Fortuna Mining Corp FSM

Lindero Heap Leach Ramp Up Problems

[ganndolph1]

all, 

I made the following post on ORV.TO's stockhouse board back on August 18th. Although I hold no shares of FSM at this time, I was interested in the SART plant at Lindero, because that was one of the options which Orvana could have used to recover copper at the Don Mario OSP.  Furthermore, since Orvana also has the Taguas project in Argentina with copper levels higher than Lindero in their sulphide ore, I have been following developments at Lindero with great interest.

To me, it seem that the problem at Lindero could be solved by increasing the flow rate through the heap leach from 400 cubic meters per hour to 600 cubic meters per hour to up the flow rate through the heap leach.  IMHO, management has done an excellent job in response to a set of adverse conditions at Lindero,

So with that background, here is my Orvana post:


I thought that Orvana would opt for a low cost heap leach coupled with a 2 stage SART plant for recovery of copper and zinc from the Don Mario OSP.  So in addition to the Parral Heap Leach operation, I have also been following Fortuna Silver's Lindero heap leach operation and SART plant with great interest and even contructed leach models for both projects.

There are a couple of reasons to watch developments at Lindero:

• 1) its location is in Argentina, and I am following the economics of this project closely;
• 2) the SART plant is well designed to process 400 cubic meters per hour of pregnant leach solution; and
• 3) the project has an 2 stage ore leaching plan designed to maximize gold production while minimizing copper production.

In a previous post, I compared the Don Mario TSF gold recovery project with the Parral heap leach operation. Parral has a heap leaching operation with a SART plant, a Merril Crowe plant.

The other heap leach project with a SART plant for copper recovery is Lindero where average ore grades for gold are 0.62 g/t slightly lower than the gold grades at Don Mario’s tailings facility, silver grades are 30 times lower at Lindero than at the Don Mario TSF, and copper grades are 1100 ppm about 20 percent of copper grades at the Don Mario TSF.

Average tailings ore grades at the Don Mario tailings impoundment  are 0.67 g/t gold, 15 g/t silver, 0.52 percent copper, and 0.5 percent zinc with a big question mark on the zinc grades.


At Parral, the heap leach solution application rate is 228 cubic meters per hour applied to 3 leach cells at a time for a 60 day leach cycle at an application rate of 10 liters per square meter per hour.  The area under leach at any one time at Parral is 22,800 square meters. Heap leach height is 10 meters same as at Lindero, but with only one lift, while there are 11 lifts planned at Lindero with an ultimate stack height of 110 meters.

Lindero’s ore leaching strategy is to maximize the production and recovery of gold while minimizing the recovery of copper.  The heap leach design calls for a 30 day primary leach at 12 liters per square meter per hour followed by a 60 day secondary leach at 6 liters per square meter per hour. The Lindero leach plan calls for 66,600 square meters to be under secondary leach for a total flow rate of 400 cubic meters per hour, while 33,300 square meters are under primary leach for a total flow rate of 400 cubic meters per hour to the primary leach.

Heap leach areas are segregated so that barren leach solution gets applied to the secondary leach with discharge to an intermediate pond, while the intermediate pond solution is applied as the primary leach solution with discharge from the primary leach reporting to the PLS pond.

With this leach plan, it takes at least 90 days to reach steady state leaching with 100,000 square meters under irrigation.

Lindero’s recovery target for gold is 75 percent, while the expected copper recovery is only about 19 percent.  Lindero’s cyanide use per ton of ore is only about 0.60 kg/t in comparison with 3 kg/t applied at Parral.

Based on column testing at Lindero, about 10 percent of expected 75 percent gold recovery comes from HPGR crushing of ore.  And another 5-10 percent of the gold recovery comes from the cyanide cure applied with cement during the agglomeration process.

So, let’s review the leach history at Lindero since the start of ore stacking on July 10, 2020. Irrigation of the heap commenced in August, 2020, and on October 20, 2020 Lindero had its first gold pour of 728 ounces. To date, in the last 12 months, Lindero has stacked 153,810 ounces of gold and recovered a total of 55,288 gold ounces for a cumulative recovery of 35.9% way below the75% design gold recovery. 

The production ramp at Lindero ran into five problems:

• 1) electrical signal problems with the ore conveyers and stacking system;
• 2) delays in the commissioning of HPGR-Agglomeration system; 
• 3) Covid-19 related restrictions on getting contractors into Argentina to work on the ramp up issues;
• 4) SART plant flow rate at 25% of design flow rate; and
• 5) a potentially defective heap leach design.
•  

With the ore conveyer system not working, management made the decision to bypass the HPGR and truck crushed rock directly to the heap leach stacking without agglomeration. The expectation was that the expected gold recovery would drop to 50% for ore stacked in this fashion. For the first 4 months, the SART plant was also bypassed. 

The reason given was that the ADR plant was working satisfactorily without the SART plant and that only 5 percent of the copper present in the ore was expected to leach out.In the second quarter of 2021, a surge in Covid-19 was blamed on lower mining and stacking rates with the crushing circuit averaging 14,870 tpd or 79 percent of design capacity of 18,750 tpd. The HPGR-agglomeration circuit was working at 51 percent of capacity, and the PLS flow rate to the SART plant was between 100 and 150 cubic meters per hour, 25 percent of the design flow rate.

IMHO, the PLS flow rate is the most significant concern because for the last 6 months, the ore stacking rate has been sufficient to add 3 sets of 10 full leach cells per quarter, and so flow to the PLS should have already reached 400 cubic meters per hour based on the total area being leached.  The fundamental problem at Lindero could be that the solution application rate is too low, due to ROM ore getting stacked without agglomeration.  

Q2 2021 gold recovery was 43.3% of the gold stacked during the quarter.

As a result of the shortfall in gold production at Lindero,  Fortuna Silver’s management cut production guidance at Lindero from 140-160k ounces of gold for 2021 to 90-110k ounces, and raised the AISC guidance from $730- $860 USD/oz to $1,010 - $1190 USD/oz. The market  reaction to the Q2 2021 FSM earnings release was negative and the FSM stock has declined 18 percent since the date of the financial report.

Based on the poor gold recoveries achieved at Lindero to date,  it does not appear that the Lindero heap leaching model should be used as a model for the Don Mario TSF.