By Miguel A Heredia
During the fifty-one week of the year (December 16th to December 22th, 2019), at least 28 press releases were announced by companies working in Mexico, with nine announcing financial rounds, seven disclosing deals and corporate issues, five discussing social issues, four reporting on resources and developments of their properties, two communicating production and financial results, and one commenting on Mexican issues. ON MEXICO ISSUES, Mexico mining production showed signs of recovery. ON EXPLORATION, no relevant news. ON MINING, Starcore presented production and financial results for the second quarter ended October31, 2019 from its San Martin mine in Queretaro. Premier provided a year end operations update (Mercedes mine, Sonora). ON FINANCING, Defiance extended its loan until December 21, 2020 for a balance of $1.2 M (San Acacio project, Zacatecas). Alamos Gold announced renewal of a normal course issuer bid, and an increase of a credit facility from USD $400M to USD $500M (Mulatos mine, Sonora). Orla finalized a credit agreement for USD $125M for the development of its Camino Rojo project in Zacatecas. First Mining closed a non-brokered flow-through equity financing for $2M (San Ricardo project, Sonora). SilverCrest closed a CAD $92M bought deal financing, including CAD $12M over allotment option exercised in full (Las Chispas project, Sonora). Golden Minerals sold two non-strategies Mexican exploration properties to Industrias Peñoles for $3M. Mexus paid off two loan agreements which were coming due (Santa Elena mine, Sonora). Mithril announced its plan to raise up to A$4.9M by way of an entitlement issue to shareholders (Copalquin project, Durango). ON RESOURCES AND DEVELOPMENT, Argonaut presented a positive PFS for its Cerro Del Gallo project in Guanajuato, and increased company´s mineral reserves by 48%. Coeur provided an update on its exploration program at Palmarejo mine in Chihuahua. Azure commenced a 7,000m RC resource expansion drilling at its Loma Bonita deposit in Sonora. Industrias Peñoles commenced extraction and grinding tests at its Capela mine (former Rey de Plata mine) in Teloloapan, Guerrero. ON DEALS AND CORPORATE ISSUES, Discovery Metals announced the appointment of its new VP of Corporate Development and Investor Relations (Cordero project, Chihuahua). Equinox Gold and Leagold entered into a definitive agreement to combine in an at-market merge (Los Filos mine, Guerrero). Goldplay entered into a letter of intent agreement with Mako Mining Corp., to acquire 100% of the shares of Marlin Gold Mining Ltd. (San Marcial project, Sinaloa). Oroco presented results from its special annual general meeting for shareholders (Santo Tomás project, Sinaloa). Prize Mining announced the resignation of its CEO and the appointment of its replacement (Manto Negro project, Coahuila). Mithril entered into an exclusive option agreement to acquire all the issued share capital of Sun Minerals Pty Ltd., which holds an exclusive option to earn up to 100% interest in the high grade Copalquin Au & Ag project in Durango. ON SOCIAL RESPONSIBILITY, Zacatecas Mining Cluster held its second Talent Meeting with participation greater than the 30 people who previously registered to participate in the event. Ladies Committee of the AIMMGM and Outlet Minero promoted the environmental education in Zacatecas. Grupo Mexico participated in the conference of preventive culture in San Luis Potosi. Minera Peñasquito held Christmas celebration in Mazapil, Zacatecas. It also informed about the progress of the social programs that the mining company performs in the 25 communities of direct influence.
ON MEXICO ISSUES
- Mexico mining production, showed signs of recovery, at a time when companies move forward with their efforts to face the problems that hinder operations in a series of large mines. General production increased 1.0% in October compared to the same month last year, led by increases in Pb, Zn, and Ag, according to the INEGI statistics agency. The October increase was largely due to the improvement experienced by three metals. Pb production increased 22.7% to 26.1M Lb, Zn production rose to 12.2% to 78.5M Lb, and Ag production rose to 11.6% to 10.3M Oz. The hike occurs despite a major disruption during October at the Peñasquito mine in Zacatecas, one of Mexico’s largest producers of Au, Ag, Pb, and Zn.
- No relevant news.
- Starcore International Mines Ltd., presented production and financial results for the second quarter ended October 31, 2019 from its San Martin mine in Queretaro. It milled 54,100 tonnes of 1.78 g/t Au and 34 g/t Ag to produce 2,700 Oz Au and 31.1K Oz Ag (3,100 Oz AuEq), at a cash cost of USD $71 per tonne milled or USD $1,259 per Oz AuEq, and AISC of USD $1,527 per Oz AuEq Starcore had Au & Ag sales of CAD $ 5.8M, a loss of CAD $1.1M, or CAD $0.02 per share, and an EBITDA of (CAD $342) for the six months period ended October 31, 2019.
