Nicaragua’s gold boom taking shape

A forecast gold boom in Nicaragua is taking shape, with mining companies reporting rising output and key advances at growth projects amid elevated prices, despite concerns over President Daniel Ortega’s increasingly authoritarian approach.

Firms have outlined projects capable of delivering more than 300,000oz/y of the yellow metal, which would nearly double the nation’s output from 2019 levels.

And the investments are already bearing fruit.

Gold shipments reached 247,600oz in H1, putting them on track to far exceed the 391,000oz in 2020, which was up from 368,000oz the previous year.

The rising volumes – coupled with elevated prices, with gold fluctuating around US$1,800/oz over the past 18 months – have seen gold cement its position as Nicaragua’s biggest value export.

OUTPUT GROWTH

Expanding production by Calibre Mining accounts for a significant chunk of the rise.

The company, which acquired the Libertad and Limón (pictured) gold mines from B2Gold in October 2019, has taken a ‘hub and spoke’ strategy to the assets, aiming to deliver mill feed from satellite operations or spokes for processing at the Libertad hub.

Production from the Pavón Norte spoke began in January, with the asset contributing 843t/d of ore in Q3 and exceeding 1,000t/d three months earlier than planned in September.

Pavón Norte contributed to Calibre’s Q3 output of 44,579oz, with year to date production of 133,537oz putting the company on track to deliver at the high end of 2021 guidance of 170,000-180,000oz, with the fourth quarter expected to be the strongest of the year.

This is up from 136,009oz last year, in part reflecting a temporary COVID-19 suspension in 2020.

EXPANSION

With operations at Pavón Norte ramped up, Calibre has started a multi-rig exploration program at Pavón Central, where drilling has identified indicated resources of 131,000oz gold to date.

“We see excellent potential to expand resources and make discoveries along this exciting emerging district,” CEO Darren Hall said in a release.

Advances are also continuing at the Eastern Borosi project (EBP).

“With technical and environmental studies ongoing, we are confident that the EBP will be our next high-return mining spoke, replicating the success at Pavón Norte,” Hall said.

MINE RAMP UP

Another company contributing to Nicaragua’s gold boom is Mako Mining.

Mako declared commercial production at San Albino on July 1, and the mine delivered 8,239oz gold in Q3, its first full quarter of commercial operations.

The process plant operated at 429t/d during the quarter despite labor availability and minor start-up issues, CEO Akiba Leisman said in the results release.

“Adjustments to the plant, along with additional hiring and training of key personnel, have increased plant availability and we expect to be at nameplate capacity of 500t/d in Q4,” he added.

The CEO told BNamericas last year that production from San Albino is expected at 40,000-50,000oz/y.

One forecast source of growth that has yet to materialize is the Bonanza mine, operated by Hemco Nicaragua, a subsidiary of Colombia’s Mineros.

CEO Andrés Restrepo said last year that development of two fronts, Pioneer and Porvenir, was expected to increase output to around 160,000oz/y from 130,000oz in 2019, but production in H1 was falling short of this level, at 62,000oz.

Mineros has yet to report results for Q3.

LA INDIA ADVANCES

An earlier-stage project which is expected to make a meaningful contribution to Nicaragua’s gold production is Condor Gold’s La India.

The company took a step forward with the project after reporting results of a new PEA in September, which outlined metrics for two development options.

The first, which considers a 1.4Mt/y-throughput open pit and underground operation, would produce around 150,000oz/y gold in the first nine years of a 12-year mine life, and requires US$160mn of initial capex.

The option would deliver a 43% IRR at US$1,550/oz gold.

The smaller 1.23Mt/y-throughput alternative, which involves developing the La India open pit plus feeder pits, would deliver a 58% IRR at US$1,700/oz gold prices, with production at around 120,000oz/y over the initial six years of a nine-year life, with initial capex estimated at US$153mn.

Construction is expected to take 18-24 months, according to information on Condor’s website. 

The company selected Hanlon Engineering & Associates as lead engineer to develop a feasibility-level design for a new processing plant, which would produce 80,000-100,000oz/y gold based on 2,300t/d throughput, with the potential to upgrade this to 1,850t/d.

POLITICAL BACKDROP

Companies have praised Nicaragua as a relatively safe haven for mining, with President Daniel Ortega’s administration delivering some level of stability for the industry, despite concerns over increasingly authoritarian rule.

Presidential elections are planned for November 7, with Ortega expected to secure a fifth term following a campaign which has been marred by arrests of opposition politicians.

But a win for Ortega could spark a repeat of violent protests witnessed in recent years in the Central American country, which have disrupted mining operations in the past.