MINING IN MEXICO — Spate of mine openings underscores

The recent opening of several new mines in Mexico and the overall revival of the country’s mining industry owe much to policies aimed at attracting foreign investment.

These policies, implemented several years ago, have led to an influx of North American-based mining groups interested in Mexico’s exploration potential, and to the development of mineral projects not traditionally pursued in the past.

Heap-leach gold mines, for example, were not a part of Mexico’s traditional mining industry, even though they have long been common across the border in the southwestern U.S. In the past year, however, several new mines of this type were placed into production.

In early 1994, Hecla Mining (NYSE) opened La Choya, a gold mine in Sonora state and the company’s first operation outside the U.S. and Canada. The open-pit operation was designed and built with strict environmental safeguards, such as double-lined leach pads and a closed-circuit processing system. A reclamation program, which meets or exceeds government regulations, was also put into place.

At last report, La Choya hosted proven and probable reserves of 6.7 million tons averaging 0.037 oz. gold per ton. Production this year is forecast at 50,000 oz., which is to increase to 63,000 oz. annually thereafter. La Choya is not the only gold mine in Sonora state to have entered production in 1994. La Colorada, owned 70% by Eldorado (TSE) and 30% by Campbell Resources (TSE), is expected to yield 25,000 oz. this year.

Eldorado has several other advanced gold projects in Mexico. Campbell also has other interests, namely the Santa Gertrudis gold mine, which it bought from Phelps Dodge this past summer.

Cominco Resources International (TSE) is deeply rooted in Mexico, having spent years working in the Cananea copper district of Sonora (and elsewhere). Today, the company holds a 49% interest in the Maria mine and the nearby Mariquita project.

The high-grade copper ore has been mined out at Maria, where miners are now focusing on lower-grade copper-molybdenum material. At Mariquita, a feasibility study is being prepared which envisages an open-pit mine with copper recovered by heap-leaching and solvent extraction-electrowinning. Capital costs are estimated at US$30-35 million for an operation targeted to produce 30-35 million lb. copper cathode per year. At the end of 1993, the indicated resource was 33 million tonnes averaging 0.47% copper, plus an additional 10 million tonnes averaging 0.43% copper in the possible resource category.

It is likely that, within the next decade, many more mines will open in Mexico and that these will feature a range of deposit types. North American companies active in the country are making a conscious effort to incorporate the highest possible environmental standards into mine planning, and to ensure that economic and social benefits are provided to local residents.