Huaron

Huaron

Huaron is an underground polymetallic silver mine located in Pasco in Peru.

Highlights

  • Location: Pasco, Peru
  • Mine Type: Underground
  • Ownership: 100%
  • Products: Silver rich zinc, lead, and copper concentrates
  • Capacity: 2,300 tpd
  • Deposit Type: Epithermal veins, mantos, and replacements
Huaron Map

The mine was acquired by Pan American in 2001. Silver, zinc, lead, and copper mineralization is present as epithermal veins, mantos, and limestone replacements.

Mining is undertaken using a combination of mechanized sub-level long hole stoping, and mechanical and conventional cut and fill.

Huaron operates an 870,000 tonne per year nominal capacity mill using froth induced flotation technology to produce silver in copper, lead, and zinc concentrates.

Operating Update

In 2015, the processing capacity of the plant was expanded on account of the ongoing mine mechanization efforts and optimization. The mill processed approximately 895,000 tonnes of ore with metallurgical recoveries averaging 83.2% for silver, 63.8% for zinc, 73.1% for lead, and 78.5% for copper.

With comparable year over year throughput rates, silver grades and recoveries, silver production of 3.7 million ounces during 2015 was similar to that in 2014. During 2015, Huaron produced 6,900 tonnes of lead and 6,700 tonnes of copper, which was 15% and 14% more than in 2014, respectively, while zinc production of 13,600 tonnes was 5% less than 2014. The year over year difference in base metal production was a function of grades and recoveries on account of mine sequencing.

Huaron cash costs of $10.91 per payable ounce of silver declined 6% as a result of substantially lower unit operating costs per tonne driven by benefits from the on-going mechanization efforts, while higher by-product lead and copper production was more than offset by lower base metal prices.

2015 all in sustaining costs per silver ounce sold (“AISCSOS”) of $16.89 was 11% lower than the $19.07 in the previous year. The decrease was attributable to a reduction in production costs, a $3.7 million decline in sustaining capital expenditures, and a reduction in treatment and refining charges, which more than offset lower by-product credits driven by the decline in base metal prices.

For a more detailed discussion of cash costs and AISCSOS and their calculations, readers should refer to the “Alternative Performance (non-GAAP) Measures”, section of the Company’s Management’s Discussion & Analysis for the year ended December 31, 2015.

2016 Forecast

In 2016, throughput at Huaron is expected to increase 3% to the plant capacity of 920,000 tonnes per year, given the unscheduled mill breakdown that was reported during the third quarter of 2015. The slightly improved throughput in 2016 is expected to be coupled with a slight increase in silver grades from mine sequencing resulting in a small increase in silver production to between 3.65 million to 3.80 million ounces, comparable to the 3.71 million ounces produced in 2015. Copper production is expected to decrease between 15% and 18%, due to mine sequencing away from a high-copper grade vein system. Zinc and lead production are expected to be relatively similar to 2015 levels.

Cash costs per payable ounce of silver of between $12.25 and $13.25 are expected to increase from the 2015 level of $10.91 per ounce, primarily driven by a decline in by-product credits which is only partially offset by expected lower operating costs, and slightly higher silver payable production expected for 2016.

We have forecasted sustaining capital expenditures of between $6.0 million and $7.5 million for 2016, which are lower than the $13.6 million spent in 2015. The 2016 capital budget is primarily comprised of $0.8 million for completion of the tailings storage expansion, $1.4 million in brownfield diamond drilling, and $1.2 million in mining equipment refurbishments and replacements.

AISCSOS at Huaron for 2016 is expected to be between $14.40 and $16.00, representing a 5% to 15% decrease from the $16.89 AISCSOS reported in 2015 due primarily to lower sustaining capital expenditures.

For a more detailed discussion of cash costs and AISCSOS and their calculations, readers should refer to the “Alternative Performance (non-GAAP) Measures”, section of the Company’s Management’s Discussion & Analysis for the year ended December 31, 2015.

Cautionary Note Regarding Forward Looking Statements

Minerals Reserves & Resources

Management estimates that the mineral reserves at the Huaron mine, as at December 31, 2015, are as follows:

Huaron Mineral Reserves1,2

Reserve Category Tonnes (Mt) Grams of Silver per tonne % Zinc % Lead % Copper
Proven 6.1 172 2.99 1.40 0.41
Probable 3.7 167 3.17 1.58 0.27
TOTAL 9.8 170 3.06 1.47 0.36

Notes:

  1. Estimated using prices of $17.00 per ounce of silver, $1,800 per tonne of zinc, $1,800 per tonne of lead and $5,000 per tonne of copper.
  2. Mineral Reserve estimates for Huaron were prepared under the supervision of, or were reviewed by, Martin Dupuis, P.Geo., and Martin G. Wafforn, P.Eng., who are Qualified Persons as that term is defined in NI 43-101.

Management estimates that mineral resources at the Huaron mine, as at December 31, 2015, are as follows:

Huaron Mineral Resources1,2

Resource Category Tonnes (Mt) Grams of Silver per tonne % Zinc % Lead % Copper
Measured 1.7 166 2.93 1.66 0.27
Indicated 1.4 167 2.95 1.58 0.67
Inferred 7.3 153 2.75 1.48 0.32

Notes:

  1. These mineral resources are in addition to mineral reserves. Estimated using prices of $17.00 per ounce of silver, $1,800 per tonne of zinc, $1,800 per tonne of lead and $5,000 per tonne of copper.
  2. Mineral resource estimates for Huaron were prepared under the supervision of, or were reviewed by, Martin Dupuis, P.Geo., and Martin G. Wafforn, P.Eng., who are 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.

Click here to see Pan American’s full mineral reserves and resources at December 31, 2015
Mineral reserves and resources are as defined by the Canadian Institute of Mining, Metallurgy and Petroleum.
Mineral resources that are not mineral reserves have no demonstrated economic viability.
Cautionary Note to US Investors

Technical Report

Huaron Technical Report