"Joining the ICMM showcases our commitment to sustainability in all of our operations. We are the first Peruvian company and the only tin company worldwide to join the organization."
What have been the latest milestones in the evolution of Mina Justa?
The feasibility study was approved by our board a few months ago. While this was a key milestone for us, this is around a US$1.6 billion project, so we decided to implement a two-tier financing strategy. First, we decided to bring in an equity partner with a maximum of a 40% interest. We ran a very competitive process – we did not only want to bring in a partner to provide capital and de-risk the project, but also a partner that we can count on in the longer term to develop growth opportunities in the Mina Just area. The Angelini Group of Chile, through Alxar Investments, acquired 40% of Mina Justa in a transaction that was closed on May 31st, 2018. We are very happy with our new partners who have significant experience building large industrial complexes around Latin America and share our values and entrepreneurial culture.
Secondly, we are in the process of closing our debt portion of the project for between US$800 million and US$900 million, divided between export credit agencies and commercial banks. This should be completed by August 2018, and upon closing we will be taking the full construction decision.
In parallel to the financing process, the project has not stopped moving. Could you provide more details?
Last year, we decided to do some early works (roads, camps, explosive magazines, fuel stations, power transmission lines) and lock in the price and delivery times of the critical equipment. The idea is that, by the time we secure the full financing for the project, we are ready to go and we can shorten the time to market. Meanwhile, we have been working on the detailed engineering and today we have 70% of it completed, to reduce the execution risk.
We feel that the engineering risk is lower in Mina Justa than in any other project at this stage of development. It is a world-class ore body with very sound technical work and a fairly low execution risk thanks to its location. It is prime mining real estate, just next to the Pan American highway and close to the sea and power infrastructure. It is also going to be a sustainable project, that will only use seawater for its process, and there is a wind farm being built right next to the project. Even though production has not started, we are already working on Works for Taxes projects to improve the sewage and potable water infrastructure in San Juan de Marcona, while we are also promoting tourism in the area.
How important is it for Minsur to have joined the International Council of Mining and Metals (ICMM)?
Joining the ICMM showcases our commitment to sustainability in all of our operations. This is another milestone of a long journey that started many years ago. We went through a rigorous and exhaustive process to join an institution that includes the world’s largest and most important companies. We are the first Peruvian company and the only tin company worldwide to join the organization.
Speaking of your tin business, how is the B2 project going at San Rafael?
The B2 project, a US$200 to US$220 million investment, is under construction right now and should be commissioned by Q3 2019. This is an important project for us that will add 5,000 mt/y of refined tin at a very high margin. From an environmental perspective, we are retreating old tailings, so we are going to be creating value by improving our environmental performance. From an operational perspective, the new plant is located right next to the tailings dam, so it will be very efficient. Overall, B2 will increase our production profile by 20 to 30%, through to 2028 or 2029. Then, if you look at the big picture in the tin industry, this is probably the largest capital investment in a new tin project worldwide for the last 15 or 20 years.
What is the potential of the Nazareth deposit to add to San Rafael’s mine life?
We are working on scoping studies on Nazareth, which should come into production in 2024 or 2025. It is a new ore body we found right next to the main San Rafael vein. So far, we have expanded our resources at Nazareth to 150,000 mt of contained tin, and the deposit is still open at depth.
Finally, you have a high-margin gold operation, Pucamarca. How is that operation performing?
Pucamarca was a greenfield project that we built in 2013, and since then it has really become a very significant contributor to our company’s results. It is a world-class gold mine and is a really low-cost operation at less than US$350 per ounce. We started Pucamarca at 14,500 mt/d, and we ramped it up with very little capex to 21,000 mt/d. When we started, we thought we had a mine-life of 7 years at a much lower capacity. Through a lot of exploration work and optimization, we have extended mine-life and as of today we still have seven years to go.