Pan American Silver says road blockade ends in Peru

Pan American Silver Corp. [PAAS-TSX, NASDAQ] on Thursday May 10 said road blockades at its Huaron Mine in Peru have ended.

As announced on April 27, 2018, operations at the mine had been suspended since April 24, 2018, as a result of road blockades instituted by members of the nearby Huayllay community.

“With oversight from the Social Affairs General Office of the Peruvian Ministry of Energy and Mines, an agreement was reached with representatives of the Huayllay community to end the roadblocks,” Pan American said in a press release, Thursday.

The company now says it expects operations will return to normal levels within the next 48 hours.

“This was resolved quickly enough that guidance is maintained at 25.0 to 26.5 million ounces of silver with all-in-sustaining costs of US$9.30 to $10.80 an ounce,” Scotiabank said in a report.

Pan American said the community members were demanding compensation from the company for alleged impacts to the community land, as well as additional service contracts for construction work, haulage and material supply at the mine.

The underground mine, mill and supporting villages at Huaron were originally built in 1912 by a subsidiary of the French Penarroya Company. The nearby town of Huayllay provides workers, lodging and supplies.

Shares of Pan American Silver, the world’s second largest primary silver producer, rose 10.57% or $2.22 to $23.23 in morning trading on Thursday.

Pan American owns and operates six mines in Mexico, Peru, Argentina and Bolivia. The Peruvian operations include the Huaron and Morococha mines and an exploration stage gold property know as Pico Machay.  Huaron is a 2,300 tonne-per-day underground polymetallic silver mine located in the province of Pasco in the Central Highlands of Peru.

Cerro de Pasco, the nearest city, is a major mining centre and capital of the region with a population of 70,000. The operation is producing silver-rich zinc, lead and copper in concentrates. It is expected to produce 3.6-3.8 million ounces of silver, or 14% of the company’s targeted production this year.

The company’s largest operations, in terms of production are the La Colorado and Dolores mines in Mexico. They are expected to produce between 7.4-7.7 million ounces, and 4.5-4.9 million ounces of silver this year, respectively.

The Huaron Mine was acquired by Pan American in 2001. The company is now the 100% owner of Huaron and the mining concessions, through its wholly-owned subsidiary Pan American Silver Huaron S.A. The mineral rights are held by 187 mining concessions with a combined area of 29,343.7 hectares. The concessions are permanently granted provided that the holder complies with an annual payment to the Institute of Geology, Mining and Metallurgy (INGEMMET), which is a branch of the Peruvian Ministry of Energy and Mines.

Huaron operates an 870,000 tonne-per-year mill using froth induced flotation technology to produce silver in copper, lead and zinc concentrates.

Silver, zinc, lead and copper mineralization are present in epithermal veins, mantos and limestone replacements. Mining is undertaken using a combination of mechanized sub-level long hole stoping, and mechanical and conventional cut and fill.

A June 2014 technical report said Pan America’s community relations team implements an extensive program of community engagement activities including information sessions, health services, infrastructure works and education and training programs for local people, which have resulted in the establishment of several small businesses.

The report said experienced mining personnel from the region commute to the property via company sponsored buses, company vehicles, or privately owned vehicles.