Dowa to joint venture Tizapa project

Dowa Mining is set to develop its first commercial mining project outside Japan after a $32 million bid for the Tizapa polymetallic project in Mexico was accepted by the Mexican government.

A world leader in metallurgical processing, Dowa has agreed to develop the complex lead-zinc deposit in a joint venture with Mexican mining giant Industrias Penoles. Dowa will own 49% of the project and Penoles 51%. The manto-type volcanogenic deposit is one of 15 mining properties the Mexican government is selling as part of a massive privatization program encompassing not just mining, but the entire economy.

Situated 270 km west of Mexico City, Tizapa hosts estimated reserves of 5.2 million tonnes grading 2.17 grams gold, 277 grams silver, 1.49% lead, 6.46% zinc and 0.58% copper per tonne. Figures are based on 10,000 metres of diamond drilling.

Dowa has developed a metallurgical process, involving the use of flotation, that Mexican officials believe will enable it to recover metals in sufficient quantities to make the Tizapa operation viable.

Pilot tests conducted in Japan and Arizona indicate that recoveries for lead and zinc will be in the 60-80% range, said Alejandro Trejo Repetto, director of operations at the Consejo de Recursos Minerals, Mexico’s mineral resources council. “Dowa is very strong at getting the most out of pyrites,” he said. While terms of the joint venture are still being finalized, the Mexican government is retaining a 2.5% net smelter royalty and will also be reimbursed for the $500,000 it has spent on exploration at Tizapa. Over the next two and a half years, Dowa and Penoles are planning to build an 800-tonne-per-day underground mining operation capable of producing 250,000 tonnes of concentrates annually. Some of the concentrates will be refined at Mexican smelters in Torreon and Monterrey, with the balance being exported. Government officials say Dowa is benefiting from the $10 million spent by Japan on technology transfer programs in Mexico over the past few years. Since Mexico President Salinas de Gortari, opened the doors to foreign business, Japan has been a leading investor in electronics, the computer business and now natural resources.

Having won a 3-year contract to explore other known deposits in the Tizapa area, Dowa may be in a position to expand its activities there, if the new mine proves successful.