TorexGold 2022 - Company Report by Mexico Business Publishing

Company Report

2020: A Record-Breaking Year for Torex Gold

Despite the challenges related to the COVID-19 pandemic, Torex Gold Resources Inc. posted record financial results in 2020, delivering a strong operational and financial performance.The company said the strong operational and financial performance was the result of the great effort made by employees and contractors, as well as its strong relationships with the communities in which it works.

The Company produced 430,484 ounces in 2020, surpassing the high end of revised guidance (390,000 to 420,000 ounces) issued following the COVID-19 shutdown and the low end of original guidance (420,000 to 480,000 ounces).In 4Q20, Torex reported total gold production of 130,649 ounces, its third-highest quarter on record. Additionally, in 4Q2020 Torex posted a record 133,063 ounces of gold sold, at an average price of US$1,847/ounce, and a record net income of US$91.9 million.

Jody Kuzenko, President and CEO of Torex, said in a press release that 2020 was a record year in many aspects. Its 437,310 ounces in gold sales at US$1,771/ounce resulted in total revenue of US$789 million, the highest in the company’s history and a 23 percent increase compared to 2019 figures. “Our strong operational performance, in combination with a resurgent gold price, underpinned our strongest annual financial performance ever, with record net income of US$109 million, record adjusted EBITDA of US$431 million and record operating cash flow of US$342 million,” said Kuzenko.

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Torex Gold’s Media Luna Project Receives the Green Light

Torex Gold has received the green light from SEMARNAT to continue building beyond what was previously agreed for its Media Luna project. Argonaut Gold announced the sale cancellation of its Ana Paula project after the acquiring company did not meet its obligations. Additionally, Sonoro Gold expects its Cerro Caliche to become a catalyst for massive cash flow in 2021. Read this and more in your weekly mining roundup!

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Torex Gold Receives Permission to Continue its Media Luna Project

Torex Gold (Torex) announced that it received approval from SEMARNAT for the modification of its environmental permit for its Media Luna project in Guerrero, allowing the company to continue building beyond its previous permit and to carry out other initial works to access the deposit. Jody Kuzenko, President and CEO of Torex, said this year the company will focus on early works to access the deposit from the north and south of the Balsas River. Torex will also advance its feasibility study that is expected to be completed in 1Q22, build and strengthen its long-term agreements with ejidos and individual owners and continue working on the application of its new MIA, which will include the footprint in the north and south of the river.

Argonaut Gold’s Sale of Ana Paula Project Failed

Argonaut Gold (Argonaut) has reported that the sale of its Ana Paula gold project, located 180km from Mexico City, was canceled because the acquiring company, AP Mining, did not comply with its obligations “in relation to the financing and receipt of certain and other approvals.” Pete Dougherty, President and CEO, said in a press release that the company is currently focusing on its Magino and Cerro del Gallo projects and explained that when Argonaut was negotiating with AP Mining, it thought the latter company would boost the potential of Ana Paula. However, this was not the case. As a result, the company is looking for better options for the project, especially since Argonaut believes that it can become an extraordinary asset. In addition, the company said it hopes to publish a pre-feasibility study for the project in 2Q21, which seeks to show its low capital and operating cost and its underground potential.

Cerro Caliche Is Sonoro’s Future Cash Machine Opportunity

Sonoro Gold Corp. (Sonoro) expects Cerro Caliche to be in production next year, if all goes according to plan, and its shares should trade early with a market capitalization of at least two times its indicated cash flow, which is approximately US$86 million. In addition, the project also has an exceptional exploration potential, which could bring its gold reserves to 2Moz.

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GR Silver Completes Acquisition of Marlin Gold

GR Silver Mining Ltd. (GR Silver) announced the complete acquisition of Marlin Gold Mining Ltd. (Marlin) from Mako Mining Corp. Marlin owns Oro Gold de Mexico, which owns the former La Trinidad open pit mine that ceased operations in 2019 and has 12 highly prospective concessions located alongside GR Silver’s existing properties. The new acquisition gives GR Silver control of 75km of the trend that includes three zones and more than 24 old shallow gold and silver works.

