Over the span of one month from early March to early April, the price of silver soared from below $20/oz to more than $26/oz. However, in the last couple weeks silver has pulled back to an important zone of support between $24.50/oz and $25/oz:

Silver (Daily)

 

Another way to look at the silver chart structure shows an important trendline break, followed by a consolidation near the $25 level:

Silver (Daily - COMEX Futures)

If this head & shoulders bottom pattern completes, it projects a minimum upside target of ~$30/oz. 

This recent healthy technical consolidation in the silver price has led to 20%-30% declines in many mid-tier silver producers and developers. One such silver producer/developer that has experienced a 20% share price correction since early April is Guanajuato Silver (TSX-V:GSVR, OTC:GSVRF).

The recent pullback in share price offers an attractive entry point near previous resistance at C$.50:

GSVR.V (Daily)

The correction in GSVR shares in the last several weeks has moved the daily stochastic into technically oversold territory while retracing roughly 3% of the rally from $.34 at the end of February to $.65 in early April. Former resistance near $.50 should now offer support. 

I have used the recent share price correction in GSVR shares to add to my position. IN addition, earlier this month I had the pleasure of visiting Guanajuato, Mexico to see Guanajuato Silver’s mining operations with my own eyes. It's hard to fathom just how far a little junior called Vangold has come since I first bought some shares nearly three years ago, in April 2020. 

I was thoroughly impressed by my site visit to Guanajuato and I will convey some of my takeaways. 

Guanajuato has a deep history of mining that dates back to pre-Columbian times. The indigenous peoples of the region, such as the Chichimecas, extracted precious metals from small mines and rivers, which were then used in religious ceremonies and traded with neighboring tribes.

During the Spanish colonization of Mexico, Guanajuato became one of the most important mining regions in the country. In 1548, Juan de Rayas discovered the first mine in Guanajuato, which became one of the richest places in New Spain almost 300 years before Mexico’s independence from Spain. Subsequently, the Spanish founded the town of Guanajuato in 1554 to serve as the center of mining operations, and it quickly became one of the most prosperous cities in Mexico.

Over the next few centuries, Guanajuato experienced periods of prosperity and decline, as the price of silver fluctuated and mining techniques improved. During the 18th century, new technologies such as the amalgamation process for refining silver and the use of steam engines for pumping water out of mines greatly increased production and profits.

In the 19th century, Guanajuato was a key battleground in the Mexican War of Independence. Many of the local miners joined the rebel forces, and the city was the site of several important battles. After the war, mining activity continued, but with the decline of silver prices in the late 1800s, many mines were forced to close.

Today, mining still plays an important role in the economy of Guanajuato. However, it is now best known as a tourist destination, known for its museums, theaters, and festivals celebrating the region's history and culture. The town is a UNESCO historic site and Guanajuato has preserved much of its colonial architecture and mining heritage, and is a popular tourist destination 

GSVR’s results over the last few years speak for themselves. The company’s share price rose more than 1,000% from its early 2020 low to its 2021 peak above $.70 per share. In addition, Chairman and CEO James Anderson and his team have created a C$200 million market cap gold & silver producer from the vestiges of a tiny junior exploration company in record time. 

GSVR.V (March 2020 to Present)

There have been two major transactions that have helped bring GSVR from an exploration company to a high-growth mid-tier producer:

~ The acquisition of El Cubo Mine & Mill from Endeavour Silver, announced in December 2020 and closed in April 2021.

~ The acquisition of 100% of Great Panther’s Mexican assets including the Topia mine and production facility, the San Ignacio mine, the Guanajuato Mine Complex and the Cata processing plant.

While the acquisition of El Cubo from Endeavour laid an important foundation for the Guanajuato Silver that exists today, it was the acquisition of the Great Panther assets that set GSVR on a high-growth trajectory. The Great Panther transaction required many factors to fall into places simultaneously:

~ Being in the right place at the right time (Guanajuato in 2021/2022)

~ The right team who knew what they were looking at, and knew how to integrate the assets with El Cubo

~ The financial capability to execute the acquisition

~ The right corporate culture and a 100% Mexican team on the ground in Guanajuato

The first thing that stood out to me during the visit to Guanajuato is how the town was clearly built around the many mining operations that have existed since the 1500s. Today, the town of Guanajuato largely caters to tourists but the mining history of the area has not been forgotten. 

Guanajuato Silver is one of the more impressive precious metals mining growth stories of the last couple years. Two years ago, GSVR did not produce any gold or silver. Today, the company is on track to produce 2,600,000 ounces of silver and ~20,000 ounces of gold for a total of 4.8 million silver-equivalent ounces (including lead and zinc by-product credits). 

A recent report from Echelon sees GSVR growing production an additional 25% in 2024 to more than 6,000,000 silver-equivalent ounces:

With a little bit of luck and some more high level execution on the ground, GSVR could be on track to becoming a 10,000,000 ounce producer (silver-eq) in the next few years.

