Mexico Mining Review 2021 by Mexico Business Publishing

2021

2020/21

Introduction 2020 will go down in history as the year of the COVID-19 pandemic, but also as the year that pushed humanity to take a definitive technological leap. Two decades ago, the world wondered what role new technologies would play in a hypothetical technological future. With the crisis caused by COVID-19, that future arrived and is here to stay in all sectors of everyday life. Mining is no exception. During the dual economic-health crisis, with demand from the world’s leading economies at rock bottom and with half the planet sheltering its capital and assets in the safety of gold, the mining sector advanced thanks to years of preparation, becoming more efficient, more sustainable and cleaner. In an industry that is looking toward the future as never before, the focus suddenly shifted to the implementation of new and disruptive technologies, greater awareness of the environment, the industry’s social impact on communities and energy efficiency in a period of global transition. The following pages provide in-depth analyses, interviews, reflections and insights on the main challenges facing the sector not only in Mexico, but also in Latin America and the rest of the world. Continuous technological training of the country’s workforce, improving the relationship between the public and private sectors, the creation of a beneficial regulatory framework for both the public sector and the attraction of FDI, investment in exploration of new fields and legal security are among the great challenges for the industry in the short and medium term. Mexico will soon join the green revolution that is leading the world to seek new and clean energy sources, as well. In this context, the country must play a leading role as one of the most relevant jurisdictions in mining, an industry that represents 8.2 percent of its industrial GDP. This figure could even rise in the short term if Mexico is able to deliver on one of its great hopes: lithium. The future is now. Is Mexico ready?

Table of Contents

Introduction

State of the Industry

Exploration & Development

Operation

Technology & Innovation

State of the Industry Mining is integral to the growth and economic reactivation of the country. According to data from CAMIMEX, the country is among the world’s Top 10 producers of 17 minerals. The sector contributes significantly to GDP and helps boost economic and social development, especially in the areas where the projects are located. However, the sector faces several challenges. In addition to the consequences of the pandemic, widespread uncertainty derived from the political landscape has tarnished the country’s attractiveness as an investment destination for mining. The tax burden that increases operating costs, the government’s position on concessions, insecurity and new policies such as the electricity bill initiative continue to be great tests for the industry. Efforts have been initiated between stakeholders and even countries to ensure Mexico continues to be a strong mining country. However, greater public-private dialogue is needed to develop a legal framework that provides certainty and better support to jointly address the main problems of the sector. The Mexican mining sector is also embracing the incorporation of new technologies and ESG practices to promote sustainable development. In fact, the industry’s work to implement these practices has another potential benefit: changing the negative public perception of the industry by allowing miners to demonstrate and promote its value not only as an economic generator, but also as a generator of social welfare.

State of the Industry

Analysis Retaining Strategic Influence

View From the Top Tatiana Clouthier | Minister of Economy

Conference Highlights 2020: A Year of Challenges

Conference Highlights Mining: Key Pillar for Mexico’s Economic Reactivation

Conference Highlights Miners Rank Mexico’s Mining Industry

Analysis Lack of Exploration, Continuity of Operation

View From the Top Dean McPherson | Head of Business Development at TMX Group

Roundtable How Are ESG Practices Shaping the Mining Sector and How Will They Impact Mexico?

Expert Contributor Jesús Enrique Pablo Dorantes | Chairman of the Advisory Board of the Mexican Academy of Environmental Impact (AMIA), A.C.

Spotlight Digital Transformation to Optimize All Mining Processes

Content Links

State of the Industry | 7

Retaining Strategic Influence In 2020, the Mexican mining sector demonstrated its strength and resilience. In a year characterized by a shortage of demand, rising mineral prices and a sharp drop in others, Mexico’s mining industry moved forward despite unforeseen difficulties. According to Mexico Mining Chamber (CAMIMEX) projections for 2020, the country’s mining industry was forecast to attract approximately US$4.5 billion in total investments for the year. But this figure fell by half, according to CAMIMEX. “There is no need to be overly concerned,” says Fernando Alanís, President of CAMIMEX. “We work in an industry that has always worked for the long term.” Today, mining, as Minister of Economy Tathiana Clouthier highlighted at Mexico Mining Forum 2021 (MMF21), is among the most strategic industries in the country. According to Mexico´s Ministry of Economy, mining production in Mexico represents 2.4 percent of the country´s GDP and 8.2 of its industrial GDP. Despite these optimistic views, there are some in the private sector who view the public sector’s predictions and analysis with caution. According to Grupo México, investment in the sector fell by 36 percent between 2018 and 2019, while investment in exploration dropped 68 percent since 2012. “There is no adequate design for public policies that promote investment development and correct the lack of legal security and certainty,” says Xavier Garcia de Quevedo, Vice President of Grupo México. The mining industry, which generated 379,000 jobs in 2019, will face in 2021 some of the most important challenges in its modern history, including the digitalization of operations, the safety of workers and communities, health issues as a consequence of COVID-19, the sustainability of the industry and the discovery and exploitation of new minerals, with lithium considered a new but contested player. Major Goals Sustainability, inclusion of women, digitalization and the implementation of new technologies are major goals the Mexican mining sector wants to achieve. During the two months of closure due to the strict protocols the government enforced as a result of the pandemic, the industry decided to update itself in regard to technology and processes. Nevertheless, it is still far from the levels of technification of Canada or the US. USMCA does not incorporate mining as a subject but rather as an object, since it is considered an essential industry for the development of others that are strategic in the agreement. “It is of utmost importance to highlight the true nature of the modern and professional mining industry that operates in Mexico. Mining is a responsible activity and demonstrates much respect for the environment. It is committed to the economic development of communities, regions and states where it operates. Mining develops supply chains and provides jobs, access to education, health and basic services,” says Alanís. Doris Vega, Vice President of Women in Mining (WIM), considers that inclusion Read the complete article More about this topic

of women will also be an important topic of discussion in 2021. “Mining offers many opportunities for women that must be seized,” she says.

VIEW TOP State of the Industry | 8

from the

Q: What benefits does mining generate in Mexico? A: In 2019, the Mexican mining industry generated 379,000 direct jobs, benefiting miners and contributing to their family’s earnings. The number of employees when including indirect jobs created by the industry is around 2 million. However, due to several crises, including COVID-19, the industry is bound to face challenging times. Q: How is the government promoting sustainability practices in the reactivation of the sector? A: To boost ESG practices, collaboration between society, government and the mining industry is necessary. The Ministry of Economy has invited small, medium and large companies, as well as corresponding associations, to find common solutions within a legal framework to reactivate initiatives that will benefit Mexico’s economic development. Q: What are you doing to boost mining activities and increase certainty in the sector, especially after the various disputes between the government and Canadian mining companies? A: Mining has been labeled an essential industry by this administration. Thus, our approach toward mining conflicts has been one of balancing private investor interests with those

Tatiana Clouthier

of the local communities and corresponding labor rights. For instance, in April this year, we reached an agreement between a union and the owners of the La Negra mine in the state of Queretaro. The workers had maintained a strike for several

Minister of Economy

months. Mexico’s government established negotiations to address their demands. As Minister of the Economy for Mexico, I acknowledge the importance of the industry. Mexico is among the Top 10

Balance Between Private and Public Interests Needed

producers of 17 essential minerals. We are the leading silver producer worldwide and we are No. 2 in fluorite extraction and No. 8 in copper exploitation. Our plan is to expand Mexico’s mining industry to include minerals that are useful for new technologies. Specifically, we regard lithium and its importance in battery production as an attractive segment. Q: Despite the challenges, where have you identified the biggest opportunities in the mining sector? A: With the advent of Al, robotics, the circular economy and the massive use of electricity in several sectors of the economy, the biggest opportunities for the mining sector reside in providing the raw minerals and metals that will be required for use in solar panels, robots — in combination with engineering plastics — windmills and all those products we use on a daily basis, like cellphones. These are all dependent on the mining sector. Q: What developments would you like to see in the Mexican mining sector and how do you plan to achieve them?

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A: First of all, on the governmental side, we are working to provide a modern regulatory system that will reduce substantially the so-called bureaucracy. We also need a better relationship with the private mining sector, where both sides trust each other.

Conference

State of the Industry | 9

Highlights

2020: A Year of Challenges Esther Arzate Coordinator of México Minero

Armando Alatorre President CIMMGM (College of Mining Engineers, Metallurgists and Geologists of Mexico).

Armando Ortega President of the Mining Task Force at CANCHAM

Doris Vega Vice President of Women in Mining Mexico (WIM)

Fernando Alanís President of CAMIMEX

Paola Cazares Health, Safety and Environment (HSE) Manager Mexico of Agnico Eagle,

he two-month suspension of activities that affected the sector and the communities that depend on it resulted in CAMIMEX elaborating a protocol along with the government, which forced the sector to reinvent itself and adapt. “Today, we have seen that

these protocols have been effective. Moreover, our priority during the COVID-19 pandemic has been the health of our workers and retaining our employees,” says Fernando Alanís, President of CAMIMEX. Miners are also keeping an eye on labor issues and the resolution mechanisms in the newly implemented USMCA deal. Armando Ortega, President of the Mining Task Force at CANCHAM, says that danger lurks in the rapid mechanisms regarding labor conflict resolution that Mexico committed to during the treaty negotiations. “If companies breach any labor rights, this will have an impact on trade. The affected country will be entitled to impose custom sanctions.” Ortega recommends focusing on what companies and the sector can control, which is to maintain impeccable control over labor rights, as well as having open and clear communication with labor unions. Ortega explained that even if mining is not expressly included in the agreement, the industry is at the base of the economy and anything that promotes regional trade will result in a boost for mining. Government action was at the heart of another key development for the industry, which was the Senate’s initiative to nationalize lithium, which Armando Alatorre, President of Colegio de Ingenieros de Minas, Metalurgistas y Geólogos de México (CIMMGM), says is based on misconceptions about the metal and its benefits for the country. But the year belonged to COVID-19 and the reality that a new way of doing things is necessary. Paola Cazares, Health, Safety and Environment (HSE) Manager Mexico of Agnico Eagle, says her company has focused on the implementation and development of safety protocols to help employees feel safe at work. The company has provided food, and health and safety supplies in communities nearby. “The company’s sustainability operations have continued and Agnico Eagle believes the implementation of ESG practices will be fundamental in the recovery of the sector,” she said. “Adapting to a new reality in 2020 was a major

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challenge,” adds Doris Vega, Vice President of Women in Mining Mexico (WIM), who pointed out that having women in mining has contributed to changing the image of the sector.

Conference

Highlights State of the Industry | 10

ith the vaccine campaign well under way to control the COVID-19 pandemic, attention has turned to reinvigorating the everyday economy. Mining, says Fernando Alanís, President of CAMIMEX, will be an

integral element in the recovery. “Mexico is a mining country; 70 percent of the nation’s territory has mining potential and currently only 30 percent has been explored. Mining has historically been concentrated in the center and north of the country. However, this activity can benefit more states,” says Alanís. Mexico ranks among the Top 10 world producers of 17 minerals. According to Mexico´s Ministry of Economy, mining production in Mexico represents 2.4 percent of the country´s GDP and 8.2 of its industrial GDP. The sector is present in 668 communities in 212 municipalities and 24 states and generates 379,000 direct jobs and 2.2 million indirect jobs. Alanís says that during the COVID-19 pandemic, CAMIMEX subsidiaries, which represent 90 percent of total mining value in Mexico, committed to supporting mining employees. That pledge is an example of the sector’s social and environmental

Mining: Key Pillar for Mexico’s Economic Reactivation Fernando Alanís President of CAMIMEX

commitment to communities, Alanís says. Mining companies often build and develop roads, provide electrification, water and waste management systems in nearby communities and, most importantly, they provide health and education services. “Mining happens in remote places in need of development opportunities, not only in infrastructure but also in education, entrepreneurship and health services to improve quality of life.” In its 2020 Sustainability Report, the chamber highlighted the importance of mining in generating wealth, which is not only distributed among companies but also communities. The report emphasizes that mining contributes to local, regional and national economic growth, social development and protection, care and restoration of ecosystems and the environment. “It is impossible to think about cultural development and social welfare without mining,” says Alanís. Alanís says that in addition to promoting regional development, the industry also supports the development of other economic activities, such as construction, transportation and trade. “Mining sector imports and exports represent 474,000 tons of materials per year. If the mining sector is promoted, other sectors will also grow,” he says. In terms of direct monetary contributions, Alanís highlighted the role of mining operations. “It is unfortunate to hear that mining does not pay taxes. In the last four years, mining has paid MX$131.016 billion (US$6.572 billion).” Alanís adds that the elimination of the deductibility of preoperative and exploration expenses after the 2014 tax reform led to a 40 percent decline in investment for exploration. “We hope that the government will begin to encourage mining activities, as all mining countries do. This alliance is necessary for the sector to develop,” he says, adding that Mexico needs certainty and long-term public policies that

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promote fiscal competitiveness, regulatory competitiveness, social certainty and understanding of the mining sector. “Initiatives can be achieved through a mining committee that allows good coordination between the legislative and executive powers.”

Conference

State of the Industry | 11

Highlights

Miners Rank Mexico’s Mining Industry Matthew Gordon Founder of CRUX Investor

Kenneth Macleod President and CEO at Sonoro Gold

John-Mark Staude CEO of Riverside Resources

Jorge Ramiro Monroy CEO of Reyna Silver

Alberto Orozco CEO of Capitan Mining

Robert Macdonald Vice President of Exploration at Southern Silver Exploration

Douglas Cavey Vice President of Corporate Development at Defiance Silver

David McKinlay Jones President and Founder of Minera Zalamera

ll global mining jurisdictions have both positives and negatives related to their investment environment. In Mexico, most observers agree on the country’s substantial untapped potential, but it falls somewhere in the middle

as a favorable investment destination thanks mainly to security concerns and uncertainty stemming from political developments. “My experience in the past 10 years in Mexico has allowed me to recognize the country’s potential, which is phenomenal. The main problems in the Mexican mining sector are the lack of security and political uncertainty,” said Jorge Ramiro Monroy, CEO of Reyna Silver. On a scale of 1 to 5, with 5 being the best score, he ranks the investment climate a 3.8, noting that the country’s geological potential is boosted by new exploration technologies, such as satellite imaging. Monroy’s ranking found support among other miners who mainly score the country between 3 and 5. The fact that Mexico is far from a mature industry underpins the positives for Mexico. The country has enormous geological potential “as it is still in the early stages of its exploration maturity,” said Alberto Orozco, CEO of Capitan Mining. Orozco rates the country 3.5. While some of his counterparts have been more critical of the ongoing regulatory issues in Mexico, Orozco believes that all things considered, Mexico’s mining industry has “a legal framework that works.” Others are not so certain when it comes to the country’s regulatory environment, including the legal framework, which requires clarity and transparency, particularly in regard to ejido landowners. Douglas Cavey, Vice President of Corporate Development at Defiance Silver, who ranks the country a relatively high 4, notes that Mexico’s legal framework needed to provide clarity of title ownership while addressing various components of title and land access. Robert Macdonald, Vice President of Exploration at Southern Silver Exploration, agrees. He adds that ever since AMLO entered office, Southern Silver Exploration has been able to have some conversations with agencies like SEMARNAT but has otherwise struggled to receive feedback from federal authorities. Macdonald gave the country a rating of 3.5. “A good relationship between ejidos and mining companies starts with communication. It must be a very organic and interactive process so both parties are aware of each other.”

While Orozco maintains a softer view of the regulatory environment, he does make it clear that the industry is facing issues in the management of its general administrative procedures, which need to be addressed to “get the industry going.” “We need to digitize and expedite all administrative procedures so we can do business much more efficiently. Our system is still based on what was built during the 1970s and it remains too paper-based,” he said. Perhaps the strongest area of concern is security. This is not a new issue; in fact, it has hindered miners for years, and it is the reason David McKinlay Jones, President and Founder of Minera Zalamera, divides his score into categories. He believes the country is definitely a 5 regarding its potential resources, but he rates it a 2 in terms of security issues. “I used to work in Guerrero and we have all heard about Guerrero,” he says. Jones also rates the country 1.5 when it comes to regulatory procedures, flatly stating that they were currently “very problematic, if not impossible.” John-Mark Staude, CEO of Riverside Resources, gives the country a rating of 3 but admits that he used to rate it a 5 and is eager to get the country “back on track toward a 4.” There are reasons to believe that is a possibility sooner rather than later. Part of that could depend on successful ESG management, particularly as it relates to community engagement. “Communities decide if we stay. Therefore, we must be able to communicate effectively with them and answer their questions. We are partners; this has to be a win-win relationship,” says Jones. Orozco adds that smaller exploration companies need to be aware that, “ESG implementation means that the people need to be as important as the minerals.” However, he also acknowledged that smaller companies will have an easier time managing ESG issues, since operators need to be mindful of how difficult it can be to scale up ESG. “It is more complicated for larger companies to make radical changes,” he said. Good ESG management can also have a global impact, notes Staude. “Investment from New York, Toronto and Europe comes from sources that are looking at proper ESG engagement. The expectation is that the capital they provide will be put into that as well. In general, communities do welcome the project while external NGOs and political forces question the ESG due diligence. Either way, investors must be on top of things. If news comes out regarding outstanding ESG issues, capital is being deployed to address them.”