“With this exciting acquisition, GR Silver Mining becomes the first company in the history of the Rosario Mining District to control 100 percent of the key Ag-Au assets, including two past-producing mines as well as the San Marcial Project,” said GR Silver President and CEO Marcio Fonseca in a press release. GR Silver Mining said that it is currently analyzing data from regional historical datasets and previous drilling programs as it sees that there is significant potential at La Trinidad concession.

Zacatecas Silver Completes Geological and Structural Mapping at El Cristo Vein

Zacatecas Silver Corp. (Zacatecas Silver) announced it has completed its first geological and structural mapping of the El Cristo Vein System, which is a northwestern strike extension of the Veta Grande vein. The company reported it will carry out a soil geochemical survey to identify more veins and extensions, in addition to elaborating “an aggressive rock-chip and channel sampling program” to define the grade distribution of the veins and guarantee the best targets are drilled.

International MAC Updates and Improves Tailings Management Guidance

The Mining Association of Canada (MAC) has updated its tailings standards to go beyond existing global guidelines. As a result, Canadian mining companies now have to meet higher requirements regarding tailings management. The update was prompted by the publication of the Global Tailings Management Industry Standard (GISTM) in 2020, which set a guideline to achieve zero harm to people and the environment. The new standard has a better approach to identifying and promoting human and community rights. “Effective tailings management is rightly being prioritized more than ever to ensure that stakeholders, communities surrounding mine sites, investors and the general public can have confidence in how mining operations are being run,” said MAC in a pres s release.

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Torex Gold Reports a Solid Performance

Torex Gold announced its financial and operating results for 1Q21, reporting a solid quarter with a sustained margin of 52 percent. In addition, the company shared the new environmental commitments it has made and explained how it has strengthened its relationships with surrounding communities during the COVID-19 pandemic.

Torex’s 1Q21 highlights included no lost time injuries, the production of 129,509oz of gold, the sale of 129,029oz of gold at US$1,778/oz, net profits of US$55 million on a basic basis, adjusted net earnings totaling US$527 million on a basic basis, the payment of US$40 million that remained on the 2019 debt facility, which allowed it exited the quarter debt free, US$9.3 million in free cash flow, and its 2020 mineral reserve and resource estimate that added 93,000oz of gold reserves. Torex reported that an updated resource estimate for Media Luna will be released in 2Q21, which will include the results of its 2020 drilling program.

Jody Kuzenko, President & CEO of Torex, said that 2021 started with a very strong gold production totaling 29,509oz, which is the highest first quarter of production for El Limón Guajes (ELG). Kuzenko reported that the company continues to develop its Media Luna project by starting early works, drilling and obtaining its MIA permit modification.

In an interview with MBN, Faysal Rodríguez, Vice President Mexico of Torex Gold, explained that the MIA modification included the development of the ELG tunnel that will go under the Balsas River. Rodríguez explained that the company is now seeking to obtain a construction permit from CONAGUA to continue working on the tunnel. “Certainly, by obtaining this MIA Modification permit from SEMARNAT, we have taken a very important step in moving forward with this new investment in Guerrero.”

Regarding the company’s ESG practices, Kuzenko highlighted that the company has ratified Collective Bargaining Agreement, signed the International Cyanide Management Code, published its 2020 Responsible Gold Mining Report and announced its new plans to develop a solar plant for its operations.

In April, Torex Gold entered a commercial lease agreement with Scatec, to build a new 8.5 MW solar plant at its Morelos property, which includes the ELG mine and the Media Luna project. The new plant is expected to reduce Scope 2 greenhouse gas emissions by up to 8.6 percent using 2019 as the baseline year. The new facility seeks to complement the existing power supply with a renewable energy source to reduce its carbon footprint, with a view toward carbon neutrality over time. Kuzenko highlighted that Torex is committed to combat climate change and reduce the environmental footprint of its operations, reported MBN.

