Vizsla Silver (VZLA) - Will This be the World's Largest Silver Mine?

Vizsla Silver Corp. is a Canadian exploration company focused on exploring and acquiring precious and base metal assets. The Panuco silver-gold project of the company is an approximately 6,800-hectare land package located in southern Sinaloa, Mexico, near the city of Mazatlán. The project lies along the same silver trend as the San Dimas mine of First Majestic Silver Corp. Vizsla Silver Corp. currently has 9 drill rigs active at the project, with 6 dedicated to resource expansion and 3 to exploration initiatives.

The company is currently underway with a 120,000 m drilling program at its Panuco Silver project and plans to complete the drilling program in 2022 as well as publish an update to the project’s maiden mineral resource estimate. Vizsla Silver Corp. has to date only drill tested 33% of the known targets at the Panuco Silver project.

Vizsla Silver Corp. will continue to focus on the advancement of the Panuco Silver project as it advances toward construction. The company aims to be able to produce 20 million ounces of silver per year which will entail larger mineral reserves. The company believes that both its planned mineral resource update, as well as the ensuing scoping study or PEA, will serve as catalysts in its future. The company will in parallel with its exploration initiatives continue to conduct metallurgical studies, and better understand the technical aspects of the project.

The current silver markets and identifying quality assets

The global silver market has seen a volatile and challenging 2022, with the price of silver down from approximately USD$ 25 per ounce to USD$ 20 per ounce. The decline in the price of silver is accredited to global economic concerns such as a possible global recession, as well as industrial silver consumption rates, which account for half of the global silver demand. The strengthening dollar and increased interest rates have also added to the price decline of silver, as historically the price of silver per ounce is inversely correlated to the US Dollar and interest rates. Michael Konnert, the founder and CEO of Vizsla Silver Corp. explains that even though the market falls victim to the aforementioned factors, the decline will not continue indefinitely.

“I think we are all victims of the strong dollar and a rate hike environment. It can continue for a little while, but it won't continue forever.”

The current silver market has also taken a toll on the share price of Vizsla Energy Corp. The company has published various high-grade assay results for its Panuco Silver project in recent times, yet has not experienced a large upswing in share price. Konnert explains the phenomenon as similar to a form of fatigue experienced by the market. The repeated high-grade mineralisation results may become the norm, resulting in an “If all assay results are high-grade, are any?” mentality. Konnert explains the phenomenon as well as the rationale regarding releasing the high-grade results as follows:

“...it can get to a point where you get a little bit tired of these multi-kilo hits over big widths, but this was all for a good reason: we're adding ounces faster than anyone, and if you want to add ounces fast, it's good to drill big, thick structures with high-grade. We have an end in sight; our vision is to build one of the world's largest silver primary producers out of the Panuco district. This is all part of the plan here.”

The Panuco Silver project is one of the largest undeveloped silver projects globally, boasting high-grade mineralisation, high margins and a path to production in part thanks to the existing infrastructure accredited to the project’s past-producing history. Konnert, explains the potential of the Panuco Silver project as follows:

“People always say grade is king, but grade isn't necessarily king; margin is king. You can get margin through a couple of different things. One is a low-cost operating environment like Mexico, or through scale, like a large district, and certainly through grade and near-surface mineralization. Those are key. Another thing I would think about is that grade is great, but grade over 0.5m or 20cm suffers a lot of dilution underground. You need to think about that, so what is your average mining grade? What's underground? What are the widths of the structures, that's always important. There are a few points like that and, of course, it brings me back to the point that if you want something that's high margin and a spectacular project, what's better than a high-grade district in Mexico in a brownfields area that you can actually put into production? I think Vizsla checks all those boxes.”

The Panuco Silver project

The Panuco Silver project is a 6,754-hectare land package located in Sinaloa, Mexico. The project hosts past-producing infrastructure including roads, available power and a skilled labour force. The existing infrastructure further includes a 500-ton-per-day mill and 35 km of underground mine tunnels.  The project holds a maiden resource estimate which includes 5.0 million tons of mineralisation at an average grade of 191 g/t of silver and 2.08 g/t of gold in the indicated category. The project holds a further 4.1 million tons of mineralisation at a grade of 187 g/t of silver and 1.79 g/t of gold in the inferred category.

Konnert explains the significance of the Panuco project with a tale regarding its discovery:

“The Spanish conquistador who discovered Panuco, found two other places before he died at Panuco in his mid-30s, but that first one was Fresnillo, which the world's largest silver miner is named after. The second one is the city of Durango, which is prolific for mines, and then this is the third. We always knew that but what we didn't know was the concentration, the amount of high-grade and broad mineralized structures here, but it's becoming more and more clear to us that this is truly one of these tier 1 districts in Mexico, and probably one of the last in existence that hasn't been consolidated or explored before us.”

