Hermosa to shine for South32

A feasibility study on Taylor, a zinc-lead-silver deposit, is due before year-end, and with US$338 million in pre-development financing already committed by the company, pre-production works are advancing, including building a water treatment plant and preparatory works for shaft development.With first production from Taylor due in early 2027, Risner said the feasibility project scope is in-line with the prefeasibility study, which outlines a $1.7 billion development to build a 4.3Mtpa operation to produce 111,000tpa of zinc, 183,000tpa of lead and 7.3Mozpa of silver. "The feasibility study is confirming a lot of the assumptions that came from the prefeasibility study, so we don't expect material change," he said.ManganeseWhile the Taylor sulphide deposit will produce a standard base metals concentrate, Hermosa also hosts a manganese oxide deposit called Clark, which is the only manganese resource in the US that could produce battery-grade manganese. With South32 having determined that Taylor and Clark can be developed independently, July saw the company announce a $1.3 billion impairment."From a geological standpoint, the two ore bodies are contiguous; they sit on top of one another. … The impairment decision came as by getting through the feasibility study work, we know we can develop the two projects independently, which triggered the need for accounting purposes, to evaluate Taylor independently.""That doesn't prevent us from pursuing any synergies that could be leveraged as part of developing both of these resources," said Risner.While the Taylor zinc project has a relatively clear timeline ahead of it, the company still has work to do on Clark and the manganese product it may eventually produce, particularly because the idea is to produce a speciality chemical for the lithium-ion battery market, rather than a basic base metal concentrate.South32 is looking at producing 180,000tpa of manganese sulphate, which means product specification and customer qualification are key additional steps on the road to development.The company is running a pilot plant to produce battery-grade manganese for customer testing. Early next year it plans to start building a larger demonstration plant, which from 2025, will be able to provide larger amounts of material for testing."We will soon begin the development of an exploration decline at Clark to gain underground access to the ore body for bulk sampling and underground exploration to support ongoing customer engagements for battery-grade manganese," said Risner.FAST-41Zinc and manganese are both on the US critical metals list, and with Hermosa being a potential US source for both metals, it achieved the distinction of being the first mining project to enter the FAST-41 federal programme in May, which provides coordination and specific timelines for infrastructure projects under review by federal agencies."All battery-grade manganese currently comes from China, and we highly rely on foreign zinc sources. Risner said that there are two strategic critical resources, which was one reason why the project was selected as the first mining project to enter into FAST 41," said Risner.While some projects in Arizona are entangled in legal disputes challenging permits, Hermosa is mainly in private land and therefore subject to state permitting."We can do the initial surface facilities construction, ore body access, shafts, declines, concentrator base, plant and all the typical mine facilities as they will be built on private land.""We will access both ore bodies from shafts and declines on private land, and can commence mining and production and the ramp-up on private land, all under Arizona state permitting regime. We have a majority of those permits in hand already," said Risner.The initial development at Taylor will be on private land and outside the purview of the NEPA federal permitting process. However, the company will advance the NEPA process in parallel with state permitting processes because the full development of Hermosa will require the use of federal land."Timing, uncertainty and predictive permitting processes tend to be one of the key risks [to project development] due to administrative delays. FAST-41 gives you predictability and a definite schedule [published July 5], that says when things are going to happen. NEPA is a big coordination exercise between multiple federal agencies and stakeholders, making it difficult at times," said Risner.Hermosa's proposed NEPA permitting timetable has three milestones: the mine plan of operations will be submitted and approved by December 2023, the environmental impact statement process will occur throughout 2024 and 2025, and federal authorisation for full development will occur in 2026. SustainabilitySouth32 plans to develop underground mines at Hermosa, which would be among the most sustainable in the US, with a low surface footprint, water usage, automation and local hiring."One of the unique aspects of Hermoza is that we've designed it as a very small footprint mine … with a disturbance of less than 600 acres. We are going to do paste backfill both for Clark and Taylor ... and are going to do dry stack tailings. Half the tailings will go back underground for backfill. The other half will be placed in an existing dry stack tailings facility we built as part of the voluntary remediation programme to clean up historical tailings placed on the site by a previous operator," said Risner.The mines will be automated and use a battery-electric underground fleet operated from a remote operating centre. "We are designing the mine with low-carbon design principles. Our company has a goal of net zero greenhouse gas operational greenhouse gas emissions by 2050, so we are looking at designing it to be fully powered by renewable energy and to use all battery electric vehicles," said Risner.Risner said sustainability will factor in the mines' recruitment process, where it aims to source 80% of its workforce locally in Santa Cruz County. "Santa Cruz county is one the poorest counties in Arizona.Unemployment is double the state average, and the per capita income is 40% below the state average. This would be the largest capital investment in the county by seven-fold. … We believe that sets us up to train many people in the community that don't have a mining background and attract a more diverse workforce. … We want a workforce that reflects our local community, which means more female representation in the workforce, and this is an 85% Hispanic Latino population," said Risner.WaterWith parts of Arizona experiencing extreme temperatures and multiple in excess of 100°F recently, the management water resources is a key issue. South32 believes the mine will score highly on this aspect too."This will be an incredibly low water intensity mining operation. Based on figures we've seen in the published NEPA reports for other projects, our water use intensity will be about 10% of the open pit projects proposed in the area. We are also designing the tailings facility and site closure so that it doesn't need perpetual water treatment," said Risner.The company is also engaging with the communities on water issues, such as what to do with the treated groundwater other than discharge it back into surface water courses. "We have engaged the community on other potential beneficial uses or ways of managing that water, and one that has come out is a more selective recharge of the aquifer using things like rapid infiltration basins," said Risner.

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