In the press release, Kuzenko said “there is no doubt that our team has built up significant momentum over the past three quarters, and we are well positioned to achieve 2021 guidance as we continue to deliver on our commitments reliably and safely.”

Torex Gold Gets Greener, Sets Ambitious Targets for 2021

Torex Gold achieved excellent performance in its environmental, social and governance areas last year, according to its recently released 2020 Responsible Gold Mining Report, which also outlined the company’s new goals and ambitious targets for 2021 that will see Torex become even greener.

Torex is the second-largest gold producer in the country and owns 29,000ha at the Morelos Gold Property in the Guerrero Gold Belt. Its assets include the El Limón Guajes Mining Complex (ELG), which began commercial production in 2016, and the Media Luna deposit, currently in an advanced stage of development with a feasibility study in process. The company has significant opportunities on both projects, having only explored 25 percent of the property and which already has promising exploration targets in its unexplored area.

Last year, Torex delivered a successful performance despite the pandemic and the temporary suspension of mining activities in Mexico. The company ended the year with more than 430,000oz of gold produced, which is the secondhighest annual production in its history. But for Jody Kuzenko, President and CEO of Torex Gold, the biggest point of pride was the company’s safety performance, as it achieved 10 million hours without a lost-time injury.

Regarding its environmental performance, Torex reported zero environmental incidents, 100 percent compliance with environmental laws and regulations and zero water discharges at site. In addition, the engineering studies for its 8.5MW solar plant have been completed, 5 million fingerlings have been released in local waterways, 65,745 native trees have been planted and more than 105ha of land have been reforested. The company also became a member of the World Gold Council and adopted the council’s Responsible Gold Mining Principles. It also signed the International Cyanide Management Code (ICMC), which is a global and best-practice standard for cyanide management.

The company’s health and safety community practices were also recognized by IMSS for having secure and robust COVID-19 protocols for the control of contagions between workers and communities. In addition, it continued the implementation of Community Development Agreements (CODECOPs) with 11 local communities and invested US$4 million in community projects. Last year, the company had a total of 964 direct employees and 1,675 contactors; 99 percent of its operators were Mexican and 60 percent of its operations employees were from Guerrero.

In governance matters, the company was recognized for the second year in a row by national Canadian newspaper Globe and Mail’s “Women Lead Here,” given that 30 percent of its board of directors and 40 percent in its executive team are women. Kuzenko was named one of the Top 100 Global Inspirational Women in Mining by Women in Mining UK, which selected her from among 600 nominees from 60 countries.

In the report, Torex also announced its goals and objectives for 2021, which includes a lost-time injury frequency of less than 1.0, 100 percent compliance with commitments associated with its CODECOPs, zero reported spills, continuing to improve its energy and climate change management strategy and implementing safety and leadership plans that include modules of its SafeStart®, Supervisor Excellence Program and Leadership, and Enhancement Program. The company will also monitor its human rights performance with the goal of having zero complaints and it will continue to implement the Human Rights Management System, which is aligned with the requirements of the Responsible Gold Mining Principles.

The Company recently launched a new website, which includes an ESG Reporting Portal, to further improve transparency on Torex’s ESG performance

“As we continue to navigate through the pandemic in 2021 and I look to the next 10 years of our company’s evolution, there is much work to be done,” said Kuzenko. “We are at a special moment in time with a confluence of critical challenges: emerging from the pandemic, rebuilding the economy, tackling climate change, addressing the root causes of the inexplicable persistence of gender disparity, talent scarcities, and decreasing tolerance of the industry’s social and environmental failures. This confluence of challenges calls for the mining industry to reinvent itself. It calls for thoughtful and decisive leadership. It calls for leadership with purpose. Torex will be at the fore.”

Torex Gold Sees Steady Production for Years to Come

Torex Gold’s decision to extend its El Limón open pit, which is expected to add 150,000oz of gold production through 2H24, coupled with the excellent contribution of high-grade ore from the underground, will ensure steady production at the El Limón Guajes (ELG) complex during the transition between ELG open pits and ramp up of Media Luna.

