Record highs in gold and silver prices are driving mining executives to boost output and expand operations as they cash in on the demand of the precious metals.
Gold was trading at US$3,689 an ounce and silver was trading at $42.47 mid afternoon Tuesday.
“Margins always sustain long-term profitability and capital returns, and now we’ve got a payback of this expansion from six to eight million of less than six months at the current gold price,” Dean told BNNBloomberg in a Tuesday interview.
Artemis Gold executive chair Steven Dean said the company is upgrading the first stage of the processing plant at its Blackwater Mine in British Columbia. The site holds 11.7 million ounces of gold resources and 122.4 million ounces of silver.
Blackwater, which opened earlier this year, produces roughly 20,000 ounces per month, or 240,000 ounces annually.
The $110-million expansion will raise nameplate capacity from six million tonnes to eight million tonnes per year, which is a 33 per cent increase.
“They are some really very capital efficient add-ons to the existing phase one plant that we only just commissioned less than six months ago,” said Dean. “We’ve already started that expansion and will be at that main plate by about this time next year.
Dean said new projects like Blackwater maintain lower costs compared with older mines.
“You’ve got maintenance costs, sustaining costs, you’ve got deeper open pits, you’ve got deeper underground mines, and that all contributes to an increasing cost,” he said. “If you have the advantage of a new mine like the Blackwater mine, then we can sustain a pretty low cost.”
Junior miner Sierra Madre Gold and Silver is also expanding its La Guitarra mine in Mexico. It produces about 800,000 ounces of silver annually. CEO Alex Langer said current throughput is 500 tonnes per day but will climb steadily.
“That will get us going,” Langer told BNN Bloomberg in a Tuesday interview. “It is a stage capacity build, so we’ll get up to about 800 tons per day by the middle of next year, followed by 1500 tons per day in about 24 months.”
The company received a $19.5 million investment from Franklin Templeton and businessman Eric Sprott. Current grades average 1.23 grams of silver and 1.25 grams of gold per tonne of gold.
“The price of silver and gold, and both of them, has really ran up here the last little while,” said Langer. “It’s quite exciting. Profits are being made, and there’s a lot of investment we’re seeing coming to the market.”
He expects production to nearly triple with the expansion once it is complete. “With this expansion, that’ll allow us to get over that number,” Langer said. “So, I would expect us to get 1.5 to 1.8 million ounces cut next year, followed by two and a half to 3 million ounces of silver production just from La Guitarra alone.”