- Premier Gold Mines Limited, provided a year-end operations update. The company reported that the successful 2019 drill campaign resulted in the discovery of higher-grade zones located near existing mine workings, and plans are emplaced to benefit from them. Also, it plans to enter in identified near-mine areas in the Lupita extension and Marianas in order to multiple the numbers of headings and stopes, allowing for more flexibility and increased production. At the end of Q3, 2019, year-to-date mine production totaled 47.6K Oz Au and 146.5K Oz Ag, with total co-product cash costs of $973 per Oz Au and co-product AISC of $1,226 per Oz Au.
- Defiance Silver Corp, announced that it has extended the loan for an additional year until December 21, 2020, with a reduction of $500K. The balance on extension is $1.2M at a rate of 10% per year (San Acacio project, Zacatecas).
- Alamos Gold Inc., announced its intention to make a normal course issuer bid permitting Alamos to purchase for cancellation up to 28.7M class A common shares, representing 10% of the company´s public float of the common shares as of December 11, 2019, being 287.3M common shares issued and outstanding. The price for any repurchased common shares will be the prevailing market price at the time of the purchase. All common shares purchased by Alamos will be cancelled. In addition, the company increased the size of a credit facility from USD $400M to USD $500M on more favourable terms. “The increase in our facility on more attractive terms is a reflection of the increased scale of Alamos as well as our strong operating and financial outlook. Combined with our existing cash, this further strengthens our financial flexibility with no debt and nearly US$700 million of available liquidity,” said Jamie Porter, Chief Financial Officer (Mulatos mine, Sonora).
- Orla Mining Ltd., finalized a credit agreement for USD $125M for the development of its Camino Rojo project in Zacatecas. The credit comprises three tranches: an initial tranche for USD $25 M once the agreement is closed and two subsequent tranches for USD $50M each available once Orla satisfies certain conditions, including the receipt of key permits required for the development of Camino Rojo. After the closing of the credit facility, the board of directors has approved the start of construction spending at Camino Rojo, allowing the continuation of detailed engineering and the ordering of long lead items, such as the crushing system. Commencement of project construction has also been approved, subject to receipt of all required permits. By the way, SEMARNAT has granted to Orla the approval of the change of land use permit, one of the two key permits required for the development of its project.
- First Mining Gold Corp., closed a non-brokered flow-through equity financing for $2M. Gross proceeds will be used to fund exploration programs of their mining properties (San Ricardo project, Sonora).
- SilverCrest Metals Inc., closed a CAD $92M bought deal financing, including CAD $12M over allotment option exercised in full. Gross proceeds will be used to continue the exploration and development of its Las Chispas project in Sonora.
- Golden Minerals Company, sold two non-strategies Mexican exploration properties to Industrias Peñoles for $3M. The Mogotes and Pistachon properties are located near the Velardeña mine in Durango. None of the claims contain any identified mineral resources. The cash received will be used to advance key exploration projects in Mexico and Nevada.
- Mexus Gold US, paid off two loan agreement which were coming due. The company does not have the funds to hire additional crew to run all aspects of the mine continuously, so it is seeking the necessary funds by selling a portion of its non-producing properties, selling equipment not needed at the mine site, and/or funding from its shareholder base. It also is considering selling a small royal interest in its Santa Elena mine in Sonora.
- Mithril Resources Ltd., announced its plan to raise up to A$4.9M by way of an entitlement issue to shareholders. Net proceeds will be used to complete a drilling program at Copalquin project, Durango, and to continue work on the company´s existing projects.
ON RESOURCES AND DEVELOPMENT
- Argonaut Gold Inc., presented a positive PFS for its Cerro Del Gallo project in Guanajuato. It increased company´s mineral reserves by 48%, and measured and indicated Au mineral resources by 36%. The project has 91,754,000 tonnes of 0.56 g/t Au, 13 g/t Ag, and 0.09% Cu to contain a total of 1.64M Oz Au, 39.1M Oz Ag, and 192.15M Lb Cu. Metallurgical recoveries are 60%, 53%, and 43% respectively. Cerro Del Gallo is a low-cost asset, with estimated cash cost of $597 per Oz Au sold and AISC of $677 per Oz Au sold. The project has an after-tax internal rate of return of $20% and a NPV at a 5% discount rate of $175M, assuming metal prices of $1,350 for Oz Au and $16.75 for Oz Ag. Argonaut plans to produce as an average 64K Oz Au, 1.3M Oz Ag, and 5.4M Lb Cu per year, and has estimated a life of mine of 15.5 years.
