Temascaltepec, Mexico — Tucked into the pine-covered hills of the Sierra Madre Occidental of central Mexico, a Canadian junior is in the process of turning its La Guitarra silver-gold mine into a profitable operation. The mine is a two-and-a-half-hour drive southwest of Mexico City in the Temascaltepec mining district, host to several mining districts with various types of base and precious metal deposits.
Gold and silver was found here by the Spanish in 1550 and was mined from several locations until the Mexican War of Independence in 1810. Mining resumed in the area a century later and continued until 1940 when the American-owned Rincon operation ceased production.
Exploration continued, however, and in 1991 Luismin S.A. de C.V., one of Mexico’s largest mining companies, opened the La Guitarra mine to exploit its silver-gold vein system.
At the time of the sale, control of Genco had recently passed into the hands of a group of financiers looking to enter the mining business via a project with both cashflow and growth potential. Temascaltepec fit the bill.
It contained a large land package once hosting producing operations, and numerous mineral showings, not to mention a producing mine on a 15-km-long vein system. The mine produced 902,956 tonnes of ore grading 3.72 grams gold per tonne gold and 278 grams silver from 1991 through the end of 2004.
The Temascaltepec district is underlain by Jurassic metasediments that were intruded by Early Eocene granites. All these rocks in turn are overlain by andesites and rhyolites of Middle Eocene age. A quartz vein system hosting silver-gold mineralization intruded the sequence and was then covered in low topographic areas by Miocene basalt flows. The basalt-covered areas are now prime exploration targets for hidden vein-type mineralization.
The gold and silver from the Temascaltepec district came from bonanza-type mineralization; historical production reports refer to grades in the range of kilograms of silver and tens of grams of gold per tonne.
The bulk of current ore has been extracted from the La Guitarra vein system, which strikes northwest-southeast and dips steeply northeast. The vein has a maximum thickness of 20 metres and contains silver- and gold-rich ore shoots 1-4 metres in thickness. Vein mineralogy consists of silver sulfosalts and tellurides with some free gold in banded quartz, calcite, fluorite, barite and pyrite.
The discovery by Genco of the San Rafael zone, 300 metres southeast of the La Guitarra vein system, is further evidence of the bonanza nature of the district. The discovery hole in the San Rafael zone returned 786 grams silver per tonne and 39.8 grams gold, over an estimated true width of 6 metres. This blind discovery is now open on three underground levels and supplies about 20% of the mill feed. The San Rafael ore has increased the head-grade to 317.13 grams per tonne silver and 7.22 grams gold from 10,596 tonnes, a significant increase over the previous average.
“This grade difference is due to the fact the San Rafael zone has never been mined and the La Guitarra vein has a mining history going back 350 years,” explains Genco President Jim McDonald.
The operation employs 119 workers and seven managers. There are three shifts per day, six days per week, while the mill operates 10 hours per day, seven days a week.
The mine is accessed from surface by ramps. Underground, there is one CP 65 short-hole drill, a Diamic 252, and 14 jack-legs. A Tamrock jumbo is used for drilling off ore for blasting. Six scooptrams feed three low-profile 10-tonne trucks that deliver ore to the mill. As production increases, more ore can be stored on surface and blended as required.
The mill has a capacity of 340 tonnes per day but was processing about 110 tonnes when Genco acquired the operation. Current throughput is 140 tonnes, but this is expected to increase to 200 tonnes by year-end with the development of new faces. Genco projects that the increase in production, combined with higher grades, would allow the company to produce about 1.5 million oz. silver-equivalent annually. At full capacity, or 340 tonnes per day, annual production could reach 2-4 million oz. silver-equivalent, depending on grades.
In the mill, ore undergoes primary and secondary crushing using jaw and cone crushers. It is then ground in three parallel ball mills. The ground ore is treated in a flotation circuit that produces about 12 tonnes of concentrate per day. About 300 tonnes of concentrate, grading about 4,900 grams silver per tonne and 85 grams gold, is trucked in 10 shipments per month to Wheaton River’s San Martin refinery, a 4-hour drive north.
Genco’s goal is to prove up two to three years’ worth of reserves, while at the same time bringing mine production to capacity. Given new insights into the geologic controls on silver-gold mineralization, Genco’s management thinks it can find enough reserves within sight of the mill to expand production to reach 700-1,000 tonnes per day.
Development of the San Rafael deposit has resulted in increased grades and better gold recoveries. These developments went straight to Genco’s bottom line. The quarter ended March 31, 2005, proved a record for Genco: silver production increased 5.44% to 93,516 oz. and gold production increased 220.95% to 2,238 oz., compared with the same period last year. Net income was $381,784 compared with $95,492 in the year-ago period.
Genco plans to use the increased cashflow to help finance more exploration in the vicinity of the mine, as well as at the nearby Temascaltepec and El Coloso projects.
The 2005 exploration program is aimed at building reserves and consists of underground and surface exploration for the mineralized extension of the San Rafael deposit. Four areas around La Guitarra will be explored by drifting and drilling from underground. Several induced-polarization surveys are being conducted in the vicinity of La Guitarra.
Genco will also explore its extensive land holdings in the district. The numerous historic pits, shafts and adits throughout the property offer excellent access for sampling underground. According to chief mine geologist, Jesus Perez, miners working in the ancient stopes at La Guitarra occasionally come across tools left behind by Spanish miners. In the 16th century, not far from some ancient workings, the Spaniards built a smelter. It remains well-preserved and serves as a testament to Spain’s commitment to extract mineral riches from the New World.
In the southeastern part of the property, known as the Temascaltepec project, sampling is under way on veins once mined both by the Spaniards and the Rincon operation. The earlier-worked veins probably have better potential for yielding new reserves, as the Spaniards employed limited technology. Previous mining efforts also had to contend with excessive water in the stopes, a problem solved more easily now.
Northwest of La Guitarra, on the El Coloso project, the Nazareno vein is thought to contain 30,000 tonnes of reserves. Underground crosscutting will be carried out to develop new veins and provide a better understanding of the known ones.
As production and cashflow increase, Genco will focus on exploring the 95% of its land holdings in the area that have not been explored by modern methods. The junior hopes to eclipse the success achieved by those who worked the ground in this historic mining district long before the Vancouver-based junior set foot here.
— The author is a Toronto-based freelance writer and geologist.
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