Jody Kuzenko, President and CEO of Torex Gold, said “A key strategic priority for Torex over the last 12 months has been to optimize and extend mining operations at ELG. With the recent approval of the El Limón pushback and ongoing contribution from the ELG Underground, Torex is well on the path to delivering a smooth transition between ELG and the ramp up of Media Luna.”

“Overall, we are focused on executing our strategy,” she added. “With robust cash flow generation from ELG, a strong balance sheet and some key strategic decisions behind us, we are well positioned to deliver on our operational guidance for 2021, as well as our long-term plan to deliver shareholder value,” said Kuzenko through a press release.

In September, the company released its three-year outlook for ELG, which includes the expansion of the El Limón open pit. Annual gold production from ELG at the midpoint of the outlook range is 450,000 ounces in 2022, 425,000 ounces in 2023, and 325,000 ounces in 2024, which excludes any gold equivalent production from Media Luna. Media Luna is expected to begin first production in 2024, and this production will be added to the 2024 outlook when an updated Technical Report (including Feasibility Study) is released in 1Q2022.

The current production outlook assumes production from the ELG open pits through mid-2024, and stable production from the ELG Underground through to at least the end of 2024 and likely longer based on exploration results. The Company explained that lower grade stockpiled material will be leveraged to fill the mill as required throughout the transition period, with higher grade feed from Media Luna and ELG Underground taking priority.

“The additional certainty of steady, multi-year production outlook at ELG comes at a time when our balance sheet has never been stronger. With more than US$220 million in cash on hand at the end of 3Q2021, US$150 million available on a fully undrawn revolving credit facility and robust ongoing cash flow from ELG, we are in a strong financial position to advance Media Luna while continuing to invest in value-accretive exploration to support our future,” said Kuzenko.

Rearding Media Luna, the company reiterated it is still on schedule to release the Feasibility Study in 1Q2022, and reach first production in early 2024. Kuzenko explained that as the company has progressed the Feasibility Study, it has made a series of decisions to optimize the project and upgrade some of its 2018 PEA initiatives to deliver a better transition from open

pit production at ELG, and to incorporate potential sources of feed from the wider Morelos property as exploration becomes a greater focus for the company over the coming years.

Among the changes, the main access to Media Luna will be through a 7km Guajes tunnel, which is being built on the north side of the Balsas River. Access from the south will be through the South Portal Upper and South Portal Lower.

The company has also identified the need for a water treatment facility to provide clean water for the copper and iron sulfide flotation circuits. These circuits will be added to the current flowsheet to allow for the production of a saleable copper concentrate, and to recover additional gold and silver in the form of doré. The upgraded circuit will allow for processing of ore from both Media Luna and El Limón Guajes (“ELG”). It is expected that 30 percent of the value of the Media Luna deposit sits in copper.

“We are excited about becoming a copper producer,” Kuzenko emphasized. “In this industry, given the fluctuations in demand and prices of metal, production diversification and market exposure to different commodities is a very positive thing. And I am quite bullish on the copper market.”

Importantly, the company continues to build its culture as a key strategic differentiator. Kuzenko concluded, “We have a team that has built an entire culture around working safely – getting home to their families the way they came to work – and taking care of each other. Our most important goal for the optimization and smooth transition is that we do it safely and maintain our safety excellence – with no lives lost and no lives changed as a result of a workplace injury.”

Jody Kuzenko

CEO | Torex Gold

A Pivotal Year for Torex’s Transition Between Key Mining Assets

Q: What were the company’s main milestones in 2021?

A: 2021 was a challenging but outstanding year for Torex. The year’s goal was to hit our targets regarding safety, production and costs at El Limón Guajes (ELG). We achieved an all-time production record and delivered on operational guidance for the third consecutive year, producing 468,000oz at ELG, all at a healthy total cash cost and all-in sustaining cost.

