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Downturn Sparks Innovative Financing

José Berlanga - Reyna Mining
Director General

STORY INLINE POST

Wed, 10/19/2016 - 14:42

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Q: What process has Reyna Mining taken to identify the most attractive assets in the market?

 A: We have endeavored to diversify our activities in the mining sector. We now have anthracite mines in Sonora and we have ventured into iron as well. In that sector we see that national players face unfair competition from Chinese iron dumping and also informal operations. Here we encountered some difficulties stemming from acquiring the necessary permits, and in response to the informality in this sector the government imposed restrictions on exports that ultimately stifled national production.

Q: How have you attracted financing, and how have your projects developed recently?

A: The projects we have developed such as La Negra and El Barqueño have been made possible through national investors. Investing in mining can be a long term commitment but the returns can be very attractive. We increased the share value of Aurcana Corp from US$0.04 in 2005 to US$2 years later. The unfriendly market conditions have caused junior companies to flounder since it becomes far more difficult to find financial resources. We closely followed the progress of these companies and we created an agreement with Telson Resources, and through a private placement we gained control of the company. The flagship project is called Tahuehueto, and the company had been exploring there for the past 18 years with investments having reached US$30 million to date. It is an interesting project and we are taking a whole new approach in its development. Its deposits are comprised of 75 percent gold, 11 percent silver, and the remainder lead and zinc.

Q: What process does Reyna Mining undertake when acquiring small projects?

A: A perfect example of this transformation is the Tahuehueto project since it had many areas of improvement. We reevaluated the engineering and we decided to begin production with 500t/d, and in two years scale the production increased to 3,000t/d. Within this concept we will mine veins that are clearly defined in order to be competitive and make the project bankable. Projects take an average of 19.5 years to enter into production from the discovery stage, compared to 18 years in the period 2006 to 2013. Reyna’s first purchase was La Negra, which was acquired during a time of crisis. In addition to Tahuehueto, we are in the midst of buying the San Andrés de la Sierra gold-silver project, which has a 300t/d plant and all the permits, as well as agreements with the community. We have learned that we are not an exploration company so we seek projects that have passed this stage.

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