LatAm gold mine expansions hit by community, COVID-19 headwinds

Community and COVID-19 headwinds are holding back some of Latin America’s largest gold expansion projects, with at least two facing significant delays.

Mining companies are seeking to grow output or extend the lives of major assets to cash in on current elevated gold prices. But progress is being hampered by community opposition and blockades, along with continued impacts from the COVID-19 pandemic.

YANACOCHA DELAY

Newmont – Latin America’s top gold producer – has delayed a construction decision on its US$2.1bn Yanacocha Sulfides project in Peru due to COVID-19.

The project aims to extend the life of the Yanacocha mine into the 2040s, adding around 500,000oz/y gold equivalent output.

“We have experienced significant challenges due to the global pandemic, particularly in Peru, where vaccine availability remains low,” CEO Tom Palmer told the Gold Forum Americas event in Denver, US.

“Given the current status of the pandemic in Peru and the potential for more contagious variants, we have decided to extend our full funds decision for the sulfides project to 2H22 and will progress the project as the pandemic allows.”

The company had planned to reach a construction decision this year.

Palmer said the company remains committed to the project, and will be investing at least US$500mn by end-2022 to advance detailed engineering, long-lead procurement, earthworks and camp construction.

“Newmont is committed to protecting the health and safety of our workforce and host communities above all else and will be continually engaging with government and local communities to ensure a safe and mutually beneficial path forward.”

COMMUNITY CONFLICTS

Equinox Gold has also delayed investment in its Los Filos expansion in Mexico due to challenging community relations.

The Los Filos asset was impacted by blockades in 2H20 and in mid-2021, which hit production and expansion progress.

While the blockades have been lifted and new agreements struck with the communities that were behind them, Equinox plans to wait to ensure conditions are right for investment.

“With the resolution of the community issues there we said to the communities that we can invest in other parts of the world where we have projects, and once we get the stability back we will go back in and invest there,” CEO Christian Milau told the conference.

“It’s a little bit of a wait-and-see there but maybe in a year, maybe two, we will be investing in that part of the world again.”

The blockades were disappointing and frustrating, he added, with COVID-19 preventing the company from building strong relationships with a few communities after acquiring Los Filos in the Leagold takeover in March 2020.

A study is due out in the coming months on a proposed new carbon-in-leach (CIL) plant, which forms a key component of the expansion, potentially adding 100,000-150,000oz/y gold output, the CEO added.

The expansion aims to roughly double gold production at Los Filos to 350,000-400,000oz/y. Capex is estimated at US$213mn, but this figure could change depending on the outcome of the CIL plant study.

PUEBLO VIEJO TAILINGS

Barrick Gold’s plans for a US$1.3bn expansion of its Pueblo Viejo mine (pictured) in the Dominican Republic – Latin America’s biggest gold producer – has also suffered setbacks due to community conflict.

Some residents are opposed to the planned siting of a new tailings facility, which is needed for the expansion, which aims to extend operations into the 2040s, with production continuing at around 800,000oz/y gold.

Work on an expansion of the mine’s processing plant capacity is already underway.

Opposition to the tailings dam, which sparked violent protests earlier this year, is being led by two main detractors, local church-based leadership and a politician, CEO Mark Bristow told the forum.

In order to break the deadlock, the Dominican Republic government has appointed an independent consultant to conduct its own assessment of tailings options, which will consider two possible sites.

“Rather than just ignore [local opposition], we encouraged that conversation, and whilst we are continuing with our test work, we have now landed on two sites, so there’s a choice, and we feel like in a proper, transparent way we should manage the assessment of those sites,” Bristow said.

“We are doing it ourselves. We now have an independent consultation appointed by the ministry of mines, and they will work alongside what we are doing, and give comfort to the communities that we are doing it properly.”

The new tailings facility must be operational by 2025 for Barrick to advance its expansion as planned, the CEO said in May.