and preparation of the first production stope was concluded in the third quarter.
With spending of US$197.4 million to the end of September, the JV expects to spend another US$242.6 million in initial capital costs at Juanicipio, a high-grade silver-gold-lead-zinc epithermal vein deposit.
A 2017 resource estimate pegs indicated resources at Juanicipio at 12.8 million tonnes grading 427 grams silver per tonne, 2.1 grams gold per tonne, 2.11% lead, 3.68% zinc and 0.13% copper for contained metal of 176 million oz. silver, 867,000 oz. gold, 598 million lb. lead, 1 billion lb. zinc and 38 million lb. copper. Inferred resources added 12.1 million tonnes grading 232 grams silver, 1.44 grams gold, 2.46% lead, 4.68% zinc and 0.27% copper.