Guerrero Gold Belt Growing Source of ProsperityWed, 10/21/2015 - 08:29
The concept of a Canadian-based mining company exploring its Mexican property is not a particularly innovative one. However, several aspects allow Torex Gold to stand out from the crowd. This is largely because Torex’s asset is the Morelos Gold Property in Guerrero in the southwest of Mexico, as opposed to the vast majority of mining which takes place in northern states like Sonora, Durango, and Chihuahua. To date, Torex has two ongoing projects on its 29,000 hectare property. El Limón-Guajes has moved beyond the exploration stage and is currently in the middle of a construction phase that began in November 2013. As a high grade, open-pit gold deposit, El LimónGuajes has resources of 4.95 million ounces of gold at 2.79 g/t plus inferred resources of 576,000oz at 1.95 g/t. Should such resources be fully tapped up once production begins, Torex expects it to be one of the largest and lowest cost gold mines in existence. Beside it, Media Luna was discovered in March 2012, with exploration underway as well as a preliminary economic assessment set to be finished in late 2015. As it stands, Media Luna has inferred resources of 5.8 million gold equivalent ounces.
These discoveries are just the latest to be made in the Guerrero Gold Belt, which is rapidly becoming one of Mexico’s hottest mining commodities. “The Guerrero Gold Belt is already considered one of the most important mining clusters in Mexico,” says Fred Stanford, President and CEO of Torex Gold. “The Los Filos mine, operated by Goldcorp, is currently one of the largest gold mines in the country and Nyrstar’s G9 Metals mine is also a large metals producer. A number of exploration companies have made serious investments in the area, while Osisko Royalties and Agnico Eagle own mineral rights over significant areas within the Guerrero Gold Belt. On our part, Torex will continue to be focused on exploration within our property and increasing the resources that will allow us to continue mining here for generations.”
Before Torex acquired it, the Morelos Gold property had previously been explored by Teck for ten years, which had established an initial high grade deposit. This established the Guerrero Gold Belt as one of the most prolific mining districts in the world, which attracted Torex and saw it buying the mineral rights for the property in 2009. The company continued Teck’s work by expanding the amount of resources known to lie in the area’s first deposit and then finding a second one. “This area has contributed more new resources than any other in the world in the last few years,” states Stanford. The government of Guerrero has not been idle in making the most of this opportunity. Torex states it has received excellent support from the authorities, as well as benefiting from Mexico’s well-established regulatory regime. According to Stanford, Torex’s operations team has always worked closely with regulators, keeping them informed of all technical, commercial, and social aspects of the projects. “This exchange of information, which started prior to our permit application, contributed to a wellmanaged and timely permitting process,” he says. Given the number of mining companies that run into problems with permitting, this model may seem like an obvious one to follow. Despite these positives, Stanford does point out the challenges of working within Guerrero, and Mexico itself. “Our shareholders have been dismayed by the sharp increase in mining royalties in 2014. The violence in Guerrero is also of concern to investors and will lead some to choose to invest elsewhere,” Stanford says. Nevertheless, he is confident that those unfortunate realities are being managed at all levels of government. “We all look forward to future production and the associated revenues that will provide a return to investors and the tax incomes that will help to improve circumstances in the region.”
None of these aspects have dispelled the enthusiasm present among Torex’s staff and shareholders at the future wealth to be untapped within El Limón-Guajes. Perhaps none feel this more deeply than Stanford himself, who has seen the mine grow step by step. Once Torex acquired the property, he had to put together the management team, build the exploration department, and support a drilling program. More recent highlights include obtaining the financing to build the mine in spite of depressed investment and metal markets in the last couple of years, as well as completing the land lease agreements with the local ejidos. The way Torex has settled in among the neighboring communities has been another strong factor in its favor. “Our mandate is to bring the mine to full production in a safe manner, without harm to the communities, and equal to or better than the constraints within the environmental permits,” says the President and CEO. Torex’s future may not lie only with El Limón-Guajes and Media Luna. “One of the beauties of the Morelos Gold Property is its exploration upside,” says Stanford. “Approximately 75% of the property still remains unexplored and our exploration team has been spending a great deal of time in analyzing data to identify the priority targets that could potentially host the next discovery.”