We’ve written before that GR Silver Mining Ltd. (“GR Silver Mining”) (formerly Goldplay Exploration Ltd.) (TSX-V: GRSL) CEO, Marcio Fonseca, is both a geologist and a former investment banker. It is a formidable combination and was front and centre in the company’s January 7, 2020 press release announcing a letter of intent in which GR Silver Mining would acquire a First Majestic Silver subsidiary which owns the past-producing Plomosas Silver Project. This project is located 5km from GR Mining’s San Marcial Silver-Gold Project in the historic Rosario Mining District in Sinaloa, Mexico.
In that release, Fonseca stated, “We are delighted to continue toward our corporate mission of becoming the first company ever to consolidate key assets in the Rosario Mining District. GR Silver Mining is poised to secure an attractive resource stage expansion portfolio with excellent infrastructure for future project development. The extensive exploration and drilling database combined with historical operational data provides a wealth of technical information (geology, geochemistry, geophysics, drilling, Landsat/structural studies, historical metallurgical and operational data) on the Plomosas Silver Project. The value of the extensive database and potential upside of this asset cannot be understated, as it provides an opportunity for GR Silver Mining to achieve new discoveries and delineate new resources in the Plomosas Project, especially given the potential of expanding the mineralized trend in the district from 6 km to 31 km”.
Fonseca goes on to explain where GR Silver Mining can add value, “Our recent success expanding the resource at the San Marcial Silver-Gold Project has brought fundamental knowledge of the geological controls of the silver and gold mineralization in the Rosario Mining District. This knowledge will allow GR Silver Mining to implement a cost-effective exploration program at the Plomosas Project in 2020”. GR Silver Mining will also continue its drilling and exploration program at San Marcial in 2020. Currently, the company is accelerating underground development to support the resource expansion drill program.
Since it has been exploring in the Rosario Mining District, GR Silver Mining has developed knowledge and a set of skills to support a cost and time-effective approach to drilling and maximizing the potential for discoveries and resource expansion. It has identified and drilled a number of targets at its San Marcial Project, increased its 43-101 compliant resource estimate by 60% and made further discoveries along a 6-kilometre trend. Most of all, the company has proven itself a successful, efficient and low-cost explorer. Facts which were not lost on First Majestic.
Keith Neumeyer’s First Majestic Silver (T.FR) has become a preeminent silver miner in Mexico with six producing mines. It acquired the Plomosas Project when it bought out Silvermex Resources in 2012. From First Majestic’s perspective, the Plomosas Project, while very attractive, was not an exploration priority.
The deal took some time to complete with the first Non-Disclosure Agreement signed in March 2019.
“Everyone is asking why First Majestic is selling,” said Fonseca in a phone interview. “In fact, First Majestic approached us. They knew we had been working on the same geology at San Marcial, and we have been successful delineating discoveries and new resources at low cost.”
“There is a camp and infrastructure and high voltage power at the Plomosas Project.,” said Fonseca. “There was lots of drilling, including 133 more recent drill holes representing close to 8.5 million US dollars but no resource. All this can allow GR Silver mining to achieve definition of new silver gold resources at the Plomosas Project.”
“With this deal, we get all the data, the camp, the infrastructure,” said Fonseca.
“Plomosas was not a core asset for First Majestic,” said Fonseca. “We can add value to the property faster than First Majestic can. We want to get to a resource estimate quickly.”
In exchange for its Plomosas Project First Majestic will receive shares in GR Silver Mining Ltd. which will take its ownership stake to 19.9%. “These shares are escrowed and First Majestic has agreed to vote with GR Silver mining management for two years,” said Fonseca. “However, nothing in the deal blocks another company from coming in as we deliver more results and continue to prove the upside potential in the district.”
Fonseca won’t say it, but the effect of the First Majestic deal is a huge vote of confidence in GR Silver Mining from a knowledgeable, major in the Mexican silver world. Fonseca’s strategy of adding value by acquiring high grade, low cost, silver assets seems to have paid off.
If that was the only GR Silver deal it would be hugely significant, however, on December 17 – in the middle of the Christmas lull – the company announced a Letter of Intent agreement with Mako Mining to acquire nine concessions totalling 104,094.5 ha as well as the La Trinidad mine facilities located adjacent to GR Silver Mining’s existing portfolio in the historic Rosario gold-silver mining district, Sinaloa, Mexico.
The effect of the First Majestic and the Mako agreements is to make GR Silver a leading mining company in the Rosario gold-silver mining district. Which brings us to the name change.
As of January 9, 2020, Goldplay Exploration changed its name to GR Silver Mining to emphasize its focus on more advanced stage silver mining projects in the Rosario Mining District, Mexico. Its trading symbol will change from GPLY to GRSL.
I asked Fonseca why “GR”? “Gran Rosario”, said Fonseca.