LatAm gold mines see muted COVID-19 impacts

Production by Latin America’s biggest gold mines remained broadly stable in Q1 – despite major fallout from the COVID-19 pandemic.

The nine biggest assets – each of which were originally forecast to produce over 400,000oz gold this year – generated a combined 1.17Moz in the quarter, according to figures compiled by BNamericas.

This compares to 1.02Moz in 1Q19, excluding Cerro Negro and Peñasquito, for which production data were not reported by previous owner Goldcorp prior to the Newmont merger (the mines produced 198,000oz in Q1).

COVID IMPACT

Five of the nine operations were temporarily suspended as a result of COVID-19 lockdowns in Peru, Argentina and Mexico.

However, the biggest impact of the suspensions will be felt in Q2.

The remaining four mines have continued to operate during the pandemic.

TOP GOLD MINES

Pueblo Viejo, Dominican Republic

Company: Barrick Gold/Newmont (60:40)

COVID-19 impact: MINIMAL

Q1 production: 238,000oz gold

2020 guidance: 883,000-967,000oz

Latin America’s biggest gold mine has not been impacted by the COVID-19 pandemic.

Output in Q1 was marginally lower than the 247,000oz in 1Q19 because of lower grades, but was tracking toward the higher end of guidance.

Pueblo Viejo was also one of the lowest-cost producers in the quarter, with all-in sustaining costs (AISCs) of US$626/oz, up from US$543/oz on lower production, partly offset by lower contractor and fuel costs.

Guidance for 2020 is unchanged, with AISCs forecast in the US$720-770/oz range.

Veladero, Argentina

Company: Barrick Gold/Shandong Gold (50:50)

COVID-19 impact: TEMPORARY SUSPENSION

Q1 production: 150,000oz gold

2020 guidance: 480,000-540,000oz

Lockdown measures imposed in Argentina on March 19 resulted in a dip in ore stacked on the leach pad in Q1 before mining was deemed essential on April 3.

But output increased from 140,000oz in 1Q19 on higher recoveries.

Restrictions on movement and social distancing rules limited the mobilization of workers back to the site, with near-normal operations achieved at end-April.

This is expected to impact on Q2 output.

The mine saw AISCs rise to US$1,266/oz from US$1,100/oz, mainly due to lower gold volumes sold and higher sustaining capex on a per-ounce basis.

Merian, Suriname

Company: Newmont/Staatsolie (75:25)

COVID-19 impact: MINIMAL

Q1 production: 133,000oz gold

2020 guidance: 465,000oz

Operations at Merian have continued during the COVID-19 pandemic.

Production slipped from 148,000oz in 1Q19 as a result of lower grades and recoveries, but was tracking ahead of 2020 guidance.

Lower grades also contributed to higher AISCs of US$707/oz, up from US$576/oz, but below 2020 guidance of US$840/oz.

Paracatu, Brazil

Company: Kinross Gold

COVID-19 impact: MINIMAL

Q1 production: 124,367oz gold equivalent

2020 guidance: withdrawn

Production has continued at Kinross Gold’s Brazilian behemoth throughout the COVID-19 pandemic.

Output slipped from 146,776oz in 1Q19 on lower throughput and recoveries, linked to temporary crusher downtime and variations in ore characteristics.

Cost of sales increased to US$722/oz from US$648/oz on lower production, partly offset by favorable foreign exchange rates.

While COVID-19 has not materially affected operations, Kinross withdrew guidance on April 1 due to pandemic-related uncertainty.

BNamericas originally forecast 520,000oz gold for 2020. Kinross did not give guidance for individual mines.

Yanacocha, Peru

Company: Newmont/Buenaventura/Sumitomo (51.35%, 43.65%, 5.0%)

COVID-19 impact: TEMPORARY SUSPENSION

Q1 production: 122,000oz

2020 guidance: lowered

Operations at Yanacocha were ramped down in response to lockdown measures in Peru on March 17, although gold production from the leach pads continued.

Following Peru’s economic reactivation plan, milling resumed on May 16 with surface mining expected to restart by end-May, Newmont said in a release on May 19.

The suspension and lower grades resulted in output falling from 144,000oz in 1Q19, while AISCs increased to US$1,309/oz from US$853/oz.

Newmont reduced companywide consolidated production guidance to 5.90Moz from 6.30Moz as a result of COVID-19 disruptions but no breakdown by mine was given.

Peñasquito, Mexico

Company: Newmont

COVID-19 impact: TEMPORARY SUSPENSION

Q1 production: 116,000oz gold

2020 guidance: lowered

Newmont produced 116,000oz gold at AISCs of US$769/oz in Q1, compared to original 2020 guidance of 575,000oz and US$725/oz (no information was given for 1Q19, when the mine was run by Goldcorp).

Production was halted on April 12 to comply with a Mexican lockdown.

A restart began in late May after Mexico deemed mining essential, enabling operations to resume under COVID-19 health protocols.

The ramp up to full production is expected to take about two weeks.

Newmont lowered companywide guidance by 400,000oz to 5.90Moz because of COVID-19 disruptions, but forecasts were not given for individual mines.

Herradura, Mexico

Company: Fresnillo

COVID-19 impact: MINIMAL

Q1 production: 110,493oz

2020 guidance: 440,000-475,000oz

Output slipped from 116,879oz in 1Q19 on lower volumes of ore processed and lower grades, partly offset by higher recoveries.

Fresnillo appears to have secured an exemption to Mexico’s COVID-19 lockdown measures, under which most mines halted activities from early April to end-May, although the company has not confirmed this.

Guidance remains under review.

Fresnillo reports production costs every half-year.

El Limón-Guajes, Mexico

Company: Torex Gold

COVID-19 impact: TEMPORARY SUSPENSION

Q1 production: 108,537oz gold

2020 guidance: withdrawn

Output at Torex Gold’s El Limón-Guajes (ELG) mine in Q1 was in line with original 2020 guidance of 420,000-480,000oz.

Operations at ELG were suspended in early April to comply with Mexican lockdown rules.

Mining activities in the country began resuming around end-May as part of a gradual economic restart.

The mine saw AISCs decline to US$975/oz from US$1,161/oz, in part due to lower sustaining capex.

Torex has yet to issue revised guidance.

Cerro Negro, Argentina

Company: Newmont

COVID-19 impact: TEMPORARY SUSPENSION

Q1 production: 72,000oz

2020 guidance: lowered

Newmont suspended Cerro Negro on March 23 due to travel restrictions imposed by the government.

The company began implementing a restart plan in early May, with milling due to resume on May 20, it said in a release on May 19.

Productivity challenges are expected to continue as a result of the travel and other restrictions.

The mine produced 72,000oz gold in Q1, with operations hit by development delays and unscheduled crusher maintenance as well as the COVID-19 suspension.

Output was tracking below original 2020 guidance of 405,000oz, with AISCs of US$985/oz above the December forecast of US$710/oz.

Production and cost figures for 1Q19, prior to the Goldcorp merger, were not given.