The Salares Norte project is a 100% Gold Fields-owned goldsilver deposit. It is located between 3,900m and 4,700m above sea level in the municipality of Diego de Almagro in the Atacama region of northern Chile. Mineralisation is contained within a high-sulphidation epithermal system, offering highgrade oxides. The project is currently in construction phase, and is expected to meaningfully change the future profile of Gold Fields by accelerating growth in production and reducing Group AIC.
Land easement for the project was granted for 30 years on 30 May 2016. We obtained water rights in December 2016, with the regulator granting Gold Fields access to more than double the volume of water the project requires. The Atacama Environmental Assessment Commission approved Salares Norte's environmental impact assessment (EIA) on 18 December 2019, and Gold Fields' Board of Directors approved construction and development of the project in February 2020.
First production remains on track for Q1 2023, with life-of-mine production of 3.7Moz gold-equivalent over an 11.5-year period. Average annual production is forecast to be 450koz gold-equivalent for the first seven years, at an AISC of US$465/oz (in 2019 terms). Production over the 11.5 years current life-of-mine is forecast at 3.7Moz and an AISC of US$545 per gold-equivalent ounce (in 2019 terms).
Of the total estimated project capex of US$860m (in 2020 terms), US$97m was spent during 2020 and US$375m during 2021, with US$330m in project capital budgeted for 2022. Covid-19 and severe weather conditions impacted construction activities during 2021. The detailed engineering, 97% completed at the end of 2020, was finalised during the early months of 2021. At the end of December 2021, construction progress was 55% (plan: 61%) and total project progress stood at 63% compared with a planned 65%. Importantly, all critical path items of the project have tracked against plan, and the bulk of the equipment (97%) was fabricated and delivered by the end of December. Pre-stripping the pit and construction of the processing plant commenced during January 2021 in line with the project's construction schedule. At 31 December 2021, 22.9Mt of earth had been moved ahead of the plan of 17.3Mt.
In addition to the Agua Amarga and Brecha Principal ore bodies, which will be mined over the initial seven-year period, there is significant exploration potential within the surrounding area. Salares Norte controls 84,000ha of mineral rights in the Salares Norte district and has carried out extensive district-wide exploration within a 20km radius of the plant site. In 2021, US$28m was spent on exploration, resulting in a total of 23,848m drilled. We will continue to invest in exploration within the area to add to the production pipeline from 2025 onwards.
A critical element of the EIA approval was the relocation of the endangered short-tailed chinchilla in the area of the Agua Amarga pit, where mining activities need to commence in 2025. The relocation programme, which began in 2020, was halted by the authorities in April 2021 when two of the four relocated chinchilla died. In December 2021, Gold Fields was informed by the Chilean regulators that they had begun sanction proceedings against Salares Norte regarding the relocation process. We continue to collaborate with the authorities to resolve the sanction proceedings and ensure that the relocation process can recommence. Importantly, the delay in relocation does not in any way affect the construction schedule at Salares Norte.
While there are no indigenous claims or community presence on the concession or the dedicated access routes, Salares Norte embarked on an extensive engagement programme with three indigenous communities within its wider vicinity and entered into long-term agreements with them. The project's principal area of social influence – and potential laboursending area – is the Diego de Almagro municipality, approximately 125km away.