Turning Undervalued Assets Into Successful ProjectsMon, 10/22/2018 - 16:19
Q: How have you raised the funds for your exploration projects and what financial schemes have proven to be the most successful?
A: In mining and mineral exploration, investors come from everywhere. There is a strong European appetite to invest in exploration companies in the Americas, so we have to be listed on their stock exchanges to make it easier for their nationals to participate in financing our projects. Our companies are listed on the TSX Venture Exchange, as well as the OTC-QB and Frankfurt Exchanges. Also, Southern Silver Exploration is listed on the Santiago Stock Exchange (BVS), which provided some ability to invest for Mexican investors. The TSX asked us to co-list on the BVS in Chile to benefit Mexican investors. We have not yet pursued a listing on the BMV, but we would be happy to consider doing so.
We also do in-house, non-brokered placement funding’s ranging in value from CA$1 million to CA$5 million, as we have a significant number of investors that are happy to speculate with us. In the end, we speculate to raise money and become a more mature company, and this strategy has proven to have been successful. Of the four companies in the Manex Group, only Southern Silver Exploration and Valterra Resources have properties in Mexico, the first in Durango and the second in Chihuahua. Southern Silver Exploration has spent around US $4.65 million in acquisition costs and US$11.5 million on exploration costs on its significant Cerro Las Minitas polymetallic property that it is now developing into what will be the next mine in that district. We are also spending US$3million on the current drilling and surface program that will lead to a PEA requiring a further US$5 million investment to completion.
Q: What are the main projects you are pursuing in Mexico?
A: Southern Silver Exploration is the most senior company in the group by way of market capitalization. It is currently conducting a US$3 million exploration program which will lead to a preliminary economic assessment on its Mexican property, which will then require additional equity financing. It operates the property with Electrum Group of New York as a 40/60 joint venture. Electrum provided US$5 million to earn its 60 percent working interest in Cerro Las Minitas in Durango. The property acquisition price was US$4 million and we spent US$11.5 million on exploration.
According to our resources estimates, the property has approximately 20 million tons of silver equivalent with strong zinc and lead components. The current estimated value of those in situ resources is US$3.9 billion. We plan to spend another US$3 million further exploring the property to increase its resources by upward of 10 million tons to over 300 million ounces of silver equivalent. We are presently carrying out an internal scoping study, which gives us better insight on underground mining methods on the property. We expect to move to a PEA in early 2019, which should lead to a production decision.
Valterra Resources is the junior company which recently acquired a copper-gold property in Chihuahua. We are confident that Los Reyes has substantial opportunities to be developed into more than 10 million tons of high-grade copper and gold. We are in the permitting process and expect to be drilling before the end of 2018. Los Reyes is surrounded by Peñoles projects and has historic value and tremendous infrastructure, which allows us to better take its products to market. It is only 2km away from Route 49 and there is a rail that runs by the property. When developing a mine, it is key to make sure it has good transportation access and electricity, among other infrastructure features. It is also important to consider labor availability and to have a good relationship with local ejidos. We believe we have addressed all those factors in Los Reyes. Valterra Resources has been in existence for some time and it is funded by a loyal shareholders’ base. It also has a high-grade gold property in Nevada and a porphyry copper-gold project in British Columbia, but we thought that exposure to Mexico would be beneficial, which is why the board approved the optioning and further acquisition of Los Reyes.