Guanajuato Silver (GSVR) - Already Selling Silver Concentrate

Mexico’s newest precious metals producer, Guanajuato Silver Company Ltd. (TSXV: GSVR, OTCQX: GSVRF), is passionate about the reactivation of past-producing silver and gold mines near the city of Guanajuato, Mexico. Guanajuato has a 500-year history of mining and hosts various active mining companies. Three Canadian-owned mining companies are currently active in Guanajuato. Mexico's second-largest gold miner, Fresnillo PLC, who also acts as the world's largest producer of silver from ore, is also based in Guanajuato.

One of the mines marked for reactivation is the El Cubo mine and mill complex, located close to the city of Guanajuato in central Mexico. The El Cubo mine and mill complex is currently Guanajuato Silver Co.’s highest priority project and garners the most attention and focus. Guanajuato Silver Co. is dead set on reaching full production before the end of 2022. A few kilometers down the road from El Cubo mine, Guanajuato Silver Co. is also in the process of recommissioning the El Pinguico property.

El Pinguico is poised to contribute half the amount of the total mineralized material sent to the El Cubo mill. Guanajuato Silver Co. has its eyes set upon the delineation of additional gold and silver resources. They plan to achieve this through underground and surface exploration drilling.

The recommencement operations ramp-up is currently on track, being both within budget and on time. Currently, the projected total production is 1.8M ounces of silver equivalent (AgEq). Guanajuato Silver Co. has the potential to become a large player in the Mexican precious metal circuit when keeping in mind its mineral resources, location of operations, mineral prospects, and management.

Matthew Gordon had a chat with James Anderson, chairman, and CEO of Guanajuato Silver. James, who was standing outside the Mexican Mining International Convention in Acapulco, Mexico was very keen to discuss Guanajuato Silver.

Company Overview

Guanajuato Silver Co. purchased the El Cubo mine and mill complex from Endeavour Silver in April 2021. Guanajuato Silver was previously known as VanGold Mining Corp. In June 2021 the company management felt it was necessary to rebrand. They wanted their name to better illustrate the region they are active in and the principal metal they would soon be producing.

To contextualize the region, the area of Guanajuato has been a mining site dating back as far as the 17th century. This area is known for the Sierra structure. The Sierra structure is an anticlinal structure (arch-shaped) deposit roughly 100km long and accounts for much of the gold and silver produced in the Guanajuato district.

The two operations owned and refurbished by Guanajuato Silver Co., the El Cubo and El Pinguico properties are within this district. These properties share many of the same geological, mineralogical, and metallurgical characteristics. From a corporate perspective, the similarities lead to easier project execution due to similar mining methods used.

Guanajuato Silver Co. has been able to re-commence production at the El Cubo mine and mill complex. This production can be ascribed to the successful refurbishment of the mining complex. The raw production material used as feedstock was freshly mined mineralized material from the El Cubo mine. This freshly mined mineralized material was excavated since the beginning of July at El Cubo. The feedstock also included ore from stockpiles from the El Pinguico site.  Guanajuato Silver Co. has not let the grass grow beneath its feet and has recently signed an agreement with Ocean Partners, a UK-based metals trading company. The agreement with Ocean Partners comprises the purchase of silver and gold concentrate. 

The first sale of concentrate to Ocean Partners by Guanajuato Silver Co. was in the week of 18 October. Guanajuato Silver Co. sold approximately 75 tons of bulk silver and gold concentrate worth approximately US$480,000.00. The concentrate graded approximately 200 ounces of silver per ton and 2 ounces of gold per ton of concentrate. The rapid movement of Guanajuato Silver Co. requires rapid management and at the helm of this company is James Anderson serving as chairman and CEO. 

Management 

Anderson primarily comes from a background in the financial services industry. His successful 19-year career includes titles as retail broker, investment banker, and manager at several Canadian investment firms. James served as CEO of NuLegacy Gold Corp. from 2012 until April 2019 and currently also acts as a director of Orestone Mining Corp. 

Ramón Dávila, a giant in the Mexican mining industry, serves on the board of directors. Davila was Chief Operating Officer (COO) and a member of the board of directors of First Majestic Silver Corp from 2004 to 2014. In these 10 years, Dávila and his team created five new silver mining operations in Mexico. This led First Majestic Silver Corp to grow from two to more than 4000 employees and gain a production profile of over 12 million ounces of AgEq annually. Shifting away from First Majestic Silver Corp Dávila also served as Minister of economic development for the State of Durango in northwest Mexico from 2016 to 2020.