As an operator, I am most proud of having reached these milestones safely. Our lost time injury frequency rate (LTIFR) sits at 0.14. We experienced just one lost time injury in April 2021, involving a contractor. This demonstrates to the world that you can be a best-in-class producer, produce with excellent margins and do so safely. Torex achieved great results despite COVID19’s significant challenges, which affected both our supply chain and workers. Through cost-containment programs, we reached an excellent all-in sustaining margin in the 50 percent range. We closed 3Q21 with no debt and US$370 million of available liquidity and further improved our results in 4Q21. This healthy balance sheet funding will be directed into the Media Luna project for the coming years.

Q: What factors are behind Torex’s success in its safety-oriented performance?

A: Torex works hard on safety every day, from the top of the house to the front lines. Getting the right leaders in the right roles is important: When I hire, I look for people who have similar beliefs when it comes to running a mine safely. Gold can be produced without hurting people; all accidents can be prevented. The company also operates with clear and effective systems of work. Planned work is safer because nobody is running around without direction. A well-defined, meticulously enforced set of rules is essential. People need to know what these rules are and why they were created.

Additionally, Torex Gold aims to connect the head with the heart. People need a reason to work safely other than systems, procedures or rules. In Mexico, Torex connects this to relationships between employees and with their respective families. We have specific programs built around personal reasons to get home safely. Combined with Torex’s approach to hire the right people, our strong systems and clear rules, this sets the company apart in terms of performance. This approach may sound easy but it is anything but simple to do this every day and get everyone to have the same mindset.

Q: How is the company working to capitalize on the success at ELG while looking toward its developments at Media Luna?

A: We will need to deliver on the present and build our future simultaneously, which means 2022 will be a pivotal year for Torex. To optimize and extend ELG, we are working on four key areas. First, we continue to build on the company’s culture as a key strategic differentiator, which contributes to safety and production results. Second, we aim to deliver on our commitments associated with safety, production and costs. Just like the past three years, Torex wants to continue reaching its production guidance to the market. Third, we are looking toward the future as we work on our transition from ELG to Media Luna, with first production expected from Media Luna by

2024. The goal is to deliver smooth cash flow and production while we transition from ELG’s open pits toward Media Luna’s underground operations. Finally, we consider it essential to extend the life of ELG’s underground via ongoing exploration efforts. Torex has drilled a lot since it turned the mine on in late 2018. It has been a great asset, so the goal is to keep it going for as long as possible. Our exploration results look promising.

Q: What are the next steps for Torex’s Media Luna project following its feasibility study?

A: We have all hands on deck to finalize the project’s feasibility study. Torex’s work for Media Luna in 2022 is clear. First of all, we need to finish the engineering properly, issue the capital estimates and complete the feasibility study, all while meeting our high-quality standards and setting the company up for project delivery. We also want to continue our exploration and drilling plan on the south side of the river near Media Luna. We had an extensive infill drill program over 2021, drilling 80,000m and investing US$22 million. In 2022, we aim to drill between 64,000 and 65,000m at a cost of US$19 million. This would allow us to create a plan for our existing resources while adding to our reserves.

Torex also wants to execute its early works for the mine. The Media Luna deposit is 7km away from existing infrastructure, across a river. Our ongoing work aims to access the deposit via a series of tunnels moving from north to south and vice versa. When we bring the mine online, we will become a diversified metals producer, adding 800 million oz of copper to our production. With the transition to a low-carbon economy, this resource is essential to the global industry.

Q: How is the company planning to continue with its permitting plan for the mine?

A: We were granted our EIA by SEMARNAT, which enabled us to start construction. Torex submitted its application for an integral EIA to bring all our activities into one broad permit and we have had constructive discussions with the regulator to this end, allowing us to move forward and reach a decision. Permitting is a reciprocal process and should be looked at on a case-bycase basis. Some of the stories surrounding delays in permitting are true. A reduction in SEMARNAT’s staff and a global health pandemic are not conducive to fast permitting. Nevertheless, a company’s reputation, as well as the scale, environmental impact and social approach of a project and the quality of the application are crucial. Torex is in a great position regarding all these elements. Our approach with SEMARNAT and CONAGUA has been positive and we look forward to working constructively with them as the project develops.

