Altaley Mining (ATLY) - 2023 Turnaround Plan: Deliver, Refinance, Rerate

Altaley Mining Corp. is a Canadian metals producer with its assets located in Mexico. The Tahuehueto gold mine of the company holds a land position of 7,492 hectares and is located within the state of Durango, Mexico. The project hosts at least 12 mineralisation zones, culminating in 424 koz of gold in the measured and indicated category as well as 9.5 million ounces of silver in its reserves. The Campo Morado mine is located in the state of Guerrero, Mexico and holds copper, lead, silver and gold mineralisation. The mine is fully operational and is capable of processing 2,500 tons of ore per day.

Altaley Mining Corp. in September 2022 announced that Mike Struthers had been appointed as CEO of the company. Struthers has more than 40 years of experience in the mining industry and has been involved in operations ranging from Africa to Australia as well as in technical consulting internationally.

The company at the end of January 2023 announced an update to its operational plans for 2023. The update includes changes in the management of the Tahuehueto gold mine with the aim thereof being to enable the company’s goal of completing the construction of the 500 tpd operation in Q3 2023. The company also plans to expand the operation to 1,000 tpd by the end of Q4 2023.

The operational update of Altaley Mining Corp. further includes the company shifting its focus at the Campo Morado mine towards the mining of higher-grade copper orebodies. The high-grade copper mineralisation averages between 0.7% and 1.1% copper and is located within the mine’s Fish and South-West orebodies. The EBITDA of the project is projected to be USD$ 15.9 million in 2023.

Newly appointed CEO

Altaley Mining Corp. in September 2022 announced that Mike Struthers had been appointed as CEO of the company. Struthers has more than 40 years of experience in mining and has been involved in operations ranging from Africa to Australia as well as in technical consulting internationally.

Struthers began his career in Zambia as a mining geologist before quickly moving into rock engineering, which he continued with for the next 20 years. After working in operations in Australia, including at Mount Isa, he opened an office for a consulting firm in London, where he began consulting internationally, mainly in rock engineering but later in broader engineering studies. He then spent approximately three years in Russia, working on a joint venture with the Lundin Mining Corporation on a large zinc asset in southern Siberia. He later went on to join the management team of one of Lundin Mining Corporation’s operations in Portugal. In Portugal he worked to expand the Neves-Corvo Zinc business, doubling its production to approximately 2 million tons. He went on to be involved in expanding the company’s operations in Chile and exploring opportunities in the high Andes. In 2017, he became CEO of Empire Metals Ltd., a London-listed company, before joining Candelaria Mining Corp., a TSX-V listed junior mining company. He was introduced to Altaley Mining Corp. in 2021 and joined the company in September 2022.

Projects

The Tahuehueto gold mine is a mining operation located in the Sierra Madre mineral belt in the state of Durango, Mexico. The area is known for its rich history of mining activity. The mine consists of 28 mining concessions, with a land position of approximately 7,492 hectares.

The Tahuehueto operation is situated approximately 100 km southwest of the silver mines in the Guanacevi region and 25 km north of the silver mines at Topia. The operation possesses substantial exploration potential, with the project’s concessions covering roughly 80% of the mineralised district Tahuehueto, signifying a substantial amount of prospective ground for exploration.

The mine is presently in the pre-production phase, intending to achieve commercial production in 2023. Altaley intends to commence production utilising the identified reserves in the core 500-hectare area, subsequently expanding the reserves on structures where they have already been defined. The company also plans to explore the less explored structures within the core 500-hectare area, and to design and implement a Greenfields exploration program to explore the regional potential of the mineralised district within its concession area.

The Campo Morado mine is a fully operating underground multi-metal mine, owned by Altaley Mining Corp. The mine is located in Mexico and has over 700 exploration diamond drill holes in place, which have been able to outline six mineralized bodies. The mine contains approximately 16.6 million tons of measured and indicated resources grading 4.01% zinc, 0.80% copper, 0.93% lead, 123 g/t silver, and 1.70 g/t gold, in addition to one million tons of inferred mineral resources. The mine is equipped with infrastructure, installations and equipment that can process 2,500 tons of ore per day.

The Campo Morado mine was commissioned and started operations in 2009 by Farallon Resources Ltd., which was later acquired by Nyrstar Metal Processing in 2010 for approximately CAD$ 420 million. The mining operations were suspended in January 2015 due to the deteriorating industry conditions, with the mine being placed in care and maintenance.

Altaley Mining Corp. acquired the project in April 2017 from Nyrstar Metal Processing and announced the restart of full-scale mining and mill processing on a pre-production basis in October 2017.

