Mexico's Exploration Outlook: Opportunities & Best Practices

You can watch the video of this presentation here.

Mexico’s opportunities to develop large operation projects is yet to be developed by Mexico’s mining industry.  “Large projects are one of Mexico’s differentiators over other countries,” explained John-Mark Staude, CEO of Riverside Resources, however, there are still challenges to over come first.

“The faster mineral titles, permits and close relationships with local governments are in place, the faster we can carry out projects and generate a greater impact in Mexico and its communities,” said Staude. Aside from the government relationships, companies’ partnerships to fund large projects are to be established. Through these partnerships, the industry will have a true potential to generate greater economic spillovers and achieve deeper social developments for communities, explained Staude.

For instance, Riverside Resources, a company dedicated to mineral exploration in Mexico, has focused its work on developing large projects in the country, such as Los Cuarenta, which is 100 percent Riverside owned focused in gold-silver drilled 1200m in 2020, and Cecilia, which is 100 percent Riverside owned, focused in gold-silver, drilled 1000m in 2020.

Riverside’s business model is relatively simple: it generates alliances where majors contribute the money and Riverside offers the technical expertise. The company differentiates itself from other prospect generators because it has been able to produce a profit from its JVs, alliances and sales of its projects, this means that in the past ten years it has kept a tight share structure with only 44 million shares and US$5 million in cash. Riverside Resources focuses in copper drilling and exploration through a partnership with BHP, as well as gold drilling and partner work. Staude said that “through our large- project focus, we have brought in over US$80 million for grass roots exploration into work in Mexico over past 13 years.”

Companies’ partnership spill over for these types of projects have the potential to bring significant international investments to Mexico. “Through our BHP agreement, the company is to fund US$5.4 million in drilling towards 2 projects plus geophysics in 2 priority properties,” said Staude. BHP also funds US$1.3 million per year for 2021-2022 continuing generative copper program in Sonora, Mexico, therefore, there is over US$6.5 million of BHP funding for 2021.

To exemplify Mexico’s large potential for large projects, Staude said “Los Cuarenta gold-silver project represents one of the largest opportunities for Mexico’s long-term economic and social spillover.” This partner-funded 1,500 m drill program completed continued exploration in preparation for future drilling. The project is located in Sonora, Mexico and has a high-grade, low-sulphidation epithermal gold quartz vein system.

As part of their ESG commitments and the social impacts mining companies have in their communities, Staude said that “during the COVID-19 pandemic, Riverside responded to municipality of Bacadehuachi by donating PPE products jointly with its partner BHP. We also expanded safety protocols at Riverside office in Hermosillo, while running education sessions to educate communities on COVID-19 safety protocols.”

Moreover, Riverside has provided construction funding to the Ejido community (another active site of the company) in Peñoles district to rehabilitate/refurbish a local community church, as well as collaborate work with Ejido members in Peñoles to construct suitable enclosures for livestock, as well as leading the initiative to improve municipal infrastructure in Peñoles by refurbishing local roads. “It is also relevant to mention that we employ local people to work at the company, we do this not only to have a better understanding of the community, but to provide the local people specialized working opportunities that will improve their skill set.” Staude added that Riverside sponsors universities and students as part of their community commitment.  “Additionally, we like to ensure that communities become self-sufficient so that they are not dependent on mining, thus we try to create a diversified economy through agriculture and support for farm owners and ejidos.”

In regards to the company´s environmental commitments, Riverside worked on site reclamation at Los Cuarentas, following a trenching and sampling program. “Riverside ensures that its work on physical properties is followed by reclamation work in accordance with environmental regulations,” highlighted Staude.

Mexico’s upcoming catalysts for 2021 and beyond must be based on partnerships to exploit the project’s value drivers inside the country. For example, Staude exposed that based on their partnerships, Riverside will continue their Exploration Funding Agreement with BHP into a third year which will increase funding for over US$5 million with focus on four projects. Riverside’s plans to continue exploration work at the La Silla Project in Sinaloa, and according to Staude, the company will continue to seek new strategic partnerships to advance existing 100 percent-owned Riverside projects. “Through new project acquisitions and portfolio development, we see an expansion in Mexico advancing with the Cuarentas Project with continued exploration.”