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 44 of 91

PERU GOLD APRIL 2018 • E&MJ 43 price assumptions for 2017 and 2018, a lower resource price, and an increase in the Peru tax rate," Gold Fields reported. Capital expenditures at the mine dropped 21% in 2017, from $43 million to $34 million from lower spending on tailings dam construction and waste stor- age facilities. That work is part of a project, the subject of a prefeasibility study com- pleted in 2017, to extend the life of the mine to 2030. "The life extension is to be achieved by a combination of a high- er density factor along with an increase in the dam walls of the current tailings dam to 3,803 m above sea level, which adds two years to the existing (tailings storage facility), and in-pit tailings, which adds five years," Gold Fields reported. "The increased tailings storage comes at minimal additional capex and allows for an increase in reserves of 1.4 million oz (40.1 million mt at 0.5 g/mt gold and 0.4% copper, a 58% net increase), which converts 80% of resources." The company's 2018 guidance has production falling 9% yoy to 280,000 oz, AISC rising 20% to $810/oz and capital expenditures rising 32% to $45 million, perhaps bringing into question wheth- er the mine will remain, as the company described it, the "lowest-cost producer in Gold Fields' portfolio, producing high-mar- gin gold and copper." (Gold Fields report- ed a $35 million net loss for 2017.) Orcopampa Grows Gold Production Buenaventura's 100% owned, 50-year- old underground gold mine, located in Castilla, Arequipa, annually gets the lion's share of the money the company spends on exploration. Silver mining op- erations started there in 1967, and the company reported in 2016 that the mine has produced a total of more than 4.8 million oz of gold and 73.8 million oz of silver. It exploits two areas via mecha- nized overhand cut and fill with low-profile equipment. The ore goes into railroad cars that run to the surface, and into haulers for the 7-km-ride to the 1,500-mt/d-capacity, doré bar-producing concentrating plant. The 2017 numbers show the explora- tion expenditures are paying dividends. Since 2013, costs have mostly fallen steadily, while production numbers, after a steep decline, have leveled off. Along those lines, Orcopampa is one of the only two major Peruvian gold mines covered here whose 2018 production is a lock to eclipse that of 2017. In 2017, the mine maintained its production level as costs crept up. To- tal gold production rose 9% in Q4 over Q4 2016. "Fourth-quarter 2017 gold pro- duction at Orcopampa increased mainly due to a 13% Q/Q increase in volume of ore treated," Buenaventura reported. For the year, total gold production was rough- ly the same as 2016. The mine dropped costs as the year ran down; however, on the year, CAS in- creased slightly for the first time since 2013. "Fourth-quarter 2017 CAS de- creased 4%, to $738/oz, compared to $772/oz in 4Q16, mainly due to lower meters drifted (8% decrease Q/Q)," Bue- naventura reported. For the year, CAS rose from $704/oz to $743/oz, or 5%. SIZE

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