Will Fortuna Mining remain in Mexico?

Canada-based Fortuna Mining, formerly Fortuna Silver Mines, could be taking a crucial step that would guarantee the company's future in Mexico, even if exploration at the Yessi vein, discovered in the third quarter of 2023, turns out unsuccessful. 

In May, Fortuna announced it will decide whether to continue operations at its San José mine in Mexico’s Oaxaca state in Q3, when the miner expects to have a better idea of how significant and profitable the Yessi vein will prove. 

The future of the mine, operated by subsidiary Minera Cuzcatlán, is still uncertain, while the company continues updating an upcoming mine closure plan. 

CEO Jorge Ganoza told BNamericas previously that the company would also want to see a change in the government's attitude toward the industry in order to remain in Mexico. 

In its Q2 results report earlier this month, the company said sustaining capex has decreased as the mine nears its anticipated closure. 

However, a recent announcement by Vancouver-based Plata Latina Minerals may indicate that Fortuna has decided to remain in the country, regardless of the San José operation’s future and the government’s approach.

Plata Latina said its wholly-owned subsidiary Plaminco has agreed with a wholly-owned subsidiary of Fortuna Mining to assign it the mining concession for the La Joya silver and gold project in consideration for the right to receive a royalty of 2% of net smelter returns (NSR) on the project at the start of its commercial production.

Fortuna may acquire 1% of the NSR for US$1 million at any time. The La Joya project is located in Hidalgo state. 

BNamericas contacted a Fortuna Mining spokesperson in Mexico to find out if this would guarantee the Canadian miner's presence in the country, but did not immediately receive a response.

In the Q2 results call, Ganoza said that Fortuna has three options with San José and is set to exhaust its reserves, estimated for early this year.

“One, by year-end, we call a progressive closure. Second, we go into care and maintenance while our exploration and evaluations continue. Or third, we have the opportunity to continue mining depending on the success of the work we carry out over the coming weeks, months, before the end of the year,” Ganoza said, adding that the firm will have clarity on which of those three options it will choose in the third quarter. 

“We're updating our mine closure plan. We're conducting an exploration. We're doing several iterations on the optimization of existing resources. All of that is taking place right now,” Ganoza said.

Since President Andrés Manuel López Obrador took office in 2018, practically no new mining concessions have been granted, and two legislative reforms have been introduced that expand the State's power over the mining sector.

Meanwhile, issuing of project permits has been delayed, and several processes have been suspended pending new regulations.

Greenfield exploration, in particular, has been affected since the 2023 mining reform gave the Mexican geological service (SGM) the exclusive rights. Although the law stipulates that miners may partner with SGM to conduct exploration, no procedures for negotiating agreements are in place.