One of the largest companies in the mining sector in Mexico, Fresnillo plc reported that it expects the construction of the Juanicipo beneficiation plant, Zacatecas, in mid-2021, and that capital spending on that project increased from 395 million to 440 millions of dollars.

However, development material and initial production rebates will be processed at the Fresnillo beneficiation plant beginning in June 2020.

For the second semester of 2020, Fresnillo plc, together with MAG Silver, plan to start operations at its Juancipio project, which will produce 30,000 tons of gold and 10 million ounces of silver.

Resultados trimestrales de Fresnillo plc

The feasibility study was completed in 2018. Exploration and development work continues as planned.

2019 was the first year that Fresnillo plc has recognized reserves at Juanicipo, confirming their belief that “this will be an exceptionally high grade mine,” with the potential to be the foundation of growth in future years.

The construction of the Juanicipo mine already exceeds 25 km of underground works, and the company expects that the first production stretch will be fully prepared by the third quarter of 2020.

Mining and challenges

Over the past year, the company experienced unexpectedly low production levels and ore grades, delays in infrastructure projects, deficits in contractor performance, higher costs, and ineffective maintenance, among other problems.

In the face of these challenges, the company’s response has been to increase the pace and scale of investments in a series of projects and take corrective measures to return production to acceptable levels in the short term and achieve constant growth in the coming years. .

These projects include: the appointment of new teams in Fresnillo and Saucito; a significant investment in development work in Fresnillo, specifically one of the first tunnel boring machines of this type in the world, as well as new equipment and technologies; the deepening of the elevation axes in Fresnillo and Saucito to access deeper reserves; the expansion of the Fresnillo flotation plant to treat higher grades of lead and zinc, and the pyrite flotation/tailings treatment plant in Fresnillo.

Taxes

Mining in Mexico faces two new challenges in 2020, the impact of COVID-19 and delays in VAT refunds, said Fernando Alanís, president of the Mexican Mining Chamber (Camimex).

Mining is a highly exporting sector, so it always gets balances in favor of VAT.

“In the last year, the authority has begun to delay the refund despite the fact that several of the unionized companies have the Highly Exporting Company Certification, which gives the right to receive the VAT refund within 30 calendar days of its presentation, which is no longer happening, ”said Alanís in a letter sent to Concamin in March.

“We estimate that in our sector, close to the 1,000 million dollars of VAT have been accumulated that the authority has not returned, which has put at risk the flow of several of them, which adds to the financial problems that the coronavirus pandemic, ”he said.

In Mexico, the federal government has declared a national health emergency due to the COVID-19 pandemic and has decreed various prevention measures, including the suspension of non-essential activities, among which it classified mining.

Mining in Mexico

In Mexico there are 1,158 mines in operation, some of them with world-class mineral resources (long-term reserves) and still with large areas of the country unexplored.

Around 25% of the Mexican territory has been explored in detail, so there is a great opportunity for the development of new projects. Year after year, Mexico places 12 to 19 minerals in the top 10 places of production globally.

Mining development risk is concentrated in the exploration stages and decreases as the operation stage progresses.