Mexico’s environmental authority halts Almaden’s Ixtaca project

Mexico’s environmental authority, Semarnat, has suspended permitting for Almaden Minerals’ (TSX: AMM; NYSE-AM: AAU) Ixtaca gold-silver project in the state of Puebla, pending the resolution of a lawsuit that challenges the country’s mineral-title system.

The lawsuit, filed by the Tecoltemi community of about 150 people in Puebla state, contends that granting mineral titles without Indigenous consultation is unconstitutional and a violation of human rights, as set out under the International Labour Organization Convention 169.

In April, a lower court in the state ruled that Mexico’s mineral-title system is unconstitutional and that the original mineral claims granted to Almaden should be suspended until consultation wraps up.

The court’s decision is being appealed by the Mexican Congress, the Senate, the Secretary of Economy and Mining, and the company, as an affected third party to the lawsuit.

Almaden Minerals’ Ixtaca gold-silver project area in Mexico’s Puebla State, east of Mexico City. Credit: Almaden Minerals.

Morgan Poliquin, Almaden’s president and CEO, says the claims the company currently owns have nothing to do with the Tecoltemi community. “Our development of the mining area is kilometres away, and our current mineral claims do not overlap with this community,” he said in a recent interview with The Northern Miner.

Poliquin also said the company has been advised that Semarnat has no grounds to delay permitting on this basis because its mandate is to review the technical merits of environmental-permit applications, and none of the 12 communities within Almaden’s current claims covering the Ixtaca project are parties to the lawsuit.

The Ixtaca project, 95 km north of Puebla city, is located on the Tuligtic property owned by Almaden’s subsidiary, Compania Minera Gorrion S.A. de C.V.

Almaden submitted a writ to Semarnat on Oct. 24 to clarify that the company has already abandoned mineral claims in the Tecoltemi community and has no interest in holding any mineral claims in the area.

“We have been there for 18 years, working very happily,” Poliquin says, adding that the company had more than 70 local people working on the project during the exploration stage. “The highest levels of government have pointed out that mining is part of their investment strategy and they welcome mining that respects the labour law, that respects communities, that respects the environmental law. So we feel very positive about Mexico.”

He adds that the lawsuit should be a concern to investors in Mexico, and is part of a broader effort by special interest groups in the country to use Almaden’s mineral claims as a basis to challenge the Mexican government and change the mining law.

“What it speaks to is the fact that there are strategic attacks on the institution of Mexico right now,” Poliquin says, given that every other mineral title in the country had been granted under the existing law.

Geologists examine a map at Almaden Minerals’ Ixtaca epithermal gold-silver deposit 95 km north of Puebla City, Mexico. Credit: Almaden Minerals.

The permitting suspension has affected the project’s time line. “We would like them to remove that halt to the process, and we are working on that,” Poliquin says.

Almaden identified the Ixtaca gold-silver deposit in 2001 during the company’s regional exploration program.

The Ixtaca deposit is a low sulphidation epithermal vein system. Most of the gold and silver mineralization occurs as high-grade vein and veinlet zones in the carbonate basement units.

The property first consisted of two concessions covering 140 square kilometres. Almaden filed an application in 2015 to lower the aggregate claim size to those areas that are considered prospective. The application was completed in 2017.

The Tuligtic property comprises seven mineral claims covering a total area of 72 square kilometres.

A drill crew at Almaden Minerals’ Ixtaca gold-silver deposit in Mexico. Credit: Almaden Minerals.

Almadex Minerals (TSX: DEX), a Vancouver-based exploration company, holds a 2% net smelter return royalty on the property.

Almaden plans to continue advancing Ixtaca’s development, and Poliquin says he is “hopeful that they will resolve it soon.”

A 2018 feasibility study envisioned a conventional open-pit mine producing 1.79 million equivalent oz. gold and 134.3 million equivalent oz. silver over an 11-year mine life.

The study forecast all-in sustaining costs of US$850 per equivalent oz. gold and US$11.30 per equivalent oz. silver.

Initial capital expense was pegged at US$174 million. The study estimated an after-tax net present value of US$310 million at a 5% discount rate and a 42% after-tax internal rate of return with a 1.9-year payback period, using a US$1,275 per oz. gold price and US$17 per oz. silver price.

Measured resources stand at 43.4 million tonnes grading 0.62 gram gold per tonne and 36.27 grams silver for 862,000 contained oz. gold and 50.6 million contained oz. silver.

The project has indicated resources of 80.7 million tonnes grading 0.44 gram gold and 22.67 grams silver for 1.14 million contained oz. gold and 58.9 million contained oz. silver.

Inferred resources add 40.4 million tonnes grading 0.32 gram gold and 16.83 grams silver for 412,000 contained oz. gold and 21.9 million contained oz. silver.

Mexico has been the world’s top silver-producing country for the last two years, producing 197 million oz. silver last year, according to the 2019 World Silver Survey. The country was among the top 10 gold-producing countries in 2018, producing 115.4 tonnes gold.

Almaden’s shares were trading at 61¢ at press time in a 52-week trading range of 57¢ to $1.19. The company has 112 million common shares outstanding for a $68-million market capitalization.