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IM SI
Continuous
MINING | IMPACT SILVER CORPORATION
MPACT ILVER
s silver production in one of the oldest mining districts in the Americas
TSXV-listed IMPACT Silver is now well into its 15th year of continuous production in the Royal Mines of Zacualpan district in South-central Mexico. The region has a long and rich history of mining activity going back to the 15th century when indigenous peoples mined silver and built temples in the current location of Zacualpan town, before the Spanish conquistadors arrived and extracted gold and silver for several centuries, leaving thousands of historical mine workings. IMPACT Silver took up the mantle of silver production in 2006 and has produced over 10 million ounces (Moz) in the last decade and a half from multiple mines within its 211 km² land package encompassing two contiguous mining districts.The properties are comprised of a series of epithermal veins which range from very high-grade sections to lower grade, intermediate mineralisation. In recent years, the firm happened to be working on lower grade sections which – along with depressed silver prices – contributed to a marginally profitable operation. However, a new production strategy for the district and positive developments in the silver price this year are set to add new shine to IMPACT’s horizons. “First of all, we’ve had some discoveries that suggest there’s a lot more happening in this district than previously we could say,” president and CEO Fred Davidson tells RGN. “Secondly, our leverage to the silver price is dramatic. When silver goes from $13-14 [per ounce] to $26-27, that virtually goes straight to the bottom line.
“What makes us somewhat
at C$0.95 per unit. Each unit
unique is that we are a
is comprised of one common
dedicated primary silver
share and one-half warrant.
producer, over 90% of
One warrant is exercisable to
our revenue is from silver
acquire one share at $1.30 for a
production,” Davidson
24-month period. We intend to
continues. “Recently we have
use a significant portion of the
been marginal in terms of
proceeds to accelerate current
profitability, but we’ve got a
exploration and development of
district-wide programme that’s
numerous targets.
going forward after a recent financing.
“That programme is going to explore not just the potential
“In August, we completed
for higher grade silver veins
a C$9.5 million financing
themselves, but an underlying
from the issuance of about 10
gold-copper district that hasn’t
million units of the company
been seriously exploited in the past 500 years.”
MINING | IMPACT SILVER CORPORATION
Coping with COVID-19
up and running again by
we were cash positive for the
June, however the shutdown
quarter.”
While major global economic
period knocked the company’s
uncertainty stemming from
quarterly and annual
As regional, national and
the COVID-19 pandemic has
production targets back, along
international authorities
significantly boosted precious
with revenues.
continue to battle the ongoing
metals prices this year, the
threat of COVID-19, IMPACT’s
worldwide health emergency
“We lost probably 25-30% for
boss is relieved that Mexico
precipitated the closure of all
the quarter in terms of total
moved to reclassify mining
mines in Mexico back in April,
sales,” Davidson concedes.
and points to the country’s
as the Latin American nation
“In retrospect, I think our
long-lasting appreciation of
emerged as one of the worst
loss for the quarter was about
the sector.
affected by the pandemic.
$200,000, but our EBITDA was extremely positive. That
“Every Mexican is convinced
The Mexican government
$200,000 encompassed things
he is a miner, so there is a
soon reclassified mining
like deferred income taxes,
real sympathy for mining in
as an essential business,
amortisation and depreciation,
Mexico. They understand
allowing IMPACT to get back
so on a cash generating basis
it. To give an example, the
MINING | IMPACT SILVER CORPORATION
church in the local town has a
the district and closed down
which has been on care and
statue of a miner out in front,
a handful of underground
maintenance since 2014, when
so mining is part of the culture
mines with low margins. This
margins slipped below the
there.
resulted in declining operating
profitability line.
costs and improving average “They are one of the countries
grades across the board.
that has been hit badly and
The facility is comprised of a 4.5 Moz open pit silver mine
therefore they need revenue
“Our emphasis during the
(with lead and zinc by-credits)
and employment. We can
last couple years has been on
and a 200 tonnes per day (tpd)
offer both while the district
positive cash flow. It may not
pilot plant. Restarting Capire
continues to have a very low
be as pretty, or have the same
could add 150,000-250,000
incidence of COVID-19. We
total of ounces coming out,
ounces of silver to IMPACT’s
shut down the district for
but the bottom line is better
annual output, according to
outsiders and it was only until
and people tend to forget that
Davidson.
about a month ago that we
mining is more than counting
had our first case in the whole
ounces,” Davidson stresses.
district.”
