Mexico’s Exploration Outlook for 2021
Home > Mining > Analysis

Mexico’s Exploration Outlook for 2021

Photo by:   Reyna Silver
Share it!
Paloma Duran By Paloma Duran | Journalist and Industry Analyst - Wed, 06/02/2021 - 17:48

Mining projects are expected to grow as the market environment and commodity prices increase investors’ confidence around the world. However, Mexico faces other challenges in addition to COVID-19 as political uncertainty has prevented the arrival of new investors and projects. What is the outlook for exploration projects in Mexico in 2021 and how can the country improve its situation?

Mining Exploration Around the World

In 2020, the mining sector was affected by the COVID-19 pandemic, mainly due to lockdowns and the fall in metal prices in March. However, despite these challenges, the industry was able to get through the first half of the year and ended the year better than expected. According to S&P Global Market, the global exploration budget only decreased 11 percent in 2020, representing a decrease of US$8.7 billion compared to the US$9.8 billion in 2019. According to S&P analysts, the decrease in the exploration budget was expected to be greater. Commodity prices and a better market environment mainly due to the distribution of the COVID-19 vaccine have improved the outlook for 2021, which is expected to see an exploration budget by 20 percent.

However, it is expected that the mining industry will continue to see a greater focus on to advanced and mine-site assets than on early-stage exploration assets. This trend is mainly due to project financing, as junior mining companies prefer to use their limited budget on assets that are not high risk. Meanwhile, major mining companies prefer to maximize the value of their already profitable assets.

Mining Exploration in Mexico

Mexico is one of the most important mining countries in the world and in 2019 it was among the Top 10 countries in the production of 17 minerals. It ranks first in silver, second in fluorite, third in celestite and wollastonite, sixth in zinc, seventh in salt, eight in copper and ninth in gold, among others. According to the Mexican government, the country ranks second with the largest exploration budget in Latin America, and fifth worldwide. Latin America continues to be the main destination for mineral exploration, with Chile, Peru, Mexico, Brazil, Argentina and Ecuador representing almost 90 percent of the total exploration in the region.

“Mexico is a mining country; 70 percent of the nation’s territory has mining potential and currently only 30 percent has been explored. Mining has historically been concentrated in the center and north of the country. However, this activity can benefit more states,” Fernando Alanis, President of CAMIMEX, told MBN.

Despite its potential, Mexico’s investment environment has prevented the arrival of new projects. Political factors, taxes, legal frameworks and security concerns are key factors for mining investors and, due to the current situation in Mexico, mining companies and investors are looking at other countries, CAMIMEX reported.

In 2020, Mexico received only US$2.5 billion in investments for the mining sector, which is its lowest record in 13 years. According to CAMIMEX, 2021 has a better outlook as COVID-19 is expected to have a lesser impact on the mining market and national economy. However, the country faces other important challenges. Previously, the sector has been accused of not paying taxes, benefiting only foreign companies and causing social and environmental damage where mining companies operate. As a result, the sector has constantly tried to show the positive impact and commitment it has with Mexico, its environment and its people.

CAMIMEX’s 2020 sustainability report states that the companies with approximately 90 percent of the value of mining production in Mexico are an important driver of sustainable mining and UN’s Sustainable Development Goals (SDG). The report emphasizes that mining contributes to local, regional and national economic growth, social development and protection, care and restoration of ecosystems and the environment. "It is impossible to think about cultural development and social welfare without mining," states the report.  Alanis explained to MBN that in addition to promoting regional development, the industry also supports the development of other economic activities, such as construction, transportation and commerce, highlighting that in terms of direct monetary contributions, mining has paid MX$131.016 billion (US$6.6 billion) in the last four years.

Promising Mining Exploration Projects for 2021

Despite the sector facing many challenges, Mexico remains a key hub for mining projects, especially due to its rich resources and mining culture. Additionally, as COVID-19 restrictions ease and commodity prices rise, 2021 is expected to be a significant year for many exploration projects in Mexico.

Guigui, Reyna Silver

The Guigui project is located in Chihuahua and comprises 4,500ha that cover a significant portion of the world’s largest Carbonate Replacement Deposit (CDR) system. It has 500Moz of silver, where the average rate is 310g/t with 15 percent lead-zinc combined with a very high tonnage. In an interview with MBN, Jorge Ramiro, CEO of Reyna Silver, explained that what is unique about the CDR system is that only the top part has been found. The skarn part of the system usually has the richest mineralization, which is believed to be within Reyna’s property. The theory has been validated by geophysics, mapping and drilling work.

