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GUANAJUATO SI
A diamond in the rough silver-gold o
MINING | GUANAJUATO SILVER COMPANY
ILVER COMPANY
opportunity in Guanajuato, Mexico
Experienced Canadian mining executive James Anderson spent seven-and-a-half years leading junior precious metals explorer NuLegacy Gold to drilling success in Nevada’s Cortez Trend, before seeking pastures new South of the Mexico-US border. “I got a chance to take over a company called VanGold; they had what I consider to be a ‘diamond in the rough’ mining project in Guanajuato, Mexico. It’s a city of 150,000 people and it’s been a mining community for 480 years,” Anderson tells RGN. In June 2021, the outfit renamed itself Guanajuato Silver Company to better illustrate the region and commodity it is focused on. “The project itself was a very high grade past producer about 110 years ago. A British and an American company were ostensibly mining two halves of the same epithermal system. In 1906 they decided to merge those two companies. That corporate entity became listed on the NYSE and they mined 400 tonnes per day of very highgrade material up until the time of the Mexican Revolution. The violence of that conflict drove the Americans home and that project just hasn’t had a chance to get going again since then.” The project in question is El Pingüico, which was the highest grade silver-gold mine in the region during its time of operation from 1890 to 1913, when it processed ore in what was then heralded as a state-ofthe-art facility.
Anderson reveals that the availability and accessibility of historic stockpiles at El Pingüico put Guanajuato Silver in pole position to acquire another asset - the El Cubo mine and mill complex – located just 8 km away by road. After conducting a considerable amount of due diligence on the asset, which has been on care and maintenance for the last 18 months, Guanajuato Silver finalised the acquisition in March 2021 for an exceptionally low entry fee of US$15 million, given that Endeavour Silver purchased the property for $200 million back in 2012. “When Endeavour closed it in 2019, they did it for a couple reasons but mostly because silver was $16 [per ounce]. Things change quickly in our business. They also closed it because it could no longer offer the returns for a big company like Endeavour, with its billion+ dollar market cap. For us, it’s very different.”
MINING | GUANAJUATO SILVER COMPANY
Instead, Guanajuato Silver
and gold concentrate from the
“We’re not even putting a
saw El Cubo as the perfect
combined project in the fourth
mine into production, we’re
stranded asset that could be
quarter of 2021.
putting a mine and mill back
brought back to life to provide
into production that’s only
project using the El Pingüico
Leading with locals
stockpiles as initial ore feed
The acquisition of El Cubo
things to consider in such a
for the El Cubo mill.
resembles the execution of
short period of time, like who
Guanajuato Silver’s long-
do you sell the concentrate to?
The TSXV-listed company
held strategy to develop a
What kind of terms are you
is wasting no time with
portfolio of past producing
going to get on that? What does
this undertaking and
projects in the Guanajuato
the local community think
anticipates a four to six month
region. This not only offers
about you coming back into
refurbishment period for the
the chance to combine
production?”
El Cubo mill, at which point it
synergistic assets for scale, but
will be ready to process silver
also an opportunity to build a
So, what has Guanajuato
distinctly local company with
Silver learnt with regards to
a broad understanding of the
the wider implications of its
intricacies involved in creating
ambitions in Guanajuato and
a mining project in the
how well does it understand
Mexican context; from geology
the idiosyncrasies of this
to social components, mining
particular mining jurisdiction?
laws and more.
First and foremost, Anderson
the nucleus for a combined
G UA N A JUATO S ILV E R AT A G L A N C E
been suspended for about 18 months, but there’s so many
believes that the operation “If you look at a lot of the
should be run by local experts
other junior companies out
– namely the company’s COO
there, a lot of them will have
Hernan Dorado and his father
STOCK TICKER: TSXV:GSVR
a project in Peru, another in
Gerardo.
MARKET CAPITALISATION: US$93.4 million (as of June 21, 2021)
Mongolia and one more in BC.
aj
I’m sorry but you can’t do that,”
Hernan is a fifth-generation
Anderson stresses.
Mexican mining engineer and has worked on projects all over
MINING | GUANAJUATO SILVER COMPANY
We have a mine here that has been operating for 200 years on-off and there will be people mining here for another 100 years” James Anderson, Guanajuato Silver Company president and CEO
VIDEO
the world, before excelling
The company has also taken
strongly adheres to all local,
to his current position at
the time to learn its position
state and federal regulations,
Guanajuato Silver thanks to his
within the 480-year mining
particularly with regards to
extensive knowledge of the El
history of Guanajuato - where
disposing mine tailings in a
Pingüico deposit.
the continued preservation of
safe and sustainable manner.
