Tag Archives: Fortuna Silver Mines

Appian continues to flex ‘multi-faceted’ skillset in latest mining deals

Private equity firms might not be the most obvious port of call for companies in need of the technical skillsets to transition ‘projects’ to ‘mines’, but, in recent years, Appian Capital Advisory LLP has shown the industry that it has all the credentials to help with this transition.

The firm, headquartered in London but calling on expertise from across the globe, has just completed divestments of the Santa Rita nickel mine and the Serrote copper mine, both in Brazil.

Sibanye-Stillwater, the purchaser, agreed to pay Appian $1 billion, plus a 5% net smelter return (NSR) royalty over potential future underground production at Santa Rita, for the assets, with the private equity firm, in the process, pocketing a pretty profit.

In 2018, Appian acquired Atlantic Nickel (owner of Santa Rita) out of bankruptcy for $68 million and Mineração Vale Verde, the owner of Serrote, for $40 million.

It reoriented the former large-scale open-pit mine into a much more conservative – and profitable – mine able to produce around 20,000-25,000 t/y of contained nickel sulphide equivalent. It also carried out extensive drilling to showcase its underground potential, prolonging its mine life.

The plans at Serrote, meanwhile, were re-evaluated in a DFS. Having completed project construction and commissioning ahead of schedule and under budget, the mine is now ramping up to nameplate capacity of 20,000 t/y of copper equivalent.

These two divestments represent the fourth and fifth portfolio sales the company completed this year. The others included the sale of its 13.2% interest in West Africa-focused gold company Roxgold to Fortuna Silver Mines, the sale of its 0.28% NSR royalty over the large-scale Caserones copper mine in Chile and the repayment of a royalty Appian held over Peak Resources’ Ngualla rare earth project in Tanzania.

The diversity of these asset exits is indicative of how well-versed mining-focused Appian is in the sector’s ‘hot commodities’, but there is more to appreciate here than purely financial gains and well-timed acquisitions and divestments.

“People know that not all money is created equal,” Michael W Scherb, Founder and CEO of Appian (pictured), told IM. “We have a team that is able to solve specific operational challenges – we can call on specialists to solve problems on the process flowsheet side, for instance – while providing financial advice to avoid expensive streams and set assets up for profitability.”

Scherb’s words are backed up by a solid track record: seven of nine investments it has made have resulted in mine builds. Its divestments have also provided healthy returns.

The company has been able to do this by recruiting industry specialists – mining and finance – and educating them on the facets they need to succeed in both the private equity and mining world.

“People that join Appian need to be multi-faceted,” Scherb said. “We get mining folks to think like investors and vice versa,” he said.

This has seen them build a project review team populated with former consultants and an operations team full of mine personnel with operational experience.

“We then get all personnel to cross-train across these teams to avoid any siloed disciplines,” Scherb explained.

Take Santa Rita as an example of where this expertise paid off.

The company carried out a six-month due diligence process on Santa Rita, which led to the development of a more defensive and low-cost mine plan able to see the asset through nickel price peaks and troughs – in stark contrast to the plan former operator Mirabela Nickel had for the asset.

Among the operating changes implemented were the use of a smaller, locally procured equipment fleet of 40 t trucks (Santa Rita previously used Caterpillar 777 90 t and 785 137 t payload trucks), the use of shorter benches and tighter blasting patterns.

This resulted in better grade and fragmentation control, improving the feed to the crusher.

It also defined a significant underground resource base at the mine, which it will still be leveraged to thanks to the NSR royalty.

Such moves were based on exploiting the nickel sulphides at Santa Rita. This reoriented focus aligned with the industry preference for nickel tied to the battery materials space, which eventually paid off with the amount of interest in the asset.

This blend of technical and financial expertise has served the company – and any company it has an interest in – well. Backed by a long-term investment philosophy where its funds are 12 years in duration, the company can make moves aligned with the realities and timelines associated with turning assets into mines.

The next asset on the Appian books likely to move into construction-ready territory is Kalbar Operations’ Fingerboards mineral sands project, which focuses on the Glenaladale deposit, about 20 km northwest of Bairnsdale in Victoria, Australia.

Scherb said this project will be “build-ready” very soon, explaining that it is currently going through the permitting stage.

The project has the potential to be one of the world’s major producers of zircon, ilmenite, rutile and rare earths, and Kalbar is proposing an investment of over A$200 million ($148 million) in the development of a project able to produce around 575,000 t/y of heavy mineral concentrate over 15-20 years.

Scherb said Appian is keen to further pursue commodities associated with the electrification of industry, but he is aware of the premiums that may come with these deals.

“A lot of money has flooded into the battery metals,” he said. “We can be patient and are starting to look earlier stage in some investments.”

“Earlier stage” still has the potential to be producing in four- or five-year’s time, he clarified.

What’s clear is that the Appian team is gaining widespread recognition, with Scherb saying larger mining companies are starting to approach them with proposals that would see Appian gain operational control of assets, realising the firm has the right blend of “operational skill” and “value principles” to succeed.

Having acknowledged a skills shortage across the sector – one Appian is doing its bit to tackle with internship programs with universities in Canada, the UK and Australia – Scherb was confident the company’s talent would be retained and, ultimately, grow.

“In terms of talent retention, we at Appian offer experience of reviewing many different assets at different times in their lifecycle,” he said. “If you’re in-house at a mining company, you run the ruler over the same assets, stress testing them against different scenarios. We offer our teams variety that they cannot get in many places.

“At the same time, our structure means employees invest directly in companies to ensure they are correctly incentivised. This means they get to share in the profits.”

With plans to make one-to-three investments per year – along with the same number of exits – and expectations of committing its latest $775 million fund within the next two quarters, expect to hear more from Appian into 2022.