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b a d e o Irl

State of the Industry | 13

Lack of Exploration, Continuity of Operation Last year, as a consequence of the COVID-19 pandemic and its impact on the global economy, the mining sector in Mexico attracted only US$2.5 billion in investment, considered the lowest level in 13 years. The future, however, looks brighter. Six multimillion-dollar projects are expected to start this year. These exploration projects are located in the states of Chihuahua, Durango, Guerrero, Zacatecas and Sonora and will concentrate on producing gold, copper, silver, zinc and lithium. The companies heading these projects are Torex Gold, Chesapeake Gold, Southern Copper, Bacanora and Fresnillo. Exploration has seen a major decline caused not only by the pandemic, but also by the new policies introduced by the federal government. “Mexico has lost attractiveness as a mining investment destination; that is a fact. We have seen a very important reduction in more than 150 exploration companies that are no longer in Mexico and that is worrying,” says Fernando Alanís, President of CAMIMEX. “This lack of investment is a future mortgage for the country,” adds Alanís, who has been asking the government for legal and regulatory certainty since the beginning of the COVID-19 crisis. On the other side of the spectrum, four of the largest companies operating in the country announced at the beginning of 2021 that they would inject capital for their operations in Mexico after the downturn experienced by the sector the previous year. Southern Copper will increase its CAPEX by US$1.4 billion in 2021 to US$2.9 billion in 2024; Fresnillo will increase its CAPEX by US$565 million, Newmont will inject US$155 million into its Peñasquito mine and Alamos Gold will invest US$135 million in Mulatos. While exploration projects were at their lowest investment levels in the country’s history, in addition to a world economic recession that put factories in China and Southeast Asia on standby waiting for demand to recover, the Mexican mining industry took advantage of the worst months of the pandemic to revamp its operating processes. As a consequence, operational continuity has become one of the major concerns of the industry in recent months, as it seeks to maximize operations while meeting client demands. Remote operation centers have become indispensable during the pandemic, as they have enabled many companies to meet their delivery contracts. These centers directly impact one of the trends that was discussed at Mexico Mining Forum 2021: security, which has gone from being just another topic on many agendas to being a priority and concern for many operators. The challenges of safety through remote operations require, of course, significant investment not only in the installation and adaptation of the latest technologies and communications, but also in the training, education and space for workers. Investment in Mexican mining, therefore, will need to deal with internal factors that are related to a mine’s jurisdiction. The Read the complete article More about this topic

world economy lost strength after the 2008 financial crisis, which directly affected metal prices, reaching their highest level in 2011. Since then, prices have trended downward.

VIEW TOP State of the Industry | 14

from the

Q: How is the evolution of Mining 2.0 helping companies access capital? A: A large part of the current confidence in the sector is related to its consolidation around Environmental, Social, and Corporate Governance (ESG) issues, as well as improvements in operational efficiencies, through innovation for example. We have noticed in this cycle the return of generalist investors. In April, we saw perhaps the world’s most famous value investor, Warren Buffett, take a positive interest in gold. It made headlines, showcasing that the sector may have entered a new phase. Mining companies are operating more responsibly and communicating better. However, there is still work to be done particularly in communicating ESG efforts. TSXV recently launched an ESG 101 hub to help investors gain insight around the standards and provide mentorship and information for our junior issuers. An important indicator is our flagship TSX30 program, the annual ranking showcases the 30 top-performing companies across all sectors on the TSX based on dividend adjusted share price appreciation for the past three years. In 2020, 14 out of the 30 were mining companies, which shows the strength of the market and the renewed effort to do better, as well as the strength of our two-tiered system. The key bottom line is generalist investors are taking notice and are more willing to invest in mining.

Dean McPherson

Q: Why should ESG be top of mind for mining companies in search of investments? A: Mining companies should be aggressive when it comes to

Head of Business Development at TMX Group

increasing their level of ESG disclosure and communication with investors. They should not only share operating results but also show how they are raising stakeholder value. There is a new set of investors that focuses on the added value and the way the environment and people are treated. Investors are

Mining 2.0 Consolidation Key to Access Capital

now more likely to invest in companies that are trying to meet ESG standards. Q: What is the investor perception of Mexico as a mining jurisdiction? A: Mexico is considered an important jurisdiction. Outside of Canada, Mexico has perhaps the largest number of issuers and the highest number of properties represented in our exchanges. Mexico is a relatively safe jurisdiction. Despite it facing some security challenges at times, miners have learned how to deal with them and operate safely in the country. The challenge for the government is to create stability through consistency and transparency. Q: How will mining perform in 2021? A: When the global pandemic subsides, an economic rebuilding process will be paramount. The expectation is that mining will play a huge role in this. Governments will respond to the crisis through spending and infrastructure developments and as a result, the mining industry will be

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very active. China is getting out of the pandemic and we have already seen iron ore prices increase significantly due to the country’s demand for infrastructure commodities. I expect the same to happen on this side of the world, with a rise in commodity prices, including base metals.

State of the Industry | 15

How Are ESG Practices Shaping the Mining Sector and How Will They Impact Mexico?

Mining companies have come to recognize the important role they play in caring for the environment and communities. The sector has sought to change its impact and perception through the implementation of ESG practices. Today, an increasing number of stakeholders have realized the importance and the benefits that responsible mining could bring to society. As a result, there has been an increased demand for their implementation. Mexico Mining Review asked mining experts how ESG practices are shaping the sector and what their impact on the country may be.

There are many frameworks of what constitutes responsible mining as there is a growing demand for ESG practices. To mine gold, we established Responsible Gold Mining Principles, which define all material issues associated with gold and are based on best practices. Mining has the potential to positively impact the fight against climate change. However, results will depend on ESG practices. I believe regulation is one of the drivers for ESG; it is helpful but needs to be mindfully constructed. Likewise, investors have an important role. At the beginning of the pandemic, there were concerns

Terry Heymann CFO of the World Gold Council

regarding the importance of ESG practices, which fortunately has only increased. ESG and gold will be the important issues in 2020 and Mexico will play an important role in both.

The US political environment will affect the world, especially as the country has an unpayable debt. Our company is focusing on metals in a low-interest-rate and low-growth-rate environment, which is positive for mining investments. For us, the most important thing regarding investments is transparency and the implementation of ESG practices. Nowadays, investments in mining depend 50 percent on the country’s jurisdiction and 50 percent on the company’s management regarding ESG practices. Mexico has great potential, since it is one of the most important jurisdictions in

Javier Reyes

the world, and we are excited to continue working in Mexico and with miners that want to improve their ESG practices.

Chairman and CEO of Accendo Banco

ESG and environmental concerns have been more important than ever for major mining companies. Visiting mining sites can give you an entirely different view on these issues. Proximity with communities is needed to change companies’ mindsets on the importance of implementing ESG practices. In addition, having a good relationship with communities makes permits and projects easier to obtain. It is necessary for companies to embrace ESG practices, including programs to decrease carbon dioxide emissions and tailings disposals. Mining has a role in the green revolution.

Matt Geiger Managing Partner of MJC Capital Fund

Citing the World Bank study “Minerals for Climate Change,” copper, lithium and nickel will have a clear advantage over other metals because of their green edge in the next years.

State of the Industry | 16

SI is highly engaged with ESG issues, especially because silver will have a vital role in the decarbonization of societies. Silver is truly a green metal and it is playing a vital role in EVs and photovoltaic development. In addition, silver can also be used for water purification and is expected to become the solution to many countries where there are water shortages. We are committed to ensuring that silver mining is done responsibly as we believe mining can improve people’s lives. Mexico is the largest silver producer and, therefore, the country will

Michael DiRienzo

play a fundamental role in the decarbonization of the industry.

Executive Director of The Silver Institute (SI)

Investors have a great responsibility in ensuring the implementation of ESG practices. As investors, we are the architects of these companies. However, most of us do not realize our role in pushing companies down the right path. Investors must demand detailed information regarding ESG practices and in case the company has not implemented them, investors need to make sure companies look out for communities, the environment and employees, holding the board accountable if they have not made the right choices. Mexico is a great mining jurisdiction and the government is creating a stable environment for mining, increasing

James Rasteh Partner at Coast Capital Management

its investment attractiveness. The country can be a leading example of responsible mining through the adoption of new clean technologies, which could lead others to adopt ESG practices.

n Jan. 13, the Second Chamber of the Supreme Court of Justice of the Nation resolved the amparo under review 928/2019, promoted by representatives of the Maseual, or Nahua indigenous people, who live in the northern

highlands of the state of Puebla, against the Legislative and Executive branches of the Mexican nation. In the court’s decision, it was ratified that, in accordance with the Political Constitution of the United Mexican States and Convention 169 on Indigenous and Tribal Peoples in Independent Countries of the International Labor Organization, all Mexican authorities, within the scope of their respective competence, are obliged to consult indigenous peoples and communities before adopting any action or measure likely to affect their rights and interests. It also resolved that the Mining Law is not unconstitutional

State of the Industry | 17

because it does not provide for said consultation, since the

Why Is Resolution 928/2019 Relevant? Jesús Enrique Pablo Dorantes Chairman of the Advisory Board of the Mexican Academy of Environmental Impact (AMIA), A.C.

obligation to do so is provided for in the Constitution and through an international agreement and, therefore, it applies to all matters, including, without a doubt, mining. Without it being necessary that each law has to provide or regulate it, subjecting the mandatory nature of the consultation to its recognition in a secondary law would be to reduce it to a normative text of a lower hierarchy. It is important to note that previously, when resolving other matters, the Second Chamber had already decided that the Congress of the Union has the obligation to issue a law that regulates the right to indigenous consultation. The aim is to grant legal security to all the governed and, above all, to indigenous groups and communities in terms of the stages, characteristics and other general aspects that must be satisfied when carrying out said procedures, regardless of the subject matter of the consultation, whether it relates to mining, ecological issues, health or other matters. The resolution highlights that, considering the jurisdiction of the Second Chamber, only the arguments presented against the challenged norms were examined, without at some point being analyzed. Nor was there a pronouncement on the legality of the mining concession titles that were also challenged, whose legality will be analyzed and resolved, in due course, by the collegiate circuit court in Puebla. Unfortunately, this does not resolve the main issue, relative to the lack of an Indigenous Consultation Law or some administrative laws that would provide certainty to investment in the mining sector. In this sense, it is indisputable that prior consultation is required, but when should it be executed? One requirement is that such consultation be prior and informed, among other requirements. Thus, how can one speak of the possible effects on the resident indigenous population if, in the exploration stage, there is still no certainty that there is even an economically viable deposit?

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Furthermore, the quantity of the mineable deposit varies depending on the price at which the metal that can be extracted is traded and the probable grade, which also directly impacts economic feasibility.

Nor should we forget about the metallurgy or mineralogy of the deposit, since the profitability of the project also varies depending on the ease with which the benefit can be carried out and the activities that may be required in the presence of potentially significant acid drainage generation. Thus, there are several elements that need to be synchronized to enable the development of the project and that define the environmental and social impacts that must be identified, ranked, prevented, mitigated and compensated. Only in this way can the possible implications be explained to the indigenous communities that are within the environmental system in which the project is immersed. It is then necessary to reconsider the convenience of returning to the old regime of mining concessions, which were divided for exploration or production. Thus, only the concession for production would require consultation because exploration commonly does not generate significant impacts on the environment. An alternative route that is still disruptive in the Mexican experience is to rethink the negotiation process and make it possible for indigenous communities to have shares in the company that wants to develop the project. In this way, it is even easier to obtain a concession since the Mining Law gives preference to indigenous communities when granting concessions over the interests of any private company. Despite these considerations, on the second day after the Supreme Court’s decision was released, the Ministry of Environment and Natural Resources (SEMARNAT) issued its Press Release No. 07/21, in which it openly stated that it did not agree with the criteria expressed by the Judicial Branch of the Federation and insisted that the current concession system does not contemplate the duty to consult indigenous peoples when their rights may be affected. What is next, then? A SEMARNAT that speaks on issues that are not within its competence? A SEMARNAT that, when it does not deny environmental authorization, applies the condition that mining projects must ask the competent authority in the state in which it intends to develop the project, in coordination with the National Institute of Indigenous Peoples (INPI), to establish if there is an indigenous population and if it is necessary to carry out the Indigenous Consultation? Given this scenario, a more active and supportive participation of the mining sector is required, perhaps led by the Mexican Mining Chamber (CAMIMEX). This should be focused on explaining to SEMARNAT, in even more detail, the benefits of this activity and the technological advances that make it possible to prevent damage to the environment and the health of neighboring populations.

Mexico View

SPOTLIGHT

State of the Industry | 19

Digital Transformation to Optimize All Mining Processes Thermo Fisher Scientific sees itself as the best ally for a digital transformation, especially now, since the needs of the mining sector have spurred a greater interest in automation and data technologies. The company is helping clients to move toward digital transformation in three steps: the first is to connect everything that has value so that data is more available, the second is to provide an end-to-end workflow and the third is advanced analytics to make better decisions based on the data collected. There is a need in the mining industry to quickly analyze geochemical samples that will allow companies to successfully increase detection rates, identify drill points and make better on-site decisions. For this reason, the company offers the Thermo Scientific Niton X-ray, a fluorescence analyzer that provide fast-field qualitative analysis and lab-quality quantitative analysis, which increases productivity by eliminating the expensive and time-consuming process of sending samples to the laboratory. Ivan Sanhueza, PA Minerals Manager at Thermo Fisher Scientific, explained at Mexico Mining Forum 2021 that elemental analyzers provide real-time sampling and analysis to help mining companies address process variations and improve their operations. The company’s sampling and analysis systems can determine the elemental composition of all raw materials transported by the conveyor and eliminate numerous errors and costs. These samples also allow an efficient planning for exploration to know which minerals are in the area, their size and geological context.

Mining and AMLO’s Economic Policy Adrián Juárez Founder and Director of Consultoría y Tecnología Ambiental

Mining’s Strongest Allies Are Mexican Communities Adrián Juárez Founder and Director of Consultoría y Tecnología Ambiental (CTA)

Mexico Needs a Mexican Code for Resources, Reserves Armando Alatorre President of College of Mining Engineers, Metallurgists and Geologists of Mexico

Public Perception as a Driver of Change in the Industry Robert Schafer President of SME

Crisis in the Mining Industry Israel Méndez Becerra President of Association of Miners and Cooperative of Mexico (AMICOM)

Natural Protected Areas: Good Idea, Bad Strategy Rubén de J. Del Pozo Mendoza President of Association of Mining Engineers, Metallurgists and Geologists of Mexico, Zacatecas District (AIMMGM)

Five Challenges Mining Will Face in 2021 Rubén de J. Del Pozo Mendoza President of Association of Mining Engineers, Metallurgists and Geologists of Mexico, Zacatecas District (AIMMGM)

Are Mexican Mining Opportunities Over? Jesús Enrique Pablo-Dorantes Chairman of the Advisory Board of Mexican Academy of Environmental Impact

Gold: The Smart Choice for ESG-Savvy Investors Terry Heymann CFO of World Gold Council

The Silver Institute’s Interim Silver Market Review Is Out Mining Concessions the Path to Sector’s Recovery USMCA: An Opportunity for Mexico to Integrate Metals Value Chain Armando Ortega President of the Mining Task Force and USMCA

Exploration & Development Mexico is among the world’s most important exploration and development destinations for the mining industry. The country is rich in minerals and has a strong mining culture that contributes to profitability. New techniques and technologies are opening the door to improved and more precise exploration, and Mexican miners are eager to seize the emerging opportunities. In terms of new project development, mining companies continue to build new mines but at a slower pace as the optimization and expansion of existing assets are further analyzed. New trends to achieve responsible mining are being explored. By implementing ESG practices, mining companies become more efficient, socially responsible and sustainable, which is necessary to reduce risks and adapt to the new challenges of the industry. The Mexican mining sector is embracing these ESG trends as important projects get underway in 2021, many of which were delayed due to COVID-19. However, the pandemic has not been the only challenge for the industry. Exploration has slowed dramatically since the elimination of the deductibility of preoperational and exploration expenses with the 2014 reform, causing a 40 percent decrease in investment for exploration. Additionally, the negative view of the López Obrador administration toward new concessions has made it difficult to continue developing projects in the country.

Exploration & Development

Analysis No Exploration, No Industry

View From the Top Alberto Orozco | CEO of Capitan Mining

View From the Top Jorge Ramiro | CEO of Reyna Silver

View From the Top Arturo Bonillas | President and CEO of Magna Gold Corp

View From the Top Alan Pangbourne | CEO of Chesapeake Gold Corp.

View From the Top Douglas Covey | Vice President, Corporate Development of Defiance Silver

Analysis Government Misses the Point on Lithium

Conference Highlights Leadership in Mining and How It Breeds Success

View From the Top Sergio Sáenz | General Manager of Minera Camino Rojo

Roundtable How Is the Company Driving Mexican Assets and What Defines Your ESG Approach?

View From the Top Luis Felipe Medina | Director General of Agnico Eagle Mexico

View From the Top Naresh Singh | Country Manager of IMR

Spotlight Cerro Caliche a Potential Dynamo

Content Links

Exploration & Development | 24

No Exploration, No Industry President López Obrador has been adamant about not authorizing new mining concessions to private investors during his administration. While many analysts have interpreted the president’s decision as a bold and favorable move for the nation’s sovereignty, the cost could be higher than most predict. “We have not granted any mining concessions because it is not necessary,” said López Obrador in March, while addressing journalists gathered at his daily press conference. “Our territory has 200 million ha and 120 million ha were granted (for concessions) during the neoliberal mining exploitation period. When will we finish exploiting 120 million hectares?” The president’s address to journalists related to the conflict between companies like First Majestic Silver Corp and Americas Gold and Silver Corporation that have clashed with the government for various reasons. Among the most important has been the president’s claim that miners are “not paying taxes,” despite the sector’s significant contributions to the country’s industrial GDP. “The economic spillover from mining in Mexico is US$9.8 billion,” explains Fernando Alanís, President of CAMIMEX. “This sum includes taxes paid and the purchases that come from approximately 9,600 national suppliers. This is real money that boosts the economy,” said Alanís, who based his viewpoint on an independent audit by PwC. The report says that unlike other mining jurisdictions similar to Mexico, such as Chile or Peru, there will be a tax increase this year. According to Mexico’s Mining Law, concessions are granted for a term of 50 years, with extension options. It is important to consider the amendments to the Mining Law that worry many industry players, since they would allow the Mexican Geological Service to carry out social impact studies on concessions already granted, while the Ministry of Economy could declare exploration and exploitation zones null and void due to negative social impacts. “Although these consultations already exist in other countries, such as Peru, where they came into force in 2012, this measure implies a cost in time, which also increases uncertainty regarding the possible approval of the concession if a satisfactory agreement is not reached between mining companies and the communities,” reported Moody’s in January. In addition to a global economic recession that has affected world economies, the COVID-19 crisis brought an increase in the demand for minerals and metals in industries such as pharmaceuticals, which has turned its eyes to the world’s top mining countries, including Mexico, one of the world’s main producers of gold, silver and copper. During the López Obrador administration, no concessions have been granted. Important lithium reserves have also been discovered in the country and the government now wants to protect the metal. To shield these large deposits, the government intends to keep four concessions so the Mexican Geological Service can evaluate lithium exploration in three states: Puebla, Sonora and Jalisco. “We are evaluating the best options for the use of these mines. Everything will depend on the results of Read the complete article More about this topic

the exploration,” said Francisco Quiroga, former Deputy Minister of Mining in a press conference shortly before López Obrador reaffirmed his decision not to authorize any concessions.

