Activity from producers and juniors has picked up significantly in 2021
Despite being one of the fundamental value-creators for mining producers and juniors, drilling was not considered an essential activity during the first lockdown in 2020 in Peru. However, this sub-segment of the industry rebounded strongly in the second half of the year, and its outlook for 2021 appears as bullish as it has been for many years.
The increase in the participation of the exploration sector is one factor, illustrated by the amount of financings by Peru-focused juniors on the TSX Venture Exchange doubling from 2019 to 2020, with the amount of capital raised increasing by over 300% in the same timeframe.
Additionally, rising metals prices have given the impetus to producers to expand brownfield exploration programs, a point emphasized by Hochschild CEO, Ignacio Bustamante, who commented that he could not remember a time “with so many meters to drill.”
Such a context is providing ample opportunity for drilling contractors and equipment providers to grow their business, with both producers and juniors as clients.
Approximately 30% of Boart Longyear’s business is in product sales and 70% in services, giving the company a holistic view of the sector as it supplies drilling contractors worldwide. “We have seen a significant uptick for exploration tooling and drill rigs, and over the past three months (February to April 2021) the demand has been higher than we have seen for several years,” revealed Jeff Olsen, Boart Longyear’s CEO, who explained that exploration tooling is a good indicator for drilling.
Elaborating on the company’s exploration tooling products, Olsen highlighted the Longyear Diamond Bits line that helps drillers with longer bit life and faster penetration rates. He also cited tremendous global demand for Boart Longyear’s surface coring products, such as the LF 160 drill rigs and Freedom Loader for rod handling. On the subject of future investments, Olsen added: “The Holy Grail for underground operations is hands-free drilling technology, and Boart Longyear has a prototype which is going to a test site in a few months.”
Through its contract with Las Bambas, Geotec has undertaken one of the biggest drilling campaigns in Peru in recent years. However, in addition to the issues MMG has had with reoccuring blockades of its copper concentrates, the pandemic has caused a fear of outside workers coming into local communities. “Mines often mobilize 3,000 to 4,000 people from outside the communities and this is being regarded as a threat due to the health situation,” related Miguel Ángel Arenas, general manager of Geotec.
“We have seen a significant uptick for exploration tooling and drill rigs, and over the past three months the demand has been higher than we have seen for several years. Exploration tooling is a good indicator for drilling, and we have seen a strong take-up in growth in Latin America, Africa, and especially North America.”
Jeff Olsen, CEO, Boart Longyear
While Covid has accelerated the adoption of automated technology, Geotec had been working with automation long before the pandemic, according to Arenas, who underlined that the benefits of the technology go beyond just productivity and safety, but also help the environment by recycling water. Moreover, he mentioned that automation will be required to fulfil the uptick in demand for drilling services: “Geotec has been training new workers for several years now, but with the increase in demand for drilling we are seeing, it will probably not be enough, so it will become necessary to automate more processes.”
On the subject of technology, Jorge Granda, general manager for Peru at AK Drilling International, related that his company has been focused on compact drilling equipment that is easy to use. “In collaboration with IDS, our technology branch in Chile, we have been developing technologies such as horizontal drilling, deep-pit drilling and automated diamond drilling,” said Granda, adding that while technology has improved efficiency and productivity, the human element of drilling is still important. “Remote work has accelerated during the pandemic and this is a good thing, but with certain activities, a level of skilled human intervention is necessary to maintain quality control and ensure safety,” concluded Granda, reinforcing the need to train the next generation of drilling contractors to meet growing demand.
Ian Venero, general manager of MDH Perú, another of Peru’s main drilling contractors, noted that there has been growing demand for automated solutions due to the pandemic, but only among large mining companies. He mentioned that MDH has been implementing equipment and technology that reduces human interaction with machines, as well as equipment that increases safety and reduces risks: “For example, we have introduced anti-impact gloves with special protection to reduce the risk of accidents for the workers’ hands, we have manufactured special equipment for handling pipelines and internal tools, and we use anti-sleep clocks and GPS tools to follow the transfer of personnel, tools and equipment.”
“Novamera’s SMD (Sustainable Mining by Drilling) process is going to provide a turnkey solution to mining companies to be able to surgically mine steeply dipping, narrow vein deposits more sustainably, economically and safely compared to conventional mining methods.”
Dustin Angelo, President, CEO and Co-Founder, Novamera Inc.
Discussing where he sees opportunity for growth in Peru’s mining industry, Venero replied that MDH currently sees more potential in brownfield exploration, as there are restrictions to open new projects in different areas due to permitting and social issues. “Mining companies are trying to grow inside their units and extend the life of their mines,” he said.
G&G Perforaciones, a Peruvian drilling services company established in 2007 by a group of students from the National University of San Luis Gonzaga, Ica, has grown its business since gaining its first contract with Buenaventura. Marcos Garayar, general manager and co-founder, explained that in addition to a full range of drilling services, G&G designs its own equipment to take into account the ESG concerns of an operation: “We are developing technologies that reduce environmental impact, including solutions for water optimization, and solutions for the reduction of gas emissions and energy consumption.”
This focus on sustainability is one of the reasons G&G won a large international tender for a drilling contract at Lundin Gold’s Fruta Del Norte mine in 2020, a milestone for the company which represents its first project outside of Peru. “Technologies which reduce environmental impact are being applied in Ecuador in a particularly aggressive way, as Fruta del Norte is in the middle of the jungle, so environmental treatment, and especially water treatment, is especially important,” added Garayar.
Environmental concerns, and the wider ESG umbrella, are factors which Novamera Inc hope to address with its innovative SMD (Sustainable Mining by Drilling) solution. Dustin Angelo, president, CEO and co-founder of Novamera, elaborated how SMD is a multi-stage process with four main stages. First, a pilot hole is drilled down the dip of a vein, guided with an imaging tool. Next, a large diameter drill is sent in, which follows the pilot hole, excavates the ore and brings the material to surface using reverse circulation airlift assist – a low energy method of cuttings transport. Once the material is at surface, the third stage is to dewater and separate the ore. After the ore is processed, the fourth stage combines the tailings with cement and put the product into the hole created by the drilling.
“Essentially, the hole becomes a landform tailings facility. Approximately 50% to 60% of the material we take out, will go back down. This reduces the reliance on constructed tailings facilities, which also reduces risk,” explained Angelo, stating that Novamera’s SMD process will allow companies to surgically mine steeply dipping, narrow vein deposits more sustainably, economically and safely compared to conventional mining methods.
The demand for drilling-related products, such as fluids and additives, has also been robust in 2021. Industrias Morven manufactures viscosifiers, filtration reducers and drill hole stabilizers, and the company now accounts for 30% of the national market share in Peru, according to Pablo Moreno, general manager.
Moreno spoke about the company’s laboratory, designed to carry out the analysis of materials, such as polymeric sludge systems: “The tests we perform measure the rheological properties of the fluids, which allows clients to optimize results in their drilling projects. There are many parameters to assess when testing, including the quality of the water used for the sludge, analysing filtering capabilities, and other material characteristics.”
Image courtesy of Geotec