Fortuna pours first gold at Lindero heap leach mine

Fortuna Silver Mines has reported the first gold pour from its Lindero mine, in the Province of Salta, Argentina.

The pour took place on October 20, 2020, producing 728 oz of gold.

It follows on from the starting of irrigation and leaching of ore placed on the heap leach pad, reported in early September.

Jorge A Ganoza, President, CEO and Director of Fortuna, said: “The first gold pour at Lindero, our third mine in the Americas, is a significant achievement for the company as we advance the mine’s ramp-up phase towards commercial production in the first (March) quarter of 2021. Lindero is a mine with reserves for a projected life of 13 years and is a pillar in Fortuna’s asset portfolio.”

Ganoza continued: “I want to take this opportunity to commend our Salta-based team’s commitment and hard work in achieving this milestone, especially in the context where COVID-19 related restrictions continue to pose multiple limitations.

“If conditions permit, we look forward to hosting an on-site inauguration ceremony of Argentina’s newest gold mine with provincial and federal authorities early next year.”

Fortuna keeps Lindero on track for first gold pour in early October

Fortuna Silver Mines says it has started the irrigation and leaching of ore placed on the heap leach pad at the Lindero gold project, in Salta Province, Argentina.

This is ahead of the first gold pour, expected in early October.

Jorge A Ganoza, President, CEO and Director, said: “In spite of all the restrictions and challenges brought by the COVID-19 pandemic, we are managing to successfully advance Lindero in a safe and secure manner for our personnel and neighbours.

“With the start of irrigation, we achieved one more key milestone in the pre-production phase as we prepare for what follows, the first gold pour at our third producing mine.”

Back in July, Fortuna said it had completed the primary and secondary crushing circuits at Lindero and it had started stacking ore on the heap leach pad.

The night shift operations at the primary and secondary crushing circuits began in mid-August and, at month’s end, daily throughput peaked at 17,400 t/d or 93% of design capacity of 18,750 t/d, Fortuna said.

This has seen 277,000 tonnes of ore averaging 0.87 g/t Au, containing an estimated 7,750 oz of gold, placed on the leach pad as of August 31.

Meanwhile, irrigation and leaching of ore on the leach pad commenced on September 1. The company also noted that pre-commissioning of the ADR (adsorption, desorption and regeneration) plant was 80% complete.

Fortuna starts stacking at Lindero heap leach gold mine

Fortuna Silver Mines has completed the primary and secondary crushing circuits at the Lindero gold project, in Salta Province, Argentina, with the company starting to stack ore on the heap leach pad.

As of the end of June, the overall project is now 97% complete, with the first gold pour expected at the end of the September quarter, Fortuna said.

Jorge A Ganoza, President, CEO and Director of Fortuna, said: “The successful commissioning of the primary and secondary crushing circuits and the start of stacking ore on the heap leach pad are key and much awaited milestones at Lindero. Our project team is delivering on schedule and budget according to the revised plan, despite the challenges and limitations of carrying on construction activities under COVID-19 related constraints.

“The next upcoming milestone is the start of heap irrigation which is scheduled for the end of August.”

The ramp-up phase of the primary and secondary crushing circuits will involve an increase in production until nominal rates of 18,750 t/d are achieved, the company said. Fortuna expects to achieve nominal rate production in the December quarter of 2020, inclusive of the tertiary high pressure grinding roll system and agglomeration plant.

Ore for the commissioning and initial ramp-up of the crushing circuit and stacking on the heap leach pad is being sourced from the medium-grade coarse ore stockpile inventory of around 1 Mt averaging 0.55 g/t Au.

During the period from July to December, an estimated 1.7-1.9 Mt of ore is scheduled to be placed on the leach pad with an average gold grade of 1-1.1 g/t, the company said. The estimated stripping ratio during this period is 0.68-0.75.

Final construction activities related to the process ponds, ADR (adsorption, desorption and regeneration) and SART (sulphidisation, acidification, recycling and thickening) plants continues with electrical and piping installations progressing according to plan, Fortuna said. The process pond and ADR plant electric rooms have been energised, with pre-commissioning of the solution handling system commencing on July 11 with the barren pond pumping equipment.

Lindero has been designed as an 18,750 t/d owner-operated open-pit mine with a pit life of 13 years based on current mineral reserves.

Komatsu fleet starts arriving at Fortuna’s Lindero gold project

The ramp up to production at Fortuna Silver Mines’ Lindero gold project in Salta, Argentina, is well underway with equipment arriving on site ahead of first output in the September quarter of next year.

In a project update, the company said initial on-site delivery of Komatsu mine equipment started in mid-July with the arrival of two graders and a dozer (see photo).

The manufacturer is on schedule to deliver 11 additional pieces of equipment, including six 100 t rigid dump trucks and two 13 m³ wheel loaders, in September.

Final delivery of two mine production drill rigs is scheduled for November 2018, which will allow development activities to kick off in December and drilling and blasting to take place in March 2019.

Jorge Ganoza, President, CEO and Director of Fortuna Silver, said delays in the building and expansion of the camp at site had been a limiting factor for commencing certain contracts, but the project team was working on opportunities to further “optimise the sequencing of concrete, electromechanical and piping installations to streamline the project’s schedule”.

He said mass earth movement and leach pad construction was, after a slow start, in “full gear”, while detailed engineering was between 70% and 100% completed in all project areas.

Lindero has been designed as an 18,750 tpd open-pit mine with a life of 13 years based on existing reserves. Crushed ore will be placed on a leach pad with the pregnant solution pumped to SART and ADR plants prior to electrowining and refining where gold will be poured to doré bars.

The project is expected to cost $239 million in upfront capital to build and is expected to produce 96,000 oz/y of the yellow metal.