First Majestic Silver is citing high costs and other challenges for the temporary suspension of operations at its Jerritt Canyon mine in Elko County, Nevada.
Officials did not indicate how long the mine could remain idled, but said all activities will be cut effective immediately, and its workforce will be reduced at the same time.
The silver and gold miner has owned Jerritt Canyon, situated in the northeastern region of the state, for 22 months. It purchased the asset from Sprott Mining in April 2021.
“Since the acquisition…the company has been focused on increasing underground mining rates in order to sustainably feed the processing plant at a minimum of 3,000 tons per day in order to generate free cash flow as our plans suggested,” it said.
“Despite these efforts, mining rates have remained below this threshold and cash costs per ounce have remained higher than anticipated primarily due to ongoing challenges such as contractor inefficiencies and high costs, inflationary cost pressures, lower than expected head grades and multiple extreme weather events affecting northern Nevada, which have compounded conditions and caused material headwinds for the operation.”
President and CEO Keith Neumeyer added that the suspension represents about 21% of its revenue for 2022, and its decision was driven by its mission to produce profitable ounces company-wide.
Neumeyer stressed it has invested heavily at Jerritt Canyon since taking over, and several of its key projects have returned successful results.
“We rehabilitated and reopened the West Generator and Saval II underground mines and have successfully upgraded and modified the roaster and refinery off-gas handling systems to ensure we remain fully compliant with all state and federal air quality standards,” he said.
“The team at Jerritt Canyon has helped the company achieve significant milestones and we are thankful for their service.”
Despite the activities stoppage, processing of the remaining surface stockpiles will occur for the next couple of months. The company will also continue exploring both near-mine and prospective regional greenfield targets to grow Jerritt Canyon’s resources, which it feels will significantly enhance the economics for the mine’s eventual restart of operations.
During the suspension, the company intends to process approximately 45,000 tonnes of above-ground stockpiles through the plant. The operator noted, though, that as a result of the suspension, its previous production and cost guidance for Jerritt Canyon can no longer be relied upon.