In December, the company announced that it began drilling its Guigui project. The targets were chosen based on various analyzes of geology, geochemistry, geophysics and hyperspectral satellite imagery. "The initial holes point to a series of strong geological and related anomalies that coincide above where the CRD exploration model suggests the underlying engine of the system should lie," said Dr. Peter Megaw, Reyna Silver's Chief Technical Advisor. In addition, Romero told MBN that the company is currently drilling 10,000m, which is already halfway through. However, the company intends to add another 10,000m in 2021. 

Los Ricos North, GoGold Resources

In 2019, GoGold acquired the Los Ricos property located in Jalisco, which has 42 concessions that cover over 22,000 ha. The property is divided in two projects, the Los Ricos South project and the Los Ricos North project.

The Los Ricos North project began in 2020 and includes more than 100 exploration targets. The company is currently carrying out a drill program at the El Favor, La Trini, Casados and El Orito targets. The company has announced that the drilling campaign has yielded positive results, as they have shown high-grade interceptions and wider areas of new potentially ore grades. For 2021, the company plans to drill 10 of its 100 targets as part of its drilling program, which is planned to exceed 100,000m of drilling and will be one of the largest in Mexico. Additionally, GoGold is completing an Initial Mineral Resource Estimate at Los Ricos North, which will be released in 2021. GoGold is currently completing an ESG report, which will also be available this year.

Cordero, Discovery Silver

Cordero  is considered one of the largest undeveloped silver projects in the world. The project has great potential due to its grade, scale, growth opportunities and strategic location in Chihuahua, according to the company. The asset was acquired in 2019 and since then it has focused on exploring high-grade zones within its mineralized system to better define its margins. Currently, there is an aggressive drilling campaign that seeks to define and expand its mineralization resources.

Taj Singh, President and CEO, said the results of the Phase 1 drilling program have exceeded the company's expectations as it shows the increased scale, continuity and higher-grade nature of the mineralized system. The company expects to continue with good results during its Phase 2 drilling program in 2021, which will focus on "delineation of high-grade veins and definition of high-tonnage reserves and expansion of resources." In addition, the company announced the implementation of a new resource model, including geology and structure for the first time and 350 drill holes.

Discovery's environmental study began in 1Q21 and will continue throughout the year. The company's environmental and social work will be described in its ESG report, which is expected to be published in 3Q21.

Cerro las Minitas, Southern Silver

The Cerro Las Minitas project is located in Durango and includes 25 concessions, where the company has identified four high-grade silver-polymetallic deposits: the Blind zone, El Sol zone, Las Victorias Zone and the Skarn Front Zone. Currently, a total of 162 drill holes have been completed, which had an acquisition and exploration cost of more than US$27 million.

In 2021, the company announced that it will double the size of its drill program from 10,000m to 20,000m. The company's drilling will continue to target the east side of the property where sulphide lenses with Bonanza-grades of silver have been identified. In an interview with MBN, Robert Macdonald, Vice President of Exploration at Southern Silver Exploration, explained that the company believes that through further exploration and drilling, the company can increase its current mineral resource. “Through engineering and metallurgical test work, we will further de-risk the project and provide the opportunity to not only increase its value but also increase the value that we get for every ounce that we have in the resource.”

Last month, the company said its drilling program continues to deliver strong results as the La Bocona area continues to expand “both shallow gold-silver enriched oxide mineralization and high-grade polymetallic sulphide mineralization” at Cerro Las Minitas.

What Does Mexico Need to Increase Its Exploration Appeal?

The Mexican mining sector has the important task of improving its investment situation. However, it cannot do it alone; it needs the support and help of the federal government. “We hope that the government will begin to promote mining activities, as all mining countries do. This alliance is necessary for the sector to develop,” Alanis told MBN. Mexico needs certainty and long-term public policies that promote fiscal competitiveness, regulatory competitiveness, social certainty and understanding of the mining sector. "Initiatives can be achieved through a mining board that allows good coordination between the legislative and executive powers," said Alanis.

Recently, Minister of Economy Tatiana Clouthier announced that she will seek to improve the mining situation in the country, in addition to reaching beneficial solutions to many mining conflicts. Clouthier reported that the Ministry of Economy has invited small, medium and large companies, as well as their corresponding associations, to find common solutions within a legal framework to reactivate initiatives that will benefit Mexico’s mining sector. “We are working to provide a modern regulatory system that will reduce substantially the so-called bureaucracy. We need a better relationship with the private mining sector, where both sides trust each other,” said Clouthier.

Clouthier told MBN that the pandemic highlighted the importance of the sector and the need for it to become a sustainable activity that oversees and protects the economy, workers and the environment. Clouthier explained that to promote ESG practices within the sector, there needs to be greater collaboration between society, government and industry, which is a fundamental task that the ministry is already prioritizing.


Photo by:   Reyna Silver

You May Like

Most popular