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Peru Silver Production Soaring

Written By Brian Hicks

Posted March 21, 2013

Peru is the world’s second-largest miner of silver, and it seems production of that metal is projected to go up nearly 5 percent over this year, with further production increases expected from 2014 through 2016. That, at least, is the view of Scotiabank, one of the country’s major banks.

The bank’s report, says Fox Business, indicates that silver output could keep going up by 9 percent yearly between 2014 and 2016. This would largely be a consequence of a slew of major large-scale mining projects concerning silver production coming online. That amplified production is expected to positively influence national GDP and government revenue.

Last year, Peru’s silver production climbed by 1.74 percent, reaching 102 million ounces. This year, the Compania de Minas Buenaventura SAA’s Uchucchacua silver mine should see an increased output; the company expects to see 11.5 million ounces through 2013 against 2012’s 11.3 million ounces.

silverLikewise, Volcan Compania Minera is expected to produce an additional 1.5-2 million ounces. That company produced 22 million ounces last year. Various other companies, including Sociedad Minera El Brocal SAA and Compania Minera Milpo are also expected to see a rise in silver output, while new projects like Canada’s Trevali Mining Corp,’s (TSX:TV) Santander project (focusing on lead, zinc, and silver) are likely to begin production through 2013.

According to Scotiabank’s study, three major copper projects – Xstrata’s (LON:XTA) Las Bambas, Minera Chinalco Peru’s Toromocho, and Hudbay Minerals’ (TSX:HBM) Constancia – are going to cause a production increase of about 40 percent through 2014-2016. The remaining 60 percent is being attributed to newer projects and the gaining of further efficiencies at existing projects.

However, Silver Vigilante notes that this optimistic outlook is balanced by the fact that this Monday, the Peruvian Ministry of Energy and Mines indicated that national gold production dropped by 25.12 percent through January. At the same time, silver and copper production saw declines of 7.27 and 4.41 percent respectively.

In terms of specific numbers, January’s gold production was 378,162 troy ounces, down from 503,036 troy ounces in January of last year. Silver was 8,583,638 troy ounces, compared to 9,256,778 ounces for January 2012.

So we ought to expect significant increases in silver and copper production over the longer term – that is, between now and 2016 – despite the fact that the immediate numbers are a bit of a downer. The momentum generated by all the new projects coming online, as well as current projects cranking out higher volumes of silver production, ought to buoy the Peruvian markets a fair bit, and investor sentiment should certainly see improvements over the coming months.

Meanwhile, copper production in that country is likely to experience a good boost, since Rokmaster Resources Corp. (TSX-V:RKR) has made an announcement to the effect that it has discovered a new zone on the Pinaya Project that has yielded results of up to 2.91 percent copper and 36 grams per ton silver over a 2 meter sample area.

The press release, once the mining jargon is cut through, suggests that the company has obtained 4,290 soil samples and is putting them all through analysis at present, with further exploration and mapping scheduled.

Thus far, the Pinaya trend has been marked out for six high-quaity porphyry copper gold and oxide gold drilling targets. Paperwork, including environmental compliance and related work, is being prepared, while the technical team continues to work on geological, geochemical, geophysical, and historical data. What that means is that the company is looking to define the main ore zones, and confirm the makeup of the ore, while also evaluating this find in relation to the Tintaya, Antapaccay, and Las Bambas deposits.

This new discovery is certainly a major boost to Peru’s copper production and goes along well with Scotiabank’s estimation of new projects coming online through 2016. No dates have been announced by Rokmaster as to when mining might begin on this new find, but we should expect further news by 2016.

And another company, Hochschild Mining (LON:HOC), has good news regarding its Immaculada and Crespo projects.

From Fox Business:

“These projects are expected to contribute an average attributable annual production of 10 million silver equivalent ounces, increasing current production levels by 50%. Both projects are due to be commissioned in the second half of 2014,” Hochschild Mining says on its website.


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