Boroo Pte. Ltd has carried the momentum of its very busy 2021 into the new year, announcing substantial improvements to the economics of its Lagunas Norte Carbonaceous Material Optimization Project (CMOP).
The privately held, Singapore-based company purchased the Lagunas Norte gold mine and processing facility in northwestern Peru from Barrick Gold in June 2021 after agreeing to pay Barrick $81 million and grant it a 2% net smelter return.
Following the acquisition, Boroo immediately went about restarting production from the existing heap leach operation at a rate of 60,000 ounces of gold per year. The second phase of Boroo's three-phase mine plan at Lagunas Norte, and the one where it is currently concentrating most of its efforts, is the CMOP project, which will involve the processing of about 15 million tonnes of high-grade gold-bearing oxides that were stockpiled by Barrick over the years. An additional phase, the Refractory Material Project (Proyecto de Minerales Refractarios, or PMR), will focus on extracting value from the main portion of the Lagunas Norte mineral reserve.
"CMOP will increase our production three-fold in the near term. The project has a life of mine of around seven years at annual production of around 150,000 to 160,000oz of gold. It will give us a very good scale of production at our Peru operations," said chief executive Dulguun Erdenebaatar.
Under Barrick's ownership, a scoping-level study for the CMOP project indicated that positive financial metrics could be achieved by processing previously mined gold-bearing ore with carbonaceous content.
In January, Boroo announced completion of an update of the study based on more comprehensive sampling of the previously mined material. The update confirmed the economic benefits of the CMOP project. By purchasing and repurposing processing equipment, Boroo was able to reduce the capital cost estimate from the $254 million set out in the old study to a much lower $143 million. Moreover, Golder Associates has completed the basic engineering for the processing plant and has already completed "around 60%" of the detailed design engineering.
"CMOP was well de-risked during the Barrick years, but we have a different approach when it comes to the project's development," said Erdenebaatar.
"Our NPV, at a 5% discount rate, has increased more than $170m to around $336m. Our internal rate of return has improved two-fold to 67.1%, the payback period is 1.5 years, and the project timeline has been reduced to 17 months. What we are [now] aiming for is first gold pour from CMOP in November/or December 2022."
The updated CMOP study came on the heels of an updated NI 43-101 report confirming proven and probable mineral reserves, including existing stockpiles, of 4.0 Moz of gold and 9.9Moz of silver.
Turning to the PMR phase, Erdenebaatar said, "The CMOP project only [comprises around] 25% percent of this reserve. The remaining reserve of almost 3Moz is the refractory ore. Now we are starting to work on how we're going to extend our life of mine beyond the CMOP. We are in discussions with several engineering firms and institutions about unlocking the real value of Lagunas Norte beyond 2027."
Boroo has begun working on the PMR project and hopes to have a preliminary economic assessment completed by the second half of this year. Looking at the bigger picture, Erdenebaatar sees the work on the CMOP and PMR projects as critical to fulfilling Boroo's goal of becoming a mid-tier gold producer within three years.
"We are actively looking at different assets inside and outside Peru. Our strategy, as at Lagunas Norte, is to acquire care and maintenance assets from mid-tier producers. For them, these are non-core assets, but [for us] they could be turned around and the life of mine could be extended," he said.
"We are actively searching for the next kind of asset suitable for our portfolio, and we are looking to several opportunities not only in Peru but also around this region (South America) and the North American region."