More Mexican Silver
I've said many times that I really like Mexico as a mining environment. For all practical purposes, the country was closed to outside investment in mining from about 1910 to the mid-1990s. Because of the crash in mining due to Bre-X it didn't start to come into its glory until lately. Mexico is a great place to operate.
I went to Mexico three weeks ago to see some silver projects. Anyone who wants to believe there is some sort of shortage of silver has obviously never been to Mexico. There is a lot of silver yet to be mined in Mexico, far more than has been mined to date.
My first visit was to Silvermex (SMR-V). The company shares a CEO with Timmins Gold Corp., Bruce Bragagnolo, and a similar policy of relying on Mexican exploration expertise. The President of Silvermex, Arturo Bonillas lives in Mexico and has extensive contacts in the Mexican mining industry.
Bruce wanted to duplicate the success of Great Panther and Endeavour Silver by finding an existing mill and mine but those days are long past where people were giving mills away in Mexico. He did come close with the purchase of the Rosario Property near Silvermex's existing San Marcial silver project.
Rosario did come with existing mill equipment capable of processing 800 TPD and a small 3 million ounce silver resource with an excellent potential for expansion. In total, Silvermex has about 40 million ounces of 43-101 silver resource in addition to some gold, lead and zinc resources. It works out to about an ounce of silver per share. That should put some kind of floor under the share price. As it works out right now, investors are buying ounces of silver for less than $.20 an ounce. With near term production potential, that's pretty cheap.
The goal of company president Arturo Bonillas is to define over 50 million ounces of near surface easily minable silver at San Marcial, and then to put the project into production. The company has been doing its own internal studies and costing for production. They have been reviewing the in-line leach technology of Gekko Systems of Australia. There is currently a 22 million ounce silver resource at San Marcial with lead and zinc credits. San Marcial is located some 90 kilometers east of Mazatlan in the state of Sinola, Mexico.
San Marcial and Rosario came with a 60-man camp, tailings dam, water, power, warehouses, shops and metallurgical lab. Silvermex also picked up a number of vehicles and mill equipment with the purchase. A back of the envelope projection shows the potential for 2.3 million ounces of silver produced a year at a cash cost of $7 doing 800 TPD. Naturally Silvermex will also do a scoping study and feasibility study before going into production.
The second major project of Silvermex is the La Frazada mine with about 9 million ounces in a 43-101 resource. The project had been mined from around 1890 until the time of the Mexico Revolution about 1910. The property is located about 300 km north of Guadalajara, Mexico in the start of Nayarit. Historic but unverified sources suggest the mine contained bonanza grade silver up to 1.5 kilograms per tonne.
Another mining company staked the project and put in a 280 TPD mill in 1985 and completed reconditioning a series of underground workings before abandoning the property in 1997 due to low silver prices.
Silvermex has another major project they call the Penasco Quemado property in north-central Sonora. Silvermex and other operators have drilled a total of over 8900 meters of core and RC drilling in 107 holes to define an 11 million ounce resource of near surface, lower grade ore. Their results suggest the resource could be mined successfully with low cost bulk mining techniques.
All of the properties belonging to Silvermex were past producers. They went out of production due to silver prices, not any lack of resources. For anyone who believes the price of silver is going up, Silvermex offers a low price way to buy silver ounces. The company believes they can be in production within 24 months at a capital cost of under $15 million. This is one of the most highly leveraged silver plays in the world.
You can buy an ounce of silver in the ground for right at $.22 an ounce. If you like silver, it doesn't get much better than that.
Silvermex is an advertiser and as such, we are biased. We caution potential investors to do their own due diligence and to feel free to contact the company for more information before making any investment decision.
Silvermex Resources Ltd