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Q: What opportunities did you identify when launching Capitan Mining? A: It is a good moment to start a new company. The mining market had been depressed since 2013. It has been especially hard for exploration, resulting in a depletion of the project pipeline. However, we have now entered a bull market. Capital can be raised and many companies that are listed on the TSXV have chosen to invest it in Mexico. More companies would bring their resources if the country’s investment conditions improved. As a result of a thinning project pipeline, there is a need in Mexico for quality projects that have a certain degree of maturity and can be viably developed into a mine. The Peñoles project meets these conditions. Importantly, we have the right team for the job. We have been working on the project for 16 years with Riverside Resources. Capitan Mining is an exploration company. We will develop Peñoles until we have a PEA. That is the goal right now. Nonetheless, we have the capacity and experience to bring the project into production. Q: What is the history of Peñoles and what are its main characteristics?

Alberto Orozco

A: Riverside found Peñoles almost unexplored. It optioned the project to another company, Sierra Madre, in the 2010s. The company worked on defining a mineralization body but the

CEO of Capitan Mining

market was not interested. Sierra Madre passed the project on to Morro Bay Resources, which published the first resource estimate. But, again, the market was unenthusiastic and it returned to Riverside with 10,000m of drilling and an inferred resource of approximately 500,000 AuEq. The Peñoles

Capitan Mining: Recharging Mexico’s Au, Ag Pipeline

project reached a stage that was too advanced for what Riverside usually does, so we decided to spin off and form Capitan Mining. Peñoles has a strong exploration upside. It has 2,200ha of property with other targets that can add mineralized zones. As of now, the current inferred mineral resource has been estimated for an open-pit, heap-leach operation. We also have intercepted some high grades that show potential for an underground resource. Our goal is to expand the resource. Peñoles has the potential to significantly increase the resource in the short term. Moreover, Peñoles is located in a mining area and Durango is a mining-friendly jurisdiction. Q: What does financing look like for the Peñoles project and how will that impact its development? A: We have completed our inaugural financing. It is a private placement. We raised C$3.84 million at 20 cents per share. Capitan Mining now has 36.7 million shares, with 17.5 million

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of them owned by Riverside’s shareholders. We will be listing on the TSXV starting in September. We want to carry out a step out drilling program to define the mineral resource’s real size. We are confident that the resource will grow in the coming months.

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Q: What characteristics make Mexico an ideal place for mining exploration, especially in the state of Chihuahua? A: The geology of Mexico is exceptional because it hosts many mining districts, but Mexico itself is a truly exceptional mining jurisdiction. It is a great place to operate because it has a great deal of exploration potential. Another benefit is that for more than 400 years, the Spanish undertook very intense mining activities in Mexico. All that hard work left us with an excellent guide to continue with modern exploration activities. For the most part, Chihuahua is a dry state year-round, which is beneficial because it is very suitable for satellite imagery exploration and prospecting efforts. Q: What makes Reyna Silver’s Guigui a unique and flagship asset? A: Guigui is located at the heart of Mexico’s largest covenant replacement system. It has 500Moz of silver, where the average rate of silver is 310g/t with 15 percent lead-zinc combined with a very high tonnage. What is unique about the Carbonate Replacement Deposit (CDR) system is that only the top part has been found. The

Jorge Ramiro

skarn part of the system usually has the richest mineralization. Peter Megaw, our Chief Technical Adviser, believes that the heart of that skarn sits within our property. Typically, the upper part of these systems, which is a senatorial line in the

CEO of Reyna Silver

bloodstream, produces 500Moz of silver. Therefore, we think that this skarn has at least this amount. Q: What were the main opportunities that the company identified at Batopilas?

Finding Gold in High-Grade Silver Mining Districts

A: Batopilas is a fascinating project. It has about 350Moz of silver, where the average grade of silver is 1.5kg/t. When we took over the project, we wanted to focus on validating its district-scale potential. Therefore, we explored in the north where the historical production was located and obtained some fantastic results. Additionally, through trenching and sampling we discovered two new lanes. We are in the process of finalizing our drilling permits and we expect to announce the start of that 5,000m drill program shortly. Q: The company found high grade gold on its property for the first time. What impact will that have on the company’s plans for Batopilas? A: We were very surprised to find gold – this is the first-time gold has been found there. MAG Silver drilled the project and it did not target gold because in the historical production data there is no record of the mineral. As a result, we have analyzed part of the historical core and some selected areas that are

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close to where gold was discovered. We look forward to analyzing Batopilas over the next several months to understand what this gold discovery represents for our plans.

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Q: What is the history behind Magna Gold Corp and the San Francisco mine? A: We created Magna Gold Corp two years ago. It is a Mexican company with Canadian capital: the top leadership and workforce are Mexican. At the time, we were an exploration company with a project in the Sierra Madre Occidental. It was a new company, with a highly experienced management team in all phases of mining projects in Mexico. We now operate, produce and explore in the country. In 2019, our market cap on the TSXV was about US$12 million. At present, we are nearing the US$100 million mark. To achieve this, we acquired the Mexican subsidiary of a Canadian company, Alio Gold Corp, which used to be Timmins Gold Corp. Part of our management team founded Timmins Gold Corp in 2005 and acquired the San Francisco mine. The mine was abandoned, and Timmins Gold Corp brought it into production in 2010. Magna started a new operation and production results have been strong. We are undertaking an optimization plan for San Francisco to increase reserves. In 2020, we released a prefeasibility technical report that shows a geological resource of 1.43Moz of gold and an eight-year production plan that mines 760,000oz and produces 530,000oz of gold over

Arturo Bonillas

that period. Magna continues to carry out an aggressive drill program and optimization studies to increase mine life and reduce costs.

President and CEO of Magna Gold Corp

Our goal is to have gold and silver reserves totaling 5Moz and for 2023, is to produce 200,000 gold oz per year with several mines in operation. Q: What are the main problems that Magna Gold

Magna Gold: A Growing Gold Producer in Mexico

Corp inherited from San Francisco’s former owners and how are you solving them? A: There were three main issues that needed to be addressed. We needed to consider large tonnage deviations, low metallurgical recoveries and operational disarray. In their laudable intention to optimize the mine, they did not plan correctly for the very short term. The long-term planning was reasonable but open pit mining is about making a series of precise short-term moves. The need to find available ore began to exert pressure on the management team, who decided to focus on areas with exposed mineral outside of the original plan, neglecting other important areas. We have resolved all those issues through new planning and executing with the right people. Q: What are Magna Gold Corp’s exploration plans and how could they impact your production goals? A: The San Francisco purchase agreement included a concession package of around 41,000ha. The concessions

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contain high grade silver in addition to gold. Employing focused exploration to expand our geological and mineable resource is a priority. We are currently carrying out infill and expansion drilling in and around our two operating open pits and expect to add at least 250,000oz by year’s end.

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Q: How will the acquisition of Alderley Gold Corp impact the Metates project? A: We purchased Alderley because we wanted a technology that would allow us to heap leach the refractory sulfide and recover the gold and silver through that process. This technology will have a massive impact on lowering the project’s capital and operational costs. In addition, it is more environmentally friendly because it uses less water and power. The most important advantage is that there is no tailings dam associated with it. The technology is ready to be deployed and does not need to undergo a significant adaptation process in Metates. This is because the technology is not necessarily new; it has been used for the last 30 years in the copper industry. However, some degree of adaptation will be necessary. We need to work over the next 18 to 24 months, especially on ore samples sourced, to make sure we understand how well the process works and what our final recoveries will be, along with other operational variables. In a way, we are speeding up nature. Sulfides do not want to be or stay sulfides; sulfides oxidize naturally. The biggest difference between what we do and what the copper industry tends to do is that we do it in an alkaline environment as

Alan Pangbourne

opposed to an acidic one. Q: What is the status of your Metates project and what are the next steps?

CEO of Chesapeake Gold Corp.

A: Two and a half years ago, I founded Alderley Gold Corp with three partners. We started talking to Chesapeake Gold about a year ago and that culminated with the deal in January 2021. We took over management and we are now moving the

Merger Unleashes New Tech to Lower Operational, Capital Costs

project forward. We plan to have an updated prefeasibility and scoping study for the heap leach process that will be released in June or July 2021. This will be the first time that investors will have a chance to see the hard numbers behind this new process and how they will change the economics of the project. We already have a permit to drill more holes and the work has already started. We are planning to drill around 2,500m to get samples that we can bring up to a lab in Vancouver and perform the test work. Q: What are your most important shortterm concerns and goals? A: We are concentrating our efforts on finishing all the background test work and generating data. We have US$35 million in the bank, which is enough to complete all feasibility studies, which we expect to finish by 2023. Before the feasibility study is done, we can start the permitting process with Durango’s government and the federal government to start operations in 2026. Moreover, the technology is

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applicable to other ore bodies beyond the Metates project. We spent years looking at all sorts of different projects where the technology could be best applied. Now, we want to return to some of those projects and see if we can make some deals and expand our portfolio.

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Q: How has the COVID-19 pandemic become an opportunity for Defiance Silver to re-evaluate its projects and the company’s main investment targets? A: COVID-19 was very much that black swan event in the world that has had an adverse outcome for many communities. Mexico has had a very difficult situation with the virus. We were fully operating with technical and exploration work in March and then the pandemic hit full speed. We sat down and discussed the situation and made the decision early on to pull our crews off our projects before the federal decree from the federal government was announced. This time presented an opportunity for Defiance to really dig into the data and assemble all of our targets and 3D models with both in-country teams and executive level staff. This desktop time gave us an opportunity to put together a larger 12-month plan to restart operations once it was safe and with appropriate health and safety protocols in place. This was very fruitful for us because we were able to establish really good targets and plan the drill program. We were then able to start reaching out to drill contractors and start putting together our drilling permits and amendments to cover where we wanted to have certain drill pads and access roads built. We were able to make the best out of a difficult situation.

Douglas Covey

Q: The company’s modeling has shown significant resource potential at depth in San Acacio, where it started drilling in December 2020. What have been the major discoveries?

Vice President, Corporate Development of Defiance Silver

A: Our 3D modeling done in January showed us that this mineral system is long-lived, with many fluids coming through carrying precious and base metals that have been deposited over a long period of time. There were multiple pulses and we saw that there was a great deal of high-grade mineralization

Taking Advantage of Industry Downtime to Boost Operations

in what was a large mineral system. We also noticed this system had never been tested at that depth and there were hundreds of meters in the heart of the camp that had never been tested. If they had, it was not done correctly. Because of this, there was no background structural model or structural geology. Nevertheless, it is a complex system and the initial test left many really key questions to answer. That is what we have been following up. What we discovered was a very long system, multiple pulses of mineralization and mineralized structures in a number of different domains. Q: What does the company expect to find with the potential expansion of its 5,000m drilling program to 10,000m at San Acacio? A: We have completed over 5,000m already, thanks to a great partnership with Major Drilling, which has been an excellent company to work with. We will do more drilling, get the data integrated, analyze it and follow up with the remaining meterage. We have always operated with the same mandate: in a linear fashion, we address the targets, test the targets and follow up. We want to wait until we get some additional results back before deciding where to drill next. Once we move forward, we do have a pipeline of targets that include part of the acquisition we did with Pan American Silver when we saw an option to acquire their Zacatecas district landholdings.

Q: What factors make Tepal a valuable and attractive project for Defiance Silver? A: It is a well-known asset that has been around for 50-plus years. It has a very different discovery profile or pipeline than your traditional silver-gold-silver camp in Mexico. The project has had a great deal of work done, about 60,000m of drilling and a lot of advanced technical studies. It has great economics and a large measured and indicated resource: 1.8 million oz of gold and then 813 million lb of copper. The previous operators of the project did a good job of unlocking the metallurgical value, drilling and getting indicated ounces onto the book. A really important component to any mining operation is that you are not just mining the whole thing out but instead, you are meant to have a steady stream of replacement ounces, or increasing the total ounces that you are going to put through the mine operation and your mine planning. That is what we have been focusing on at Tepal. Q: What are the main advantages that led to the recent agreement with Pan American Silver to acquire the Lucita property in Zacatecas? A: Pan American Silver is a very well-known, large, global silver mining company, one of the largest silver mining companies in the world, in fact. It has been working in Mexico for a long time. This property has been in its portfolio since the 1980s. Parts of the Lucita property have never been drilled, including a 4km-long and up to 12m-wide structure called Palenque with grades up to 700 grams per ton of silver. We are hoping to drill there before the end of the year. Q: Why should investors pay attention to Defiance Silver this year? A: We are drilling right now. We are going to continue to drill throughout the year. In addition, we have really strong management, insider and institutional shareholdings. We are philosophically aligned with what our shareholders are looking for: an explorer with a strong technical team. As a management and technical team, we have worked with all types of projects, ranging from small resource to large resource operations in Mexico, Canada and other countries. We are financially capable of conducting our planned programs; our 2021 program is fully financed. As an investor, the best thing you can do is build your project and your assets to show that you have strong underlying economics. We like to try and demonstrate that those economics are feasible, with low metalprice environments and in case metal prices do fall out, the projects still remain interesting and viable in those markets.

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Exploration & Development | 31

Government Misses the Point on Lithium MORENA, President López Obrador’s party, wants to nationalize Mexico’s lithium production and has a majority in both houses of Congress. The party wants to introduce in its Senate program for the current legislative period an initiative that would nationalize the country’s lithium production, arguing that the metal is pivotal to the country’s development. This legislation, if passed, would require legal reforms. The initiative also raises questions about technical and economic feasibility. Most importantly, the proposal may be missing the point considering Mexico’s role in the geopolitics of lithium. It is important to understand what “nationalization” would represent in Mexico’s lithium debate. Art. 27 of the Constitution states that natural resources on Mexican territory, including minerals such as lithium, belong to the nation. In regard to oil and other hydrocarbons, after the enactment of the 2013 Energy Reform, the door was opened to private and international investors. Prior to the reform, private players were barred from exploration and extraction; only state-owned companies were allowed to perform these activities. Mexican law considers lithium to be national property and MORENA senators want to set up a state-owned lithium company where private sector participation would only be allowed through contracts. Nevertheless, if the purpose is to keep lithium extraction exclusively in the hands of the state, that course of action would defeat the purpose. “Matching lithium’s rank to that of oil seems absurd. Currently, there are private companies participating in the oil and gas sector,” says Jesús Enrique Pablo-Dorantes, Chairman of the Advisory Board of the Mexican Academy of Environmental Impact. Indeed, from a constitutional point of view, equating lithium’s status to that of oil would only be effective if the 2013 Energy Reform were rolled back through comprehensive legal tinkering. That would require a two-thirds majority in the lower house of Congress, which MORENA does not have. Nevertheless, midterm elections are set to take place and if MORENA achieves a majority, it could attempt to change Art. 27 of the Constitution. Even if the political will to ban the private sector from exploiting Mexico’s lithium were to take place, numerous obstacles would complicate the establishment of a viable state-owned lithium company. Budget constraints immediately come to mind. “The federal government suffers from an extreme limitation of resources, even for the most urgent tasks. Where would the money for such an undertaking come from? Moreover, the success of mining exploration is by no means guaranteed. The whole process would take several presidential terms and cost millions of dollars. Why not let private capital take on the risk instead?” asks Armando Alatorre, President of College of Mining Engineers, Metallurgists and Geologists of Mexico. In addition, lithium extraction is notorious for its technical difficulties. “(Proponents of nationalizing lithium) overlook the technical complexities Read the complete article More about this topic

associated with the mineral’s exploration and extraction, instantiated by delays at the Bacanora Lithium and Ganfeng Lithium joint venture project in Sonora,” says Pablo-Dorantes.

Conference

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Highlights

Leadership in Mining and How It Breeds Success Kenneth MacLeod CEO of Sonoro Gold Corp.

Jason Simpson CEO of Orla Mining

Doug Ramshaw CEO of Minera Alamos

James McDonald CEO of Kootenay Silver

he leaders in Mexico’s mining industry have all taken different roads to success but they highlight the common factors that have helped them on the journey: vision and people. “Without vision, you will not get to the destination you want

as a mining CEO,” says Kenneth MacLeod, CEO of Sonoro Gold Corp.

The people who work in a company day in and day out, who provide support and feedback, have a central role to play that is integral to success, agrees Doug Ramshaw, CEO of Minera Alamos. “A key attribute in terms of success and leadership is surrounding yourself with the right people.” A good leader also needs good advice, adds Jason Simpson, CEO of Orla Mining. “Mentorship is incredibly important,” he says about his personal development, noting that a focus on people characterizes his personal philosophy as a CEO. Having the right people is one thing, using them effectively is another and perhaps the true key to successful leadership, according to CFO of Kootenay Silver James McDonald, who has a background in finance. “We want to make sure that we have an effective risk-reward system in place for the utilization of our fund,” he says. The next step is to translate the leadership philosophy into company success stories. Macleod says that having a secure vision helped him foster strong bonds with local authorities and communities. “You have to wear many hats as a CEO in the resources sector. Unless you demonstrate that you value them, you will not go very far,” he said in relation to the versatility needed to tackle the different problems miners encounter. For many, success is seen in the communities in which miners work. Simpson highlights how developing local resources can really change people’s lives. In the case of the Camino Rojo project, Simpson said that it was especially rewarding to learn how the company could contribute to a community’s development. “The success of these developments will last far longer than my tenure there,” he says. Ramshaw concurs, noting that Minera Alamos’ mines have had a beneficial impact on their surroundings. “We can change

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the lives of our communities by developing national resources rather than only creating a good impact for shareholders,” he points out.

