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Why Great Panther's Mines Make Sense for GSilver
Written by Sam Williams, BNamericas
Published Tuesday, July 12, 2022
Guanajuato Silver's planned acquisition of Great Panther Mining's Mexican assets will deliver a swift and sharp rise in silver equivalent production for the company, which is seeking mid-tier status in the Mexican silver space.
Vancouver-based Guanajuato Silver (GSilver) aims to restart operations within weeks at the San Ignacio and Valenciana (formerly Guanajuato mine complex) mines, CEO James Anderson tells BNamericas, after the assets were suspended in November due to a lack of tailings capacity, with ore transported to the company's El Cubo facilities for processing.
The transaction, for an upfront consideration of US$14.7mn, will also see the company acquire the operating Topia silver-lead-zinc mine in Durango state, where it plans to deliver operational improvements.
The result will be a jump from 1.8Moz/y silver equivalent production – once El Cubo is ramped up – to 3.4Moz, and potentially up to 6Moz/y, according to Anderson.
BNamericas: What attracted you to the Great Panther Mining assets in Mexico, and what are your plans for them?
Anderson: They can be immediately accretive to our business. The assets that we're buying in Guanajuato were in production until November last year. The only reason they had to be shut down was because Great Panther ran out of tailings processing capacity near their Cata plant. We don't have that constraint. We can start mining at both San Ignacio and Valenciana in, I keep saying, three months, but really I think it's within weeks, and start hauling material to El Cubo, where our plant is.
We run the El Cubo plant at about 30,000-32,000t per month but in 2018 Endeavour Silver was running it at about 55,000t. We can certainly get up to 40,000-42,000t per month and at that moment we can be taking good grade material from San Ignacio, from Valenciana, from Cubo, and not put too much pressure on any of those mines. For this very modest price we're buying three mines and two processing facilities.
The other mine, Topia, in Durango state, it's a little further afield for us. It's a silver-lead-zinc mine. It's been in operation almost continuously since the 1940s, when Industrias Peñoles had it. It's a great mine.
If you look at the component pieces here, there's two mines and a processing facility in Guanajuato, but they don't have any tailings capacity. Which other mining company would want those assets? For us they make sense. Topia is operating right now, producing a high-grade lead and silver concentrate that they sell to Samsung. Samsung are very desiring to continue purchasing that concentrate. It's never going to be a big mine. Who else would want to buy it? There's only so many different players… it makes sense to GSilver in a way that it doesn't to many other participants.
BNamericas: Is the plan to hang on to Topia?
Anderson: We want to hang onto it for the foreseeable future. It's very remote, up in the mountains, about a seven-hour drive from Durango city. There's a tiny airstrip and a town of about 3,000 people. I think that we can mine and operate it better.
BNamericas: Can you give me an idea of how important the Great Panther deal is for the company?
Anderson: We go from two mines, or really one and a half, with El Cubo and Pinguico where we have been taking material off the surface from an old waste dump, to five mines, from one processing plant to three. There's a dramatic increase in our silver equivalent measured and indicated resources, and we go from 1.8Moz/y silver equivalent production to 3.4Moz/y. That number we feel we can drive into 5-6Moz/y range as early as next year.
BNamericas: You recently reported discovery of high-grade tailings at El Cubo. What are the potential implications of that?
Anderson: There are several potential implications. In the immediate term we continue to do tests to make sure we know exactly the best way to process this material. Depending on the different processes we use we get very different recoveries. Most of the values in that material are in the form of free gold. How do we cost effectively remove the free gold, and hopefully some of the silver, and get us to a target of 60-65% recoveries from this stuff? We're using shaker tables, or more modern equipment, with concentrators. There are a whole bunch of tests we've done and we're really close to coming to a conclusion about which one works best. [We're aiming for] low capex, low opex, and that's going to drive extra revenue. In the medium term, we believe there are going to be other places we can use this new thinking and technology. There's a lot of free gold in these veins in Guanajuato. There are tailings facilities that are 40 years old, or 140, throughout the district and once we get ourselves set up in this revenue stream there could be lots of opportunities. Some of those concessions are at Topia, but most are in the broader Guanajuato area. [With the Great Panther deal] we go from 7,000ha to 18,000ha in the Guanajuato area. The other thing we're doing as we take mineralized material of that tailings area, that immediately frees up tailings capacity that we could use for our ongoing operations.
BNamericas: How is El Cubo performing and how much do you expect to produce there?
Anderson: We're ramping up to 1.8Moz/y. We're not quite there yet. We're at a run rate now of about 1.3-1.4Moz silver equivalent. In 4Q21 we produced about 250,000oz silver equivalent, in Q1 we did 275,000oz. In Q2 I would say we'll be just over 300,000oz. The ramp up is continuing. It's perhaps not quite as steep a ramp-up as we planned but we're producing month-on-month more ounces of silver at lower cost. ...
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