Q: How is Torex planning to integrate renewable energy into its projects?

A: We developed a plan to build an 8.5MW on-site solar energy project by partnering with Scatec. It will complement our existing power supply and represents our first venture into renewables, which we aim to grow in the future as it fits our identity of constant innovation and proves that Torex is serious about diminishing its carbon footprint. Investors are tired of hearing all talk and no meaningful action regarding

decarbonization. The project will bring economic benefits, reduce energy costs and help curb emissions. Furthermore, it will create jobs for our community and leave a net-positive legacy there. Transforming mineral resources into sustainable prosperity over time is important to us.

We submitted our permit application for construction of the project in 2021 and had positive discussions but the government’s constitutional energy reform proposal has caused delays. We will let this situation play out, though we are monitoring developments closely. For companies like Torex, availability of a power supply in remote regions is crucial. Reliability is equally important to run our equipment optimally. Our energy bill is expensive, so competitive pricing is of the essence. The energy mix, with added clean capacity, is another key point for Torex. We work closely with associations to ensure that a new reform supports the mining industry instead of creating more headwind.

Q: What would the company like to have achieved by the end of 2022 to call the year a success?

A: A brilliant 2022 means nobody gets hurt. A successful 2022 would see Torex setting up a smooth transition from ELG to Media Luna, finishing its feasibility study for the latter project, getting into execution and managing to deliver on its production guidance and cost guidance to the market. Another objective is to look at growth outside of our Morelos gold property. I would like Torex to become a million-ounce-plus producer on an aggressive timeline. To foster the company’s consolidation, we are spending time to evaluate opportunities in M&As. Because our business is well-structured, we can be prudent, patient and opportunistic in these transactions until we find something that truly creates value for our shareholders and the business. It is beneficial to move slightly outside of the gold market, where companies are somewhat forced to be price-takers.

Torex Gold is an intermediate gold producer based in Canada. In Mexico, it focuses on exploration, development and operation of its 100 percent-owned Morelos gold property, a 29,000ha area in the highly prospective Guerrero Gold Belt.

The Path from Mining to Decarbonization

Verónica Martínez Senior Programme Officer | ICMM

Fred Stanford

Chairman

| Torex Gold Resources

Jason Green

President

and CTO | GFS Corp

Koen Langie Head of Mining Program | Engie (Hydrogen Business Unit)

Andre Barriault Product Manager Electric Vehicles | Epiroc

Brian Huff VP | Sandvik

Verónica Martínez, Senior Programme Officer

-Innovation and Climate Change at ICMM, introduced the panel “The Road to Decarbonization: Innovative Haulage Systems” which focused on the industry’s transition to decarbonization, its challenges and the benefits it could obtain by incorporating new technologies.

“The miners are conservative, but once we get to build the first mine with this Muckahi process, it will completely change the industry,” said Fred Stanford, president of Torex Gold Resources. Stanford presented its Muckahi process that increases production through the efficient use of elevated rails, which is a cost-effective process for transporting people, mining devices, and minerals out of underground mines. Standford added that the company is testing and building machines that are required for the Muckahi process, besides carrying out a prefeasibility study that will be ready in March 2022, which will include costs, benefits and risk assessment.

Stanford explained that Torex Gold has long time investors , and they are always worried about the risks that could arise. He said that for several years, investors have been saying no to its processes; however, with the new ESG trends people have been demanding more of these changes. The financial benefits of the Muckahi process include a 30 percent capital reduction and a 30 percent operational reduction, which are attracting new investors.

The company’s principal assets are the El Limon Guajes mining complex and the Media Luna deposit, an early-stage development project. According to data released by Mexico’s Mining Chamber (CAMIMEX), El Limon Guajes was the country’s second-largest gold producing unit in 2019, churning out 454,800 oz. CAMIMEX highlights that in 2019 Guerrero was the second-largest gold producer in Mexico, registering a record yearly output growth of 19.4 percent, partly thanks to Torex Gold’s performance, reported MBN.