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from the

Q: Orla Mining has increased its gold mineral reserves at Camino Rojo by 54 percent. How is this project progressing? A: We knew we had the additional mineral resources at our property but needed to reach an agreement with our neighbor to have access to their property and reach the deeper mineral within our concession. This was a long and slow process but we were able to reach an agreement that benefited both companies. We are now working on the environmental and regulatory aspects to expand our operation. The great news is that we were able to extend the life of the mine by four years while maintaining the same production rates. It is important to note that the additional mineral is located within our original resources, but we are now able to reach them by stepping out into the neighbor’s property. The additional life added to the current oxide mine plan gives us additional time to conduct studies to explore and test the options to mine the large sulfide mineral resource underneath our current oxides pit footprint, which hosts 7.3Moz of gold in measured and indicated resource categories. Q: What are your production targets and strategy for Camino Rojo? A: Our average annual production for the life of the mine will be 94,000oz of gold and 597,000oz of silver during 10.4 years of production as opposed to 6.8 years of mine life of the previous

Sergio Sáenz

scenario. This additional four years will also give us more flexibility to develop other projects, like the sulfide resource at Camino Rojo, the Cerro Quema in Panama, as well as continuing our exploration programs in both countries. The timeline for

General Manager of Minera Camino Rojo

the construction of Camino Rojo did not change but there were some delays in permitting due to the pandemic. We expect to have the first pour in the latter part of 2021 and complete the ramp up and fine-tuning of the operation in 1Q22.

Camino Rojo Increases Gold Reserves by Over 50 Percent

Q: What are you most proud of as we move into the second half of 2021? A: I would say that I am most proud of the quality of people we were able to attract to our team at Camino Rojo. There is a saying that great projects attract great people and this has certainly been the case for us. Despite 2020 being a very difficult year in general, I believe we succeeded in reaching our goals, obtained the necessary permits and commenced the construction of Camino Rojo. This was only possible because we had a team of dedicated people willing to go the extra mile to achieve our objectives. We are now working on our next goal, which is to build a mine and produce the first metal this year. Q: How is the company’s social responsibility strategy coming along for 2021? A: Our social responsibility strategy is based on the conviction that we are part of the communities where we operate. We strive to make these communities feel part of the process of building a mine and benefit from it, be it through employment or providing services. They cannot be merely spectators watching us go

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to work. We have implanted a very good community relations program, based on open and honest communication between them and the company. As part of the initiatives, we are incorporating members of the communities into our workforce or as providers of goods and services.

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How Is Your Company Driving Mexican Assets and What Defines Your ESG Approach?

Across the board, assets for many precious metal mining companies in Mexico were strengthened by incorporating technological innovations and establishing ESG criteria. Investors now require that mining operations are thoroughly screened for potential investments. However, after a successful year, there are some issues that are still lingering in regard to development for this year. Mexico Mining Review asked industry experts about their plans to drive their Mexican assets and their ESG approach and practices.

We are producing one mine and building another one. After purchasing one mine, we can now look forward to 2,000 tons p/d production at our new flagship project: Tahuehueto in Durango. It is a district-scale project, which is now 50 percent built. As the company is finalizing funding, it is hoping to complete construction by the end of 2021 and is hoping for US$20 million free cash flows in operations or more. Furthermore, by using Leachox testing, we have improved recoveries from current levels of gold at 15-20 percent and silver at 30-40 percent, which would significantly increase the mines profitability by increasing the ounces of gold and silver

Ralph Shearing

produced at Campo Morado.

CEO of Telson Mining Corporation

With resources of over 10Moz of gold in Mexico and Panama, what makes the company tick is the support of its industry veterans, as well as reputable board and partners. But most importantly, we have the support of the communities where we operate. However, there are still some challenges the country faces and there is always room for improvement. For me, Mexico has four out of five stars. For this year, we expect gold to be popular as a hedge against inflation. However, this increased demand also means that precious metals should be extracted such that benefits far exceed the cost.

Jason Simpson CEO of Orla Mining

We have two new discoveries that we would like to take into production in Mexico. We already have three operations but we would like to continue exploring. For this year, investors should not worry about demand or Mexico’s potential as most metals entered a bull market in 2020. Gold’s outlook was great because of various value drivers. However, silver, which is both a precious and industrial metal, is expected to outperform gold. Electric vehicles, 5G and solar power will drive a 20 percent growth in demand. Furthermore, mining companies did not recently discover ESG, only investors did. At Endeavour, we have made efforts to build infrastructure while involving the community in

Bradford Cooke CEO of Endeavour Silver

the process, making it more than just a handout.

Exploration & Development | 35

SilverCrest is currently building the Las Chispas mine in Sonora, with some of the highest quality silver found worldwide. We are hoping to have US$30 million in revenue by the end of the year and continue exploring other satellite deposits. Regarding ESG practices, the company has a long-existing “qualified” approach toward gender equality, featuring internal targets: 50 percent of its executives are women and 30 percent of the board as well.

Eric Fier CEO of SilverCrest Metals

We operate Valerdena, the newest gold and silver producer in the country after we started producing the Rodeo open pit mine in January 2021. At our Valerdena mine, a bioxidation plant has boosted gold recovery by using bacteria that metabolize sulfur. The project looks promising, with US$1,000/oz or less in cash cost. Moreover, Mexico’s geography allows low operational costs such as diamond drilling that is one-third of the cost compared to the US and half compared to Argentina. Before the resurfacing of ESG, we had a good relationship with communities and investors in regard to social and environmental

Warren Rehn

issues, but we did not do a very good job in communicating that with the rest of the world.

CEO of Golden Minerals Company

We are developing Cordero silver in Chihuahua. The company is working a very extensive drill program to expand this resource as it has great potential. We posted over 1 billion oz of silver equivalent and these scalable silver assets are rare. Mining is in Mexico’s blood, especially due to its strong local mining culture. Permitting is clear and straightforward too and environmental considerations were catching up fast. We have not even gone into production but will still do an inaugural ESG report because we believe it is an important area to document.

Taj Singh CEO of Discovery Metals

We are focused on the exploration, development and production of silver at the Cerro Los Gatos mine in Chihuahua, which is now cash-flow positive. This year, the company listed its IPO on both the NYSE and TSX. Heat is coming up after drilling of the Cerro Los Gatos mine caused significant issues. These were dealt with by building a refrigeration plant, which made a huge difference in productivity. The importance of ESG is high, whether it is the latest trend or not. We believe that we have an obligation to improve people’s lives. Although one of our projects only had one nearby ejido, we built a hospital that is now staffed by health

Stephen Orr CEO of Gatos Silver

personnel provided by the local government and that has now become a regional clinic.

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from the

Q: How can stakeholders in Mexico’s mining industry engage in a beneficial dialogue? A: Information is the basis for dialogue and decision-making but it is important that all parties have access to the same information. Many times, we see discrepancies between data that is provided, and the problem is that there is no external organization that evaluates which data corresponds to reality. We need a neutral and authorized entity that creates common ground and offers the opportunity for all stakeholders to engage in dialogue. An independent mining observer, a mining roundtable to encourage dialogue or another thirdparty figure could be good options. Q: What are the main pillars of Agnico Eagle’s exploration strategy in Mexico? A: Our highest priority is to increase the life span of our operations. They are located in jurisdictions that we already know and trust. Where we have mines, we also have a sizeable workforce and all necessary infrastructure set in place. The success of this exploration strategy can be seen at Pinos Altos. According to the feasibility study, this operation was originally expected to be closed in 2019. However, the life of the mine has been extended to 2025 and we are working

Luis Felipe Medina

to extend it to 2027. Our La India operation had 900,000oz when we acquired it. Through systematic exploration, we have increased this figure to 1.5 Moz.

Director General of Agnico Eagle Mexico

Another example is the Creston Mascota project, which began operations in 2011. The life of the mine was originally expected to be four years, adding 40,000oz of gold per year to the larger mine it belongs to. It is now reaching its operational life cycle and has doubled the company’s expectations.

Agnico Eagle: Top Engineering for Enhanced Sustainability

Near Creston Mascota, a deposit was found that we hope to incorporate into our mining plans in 2021, increasing the life of Pinos Altos. In 2017, we acquired Santa Gertrudis, a gold property 180km from Hermosillo. It produced interesting drilling results and in 2020, approximately 20,000m of drilling were developed. The results invite us to continue exploring and when we have a feasibility study, we will decide if we proceed to the next stage. Santa Gertrudis will remain an exploration project for the next few years. Q: What was it like to turn Pinos Altos into an underground mine and how will the experience help Sinter with its own transition to underground mining? A: The transition did not happen all at once. It was in the mine plan from the beginning and we had plenty of time to prepare for it. When the project started, almost 80 percent of the production going to the mill came from the open-pit mine. That has gradually changed. Now, the production from the underground mine contributes more than 90 percent of the total. The success of Pinos Altos’ transition is the result of planning based on a thorough exploration of the deposit. We are deploying the same strategy at Sinter, a new deposit at Pinos

Altos. Sinter’s ore body was not in the original Pinos Altos plan but our exploration team identified its potential and we have incorporated it. Underground mining there will be different from Pinos Altos. The grades are lower and the veins are narrower, but Sinter is strategically attractive because it gives us mining flexibility, which is crucial in underground operations. Mines sometimes get all their production from one body but if there is a problem, an alternative source of ore is needed while the problem is being solved. The key is to have options. Sinter fits that role. Q: What are the main elements of Agnico Eagle’s ESG strategy? A: We base our ESG efforts in Mexico on four pillars. First, respect for co-workers. We need professionals to trust us and choose us as their best option. Second, being environmentally responsible. In 2020, Pinos Altos won an award for excellence in environmental restoration from the Mining Association of Canada. The third pillar is safety, a condition that must be guaranteed for workers. We are responsible for providing training to our workers as part of a safety culture. Furthermore, the person in charge of our tailings facilities has a direct line to the board of directors. That kind of transparency ensures safety in our operations. Fourth, we have to understand our communities and be good neighbors. Even if we bring jobs and development, we must be humble and respect our communities. Community involvement has to be multilateral. Q: How will Agnico Eagle’s new leaching platform in La India strengthen your sustainability strategy? A: La India consists of three leach pads, each with its own life span. Our team was faced with the complexity of building a leach pad on the steep slopes of the mountain range. Looking at options, the idea of building the leach pad extension on a pit that had already served its useful life was born. The complexity level was high, but our engineers were able to build the project. We will reuse an area that has already been part of our mining operations. It is an innovative approach for repurposing construction spaces and optimizing areas. For this project, we consulted external experts with experience in geotechnical engineering who are supporting our team and validating the safety and viability of the team’s ideas. At Pinos Altos, we are doing something similar: the first pit we built is being filled in with tailings, instead of building a new dam elsewhere.

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VIEW TOP Exploration & Development | 38

from the

Q: Why did IMR choose Mexico and what are the company’s plans in the country? A: Our first objective was to enter the iron ore mining market. Since IMR Global is primarily a steel and raw materials trading company, we saw the opportunity to extract iron ore. However, iron ore prices are not very stable and that is why we began to participate in the precious and base metals markets as well. Currently, we are exploring two projects and developing a mine. Our goal for this year is to further develop the mine and start production in July. In addition, we will complete exploration and technical studies in another two projects. By the end of 2021, we expect to have a producing mine and two projects ready for development. Q: How does the company choose greenfield projects and turn them into highly profitable mining operations? A: IMR has several teams, including one focused on technical study and exploration. We acquire projects that have some drill samples and surface samples that demonstrate the presence of minerals. In addition, a preliminary study has to be conducted.

Naresh Singh

After finishing preliminary technical studies, if the project is acquired then we go for geophysical and geochemical explorations followed by drilling programs to prepare a detailed technical study. If the project is feasible, we can turn

Country Manager of IMR

it into a profitable mining operation in three years for small and medium mines. Q: How has the development of the company’s La Perla project advanced?

From Greenfield Projects to Highly Profitable Mining Operations

A: La Perla is a large project where we have several mines. We expect to start production in one of these mines, while exploring others. One of its advantages is that this mine is very close to the city of Hermosillo and it has been a strategic location for us since there is a skilled workforce available close by. Regarding the disadvantages, we thought we would find similar mineral resources. However, this was not the case and we were not able to use our processing plant as planned. The new areas require a different processing plant. As a result, one of our main investment requirements is the processing plant that is being installed in a small mine called Oro Fino in La Perla and the investment required to finish exploration in other areas. Q: What are the company’s goals for 2021? A: We want to acquire a new project. We are looking for precious metals or a polymetallic mining project, preferably in the state of Sonora. However, we know that most of the

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polymetallic underground mines in Mexico are located in Zacatecas, Chihuahua, Durango and San Luis Potosi. As a result, we are looking for small and medium-sized projects in the north central part of the country, which we hope to find in 2021.

SPOTLIGHT

Exploration & Development | 39

Cerro Caliche a Potential Dynamo The development of the Cerro Caliche mine is expected to be a cash-flow catalyst for Sonoro Gold Corp. The company’s flagship mine is expected to enter production next year and drilling results suggest a major windfall is on the way. Cerro Caliche has exceptional exploration potential that could bring its resources into the Au range of 2Moz. Over 14,000m have been drilled since September, with outstanding drill intercepts, while additional gold zones have also been established. The completion of a new resource estimate is scheduled for April-May, which is expected to reflect a substantial increase in gold resources. Kenneth MacLeod, President and CEO of Sonoro, explained that according to internal calculations, the already established resource supported an operation of 15,000t/d, which means that 20,000t/d is possible. MacLeod also estimated the CAPEX and the startup would not exceed US$12 million, adding that using the estimated revenue from 15,000t/d would ensure a swift CAPEX payback period of 91 days. Moreover, it is reasonable to expect an AISC cash cost in the range of US$1,200/oz of gold. Using a gold price of US$1,700/oz, and a gold price of US$500/oz in terms of profit margin, results in free cash flow of US$132,321.00/d. Multiplied by 330 business days, free cash flow would be US$43.665 million per year. The Sonoro team has 40 years of experience in developing successful mines and Cerro Caliche appears ready to join the list.

Expert Guidance for Building an Integral Mining Project in Mexico Mexico Mining Forum 2021

Addressing Legal Challenges, Minimizing Risks Citlali Pérez Partner at Jáuregui y Del Valle, S.C.

Environmental Consultants Emphasize Mining’s Contributions César Fernández Owner of CIMA Consultoría Ambiental

Mexico’s Lithium Misconceptions and Facts Armando Alatorre President of College of Mining Engineers, Metallurgists and Geologists of Mexico

Private Placement to Boost Sonoro’s Cerro Caliche Project Bacanora, Ganfeng Reach New Agreement on Sonora Lithium Project Zacatecas’ Top 3 Mining Projects for 2021 Reyna Silver Receives Permits for Flagship Project Excellon Resources’ R&D Strategy Bears Fruit Six Mega Mining Projects Set to Start in 2021 Gold Deposits in Mexico Show Promising Future

Operation To be competitive in the mining industry, companies must constantly optimize their capacity and recovery rates by incorporating new methods and processes to improve their production and reduce their environmental impact and expenses. Such actions also increase resources, expansion opportunities and the operational life of a mine. Another essential element for operational improvement is safety, which is a vital consideration for all mining operations. Miners aim to achieve zero fatalities by offering better training, strengthening protocols, and identifying areas for improvement. Furthermore, safety has become one of the best indicators of a good investment, as it demonstrates the company’s commitment. The role of people themselves also cannot be understated. Mining is a complex business that requires a good and reliable team sharing the same vision. Communication, feedback, constant learning and leadership have become fundamental for achieving better performance. Another key to the success of operations is the relationship of the mining company with nearby communities since many of the social conflicts experienced around mines are caused by poor communication. Local hiring and community projects remain important tools for connecting with them, as well as ensuring a constant dialogue, where the benefits of the company’s operations are clearly enunciated.

Operation

Analysis Signs of Recovery

Conference Highlights People, Community, Tools Maximize Operational Potential

View From the Top Faysal Rodríguez | Vice President Mexico of Torex Gold

View From the Top Peter Dougherty | President of Argonaut Gold

View From the Top Frederick Davidson | CEO of Impact Silver

View From the Top Mick Routledge | COO of Coeur Mining

Analysis Changing Role a Great Challenge

Conference Highlights Mining Safety at the Crossroads of Culture and Technology

Analysis CyPlus Idesa Transforms the Mexican Cyanide Market

Conference Highlights Tailings Management for Responsible Mining

View From the Top Diego Torroella | Director of TAKRAF Mexico

Conference Highlights The Path From Mining to Decarbonization

Spotlight Newmont: A Leading Example of Responsible Mining

Content Links

Operation | 44

Signs of Recovery Mining production in Mexico started showing signs of recovery after 1Q21, following a year marked by an economic recession due to the pandemic. Since June 2010, the mining industry has been considered a strategic industry for the country but in 2020, it was forced to suspend activities in 2Q20, which generated uncertainty among investors. This also opened new windows of opportunity. In times of economic tribulations, precious metals generally are considered a safe haven, a trend that mining companies operating in the country knew how to take advantage of. CAMIMEX reported that the total value of mining production stood at US$11 billion in 2020, 4.5 percent below 2019, when it was valued at US$11.9 billion. The Bank of Mexico reported that by the end of January 2021, the mining sector had started returning to the levels of production it enjoyed before the pandemic. The central bank set the index it uses to measure the country’s total production at 87.27 points, 5 percent above the 77.4 points registered in March 2020. By April 2020, it had dropped 10.6 percent, ending at 69.13 points. Among the causes for the drop in production were the mandatory shutdown enforced by the Mexican government during the second quarter of 2020, as well as the weak performance of the automotive and oil and gas industries and the drop in demand from manufacturing countries in China and Southeast Asia. The high price of precious metals during this time helped buttress the sector’s performance in 2020. In a global economic climate marked by uncertainty, precious metals once again became the solution to the mining equation, especially metals such as gold and silver. As a result, some precious metal companies in Mexico ended 2020 with positive results. Grupo México, the country’s largest mining company, closed 2020 with US$8.5 billion in sales, a 7.5 percent increase over 2019. “It was a record year in copper, molybdenum and silver production,” Grupo México said in a press release. “Due to strict health and safety protocols, we have applied during the pandemic and despite the very complicated environment, we managed to achieve a new copper production record.” Industrias Peñoles, Mexico’s second-largest mining group and a producer of zinc, copper, lead, gold and silver, also performed well in 2020 with over US$4.6 billion in sales, an annual increase of 4.5 percent. Fresnillo, a leading gold producer, also improved its sales performance in 2020, closing with US$2.6 billion in sales, representing 14.8 percent growth. According to Mexico´s Ministry of Economy, mining production in Mexico represents 2.4 percent of the country´s GDP and 8.2 of its industrial GDP. For this reason, production recovery levels will depend on synergies between the public and private sectors. A large part of the industrial activity in the US, Mexico’s main trading partner, depends on its domestic mining industry and its extractive capacity, which is key to industries such as the automotive sector. According to CAMIMEX, fluorspar, graphite and strontium were the three minerals in the US that generated Read the complete article More about this topic

the most demand in 2020, in addition to iron and carbon, essential minerals for the production of chassis, brakes, engines and valves for the automotive industry.

