Exploration: projects and prospects
Extend the growth pipeline
We believe that consistent investment in exploration is essential in maintaining a healthy project pipeline; therefore core to our growth strategy and a key element in extending mine life. We routinely apply advanced geospatial, geochemical and geophysical technologies such as tomographic imaging, high resolution satellite imagery, airborne and core hyperspectral technologies, and hand-held and down-hole instruments as an aid to improving the geologic interpretations that guide exploratory drilling leading to ore discovery. We maintain the largest land area of concessions for precious metals exploration and mining in Mexico. We do this through continuous investment in exploration irrespective of price cycles, and ongoing acquisition of mining concessions and surface land.
|» Las Casas-Rosario & Cebollitas Cluster|
|» Centauro Deep|
Key growth driver
We focus on the discovery and potential acquisition of large, low cost silver and gold ore bodies in Latin America, in regions with the greatest geological potential and mining tradition such as Mexico and Peru. Prospects must have a minimum potential of 100 million ounces of silver or 2 million ounces of gold equivalent, and meet strict criteria on ore grades, metallurgical recoveries, extraction costs and environmental impact, in order to proceed.
The Group has four Exploration Offices in Mexico – Zacatecas, Toluca, Chihuahua and Hermosillo and one in each of Peru and Chile. Each has an HSECR programme focused on health, safety, environmental management systems and community engagement initiatives that allow us to build positive relationships from the earliest interactions. We have built an experienced exploration team of 80 geologists and 74 technicians and administrative staff, and employ 300 local community members at our project sites.
Our geologists have significant technical expertise and a proven track record of new discoveries. We also look for opportunities to acquire early-stage projects with strong growth potential or to partner with other groups through agreements that allow us to share the inherent benefits and risks of prospect exploration. This comprehensive approach results in a pipeline of projects that extend across the multiple stages of exploration (detection, discovery and definition) and ensure long-term organic growth.
Our long-term objective is to discover and develop economically viable silver-gold deposits and to advance new and early stage prospects into the drilling and advanced exploration phases.
Investment at current mines helps replenish reserves and explore areas of influence; at development projects we convert resources into reserves and expand the total resource base; prospecting and drilling at early stage prospects and projects feeds our growth pipeline.
The development of underground mines takes time, with results from surface drilling requiring confirmation by underground exploration and the metallurgical testing of bulk samples. We conduct initial underground exploration and development in the pre-feasibility phase in a manner that will optimise the investment and shorten future mine development schedules.
Exploration Highlights (FY16)
- Exploration results positive, with an 8.2% and 10.2% increase in total gold and silver resources
- Exploration expenses decreased by 13.6% to US$121.2 million
- Additional US$16.7 million was capitalised in association with mining works at Juanicipio and minor equipment acquired at the Centauro Deep, Orisyvo and Guanajuato projects
- Total investment in exploration totalled US$137.9 million, a decrease of 8.9% over 2015, mainly focused on areas of influence at current operating mines and key exploration sites
- Continue to evaluate a major expansion of Herradura based on most recent exploration results below open pit
- Juanicipio, our joint venture with Mag Silver, will be presented to the Board for approval in 2017
- Total invested in exploration for 2017 is expected to be approximately US$160 million, of which US$8 million is estimated to be capitalised