In today’s forum, Andre Barriault, Product Manager Electric Vehicles at Epiroc, explained that the company’s technology can provide more operational benefits than conventional equipment. He also explained that one challenge in this transition is that companies want to know success stories before implementing these solutions. Another challenge is that companies think they will be alone in this transition; however, Barriault emphasized they have Epiroc. “Being innovative and socially responsible does not mean you cannot be profitable or that you have to lose productivity

Mining companies need to have more vision and acknowledge all the benefits they could obtain.”

In a recent interview with MBN, Alfredo Bertrand, General Manager at Epiroc, shared that the company’s battery-powered equipment that address environmental issues was being tested in operations abroad. In addition, the company introduced the first units to the Mexican mining market and the machine that was delivered during 2Q21 to a major mining group.

Koen Langie, Head of Mining Program at Engie’s Hydrogen Business Unit, explained that the company is targeting big mining equipment by incorporating in them hydrogen, which is an excellent complementary. “According to our simulations, hydrogen solutions will be competitive with diesel in 2025. Mining can switch to hydrogen without increasing costs and improving productivity and environmental practices,” said Koen Langie. He explained that the company is combining the batteries’ technology with hydrogen; the first provides a fast energy response and charge, meanwhile, hydrogen can increase the equipment’s autonomy.

Recently, Langie told MBN about the first hydrogen-powered truck created in cooperation with Anglo American, which is expected to operate in 1H21. Langie explained that more than a final product, this is a proof concept that is part of the development process of getting to a commercially viable hydrogen mining truck solution, which can be used not only by Anglo American but by other mining companies that want to start decarbonizing their operations.

Jason Green, President and CTO at GFS Corp, explained that natural gas will play a huge role in the decarbonization of mining companies and that this technology will definitely be the future of OEMs. “Natural gas might be the least ‘sexy’ option for decarbonization in mining but LNG will still be an important bridge technology,” said Green.

Green said that natural gas is a cleaner and not expensive option to reduce carbon emissions. He explained that previously, when the company was starting, customers asked about the risks of investing and incorporating equipment that uses natural gas; however, its acceptance has grown and now questions focus on productivity benefits. Green said the biggest challenge continues to be showing the potential of natural gas. GFS Corp is the worldwide leader in the development of systems that allow large, high horsepower diesel engines to operate on a combination of natural gas and diesel fuel.

Brian Huff, VP of Technology at Sandvik, said the company’s products are ready to be introduce in the Mexican mining sector; however, the challenge lies in increasing awareness regarding these alternative solutions. “This industry is full of people who are ready to do the impossible, but that works for companies that are quite conservative and unwilling to take on new risks,” said Huff. However, Sandvik technology is reliable, they have been developing and preparing for the las decade. “The mining sector has the technology, and it can have an easy transition; however, education and awareness are needed for the customer base to understand that these technologies are capable and available for the development of new mines.” Huff added that one of the key innovations that the company has been focused on is minimizing infrastructure changes and an example of this is that the company’s machines can swap their own batteries.

People, Community and Tools to Maximize Operational Potential

Jody Kuzenko CEO | Torex Gold Resources

Arturo Bonillas CEO | Magna Gold Corp

John McCluskey CEO | Alamos Gold

Steve Holmes

CEO | First Majestic Silver Corp

Jesus Romero

Senior Consultant | Golder

Closing Mexico Mining Forum’s second day, Jesus Romero, Senior Consultant at Golder, looked at how existing operations’ potential could be maximized. Experienced panelists outlined how expertise, tools and most of all people, play a significant role in improving operations.

“A company’s staff is always a crucial factor for mining companies that are looking to improve their operations. I can talk about my team all day. Without our people, all we have is a rock on the ground,” said Jody Kuzenko, CEO of Torex Gold Resources. Because mining is a complex business, people are crucial but they need to be aligned to the company’s vision. This vision, Kuzenko said, should be clear and informed in regards to culture and value. To this end, Torex utilizes the ‘systems leadership’ theory to foster commitment.