Conference

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Highlights

People, Community, Tools Maximize Operational Potential Jody Kuzenko President and CEO of Torex Gold Resources

Arturo Bonillas CEO of Magna Gold Corp

John McCluskey CEO of Alamos Gold

Steve Holmes

aximizing the potential of a mining operation can filter down to three elements: human resources, technology and community relations. How miners address those factors can dictate the success of a project, particularly in Mexico.

“A company’s staff is always a crucial factor for mining companies that are looking to improve their operations. Without our people, all we have is a rock on the ground,” says Jody Kuzenko, President and CEO of Torex Gold Resources. Because mining is a complex business, people also need to be aligned to the company’s vision. This vision, Kuzenko says, should be clear and informed in regard to culture and value. To this end, Torex utilizes the “systems leadership” theory to foster commitment. Arturo Bonillas, CEO of Magna Gold Corp, agrees with this notion.

COO of First Majestic Silver Corp.

“Alignment is fundamental in any organization. In our case it

Jesus Romero

is absolutely vital,” he says. To keep people aligned with the

Senior Consultant at Golder

company’s vision, Bonillas says setting clear KPIs and focusing on top-down and bottom-up communication and feedback are crucial elements. Furthermore, employees should know what they contribute to the company’s direct results. Sharing a common culture is a particularly interesting challenge for companies that started out small, like Alamos Gold. Its CEO, John McCluskey, scrambled to get the project going with a team of only four people. Now, the company has grown to over 2,000 people and has a market value of US$4 billion. “We had to learn along the way,” explains McCluskey. It is even more important to adhere to a company’s standards after they have been set, especially in an uncertain year marked by a global pandemic, he says. “If you do not see that mining has a purpose that goes far beyond the production of metals, you have missed the point,” says McCluskey. The tools a company uses are equally valuable in maximizing potential. “Our No. 1 tool is cost control,” Bonillas says. Reacting quickly to issues is a must to optimize cash flow. Furthermore, the importance of geological models cannot be understated; after all, a mineral can only be mined once. At First Majestic’s Santa Elena mine, a high-intensity grinding mill provided a competitive advantage in the liberation of gold and silver, says Steve Holmes, COO of First Majestic Silver Corp. But not

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everything needs to be cutting-edge technology. By incorporating “5S” criteria: sort, set in order, shine, standardize and sustain, an efficient workspace can become a reality, Holmes adds.

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from the

Q: What are Torex’s main targets for 2021? A: We have a variety of targets for 2021. At Media Luna, we are drilling 44,000m this year to include the results in its feasibility study, which will be released in Q1 of next year. At El Limón Guajes, an exploration investment of US$13 million has been budgeted for this year and we have three main objectives. First, we are looking for opportunities to extend the life of the open pit through a drilling campaign. Second, we will look for a connection between the pit and the underground mine; and third, we are seeking opportunities in the deeper areas of the underground mine through an aggressive campaign. At our regional targets, which are very close to El Limón Guajes, we are doing some prospecting and plan to drill some holes, with a projected expenditure of US$2.5 million. We are confident we will find something to develop after Media Luna, since we have many targets within the 29km 2 that this area covers. Q: How is the company planning to make El Limón Guajes Complex’s underground mine a value driver for Torex and its shareholders in the coming years?

Faysal Rodríguez

A: Both the underground and open pit mines have a very strong operating basis. We will continue with that objective at the underground mine, in addition to the exploration targets that we are drilling to add more resources and

Vice President Mexico of Torex Gold

reserves to the underground mine. Our geologists have very high expectations for these resources and as a result, we are conducting an aggressive drilling campaign there. A key factor that will be significant in the coming years is

2021 Looking Bright for Torex Gold

the construction of Portal 3, which is a new access that we have begun building for our underground mine with the goal of reaching deeper areas. That specific infrastructure will be a key driver for future resources for several reasons. First, it will have a very positive impact on the underground mine holes because we will have shorter haulage distances. Second, opening that access will be key to drilling deeper and searching for targets. Q: What is the company incorporating into its MIA Integral? A: There is a river between our two projects, Media Luna and El Limón Guajes, that is considered one of the main water sources for agricultural areas in Guerrero and Michoacan. We recognized that our regional environmental permitting strategy had to change with the construction of Media Luna, considering SEMARNAT’s rules and regulations. The MIA Integral aims to include both projects in a single permit, including all the environmental conditions and actions that we need to apply to both. This will facilitate the evaluation by the authorities and the compliance with these permits by the company. In that permit, we plan to include new infrastructure for the underground mine in Media Luna

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and some additional infrastructure changes in our process plant, considering the different metallurgy that the Media Luna ore will provide.

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from the

Q: What is Argonaut Gold’s strategy to consolidate itself as a leading producer? A: We are transforming the company from a relatively highcost, short-mine-life producer into a lower-cost, longer-mine-life producer. To bring that strategy to fruition, we are lowering our operational costs and investing in exploration. We are harvesting cash out of existing operations whenever possible, including our three Mexican operations and the one in the US. That cash will then be redeployed into exploration and drilling to extend the life of our operations. Additionally, we will build two new projects, one in Canada and one in Mexico. The Cerro del Gallo project in Guanajuato is larger than those we are already running in Mexico. It sits with 3Moz identified. The first chunk that we would take out is 1.6 Moz. It will take us 15 years to process that. It is a project with a very long life. Q: What is the timeline for starting construction at Cerro del Gallo? A: Cerro del Gallo is the cornerstone of our strategy in Mexico. Our in-house crew of engineers and constructors are completing a construction project at our San Agustin project that will be available in May 2021. It would be perfect if the permit we need for Cerro del Gallo came at that time. This crew understands how

Peter Dougherty

we work and we are aiming to start construction in 2H20. It will be an open-pit, heap-leach operation. We are experienced in that kind of operation and have the required know-how to build all environmental safeguards.

President of Argonaut Gold

Q: How do you schedule construction work at your operating projects? A: Our philosophy is to stay in front and build before you need to.

Argonaut Gold: Lower Cost, Longer Mine Life

In 2020, even with the pandemic, we implemented this philosophy. This proved to be prudent. If we had been behind on our building, when we started back up again after the shutdown, we would have struggled to get our ounces back up again. However, because we had recently built new leach pads, we were able to process the mineral in a timely manner. When we plan, our horizon is at least three years down the road. When we go into construction at San Agustin next year, we will be building the fourth phase of the leach pad and this will carry us to the end of the operation, unless we find more ore. We are wellahead. That property will not shut down at least until 2025. We are ahead of schedule at El Castillo, where all the leach pads are built for the next two years. La Colorada will be running for the next four years and all the leach pads are ready. Q: What is Argonaut Gold’s long-term view of Mexico? A: Argonaut Gold believes in Mexico. We are excited about the prospect of building our fourth mine here soon. Mexico is a good mining jurisdiction. It has the five characteristics we look for: laws and regulations are in place, there are knowledgeable

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people and a mining culture, geology is propitious, investments are reasonably safe and the sector is important to Mexico’s overall economy. Mining is needed to develop remote areas and we hope Mexico will develop more policies to keep driving the mining industry forward.

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from the

Q: What defined your activities last year? A: We have two production centers, one of which is not in production. We are waiting to conclude the metallurgical work and want to know if we can upgrade the feed. There are two other ore bodies nearby, which we would then drill. One is primarily producing silver, lead and zinc. Ninety-five percent of our revenue comes from silver. We are probably the highest grade in terms of concentrate of silver mines in Mexico. Most other miners use silver equivalent but we do not. Ours is strictly silver production. We have been in Mexico close to 20 years and at this property for about 15 years. It started as an existing mill and the owner basically ran out of ore. We acquired it because we believed that there was a lot more potential in the area. I think we will remain there for a long time. We have had a great deal of success with our most recent work in our Guadalupe mine, and we are now expanding our production operations. Two years ago, we had zero production, now we are putting in new equipment, upgrading the shaft, and we will probably produce between 40 to 45 percent of the feed for the mill. When we came to Guadalupe for the first time right after acquiring it, we realized we needed to redo the exploration. Meanwhile, we had two other targets that were outside of Guadalupe, which were very high

Frederick Davidson

grade and easily accessible. We began work immediately. Thankfully, we hold the title for the land next door, and we will be pursuing that actively for the next few years.

CEO of Impact Silver

Recently, we also found an old open pit around 5,000m to the west of Guadalupe. This is what we have come to call our Negra mine, which has two veins running parallel. We have evidence that one of the veins extends over 600km. Four months ago, the mining from this section accounted for

Impact Silver: Following the Veins to Success

15 percent of our feed. We will be continuing to exploit this prospect. We are trenching to determine the extent of the open pit. Q: What are Impact Silver’s main strategies for cost optimization? A: We made a conscious decision over a year ago to reduce production. At some of these mines, the margins are tight and the mining costs are high. We selectively reduced our production and staff by around 25 to 30 percent. This gave us cash flow, even when the silver price was extraordinarily low. As the price now is on the rise, we plan on ramping production back to our original target levels. This move represented an enormous part of our cost-optimization strategy. Q: How would you define your general outlook for Mexico and interacting with its governmental authorities? A: Mexico is friendly to the mining sector. I think Mexico’s bureaucracy understands money, which is a huge advantage. We are concerned about some of the references to Canadian

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companies “exploiting” Mexico. We are starting to hedge our bets, which means that we are redirecting some of our efforts to Peru. This is just to protect ourselves. It is still at a very early stage, but if the discourse continues to be so negative, we might have to put more money into those prospects.

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from the

Q: What has Coeur Mining learned from 2020 that it can apply to its business? A: In 2020, COVID-19 took us all by surprise, but we worked hard to put controls in place that allowed us to maintain our business flow. We did face a 45-day government-mandated shutdown at our Palmarejo operation in early 2020. We were happy to restart operations but had to do so under strict COVID-19 health protocols. For us, there is nothing more important than keeping our teams, their families and the communities where we operate safe. The great thing was that our team had the motivation and mindset to get back on track. Despite the downtime, the company had great results. The recovery of Palmarejo has been fantastic. Our third quarter results showed a 92 percent production increase compared to the previous quarter. We plan to use the knowledge we have gained in 2020 to improve our operations in Mexico and abroad through sharing best practices. Even though it was undoubtedly a tough year, it has also been effective in terms of learning how to improve our business. Q: What role does Palmarejo play in Coeur Mining’s results? A: Palmarejo plays a key part. When you look at its

Mick Routledge

contribution both in silver and gold production, it is a significant part of our portfolio. The exploration results we released in August 2020 demonstrated that we continue to seek to expand our Mexican operations, which is a critical

COO of Coeur Mining

piece of our portfolio. We are continuing to invest in Palmarejo. Our overall free cash flow contribution in 3Q20 was approximately US$45 million. It is a good price environment at the moment and the team is

ESG Excellence Key To Success at Palmarejo Mine

working hard and achieving great results. Q: Where do you think are the areas of opportunity to further improve operations at Palmarejo? A: Palmarejo has a healthy business improvement culture. It was an open pit mine, which transitioned to underground operations. The team is doing a fabulous job at innovating, while developing new technologies and techniques to optimize efficiency. When you examine the costs of Palmarejo and compare them to past costs, it is amazing how these costs have been kept down. This includes underground and above-ground operations, where several high-profile business improvement processes have been implemented. Recovery was traditionally difficult in the mine, but the team has greatly improved this process. In 2019, Palmarejo delivered over US$7 million in sustainable additional contributions and benefits from recovery projects through this Business Improvement program. This is just one of the many successful changes implemented in the transition to underground, which has lasted around one year. In prior years, the average production was between 4,600 and 5,000 tons per day. Following the temporary shutdown, production increased to 5,300 tons per day while improving the team’s safety and training.

Q: Other than COVID-19, what are the main risks Coeur Mining will need to manage in Mexico? A: We have a robust risk-management framework and continue to improve processes and controls to manage the key risks we face. We have made a huge effort and are proud of the progress we have made both in ESG programs and disclosures. As part of our ESG initiative, we undertook an internal materiality assessment to identify the ESG factors that are most material to Coeur. We identified 16 factors addressing governance, people and safety, the environment, anticorruption and communities, among other items. We have also bolstered our internal resources dedicated to ESG initiatives. We do not see a trade-off between responsibility and profitability; we see them as directly aligned. Furthermore, Coeur aligns toward a vision of zero-harm mine sites from both a health and safety and environmental perspective. Q: What is a tangible example of the company’s ESG approach having a positive effect on the company’s operations? A: An example can be how we approach our permitting and licensing processes. We try to apply best practices that will be beneficial for the long term. At our Nevada operation, we were the first mining operation to participate in a state of Nevada sage grouse conservation program. By purchasing conservation credits, we not only helped protect over 3,000 acres of critical sage grouse habitat but also bolstered our community relations. This type of investment benefits all stakeholders in our operation. Following the right path and applying best practices yields results because we receive support from government and locals alike, as well as having the support of our workers. It is good to communicate our efforts as a business. Coeur, therefore, tries to execute a balanced scorecard-type approach. This involves business risk, ESG, health and safety, as well as operational excellence and execution because we are in business to generate value responsibly. This approach is also balanced with how we execute capital projects, develop resources, build our team and take care of them. We look at all these parts and balance them in a short, medium and long-term framework. We have a tiered approach in regard to how we do business and build robust, executable plans, based on opportunities we can identify. Instead of working only on a oneyear plan, we work toward five and 10-year plans. We also balance costs and budget with value, impacts and controls. The company continues to improve its processes from a lean business mindset so that we can be recognized as a leader in business management.

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Changing Role a Great Challenge Mining has been considered an indispensable industry for the development of human societies since Neolithic times. Today, the industry faces one of its greatest challenges: playing a strategic role in the world’s most important economies, while adapting to new social demands, such as respect for the environment and the communities in which it operates. In Mexico, governments, authorities, NGOs, local communities and companies have begun a process of change aimed at transforming mining activity into a sustainable and socially beneficial industry. “The mine of the future will have a fully integrated community and business environment, in which planning will occur beyond operation and toward closing, so the community can remain sustainable beyond the mine’s life,” says Robert Schafer, President of the Society for Mining, Metallurgy & Exploration. The sector’s environmental and social risks have been a part of Mexico’s national conversation for quite some time now, especially since Andrés Manuel López Obrador, historically critical of this industrial activity, became president of the country. This is one of the reasons why both the public and private sectors have begun to take steps to offer guarantees to a public that is increasingly aware of the need for radical change in a sector. One of these trends is Industry 4.0, in which concepts such as AI or IoT will prove to be key in the short term, along with the energy transition that is aimed at eliminating industrial pollution. “This will have implications for local communities. While most jobs will not necessarily disappear, we will need more skilled workers,” says Isabelle Ramdoo, Deputy Director of the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development. Mexico is considered one of the most diverse mining countries in the world but it also has the most at stake in the near-term future. Water resources, protection of endangered ecosystems, ensuring plans for the future of mines and diversification of economic activities for communities once the mines closed should be at the top of the list of coming changes in the sector. However, the process could change the status quo, making it imperative that all parties involved (federal and local governments, private sector and communities) work together, says Aidan Davy, COO of the International Council on Mining and Metals. Otherwise, Davy says, “problems will prevail.” He further explains that, “Governments traditionally give up their resources so that mining companies can develop them and local communities expect to benefit in a more direct way. If a changing industry alters that relationship, new approaches need to be found.” The effort to transition to cleaner energy, with US President Joe Biden’s Green New Deal as the main exponent, will once again place mining at the center of the discussion. The construction and design of more efficient solar panels, the construction of batteries destined to lead the electric mobility revolution, 5G and the need for companies to eliminate their carbon footprint in an increasingly culturally, politically and commercially connected world will shape the way the world will unfold in the future. “A big commitment is Read the complete article More about this topic

needed. Industries need materials to decarbonize, but there needs to be a balance between mineral development and environmental protection,” Schafer says.

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Highlights

Mining Safety at the Crossroads of Culture and Technology Mick Routledge COO of Coeur Mining

Alan Pangbourne CEO of Chesapeake Gold

Luz María Sánchez Mine Manager at Santacruz Silver

Ivan Montiel Director of Operational Strategy and Development at Agnico Eagle

Jesús Vargas Head of Industrial Safety at Minera Autlán

afety is an essential consideration in all mining operations, and it begins with an investment in the clear communication of expectations regarding all processes and procedures. “There are no silver bullets,” says Alan Pangbourne, CEO of Chesapeake Gold.