Our tour was led by Hernan Dorado Smith, formerly the Chief Operating Officer of Guanajuato Silver and now the Chief Strategy Officer and one of the key members of the executive management team since 2017. Mining is truly a team sport, and no new discovery is made, or mine is put into operation without a tremendous amount of teamwork. 

In Guanajuato, teamwork is very much on display with Mexican mining veterans Mario Valdez (co-COO) and Ramon Davila (President and co-COO) working alongside a younger team of geologists and mine site managers. While Chairman and CEO James Anderson is Canadian, GSVR’s teams on the ground in Guanajuato and Durango (Topia) are 100% Mexican nationals. 

I've never been on a site visit like this one - the infrastructure advantages in place in Guanajuato are truly impressive. Managing multiple active mining operations in a company that was a junior not too long ago is never easy. However, if there is a team that can do it, it is this one. 

The El Cubo Mine & Mill was definitely the main attraction during my visit and it did not disappoint. I have been inside of mining adits (relatively shallow) in Arizona, Nevada, and the Yukon. However, I can’t say that I have been several hundred meters deep in an active underground mining operation. Well, that changed during my visit to El Cubo. 

Hernan Dorado led our expedition into El Cubo

GSVR CSO Hernan Dorado Smith underground at El Cubo

Underground at El Cubo 

I was impressed by how dry the underground operations at El Cubo are. In addition, the ventilation was excellent. I did not feel like I was 300 meters beneath the surface of the Earth, depths that can definitely cause some claustrophobia for some. 

On the day we visited, the GSVR underground mining team was busy working at Veta San Nicolas and Veta Dolores, two key mineralized zones for near-term production expansion:

While the exploration and mining teams work hard to continue to find new mineralized zones to increase production at El Cubo, the El Cubo Mill is set to ramp up to process 32,000 tonnes/month of ore. 

Mixing Tank at El Cubo Mill

In total, GSVR is ramping up at three mills and four mines across its Mexican asset portfolio. Topia is the one mine that I did not visit on my tour due to its location in Durango Province (a two hour flight from Guanajuato). However, Topia is a key component of GSVR’s growth strategy due its higher-grade nature (1,041 silver-equivalent average grade in the measured & indicated category). 

Another key growth asset for GSVR is the San Ignacio Underground Mine. San Ignacio hosts an impressive gold component grading 2.8 g/t Au on average for a total historical resource of 9,000,000 ounces Ag-Eq grading roughly 400 g/t Ag-Eq. 

GSVR transfers mineralized material from San Ignacio to the Valenciana Mines Complex for processing at the Cata mill. An ore truck can be seen leaving San Ignacio in the video posted to GSVR's Twitter account. 

Over the next 18 months, GSVR plans to ramp up ore processing at the Topia Mill from 7,500 tonnes/month to 12,000 tonnes/month. In addition, Topia boasts an impressive 20,000,000 silver-eq ounces of mineral resources in all categories, with the majority being in the measured & indicated category.

 

Two other key members of the GSVR team are Ramn Dvila (co-COO, President, and Director) and James Anderson (Chairman and CEO). Mr Davila was COO of First Majestic Silver Corp from 2004 to 2014. Within that 10-year period, he led a team that created five new silver mining operations in Mexico, taking the company from two employees to more than 4,000, while growing First Majestic’s production profile from zero to over 12 million ounces of silver equivalent production per year. Mr. Davila was also Minister of Economic Development for the State of Durango, Mexico from September 2016 until June 2020.

Meanwhile, the man who has been instrumental in putting all of the pieces of the puzzle together for Guanajuato Silver is Chairman and CEO James Anderson. Mr. Anderson spent nearly twenty years in the Canadian investment management industry both as a broker and investment banker. Ultimately deciding to focus his energy working within the mining industry, serving as CEO of NuLegacy Gold Corp. from 2012 until April 2019. In March 2019, Mr. Anderson was appointed Chairman and CEO of Vangold Mining Corp. In a period of four years, Mr. Anderson has been the driving force behind the evolution of a dormant junior exploration company to a company that is on the cusp of generating revenues of more than US$100 million per year and employing more than 1,000 people. 

In summary, due to its impressive asset base and strong management team, Guanajuato Silver offers rapid production growth along with sustainable long term plans. While growing production in mining is never simple, GSVR has a highly competent management team with a track record of bringing mines into production. 

The trend of production growth speaks for itself and GSVR in on pace to deliver its first 1,000,000+ ounce Ag-Eq quarterly production in this quarter, Q2 2023:

If GSVR is able to achieve its 2024 production and cost goals of 6,000,000 ounces Ag-Eq production at US$19 AISC (all-in sustaining cost) I can envision the share price doubling from today’s C$.55 - a C$1.10 share price would equate to a US$370 million market cap on a fully diluted basis (using a $1.30 USD/CAD exchange rate and assuming the current share structure remains the same). 

Disclosure: The author has purchased GSVR shares on the open market and may buy or sell at any time without notice.  Author has been compensated for marketing services by Guanajuato Silver Ltd. 

 

DISCLAIMER: The work included in this article is based on current events, technical charts, company news releases, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. This publication is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.