Sierra Metals is set to invest $28m for the construction of a magnetite processing plant at its Bolivar Mine in Chihuahua, Mexico.

This will also include an initial expenditure of $5.2m for early procurement and contracting on the project.

The plant is expected to produce nearly 500,000tpa of 62% iron ore fines concentrate.

The company has already started the engineering and test work of the final process. Construction of the processing plant is slated for commencement this June with completion expected after six months.

Sierra Metals plans a series of magnetic drums and regrinding equipment to concentrate magnetite as an additional process to the existing copper concentrator plant.

Sierra Metals CEO Luis Marchese said: “We are very excited about initiating this new process the potential for additional revenue for the company. The iron ore market is presenting value-enhancing opportunities for Sierra Metals and the company is taking decisive action to extract value from its existing iron ore-copper mineral resources.

“As well, this process is expected to have additional benefits including reduced haulage costs of our copper concentrate by rail and enhance the Bolivar mine’s economics due to this new revenue stream.”

In the Bolivar Mine’s preliminary economic assessment (PEA) filed on SEDAR and EDGAR in November 2020, the company already mentioned the magnetite project.

According to the report, the economic analysis excluded the potential sale of magnetite.

But the company, which was studying this development, believed that it is expected to result in increased sales revenue, reduced future closure costs and fewer tailings for deposition.

The project has now received approval and will be included in an updated PEA for the Bolivar Mine.