“Without clarity, you cannot expect processes and procedures to be absorbed effectively by your workforce.” Pangbourne believes behavioral science can be a helpful tool to better implement safety protocols. One example, he says, is when employees receive positive reinforcement for good safety practices from their peers, rather than from managers. “In terms of influence, people listen to their peers, not their supervisors.” That also applies when implementing a cultural shift, where the example from others becomes the role model. “Health and safety culture is built by example. Leaders’ involvement as safety promoters is key. Risk management, training, performance measurement and communication are essential to ensure safety,” notes Ivan Montiel, Director of Operational Strategy and Development at Agnico Eagle But safety is not about people only. It is about technology implementation, in part to turn observations into hard data to monitor the progress of adopted conventions. “Thousands of observations must be turned into data so you can measure the degree to which people are absorbing safety protocols to determine what is not working in your training system and what needs to be reinforced time and time again,” says Pangbourne. Montiel agrees, saying that it is necessary to migrate numbers and procedures toward proactive actions that make people safer. “Otherwise, no amounts of schematizations of company culture will work. Being proactive is key to safety in operations: no matter how good a standard is, it needs to be implemented right,” Montiel said. Tied to technology and automation is education, without which safety efforts may fall short, adds Hugo Barrientos, Manager of IIoT Plantweb Digital Ecosystem at Emerson. “Education and communication are vital to ensure safety. Flexibility is also necessary. Monitoring and control of environmental impact and the health and safety of staff are a necessity to achieve the best performance.” Even just a few basic rules, with appropriate oversight, can have a dramatic impact on safety results. “We started with 10 basic safety rules in our company, actively promoted by the director of the

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mine. This changed the outlook within the mine, even though it was difficult to implement these rules with a zero-tolerance approach,” says Jesús Vargas, Head of Industrial Safety at Minera Autlán.

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CyPlus Idesa Transforms the Mexican Cyanide Market In the past, cyanide was generally imported from countries like the US, Europe and China. In 2016, CyPlus Idesa changed that, revolutionizing the Mexican cyanide market by producing the first batches of sodium cyanide in the country. Cyanide is an important chemical — more than 1 million tons are used yearly in electroplating, metal processing, plastic and chemical/pharmaceutical intermediates production, among others. In the mining sector, cyanide has been used in precious metals mining for over 120 years. In the form of a diluted sodium cyanide solution, cyanide is used to dissolve and separate precious metals such as gold and silver through a process called leaching. There are two main types of leaching processes: heap leaching, where the cyanide solution is sprayed in huge heaps of crushed ore spread on giant collection pads, and tank leaching, where ore is mixed with the solution in large tanks. CyPlus Idesa is a joint venture founded in 2010 between Germany’s Evonik and Mexico’s Grupo IDESA. Since the beginning of production in 2016 in Mexico, CyPlus Idesa has supplied sodium cyanide to the mining industry with the support of CyPlus GmbH. The company’s sodium cyanide plant is located in Coatzacoalcos, Veracruz, and has a capacity of 40,000 metric tons. It is the only sodium cyanide plant in Mexico and its strategic location ensures the uninterrupted supply of cyanide to all mining units across the country. The company uses hydrocyanic acid and cyanide technologies and complies with all safety and environmental regulations to ensure that the production and transportation of sodium cyanide follows the International Cyanide Management Code (ICMC), which was developed by a committee director under the direction of the United Nations Environment Program (UNEP) and the International Council on Metals and the Environment (ICME). CyPlus Idesa produces solid sodium cyanide in briquettes which are delivered in two types of packaging. Solid sodium cyanide is packed in UN-approved wooden boxes with a capacity of 1 ton. The UN mark is an international standard for the classification, packaging, marking and labeling of dangerous goods so when transporting any hazardous material, the packaging grants safety in all modes of transport. The other is Solid to Liquid System (SLS) containers: stainless steel containers that hold solid sodium cyanide. This packaging is used when the client has the equipment or an automated station to control the dissolution process. It is also the safest way to transport cyanide and ensures there is no contact with the product during the dissolution process. CyPlus Idesa uses high-quality packaging to ensure the safest storage and transportation of cyanide. The sodium cyanide offered is exclusive for mining customers, so it is produced and delivered according to mining needs. Read the complete article More about this topic

Production is local and customers are supplied directly, without any distributor. The supply chain is certified by the ICMC and it is customized, fast and the most flexible in the Mexican market.

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Highlights

Tailings Management for Responsible Mining Kim Morrison Global Tailings Manager at Newmont

Elaine Baker GRID-Arendal’s Global Tailings Dam Portal Project Expert

Mitchell Krebs CEO of Coeur Mining

Bradley Langille CEO of Gogold Resources

Luis Camargo Minera Cuzcatlan

ne tailings-related failure is a failure for the entire industry and the implementation of global standards and technology is necessary to improve their management, says Kim Morrison, Global Tailings Manager at Newmont. “We

must collectively address the challenges of tailings. The future requires not only the adoption of best practices, but also the best technology.” Accidents such as the 2014 dam failure in Canada that released 7.3 million m3 of tailings into the environment and the collapse of the Brumadinho dam in Brazil in 2019 have highlighted the need for a stricter approach to tailings. As a result, ICMM, PRI and UNEP developed an international standard on tailings facilities that was published in 2020. Several organizations are also promoting ethical mining by crafting global standards. Global Tailings Portal, for example, provides information regarding storage facilities for tailings. Elaine Baker, GRIDArendal’s Global Tailings Dam Portal Project Expert, says the platform has information on 115 mining companies, 309 operators, 758 mining sites and 1,853 tailings storage facilities. The platform and standards were created with the help of an advisory group formed by social and environmental organizations. As a result, the standard has an ESG-oriented perspective. Part of the effort is a reflection of the highly public nature of mining and the importance of perception, particularly when misinformation runs rampant. Mitchell Krebs, CEO of Coeur Mining, says his company pursues high standards and that Coeur’s operational risk reduction plan on tailings dams follows authorized international guidelines, and implements effective filtration and hydraulic control systems, while providing an excellent tailings management track record. “People can tell if your being honest or not. That is part of the core of who we are. If you do not tell your story, someone else will,” Krebs says. He emphasizes that mining companies must be consistent and clear with their messages, so that people are aware of the positive actions that miners take. He notes that when there is a lack of information, people assume the worst. For junior miners, implementing the necessary technologies can be difficult due to cost. But even those companies are making progress. “We have generated innovation around tailings.

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However, as a junior company it is difficult. We do not have as many resources available but we are working on our ESG right now,” says Bradley Langille, CEO of Gogold Resources.

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Q: What added value does TAKRAF’s partnership with DELKOR offer the mining sector with the Complete Dry Stack Tailings System? A: DELKOR is a product brand of TAKRAF focused on liquid/ solid separation and in combination with our TAKRAF branded products we are able to supply sedimentation, filtration and material handling equipment. We refer to our approach as “The Complete Dry Stack Tailings System” rather than the supply of individual units of equipment. We strongly believe in a system approach to the application of Dry Stack Tailings (DST) for tailings management. The design of a DST circuit is complex and requires a thorough understanding of all the unit processes involved. We suggest first carrying out a conceptual study or basic engineering analysis, where we provide information. We want to ensure this system works, and therefore, we provide advice on the best ways to optimize mining operations. Q: What are the benefits of implementing the Complete Dry Stack Tailings System in mines? A: We believe this system provides significant environmental and social benefits. Other benefits include a financial element because companies can implement this system when they do

Diego Torroella

not have enough space to continue dumping their tailings. Otherwise, they would need to purchase more land. This system might eliminate that need and is the best option for companies to be environmentally and socially friendly.

Director of TAKRAF Mexico

Q: What is the added value of the DELKOR BQR flotation cell with MAXGen mechanism and how does it compare with others in the mining market?

Systems to Optimize Mining Operations

A: DELKOR has modernized the product by significantly improving the mechanism. The MAXGen mechanism is able to generate a massive flow of air bubbles with optimum size distribution. This facilitates the flotation of fine and coarse particles equally, while keeping the solids in suspension efficiently. This maximizes the probability of bubble-particle interaction. We have also implemented deeper high slope launders to obtain an easier froth flow and a faster extraction. Many companies also offer this product. What differentiates us is that we have improved the process time and we have the best technology for it. Q: How does the TAKRAF Mining Technology Center (TMTC) help mining companies to identify the best technical solutions for their projects? A: TMTC is our highly skilled and experienced team to conduct studies to arrive at the most effective plan and determine the equipment that is best suited for their specific needs for building and operating mechanized and automated material transport and dumping schemes. If they accept our advice, we then work closely with them to better understand their needs.

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For TAKRAF it is very important to study the current mining conditions of the company and where they can expect it to be in the future.

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Highlights

The Path From Mining to Decarbonization Verónica Martínez Senior Program Officer -Innovation and Climate Change at ICMM

Fred Stanford Executive Chairman at Torex Gold Resources

Jason Green President and CTO at GFS Corp

Koen Langie Head of the Mining Program at Engie’s Hydrogen Business Unit

Andre Barriault Product Manager of Electric Vehicles at Epiroc

Brian Huff Vice President of Technology at Sandvik.

n mining, the road to decarbonization and sustainability is now a one-way street. Challenges remain, but given investor emphasis on ESG practices, the introduction of new technologies that are having a positive financial impact and the transition to a digitalized landscape, the wheels are

already turning. “The mining sector has the technology, and it can have an easy transition; however, education and awareness are needed for the customer base to understand that these technologies are capable and available for the development of new mines,” says Brian Huff, Vice President of Technology at Sandvik. Recently, the company qualified for the renowned Sustainability Yearbook by S&P Global. S&P applauded Sandvik’s sustainability performance, which is within the Top 15 percent of the mining industry. Huff adds that the company’s products are ready to be introduced in the Mexican mining sector but that the challenge lies in increasing awareness regarding alternative solutions. “This industry is full of people who are ready to do the impossible, but who work for companies that are quite conservative and unwilling to take on new risks,” he says. The company has been developing and preparing its technology for the last decade. One of its key innovations has been focused on minimizing infrastructure changes. An example is that the company’s machines can swap their own batteries. Innovation is at the heart of the transition taking place in the industry and examples abound, despite the sector’s legendary hesitance to change. Canada’s Torex Gold Resources is among those introducing new developments to the industry. The company is testing a new two-way system invented by Executive Chairman Fred Stanford. The so-called Muckahi process runs on an overhead monorail that combines drilling and blasting with a conveyor system. “The miners are conservative, but once we get to build the first mine with this Muckahi process, it will completely change the industry,” says Stanford. The Muckahi process increases production through the efficient use of elevated rails, which is a cost-effective process for transporting people, mining devices, and minerals out of underground mines, Stanford says. Stanford further explains that Torex Gold has long-time investors, and they are always worried about the risks that could arise. He said that for several years, investors have been saying no to its processes; however, with the new

environmental, social and governance (ESG) trends, investors have been demanding more of these changes. The financial benefits of the Muckahi process, Stanford says, include a 30 percent capital reduction and a 30 percent operational reduction, factors that are attracting new investors. A major challenge in the industry as it moves further down the road to decarbonization, is that many companies want to hear the success stories before implementing these solutions. As one insider has said, many mining companies want to be the first to be second. “Being innovative and socially responsible does not mean you cannot be profitable or that you have to lose productivity. Mining companies need to have more vision and acknowledge all the benefits they could obtain,” says Andre Barriault, Product Manager of Electric Vehicles at Epiroc. Barriault explains that his company’s technology can provide more operational benefits than conventional equipment. In a recent interview with MBN, Alfredo Bertrand, General Manager at Epiroc, said that the company’s battery-powered vehicles, which address environmental issues, are being tested in operations abroad. The company has also introduced the first units to the Mexican mining market, with one delivered in 2Q21 to a major mining group. Even heavy vehicles used in the rugged conditions present at all mines are the subject of decarbonization, with hydrogen being used in some cases to make the vehicles more environmentally friendly. “According to our simulations, hydrogen solutions will be competitive with diesel in 2025. Mining can switch to hydrogen without increasing costs while improving productivity and environmental practices,” says Koen Langie, Head of the Mining Program at Engie’s Hydrogen Business Unit. He explains that the company is combining its battery technology with hydrogen: the first provides a fast energy response and charge, while hydrogen increases the equipment’s autonomy. Natural gas is also on the radar. Jason Green, President and CTO at GFS Corp, says that natural gas will play a huge role in the decarbonization of mining companies. “Natural gas might be the least ‘sexy’ option for decarbonization in mining but LNG will still be an important bridge technology,” says Green. Although a fossil fuel, natural gas is a cleaner and less expensive option to reduce carbon emissions. Green says that when the company was starting, customers questioned the risks of investing in and incorporating equipment that used natural gas; however, its acceptance has grown and now questions focus on productivity benefits.

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SPOTLIGHT

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Newmont: A Leading Example of Responsible Mining Newmont is committed to Mexico’s progress and the implementation of ESG practices. The company has made a global commitment to reduce its greenhouse gas emissions by 30 percent by 2030 with the goal of being an emissions-free company in 2050. The company’s Peñasquito mine is located 780km from Mexico City. The operation (Peñasco) is an open pit mine that produces gold, silver, lead and zinc. Newmont’s approach to the talent at its operations focuses on gender, nationality, and local and indigenous groups. In 2020 and for the 13th year in a row, Newmont made the Dow Jones Sustainability World Index and was named the top global gold mining company for its leading ESG performance. Peter Hughes-Hallett, Country Manager for Mexico at Newmont, said at Mexico Mining Forum 2021 that, “Newmont is the only gold producer ranked on the S&P 500 index and recognized for its ESG efforts.” Hughes-Hallett emphasized that future mining will require strong and sustainable relationships with communities. He added that Newmont has ramped up efforts to establish thorough communication with nearby communities. The company has implemented a program called “Ideas With Value,” in which it partners with Peñasquito’s communities to strengthen their business capacities. The goal is to promote the creation or improvement of small and micro businesses. Juan Reynaud, Peñasquito’s Head of Human Resources at Newmont, also stressed the importance of Newmont’s community commitment and explained that the company has hired 150 people from nearby communities to be road operators, who are being trained for future projects.

How Hydrogen Ties Into the Future of Mining Koen Langie Senior Hydrogen Solutions Developer and Head of Mining Program ENGIE

Best Practices to Improve Performance Euridice González Country Manager of Coeur Mexicana

Ensuring Safe and Stable Mining Facilities Kimberly Morrison Senior Director of Global Tailings Management Newmont Corporation

2020: A Record-Breaking Year for Torex Gold ICMM: A Benchmark for Responsible Mining Aidan Davy Chief Operating Officer and Director of Environment Program ICMM

Magna Gold’s San Francisco Mine Ramps Up Gold Production Complicated 1Q for First Majestic Silver Social, Environmental Best Practices Enable Mine of The Future Mexico Mining Forum 2021

Safety, a Top Priority for Success Carlos Villacian Director of Business Unit Latin America North of MSA Safety

Fresnillo Lowers Gold Production in 2021 Newmont’s Comprehensive ESG Approach Yields Results Peter Hughes Hallet Country Manager and Senior Director of Sustainability and External Relations of Newmont Mexico

Technology & Innovation It may have a long-standing reputation as a traditional sector, but mining is constantly changing to better adapt to harsh environments and work smarter. The promotion and implementation of technology and innovation within the sector was strengthened during the COVID-19 pandemic, especially given the sudden need to adapt to the new dynamics. Automation and digitalization solutions are finding a secure footing in mining as they can reduce costs, create safer environments and optimize operations. These solutions are becoming more widely accepted as they are adapted throughout the entire value chain and drive value. Although automation and digitalization are great opportunities for the sector, they also represent a challenge since many solutions require major changes and for some, the cost can be prohibitive. However, mining companies overall continue to see these innovations as key to improving profitability and ensuring the sustainability of their operations. In addition to technology, ESG trends have also strengthened during this new reality. Mining is expected to move toward greener initiatives to better adapt to current and future challenges, while also appeasing the demands of ESG-minded investors.

Technology & Innovation

Analysis Traditional Technologies: The Great Unknown?

View From the Top Jaime González | Digital, Automation Manager Mexico, CenAm and the Caribbean of Sandvik

View From the Top Barry Henderson | Strategy Director of Eclipse Mining Technologies

View From the Top Antonia Salvas | Vice President of Operations at Centric Mining Systems

Analysis Promi-Mex: Representative Sampling Systems Equal Productivity

View From the Top Stuart Sandler | Regional Manager North America of MineSense Technologies

Analysis Mining Tech Revolution: The New Valhalla

View From the Top Joseph Délano | Director of Director of Délano – Schmidt & Kranz

View From the Top Uriel Montelongo | Industry Specialist Manager of SKF Group

View From the Top Ángel Pedraza | Country Manager Mexico of Solenis

View From the Top Marcello De María y Campos | Director General of COMSA

Spotlight Digitalization the Future of Mining

Content Links

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Traditional Technologies: The Great Unknown? A sudden halt in the operation of a mine can result in tens of millions of dollars in losses, especially if the stoppage lasts weeks. The COVID-19 pandemic has made it clear that unexpected situations like these could very well happen. Having the means to protect against such events will be key to stabilizing an industry that is highly exposed to external factors. The Mexican mining sector has recognized the need to invest not only in the most revolutionary and disruptive technologies but in traditional technologies, as well. AI and IoT will obviously mark the future of the industry but without the study of geology, developments in exploration and 3D technology applied to topography and the operational efficiency of mines, progress will be unlikely. The pandemic allowed a change in the focus of investments, which are now aimed at risk prevention. Nevertheless, this has not changed the government’s direction with regard to halting mine concessions and exploration permits, a matter in which President López Obrador has personally interceded. However, it is precisely in exploration where traditional technology has enormous room for improvement. “3D modeling techniques use software to create schematics for subway areas prior to the construction of new mines. This can expand the area covered by exploration work by allowing imaging of areas that would otherwise be difficult or impossible to access. Modeling also offers significant opportunities for worker safety by providing users with a greater degree of information about a mine and its safety and by reducing the degree to which humans must investigate potentially dangerous or unexplored subway areas,” according to the report, “Minerals and Metals: Technology Trends 2020,” by Baker McKenzie. AI and the use of drones have also impacted this mining phase, exposing the need for the federal government to make an effort to boost the mining industry, as well as all industries that supply technology to the mines. Donovan Sanchez, Mining Director of SGS, is emphatic. “Exploration in Mexico has also been significantly affected by the tax levied on exploration. I think this tax should disappear. To explore is to risk money, as nobody can know for certain that the exploration target will yield a mine. Exploration must be favored to generate new projects that can become operational and later guarantee a constant tax income for the government when producing.” Locating new mining deposits, controlling the mine’s operational activities, minimizing risks in the use of explosives, monitoring leaching dams, improving logistics and transportation of minerals, waste and workforce, and managing water resources are other areas where traditional technologies have found windows of opportunity during the pandemic. However, the implementation of new technologies and operational structures must be accompanied by constant monitoring that, in addition to control, provides data to further improve and streamline operations in real time. “Technology must be accompanied by a great deal Read the complete article More about this topic

of experience and specialists must be in charge to be able to monitor its performance,” says Alejandro Espejel, Head of Smart Services at FLSmidth.

