Historic Consolidation Positions Capitan Silver for Discovery at Mexico's Cruz de Plata Silver Project

• Capitan Silver has achieved a historic consolidation of Mexico's Cruz de Plata project, reuniting for the first time in over 100 years a silver district where Peñoles mining company produced 300-2,000 grams per ton silver from the late 1800s until the Mexican Revolution fragmented ownership in 1908.
• A conceptual geological breakthrough has tripled the company's exploration targets from 7 to over 20 kilometers by identifying mineralization wrapping around an intrusive body, with the addition of over 2,000 hectares providing multiple discovery pathways within the expanded land package.
• CEO Alberto Orozco leads an ex-Argonaut Gold team that built and operated three mines on time and on budget, demonstrating strategic discipline by pausing drilling during difficult markets (2022-2023) to focus on property consolidation and royalty removal, positioning the company royalty-free with a clean capital structure.
• The Jesus Maria target showcases 1.5 kilometers of strike length with outcropping mineralization extending from surface to depth, enabling cost-efficient reverse circulation drilling in the upper 150-200 meters that has already identified new high-grade zones in the first 11 holes reported.
• At a current market capitalisation of C$188 million, Capitan Silver offers significant upside potential as strengthening silver fundamentals approach $50 per ounce and the Mexican regulatory environment improves under the Sheinbaum administration.

In an era when silver fundamentals are strengthening and capital is returning to the junior mining sector, Capitan Silver Corp. presents a compelling exploration story anchored in both historical production and modern geological understanding. The company's Cruz de Plata project in Mexico represents more than just another silver exploration play - it marks the first time in over a century that a historically significant mining district has been consolidated under single ownership, creating what management believes could be a company-making discovery.

Speaking during a five-day European roadshow in October 2025, CEO Alberto Orozco outlined how his team has methodically built Capitan Silver since 2021, navigating difficult market conditions through strategic decisions that prioritised long-term shareholder value over short-term activity.

Historical Context and Property Consolidation

The Cruz de Plata project carries significant historical pedigree as Orozco explained:

"There was some historical mining here and we're talking late 1800s to early 1900s. This is actually where the Peñoles mining company had its first mine, its first operation."

Production continued until approximately 1908 when the Mexican Revolution disrupted operations and fragmented ownership of the property. Historical records indicate the mine produced between 300 up to 2,000 grams per ton of silver alone, with additional credits for lead and zinc.

The fragmentation that occurred over a century ago created a complex ownership puzzle that Capitan Silver has been systematically solving. Through two separate transactions - one in 2022 and another announced in August 2024 - the company has reassembled this historic mining district. This consolidation required patient negotiation and strategic timing, but the result has fundamentally transformed the project's potential.

Orozco emphasised the significance of reuniting these historically productive lands under unified exploration and development strategy.

"With this new consolidation we've done, this is the first time in over 100 years that this whole property has been put together."

Expanding the Geological Model

Perhaps the most significant recent development at Cruz de Plata involves not just the physical consolidation of land, but a conceptual breakthrough in understanding the property's geological architecture. The company has evolved its targeting model from a simple linear trend to a three-dimensional system that wraps around an intrusive body. Orozco described the evolution:

"We started working with this high-grade silver trend that at some point was 2.5 km. What this land consolidation did is first it added an additional 1.2 km of on surface mapping and sampling of these structures. But that's not the most exciting part. What we realise is that this system is wrapping around an intrusive body that we see at the project and we followed all this contact with mapping and sampling and sure enough we now have that target wrapped around that body and basically multiplied our targets times three."

This represents a dramatic expansion of the project's potential. The company's cumulative structural targets have grown from approximately 7 to over 20 kilometers - a threefold increase that provides multiple avenues for discovery while also creating portfolio diversification within a single project. The addition of over 2,000 hectares to the land package provides the physical space to pursue this expanded geological model.

Strategic Decisions During Difficult Markets

One of the most instructive aspects of Capitan Silver's story involves the decisions management made during the challenging capital markets of 2022 and 2023. Rather than continuing drilling campaigns that would have required dilutive financing during unfavourable market conditions, the company pivoted to what Orozco termed "housecleaning" activities.

"During the tough times we decided not to drill and instead consolidate the project,,[and] take out some of the royalties that were there. We're currently contracted to be royalty-free," Orozco explained.

