Engineering & Mining Journal

APR 2018

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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Page 42 of 91

PERU GOLD APRIL 2018 • E&MJ 41 Main project extends the life of the Yana- cocha operation until 2027, with average annual gold production of 200,000 oz per year (oz/y) expected between 2020 and 2025," Buenaventura reported. The medi- an projected CAS is $800/oz. The median projected AISC is $950/oz. The median projected CAPEX for 2018 is $85 million. "CAPEX for the (entire) project is expected to be between $250 and $300 million," Buenaventura reported. Those production numbers will help compensate for "Yanacocha's lower pro- duction resulting from lower grades and recoveries from deep transitional ore," Newmont reported. Total South American "production is expected to be between 590,000 oz and 690,000 oz in 2019, with the addition of Quecher Main, and between 475,000 oz/y and 575,000 oz/y in 2020, as Yanacocha laybacks are mined out." For perspective, total gold output from Newmont's South American opera- tions was 970,000 oz in 2014, falling to 918,000 in 2015, and 759,000 in 2016. With sinking grade, sales and produc- tion numbers, Yanacocha is in the midst of an identity crisis, which won't last long, according to Buenaventura. "We have no doubt that Yanacocha will become a ma- jor copper producer in the medium term." Refractory Ore to Extend Lagunas Norte's Life Barrick's Lagunas Norte open-pit gold mine, located more than 4,000 m above sea level in north-central Peru on Bar- rick's Alto Chicama property in the La Libertad region, 140 km east of Trujillo, saw production fall steadily over the last half-decade while costs somewhat pla- teaued. The mine is run by Minera Bar- rick Misquichilca S.A., Barrick's Peruvian subsidiary. Its production provided 8% of Barrick's total gold output in 2016. And the company forecasts "in the medium term," the mine and its expansion proj- ect will "contribute free cash flow through new, high-quality production." Until then, production is expected to plummet; yet it remains one of Peru's biggest gold mines. In 2017, Lagunas Norte produced 387,000 oz of gold, down 11% from 435,000 oz in 2016. Production fell 22% yoy in 2016, "a result of lower equipment availability, combined with processing harder material and a higher percentage of older stock material, in line with expec- tations as the mine matures," Barrick re- ported. "The decrease in gold production was partially offset by higher ore grades." Prior to that, production fell 4% yoy in 2015, 4% in 2014 and 20% in 2013. Production is down 49% since 2012. During the same period, costs inter- mittently counterintuitively trended with grade. For example, in 2014, as grade ticked downward slightly, so fell AISC. Similarly, in 2016, when grade rose 10%, AISC spiked 4%. Some of that spike was due to consumables costs and falling sales volume, Barrick reported. For 2017, AISC was $483/oz, down from $529/oz. That 2017 number is down 23% from the half-decade peak of $627/oz in 2013. In 2016, with gold prices on the rise, Barrick reversed a $247 million goodwill impairment charge for Lagunas Norte. Such was the "result of cost improve- ments," lending to an increase in Fair REDUCE

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