- Coeur Mining Inc., provided an update on its exploration program carried out at its Palmarejo mine in Chihuahua, which has been focused on resource expansion drilling. Highlights from the 2019 drilling campaign at Palmarejo includes positive infill results at the western and southern portions of the Guadalupe mine complex, including hole DC3-ZPA-0010 with 12.8 g/t Au and 1,047 g/t Ag over 5.7m; new resource expansion intercepts from the northern portion of the Independencia mine complex, including hole VIDH-120, with 1.5 g/t Au and 179 g/t Ag over 9.3m; and new resource expansion intercepts from the northeastern most portion of the Independencia mine complex, with hole BVDH-039 with 1.1 g/t Au and 165 g(/t Ag over 5m. “Coeur’s geologic team also expanded its footprint in the district by mapping and sampling exposures of new veins southwest and northeast of the two underground mining complexes as well as new veins west and east of the legacy open pit mine. Coeur expects to seek drill permits for several new areas in 2020 based on positive surface trace-element geochemistry and alteration results”.
- Azure Minerals Limited, commenced a 7,000m RC resource expansion drilling program at its Loma Bonita deposit in Sonora, where a channel sampling in a road returned 3.6 g/t Au over 35.5m. Alacran project includes Mesa de Plata and Loma Bonita deposits. Initial focus is on growing the Alacran Au & Ag resource of 32.2M Oz Ag and 150K Oz Au. Loma Bonita deposit is open for expansion in most directions with good drill intersections of Au including hole MDPC-131 with 2.8 g/t Au and 33 g/t Ag over 47m; hole MDPC-096 with 1.6 g/t Au and 21 g/t Ag over 67m; and hole MDPC-102 with 1.1 g/t Au and 89 g/t Ag over 44m. In addition, Azure is continuing to undertake reconnaissance and follow-up work throughout the Alacran project where first pass surface sampling of historical dumps returned high grades of Au-Ag and base metals with maximum values of 24.1 g/t Au, 3,675 g/t Ag, 33.5% Pb, 21% Zn, and 2.3% Cu.
- Industrias Peñoles S.A.B.de C.V., commenced extraction and grinding tests at its Capela mine (former Rey de Plata mine) in Teloloapan, Guerrero. Capela mine is expected to begin operations in 2020 with a daily production of 4,500 tonnes per day. According to the general director of Industrias Peñoles, Fernando Alanís Ortega, the mine located in Teloloapan required an investment of USD $340M.
ON DEALS AND CORPORATE ISSUES
- Discovery Metals Corp., announced the appointment of its new VP of Corporate Development and Investor Relations (Cordero project, Chihuahua).
- Equinox Gold Corp., and Leagold Mining Corporation, entered into a definitive agreement to combine in an at-market merge, creating one of the top Au producing companies operating entirely in the Americas. The combined entity will continue as Equinox Gold. “Pursuant to the Transaction, Leagold shareholders will receive 0.331 of an Equinox Gold share for each Leagold share held (the “Exchange Ratio”). This implies at-market consideration of C$2.70 per Leagold common share, using closing prices for both Equinox Gold and Leagold common shares on the Toronto Stock Exchange on December 13, 2019. At closing, existing Equinox Gold and Leagold shareholders will own approximately 55% and 45% of the merged company, respectively, on an issued share basis”. (Los Filos mine, Guerrero).
- Goldplay Exploration Ltd., entered into a letter of intent (LOI) agreement with Mako Mining Corp. to acquire 100% of the shares of Marlin Gold Mining Ltd. (San Marcial project, Sinaloa). Marlin owns, amongst other assets, Oro Gold de Mexico, S.A. de C.V. , a Mexican company that owns the La Trinidad mine facilities, currently being decommissioned. Oro Gold also controls 100% of nine concessions totaling 104,094.5 ha located adjacent to Goldplay’s existing portfolio in the historic Rosario gold-silver Mining District, Sinaloa, Mexico. “Under the LOI, upon payment of $50K by Goldplay to Mako the parties have agreed to a binding exclusivity and non-solicitation period from the signing of the LOI until December 31, 2020, or such later date as the parties may agree, which is binding on the parties. Exclusivity will otherwise terminate on the early of the completion of the proposed acquisition or earlier termination of the LOI or the definitive agreement, as the case may be”. The terms of the transaction are subject to negotiation and will include a nominal cash payment to Mako and the issuance of a small NSR royalty to Mako on the concessions currently owned by Oro Gold. Goldplay will assume all remaining tax liabilities of Oro Gold.
