No two mines are the same. Indeed, the optimal layout and process approach for a mine depends on a wide range of variables including local minerology, ore hardness, landscape and regional regulations. These and other elements influence both the design and the overall economics of the project.
That is what makes mining both challenging and rewarding, as well as capital-intensive. Each mine requires a tailored design and unique process. There is no one-size-fits-all solution; you can’t simply copy and paste a model from one site to the next. As a result, the Net Present Value (NPV), a key indicator of a project financial viability, and overall economics of the project can often be heavily influenced by the skills and capabilities of the technical experts and advisors involved.
It also means there are multiple ways to achieve the same objective with a wide range of similar results. Ask two equally qualified teams of engineers to design an optimal process based on local data and you will likely end up with two different, yet equally viable, options. But engaging two engineering teams from the start is cost prohibitive for many. So, instead, some mine leaders are choosing to seek out a second opinion to evaluate whether their initial design can be improved. This step can add real value to their project economics.
Taking another look
We recently collaborated with Southern Silver Exploration Corp, a Vancouver-based company with significant silver assets in Durango State, Mexico. The company had conducted a Preliminary Economic Assessment (PEA) for their Cerro Las Minitas project in 2022, followed by a Preconcentration Trade-off Study in 2023. While the project economics were strong, the executives at Southern Silver believed there was potential to further improve the NPV. We agreed.
Working alongside Southern Silver’s management team, we went back to the basics and examined everything from the layout and flowsheets, through to the costing and estimates. Using Ausenco’s extensive benchmarking database, we quickly identified areas that warranted deeper analysis. Based on our findings, we developed a list of potential opportunities and quantified their potential impact on project economics.
Uncovering hidden value
Our data and analysis indicated that by implementing a set of identified opportunities, we could decrease capital costs and increase the NPV of the Cerro Las Minitas project. This included optimizing the layout of the plant, reducing the footprint and shortening the length of the tailings conveying system from over 500 meters to around 300 meters. These layout adjustments also drove significant cost savings in the civil, structural and tailings management capital expenditures estimates, as well as reduced long-term operational costs.
What did we do? We updated the comminution circuit design to explore the benefits of a modular crushing facility. When examining the crushing circuit, we identified areas of significant overcapacity and addressed them. We also reviewed the floatation circuit, updating the flowsheet to improve both concentrate recoveries and quality. And finally, we assessed how ore sorting technologies could enhance efficiency and unlock cost savings opportunities.
After completing the updated PEA for Cerro Las Minitas in 2024, we were extremely pleased with the outcome. By combining some of our most valuable insights with an improved mine plan developed by others, we helped Southern Silver increase the NPV of the project by over 44 %. This has given the management team the confidence to explore new opportunities to further enhance the value of the project. Currently, we are working together to assess a range of value-creation strategies including acquiring neighboring concessions, increasing the throughput of the plant, further optimization to the process design, and consolidating operational infrastructure.
Lessons from the Cerro Las Minitas story
Regardless of whether you are satisfied with the results of your PEA, there are three lessons every mining leader can take from this experience:
- Demand a tailored design. Every mine is different, and your design should reflect that. Work with a multidisciplinary design team of technical experts who work collaboratively to create a design tailored to your project. The team’s focus should be on finding better ways to deliver on your objectives either focusing on higher recoveries, lower capex, best NPV, etc. The quality of your design and engineering team at the start will dictate the economics of the project across its lifetime.
- Use a local team with global support. Individual mines may be unique, but best practices are global. The greatest value comes from design and engineering teams that combine deep local experience with global technical expertise. This ensures you benefit from the best ideas from around the world and have them applied to your specific context, such as a unique Mexican operation. Understanding the local realities is key to creating value for all stakeholders.
- Seek a second opinion. Developing a mine is a significant undertaking with little room for error. Many mine leaders are recognizing the value of seeking a second opinion during the design and engineering phase, where issues can be prevented and opportunities to add value can be generated for a low cost. Our experience shows that the return on the investment of a second opinion can be substantial.
Article first published in Mexico Business News, February 2025. Reprinted with permission.