Demand for electric vehicles are expected to rise significantly, and in response investors and technology companies are making efforts to guarantee future supply by investing in mines that can provide battery metals such as zinc, cobalt and lithium. Bloomberg estimates that electric vehicles will account for 54 percent of new car sales by 2040, an increase from its previous estimate of 35 percent. And Mexico is becoming a rising star in the battery metal industry as it is expected to hold not only the biggest lithium mine in the world but also the highest-grade cobalt mine.
Mexico Mining Review, has compiled a list of the top 4 base metal mines that are attracting the attention of leading experts in the industry.
Ownership: 100% Americas Silver Corporation
Initial Production Date: 4Q17
Initial Capex: US$16.3 million
Average Annual Production: 1 million ounces Au, 50 million lbs Zn, 20 million lbs Pb
Mineral Resource Estimate: 11.4 million ounces Ag, 303 million lbs Zn, 127 million lbs Pb (Proven and Probable)
Mine Life: 6 years
Darren Blasutti, President and CEO of Americas Silver Corporation
We have been very bullish on zinc. We just built a new zinc-silver-lead mine, San Rafael in Sinaloa, which came into production in December 2017 and is now ramping up production.
Our internal estimates envision zinc prices averaging about US$1.40/lb over the next three years. Even though those prices are not as high as the prices we are seeing today, as an average this number makes us very bullish on the metal.
2. Sonora Lithium Project
Ownership: 100% Bacanora Minerals
Initial Production Date: 1Q20
Initial Capex: US$420 million
Average Annual Production: 17,500t/y
Mineral Resource Estimate: 5 million tons lithium
Update: Started the construction of a 35,000t/y lithium carbonate opera
Joel Carrasco, Director General of Solum Consulting Group
The company plans to start production in 2019. Everyone is expressing interest in this project as it is expected to be one of the largest lithium producers in the world. This project serves as an important example on how our local presence and expertise of the work we can achieve positive results for our clients.
3. Los Gatos
Ownership: 70% Sunshine Silver and 30% DOWA
Initial Production Date: 4Q19
Initial Capex: US$316 million
Average Annual Production: 9.6 million ounces Ag
Mineral Resource Estimate: 9.8 million tons of 247g/t Au, 4.8 percent Zn, 2.3 percent Pb and 0.3g/t Ag
Mine Life: 11.5 years
Update: In construction and ongoing definition drilling to increase reserves and resources
Philip Pyle, Vice President Exploration Mexico of Sunshine Silver Mining & Refining
Production will begin in the latter part of 2018. We will begin mining the ore at the end of 2018 and will begin processing that ore around 2Q19. We should be in full commercial production by July 2019. We have arranged all the financing and we are in the process of constructing the office buildings, the mine support itself and the workers’ camp. We are also in the process of commencing the earthworks for the processing plant.
The overall pre-production capital costs for the project, according to the feasibility study, is US$316 million. We believe the actual capital cost will be slightly less than that. Seventy percent of the financing is coming from debt issuance to a consortium of Japanese banks, one of the lead banks being the Japanese Bank of International Commerce. The remaining 30 percent of the financing is shared between the two operating partners. Since Sunshine Silver owns 70 percent of the project and DOWA owns 30 percent, both parties are supplying a proportional amount of the remaining financing.
4. Sara Alicia
Ownership: 100% Azure Minerals
Initial Production Date: TBD
Initial Capex: TBD
Average Annual Production: TBD
Update: Second Drilling campaign was completed in 1Q18, 13 holes were drilled over 1,061m, results to be determined
Tony Rovira, Managing Director of Azure Minerals
The Sara Alicia project in Sonora is gold and cobalt. As the latter is a metal gaining demand for technological purposes, we have been looking for such a project in Mexico for a while. Its geological tenure is very good. We purchased it from a Mexican family in late 2017 and drilled in November of the same year, achieving outstanding high-grade sample results. It may be the highest-grade cobalt exploration project in the world. We have two very exciting projects and we hope to become both an explorer and an operator. We expect to be investing US$6 million in exploration over the next year.
Sara Alicia is especially appealing given the increased demand for cobalt, so a German investment bank and an investment fund from New York are coming on board on have invested in Azure because of our cobalt project. We are convinced that cobalt is going to be in demand over the next couple of years. The price rose from US$30,000/t in early 2017 to more than US$980,000/t in early 2018, an indicator of the expectations for this metal.