This counter-intuitive approach - an exploration company choosing not to drill - required conviction and discipline, but appears to have positioned the company advantageously for the current market environment. Orozco elaborated on the rationale:

"When access to capital is hard, I think you want to do what's best for your shareholders in the long term. It's tempting to go and raise money if you can and start drilling, but when the market's not there I think it was smart of us to just go and do the tough work that we needed to clean up the story to make it more appealing today."

The benefits of this approach are multiple. The company avoided issuing shares at depressed valuations during difficult markets. It eliminated future royalty obligations that would have reduced project economics. And it consolidated a property that might have remained fragmented indefinitely if competitors had acquired key parcels during the interim period.

Interview with CEO Alberto Orozco

The Jesus Maria Target: Advanced Exploration Focus

While the expanded property provides numerous targets at various stages of development, Capitan Silver's most advanced work centers on the Jesus Maria zone, where the company has already defined 1.5 kilometers of strike length through drilling. This target exemplifies the project's key advantages: outcropping mineralization that extends from surface to depth without requiring penetration of significant barren overburden.

The company's current drilling strategy employs reverse circulation (RC) methods to efficiently test shallow mineralization across broad areas:

"The strategy was to go with reverse circulation drilling to do shallow holes because that's going to be a cheap and fast way to identify these high-grade zones in the system and then follow up with that on a phase 2 program. Go deeper with diamond drilling," Orozco explained.

This approach has already yielded positive results. In the first 11 holes reported from the current program, the company identified a new high-grade zone and drilled one of the best holes in the property's history. The RC drilling targets the upper 150 to 200 meters of mineralization, establishing continuity and grade characteristics before committing capital to more expensive diamond drilling at depth.

Critics might question why the company isn't immediately pursuing deeper targets, but the logic reflects both geological understanding and capital efficiency.

"We have this these structures mapped and sampled on surface. It's an outcropping system. So if you visit the project, you can stand right on it. It comes to surface," Orozco noted. "This drill program has the goal of showing that this mineralization is actually there at depth on the top 150 maybe 200 meters. We're not talking about a kilometer depth deposit that we have to go through 500 meters of barren rock to start hitting something."

This near-surface mineralization carries implications beyond exploration efficiency—it also suggests favorable development economics should the project advance to production, as mining and processing costs typically increase significantly with depth.

Deposit Type and Comparable Valuations

Capitan Silver's geological model identifies Cruz de Plata as an intermediate sulfidation epithermal system, a deposit type with a proven track record of creating significant value in the silver sector. The comparison to Vizsla Silver proves particularly relevant for valuation purposes, implying the potential upside of more than 10x when Capitan Silver can demonstrate deposit scale and quality comparable to successful peers.

"A few years ago, there were five of these in single asset companies. Today, we see two. Vizsla, with a C$2 billion dollar market valuation, and we are there at C$180 million currently today," Orozco stated.

However, management's approach to reaching that valuation target distinguishes the company from some competitors.

"Our goal is to continue expanding this project by printing the least number of shares possible," Orozco emphasized. "We believe we had a reasonable shot on goal of reaching this type of deposit like the examples I just mentioned and we're looking at really developing this, not just building a resource."

Team Capabilities

The composition of Capitan Silver's management team provides credibility to development ambitions that extend beyond resource definition. Orozco and much of his team come from Argonaut Gold, where they built and operated three mines on time and on budget.

"We have the team to build it. We have built and operated mines in the past. Most of our team as you know is ex-Argonaut," Orozco noted.

This operational experience influences strategic thinking throughout the exploration process. Rather than simply accumulating ounces for eventual sale to a producer, the team evaluates the project through a developer's lens, considering factors like mining method, processing requirements, infrastructure access, and operational costs from the earliest stages of exploration.

The company has recently expanded its team with additional hires focused specifically on development aspects, signaling that management views advancement toward production as a realistic medium-term objective rather than a distant theoretical outcome.

Financial Discipline and Share Structure

Capitan Silver's approach to financing stands out in a sector often characterized by aggressive promotion and dilutive capital raises. The company has demonstrated restraint in multiple dimensions of capital management, creating what management believes is a cleaner capital structure than many peers.

"Our last two financings have been done at a 30% premium to market. We've added a strategic investor in the last three financings. We have no warrants currently which I think it's an anomaly in the junior resource world," Orozco explained.

The absence of warrants eliminates a common source of future dilution that can suppress share price appreciation even as a company advances its projects.

The participation of strategic investors - including Michael Gentile, who became involved in 2021 - provides both validation and patient capital. Strategic investors typically conduct extensive due diligence and maintain longer time horizons than retail participants, reducing volatility and providing management with stability to execute multi-year plans.

