“Is it a mine?” is GR Silver Mining Ltd. (GRSL.V) CEO Marcio Fonseca’s constant question as he leads the exploration of the Rosario Mining District in Sinaloa, Mexico. “We’re very close to saying yes,” said Fonseca in a telephone interview.
GR Silver already has an NI 43-101 compliant resource at San Marcial which is a near-surface, high-grade silver, lead, and zinc project. Now Fonseca is looking to bring out the first NI 43-101 resource at its recently acquired Plomosas Silver Project. “We’re close to a resource estimate,” said Fonseca. “Likely by the end of the first quarter of 2021.”
The resource estimate for Plomosas will incorporate results such as those released January 5, 2021. The Plomosas Mine Area, one of the two areas in the Plomosas Silver Project undergoing resource estimation, has underground workings from earlier mining interrupted in 2001 and this has allowed GRSL to drill from underground drill pads, instead of deploying capital for underground development. This means the company can reach its new targets more quickly and cost & time effectively. In this release, Fonseca summed up the results, “These are extraordinary drilling results from the Plomosas Mine Area, indicating potential for size and scalability in the geological model to host attractive precious and base metals mineralization in areas close to existing underground development. We will continue with underground drilling in the vicinity of this polymetallic mineralization in 2021 and will also apply the technical knowledge to look for similar mineralization in other targets in the Plomosas Silver Project.”
What is emerging is the fact Plomosas Silver Project is a polymetallic high-grade Au-Ag-Pb-Zn hydrothermal breccia. There is high-grade gold and silver low sulphidation epithermal vein mineralization and, more recently, the company has discovered copper as well. “We are taking samples so that we can determine if we can recover that gold and silver by modern leaching technologies prior to future processing of polymetallic mineralization undergo concentrate metallurgical flowsheet.”
The investigation of Au and Ag recoveries in polymetallic mineralization is a key question when pursuing an increase in economic return during engineering studies of polymetallic projects. Normally a base metals operation produces a concentrate which is a combination of all the metals. This concentrate is sent to a smelter and the metals are separated. However, usually, the recovery of precious metals from concentrate is very low, 40 to 50%. “By studying the application of modern and well-used leaching technologies in the material, we are looking at improving that recovery by +35%.,” said Fonseca. “Our gold grades vary from hole to hole and some of our silver samples grade up to 1000 grams per ton silver. We hope that by achieving potential positive leaching results we will materially increase what can be defined as value in dollars to each ton we mine based on recoverable metals.”
Finding out if the precious metals can be leached is important to the NI 43-101 resource estimate, as recoveries will be applied when defining the potentially extractable material when reporting the resources. The better the potential recovery the larger the potential resource.
GRSL has the advantage that it has the data from previous, unreported, drilling on the property which it can use to guide its own drilling and incorporate into the overall model and applying a lot of the knowledge gained in the last 12 months can bring additional discoveries. “We’re looking at other zones,” said Fonseca. “Previous companies did not fully investigate some very interesting areas. We may just be looking at the tail of the elephant. But we are pretty sure we have found a robust, large footprint, high grade, system. We’ll be doing a lot of drilling in the first quarter of 2021 and bring a good news flow to the market.”
Defining and extending the resource at Plomosas is one element of GRSL’s overall strategy. “The really successful companies control whole districts,” said Fonseca. “We’re very close to completing another asset acquisition in the Rosario district.” GRSL is already the dominant company in the district and Fonseca maintains “You can add value by controlling a district.”
There is quite a difference between exploring to find a mine and actually building a mine. A fact that, as a former investment banker, Fonseca is very aware of. Asked if GRSL would be looking for a joint venture partner on one or more of its projects he said, “That is one way to go but we’d prefer a strategic partners.”
Which is interesting because GRSL already has First Majestic Silver as a 19% shareholder. A position which is normally seen as a strategic partnership. At the same time, however, other companies are paying attention. “I get calls from geos at other companies,” said Fonseca. “They understand the releases.”
Fonseca has taken pains to ensure that there is a consistency in GRSL’s releases. “We give our numbers in grams per ton silver equivalent. We have done that since the beginning. Then we can break out the gold, silver, lead, zinc and copper,” said Fonseca. “We use conservative values $1600 per ounce gold, $16.50 per ounce silver. We will update further the commodity prices used in the calculation as we continue into the precious metals bull cycle. When we do the resource estimate we’ll certainly use a consensus number based on a basket of commodities forecast assumptions reported by experts in the industry.”
I have a small position in GRSL. I am a bit ahead on the investment but will be holding for some time. As Fonseca points out, the company will “update further into the precious metals cycle”. That cycle is just beginning, and GR Silver is poised to take full advantage of the likely rise in the price of silver and gold..