First Majestic Jerritt Canyon plan for 2025

First Majestic Mining is working on a restart plan for its Jerritt Canyon gold mine in Nevada, US, which it may be able to reveal in 2025, chief executive Keith Neumeyer told Mining Journal.

Neumeyer said he didn't regret buying the asset in 2021 for US$470 million in stock and 5 million warrants, although it has not performed as hoped, leading the company to shut it down in March.

"It was burning too much cash. In hindsight, when we bought that asset, we probably should have just shut it down on day one and rebuilt it from scratch," he said.

First Majestic ran into several legacy issues, including bad operating practices by the contract miners and entrenched mindsets of the staff and contractors.

"It was just too difficult to make an investment and produce at the same time, so we had to stop production. The investments are continuing over the next two years where we'll be making substantial investments in exploration and mill improvement. There is a lot of gold, there are 3Moz there," Neumeyer said.

"The issue is getting it into the mill and economically. We are putting a plan together to accomplish that, and we're hoping that the operation will be up and running by 2026." 

Technical work will continue through 2024 to determine what is required to return to production and the cost of doing that work. This includes winter-proofing the plant building.

Jerritt Canyon also has a roaster for processing refractory ores, one of three in Nevada and the only one not controlled by Nevada Gold Mines. With other gold companies in Nevada having refractory ore and limited ability to process it, a standalone restart may be something First Majestic considers.

"We are getting approached by groups looking to access this because it is a very critical piece of equipment. We are in discussions with groups that it may make sense to do that with, but it's got to work for both companies. It's got to make money for us as well as other companies," Neumeyer explained.

Despite the setbacks in Nevada, operations in Mexico, particularly Santa Elena and San Dimas, have performed strongly.

"We are back to our roots and we are all Mexico again. It is a matter of time where our balance sheet is improving," Neumeyer said.

To help improve the balance sheet, the company expects to start production from a purpose-built company mint near Las Vegas, Nevada, which will produce First Majestic silver coins and bars, enabling the company to obtain more revenue per ounce sold.

"We've been selling silver directly to our retail customers and shareholders since 2008. The business has slowly grown over time, and over the last couple of years, we've noticed that the mints have reached their limits and cannot give us the demand we're receiving. We are confident we can sell 300-500 percent the amount we're currently selling," Neumeyer said.