Recent Coverage Santacruz
Silver Mining
SCZ.V; SZSMF.PK
604-569-1609
santacruzsilver.com
Mexican silver plays have
made investors a lot of money
over the past decade.
As a silver bug, I have
always been intrigued by these
companies decision to breathe
life into silver regions that had
literally been producing silver
and gold for centuries.
As we’ve already seen earlier
in this report, the second
piece of that strategy is to build
portfolios of silver-predominant
projects in an attempt to join the
world’s short list of primary silver
producers.
In an investment sector with
a minimal number of players,
demand for those equities was
bound to skyrocket when silver
took off as an investment
theme. And it certainly did, rising
from the mid-single digits in
the early 2000s to almost $50 in
2011. Even with the recent pullback,
silver is still trading at
several multiples of its nadir
trading price.
All this background is to
introduce to you to another
Mexican primary silver investment
opportunity: Santacruz
Silver Mining.
Santacruz came into being
in April 2012, which was certainly
a more optimistic time for
silver investors. It emerged onto
the mid-tier silver producer
scene almost fully formed, with
four silver-focused projects in
Mexico at varying stages of
development.
With only C$10 million in
capex, the company was able to
put the most advanced of these
(Rosario) into production in
April 2013.
Located in Mexico’s San
Luis Potosi State, Rosario lies
close to Grupo Mexico’s
Charcas Mine, which is in an
area that has seen silver production
for the past four centuries.
The hope with Rosario is that
the veins that are providing the
ore from this deposit go on forever
like they apparently do at
Charcas.
Based on Rosario’s current,
NI 43-101 compliant resource,
the project has enough ore for a
seven-year-plus mine life with a
500 tpd processing plant. In the
measured and indicated categories,
that resource stands at
10.2 million ounces of silver
equivalent material (28,320
ounces of gold, 5.54 million
ounces of silver, 25.4 million
pounds of lead and 62.7 million
pounds of zinc).
Santacruz has a number of
avenues for growth, with the
two most promising being the
expansion of the ore-hosting
veins at Rosario and the development
of its San Felipe project
in Sonora State.
Management currently has
drills turning at San Felipe, with
an eye to generating a prefeasibility
study on the project by Q4
2013. The property’s current
resources stand at 4 million
tonnes of 70 g/t silver, 5% zinc,
2.77% lead and 0.28% copper.
All water, environmental and
local ejido permits have been
granted for the project.
Better still, just one vein (La
Ventana) hosts the vast majority
of that resource, yet there are
six other polymetallic veins outlined
on the property. To date,
18,500 meters of drilling have
been completed at San Felipe,
and another 25,000 meters are
currently underway.
The recent market downturn
caused Santacruz to scale back
its plans on its earlier-stage projects,
but the effort at San Felipe
will continue throughout the
balance of the year, ensuring
that the company won’t lack for
news flow any time soon.
In summary, I see Santacruz
Silver Mining as a great way to
take another bite at the apple on
Mexican silver plays. With a
producing asset in Rosario and
a high-potential target like San
Felipe, this is a company that
could take off like a rocket
when silver spikes again.
Santacruz Silver Mining Ltd.
Recent Share Price:............C$1.45
Shares Outstanding:...90.0 million
Market Cap: ........C$130.5 million
Shares Outstanding
Fully Diluted:.............98.8 million
Market Cap
Fully Diluted:......C$143.3 million