Tahuehueto gold mine update

The company at the end of January 2023 announced an update to its operational plans for 2023. The update includes changes in the management of the Tahuehueto gold mine with the aim thereof being to enable the company’s goal of completing the construction of the 500 tpd operation in Q2 2023. Struthers explains that when he joined Altaley Mining Corp. he found that there was not a clear separation between the construction and commissioning of the separate 500 tpd circuits.

“In my view, when I joined, I felt there was some confusion there both internally and externally I would say. There are two stages effectively, a 500 ton a day base case if you like and then a 1000 ton a day expansion. It's simplistically put that way because you have one ball mill to do 500 and then you need another one to do 1000 and that was a sort of a simple partition. I found that in a sense, there was a tendency, they were trying to do both at the same time. I didn't feel that there was enough separation or clarity between those two stages.”

Struthers was able to clearly define the end goal of the circuit construction with concise communication to the market regarding the envisioned 500 tpd circuit and the expansion to 1000 tpd. The company aims to expand the operation to 1,000 tpd by the end of Q4 2023.

“There were some final things to be done on the crusher, the feed circuit, the crushing and conveyors and what have you, but the mill was sort of ready to go. So I said, Look, what we need to do here is to finish that stage so the first goal is to deliver the 500 tpd project, get that all working properly. We set aside the 1000 tpd expansion as a stage two. So the 500 tpd project now is about 85% complete.”

Altaley Mining Corp. will aim to finance its initiatives through an envisioned CAD$ 16 million offering.

“In terms of funding the 500 delivery for Tahuehueto, we also announced a while back a rights offering. The goal of that was to complete that project and the quantum of that rights offering was CAD$ 16 million. We haven't started that process yet, we've announced it but it was prior to consolidation, we'll have to revisit the pricing of it. The goal basically there is to get the company funded and then deliver.”

Campo Morado operations update

The Campo Morado mine of the company has seen challenges in the past year, due to the operation being a VMS deposit and requiring more technical management than an average mine, as Struthers explains:

“Campo is VMS. It's one of those mines where it's always going to require more than the average amount of technical management. It just requires that extra level of technical input on a routine operating basis more than your average mine, if I can be clumsy like that.”

There are two parts to the operation, the base metal concentrator, and the opportunity to improve precious metal recoveries in the future. In 2021, the mine moved from a high-grade zinc ore body to an area with higher iron grades, causing a negative impact on the processing circuit. The mine migrated to another ore body, which was relatively copper-rich, but the plant was not optimised for copper, leading to poor performance in the first half of the year. Struthers explains that the situation could have been avoided if there had been sufficient metallurgical work done beforehand and appropriate planning.

“There's the base metal concentrator and then there's this opportunity to improve precious metal recoveries in the future through the application of different technologies. What happened last year at Campo Morado in my view is illustrative of recent experience at the operation which is that it tended to have been more reactive than it has been proactive.”

Ausenco Ltd. an engineering consulting firm specialising in base metal location plants were engaged to assist with the Campo Morado mine. The company was able to provide Altaley Mining Corp. with a roadmap to improve the performance of the Campo Morado plant. The roadmap identifies the shortcomings and opportunities for improvement, providing a detailed plan on how to progressively improve performance at the Campo Morado plant.

“They gave us a roadmap. They went through the plant from one end to the other and at every stage in the circuit gave us how the plant is configured, how well it is operating, its performance, etc. What are the shortcomings, what are the opportunities so we've got a detailed roadmap now as to how to progressively improve performance at the Campo Morado plant.”

The operational update of Altaley Mining Corp. also included the company shifting its focus at the Campo Morado mine towards the mining of higher-grade copper orebodies. The high-grade copper mineralisation averages between 0.7% and 1.1% copper and is located within the mine’s Fish and South-West orebodies.

Future plans

Altaley Mining Corp. sees 2023 as a turnaround year for the company and anticipates that the delivery of the 500 tpd processing circuit in Q2 2023 will result in a re-rating of the company in the market. The company plans to publish a press release detailing its test work conducted at the Campo Morado mine, which has been aimed at identifying new processing methods and systems. The company will create a scoping study that will determine the best direction for the mine to take, which will upon successful completion significantly increase its gold recovery at the Campo Morado mine from 15-20% to 60-70%.

“We'll be focused on stabilising, and optimising the base metals part of the operation right now but we're going to continue doing that work as well on precious metals and hopefully see a bit of traction on precious metal recoveries during 2024.”

Struthers believes that if Altaley Mining Corp. meets its set out milestones, it will be rewarded by the market. 

“I see 2023 is really the turnaround story for us. We're going to turn this company around, deliver, we'll get some re-rating in the market that'll have a lot of positive spin-offs for us. But right now, I think the company is ridiculously undervalued.”

To find out more, go to the Altaley Mining website