Exploration: projects and prospects
Extend the growth pipeline
Exploration focus and criteria
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 tomograhic imagining, high resolution satellite imagery, airborne and core hyperspectral technologies, and hand-held and down-hole instruments as an aid to improving 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.
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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 - 1Q18
111,258m of drilling was completed at our operating mines with the aim of converting resources into reserves. Ore shoots were extended near the Fresnillo mine and east of the Ciénega mine. At exploration projects, 79,626m of drilling was carried out across 15 projects with interesting results at San Julián South, Guazapares, San Juan and Guanajuato.
Through mapping and sampling, we have located new areas in the Fresnillo, San Julián and Guanajuato districts that merit drill testing. Exploration teams working out of the Hermosillo, Chihuahua, Zacatecas, Toluca, Lima-Peru and Santiago de Chile offices have identified several new areas with gold and silver potential that are now under evaluation. Additional staff have been hired to help with the permitting processes in addition to supporting the Company’s community relations activities.
Exploration Highlights (FY17)
- Construction of US$155m Pyrites Plant remains on track; commissioning of the leaching plant expected 2Q18.
- Construction of US$110m 2nd line of Dynamic Leaching Plant (Herradura) on track to be commissioned in 2Q18.
- Progress at the Juanicipio project on track; expect to conclude updated feasibility study in 1H18.
- Gold and silver resources up 22.7% and 6.9% respectively. Gold reserves remained stable; silver reserves showed a decrease of 5.4%, with an increase at Saucito offset by falls at Fresnillo and Ciénega.
- 2018 exploration budget of approximately US$200 million (including capitalised exploration expenses).