Underground issues hamper production at El Boleo

Underground mining and processing issues continue to hamper production at the El Boleo mine in Mexico.

The US$1.8bn Baja California Sur state operation produced 3,920t copper cathode in Q1, compared to 2017 guidance of 30,000t, minority owner Camrova Resources said following a meeting of the board of operator Minera y Metalúrgica del Boleo (MMB).

Output was impacted by a scheduled plant maintenance shutdown in January plus lower throughput as a result of mechanical and other issues, Camrova said in a release.

Copper recovery of 76% was also lower than planned in January and February, partly due to issues related to lower feed grade.

MINING OPERATIONS

Ore production of 544,000t was lower than budgeted due to underperformance in underground mining operations.

Underground ore production came in at 46% of the target partly due to unstable roof conditions, Camrova said.

Surface mining exceeded expectations due to the resumption of mining of the high-grade Purgatorio area and the opening of a new mining area. Copper grades were 1.2%, in-line with budget.

The mine also produced 69t cobalt and 436t zinc sulfate, below target.

MINE PLAN REVISED

MMB revised its 2017 mine plan as a result of lower underground mining.

The company now expects to produce 0.45Mt of ore from underground operations, down from 0.72Mt previously guided, with surface mining expected to produce 2.3Mt, up from 2.0Mt.

MMB also decided not to go ahead with manganese production at the mine, Camrova said.

CASH CALLS

MMB issued a US$33.0mn cash call to fund Q2 operations in April, following a US$30.0mn call in January.

An MMB budget, which projects a cash shortfall for 2017 of US$160mn, was approved by the company's biggest owner, state-owned Korea Resources (Kores), Camrova said.

Camrova will not fund its 10% share of the cash calls, which could see its 10% stake diluted to 7.4%, at which point the company would lose its right to representation on the MMB board.

El Boleo has suffered delays and technical issues, and has required additional funding since cost overruns were identified in 2012.