La Verde-rail connection One of the strengths of the La Verde deposit is the location. It is proximal to a city with labour and resources, water is abundant, the climate is mild year round, and there is rail, road and power available within a few km of the deposit.
I follow railroads as a key indicator of industrial and related activity. They are large capital, profit driven enterprises that invest and reflect the broader economy.
The railroad that passes La Verde is the Mexican subsidary of Kansas City Southern, a Class I railroad with links between the US and Mexico. The Mexican subsidary is referred to as KCSM.
Here is some discussion from the latest (2011) KCS annual report discussing the railroad's performance and traffic mix:
https://www.kcsouthern.com/en-us/Investors/Documents/AnnualReports/04-03-12AnnualReport2011.pdf
The fourth primary intermodal component is directly
related to container growth at the port of Lázaro
Cárdenas. KCSM container movements from Lázaro
Cárdenas into central Mexico grew by 32% in 2011,
with revenues increasing by 35%. Since the ? rst
container port operation opened in November 2007,
Lázaro Cárdenas has been the fastest-growing port in
North America and appears destined to remain so for
many years to come. As the sole railroad serving the
port, KCSM’s business growth out of Lázaro Cárdenas
promises to grow at impressive rates as well.
Providing more momentum to the growth at Lázaro
Cárdenas, in late December the Mexican government
awarded a second port operating concession to APM
Terminals, a subsidiary of A.P. Moller-Maersk Group. It is
expected that the second concession will be operational
by 2015. Also, a new bulk-handling facility will open at
Lázaro Cárdenas in mid-2012, which will allow KCSM
the opportunity to move heavier bulk commodities
through the port.
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Lazaro Cardenas is the port that La Verde would likely ship concentrate to, and the rail line to this port from Mexico City passes directly past La Verde. The port already has bulk material handling facilities, they are expanding it, and the is a second port planned. KCS has been systematically upgrading the line, to serve the high margin (time-sensitive) intermodal traffic, but also to increase capacity for other traffic. This mention in the annual report is notable.
Few copper mines being developed are in such close proximity to a railroad that rail shipment can be contemplated. Examples in Arizona and South America come from the historical construction of railroads during the early 20th century. Construction of new lines for a single metal mine is cost prohibitive in most settings, so normally not a factor. The exceptions are iron ore and other bulk deposits like potash and coal. In the case of La Verde, the rail service could be implemented with a short industrial spur and some storage tracks- a minor investment that would reap significant transport savings over trucking.
Almost certainly, this will be something that emerges in the PEA. We expect to see this in the next few days, as per company NR.
Cheers