STRENGTHENED by OUR
Restrictions resulting from the pandemic affected the pace of operations and project execution. Nevertheless, we were able to recover some of our production.
Our operations were awarded the Sanitary Safety Distinction, which endorses them as safe-work places.
Peñoles’ exploration team is dedicated to detect and develop polymetallic and copper deposits in Mexico and South America—mainly in Peru and Chile—where we hold concessions for over 1.2 million hectares. We also evaluate external projects in early exploration stages for possible acquisitions or partnerships, and support our mining units in generating new mineral reserves that will guarantee their continuity and growth.
We have qualified personnel as well as equipment and work systems that guarantee the quality of our studies. We rely on procedures, codes, protocols and expert personnel to ensure that our actions are carried out under strict ethical standards, respecting and supporting the communities where we operate and maintaining a culture of environmental protection.
Due to the public health emergency in 2020, it was necessary to suspend field work for seven months, a period we used to create and update protocols, manuals and work procedures, and to conduct research and laboratory studies of new prospective areas by compiling and analyzing information with predictive methods.
Consolidated investment in exploration—Peñoles and Fresnillo—totaled US$ 141 million in 2020, 32.2% lower than the previous fiscal year. Of this amount, US$ 22.7 million were allocated to new Peñoles projects, US$ 11.5 million to exploration of mines to replenish and increase reserves, and the rest to mines and projects at Fresnillo plc.
In 2020 we conducted direct exploration on six projects totaling 22,000 meters of drilling, both in the areas of influence of the current mining units and in new projects. Geological, geochemical and geophysical work also took place at 70 prospects for further exploration with drilling and subsequent assessment. Prospecting was also intensified with the assessment of 62 external projects in search of opportunities.
The most important results were obtained in the following projects:
Reina del Cobre (Polymetallic)
Location: Cuencamé, Durango
The polymetallic skarn project is located 20 km from the Velardeña unit. As of the close of 2020, the detected (inferred) resources totaled 19 million metric tons with 1.9% of copper equivalent. Due to the depth of the ore bodies, we carried out studies and analyzed options for the development of underground mining work, in order to locate appropriate drilling positions that ensure a higher level of reliability of the resources. This work is scheduled for 2021.
Capela (Polymetallic)
Location: Teloloapan, Guerrero
We began a drilling campaign during the fouth quarter to determine the possible extension of current ore bodies, aimed at reinforcing resource inventories at this new mining unit. We expect to have enough information by the first half of 2021 to thoroughly determine whether it is feasible to conduct drilling and generate new resources.
Fortuna del Cobre (Copper)
Location: Pitiquito, Sonora
In this disseminated copper deposit, we have historic information indicating inferred resources of 10 million metric tons of ore, with 1.2% copper, in a secondary enrichment zone. Later analysis supported the feasibility of expanding the known body and detecting possible new ore bodies. We began a drilling campaign in the last quarter of the year, the preliminary results of which were attractive. We hope to have enough information in 2021 to define this project’s potential.
International Exploration
With respect to our international projects portfolio, the global public health emergency prevented us from making significant progress in talks regarding the acquisition of land for future mining operations for the Racaycocha copper-gold-molybdenum project in Peru, where we maintain excellent relations with surrounding communities. Nevertheless, geological and geophysical studies were conducted in the northern part of the district, on company land, where we have obtained evidence of mineralization. Drilling will be carried out in 2021 to test its potential.
We also carried out drilling at the Laura and Campanario projects in Chile, although we did not succeed in detecting economic mineralization. In both Peru and Chile, six drilling prospects were developed, and we are evaluating opportunities in other companies’ projects.
Fresnillo plc
Fresnillo plc, engaged in exploration of potential deposits with gold and silver content, has mining concessions and exploration projects in Mexico, Peru and Chile. It has four advanced exploration projects—Orisyvo, Rodeo, Guanajuato and Pilarica—as well as other long-term projects.
A total of 505,000 and 177,00 meters were drilled in the mining units and exploration projects, respectively, in 2020.
Currently 13 areas are being drilled. Among those we have obtained interesting results in the San Julián and Guanajuato districts in Mexico, and in the Supaypacha project in Peru. The mapping and sampling work continues at various projects. In Orisyvo, the drilling program was completed for sampling metallurgy studies.
At regional offices in Hermosillo, Chihuahua, Zacatecas, Toluca, Lima-Peru and Santiago de Chile, exploration teams worked on selected areas that might contain silver-gold belts in Mexico, Peru, Chile and Argentina. All exploration work was conducted in strict observance of preventive protocols relating to the COVID-19 pandemic.
Field exploration was limited by the health emergency. We conducted studies and analysis of the collected information.
Value chain in the exploration process
IT
Engineering and
projects
Procurement
Legal
Construction
Generative
regional
prospection
Monitoring
regional
prospection
Parametric
drilling
prospects
Grid drilling
projects
Estimated
reserves
projects
SHAREHOLDERS
EMPLOYEES
COMMUNITY
CUSTOMERS
SUPPLIERS
External
suppliers
Ecology
Industrial
relations
Safety
Mining
funds
Integral
quality
Comptroller
Management
Division personnel
2020 brought us great challenges and lessons. Our Annual Report highlights the strengths that have allowed us to overcome difficulties while generating value to our stakeholders.
The following abbreviations will be used throughout the report:
PROFILE
We are a proud Mexican company, committed to our country, with presence in the international market.
FINANCIAL HIGHLIGHTS
In a complex environment, we focused on preserving liquidity, while continuing our priority investments.
MANAGEMENT REPORTS
We manage our business responsibly and prudently, with a long-term vision.
PERFORMANCE
Our operations faced great challenges during the year. We improved our processes and sought cost reduction.
ENERGY AND TECHNOLOGY
We incorporated new technologies to increase productivity and efficiency.
CORPORATE GOVERNANCE
Our corporate governance ensures transparency, the compliance with organizational values and accountability.
INFORMATION FOR SHAREHOLDERS
Contacts available for our shareholders
FINANCIAL STATEMENTS
We present our audited financial information in thousand US dollars.
