Bruce Bragagnolo, CEO and director of Vancouver's Timmins Gold Corp. (TSX:TMM), has a pretty simple answer for his company's rapid growth – they've been aggressively expanding their flagship mine since it began production in 2010.
Timmins Gold's sole asset, the decades-old San Francisco Gold Mine property, is a 1,250-hectare, open-pit operation located in northern Mexico. Timmins Gold purchased the mine in 2005, five years after it ceased production under its previous owners.
Central to the Timmins expansion activities at the San Francisco property has been the addition of six crushers, which has more than doubled the amount of rock Timmins can process.
That added rock-crushing capacity has substantially increased the gold production at the mine. In 2010, the mine produced 47,032 ounces of gold. In 2011, production jumped to 74,241 ounces. In 2012, the climb continued as the mine produced 94,444 ounces. And this year promises to be Timmins' best yet – Bragagnolo expects the San Francisco mine to produce close to 125,000 ounces of gold.
"We've expanded all of our capacity to extract gold out of the pit," said Bragagnolo.
As for further expansion, Bragagnolo said the company is concentrating on "focused exploration" at the moment. Timmins has more than 200,000 hectares worth of land claims surrounding the San Francisco mine and has been actively drilling around the pit. Timmins iscurrently awaiting the results of that work, he said.
"Growth is difficult in this immediate environment because there really is no market for M&A [merger and acquisition] work right now," said Bragagnolo.
"Really what we're looking at is internal growth – we have enough organic growth to keep us busy. We are very happy with our land package."
Joseph Fazzini, a Toronto-based analyst with Dundee Securities, told Business in Vancouver that part of Timmins Gold's success was purchasing an asset that had existing infrastructure such as crushers that the company could eventually build on.
"These guys [Timmins Gold] bought this asset, it was a historically producing mine in Mexico, bought it for a small amount of money and basically used the equipment that was there and the infrastructure that was there and brought it back into production. "It's really a good case of strategy," said Fazzini.
Fazzini also stressed the advantages of operating in Mexico, a country with a long history of mining, a knowledgeable labour force and co-operative governments.
"Mexico is regarded as a relatively good jurisdiction for mining. We've seen guys with multimillion-dollar projects have them expropriated by foreign governments," said Fazzini.
"To have the comfort that that won't happen is priceless."
Exploration and acquisition spur growth at B2Gold, B.C.'s third-fastest-growing company
In the gold business, there have always been explorers and producers, said Clive Johnson, president and CEO B2Gold Corp. (TSX:BTO). But his company wanted to be both.
"Explorers are historically good at finding gold and producers are only good at gold production," said Johnson, a 35-year industry veteran who led Bema Gold before it was taken over in 2007 by Kinross Gold (TSX:K) in a $3.2 billion deal.
"But we have geologists, financial people and mine builders together that allow us to do it all. And we're doing it all over again."
The company, founded in 2007, currently has three operating mines: La Libertad and Limon mines in Nicaragua and the Masbate mine in the Philippines.
All three mines combine to produce about 380,000 ounces of gold per year. But that annual production is expected to jump significantly by 2015, when B2Gold's newest project, Otijkoto, a gold deposit in Namibia, starts production.
"When Otijkoto comes online we're looking at 550,000 ounces per year from all our mines combined," said Johnson.
"Otijkoto is a good deposit."
Although the company has more growth on the horizon, there may be more acquisitions yet to come. In late August, B2Gold raised $259 million in debt, prompting analysts and industry watchers to question whether the company was eyeing another purchase.
In an interview earlier this month, Philip Heywood, director of transaction services and mining specialist at PricewaterhouseCoopers, told Business in Vancouver that the money B2Gold raised "made the industry wonder whether the company was on the acquisition trail."
Johnson said B2Gold is always looking but stressed the company wouldn't make a deal for the sake of making a deal.
"We are very particular with our projects," said Johnson.
"We aren't deal junkies. But, of course, we will not shy away from building a company."
