Huaron is an underground polymetallic silver mine located in the department of Pasco, in the Peruvian central Andes. The mine was acquired by Pan American in 2001. Silver, zinc, lead, and copper mineralization is present as epithermal veins, mantos, and limestone replacements. The mining method is a combination of conventional cut and fill, mechanized cut and fill, and mechanized sub-level long hole stoping.
Ore is treated by crushing, ball mill grinding, selective flotation of the ore to concentrates, followed by thickening and filtering to produce silver in copper, lead, and zinc concentrates. The nominal mill capacity is 2,300 tonnes per day.
In 2014, Huaron’s mill throughput rose 11% relative to 2013, which more than offset a 3% decrease in average silver grades and resulted in a 10% rise in silver production to a record 3.64 million ounces. The increased throughput rate reflected the benefits obtained from the multi-year mine mechanization effort that also focused on high-grade copper ore zones and resulted in a 73% increase in copper production to a record 5,900 tonnes. Lead and zinc production increased by 3% and 1%, respectively to 6,000 tonnes and 14,200, respectively.
Cash costs at Huaron in 2014 decreased to $11.56 per ounce, 25% below 2013’s cash costs. The lower cash costs were achieved primarily due to lower operating costs from the mechanized mining methods, unit cost benefits associated with increased throughput rates, and improved by-product credits per ounce driven largely from record copper production, partially offset by reduced copper prices.
Huaron’s 2014 all-in sustaining costs per silver ounce sold (“AISCSOS”) of $19.07 was 18% lower than the $23.23 posted in 2013. The decrease was largely attributable to higher by-product credits and a 5% increase in Huaron’s payable silver ounces sold, which resulted from more silver ounces produced.
Increased mining and milling rates at Huaron are expected to continue in 2015; as a result, silver production is expected to rise modestly to between 3.70 million and 3.80 million ounces from 3.64 million ounces in 2014. The increased throughput rates are the result of higher amounts of ore available by mechanized long-hole mining. Zinc and copper production are expected to decrease as a result of lower grades, while lead production is expected to remain relatively consistent.
2015 cash costs are expected to rise to between $13.00 and $13.75 per ounce of silver from $11.56 per ounce in 2014, primarily due to a decline in by-product credits from the expectation of lower by-product prices.
2015’s sustaining capital expenditures of between $8.0 million and $10.0 million are expected to be significantly lower than the $17.3 million spent in 2014. 2015 expenditures are primarily comprised of a tailings dam expansion, near-mine diamond drilling, ventilation raises and mining equipment, camp additions and general equipment maintenance.
AISCSOS at Huaron for 2015 is expected to be between $16.00 and $17.00 per ounce, an average decrease of 13% from the $19.07 per ounce reported in 2014 due primarily to lower sustaining capital expenditures.
Management estimates that the Proven and Probable mineral reserves at the Huaron mine, as at December 31, 2014, are as follows:
Huaron Mineral Reserves 1, 2, 3
|Reserve Category||Tonnes (Mt)||Grams of Silver per tonne||% Zinc||% Lead||% Copper|
1. Estimated using a price of $18.50 per ounce of silver, $2,000 per tonne of zinc, $2,000 per tonne of lead and $6,800 per tonne of copper.
2. Mineral Reserve estimates for Huaron were prepared under the supervision of, or were reviewed by, Michael Steinmann, P.Geo., and Martin G. Wafforn, P.Eng., as Qualified Persons as that term is defined in NI 43-101.
3. Numbers may not add due to rounding.
Management estimates that mineral resources at Huaron, as at December 31, 2014, are as follows:
Huaron Mineral Resources 1, 2
|Resource Category||Tonnes (Mt)||Grams of Silver per tonne||% Zinc||% Lead||% Copper|
1. These mineral resources are in addition to Huaron mineral reserves. Estimated using a price of $18.50 per ounce of silver, $2,000 per tonne of zinc, $2,000 per tonne of lead and $6,800 per tonne of copper.
2. Mineral resource estimates for Huaron were prepared under the supervision of, or were reviewed by, Michael Steinmann, P.Geo., and Martin G. Wafforn, P.Eng., as Qualified Persons as that term is defined in NI 43-101.
Mineral reserve estimates are based on a number of assumptions that include metallurgical, taxation and economic parameters. Increasing costs or increasing taxation could have a negative impact on the estimation of mineral reserves. There are currently no known factors that may have a material negative impact on the estimate of mineral reserves or mineral resources.
|Location||Pasco Province, Peru|
|Products||Silver rich zinc, lead, and copper concentrates|
|Deposit Type||Epithermal veins, mantos, and replacements|