Opportunities for Mining Exploration in Mexico Are Unmatched

Q: What market opportunities led Monarca Minerals to specialize in silver and gold projects?

A: Monarca Minerals is a Canadian-based company that identified a great mining opportunity in Mexico, especially since it is the world's leading silver producer. In addition, we believe that the country has been very stable in terms of regulations, mainly because it has a long mining history. Together, these factors made Mexico the best option for Monarca Minerals to enter the mining industry. Since then, we have focused on two things: precious metals and the Mexican territory. We do not have plans to invest in places other than Mexico, since its potential cannot be matched. Although we know that there are political and economic factors that affect the sector, its potential will continue over the long term.

Q: How does the company protect itself against market volatility?

A: Since we are an exploration company, we need large budgets to carry out our activities. This has forced us to be very disciplined and cautious in how we invest our financial resources. Most of our budget is allocated to exploration work while diversifying our projects. Our main project is San José, which is our new discovery in Chihuahua. We do not buy projects that have been developed by other companies. We prefer to develop them from scratch. When our geologists told us that they had discovered this high-potential project. We conducted lab tests and geophysical studies, which showed its vast potential, so we decided to acquire it. This year, we did the first 4,640m drilling campaign and we are now verifying the results and planning to drill 10,000m next year. San José is a long-term investment that we are planning to turn into a mine.

Q: What is San José’s potential?

A: Of the 15 holes we drilled, we have received results from seven of them, demonstrating the high potential of the project. In each hole, we found mineralization, confirming it is a very large deposit. Regarding mineral content, we found gold, silver, zinc and copper. We were hoping to find more silver. Instead, we found more gold and copper. We are waiting for other results to confirm which mineral is predominant and based on that, we will do a geological model to do further drilling next year. The new exploration program is expected to reconfirm the results obtained and explore other areas as soon as we get the authorization from ejidos. We are currently negotiating with them and hope to continue exploration soon.

Q: What is the company's approach to water and how does it plan to use it responsibly?

A: While we were drilling in San José, we found a great deal of underground water. We are planning to make use of it once operations begin. We are discussing not only how to make use of this water but also how to recycle it because we want to implement responsible management and minimize our environmental impact. These water issues have been very important to us because they have allowed us to get closer to host communities. Some communities do not have access to this resource. We develop a well to improve their access.

Q: What value do Tejamen and San Lucas add to the company's portfolio?

A: Our main priority has been to develop the San José project. However, we believe there is great potential in our Tejamen and San Lucas projects. Tejamen has inferred resources of 28.7Moz of silver. Previous drilling campaigns were very superficial. We plan to conduct deeper drilling programs. We believe that the 28.7Moz of silver can be increased to 100Moz with better campaigns. San Lucas is a small but very good 80ha project located in Durango. We are negotiating concessions around the project to expand it to 700ha.

Q: How has the company managed social risk and built a true relationship with host communities?

A: Nurturing a good relationship with our host communities has always been a priority. Our policy is to be transparent and not promise what we cannot deliver. Our priority is always to show people what we are doing, explain our future plans and their possible impact.

We have sought to improve our social approach, for which we invited Mónica Ospina to be part of our Board of Directors. Ospina has more than 20 years’ experience working on social issues in the energy and mining industries in Latin America. With her guidance, we are improving our ESG approach and our community relationships. We do not want to be a company that arrives in a place, creates a mine and leaves. We want to integrate into the community. For example, we hire locals for our San José project from the nearby Guadalupe de Victoria community. We believe that the best defense against any social problem is the community. If the community is happy, then we can continue to operate.

Q: What are Monarca Minerals plans for 2022 and what message would you like to share with the industry?

A: In 2022, we plan to launch a 10,000m drilling campaign in San José, acquire some concessions in the San Lucas project to increase our portfolio and, finally, in Tejamen our goal is to develop an in-depth exploration program. We believe that Monarca Minerals has great opportunities; we are planning to raise more equity next year to explore those opportunities. We believe in Mexico and the opportunities that offers to mining companies, investors, government and local communities, so we are committed to continue working with all the stakeholders in Mexico and Canada. We are looking forward for a very exciting 2022, it will bring profits to everyone, especially to the surrounding communities.

Monarca Minerals is a Canadian mining company focused on exploration and development of silver and gold projects along a highly productive mineralized belt in Mexico. The company has three projects: two in Durango and one in Chihuahua.