Exploration Investment Activities for Today and the FutureBy Miriam Bello | Wed, 08/25/2021 - 17:22
You can watch the video of this panel here.
Over the past 12 months, Mexico has developed exploration investment activities aimed at shaping the future of exploration in the country. Some of these activities can translate into investment opportunities, while others can be seen more like a challenge for the industry.
“Mining can help Mexico move toward a future with more development and opportunities. However, this will only be achieved if uncertainty is addressed,” said John-Mark Staude, CEO of Riverside Resources. These uncertainties are reference to the recent regulatory changes, new tax considerations and assessment of the new labor laws. “Mexico is a good place to do mining business, but that is based on an old reputation,” explained James Anderson, Chairman and CEO of Guanajuato Silver.
"The attractiveness is set on exploration destinations,” explained Michael Konnert CEO of Vizsla Silver Corp, “specifically the state of Sinaloa." Konnert said that looking at the broader industry there are other world jurisdictions that are really getting much better, “however, as a whole, I think Mexico has more attractive opportunities around new discoveries.”
To exploit and take advantage of this attractiveness, Mexico needs to implement strategies, priorities, processes and make technology choices aimed at obtaining a successful exploration.
“I think the best strategy for companies to peruse in Mexico is to develop the country´s old known resources,” said Staude. He explained that through this strategy, Riverside has been able to acquire three new projects and 10 new projects that actually exist by third parties. “Instead of trying to develop new discoveries to bring new giant districts, because we really know those are there, we are developing new locations, which is the strategy that is currently working.”
Staude explained that Riverside has used their 72,000-location database to focus in the states of Sonora and Durango, which are two quite favorable states to develop known, larger concessions. According to Staude, another thing that really works is drilling, “we actually have over US$6 million dollars of partner funding drilling happening in the next six months.”
For Anderson, another successful strategy is to be persistence. “It is very easy to get distracted by the environmental regulation and concession regulation and various labor laws, which these things in the mining business always take a long time to unfold.”
“Groups that are successful in exploration have local people involved in Senior Management, this is also a great strategy” said Konnert. For him, “this approach includes ensuring that the communities that you work in are represented in the plans, from the curve of exploration, all the way to social development opportunities.”
Close communication and diplomacy between companies and their communities is considered another successful strategy tu succeed in Mexico, according to Jennifer Roskowski, Chief Geologist of Defiance Silver. “Companies and communities approach the issues and learn how to deal with those, which has created a serious impact in changing operating environment.” Roskowski explained that partnering with other companies or collaborating with them is an effective way to consolidate a land package so that those mineral systems of exploration work in the same direction.
Technology trends are potential game changers for exploration, as they can influence exploration risk, sustainability and bankability, Aderson stressed that the instruction and training for local talent can significantly improve a company’s operations.
“Companies from Australia, the UK and the US can bring to Mexico a broader look at mineral systems and models of mineral systems that where many of our Mexican engineers and geological professionals do not have the experience.” Anderson explained that this is because the majority of Mexican talent stays home and therefore does not have that experience of different mineral systems. For Anderson, the application of geophysics and real cutting-edge modern geophysics in Mexico is sometimes overlooked, however, this can expand the country’s mineral results.
“Other countries have much data and mapping at great detail in the SGM and this makes it accessible for a computers to start doing a generation project, but Mexico’s data bases are simply not there,” explained Roskowski. She said that the industry could help encourage the government to make historic and current data available, which could facilitate people to access and use that data instead of having it stored in a manner which is inaccessible
“At Riverside, we spent 25 percent of our total budget just getting the access to big studies in Mexico, money we do not have to spend in countries with consolidated data bases,” said Staude. Aside from the urgency of sufficient data bases, Staude recommends Mexico to get a fast hold of new technology, since there is still much to explore. “There is still so much to explore in Mexico, there are not too many trees, not so many glaciers, so getting fast in these tools would be very beneficial for further exploration.”
Legal, regulatory and permitting roadblocks are also significantly relevant to the industry. The changes in these “affect our company and other companies in regards to our decision-making process,” explained Anderson. In countries like Canada, Staude commented, “we find it much easier to finance and we were able to develop within two years a portfolio and spin out a whole new venture,” whereas in Mexico, Staude explained, they have been working for over 11 years in Durango, and Riverside had to make new corporations and change their staff to meet the country´s regulatory changes, something that does not occur in other nations.
Roskowski says what is lacking is a clear guidance and a clear framework of how companies should do things with indigenous people or stakeholder consultations. “The Mexican government can also apply consistent rules in different places in Mexico, which would really help investor confidence and bring back larger companies to the country.”
Patricia Vivar, Partner at VHG Servicios Legales said there are still many gaps on what companies should do and should not do, which also adds to the huge problem of data inconsistencies in the entire system. “This significantly impacts Mexico’s competitiveness and leaves the country out of some investment opportunities.”