Perfect Timing for New Silver ExplorerSat, 10/28/2017 - 15:12
In the good times, miners can afford to sit on a vast, diversified portfolio of assets, safe in the knowledge that the noncore projects can be siphoned off at a good price if necessary. But with volatility continuing to plague international commodity markets in 2017, companies of all sizes are forced to prioritize, resulting in a swathe of promising concessions popping up on the market. For companies like Silver One Resources, a newly formed explorer eager to make its name in the Mexican silver sector, this is a dream scenario.
“The assets that went into the company were acquired through First Mining Finance, which had switched its focus to target interesting gold assets in eastern Canada,” says Greg Crowe, President, CEO and Director of Silver One Resources. “That left some strong nonproducing assets and Silver One was created to start working on these projects. Firstly, we will advance our current projects organically and secondly, we will look at new acquisition opportunities.”
Founded in mid-2016, Silver One Resources owns a 100 percent interest in three significant, but largely undeveloped, silver assets in Mexico. It operates independently of First Mining Finance - although the mining bank is the largest shareholder with a 7.3 percent stake - and wasted no time before filing an Independent Public Offering (IPO) on the Toronto Venture Exchange (TSX.V). It quickly raised US$2.5 million from the mining-friendly investor community in Canada and has set its sights on becoming the latest in a long line of junior explorers to make the most of Mexico’s estimated 37 billion tons of silver reserves.
Simple supply-and-demand economics suggest that market conditions are perfect for launching an early-stage silver developer. According to The Silver Institute, supply of the grey metal dropped by 0.6 percent in 2016 to 885 million ounces from 890 million ounces in 2015, the first decline in over 10 years. Mexico, the world’s largest producer, produced 186.2 million ounces, 6 million ounces less than the previous year as grades continue to fall and exploration rebounds slowly from the downturn. In contrast, the growing hunger for solar panels and electronics provides silver with strong demand fundamentals.
For Crowe, the gold-silver ratio has been unbalanced by the big banks short-selling the grey metal. This provides further strength to the argument that the silver price will continue to rise. “The gold-silver ratio for the last several decades has hovered around 1:40 or 1:50, and now this ratio is out of sync at 1:70 or 1:80,” he says. “Considering global economics and the manipulation of the silver markets, there has to be a correction and I expect that silver will end up outperforming gold.”
Of Silver One’s Mexican properties, the Peñasco Quemado project in Sonora is the most noteworthy. A 2006 drilling program outlined a historical measured and indicated resource of 2.57 million tons at a grade of 117g/t for a silver resource of 9.63 million ounces, with notable manganese, lead and zinc anomalies. But this was at a shallow strike length of 450m, and Crowe and his team have seen mineralization that hints at further deposits at greater depth. Drilling will soon commence to determine how far the resource can be expanded.
“Recently completed soil surveys we carried out suggest that the mineralization has a strike length of up to 3km,” says Crowe. “There is also an entirely different soil anomaly over the west side of the property that is 3x2km and has never been explored. We suspect there is a silver-zinc-lead deposit at depth.”
To complement its Mexican properties, Silver One recently acquired a 100 percent interest in the Candelaria project in Nevada from Silver Standard Resources. But despite its foray into the US, the company’s main hopes seem to hinge on Peñasco Quemado and its other properties in Mexico. Crowe has extensive experience working in mining jurisdictions throughout Central and South America, and describes Mexico as “extremely favorable” to mining activity. Combine that with its world-renowned resources and Crowe sees no reason to look elsewhere.
“Overall the authorities in Mexico have been extremely helpful,” he says. “I find Mexico to be very favorable in comparison to any in Central America, and the only other country in Latin America that is comparable is Peru.