Minaurum’s ‘drill to kill’ plan expected to pay off at Alamos Silver in Mexico

Minaurum Gold (TSXV: MGG; US-OTC: MMRGF) is planning to put together a first resource next year at the Alamos Silver project in Mexico, the company said in an early November interview with The Northern Miner. 

Billing itself as a “discovery generator” armed with stacks of data and financial backing, the goal is to release a resource by the third quarter. It’s been involved with the project since 2016 and earned full ownership in September 2022. 

“We’re reaching that pivotal point where in the next year we’re going to be focusing on that first resource classification,” Sunny Pannu, Minaurum’s investor relations and corporate development manager, said. “The company’s founders, Peter Megaw and the late David Jones, laid the foundation for Minaurum’s drill-to-kill philosophy.” 

The project received a major endorsement when the Mexican Federal Environmental Authority (Semarnat) extended the environmental impact statement (known as the MIA) for 30 years in June, allowing Minaurum to develop Alamos Silver. 

With a permit to mine on a pre-resource asset in hand, Minaurum’s narrative is, in essence, a reverse take on the traditional junior’s journey from discovery and exploration, then outlining resources before applying for permits. Minaurum acquired the existing Alamos Silver operating permit as part of its strategic focus on Mexico’s district-scale, high-grade silver and gold projects. 

Given its historical mining activity and lack of modern exploration before Minaurum’s involvement, the Sonora-state project represents a significant opportunity to discover and develop silver resources. 

Discovery potential

Underpinned by a storied mining history dating back to the 1600s, the Alamos Silver project blew up for Minaurum in 2017 with the discovery of the Europa Guadalupe vein, which yielded a bonanza-grade hit of 1.7 kilograms of silver over 8.2 metres. The Northern Miner visited the project in 2018. 

A boulder discovered at Promontorio, measuring about a meter in size, was found to contain high levels of silver, gold, copper, lead, and zinc, indicating the rich mineral resources that early miners exploited in the area. Credit: Minaurum Gold

Since 2016, Minaurum has drilled 42,000 metres, identifying 26 veins, 19 of which it drilled, and 13 returned high-grade mineralization. While it’s taken time to make progress towards a resource, these results validate the district-scale potential and predictable nature of the vein system. 

The company plans to undertake focused infill drilling targeting the Europa Guadalupe, Promontorio and Minas Nuevas veins next year. This strategic drilling is slated to start in the first half of 2024 and the budget is yet to be finalized. 

In 2022, Minaurum shifted its exploration focus from the surface to the underground, undertaking a complete rehabilitation program at the Promontorio mine — one of the district’s largest historical silver producers. This shift allowed the team to access old workings that were previously out of reach, resulting in high-grade silver and gold samples. 

Some of the most impressive results from mine backfill sampling included grades up to 308 grams silver and 5.7 grams gold per tonne, with one notable surface dump boulder showing assays of 3,320 grams silver and 54.7 grams gold. 

As the team refurbishes historic shafts to reach lower and higher-grade levels of the mine, Minaurum’s focus on underground stabilization, dewatering, and detailed sampling will inform the 3-D-geological model underpinning the upcoming resource estimate. 

Minaurum adheres to a simple exploration philosophy, Pannu says. Prospects must demonstrate substantial resource potential or face divestment. Since 2011, this strategy has led to four significant discoveries.  

Legal advantage

Pannu says the May revision of the Mexican mining law will not materially impact Minaurum’s operations but add to its pre-resource-but-permitted-in-Mexico advantage. 

“We have an MIA permit in hand already. It’s not in process; it’s already granted,” he stressed. 

Pannu implies that because Minaurum has secured a production permit, which has been extended under the restrictive mining policies of President Andres Manuel Lopez Obrador, the company is less likely to be affected by changes in the mining law. 

Minaurum has effectively grandfathered its project under the previous regulatory regime, giving them a more predictable operational framework. 

The Alamos project boasts a complete infrastructure package, benefiting from being close to one of Mexico’s largest copper-silver mines. 

The company has also enhanced the team by appointing Reuben Padilla, credited as part of the team that discovered the Escondida mine in Chile, to the board in November. 

“We want to add more depth to our technical expertise,” Pannu said. 

On the financial front, Minaurum has around $1.2 million cash in the bank after raising $800,000 in November. The company is backed by major shareholders such as US Global, CrestCat Capital, Sprott Asset Management, and European family offices. 

The next project in Minaurum’s pipeline is the Santa Marta copper project in Oaxaca, which awaits drilling permits. Pannu described it as “potentially the next major copper discovery.” 

Despite a recent uptick, at 15¢ per share before press time, the company’s Toronto-quoted equity is down 20% over the past 12 months, touching 11¢ and 29¢. It has a market capitalization of $67.3 million.