Mexican Regulatory Environment

Any discussion of Mexican mining projects must address the regulatory and political environment, which has been a source of concern for investors following policy uncertainty during the previous administration. Orozco provided a cautiously optimistic assessment of changes under the current Sheinbaum government.

"There's a big difference from AMLO to the Sheinbaum era," Orozco stated. "You are probably not going to hear a lot about it in the news. It's been subtle. But the proof is in the permitting. Permitting has been advancing. You can see it slowly but surely. Some companies are starting to get their permits."

This assessment aligns with broader industry observations that the Sheinbaum administration has adopted a more pragmatic approach to mining than its predecessor, while maintaining emphasis on environmental responsibility and community engagement.

"The president herself has said it in her morning conferences they want to make sure that companies are doing things responsibly in the right way. And we're convinced that's the way we want to do things anyways," Orozco noted.

For Capitan Silver specifically, the company is currently working on permitting for drilling in newly consolidated areas while advancing permits that would eventually be required for production. The outcropping, near-surface nature of mineralization suggests that underground mining methods would likely be employed, which generally face fewer permitting hurdles than large-scale open pit operations.

Silver Market Fundamentals

While company-specific factors drive Capitan Silver's investment thesis, the broader silver market context provides essential backdrop reflected in silver's price movement toward $50 per ounce during 2025. Orozco noted:

"The market has changed. The fundamentals for silver are better than ever. And what we've done is build a company that's the best position to take on that opportunity."

The improving fundamentals for silver combine industrial demand drivers—including solar panel manufacturing and electric vehicle applications—with traditional investment and monetary demand. This creates a favorable environment for silver exploration companies, as rising metal prices improve project economics while also expanding access to capital as generalist investors return to the sector.

The Investment Thesis for Capitan Silver

• Capitan Silver has consolidated the historically productive Cruz de Plata district for the first time in over 100 years, reuniting lands where Peñoles mining company operated its first mine producing 300-2,000 grams per ton silver in the late 1800s through two strategic transactions completed in 2022 and August 2024.
• The company's geological breakthrough has expanded its exploration target portfolio threefold from 7 kilometers to over 20 kilometers of cumulative structural targets by identifying mineralization wrapping around an intrusive body, creating multiple discovery avenues within a single consolidated project spanning over 2,000 additional hectares.
• Management's ex-Argonaut Gold team brings proven operational capability, having built and operated three mines on time and on budget, positioning the company to advance Cruz de Plata beyond resource definition toward development with a builder's perspective on mining method, processing, and economics.
• The company maintains exceptional capital discipline with no warrants outstanding, recent financings completed at 30% premiums to market, and strategic investor participation including Michael Gentile since 2021, demonstrating management's commitment to minimising dilution while building toward a billion-dollar valuation comparable to peers like Vizsla Silver's $2 billion market capitalization.
• Cruz de Plata's outcropping, near-surface intermediate sulfidation epithermal system allows cost-efficient reverse circulation drilling to rapidly test 20+ kilometers of targets in the upper 150-200 meters, eliminating costly penetration through barren overburden and suggesting favourable future development economics.
• Current market capitalisation of approximately $180 million represents significant discount to the $2 billion valuations achieved by comparable intermediate sulfidation discoveries, offering potential 10x+ upside as the company validates its expanded geological model through ongoing drilling campaigns.
• The Mexican regulatory environment has improved measurably under the Sheinbaum administration with permitting advancing across the sector, while Capitan Silver's focus on responsible mining practices and likely underground mining methods aligns with government priorities and reduces regulatory risk compared to large-scale open pit projects.

TL;DR

Capitan Silver has consolidated Mexico's historic Cruz de Plata silver district for the first time since 1908, expanding exploration targets threefold to over 20 kilometers through a geological breakthrough identifying mineralization wrapping around an intrusive body. The ex-Argonaut management team that built three mines on time and on budget has demonstrated exceptional capital discipline—pausing drilling during difficult markets to eliminate royalties and consolidate the property, then resuming with cost-efficient reverse circulation drilling that has already identified new high-grade zones. With outcropping mineralization producing 300-2,000 g/t silver historically, zero warrants outstanding, recent financings at 30% premiums, and strategic investor backing since 2021, the company trades at C$180 million market capitalisation versus C$2 billion peer valuations for comparable intermediate sulfidation discoveries. As silver approaches $50 per ounce and Mexican permitting improves under Sheinbaum, Capitan Silver offers significant leverage to exploration success in a strengthening fundamental environment.

FAQ's (AI-Generated)