A 14.8 km long, 115 kV power line connects the Comisión Federal de Electricidad (Federal Electricity Comission, “CFE”) grid to the mine owned and maintained substation with a continuous capacity of 25 MW. A 34.5 kV CFE transmission line provides power to the El Tabelo well field.
The cost of electricity delivered at high tension in Mexico is ~$0.10/kWh, which is ~35% cheaper than Chile, the largest copper producing country in the world. Unlike other mining jurisdictions, additional electrical capacity is freely available.
CDM holds concessions authorizing it to use 16 wells up to a combined tested capacity more than enough for the operational requirements throughout the life of mine.
A network of 10 cm (4"), and 14.7 cm (6") high-density polyethylene (“HDPE”) piping connects the well field to a central 39.2 cm (16") collection line for the mine and plant site. The collection line carries the water to a booster tank, from which water is pumped to a main 3,785 mP3P capacity storage tank via a 16” HDPE pipeline.
For eight to nine months of the year, the climate is arid to semi-arid. Nightly low temperatures in December and January range between 5°C and 8°C. Daily highs of 38°C and 42°C occur during May through August. The daily average annual high temperature is 32.5°C.
Elevation in the project area ranges from 150 to 300 m above Mean Sea Level (“MSL”). Vegetation is a mix of desert cactus, open grassland, and sub-tropical shrubs and trees. Surface water sources in the region include the Rio Mayo and Mocuzarit Lake. The lake is 3 km north of the mine.
Mexico is an economic leader in Latin America and is the world’s 11th largest economy by GDP (International Monetary Fund 2011). It offers a dynamic economic environment and is expected to maintain strong economic growth with projected real GDP growth of 3.6% and 4.0% in 2012 and 2013 respectively (Goldman Sachs Economic Research). These near term growth projections also reflect Mexico’s long-term economic potential, real GDP is expected to approximately triple by 2020.
Mining has been a major component of the Mexican economy since the sixteenth century. The Secretaría de Economía (Ministry of the Economy, “SE”) is responsible for the development of mining, it participates internationally through its Fideicomiso de Fomento Minero (Mining Development Trust, “FIFOMI”) unit. The federal government is represented by FIFOMI and Secretaría de Medio Ambiente y Recursos Naturales (The Ministry of the Environment and Natural Resources, “SEMARNAT”) at major mining events throughout the world.
Mexico is a mining friendly jurisdiction. It is the largest producer of silver in the world with 17% of world production and one of the world's largest producers of other minerals and base metals. Mexico is the third largest producer of copper in Latin America after Chile and Peru. It is the world’s eleventh largest producer of copper and fifth of zinc.
The Mexican constitution establishes that minerals belong to the state. The concept of a mineral claim is therefore characterized as that of a mining concession issued by the state. These concessions have an initial term of 50 years and may be extended. Fees payable in respect of mineral concessions are administrative in amount. The exploration, exploitation and beneficiation of the minerals have preference over any other use for land subject to concessions. With the exception of hydrocarbons, radioactive materials and salt, applicable law allows up to 100 percent foreign ownership in the exploration, development and production of minerals.
As a result of its mining-supportive governmental policies, stability, OECD tax regime, proximity and its abundance of metal resources, Mexico has attracted extensive and diverse investment from foreign mining companies. Over 200 mining companies operate in Mexico of which over 60 are producing assets. 53 of these 60 companies are subsidiaries of foreign companies. Currently ~40% of mine production and ~70% of investments in exploration are undertaken by foreign investors.