Steady Head to Help Juniors with ExplorationWed, 10/21/2015 - 13:49
Q: ProDeMin’s services range from prospecting and exploration to environmental impact assessments. What are the company’s particular strengths?
A: Our focus on project management cannot be matched by other Mexican companies due to a lack of personnel or time. It is almost a turnkey operation as we provide nearly any service our mining clients may need, ranging from environmental work and land staking, to exploration programs and drilling contracts. Given our wide network of partners, we can also provide tailored quotes for those few services we do not cover directly. In terms of finding clients, our focus has been on smaller companies such as Canadian juniors or small Mexican private companies. We are now finalizing a contract with a drill rig, for which we hope to plan the drilling program itself rather than simply providing the drilling personnel. After all, our strength lies in project generation and project management. While our level of business did tail off somewhat in 2013, it picked up again through 2014 with small contracts. With around 20 geologists, as well as environmental staff, technical personnel, and database management staff, we remain quite a small operation. Our size allows us to focus on a specific niche of the mining industry.
Q: From where is the bulk of the capital sourced for the projects that you are working on?
A: Much of the capital is coming from abroad, including from junior Canadian explorers, but certain mining companies that have already invested in Mexico are generating income here. I know of small investment houses in Mexico City who seek funding both inside and outside the country. To a certain extent, ProDeMin does help its clients to obtain investment, assisting them to better communicate what they do through press releases and presentations. This is not a major part of our activities but it remains an important aspect of our work. Many junior companies are looking for ways to survive without resorting to direct financing since most smaller companies’ stock prices are depressed. It is virtually impossible to raise money in the current market. We are fortunate that our clients have not had to raise money yet, but they have started to decrease their activities while looking for ways to spark new interest in their projects. The merger and acquisition market is not doing well right now, but it looks like it will pick up.
Q: In 2013, you stated that Guerrero was arguably Mexico’s most promising mining area. What advancements have you seen in the region since then?
A: The region has essentially been explored by Mexican and foreign companies alike since the early 1990s. These have been a very successful exploration projects, turning a district without many mines into the largest gold producing area in Mexico, and it continues to grow each year. Goldcorp acquired some properties in the district and now owns the largest mine in the area, Los Filos. Torex, a junior company, did a lot of the exploration work, developed the deposits on the Morelos reserve, and is now constructing a mine to put into production. Those two mines hold a large inventory of gold deposits and reserves of Mexico
ProDeMin is working for Newstrike Capital on the Ana Paula and Aurea Norte exploration projects in Guerrero. Newstrike Capital recently published a preliminary resource study about Ana Paula which shows that it will soon result in a mine. It is one of the best gold deposits in development in North America. Situated on the Guerrero Gold Belt near Iguala, Ana Paula has become Newstrike Capital’s flagship project. It has a fairly high grade with a couple of million ounces of gold and a preliminary open pit. It includes a 5,000 hectare package and roughly 80,000 hectares of exploration ground around that. The drilling at Ana Paula is now undergoing engineering work to increase viability. ProDeMin is focusing on exploring around this property to look for more gold deposits.
Q: How did ProDeMin become involved with the Ana Paula project?
A: Newstrike Capital first acquired this project in 2009. In 2010, we were hired to do the geological work and fix the land situation as a turnkey operation. We took care of everything from the outset as they trusted us to manage the funds adequately and oversee the program. The project was at an intermediate stage, with existing drill holes, and looked likely to contain a gold resource. ProDeMin evaluated all the previous work that had been done and gained access to the surface. We then created the geological model, continued the drilling program, and furthered the exploration to discover yet undocumented aspects of the property. We found a high-grade breccia zone in the middle of the deposit which was not previously known. It was a discovery that we are all proud of.
Q: What are the advantages and disadvantages of using ground geophysical methods as opposed to conventional methods?
A: A lot of Canadian junior companies use ground geophysical methods for various reasons. Sometimes, they do not have many available outcrops or they cannot see the rocks due to permafrost or other obstacles. We tend to use direct exploration methods such as mapping and sampling, although it depends on the type of deposit. Geophysics is something that we always consider, as it can be useful for particular types of deposits. Newstrike Capital has carried out airborne geophysical surveys at Ana Paula and the surrounding area. These methods can cover extensive ground, allowing ground exploration or more detailed geophysical analysis to focus on smaller areas. There are several different methods, such as magnetometry, that can help to identify targets. The government has done magnetic surveys all over the country and this data is readily available. Some argue that all types of analysis should be carried out for each project, but that is not necessarily true. It all depends on what the goal and the budget of the company is.