Premier has a plan to tackle Mercedes problems

24th January 2020 By: Mariaan Webb - Creamer Media Senior Researcher and Deputy Editor Online

TSX-listed miner Premier Gold Mines has had a “trying” year at its Mercedes mine, in Sonora, Mexico, which fell short of its guided production last year, producing 59 901 oz of gold and 191 306 oz of silver.

Excessive grade dilution led to lower-than-planned production, the mining company said on Thursday.

Fourth quarter gold production at Mercedes was 12 274 oz and silver production was 44 809 oz.

"2019 was a trying year for our Mercedes mine," stated president and CEO Ewan Downie. "However, we believe that we understand the challenges faced by the mine this past year and have a plan in place to address them.”

Premier’s exploration focused on identifying near-mine deposits at Mercedes and this programme has been hailed as the most successful since Premier bought the mine in 2016. Key discoveries were made at Lupita Extension and San Martin. Both deposits display potential to host above average mineral resource grades. 

Premier said that access to Lupita Extension was under way and would increase the number of available ore headings and stopes, resulting in added flexibility and improved production. A comprehensive reconciliation process was being implemented at the mine as part of an overall effort to ensure mined grades are optimised to the block model estimate.

Further, the mine's dilution reduction efforts now include the use of smaller mining equipment to allow reduced mining widths and headings sizes where appropriate.

The company is expecting increased production and lower costs in 2019, with Mercedes’ 2020 guidance range set at between 65 000 oz and 75 000 oz at a cash cost of between $850/oz and $975/oz and all-in sustaining costs of between $1 125/oz and $1 275/oz.

At South Arturo, Nevada, in the US, Premier produced 7 526 oz of gold and 1 523 oz of silver in 2019. The company declared commercial production at the mine – a joint venture with Barrick Gold – at the end of the third quarter.

The El Nino mine recovered a total of 5 964 oz of gold (including 562 preproduction ounces) to Premier's account during 2019, with an additional 3 855 contained ounces being stockpiled for future processing. In addition, 2 124 oz of gold were recovered from the Phase 2 openpit stockpile during the year with an additional 392 preproduction ounces of gold from the Phase 1 openpit.

Exploration drilling to increase reserves and resources was also completed elsewhere at South Arturo. Primary Phase 3 pit targets returned highlight intercepts including 112.8 m of 7.29 g/t gold and 62.5 m of 7.39 g/t gold.

“We believe our continued exploration successes at Mercedes and the resumption of mining at South Arturo will contribute to production for years to come and provide a platform for our company's growth,” said Downie.