Guanajuato Silver Hits Production Milestone at El Cubo

Canada-based Guanajuato Silver produced 3Moz of silver equivalent (AgEq) at its El Cubo mill in Guanajuato. The company says this marks a significant event as it triggered the final contingent payment owed to Endeavour Silver derived from the acquisition of El Cubo.

In 2021, Guanajuato Silver purchased the El Cubo complex from Endeavour for US$15 billion, which included a contingent payment provision. Endeavour Silver would receive an additional US$1 million upon reaching the 3Moz AgEq production target. As part of the agreement, Guanajuato Silver has opted to settle half of this payment by issuing 2.75 million common shares to Endeavour at a deemed price of US$0.18 per share. 

Ocean Partners UK Limited, a metals off-take and trading firm, has agreed to accept shares for debt relating to two months of outstanding payments on Guanajuato Silver's existing Gold Loan Credit Facility. Ocean Partners will receive about 9.77 million shares for total consideration of about US$1.8 million, under terms similar to those of the Endeavour Debt Settlement. The Gold Loan Credit Facility is Guanajuato Silver's only remaining loan and is to be repaid in equal monthly installments of gold, totaling about 338 troy oz per month over 30 months, this started in June 2024.

Guanajuato Silver has also arranged to settle about US$250,000 in outstanding liabilities by issuing approximately 1.36 million common shares to an arm's length third party under the same terms as the Endeavour Debt Settlement.

James Anderson, Chair CEO, Guanajuato Silver, stresses the critical role financial partners play in supporting the company in advancing production at its four assets. “Ocean Partners has been our preferred metals trader from inception, and we are pleased that they are now one of our larger shareholders with approximately 4.9% of all shares outstanding. We look forward to continuing our relationship with Ocean Partners, we see this as a genuine partnership that is central to our continued success,” says Anderson.

Carlos Silva, COO, Guanajuato Silver, tells MBN that the company’s recent acquisitions, including El Cubo, have started to yield results, as the company achieved a record production of 987,312oz AgEq in 1Q24, a 16% increase over 4Q23. “Our goals are to exceed 1Moz in 2Q24 and resume stalled projects, including installing flash cells to recover minerals in addition to what is recovered by normal flotation cells. This increases the value of our concentrates and our income,” Silva said in June 2024. 

Silva says that the company is concentrating on the untapped potential of its assets. For example, Guanajuato Silver is exploring the Pinguico mine. Despite previous neglect, the mine is believed to still hold valuable resources, he adds. Since January 2024, the company has focused on using these resources by processing above-ground stockpiles of high-grade ore left by earlier miners, says Silva.

The company is restarting exploration at its Topia mine and older sites like Valenciana and Cata. Silva adds that recent drilling programs at these locations have shown promising results, indicating significant potential despite their age. Some drill holes at Topia have reported grades of up to 644g/t AgEq. “Guanajuato Silver prioritizes economically viable projects. Pinguico is a prime example of how we are leveraging our existing assets to drive growth and profitability,” says Silva.