Diversification Key Amid Investment Constraints

Q: What does the landscape for Monarca Minerals look like and what challenges did the company overcome to reach this point?
A: Monarca Minerals has three properties in Mexico: two in Durango and one in Chihuahua. These sites are strategically positioned but, as a junior company, we rely heavily on foreign investment to sustain our operations. In 2020, we decided to allocate resources to our San Jose project, a polymetallic venture covering about 6,000ha in Chihuahua. Over the years, we conducted drilling activities over 5,000m, with promising results.

Our project involves engagement with two communities: La Colonia and the Ejido. Although La Colonia has shown a favorable disposition to collaborate with Monarca Minerals, our main potential lies in the ejido; however, relations with the ejido have been slow, which has delayed our project.

The mining sector is also facing headwinds due to proposed government reforms, which make it less attractive to investors. This, coupled with the difficulties faced by junior companies in obtaining financing, has led to a decrease in shareholder interest in projects located in Mexico. As a result, we are exploring opportunities outside the country to diversify our portfolio and mitigate risks. We are also planning to restructure the company. These improvements, together with a possible new project, are expected to reactivate investment.

Q: What next steps will the company take to acquire the new project in Mexico?
A: We are seeking about US$1 million in financing through the negotiation of option agreements. This involves making incremental payments over several years, with a significant portion going to equity. Our priority is to allocate resources to property development rather than burdening ourselves with financial obligations.

While investors have shown interest in opportunities beyond mining, such as cryptocurrencies, we foresee a return to stability in the global economy from which essential minerals such as gold will benefit. The primary consideration for investment will go beyond resource potential and encompass political stability.

Q: Which project will Monarca Minerals likely prioritize in Mexico?
A: We would focus on the San Jose project in Chihuahua, given our positive results with the local community and agreements with the ejido. The project exhibits the greatest mining potential, followed by Tejamen and San Lucas. The latter requires expansion, which is driving efforts to acquire additional concessions in the area. An inactive company now has the concessions and when they expire we could apply for them, but the government is not granting new concessions.

Q: What recommendations would you offer to the mining adviser of the next government?
A: First, it is imperative to assemble a team of advisers who are well-versed in the intricacies of the mining industry to effectively communicate its nuances to the cabinet. Bridging the gap between perception and the reality of the sector is essential. Second, there should be a concerted effort to ensure companies adhere to both national and international standards. Finally, regarding critical minerals like lithium, the government's role should primarily involve establishing regulatory frameworks to have efficient operations rather than trying to develop the industry.

Monarca Minerals is a Canadian mining company that focuses on the exploration and development of silver and gold projects along a highly productive mineralized belt in Mexico. It has three projects in the country, two in Durango and one in Chihuahua.