Rebound in Mexico gold mining opens fresh prospects

10 Nov 2020

Gold production in Mexico’s COVID-19-hit mines has resumed and financial prospects look good. Mining companies want to meet increased global demand while prices remain high.

Renewed production is now triggering fresh investment. Currently, Mexico is home to the largest number of gold projects in the Latin America region.

Three projects are likely to trigger opportunities for Australian METS companies: Orisyvo, owned by Fresnillo; Media Lun Torex Gold; and Metates owned by Chesapeake Gold.

Gold prices rise as mining resumes

Mexico is the world´s ninth largest gold producer. Within Mexico, the state of Sonora produces most gold with 35% of the total. Chihuahua is next with 18%, then Guerrero with 14%, and Zacatecas with 13%.

The COVID-19 crisis has heavily impacted demand for industrial metals. Gold, however, has seen sharp price increases in 2020.

In mid-April, gold passed US$1,700/oz for the first time since 2013. On May 18 it hit a high of US$1,756.90/oz in London morning trade. Now, higher prices are encouraging investors and mining operators to increase their global gold activities.

The temporary impact of COVID-19

Mexico´s government declared mining a non-essential activity for two months at the beginning of the lockdown period. This means that overall gold production in 2020 is expected to be lower than previously anticipated.

In the past two months, mining in Mexico has largely resumed normal operations. Today it operates under strict health protocols.

What to expect of Mexico´s gold sector

Analysts expect gold prices to stay high. And the combination of high prices and a resumption of mining activities will improve the sector´s ability to raise capital and develop new projects.

Prospects in Mexico look strong. Mexico holds the largest number of gold projects in the Latin America region. There are 193 projects currently, according to BN Americas (bnamericas: Will COVID-19 Herald a New Era for Gold Mining?, July 2020). In comparison, Peru has 97 gold projects in the development pipeline, and Chile has 90 projects.

Mexico’s top 10 gold mines

According to Mexico´s Mining Chamber CAMIMEX, Mexico´s ten largest operational gold mines are as follows ( The ten biggest gold mines in Mexico, July 2020):

Rank Mine Company State/region Production 2019 (oz)
1 La Herradura Fresnillo Plc Sonora 482.7k
2 Limón-Guajes Torex Gold Guerrero 458.8k
3 Pinos Altos-Crestó Mascota Agnigo-Eagle Chihuahua 203.5k
4 Los Filos Equinox Gold Guerrero 200.9k
5 Mulatos Alamos Gold Sonora 142k
6 Peñasquito Newmont Zacateca 129k
7 Noche Buena Fresnillo Plc Sonora 127.2k
8 Dolores PanAmerican Silver Chihuahua 117.6k
9 Palmarejo Coeur Mining Chihuahua 111.9k
10 San Dimas First Majestic Durango 87.4k


Projects to watch

Several mining projects will commence in 2020–2024. These include projects owned by Fresnillo, SilverCrest Metals, Endeavour Silver and Torex Gold.

The top three projects to monitor are:

  • Orisyvo: Fresnillo expects first production by the end of 2022. The company is focused on exploration. The project has a CAPEX of US$430m and expected production of 182,000 oz per year.
  • Media Luna: This project is adjacent to Torex Gold´s Limón-Guajes mine. The project promises a 27% internal return rate (IRR) at US$1,200 oz per year. The company is developing its proprietary Muckahi mining system which could speed up construction, as well as boosting economics. The project has a CapEx of US$496 million and expected production of 170,000 oz per year.
  • Metates: This project by Chesapeake Gold has yet to find a viable way to tap into its massive 18.3 million oz of gold reserves. In 2016 the company’s public financial statements showed a post-tax (IRR) of 11.3% at US$1,400 oz prices. Current higher prices could help, but a metallurgical breakthrough is needed. The project has a CapEx of US$3.5 billion and expected production of 445,000 oz per year.

Contact us

If you are an Australian mining equipment, technology or services company and you want to tap into Mexico´s promising gold mining industry, please speak to one of our Mexico-based advisors.