Newly-minted mining company Consolidated Zinc (ASX: CZL) reports the first truckload of ore has left its high-grade Plomosas zinc-lead-silver project in Mexico bound for processing at the nearby Santa Eulalia concentrator.
The company plans to initially deliver 100 tonnes per day (3000 tonnes per month) to Santa Eulalia and scale up to at least 10,000 tonnes per month by mid-2019.
Owned by Grupo Mexico, Santa Eulalia has a proven high recovery performance of around 90%.
The Plomosas mine is located in the world-class mining province of Chihuahua and boasts combined zinc and lead grades which have been ranked higher than most deposits worldwide.
Chief executive officer Brad Marwood said the mine was brought to production in a safe and responsible manner utilising local contractors and experienced executive staff.
“We are very pleased that our Mexican team established mining operations on-time, under budget and in a safe manner,” he said.
“There is great potential at Plomosas and this cashflow from early production has created the financial means to begin unlocking that potential.”
The deposit has been mined in several stages since 1943 to approximately 270 metres below surface via room and pillar stopes using traditional air leg drill and blast techniques.
Recent results from underground sampling returned expected high grades throughout the main part of the mine and identified an additional ore zone located in the footwall to the main manto-style mineralisation.
In June, Consolidated said it would continue resource extension drilling after confirming a JORC resource at Plomosas of 1,178,000 tonnes at 14.3% zinc and 2.6% lead for 189,700t contained metal in indicated and inferred categories.
The company started mining activities earlier this month after it secured a processing and offtake agreement with Grupo Mexico whereby its ore will be sent to Santa Eulalia concentrator and its concentrate sold and delivered to Grupo’s San Luis Potosi smelter, approximately 850 kilometres away.
Mining in Mexico
While parts of Mexico are not trouble-free, Consolidated Zinc has previously confirmed to its investors that “the area in which we operate is not one of these”.
Mexico is generally a mining friendly jurisdiction with a favourable regulatory and investment environment, and a growing environmental awareness.
The country offers exploration concessions of up to six years, meaning leases are not “locked up” long-term, and long mining concessions of up to 50 years.
In 2015, Mexico ranked as the fifth best mining destination in the world, and its government continues to focus on attracting foreign and local companies and eliminating trade barriers.
US and Canadian mining companies have operated successfully in many parts of Mexico, including Chihuahua, for more than 40 years however parts of the country are still considered under-explored.
In recent years, Mexico’s government has announced major infrastructure initiatives including new roads and rail systems to benefit the mining industry.
A New Century for zinc
The mine was once the world’s third largest zinc mine before being shelved in 2016 by previous owner MMG (ASX: MMG).
New Century hopes the mine will become the fourth largest in the world by the time it ramps up to full production in late 2019.
The restart highlighting the strength and momentum gained in the zinc price since early 2016.
At midday, shares in Consolidated Zinc were trading 33.33% higher at $0.024.