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Q: What questions and concerns regarding technology and automation do you receive from your current and potential clients? A: The key concern for the Mexican mining sector is safety and to ensure constantly improving working conditions. These are major considerations, along with increased profitability and better productivity, when implementing digitalization, electrification, robotics and autonomous or remote operations. Q: How is your business line equipped to address those concerns? A: Sandvik provides scalable solutions according to our customers’ needs and their operations. These solutions include My Sandvik Digital services with connected equipment, OptiMine, which incorporates analytics to optimize mining processes, and AutoMine, our solution for intelligent, tele-remote and autonomous operations. Q: How does Mexico compare to other mining jurisdictions in terms of technological standards and adoption of new technologies? A: Every country has different challenges and are at different

Jaime González

stages regarding the implementation of new technologies. The Mexican market is betting heavily on technology and I expect strong growth in the coming years.

Digital, Automation Manager Mexico, CenAm and the Caribbean of Sandvik

Q: How is Sandvik addressing the challenge of increasing awareness regarding alternative solutions? A: Sandvik has numerous products and technologies that are ready for implementation in the Mexican market. Change

Digital Transformation to Set a New Standard in Mexico

management is a key factor in the implementation of new technologies to create awareness among users and to help them understand how these solutions improve working conditions by creating safer and more profitable operations. Q: A key factor in automated solutions is the reduction in infrastructural changes and interventions. What is the best example of this from Sandvik? A: Electric loading and hauling vehicles equipped with battery swapping systems require less infrastructure on-site and fewer interventions by the operator, providing greater efficiency and continuity in the operation, which translates into higher productivity. Sandvik’s AutoMine solution provides autonomous equipment operations for high-speed production, fewer downtimes and extra productive hours. Q: What added value and significant savings can these solutions generate? A: When using OptiMine and AutoMine, value and savings are achieved in several ways. These include: reduced exposure to

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hazards; mining process optimization; monitor performance versus schedule; fact-based decision-making; optimized operational costs; effective resource utilization; continuous operations; reduced damage and extended life time; and multimachine control.

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Q: How is Eclipse Mining becoming a new standard for mining technology? A: At Eclipse Mining Technologies, we are developing SourceOne, a vendor-neutral industry data platform built exclusively for the mining industry. Our industry data platform allows mining customers to integrate all their legacy technology sources efficiently and effectively manage the aggregated, standardized data in one central location. Eclipse Mining Technologies views the SourceOne industry platform as the cornerstone for providing successful remote collaboration to the mining industry. All data consumed and aggregated by SourceOne is kept very secure through SourceOne’s encrypted connection, which ensures the integrity of the data and provides customers the confidence that their data is safe and inaccessible by unauthorized users. SourceOne’s centralized access point provides for multiple on-site or off-site users. It allows them to aggregate data from any program, in any format, while tracking the data’s history and context. Finally, the SourceOne industry platform prepares and validates a customer’s data for advanced techniques or technologies. For these reasons, we believe SourceOne is the new standard for mining technology and a unique offering for

Barry Henderson

the mining industry. Q: How do your products improve stakeholder satisfaction?

Strategy Director of Eclipse Mining Technologies

A: At a mine site or office, many people access data from many different software programs across different areas. Very often, there is limited to no cross-platform access between different areas and systems. SourceOne can take data from all available software systems and make it available to any

SourceOne: Reining in Big Data Chaos

authorized user in the organization. The data resides in a centralized location and exists as a single source of truth for the organization. All of the data’s contextual history is maintained as SourceOne tracks all changes over time. The possibility for commonly used mining data to be accessed remotely and simultaneously by all users, the potential for collaborative work and the ability to easily replicate workflows are necessary functionalities to meet operational objectives. These capabilities of SourceOne increase the value of data enormously, which in turn increases mine stakeholder satisfaction. Q: How are the insights that SourceOne identifies different from those you can get from standard mine reports? A: SourceOne provides reporting utilities, but the difference is that we allow customers to take data from a more extensive variety of sources. SourceOne takes several data sources, generated data, and workflows (along with all history and context) and makes them available to any authorized user in the organization. These data provide operators a more comprehensive picture of what their processes look like

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in areas such as geological modeling, mine design, mine planning, remediation design, plant operation, ore refinement, and many other areas. SourceOne makes all data and data sources more easily consumable and the resulting mine reports more robust and reliable.

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Q: How does Centric Mining Systems demonstrate its value to a client? A: Many of the most interesting aspects of our offering revolve around advanced analytics. It is here where we can best demonstrate the solutions’ value and ROI potential. These tools make it easy to calculate exact cost benefits or to find efficiency or productivity gains within the mining operation. Q: How is Centric Mining Systems using agile methodologies in its processes? A: The real change is being made in the way that we are implementing our solutions. With a more agile approach to our services, we can improve our delivery to clients ensuring collaboration at every step. At Centric Mining Systems we deliver scalable products, so it is important that we have room to change the scope of a project. Often, we see that as customers learn more about our product and what it can do for them, they begin to come up with more ideas on how to enhance its application. By following an agile approach we can address those additional requests from customers. It also allows for more collaboration and feedback throughout the process, which helps to reduce the risks inherent in the project itself and to improve

Antonia Salvas

user adoption. Q: What is the company’s role in changing attitudes toward technology within a traditional industry like mining?

Vice President of Operations at Centric Mining Systems

A: We understand that we are dealing with a more risk-averse client base and we want to make sure that Centric Mining Systems is easy and fast to implement, simple for our clients to use, and will deliver value quickly in terms of clear ROI.

Agile Tech to Turn Traditional Industry Digital

Case studies are helpful to instill confidence in potential clients so that they know that the promises we are making are promises we keep. Another action we take is getting involved in industry groups. This helps build collaboration between all stakeholders including mining companies, suppliers, organizations and governments. to define what these technologies do and best practices for implementation. All of this helps the introduction of tech in mining. Q: What new technologies is the company looking forward to releasing? A: We are excited about the next version of our product, which will be called Centric Cloud. It is a fully cloud-enabled solution that will be coming out this year. This gives us opportunities to implement new technologies that will increase the speed and ease of implementation. We are also creating a type of marketplace within Centric Cloud that allows any client to share processes and resources they have built within their own Centric solution with any other user.

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The company is working with a partner using digital twin technologies. This tool will allow the client to build a complete digital simulation of their mining operations, which will allow them to optimize their business.

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Promi-Mex: Representative Sampling Systems Equal Productivity Correctly placing sampling systems in strategic locations makes all the difference in determining ore grade. The right location for a sampling system depends on the characteristics of each process, as well as what results are expected from the sample. To determine the entrance mineral grade at concentrator plants, the sampling system is located after the grinding process and before the cyclone batteries. This has important advantages, but mainly that the particle size is 80 percent under 150μm. Another advantage of placing the sampling system in the right location is that less equipment is required when compared to a system installed upstream, prior to grinding. This is possible as long as there are no process changes in the grinding. If these changes occur, the installation should be evaluated in the stages prior to grinding. The installation of a pre-grinding sampling system also has some restrictions and the viability of developing a project in that area will depend on the particle size. In post-crushing applications, sampling becomes technically and economically viable and accessible. A fundamental and recommended application is when an operation does not have its own mine or the ore it extracts is not sufficient to meet the demands of its clients. In such cases, the operation is forced to acquire ore from third parties. Like any other product that is commercialized, the value will depend on the quality. For that reason, it is necessary to know the grade. It is also critical to control the product. In many operations, each stage of the sampling process is carried out under strict, automated management to avoid human intervention, leaving out the possibility of sample contamination and fraud. A sampling system for particulate material is subject to a series of regulatory requirements so that the sample can meet its main objective: to be representative and manageable for the operator. It is also important that, depending on the process, the sample be divided into two different lines to obtain a chemical sample and a particle sample. A sampling system usually has a straight path cutter, which is located at the discharge of a conveyor belt to obtain the increments from the main flow. Each of these increments is discharged to a conveyor belt that is part of the sampling system and doses the material to the secondary straight path cutter that divides the sample into chemical and granulometric lines. In the case of the chemical line, a reduction in the size of the ore is realized by installing one or two crushing stages to better Read the complete article More about this topic

control sampling errors. The rejects produced must be returned to the downstream process and according to the configuration, they can be handled by gravity, conveyor belts or elevators.

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from the

Q: What is MineSense’s offer in the mining market and what added value does it bring? A: MineSense is a new company that offers a sensor technology using X-ray fluorescence, with which we can examine the contents of the buckets at the mine face and determine the grade of payable metal in each bucket full. We can tell mining companies from the very start what they are extracting with their shovels. In addition, the implementation of this technology increases profitability and sustainability, water and energy are saved, the number of tailings produced is reduced and, in some cases, the life of the mine can be extended. Q: How does the company’s product work and where is it implemented? A: Mining starts by taking a huge pile of rocks and having geologists examine them. By conducting tests, they can confirm the presence of minerals. Subsequently, companies build a facility around that area to drill holes and use explosives to provide smaller pieces of rock. Then, companies send shovels or excavators to scoop up the material in a bucket and they put each bucket load into a truck, which takes the material that was recovered to the concentrator or to the waste dump.

Stuart Sandler

With our product, we connect sensors to the bucket as it collects material. Our product scans the material and provides an excellent estimate of the metals content that is very close

Regional Manager North America of MineSense Technologies

to assay outcomes. Q: How does the scanning technology work? A: We attach our scanners to the shovel’s bucket. The

New Estimation Tech for Metal Recovery is a Game Changer

scanners are powered from the cab and connected through cables. We also have a wireless communication that connects to the company’s network that is configured so that scanners can send their results to computers to process the information and deliver estimates in real time. By the time the shovel filling process is complete, we can deliver to the operator a reading of the grade of metal present in the shovel bucket. This information can be integrated into a fleet management system (FMS) to determine whether the material should be sent to the concentrator or to the waste pile. Q: How accurate is this technology? A: We deliver around 95-98 percent accuracy compared to the assay results due to the calibrations that are carried out. We first start with a process called amenability testing, where companies send us a representative sample of the mine’s material to scan. At the same time, we send that sample to a laboratory for assay. Later, we compare both results and calibrate them. Second, we go to the mine site and install one of our sensor units on a shovel and carry out similar calibration exercises with the mine. We do this until both MinseSense Technologies and the company’s mining teams agree there is X grade material in each bucket. Soon after, we provide the company with real-time information of what is in each scoop.

Q: How can you guarantee a certain percentage of uptime? A: Our goal is to achieve more than 90 percent uptime, which we have achieved. Mining is a harsh environment, so we place the sensors in the best part of the bucket to scan and deploy military grade steel around them to prevent damage to the sensors. In addition, we offer multiple sensors per bucket for redundancy. If one of the sensors is damaged, our system will continue working. We have a 24/7 monitoring center in Vancouver, British Columbia, that is always checking the system. We also keep spare parts on site for clients, so they can replace the damaged part if they require. Q: What are the minimum conditions that a mining operation must meet for your solution to be financially viable? A: We do a value model for each site, but it really depends on performance. Most of the time, we can help mines that process more than 10,000 tons per day. The larger the mine, the greater the economic benefit. In addition, if we can help a company extend its life of mine, they can earn even more profit because the fixed assets of the mine will already be fully depreciated, so that the only costs that will be incurred will be the variable cost of producing each additional pound or ton of payable metal; thus, adding additional years to a mine’s life can bring substantial additional profit to the mining company. Q: At what point during the mine’s life cycle is the ideal time to implement this solution? A: We see ourselves as a company that can produce value at any point in the life cycle; however, we believe that the best value can be obtained at the very beginning. The way that mine planning works today is that geologists survey and conduct tests to create block models in their planning software. These blocks are usually 10x10x10 or 10x10x15, which are designated as either ore or waste. With our solution, we can examine each shovelful and advise our clients how much waste and how much ore are in each bucket. Q: What are the main economic benefits of this solution? A: We provide multiple economic benefits for potential customers. We can extend the life of the mine, which results in significant additional profits. In addition, our two most common use cases are that we can identify ore that was initially identified as waste and can identify waste that was initially identified as ore.

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Technology & Innovation | 70

Mining Tech Revolution: The New Valhalla COVID-19 caused a major recession that affected virtually every aspect of the world’s major economies. However, it also brought opportunities to implement a variety of technologies in the mining industry. In 2020, numerous efforts to improve digitalization and automation processes were strengthened in Mexico. For the most part, mining is an activity that is carried out in isolated locations far away from urban centers, where it is difficult to access reliable communication technologies. As a result, certain technologies have become the best bet for investors to protect their companies against future events like COVID-19 while making processes more efficient and maximizing production. Many Mexican mining companies are focused on improvements in telecommunications, the handling of large amounts of data, the creation of multidisciplinary teams, both in the mines and in corporate offices, and workforce training. In addition to the adaptation and designs of new customized technologies that will mark the year 2021, Industry 4.0, 3D graphics, self-driving vehicles, AI, IoT and the management of huge amounts of data have become the new Valhalla of mining, which seeks to make processes as profitable as possible in a period of great uncertainty. The collection of big data and its subsequent analysis have proven to be very useful for mining’s operational efficiency procedures. Many mining companies with operations in Mexico are already working on improving efficiency thanks to technologies such as Eclipse Mining Technologies’ SourceOne, a data platform that allows mining clients to integrate all their legacy technology sources “efficiently and effectively in order to manage aggregated and standardized data in a central location,” said Barry Henderson, Strategy Director at Eclipse Mining Technologies. Technology has found a window for development in the workforce, and it has been forced to change its protocols as a result of the pandemic. Companies have focused on health protocols and worker safety and new technologies are helping in this transformation. Geolocation, the tracking of trucks and personnel in and out of mining facilities and health monitoring, in addition to the social distance practices forced by the circumstances are some of the steps that have been taken by mining companies. In fact, the use of wearables that measure physical exertion, body temperature and blood pressure are already common in many mining operations, while surveillance cameras help to reinforce social distancing. “With the growing demand for operational agility and more flexibility at work, cloud-based communication and enhanced collaboration tools provide a means for employees to send near real-time task updates. Another developing trend is rebooting the digital workplace by delivering systems that collect, manage, and prepare data for machine learning and artificial intelligence—all of this to improve and quicken decision-making. A third trend is the increased investment in software and hardware tools that facilitate employee collaboration. A fourth trend is the effort to increase the employee experience by providing collaborative, highly productive Read the complete article More about this topic

work environments that document the work completed. The last trend is that of more focus on cybersecurity technologies, processes, and procedures,” Henderson explains.

VIEW TOP Technology & Innovation | 71

from the

Q: What problems does Délano – Schmidt & Kranz solve in the mining sector and what new innovations is it offering the market? A: We are trying to provide the mining sector with more options regarding vehicles and solutions. We believe there are great opportunities to improve the efficiency of mines in Mexico, especially in the area of production through the use of vehicles that are well adapted to mines and through the implementation of high technology that allows the vehicles to be connected to a mine’s operations center. We are offering a solution under Nerospec SK. This solution allows access to the telecommunications infrastructure that already exists in mines. Q: What products and services does the company offer? A: Our experience in the sector allows us to identify the needs and understand the problems miners face. We offer a wide range of services and products for the mining industry, including 20-ton trucks such as the GHH Dump Truck MK‑20, which is easy to use and maintain. We also have a line of resinous products that provide the formwork and robustness for mine tunnels to avoid gaps and water leaks. Through the implementation of high technology, we provide a less

Joseph Délano

expensive solution compared to other similar offers. We also provide products that do not have high levels of electronics, which can be very difficult to repair if the mine

Director of Délano – Schmidt & Kranz

site does not have a sophisticated workshop. We offer products with high-quality engines. Our components are mostly of well-known brands that have several workshops that ensure prompt repair or service.

A Fast and Agile Service for the Mining Industry

Q: What are the benefits companies obtain when working with Délano – Schmidt & Kranz? A: The main added value we offer our partners is a reliable technology and product. The company offers a high availability of its products and an excellent knowledge of how to use them efficiently in operations. We also have great knowledge of the market and technologies oriented toward digital marketing, which has allowed us to provide our partners with an important marketing tool. Q: What goals does Délano – Schmidt & Kranz want to achieve in 2021 and what strategies are you implementing to achieve these? A: Our goals imply 100 percent sales growth compared to last year’s results. As part of our strategy, we intend to invest in digital marketing, hire new resources, include new brands in our portfolio, get closer to the digital and face-to-face market, continue with our innovation focus and look for new business platforms. We also have a strong interest in clean energies and innovation; for instance, hydrogen products that we want to

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promote in the Mexican market. Therefore, this year we want to participate in energy forums to inform potential customers of the benefits of hydrogen.

VIEW TOP Technology & Innovation | 72

from the

Q: What is SKF’s business plan in mining? A: SKF has new, sustainable business models for several sectors, including mining. Over the years, we have understood that companies will choose our solutions if we can identify the factors that prevent them from achieving optimal results in safety, productivity and sustainability, among others. With our new business model, we are no longer product suppliers, we are now providing integral solutions. Q: How is SKF incorporating sustainable practices in its products? A: SKF is aligned with the concept of the circular economy, particularly in reuse, which is the notion that products have a positive impact on the environment. We have strategically improved our offering not only in its environmental impact, but also in cost and productivity. There are two concepts that we offer among our integral solutions: RecondOil, which regenerates the same oil so that customers can reuse it, lowering their environmental impact and costs as a result; and our reconditioning process for bearings that is applied before any major damage or bearing failure occurs. Q: How does the company help its customers achieve their objectives?

