Frederick Davidson
President and CEO
IMPACT Silver
/
View from the Top

IMPACT Silver Records Two Decades of Mining Success in Mexico

By Pedro Alcalá | Fri, 06/03/2022 - 12:10

Q: What do you consider to be the factors driving the company’s success in exploration and production in Mexico?

A: The main factor is clearly talent. IMPACT Silver has an excellent team in Mexico. It is a highly skilled and extremely competent group of people, taking on difficult operations and making them a success. Having a great property and amazing projects in general adds further value. Another underemphasized factor is that we have an excellent relationship with local communities. This connection has been established over 16 years, during which we experienced no disputes whatsoever.

Q: How have your projects benefited from mineral prices?

A: Because the company is a pure silver producer, to the point where close to 95 percent of our revenue is generated from the sale of this metal, we do not use gold equivalent ounces in our results. This makes us vulnerable to the volatility in silver prices. We simply absorb this risk and live with it. At the same time, we work on continuity and consistency to lower our costs as much as possible to brave the market’s downturns. When it turns around, we can take the extra profit and put it back into exploration and development in Mexico.

Q: How has Mexico’s position as a mining investment destination changed since you arrived in the country?

A: Mexico is an excellent location for mining, geologically speaking, and it has a strong mining tradition. Mexico’s people understand mining and the significant role the sector plays in the economy, representing over 5 percent of GDP. However, it is becoming increasingly difficult to deal with bureaucracy in Mexico. When discussing risk, its definition includes economic, government and social issues. In Mexico, that risk has increased dramatically, primarily due to governmental factors and several community issues. Communities have never posed a problem but governmental factors have led the company to develop issues that it needs to resolve. We have no idea what the government wants to accomplish, which inflicts quite some risk on us. We are debating the degree to which we wish to invest further in Mexico right now or whether we should redirect that investment elsewhere for the time being.

Q: What characteristics make the Guadalupe project a good investment?

A: The Guadalupe project covers a large amount of ground and supports historic mining sites, some of them dating back to 1529. We are considering reopening another mine that was started even earlier, so there is a long history of mining within the district. IMPACT Silver has been able to raise money to spend on the project and to improve it. The company started an intensive exploration program to expand the mill’s throughput to bring it up to its maximum capacity and increase production margins.

Q: What further developments is IMPACT Silver looking forward to in 2022?

A: We are looking to develop a second operation in the southern part of Guadalupe, called Capire, which is a volcanogenic massive sulfide (VMS) deposit. Currently, the company is mining its epithermal veins. It found high-grade silver near the surface. Going deeper, this turns into lead-zinc and even further down there is gold and copper. The VMS deposit we outlined is therefore polymetallic. The company installed a small test plant, which we are looking to expand. Hopefully, we can get it into production by 4Q22 using innovative technology, which would improve our margins. At the same time, IMPACT Silver is carrying on with its aggressive exploration program. Our plan includes over 20,000m of drilling for this year alone, primarily in greenfield exploration. In addition, we have three aggressive programs outlined for the year.

IMPACT Silver is a Canada-based silver-gold explorer-producer. In Mexico, the company has production and exploration projects, including three underground silver mines and one open pit mine at the Zacualpan Silver District that feed the Guadalupe processing plant.

Pedro Alcalá Pedro Alcalá Senior Journalist & Industry Analyst