Furthermore, IMPACT is evaluating the possibility
“Now that silver prices have
of lowering costs at Capire
improved, we will look to
through the incorporation of
reopen these marginal mines
DMS technology. A 2019 study
After silver production
which have become profitable
on a low-grade sample found
peaked across the Zacualpan
again. It will take time to go
that in a DMS set-up, over 42%
operations in 2015-17, IMPACT
back and open up an area, but
of the sample mass could be
decided to shift its strategy
we are planning to increase
rejected while retaining 93% of
towards lower cost, higher
overall production by early
silver and lead and 79-92% of
grade production in late 2018
spring next year.”
copper, gold and zinc.
prices would not recover, in
In addition, the company is
“Using DMS we can probably
the near term at least.
assessing the possibility of
run about 400-450 tpd and get
re-starting another operation
it down to 200 tpd through the
Under the new approach,
in the region. The Capire
mill. This equates to higher
IMPACT undertook a strategic
project is a VMS mine located
productivity and dramatically
review of its properties in
Southwest of Zacualpan
Boosting the bottom line
on the assumption that silver
through the lab with bench
Significant exploration upside
scale testing and it works
The Royal Mines of Zacualpan
exceptionally well.
silver district is one of the
lower mining costs. We’ve
IM PA CT S ILV E R
AT A G L A N C E
run some heavy samples
oldest mined areas in the
STOCK TICKER TSXV:IPT
MARKET CAPITALISATION
US$89.47 million (as of October 07, 2020)
aj
“Now we are working on
Americas, and over the last
scaling up. Even at the current
two decades IMPACT has
price of silver we can just
identified well over 5,000
mine Capire as it is. We are
historic mine workings which
confident that silver over the
provide ample avenues for
next year is going to remain
near-mine and district-scale
in the $25-30 range,” predicts
exploration.
IMPACT’s boss. “When we first entered the district, we started a deep
MINING | IMPACT SILVER CORPORATION
“Our emphasis during the last couple years has been on positive cash flow. It may not be as pretty, or have the same total of ounces coming out, but the bottom line is better and people tend to forget that mining is more than counting ounces” – Fred Davidson, IMPACT Silver president and CEO
RGN editor Jacob Ambrose Willson interviews IMPACT Silver Corp CEO and president Fred Davidson, September 22, 2020
study on the potential of
four key areas, including a
be several gold-copper veins.
the property. That meant
prospective district-scale gold-
We are just starting to explore
going back into some of
copper zone in the centre of
that.”
the historical records some
the Zacualpan property.
200, 300, 400 years. We’ve
When asked if IMPACT would
accumulated that data now,
“In the last few years, we’ve
prefer to remain more of a
along with our predecessor’s
had sniffs of this underlying
pure-play silver producer,
drilling work, and it’s given us
gold-copper district and
Davidson quips that he’ll never
a good idea of the structures
have proven it exists. The
complain if he’s got too much
involved. It’s a massive area.”
Northern Mill is located on a
gold, particularly considering
steep canyon with about 2,000
the positive movement in the
Armed with this new
metres elevation. 500 metres
gold price this year.
geological understanding,
below that we’ve found a very
IMPACT has identified several
large high mag anomaly and
“We’re doing soils, rock chip
exploration targets across
radiating out of that appears to
sampling, sediments and one
MINING | IMPACT SILVER CORPORATION
of the outcrops we sampled
historic workings across the
“What we are really looking
ran 76 g/t gold and 76 g/t silver,
properties.
for is elephants,” Davidson
so we know it’s there, It’s just
concludes. “As we learn
about putting it all together in
Lots of life left
economic terms.”
Although the Royal Mines
district, including things like
of Zacualpan district has
the high mag in the bottom
IMPACT’s exploration team
witnessed over five centuries
of the valley, it allows us to
is also targeting brownfields
of silver production,
have a better grasp of what’s
exploration for silver veins
IMPACT’s near and long-term
occurring. After 500 years
within trucking distance
exploration programmes will
of mining in the district I’m
to its Guadalupe plant and
ensure that millions more
confident somebody will
early stage exploration for
ounces of silver will flow
be mining here for at least
Zacualpan Southeast extension
out of the region, along with
another 100-200 years.”
silver veins, while continuing
significant quantities of copper
to evaluate the thousands of
and gold.
the structure of the whole
Published by Anderson Murray Media Ltd
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