Uriel Montelongo

A: We have a method called assessment that identifies the needs of our clients. This practice consists of a series of interviews and the collection of data that allows us to compare the results

Industry Specialist Manager of SKF Group

of the company versus global benchmarking to detect factors that prevent companies from achieving their objectives. The data collection and interviews are generally carried out between three and five business days by our strategic departments. In approximately three weeks, we have an integral solution for

New Model Transforms Supplier Into Integral Provider

our clients. Q: What added value does SKF provide its customers? A: We have been in business since 1907, which has allowed us to provide solutions and become a strategic partner. We also adapt our solutions to the client and help many organizations that want to evolve toward concepts like sustainability, Industry 4.0 and AI. Q: What is an example of an improvement SKF has achieved in mining? A: There are areas that are classified as concentrators, where minerals are processed through mills and have indicators related to productivity, safety and digitalization. SKF has provided equipment that sends wireless information to an operation center in Monterrey so that we can deliver data in real time. This provides operational and financial benefits. Q: What do you consider a top priority in the Mexican mining sector? A: Mining companies we work with have told us that personnel safety is the top priority for their organizations. It has been

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very important for SKF to understand what is really important in this sector so that we can tailor our solutions to our customers’ needs.

VIEW TOP Technology & Innovation | 73

from the

Q: What does Solenis offer the Mexican mining sector and how does it plan to strengthen the market? A: In the mining industry, we are focusing on liquid-solid separation solutions, such as anti-scaling and corrosion controls. Recently, the company merged with BASF’s paper and water chemicals business. In addition, we acquired a Mexican company that was our distributor last year. Although the merger and acquisition relate to other industries, they have an indirect impact on our mining market because they have increased our manufacturing capacity and the facilities that will be used to produce new mining products in Mexico. Q: How does the company ensure that clients are getting optimal results? A: First, we need to understand our clients’ needs. Next, we meet with the client to understand the problem and then we offer the best solutions. For example, we developed a new anti-scaling solution, which is the only product that controls scaling in low PH situations. For liquid-solid separation, we offer a variety of polymers to provide the best solution. We also developed a special chemical that changes the rheology of the pulp, which moves with a high level of concentration

Ángel Pedraza

due to the viscosity modifier. We developed this in Jamaica, and we are now trying to implement it in other sites because sometimes companies do not have enough water.

Country Manager Mexico of Solenis

We deliver the exact solutions our customers need because our technology measures the performance of the product to determine the quantity the company will require. For example, with scaling, we developed equipment to measure the scaling process. When companies can control that, they can control

Chemical Solutions to Optimize Mining Operations

the amount of chemicals they will use. Q: How does Solenis demonstrate its commitment to environmental security? A: We are a green company, and we are aligned with the Mexican environmental requirements. Solenis has achieved the Gold Recognition Level for Corporate Social Responsibility (CSR) performance by EcoVadis, a collaborative platform providing sustainability ratings and performance improvement tools for global supply chains. This is the second year in which the company attained Gold status. Q: What are your growth targets for 2021? A: We are focused on creating new alliances and increasing our market share. Previously, we were working with Grupo México with viscosity modifiers; however, it suspended the project because it needed to control the situation inside the plant. This year, we are trying to get this project back. The company is very successful with Canadian and American investors in Mexico; however, we still need to strengthen our

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position in the mining market among Mexican investors. For us, innovation is essential for developing new projects, so we are working with mathematical models and platforms to increase the efficiency of our products, processes and plants.

VIEW TOP Technology & Innovation | 74

from the

Q: What does COMSA specialize in and what is your added value? A: What we offer is gypsum, a sulfate mineral composed of calcium sulfate dihydrate, which is used. mainly in the construction sector. Due to its inherent fire resistance, gypsum board, commonly known as drywall, is the premier building material for wall, ceiling, and partition systems. It is also used in the cement industry, helping to prevent the mix from turning to stone quickly. Gypsum is a logistical business because it is a commodity that is not indexed and its price is based on supply and demand. In addition, we believe that our logistics is one of our greatest added values since we reach markets in the US, Canada, Central America, Colombia, Ecuador, Peru, Chile and Japan by sea freight. Q: What factors have allowed COMSA to become a leader in gypsum production in Mexico and Latin America? A: Our gypsum mine in San Marcos is the largest in Latin America and the third largest in the world. It has a production of 2 million tons per year and its capacity is 3 million tons. Three factors have made our company relevant worldwide:

Marcello De María y Campos

the logistics with which we carry out the ship-loading process with 55,000 tons of gypsum; our proximity to the important US market; and our high purity gypsum. Q: How does the company take advantage

Director General of COMSA

of its strategic location? A: Being on an island makes it easier for ships to arrive and depart. The company has its own port terminal, where we receive around 60 ships per year. Economies of scale allow us

Leading Gypsum Producer Moving Toward Renewable Energy

to reach the whole Pacific Coast and even Japan. This has been one of the most important factors for our success. We have a community of more than 600 people and we provide them with free housing, energy, water, schools, hospital and employment. Q: How did the demand for gypsum evolve in 2020 and what measures did the company take to adapt to the pandemic? A: We saw demand fall more than 18 percent due to COVID-19, particularly as the US construction industry had to stop many projects and the main economies in Latin America had stringent lockdowns. During these times, our priorities became the safety of our people, keeping them employed and reducing costs in terms of efficiency in our processes. COVID-19 opened our eyes to many areas of opportunity. One of our competitive advantages is the COMSA team. Without them the company would not be where it is now. Q: What are the company’s projections in terms of demand for 2021? A: In 2021, we are better prepared to face the COVID-19 crisis and we are on the right track. We expect to see higher demand this year, as the US and Latin American industries are recovering. Our projections for 2021 are very good for the company and at the same time challenging for the volumes that we export each month.

Q: What are the company’s primary export destinations and what other markets does the company want to reach? A: Our main clients are on the Pacific Coast. We export gypsum from Canada to Chile and our largest market is the US. North America demands gypsum for the construction sector, while Central and South America demand the mineral for the cement industry. There are other interesting markets. We have a sister company that manufactures agricultural gypsum with our San Marcos gypsum. Gypsum is abundant on all continents and the factor that decides its potential is logistics. We would like to look for other destinations, but sea freight costs are a determining factor when exporting. Last year, costs were lower due to the pandemic, so we were able to reach the East Coast of the US and the Panama Channel. However, this always depends on the cost of freight because if it is high, that prevents us from reaching other markets. Q: Why did COMSA decide to develop a solar project and what does it hope to achieve in the short term? A: Our goal is to be autonomous in terms of energy and water. One of our main values is our commitment with the environment and the necessary best practices to ensure sustainability. This will be a game changer because the cost of energy is the most important cost in our process. This project will produce the energy needed for our process, community and desalination plan from a 100 percent renewable source. We expect the first stage of the project to be ready in 3Q21, with more than 4,000 solar cells with bifacial modules and tracking devices combined with a lithium battery that will allow us to generate and store 60-70 percent of our energy. This is a big step as we previously used diesel, which is difficult to transport to the island and is no longer desirable given our strict emissions controls. Q: What are the company’s plans after the San Marcos mine reserves are depleted? A: We are in the final phase of the mine, with 10 to 15 years of reserves left. We are focusing on delivering the best gypsum quality to our clients. In addition, COMSA has another site off the island where we have significant reserves. We plan to continue our work after the closure of the San Marcos mine. We have gypsum concessions in other parts of the Mexican coast that we want to develop and we are also interested in exploring other minerals.

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SPOTLIGHT

Technology & Innovation | 76

Digitalization the Future of Mining FLSmidth has become an important ally for the industry, providing innovative engineering, equipment and service solutions that improve performance, drive down costs and reduce environmental impact. Furthermore, with its MissionZero sustainability program, it is helping the industry move toward zero emissions by 2030. At Mexico Mining Forum 2021, Alejandro Espejel, Head of Smart Services at FLSmidth, explained that the equipment and technologies that the company provides run the entire gamut of a mining worksite’s productive chain. Espejel explained that miners have a permanent challenge, which is to maintain the profitability of their operation, especially since the ore deposit grade is constantly decreasing. However, through digitalization, mining companies can maintain and improve that profitability. The key conundrums of automation and digitalization are that they generate volumes of data that are not necessarily easy to read. FLSmidth offers service packages that can deliver insights based on the data that all these sensors and technologies generate. The goal of implementing digital solutions is to achieve asset performance optimization and through the use of the company’s technologies, mining companies can move beyond reactive to predictive maintenance. FLSmidth has also announced it has several projects that are being developed as part of the company’s pipeline, such as robotic and augmented reality solutions that can place engineers on-site remotely.

Mining Innovation Goes Deeper Jan Petzold CEO of GHH Group

Envisioning a Promising Future with Automated Technologies Joseph Délano Director of Délano – Schmidt & Kranz and Eric Pohlmann, CEO of Nerospec SK

ECN: The Mining Industry’s Partner for Full Automation Álvaro Rendón Director ECN Scientific of ECN Automation

SP Sinergia: A Solid Base for Mining 4.0 Roberto Pérez Director General of SP Sinergia

Promi-Mex: Representative Sampling Systems Equal Productivity Drilling Experts Innovate in the Mining Sector César Ruiz General Director of MINSOL

Innovating Solutions for a World in Motion Rodolfo Calderón International Sales Manager Carlisle Brake & Friction

Breaking Barriers Through Innovation Juan Carlos Macías General Manager of Transtecno Group

Boosting Communications in the Mining Industry Amilcar Rosas Sales Manager Heavy Industry of Danfoss

The Business Software that Mexican Mining Companies Require Alejandro Sánchez | Luis Valenzuela CEO of Abacus IT | Project Director of Abacus IT

Gruminex Uses Top Software to Deliver Best Results Jean Carlo Bagnod Mechanical Engineer of Grupo Minero Mexicano (GRUMINEX)

Fenner Dunlop Provides Tangible Benefits for Mining Operators Greg Girardey Vice President of Fenner Dunlop

Acronyms AI

Artificial Intelligence

ICMM

International Council on Mining and Metals

INEGI

National Institute of Statistic and Geography

AIMMGM

Association of Mining Engineers, Metallurgists and Geologists of Mexico, Zacatecas District

AISC

American Institute of Steel Construction

INPI

National Institute of Indigenous Peoples

AMIA

Mexican Academy of Environmental Impact

IPO

Initial Public Offering

MBN

Mexico Business News

MMF21

Mexico Mining Forum 2021

MORENA

Movimiento Regeneración Nacional

NGOs

Non Governmental Organizations

NYSE

The New York Stock Exchange

PEA

Preliminary Economic Assessment

R&D

Research and Development

ROI

Return On Investment

SEMARNAT

Ministry of Environment and Natural Resources

SLS

Solid to Liquid System

SME

Society for Mining, Metallurgy & Exploration

TMTC

TAKRAF Mining Technology Center (TMTC)

CAMIMEX CANCHAM CAPEX CIMMGM

Mexican Mining Chamber Canadian Chamber of Commerce in Mexico Capital Expenditure Colegio de Ingenieros de Minas, Metalurgistas y Geólogos de México

CO2

Carbon Dioxide

CSR

Corporate Social Responsibility

CTA DTS

Consultoría y Tecnología Ambiental Dry Stack Tailings

ESG

Environment, Social and Governance

EVs

Electric Vehicles

FDI

Foreign Direct Investment

FMS

Fleet Management System

TSX

TSX Venture Exchange

GDP

Gross Domestic Product

UNEP

HSE

United Nations Environment Program

Health, Safety and Environment

USMCA

United States Mexico Canada Agreement

WIM

Women in Mining

ICMC

the International Cyanide Management Code

ICME

International Council on Metals and the Environment

Advertising Index Orla Mining 1

TorexGold 42

Accendo 5

Eclipse Mining 50

Iberdrola 12

SKF 57

MexicoView 18

VMX Mine Pro 61

TMX Group 22

Sandvik 69

Promimex 30

CyPlus Idesa 75

Emerson 37

Index Accendo Banco 15

Ganfeng Lithium 31

Agnico Eagle 9, 23, 36, 37, 52

Gatos Silver 35

Alamos Gold 13, 45

GFS Corp 56, 57, 61

Alderley Gold Corp 28

Gogold Resources 54

Alio Gold Corp 27

Golden Minerals Company 35

Americas Gold and Silver Corporation 24

Golder 45

Argonaut Gold 43, 47

GRID-Arendal 54

Bacanora Lithium 31

Grupo México 7, 44, 73

Baker McKenzie 63

ICMM 54, 56, 59, 60

Bank of Mexico 44

Impact Silver 43, 48

BASF 73

IMR 23, 38

CAMIMEX 4, 7, 9, 10, 13, 18, 24, 44

Industrias Peñoles 44

CANCHAM 9

INEGI 44

Capitan Mining 11, 23, 25

International Council on Mining and Metals (ICMM) 51

Centric Mining Systems 62, 66

International Labor Organization 17

Chesapeake Gold Corp 23, 28

Kootenay Silver 32

Coast Capital Management 16

Magna Gold Corp 23, 27, 45

Coeur Mining 43, 49, 52, 54

MAG Silver 26

COMSA 62, 74, 75

Major Drilling 29

CRUX Investor 11

Mexican Academy of Environmental Impact AMIA (AMIA) 17

Defiance Silver 11, 23, 29, 30 México Minero 9 Délano – Schmidt & Kranz 71 Minera Alamos 32 Discovery Metals 35 Minera Autlán 52 Eclipse Mining Technologies 62, 65, 70 Minera Camino Rojo 23, 33 EcoVadis 73 Minera Cuzcatlan 54 Endeavour Silver 34 Minera Zalamera 11, 12 Engie 56, 57, 61 MineSense Technologies 62, 68 Epiroc 56, 57, 61 Mining Association of Canada 37 First Majestic Silver Corp 24, 45 Ministry of Economy 8, 24 FLSmidth 63, 76 MJC Capital Fund 15 Fresnillo 13, 44, 59

Index MORENA 31

Solenis 62, 73

Newmont 13, 43, 54, 58, 59

Sonoro Gold Corp 32, 39

Orla Mining 32, 33, 34

Southern Copper 13

Pan American Silver 29, 30

Southern Silver Exploration 11

Promi-Mex 62, 67, 77

S&P Global 56

PwC 24

TAKRAF 43, 55

Reyna Silver 11, 23, 26, 40

Telson Mining Corporation 34

Riverside Resources 11, 12, 25

Thermo Fisher Scientific 19

Sandvik 56, 62, 64

The Silver Institute 16, 20

Santacruz Silver Mining 52

Timmins Gold Corp 27

SEMARNAT 11, 18

TMX Group 6, 14

SGS 63

Torex Gold Resources 45, 56

SilverCrest Metals 35

Women in Mining 7, 9

SKF Group 62, 72

World Bank 15

Society for Mining, Metallurgy & Exploration (SME) 51

World Gold Council 15, 20

Photo Credits Cover Fresnillo

39 Sonoro Gold Corp

40 Sonoro Gold Corp

Orla Mining

4 Promi-Mex

41 Torex Gold Resources Inc

Banco Accendo

42 Torex Gold Resources Inc.

Ministry of Economy

45 MBP

9 MBP

46 Torex Gold

10 CAMIMEX

47 Argonaut Gold

11 MBP

48 Impact Silver

12 Iberdrola

49 Coeur Mining

14 TMX Group

50 Eclipse Mining Technologies

15 World Gold Council, Accendo Banco, MJC Capital Fund, The Silver Institute, Coast Capital Management.

52 MBP 54 MBP

16 Tecpronim 55 Takraf Mexico 17 Mexican Academy of Environmental Impact 56 MBP 18 Mexico Business News 57 SKF 19 Thermo Fisher Scientific 58 Newmont 20 Calidra 59 Coeur Mining 21 Sonoro Gold Corp 60 Promimex 22 Toronto Stock Exchange 61 VMX Minero 25 Captain Mining 64 Sandvik 26 Reyna Silver 65 Eclipse Mining Technologies 27 Magna Gold Corp 66 Centric Mining Systems 28 Chesapeake Gold Corp 67 Promi-Mex 29 Defiance Silver 68 MineSense Technologies 30 Promi-Mex 69 Sandvik 32 MBP 71 Délano-Schmidt & Kranz 33 Minera Camino Rojo 72 SKF 34 Telson Mining Corporation, Orla Mining, Endeavour Silver, 35 Silver Crest Metals, Golden Minerals Company, Discovery Metals, Gatos Silver 36 Agnico Eagle Mexico 37 Emerson 38 IMR

73 Solenis 74 COMSA 75 Cyplus Idesa 76 FLSmidth 77 SKF 80 Avino silver

Credits Journalist & Industry Analyst: Alejandro Ehrenberg Journalist & Industry Analyst: Paloma Durán Journalist & Industry Analyst: Lorenzo Núñez Publication Coordinator: Isabel Adame Publication Coordinator: Fortuna Osorio Publication Coordinator: Anna Okopnaya Senior Writer: Daniel González Editor: José Escobedo Managing Editor: Alejandro Salas Senior Editor: Mario Di Simine Collaborator: Pedro Alcalá Collaborator: Cas Biekmann Graphic Designer: Tania Aguiñiga Graphic Designer: Marcela Muñoz Ledo Senior Graphic Designer: Mónica López Design Director: Marcos González Web Development: Omar Sánchez Circulation Manager: Constanza Blanco Director General: Jeroen Posma

ALL RIGHTS RESERVED © Mexico Business Publications S.A. de C.V., 2021. This annual publication contains material protected under International, US and Mexican Laws, as well as international treaties. Any unauthorized reprint or use of this material is prohibited. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system without express written permission from Mexico Business Publications S.A. de C.V. Mexico Mining Review is a registered trademark. The publisher has made all reasonable efforts to provide accurate information and the information contained in this publication is derived from sources believed to be true and accurate. However, the information in this publication should not be considered to be complete or definitive and may contain inaccuracies or typographical errors. The publisher accepts no responsibility regarding the accuracy of information and use of such information is at your own risk. The publisher will not be liable to any party for any direct, indirect, special or other consequential damages arising from any use of information in this publication. The publisher provides no representations or warranties, express or implied, including any implied warranties of fitness for a particular purpose, merchantability or otherwise in relation to any information provided by the publisher in this publication.

Mexico Mining Review 2021

Articles inside

Exploration & Development

Introduction