Surging Miners Reignite Guanajuato Hunt for Gold a
ANALYSIS—ProspectingJournal.com—It’s no surprise that miners are on the verge of a gold and silver renaissance. The Swiss have thwarted terrified investors by pegging the “last” safehaven currency to the euro, national bankruptcy is enemy No 1, and central banks are hoarding gold. In this increasingly volatile market we have seen precious metals reach new highs, while debates rage over the nature of fiat money. And through all the noise, supported by the vast majority of outspoken and prominent investors, an impatient question is growing louder: what about the miners?
Simple—they are grabbing great properties while they can, ramping up production and patiently waiting for the gold-silver stock boom. A large number of miners are now scouring the south in search of PMs and, not surprisingly, this search has brought them back to one of the locations that was the start of it all: Mexico’s Guanajuato Silver District.
Having produced an estimated 1-1.2 billion oz of silver in Mexico and 5-6 million oz of gold, Guanajuato has been a cornerstone in the Latin American market since the Spanish first pulled silver out of the ground in 1552. At their peak in the 1700’s, the Guanajuato and neighbouring La Luz districts were said to be the largest and richest in the world, thanks to legendary finds such as the La Valenciana mine. Now considered Mexico’s “next” precious metals hotspot, Guanajuato is rewarding the actions of a handful of ambitious junior and intermediate miners.
Golden Fame Resources
The newest explorer on the Guanajuato block, Golden Fame Resources [GFA - TSX.V] is an exploration company focused on gold, silver and copper projects in Latin America. The company’s flagship project, which it is rumoured to have barely snatched from the claws of neighbouring competitors, is the Algun Dia.
With a recent financing of $7 million and a renowned management team that includes Graham M. Clark (former Chief Council of Newmont) and Lawrence Dick (P.Geo, Ph.D Economic Geology, former Director of Exploration for Chevron Minerals Ltd.), GFA is set for a fully financed drill and underground program for the next two years. Having initiated the first phase of drilling on September 4, GFA plans to drill approximately 20 holes totalling roughly 7,000m. The drilling will test the on-strike and down-dip extension of surface outcropping for approximately 800 meters along strike to depths exceeding 150 metres. Historical underground excavations have shown the mineralized main vein (the San Cayetano) with true widths of 10-15 metres. Average typical grades of vein material show 102 g/t silver, 2.52 g/t gold and 1.69% copper. GFA has set aside $2 million for the remainder of 2011 and is confident of encouraging results in this hot property. As drilling continues, we will be keeping a close eye on this promising junior.
Great Panther Silver
Only 26 km from Golden Fame’s Algun Dia lies Great Panther Silver (TSX: GPR), one of the fastest-growing primary silver producers in Mexico. The company owns and operates two 100%-owned mines in Mexico, with the Guanajuato Mine Complex being its flagship operation.
Consisting of 32 claims and totalling 2,621 hectares, GPR’s Guanajuato Mine Complex covers 4.2 km of the highly regarded Veta Madre vein structure. This structure has elevated GPR to its well-known producer status, having delivered consistent drilling results. A recent press release reports that drilling on the Cata Mine (in the core of the complex) has returned exceptional results for five mineralized zones; for instance, the Alto 2 zone intersections from UG11-135 returned 29.44 g/t Au and 6,447 g/t Ag over 5.40 metres. With results such as this, GPR is well on its way to becoming a leading primary producer.
Endeavour Silver
A mid-cap silver mining company with two producing silver mines in Mexico and three exploration projects, Endeavour Silver Corp. (TSX: EDR) has recorded six consecutive years of record performance through its aggressive expansion and drill programs. Its Guanajuato Mines project, which consists of three operating silver-gold mines (Cebada, Bolañitos, Golondrinas) and 17 properties, totals 2,314 hectares. EDR’s 2011 exploration program for Guanajuato, budgeted at US $3,316,400, consists of mainly surface diamond drilling to expand its resource base through 20,920 metres of core in more than 60 holes to target vein discoveries.
|
YEAR
|
SILVER (oz)
|
GOLD (oz)
|
|
2010
|
837,000
|
11,675
|
|
2009
|
728,000
|
8,421
|
|
2008
|
485,000
|
4,231
|
EDR’s earnings have surged nicely in the past year, as its high-production has seen rising PM prices expand the company’s cash resources. Management claims the company is well on its way to meet its 2011 goal of silver production at 3.7 million oz. The Guanajuato plant expansion project, now underway, will increase production from 600 tonnes per day (tpd) to 1000 tpd, further accelerating the company’s performance.
AuRico Gold
A “leading intermediate Canadian gold and silver producer with a diversified portfolio of high quality mines and projects in Mexico,” AuRico Gold (TSX: AUQ) has a strong presence in the region. Of its three wholly-owned properties, the El Cubo mine in Guanajuato produces gold and silver, with the first 6 months of production in 2010 producing 4,268 oz and 213,203 oz, respectively. After recently re-opening the mine after a labour dispute in 2010, the company aims to ramp up production at El Cubo, which includes 59 concessions covering 8,500 hectares. The 2009/2010 drilling program at El Cubo uncovered 10 targets for 2011 drilling, which could increase the mine’s reserves by 10%. Before 2010, El Cubo represented 14% of AuRico’s net asset value and 24% of its gold production; next year, likely more.
As the spotlight increases its focus on precious metals, expect all eyes to turn towards well-established projects across the Americas and abroad. Well-financed, managed and positioned exploration miners, such as Golden Fame, provide the calculated risk needed to uncover new deposits and meet the surging gold and silver demand. Great Panther Silver is an example of an exploration project in the region that has built an aggressive business model on the land’s excellent mineralization. And mid-tier producers Endeavour Silver and AuRico Gold show that large-scale production is indeed possible and even preferable, as Guanajuato’s real wealth is yet to be discovered.
Nick Francis
ProspectingJournal.com
Disclaimer: The author does not currently hold any shares of any of the companies mentioned in the article. However, some members of Cordova Media Inc., which owns ProspectingJournal.com, may or may not have interests in one or more of the companies mentioned at the time of publication. Staff members from the Prospecting Journal reserve the right to acquire interests in any of the companies mentioned after 36 hours have elapsed upon initial publication of this article. Golden Fame is a sponsor of ProspectingJournal.com.