Vizsla says kidnapping halts Panuco project in Mexico

Canadian mine developer Vizsla Silver (TSX, NYSE: VZLA) suspended some work on its flagship Panuco silver-gold project in Mexico’s Sinaloa State after 10 people were taken from the site. The stock plunged.

The incident is under investigation and information remains limited, Vizsla said late Wednesday in a statement. Local authorities have been notified and crisis management and security response teams are actively engaged, the company added.

Certain activities at and near the site have been temporarily halted as a precautionary measure, the Vancouver-based company said without elaborating. Vizsla’s immediate priority is the safety and well-being of the individuals involved.

Vizsla shares plunged 15% to $7.88 Thursday morning in Toronto, slashing the company’s market value to about $2.7 billion (US$2 billion). The stock has traded between $2.40 and $9.82 in the past year.

Armed commando

For months now, Sinaloa has been caught up in an armed conflict between rival factions of the namesake drug cartel. This has led to a surge in homicides.

The kidnapping took place last Friday, according to a message on X (formerly Twitter) posted by Mexico’s Association of Mining Engineers, Metallurgists and Geologists. An armed commando broke into the La Clementina neighborhood, where the workers were staying, and abducted them, Mexico’s El Financiero newspaper said Wednesday evening, citing local media reports.

“We express our deep concern over the illegal deprivation of liberty, by unknown persons, of 10 mining industry professionals who were performing their work honestly in the municipality of Concordia, Sinaloa,” the association said in its post.

The victims include engineers and technical personnel working for Vizsla, El Financiero says.

Cornerstone project

Located near the city of Mazatlan, Panuco hosts the world’s largest undeveloped, high‑grade silver resource. It’s the cornerstone of Vizsla’s goal of reaching production of 50 million silver-equivalent oz. by 2035.

Panuco holds 12.8 million proven and probable tonnes grading 2.01 grams gold per tonne and 249 grams silver for contained metal of 829,000 oz. gold and 102.7 million oz. silver, according to a 2024 resource.

Vizsla wants production at Panuco to start in the second half of 2027. With permitting and project financing efforts advancing, it’s targeting a construction decision as soon as it has received the required approvals – probably in this year’s second half.

Vizsla is projecting a mine life of 9.4 years for Panuco. The mine is expected to produce 17.4 million silver-equivalent oz. a year over the life of the project at an all-in sustaining cost of $10.61 per silver-equivalent ounce. This includes more than 20 million silver-equivalent oz. annually during the underground mine’s first five years.

Panuco has an after-tax net present value of US$1.8 billion ($2.4 billion), an internal rate of return of 111% and a payback period of seven months, Vizsla said in November, citing a new feasibility study. The key financial metrics, which assume US$3,100-per-oz. gold and US$35.50-per-oz. silver, exceed those from a July 2024 preliminary economic assessment.