- Oroco Resource Corp., presented results from its special annual general meeting of shareholders (Santo Tomás project, Sinaloa).
- Prize Mining Corporation, announced the resignation of its former CEO and the appointment of the new CEO (Manto Negro project, Coahuila).
- Mithril Resources Limited, entered into an exclusive option agreement to acquire all the issued share capital of Sun Minerals Pty Ltd., which holds an exclusive option to earn up to 100% interest in the high grade Copalquin Au & Ag project in Durango. Copalquin contains 32 known historic Au and Ag underground mines including the La Soledad and El Refugio mines. Historic drilling highlights project’s exploration potential with multiple high-grade drill intercepts including hole UC-03 at el Cometa mine with 45.16 g/t Au and 118 g/t Ag over 17.77m; hole UC-024 at El Refugio mine with 6.54 g/t Au and 140 g/t Ag over 7.9m; and hole MP-07-101 with 28.99 g/t Au and 2,350 g/t Ag over 4.53m.
ON SOCIAL RESPONSIBILITY
- The Zacatecas Mining Cluster (CLUSMING), held its second Talent Meeting with participation greater than the 30 people who previously registered to participate in the event. The goal of the Talent Meeting is to identify personnel with the skills and attitudes necessary for certain companies in the mining industry (mines and suppliers or contractors), and be part of a talent group that can be subsequently hired by companies, according to their profiles.
- The Ladies Committee of AIMMGM and Outlet Minero, promoted the environmental education in Zacatecas. Attendees gave a brief talk to the groups about culture for sustainable development, highlighting the importance of carrying out actions such as recycling and reusing objects to make new creations at school and at home. Likewise, about the importance of mining and its presence in objects such as pencils, benches, blackboards, among others, that makes everyday life possible. In this context, the Outlet Minero team organized a Christmas tree contest made with recycling and reused material.
- Grupo Mexico, promoted preventive measures against hydro metereologic phenomena in San Luis Potosi during the conference of preventive culture. Some emergency brigade collaborated in the event with five members, who gave prevention talks with the community of San Luis Potosí and made a demonstration with a fire truck and own safety equipment. SEMARNAT, Civil Protection, and San Luis Potosi Fire Department participated in this conference of preventive measures.
- Minera Peñasquito, held Christmas celebration in Mazapil, Zacatecas, where the company distributed thousand of toys in 25 communities belonging to the mine´s area of influence. “Minera Peñasquito is not just about removing the ore, about removing the Au. The responsible mining that we want to do cannot work without working with the community. For us being part of the community is a priority, throughout the year, with social investment, entrepreneurship or infrastructure works. It’s fundamental, “said Nelson Núñez, sustainability manager at Newmont-Goldcorp”.
- Minera Peñasquito, informed to the community leaders about the progress of the social programs that the mining company performs in the 25 communities of direct influence. Among the programs to be reported, the rehabilitation of houses in Nuevo Peñasco was highlighted in infrastructure, which benefited 22 people from that community, as well as maintenance of roads in Santa Rosa, Cuitláhuac, La Mejorada, Charcos, Cedros y Mesas, as well as the maintenance and operation of wells for human consumption in El Vergel and plants and wells in Mesas, Cedros y Charcos. Regarding social responsibility, the company informed about the project “Together We Left a Legacy” that improves the conditions of educational, social infrastructure and promotes sports. This year furniture was delivered to 17 schools to benefit 1,137 students, as well as Ejidos to benefit 310 people. There was talk of Peñasquito Open Doors, a program that offers guided tours so that members of neighboring communities know about the mining operation. 71 sports academies were also held, supporting 70 teams, with 1,224 beneficiaries where 830 uniforms were delivered. Another important item is the educational scholarships, which grant economic incentives to students from primary to university. There are two types of scholarships: by agreement, which in 2019 allowed the delivery of 411 supports, and scholarships of excellence, which is open call and that this year, benefited 192 students. For the entrepreneurs there is the “Ideas con Valor program”, for the creation and strengthening of micro businesses, which supported 120 families with the participation of 300 people. Through the ‘Local Employment Program”, 765 people from the communities surrounding the operation have been hired, who through specific training were able to develop the capabilities required for the mining operation.
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On the picture above, phyllic alteration in an IOCG project in Jalisco, Mexico. Photo by Miguel A Heredia.