Exploration initiatives and advancing the project

Vizsla Silver Corp. is currently underway with a 120,000 m drilling program, consisting of 9 drill rigs, which is focused on expanding the project’s mineral resources as well as identifying new resources. The company has to date been able to classify 57% of the project’s resources as indicated, at an all-in exploration cost of USD$ 0.23 per ounce of silver.

Vizsla Silver Corp. has so far only drill tested 33% of the known targets at the Panuco Silver project. Konnert explains that the company will continue to advance its exploration initiatives, but are also underway advancing additional technical aspects of the project.

“We joke sometimes that our grandkids will be finding discoveries of veins here as we continue to explore. We're going to be drilling here for a very long time. There's always going to be an ongoing discovery drill program and resource development program for drilling going on the property”

Konnert explains that as the company continues with its 120,000 m drilling program it has also initiated environmental studies, as well as various geotechnical studies.

“…in the background what we've been doing for the last year and a half, is baseline environmental studies, geotechnical, hydrological studies. We have an internal scoping study which is assisting us with our mill placement, all the things we need to do for permitting, power line hook up off of the grid, etc. We do have excellent infrastructure here, there are two highways that run through the property, and there's high-tension power that crosses over the veins. It couldn't be better in terms of infrastructure, but as the public sees us drilling, putting out splashy numbers all the time and adding resources, it's all part of a larger plan.”

Vizsla Silver Corp. believes that it holds the correct experience in its management team to be able to advance the Panuco Silver project through the construction phase and towards production. The company’s management team which includes Martin Dupuis, Jesus Velador, Craig Parry and Simon Cmrlec have extensive experience in mine development, Konnert explains:

“We're backed up by people on the ground that are 20-year, 30-year veterans in Mexico, who have built mines and operated mines, people that have worked at Pan-American, Agnico and Capstone; all the major operations in Mexico. On our Board, of course, the living legend Craig Parry is our chairman. He built the coal mine in far eastern Russia - a challenging environment for sure. Simon Cmerlec is on our board; he is the Chief Operating Officer of Ausenco Engineering. They just built Las Chispas and Sonora. Simon has built more mines than most people have ever been to, and that's the kind of guidance and support that we have.”

The company believes that through advancing the Panuco Silver project, various parties may become interested in the operation. Vizsla Silver Corp. has not ruled out an acquisition but clearly states that it is not advancing the project with the intent to sell.

“We can only control the things that we can control here. We can't control when a company decides that they must own us. I think when companies build to sell, they might cut corners. It's clear that this is going to be a transformational asset for whoever owns it, and we'd be very happy to move forward and be one of the world's largest single-asset silver producers here with Panuco.”

Future initiatives:

Vizsla Silver Corp. will continue to focus on the advancement of the Panuco Silver project as it advances toward construction. The company aims to be able to produce 20 million ounces of silver per year which will entail larger mineral reserves. Konnert explains the company’s intent regarding its exploration initiatives as follows:

“We do have some internal goals and metrics. Our stretch target is really to be a 20 million per year producer, and in order to do that, we need to find well in excess of several hundred million ounces of silver equivalent, which I believe is achievable. That doesn't mean that's all we're going to find; we are going to continue to drill as we develop the project through studies and into construction.”

Vizsla Silver Corp. will in parallel to its exploration initiatives continue to conduct metallurgical studies, and better understand the technical aspects of the project.

“You're going to see some high-grade structures there like Copala 2 and Christiano, the high-grade zone at Napoleon, then the incredible high grades at Copala. Understanding how those would sequence into products that you need is what we're laser-focused on, but at the same time, it's optimising metallurgy. We have high recoveries already. Understanding the flow sheet early on, that's important, then it's just making sure that we don't have major delays around power, permitting, etc, so how do we offset that? Really, it's all about how we get the highest return for investors and maximise value with mine sequencing”

The company believes that both its planned mineral resource update, as well as the ensuing scoping study or PEA, will serve as catalysts in its future, Konnert explains:

“It's imperative that we continue drilling. Our near-term targets and near-term catalysts for investors are, first of all, we bounced off the bottom very well despite the silver price recently, but there are two main catalysts: the resource updates, which are the big milestones and then following that there will be some sort of scoping study/PEA. But really, how I see the catalyst is what if we find another Copala? Copala is 10m thick. It's 5x the size of an average mine width in Mexico, and it's half a kilo in grade and runs through 1km, and we still haven't found the extent to it. For us to find something like that, again, while we're drilling but while we're developing the project you get the best of both worlds.”

To find out more, go to the Vizsla Silver website