Industry Trend Analysis - Challenging Environment To Weigh On Growth - JAN 2016

BMI View : Honduras' lead, silver and zinc output growth will recover and average modestly higher from 2016 onwards . Meanwhile, the country's gold output growth will remain limited due to continued local opposition.

Honduras' lead, silver and zinc production rates will return to growth by 2016, supported by low production costs and significant reserves. Production will decline for these minerals in 2015, following a drop in ore grades at Nyrstar's El Mochito mine, the country's key mine. Honduras' gold production growth will remain on track, despite a disruption at Aura Minerals' San Andres mine, the country's key gold mine.

We forecast Honduras' lead production to contract by 5.0% in 2015, falling to 14.9 thousand tonnes (kt) from 15.7kt in 2014. However, we expect the country's lead production to recover beyond 2015, growing from 15.2kt in 2016 to 16.7kt by 2019, as Nyrstar expects ore grades to improve. On the other hand, we expect Honduras' gold output to remain steady at approximately 0.1 million ounces (moz) during 2016-2019, averaging 0.8% annual growth during 2016-2019. Honduras will remain a minor contributor to global mineral production, accounting for the seemingly volatile growth rates. The mining sector's contribution to GDP will remain below 1.0% during2016-2019.

Lacklustre Growth Ahead
Honduras - Gold, Lead, Silver & Zinc Mine Production Growth (% y-o-y)
e/f = BMI estimate/forecast. Source: BMI, USGS

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