Resource Expansion Takes Rosario District to the Next Level

Q: How does GR Silver Mining interpret the Mexican government’s decree to stop all non-essential operations in the face of COVID-19?

A: We take the health and safety of all employees and business partners very seriously. The fact that we do not operate a mine reduces the number of people on-site, which decreases potential contagion. Given that we have only been drilling some isolated samples in the field, we do not actually need to stop activities on site. However, the office in Rosario, which employs about 20 people, has implemented social distancing. Every person has a private office and does not work in physical proximity to other colleagues. External access to our facilities has been restricted.

Q: What is GR Silver’s business strategy?

A: GR Silver Mining focuses on silver and gold in Sinaloa’s Rosario District. This district has a long history related to these metals. Plomosas has both historical and recent drill holes. The company’s business strategy is to find attractive gold and silver assets that already have a lot of available data, such as drill holes and samples. The company can acquire the assets at a low-cost and then use the existing data to increase the resource. Exploration is less important for us than resource expansion, discovery and development. Today, the company has the most important assets in the Rosario District. GR Silver Mining is one of the largest concession holders there.

Q: What are your plans for the recently purchased Plomosas project?

A: Plomosas is a great acquisition because it adds to existing projects, such as San Marcial, where we already have a high amount of silver, gold, zinc and lead – 47 million ounces in total. San Marcial is important because it can be an open pit, slashing costs associated with underground operations and creating higher margins.

Plomosas was operated by Grupo México for almost 14 years. It produced 600 tons per day of lead and zinc concentrate. Silver was found in one area only. First Majestic and Grupo México recently completed 553 drill holes. Since the 1980s, they have drilled a total of 100,000 meters. We have undertaken six more drill holes, leading to the estimation of six more areas.

Our strategy is to have at least one new resource added in the next six months at Plomosas. When all six areas are mapped out, combined with the San Marcial area, we have an excellent opportunity to develop a strong business proposition and to multiply our resources. Plomosas will bring us closer to starting a new mining project in Sinaloa. It can start operating in a timely manner since we meet all requirements and possess all permits.

Q: Will GR Silver mining bring its Rosario assets into production on its own or will it form an alliance with another company?

A: To make this decision, there are a couple of steps that we need to take first. We need to estimate the resources in ounces of silver and gold, and then in pounds of zinc and lead, in each of the six areas. Once we have the final overview, we can decide whether to develop it ourselves or not. We need to complete a good number of resource estimations in the next six to 12 months. Strong pre-feasibility and feasibility studies are crucial.

It is worth pointing out that Plomosas is low risk because all the infrastructure is already in place. Any company that is interested can save a lot of capital costs and time as a result. Infrastructure includes roads, power lines and an initial 8km of underground development by Grupo México. This all adds up to US$50 million of investment. The opportunity in Plomosas is to increase the resource size at a low cost.

Q: How will Nueva Trinidad fit into your overall strategy once you purchase it?

A: Nueva Trinidad is a further low-cost acquisition that we are looking at to potentially strengthen our asset portfolio. It could be an attractive asset for the company. It is located in between our other assets. Our team of geologists understands that there is great potential in the Rosario area, which we will drill strategically in order to find new resources. We are now reviewing and assessing Nueva Trinidad’s data, as well as working to fully understand all legal and financial ramifications. We have exclusivity for purchasing the project up to the end of 2020. That being said, it is relevant to add that we do not necessarily need Nueva Trinidad. It would be a complementary, attractive asset in our portfolio.

Q: What are the main elements of GR Silver Mining’s community engagement programs?

A: It is crucial to understand the communities’ social needs. Most of the inhabitants in Rosario are rural and are organized in ejidos with very distinct social and political characteristics. We strive to make agreements that have a wide support base in the communities. Initiatives for rehabilitating and improving the environment have been well-received. The infrastructure work we have initiated for the community has also been universally accepted so far. Furthermore, we employ as many locals as possible and pay them fair wages. We have trained over 25 locals who are now employed by the company. The people understand that the company is important in the area because there is no other industrial activity there. There is goodwill on all sides, and GR Silver Mining is committed to forging alliances through transparent dialogue.