New Opportunities for Developing High‑Grade Deposits

Q: What are the main restraints holding back exploration investment in the country?
A: The greatest impact for a company like us takes place within the land ownership processes related to the granting and cancellation of mineral rights. In Mexico, this is a big challenge because concessions often enter a limbo stage where they are neither valid nor available for new applications. This can remain the case for years or even decades. In such cases, it may be that the taxes have not been paid or the work assessment has not been done and so the concession has been canceled but not liberated to make it available for someone else to apply for the rights and begin spending money exploring. This effectively prevents money being invested in exploring for new deposits because companies or individuals cannot acquire the mineral rights. This affects large areas of mineral potential. If the system could be improved where concessions are systematically liberated and made available for new applications based on fixed timelines when taxes and assessment work requirements are not met, that would stimulate a lot more exploration investment. I believe we would see millions of dollars more being spent on exploration in the country as a result. This would result in new discoveries with much larger investments in mine construction and operation, more tax revenue and more people being employed in jobs with good wages.  
Q: What is the state of the company’s major assets and what are its growth expectations for 2019?
A: Right now Promontorio/La Negra and La Cigarra are our principal assets. Promontorio and La Negra represent one property package with two different silver discoveries. We optioned that project to Pan American Silver in 2016, giving them the option to earn a 75 percent interest and leaving Kootenay Silver with 25 percent. At La Cigarra, which is 100 percent owned by Kootenay, we drilled last year with the objective of extending the resource. Drilling successfully extended the mineralization another 1,100m along the strike, a 50 percent increase in the strike extent of silver mineralization. We achieved a great result in this program but the market did not add any value to it and so we stopped drilling because of that and began pursuing a couple of new opportunities with the potential for high-grade deposits in the meantime.
Q: How are the Colombo and Copalito assets supporting your exploration activities in Mexico?
A: Colombo is located in Chihuahua and Copalito in Sinaloa. The Copalito deal took two years to finalize and Colombo one year. Both hold good potential for the discovery of high grade vein deposits so we are very happy to have landed option agreements to acquire these projects. Both are classic, epithermal, vein-hosted, precious metal systems. In the case of Copalito, there are both silver and gold values in a number of different veins. Some of the veins are higher in base metals, including lead, zinc and copper while others are higher in silver or gold. We have enough sampling on veins at surface returning good values to believe there is a resource there to be defined through drilling. Colombo is also well-situated and geologically, it is really interesting because it has an entire epithermal system preserved there, right from the very top where you cannot see any values, down to the point where we are just getting into the precious metal zone. In this case, there is a little bit of gold but it is silver dominant.
We are focusing on Colombo by doing the necessary work to get the permits done and get ready for a drilling program that we hope to start in April. We just raised US$7 million, which is more than enough money to execute this program. At the same time, we continue to look at different opportunities. When the mining market is not so good, you get the opportunity to acquire good assets that would not otherwise be available. We are also advancing some earlier stage projects we think have the potential for large high-grade silver deposits to keep the pipeline of early stage through to discovery and development going. Many projects have to be tested to make a discovery so it is important to continuously develop new properties, new targets. We are really excited about the opportunities that could arise in 2019.