Arturo Bonillas, CEO of Magna Gold Corp, agreed with this notion. “Alignment is fundamental in any organization. In our case it is absolutely vital,” he said. To keep people aligned with the company’s vision, Bonillas said keeping clear KPIs and focusing on top-down and bottom-up communication and feedback are crucial elements. Furthermore, employees should know what they contribute to the company’s direct results.

Sharing a common culture is a particularly interesting challenge for companies that started out small, like Alamos Gold. Its CEO, John McCluskey, scrambled to get the project going with a team of only four people. Now, the company has grown to over 2,000 people and has a market value of US$4 billion. “We had to learn along the way,” explains McCluskey. To generate company values, Alamos had to talk to all its employees. But even more important is to adhere to these standards after they have been set, especially in an uncertain year marked by a global pandemic. Both staff and communities need to be kept safe. “If you do not see that mining has a purpose that goes far beyond the production of metals, you have missed the point,” said McCluskey.

Steve Holmes, COO of First Majestic Silver Corp, noted that the company was founded in the early 2000’s and expanded through M&As. During this time, sharing a vision was paramount. “But vision does not always easily translate to the people on the frontline,” Holmes remarked. Every worker has a different perspective, after all. Companies should focus on what makes their culture valuable and enforce that

through strong and frequent communication, involving senior leadership when possible.

When developing their teams, the panelists highlight Mexico’s strong mining culture, which helps companies find the right talent for their operations. “Foreign companies brought in a lot of knowledge,” Bonillas said, adding that people in the areas of economic geology and experts in exploration are still somewhat lacking. However, Holmes said that most of his team are nationals. Kuzenko also explained that 99 percent of her company’s workforce comes from Mexico, 70 percent of them from Guerrero, where Torex operates. Its Media Luna project will go online around January 2024. “The expertise of our Mexican team made this all happen,” she said, stressing the importance of local experience. “The best thing we have done is to cultivate and to grow a construction team,” said McCluskey, adding that local people can help with unusual circumstances that pop up while operating.

Besides people, tools are equally valuable to maximize potential. “Our number one tool is cost control,” Bonillas said. Reacting fast to issues is key to optimize cash flow. Furthermore, the importance of geological models could not be understated: after all, you only get to mine a mineral once. Kuzenko highlighted the importance of tailings dams, as their failures cause tragic accidents. This is why the company built one of the largest filtered tailing storage solutions found in the world. Using both filters and dry stacking, the risk of a complete failure and subsequent runout is minimized. While this costs more, the mine is located in a seismically active area riddled with water issues. The company’s tailing solution brings many benefits to the table, just like its innovative rope conveyor does.

At First Majestic’s Santa Elena mine, a high-intensity grinding mill provided a competitive advantage in the liberation of gold and silver, said Holmes. The mine uses a lot of energy as well, so Holmes is commissioning a large, on-site liquefied natural gas (LNG) powerplant, along with a third party so First Majestic did not need to invest heavily. The LNG plant cuts energy spending by 35 percent and decreases carbon emissions by 50 percent. But not everything needs to be cutting-edge technology, however. By incorporating ‘5S’ criteria: sort, set in order, shine, standardize and sustain, an efficient workspace can become a reality, he says.

McCluskey aimed his efforts at engineering design, metallurgy and exploration, taking safety and efficiency into account. “What Mexico needs more than anything else is long-range thinking,” he explained. Therefore, expanding reserves and reliable policies are of the essence for the mining industry. Nevertheless, a company should plan well from the get-go. “No matter how good your people are, they can head off in the wrong direction,” he said.

All panelists concurred on the essential role community relationships play in the mining sector. “Community relations need to be really strong and long-term if you are going to be successful in Mexico,” said Holmes. “Governments give permits, communities give permission,” agreed Kuzenko. Leaving a net-positive legacy after a mining project is finished should be part of all companies’ strategies.