the local ecology is of upmost “It’s not a position that a lot
importance - in tandem with
of Mexican mining engineers
best practice mining methods
Valuable stockpiles
get to take on in their own
and corporate governance
The surface stockpile at El
country. I think it makes a big
befitting a 21st century
Pingüico is around 185,000
difference to our employees;
operation.
tonnes of material at 105
having a local voice instructing
g/t silver equivalent (Ag eq)
them every morning, as
As such, Guanajuato Silver
per tonne, according to the
opposed to me telling folks
maintains a strong connection
firm. This is moderate grade
what to do.”
with its local communities and
material by today’s standards,
MINING | GUANAJUATO SILVER COMPANY
but during the mine’s former
it’s about 150,000 tonnes of
around 300 g/t Ag eq per tonne
life over a century ago, it was
material as do the Mexican
– and it floats well in a mill
deemed waste rock.
geological survey, who
according to the company’s
made an estimation back
preliminary metallurgical
“They decided there wasn’t
in 2012, although American
work. The only challenge
enough value in there to
engineering firm Behre
remaining is for the engineers
matter; well it matters to us.
Dolbear & Company were
to figure out how to bring the
We did a 1,000 tonnes bulk
less generous in our recently
stockpile to surface safely.
sample in June last year, so we
completed preliminary
know about the metallurgy
economic assessment [PEA],
“That material is very
and how it will recover in a
giving us around 25,000 tonnes
important. Hernan always
flotation mill and we are very
of material in the underground
says it’s like oxygen for us to
confident on the grade.
stockpile.”
be able to put the thing back into production; knowing that
“Underground, there is
However, the underground
another stockpile. We think
material is of a higher grade –
the material is there to put
through the mill on any given day is vital. “There’s also extensions of the epithermal vein systems below and laterally, which we’ve just started drilling. Our drilling is a little hit and miss right now, because geologically there’s a lot of stuff that we do not know about El Pingüico yet, despite these stockpiles.”
A promising PEA Although preliminary in its nature, Anderson describes the resource estimate in the independent PEA for the combined project as numbers generated ‘on the back of a 214-page envelope’. Published in January this year, Behre put the total indicated resources at 718,655 tonnes for 7.2 million ounces (Moz) Ag eq and total inferred resources at 1.45 million tonnes for 20.3 Moz Ag eq. While the findings of the study certainly indicate a large resource base at the combined project, the figures - particularly the current
MINING | GUANAJUATO SILVER COMPANY
66
seven-year mine life - don’t
“They’ve been mining these
draw the material out of El
actually do justice to the sheer
structures for 480 years. The
Cubo and El Pingüico at a
size of the mine at El Cubo/
Spanish Conquistadors figured
sustainable rate. “That’s going
El Pingüico and its long-term
out that there’s high grade gold
to be the formula, the magic,
potential.
and silver here within 60 years
the alchemy that allows us to
of Columbus sailing. To me,
be profitable from an early
Many would consider the
that’s remarkable and speaks
point here.”
current mine life for the
to the longevity of these mines.
on real life, PEA-level data and
“We have a big mine here
Gearing up for production
a direct result of the style of
that has been operating for
Guanajuato Silver’s chairman
mineralisation at El Pingüico.
200 years on-off and there
and CEO has always been a big
“It’s very difficult with these
will be people mining here
believer in the precious metals
narrow vein structures to be
for another 100 years,” he
investment thematic, with the
able to drill enough to ever see
declares. Guanajuato Silver
current state of affairs in the
more than five to seven years
plans to mine at a rate of 750
international central banking
of mine life in front of you,”
tonnes per day, in order to
space only strengthening his
project as short, but it is based
Anderson explains.
stance as a gold and silver bull.
MINING | GUANAJUATO SILVER COMPANY
“If every central bank and
utility in manufacturing and
employees to 4,000 and from
every major Western nation’s
electronics. So I think that
zero production to 12 Moz Ag
treasury wants to bastardise
with our business, we have a
eq per annum.
their currency, they can do
huge bull market as a tailwind
it. They have the technology
for what we are doing.”
to do that; it’s called the
“This guy can put a project into production and can put a
printing press. I’m quoting Ben
The recent arrival of former
company into the limelight,”
Bernanke here, but they can
COO of First Majestic Silver
Anderson proclaims. With two
do it.
Ramón Dávila to Guanajuato
excellent assets, including a
Silver’s board of directors
working mill and ready-to-
“In that context, what are
has added further credence
process stockpiles, Guanajuato
the best acting currencies
to the company’s ambitions
Silver is all set to become
in the world? They are gold
for El Cubo and El Pingüico
Mexico’s next significant silver
and silver. Gold especially
in Guanajuato. Dávila has the
and gold producer before the
is a currency, it has very
best CV in Mexican mining
end of the year.
few other utilities. Silver
according to Anderson, after
on the other hand has great
taking First Majestic from two
Published by Anderson Murray Media Ltd
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