"Peru and Mexico are mining countries and despite short-term political noise, there is a fantastic long-term future for mining."
Could you provide an overview of the latest activities at the Corani project, and do you have a new timeline for its development?
The company has erected seven of 17 high tension line towers and has acquired all the wiring and materials needed to complete them. This will take power to the local grid where it can be distributed to several villages and towns in the region. The Peruvian government has also approved capital projects to upgrade the local grid, and hopefully by the end of the year many local communities of the Carabaya region will have access to reliable electrical power.
On the technical side, detail engineering for the whole project has been completed. We are now in the process of updating cost estimates. Cost inflation has been a big factor in the mining industry in the past year and we anticipate increases of 18% to 20% from our original capital budget. We continue to have discussions with various providers of financing, but this has become quite complicated due to inflation and the lack of guidance from the Peruvian government.
What led to Bear Creek’s acquisition of the Mercedes mine in Mexico?
Bear Creek had a long-term strategy going back to Santa Ana, where the smaller mine would have generated cashflow to help fund the development of the Corani project. This strategy was derailed, but we were always looking to re-implement it. When the Mercedes opportunity presented itself, we partnered with Sandstorm, a very strong metals streaming company. We did extensive due diligence and concluded the mine has significant potential.
Once the mine is put back into the proper development mining sequence schedule, which was disrupted due to Covid, we think it will make a significant contribution to the development cost of Corani. This acquisition also allowed us to divide our eggs into two baskets - one in Peru one in Mexico, one producing and generating cashflow, the other a world-class development project.
How has the relationship with local communities changed since the presidential election in June 2021?
In October 2021, Pedro Castillo met with the leaders of the local communities in our region, and they explained Bear Creek’s mining activities to him. The president expressed his appreciation for us. Therefore, within our area, the relationship with communities is still strong and we expect it to continue to be, but throughout the rest of the country the situation is exactly the opposite, which is very concerning. In addition, the lack of clear messages from the government towards mining is creating uncertainty in capital markets.
What type of work has Bear Creek been doing with local communities in Peru, and what do you think is the key to building successful relationships?
We have ongoing community relations activities and a life of mine agreement with the local region where the company contributes approximately US$1 million a year into a trust fund. The local communities decide where they want to deploy this money for their best advantage. We have also established the Corani Technological Innovation Center to cultivate opportunities for economic diversification and skills training, and this has been a huge success.
I believe the key for successful relationships is to communicate effectively. We must understand the people, the way they live, and find ways to respect their traditions and lifestyle. Complete transparency and honesty are also necessary; it is important to never make a promise that you cannot keep.
Where would you like to see Bear Creek Mining in two years, and do you have a final message for our international readership?
I would like to see Mercedes mine in production and possibly another Mercedes-style operation in production within the next two years. We would also like to see Corani well down the path to construction with a definitive timeline for first production. All of this depends on financing and our ability to identify and acquire additional properties. Peru and Mexico are mining countries and despite short-term political noise, there is a fantastic long-term future for mining.