Identifying & Believing in New OpportunitiesBy Lorenzo Núñez | Fri, 07/16/2021 - 13:38
Q: What is the new vision you want to impart to the mining community with the name change from VanGold to Guanajuato Silver?
A: VanGold was a long-lived shell company that traded on the Vancouver Stock Exchange and later on the Toronto Venture Exchange for about 40 years. The company has been involved in the Guanajuato area since 2016 with our first project in the area, called El Pinguico, which has a history of producing silver and gold. We recently announced the acquisition of El Cubo, which has a 200-year mining history in Guanajuato. For our company to take on the name of the city and the state of Guanajuato, which has a 480-year mining history, definitely has a lot of power. We also have silver in the name now which is going to be the primary metal that we will be producing in Mexico. Essentially, we are going the be Mexico’s newest silver mining company, and we expect to be in production by 4Q 21.
Q: What opportunities did Guanajuato Silver identify in the state of Guanajuato to consider it a profitable investment?
A: I noticed there were four substantial, large, modern flotation mills in the Guanajuato area. Yet, not one of them was fully utilized. I thought that this is a recipe for consolidation within the industry. A part of our vision, and a part of the rationale for the renaming of the company to Guanajuato Silver, is our desire to be a catalyst of change and to consolidate the large number of assets that exist in the Guanajuato area.
In regard to El Cubo, our interest revolved around our different vision of how to run an operation. El Cubo’s previous owner paid US$200 million for it, while we paid only US$15 million. The previous owner also spent an additional $40 million to expand the mill. The reality is that the mine is located in a very typical central Mexican, narrow vein, epithermal system; which means that getting 1,500 tons of new raw materials on site daily is extremely difficult. The way we will handle this operation is to use limited cut and fill and reuse mining. We will take less dilution and we will mine less rock. We believe we will have more than enough silver and gold for future production. Combined with El Pinguico, we expect to run 750 tonnes a day through the mill.
Q: What are the main goals at Pinguico and how have the initial results contributed to those goals?
A: El Pinguico has such an interesting history. It was originally founded in the 1890’s, and by 1906 it was being mined by a corporate entity called the Pinguico Gold Mines, which was based in New York City and was even listed on the New York Stock Exchange. El Pinguico ended up being closed down because of the Mexican Revolution in 1913. It had not been given the opportunity to get started again until now. From an exploration standpoint, we started drilling low-hanging fruit targets. We know a lot about the mine because we can get into the fourth level and the seventh level thanks to the intense work that we have done. But, geologically speaking, we are babes in the woods. There is a whole bunch of things that we do not yet know. The first batch of results that we published six weeks ago were mixed. We reported narrow veins but the grade on three or four of the holes we put out is exceptional. Once we figure out a little more how to drill it, we will be able to continue to come to the marketplace with more and better grades.
Q: What new opportunities did the Preliminary Economic Assessment show in both assets and what will be the impact on their development plans?
A: Surprisingly, our Preliminary Economic Assessment in regard to Pinguico did not give us as much credit for some of the material, especially for the underground stockpile material that we have measured. However, our study has established half a million tons of indicated material at very good grade, with 380 grams of silver equivalent, and about one and a half million tons at a slightly better grade in the inferred category. Because it is a PEA, all of that material has to go into either an inferred or an indicated category. Nevertheless, under different circumstances there is some of that material at El Cubo that would naturally go into a higher confidence category, either measured or even into reserves.
Q: What role do local communities play in Guanajuato Silver’s operations?
A: We want Guanajuato Silver to be a different company than many of the other mining companies that are working in Mexico. If you look at the British, Canadian, American and Australian companies in the country, they like to brag about hiring a lot of Mexican workers but they very rarely put them in charge. I believe that not doing that is a big business mistake, one that we do not intent to make ourselves. We are determined to operate differently than those companies. Our Chief Operating Officer is Hernán Dorado. He is a graduate from the University of Guanajuato. He has worked in Canada, Australia and throughout Latin America. He lives in Torreon and spends five days a week in Guanajuato. Hernan’s father, Gerardo, is also one of our partners. He also graduated from the University of Guanajuato and has over 45 years of mining experience. Having these partners really helps us in connecting with the local communities. We are planning to hire over 250 people, where the vast majority are Mexicans from Guanajuato. Our latest addition to our board of directors is Ramón Dávila, who has the best CV as a Mexican miner. Ramon was on the board of directors and was the chief operating officer for First Majestic, back when it went from two employees to 4,000 employees and from zero production to 12 million silver equivalent ounces per year. In 2016, Ramon left that job to take a political position. He became the minister of the economy for the state of Durango. After four years, he came back to work in the mining business with us.
Q: Why should investors look at Guanajuato Silver rather than another company?
A: We offer a very interesting valuation proposition as we will be Mexico's next silver and gold mining company. In addition, we have the luxury of not needing more permits. Part of our asset purchase of El Cubo includes all the mining and milling permits as well as tailings facility permits in place. We do not need to build a mill. The mill is there. In addition, we do not need to convince a community that mining is a good idea. The people from Guanajuato have been mining for 480 years. They understand that mining provides well-paying jobs and is a huge economic driver in the local community.
Guanajuato Silver (or GSilver) is a mining and development company that seeks to reactivate silver and gold mines near Guanajuato. Its main projects are El Pinguico and El Cubo.