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 43 of 91

PERU GOLD 42 E&MJ • APRIL 2018 Value Less Costs of Disposal for the mine, Barrick reported. "(A)n amount of $28 million was recorded as an impairment reversal in the fourth quarter of 2016." That move came as the company wrapped up paperwork and planning for the mine's Refractory Ore project. "At the Lagunas Norte mine in Peru, we are ad- vancing a project to extend the life of the mine by approximately nine years by min- ing the refractory material below the oxide ore body in the current open pit," Barrick reported. "The first component involves installing grinding and carbon-in-leach (CIL) processing. The second involves in- stallation of a flotation and pressure oxi- dation circuit, allowing us to optimize the timing of capital expenditures." The prefeasibility study was launched in 2015. Mining was to begin in 2016 and run through 2021, with the refractory ore being stockpiled. Permitting was to run from 2016 to 2019. Commissioning of the new circuit was calendared for completion in 2021, and refractory gold production is planned for late 2021 running to 2029. "The plan contemplates an initial capital investment of approximately $640 million for the installation of a 6,000-mt/d grind- ing-flotation-autoclave and CIL processing circuit to treat the refractory material," Barrick reported in a technical report from Q1 2016. "As contemplated by the study, average annual production in the first five years is expected to be 240,000 oz at (an AISC) of $625/oz." Those numbers may be dated. In 2016, the company reported adding 1.1 million oz to the mine's proven and probable reserves. In 2017, it report- ed adding 392,000 oz to it. Thus, the mine's proven and probable reserves sit at 4 million oz, or 55.4 mil- lion mt grading at 0.079 oz/mt, Barrick reported. Median production guidance for 2018 is 250,000 oz, or a 35% decline yoy. Median AISC is $725, or an increase of 50% yoy. Copper Influences Cerro Corona Gold Sales Cerro Corona, one of Peru's top produc- ing gold mines, fits the picture thus far drawn. It is facing long-term trends in falling grade, falling production, falling earnings and rising costs. Nonetheless, in 2018, it could produce more gold than Lagunas Norte, making it a "key asset" in a "highly cash generative region," ac- cording to 99% owner Gold Fields Corona (BVI) Ltd., a subsidiary of Gold Fields. The 4,365-hectare property is sited 1.5 km northwest of Hualgayoc and 80 km north of Cajamarca. Discovered in 1979, the property changed hands a cou- ple of times before Gold Fields brought the mine into production in 2008. Ore is crushed by two parallel jaw crushers, ground by a SAG and ball mill, and pro- cessed via copper flotation at a rate of up to 6.7 million mt/y. Concentrate is thick- ened and hauled 380 km to port, des- tined for smelters abroad. In 2017, gold production increased 13%, from 269,000 oz in 2016 to 305,000 oz, due to improving copper prices, higher gold grade and higher gold recovery, the company reported. This after falling 9% yoy in 2015 and again in 2016. Gold production is off by 20% from the 2011 high of 383,000 oz. Cerro Corona's AISC fell 2% yoy in 2016 and 12% in 2017, "on the back of a strong performance from the operation," after rising for five consecutive years, with a 43% increase occurring in 2014 alone, Gold Fields reported. The mine's 2017 AISC of $673/oz is a 54% increase over the $437/oz logged for 2011. For that timeframe, grade generally declined, fall- ing 11% yoy in 2012, 6% in 2013, 7% in 2015, and 14% in 2016. In 2017, how- ever, head grade increased by 5%, "from 1.03 g/mt to 1.08 g/mt," the company reported. "Gold recoveries increased from 67.5% to 70.4%." This, in part, contribut- ed to the company being able to decrease the total amount of ore processed by 3% and still increase sales by a 17% yoy. For 2017, the mine's bookkeepers re- versed a $53 million impairment. "The impairment was due to a reduction in gold and copper reserves due to deple- tion, a decrease in the gold and copper

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