Finding Gold in High-Grade Silver Mining Districts
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Finding Gold in High-Grade Silver Mining Districts

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Jorge Ramiro - Reyna Silver


Q: What characteristics make Mexico an ideal place for mining exploration, especially in the state of Chihuahua?

A: The geology of Mexico is exceptional because it hosts many mining districts, but Mexico itself is a truly exceptional mining jurisdiction. It is a great place to operate because it has a great deal of exploration potential. The exploration of Mexico began after NAFTA in the mid-90s and therefore, we believe there are many mining districts still to be discovered.

Another benefit is that for more than 400 years, the Spanish undertook very intense mining activities in Mexico. All that hard work left us with an excellent guide to continue with modern exploration, using the recovery technology we have today.

For the most part, Chihuahua is a dry state year-round, which is beneficial because it is very suitable for satellite imagery exploration and prospecting. Many of the outcrops are visible and you can use them as a guide for exploration. Mexico is a unique place to explore. There is nothing like it in the world; it has a reasonable exploration cost, highly qualified geologists and good infrastructure. Obtaining permits is also very easy and Mexico even has a friendlier permitting process than Canada and the US.

Q: What is the relationship with MAG Silver after Reyna Silver purchased the Guigui and Batopilas assets?

A: We acquired those two assets from MAG Silver and the company is our largest shareholder. They own about 10 percent of the company. As part of our agreement, Peter Megaw, who is one of MAG Silver’s co-founders, is our chief technical adviser. Additionally, most of our geologists have worked with MAG Silver in the past. We have a very close relationship with the company and it continues to participate in our projects.

Q: What added value has Reyna Silver brought to these two assets?

A: Guigui required a lot of work. Part of what was needed was to consolidate the land where we are. On July 2020, we added the La Chinche project to Guigui and, since taking over the property, we have performed geophysics and field mapping. We have re-conceptualized the entire project. This project was Megaw's doctoral thesis and MAG Silver had done a lot of early-stage exploration. We are currently drilling 10,000m, we are halfway there, and our intention is to add another 10,000m in 2021.

Q: What makes Reyna Silver’s Guigui flagship asset unique?

A: Guigui is located at the heart of Mexico's largest covenant replacement system. It is a system that has 500Moz of silver, where the average rate of silver is 310 grams per ton with 15 percent lead-zinc combined with a very high tonnage. What is unique about the Carbonate Replacement Deposit (CDR) system is that only the top part has been found. The skarn part of the system usually has the richest mineralization. Megaw believes that the heart of that skarn sits within our property. This theory has been validated by the work we have done with geophysics, mapping and drilling. Furthermore, the purpose of our exploration program is to validate this hypothesis: the skarn is a massive scale. Typically, the upper part of these systems, which is a senatorial line in the bloodstream, produce 500Moz of silver. Therefore, we think that this skarn has at least this amount.

Q: What indicators make the company believe that Guigui can host another 500Moz of silver?

A: Primarily, the geological environment is a very typical carbon replacement system. Furthermore, our Guigui project so far has all the characteristics of that system, and therefore, it is reasonable to expect that amount of oz. There are also many minerals on the surface and at depth. More importantly, there is ore coming out of the producing mines into the target area we are exploring, which has intersected with the drilling that historic mines have done. MAG Silver has also made some intersections in its drilling program that are consistent with the geological model. We believe that there are numerous indicators that point to the source of the system being in our exploration area.

Q: What were the main opportunities that the company identified at Batopilas?

A:. In fact, it is the highest-grade Silver Line ever produced in Mexico. It has about 350Moz of silver, where the average grade of silver is 1.5kg per ton. It was in production until 1912, when it closed due to the Mexican Revolution.

MAG Silver performed drilling in the areas where former miners stopped. When we took over the project, we wanted to focus on validating its district-scale potential. Therefore, we explored in the north where the historical production was located and obtained some fantastic results that we released in February, including the multiple uncovered extensions of known veins. Additionally, through trenching and sampling we discovered two new lanes, one with high-grade silver and the other with high-grade gold. We are in the process of finalizing our drilling permits and we expect to announce the start of that 5,000m drill program shortly.

Q: What have been some of the challenges of exploring this area?

A: The biggest challenge has been COVID-19 and making sure everyone is safe. Regarding Batopilas, the challenge has been to consolidate it as a new district. Some companies would choose to put this project into production but we want to establish a great resource in a district-scale project. The challenge is that we are going to require a new way of thinking and luckily that is one of Megaw's specialties. We want to establish new areas through exploration. For 2021, we want to show its potential as a district scale and next year, we will focus on drilling.

Q: The company found high grade gold on its property for the first time. What impact will that have on the company’s plans for Batopilas?

A: We were very surprised to find gold – this is the first-time gold has been found there. MAG Silver drilled the project, and they did not target gold because in the historical production data there is no record of gold. As a result, we have analyzed part of the historical core and some selected areas that are close to where gold was discovered. We want to know if MAG Silver missed something.  Having gold is very exciting for us, especially since it is high quality and exists on the surface. We are certainly in a prolific district and we look forward to analyzing Batopilas over the next several months to understand what this gold discovery represents for our plans.

Q: What are the company´s plans for its La Reyna project?

A: We are discussing access agreements with the local community. We are going to do something similar to what we did in Batopilas. We plan on doing a sampling and mapping campaign that will probably take us a couple of months to finish. Once completed, we will do a drilling campaign. Like our other projects, it has high-grade silver and is a historic district that was in production during the Spanish colonial period and could not go deeper than 50m. We will use the experience of our technical teams to further develop this exploration project.

Q: How have Reyna Silver’s Mexican assets been impacted by the silver boom?

A: It is good for a company to be listed in a context where silver has increasing prices and outlooks. The positive impact does not have much of an affect at the project level but it does affect the market’s perception, as it receives more interest from investors. We are aware that the market can change at any time. We focus on looking for high-grade projects that can generate income in any market condition, since this is one of the key variables for long-term projects.

Q: What other types of assets is the company looking for in Mexico?

A: We are always looking for brownfield projects that have historic production, but perhaps very little exploration. We are looking for an asset that has the potential to be a district scale high-grade silver project. One of the most important characteristics would be the silver that has already come out, either by production or by drilling. At the moment, we have our hands full but we are always willing to search for more assets.

Reyna Silver is a silver exploration company with a solid silver asset portfolio in Mexico. The company has two assets that were part of MAG Silver’s portfolio, Guigui and Batopilas. Reyna Silver’sstrategy is focused on exploring projects that have the potential fordistrict scale and high grade.

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