Hernan Dorado Smith operates as the Chief Operating Officer (COO) and has been a director of Guanajuato Silver Co. since 2017. Smith is a 5th generation mining engineer and holds 15 years of underground and open-pit mining experience. He has in-depth knowledge of the El Pinguico property and is a local, having graduated from the Universidad de Guanajuato in 2003. Smith has worked on several major mining projects, including Australia and Rainy River in Canada, Pan-American Silver in Navidad Argentina, and La Preciosa in Mexico.

Lisa Dea performs as Chief Financial Officer (CFO) and has 20 years of experience in the finance, securities, and accounting fields. Dea has been instrumental in helping several companies grow from the development stage to large-scale commercial operations.

Richard Silas has been a Director of Guanajuato Silver Co. since October 2019. Silas serves as director and Vice President (VP) of corporate development. Silas has more than 20 years of experience in corporate governance, regulatory compliance, and administration of junior resource companies. Silas understands junior exploration markets and has the ability to position, structure, and administer companies for success in these markets.  

Completing the management team in their capacity as directors is William Gehlen, director and manager of JR Resources Co., and Daniel Oliver, manager of Myrmikan Capital LLC.

El Cubo and El Pinguico Properties

The El Cubo and El Pinguico complexes are both within the Sierra district and share many of the same geological, mineralogical, and metallurgical characteristics. The similarities of the two properties lead to easier project execution due to similar mining methods used.

The El Cubo property is currently Guanajuato Silver Co’s highest priority project with Guanajuato Silver Co. dead set on reaching full production before the end of 2022. The El Pinguico property is a close second and is poised to contribute half the amount of the total mineralized material sent to the El Cubo mill.

The El Pinguico complex is roughly 8 kilometers away from the El Cubo Complex. A large stockpile of material is available at the El Pinguico property. The stockpile will be processed at the El Cubo mill in the future. Carlos Cham Dominguez the consulting Geologist and QP for Guanajuato Silver Co. completed a re-sampling of this stockpile in 2017. The results yielded an average grade of 1.75 g/t of gold (Au) and 183.5 g/t of silver (Ag). Guanajuato Silver Co. conservatively estimates that the surface stockpile comprises approximately 175,000 to 185,000 tons of material grading between 0.45-0.52 g/t Au and 67-70 g/t Ag. The stockpile at the El Pinguico project has proven valuable as seen in the past weeks.

Cash Position

In the week of 18 October, approximately 75 tons of bulk silver and gold concentrate was sold by Guanajuato Silver Co. This concentrate was graded at approximately 200 ounces of silver per ton of ore and 2 ounces of gold per ton of ore. The concentrate was valued at approximately US$480,000.00. 

The entire amount of concentrate was milled and produced at Guanajuato Silver Co.’s newly refurbished El Cubo processing plant. Guanajuato Silver Co. has received an initial provisional payment for the concentrate, representing 90% of its payable value. The additional 10% payment will be made when the remaining details of the initial shipment are finalized. Capping of this discussion on Guanajuato Silver Co. is the recent capital injection it experienced.

Guanajuato Silver Co. experienced a great capital injection between middle March and the beginning of June 2021. This capital injection was made possible with the exercise of approximately 8,500,000 warrants held by shareholders. Guanajuato Silver Co. received approximately CAD$2,105,000 due to the exercise of these warrants. 

Future

The company is currently ramping up production to its planned mineral processing levels of 22,500 tons of ore a month. When maximum production is reached, future shipments are likely to be much larger. Guanajuato Silver Co. plans to be at its planned mineral processing levels by the end of 2022. Anderson feels confident that Guanajuato Silver Co. will be able to deliver 1.8Moz of silver equivalent. 

The EL Cubo project is currently underway with the development and ramp-up of its underground production system. The final target is for the mine to be able to produce 1000 tons of ore a day, where it is currently at 600 to 700 tons a day. Guanajuato Silver Co. has plans to potentially extend the El Pinguico property to the Veta Madre. Veta Madre is a mineral target in the proximity of El Pinguico that has never been drilled before. Guanajuato Silver Co. is currently developing plans for a near-term drilling campaign to test the Veta Madre vein’s potential at depth.

Will Guanajuato Silver Co, keep up its pace and continue to blast through its milestones early? Only time will tell.

To find out more, go to the Guanajuato Silver Website