Reaching Marcio Fonseca, CEO of Goldplay Exploration (V.GPLY), at the Beaver Creek Precious Metals Conference, gave us an opportunity to discuss the company’s San Marcial project where the company has been reporting a steady stream of drill results. The San Marcial project in the historic Rosario Mining District in Sinaloa, Mexico.
“When we bought the mine from SSR Mining Inc. I knew it had a multi-million ounce potential,” said Fonseca. “It is right next door to First Majestic Silver’s Plomosas project. We realized there was a potential for a high-grade open pit project and expansion to underground and lots of upside exploration potential.”
Fonseca’s confidence was well supported by the Rosario District long mining history and the fact there was a historic 43-101 Technical Report on the property indicating 30 million silver ounces equivalent (indicated + Inferred). “And there were 50 historic holes,” said Fonseca, “Lots of historic holes. So, we wanted to sample the historic holes.”
Goldplay immediately started implementing a sampling program of historic holes as 22 of them were not fully sampled in the past, giving the company a cost-effective way to very quick update and expand the resources targeting between 45 million and 60 million ounces of silver equivalent.
Since the beginning of September the company has reported drill results on September 4 when Fonseca commented, “Consistent high-grade, near-surface silver results returned from the sampling of historical holes at the San Marcial Project continue to encourage the Company. Goldplay’s drill core sampling program is advancing rapidly, and an updated resource estimation is scheduled for completion in the December quarter of 2018.”
On September 18th the company reported more drill results and Fonseca commented, “The San Marcial exploration program continues to deliver near surface, wide and high-grade intersections supporting not only open pit, but also underground, potential. We have now received information confirming continuity of a mineralized system for more than 200 meters down dip, beyond the extent of the historic resource, as well as the discovery of a sub-parallel mineralized system that has the potential to expand the resource, generating new Ag-Au drilling targets…”
On September 27 Goldplay reported the results from its sampling of core from historic drill holes. Here Fonseca commented, “The sampling of historic core at San Marcial continues to deliver positive results at shallow depth. The width and high-grade results in the mineralized zone not only indicate the attractive potential for future open pit project development but also encourage the Company to pursue deeper drilling to support underground potential.”
“We’ll have a continuous news flow,” said Fonseca. “We are doing more exploration And we are identifying new mineralized zones outside of the historic 43-101 resource area, supporting the potential to expand the resource at depth and along strike.”
“We are confirming the upside potential,” said Fonseca. “The goal is to have an updated 43-101 resource by the end of the year.”
Based on that updated resource Goldplay is planning on doing its Preliminary Economic Assessment (PEA) which Fonseca expects will contain an attractive high-grade silver project with lead, zinc and gold credits and lots of upside exploration potential. At the moment they have already additional 14 exploration targets outside of the historic drilling areas.
Fonseca it looking at an open pit development potential to begin. “The mineralized area is wide enough and with high grade at surface with good continuity down dip supporting an open pit concept,” said Fonseca. But then Fonseca puts on his investment banker hat, “We want to be advanced enough to move to the development stage,” said Fonseca. “We want to define attractive valuation for this project and consequently to Goldplay’s investors.”
An open pit mine with the possibility of an underground component and plenty of room to grow the resource is an attractive opportunity. Especially as the property itself only cost 2.5 million dollars to acquire. All the more so as the current target zone is only the beginning of a 3.5 kilometre run of land much of which is highly prospective.
Fonseca told me in our last conversation that he’d spent ten years as a banker looking at projects and asking, “Is it a mine?”. So, I asked him if the San Marcial project “could be a mine”.
“Yes,” said Fonseca. “But how big?”
The results coming out in the next few weeks and months will give the market a clearer idea of just how big San Marcial is likely to be. Shareholders, looking at a current 7-million-dollar market cap are going to be doing back of the envelope calculations about what their shares would be worth if the market cap went to 50 or 100 million. And it would not be surprising if Goldplay’s next door neighbour, First Majestic, was taking a very hard look at buying the San Marcial project, or Goldplay itself, outright.
For the moment, Fonseca is running an exploration program at San Marcial, including preparation of a modern resource model for the San Marcial project. Which means lots of news for the market over the next few months.