Starcore has had ‘a big year,’ CEO Robert Eadie says

Starcore International Mines (TSX: SAM), the owner of the San Martin gold-silver mine in Queretaro, Mexico, has added seven assets to its portfolio over the past year.

“The company went from having one mining property and one real estate property to having eight mining properties and one real estate property. So last year was pretty big for us. It was a banner year,” Robert Eadie, Starcore’s president and CEO, says in an interview.

Starcore has made three acquisitions in the past year, with the latest being an all-share purchase of Cortez Gold.

Under the deal, which closed on Aug. 10, Cortez shareholders received three Starcore shares for each share held, or 28.7 million Starcore shares in total.

In exchange the miner received Cortez’s prized asset: the Altiplano gold-silver processing plant in Matehuala, Mexico.

Starcore will use the plant to process gold-silver concentrates from small- to medium-sized mines into doré bars, for a fee.

Eadie says the plant could generate between $4 million and $6 million of income in the first year, and a bit more once it reaches full capacity. Starcore intends to commission the plant soon.

The miner is also offering 15.9 million shares priced at 14¢ per share to settle Cortez’s outstanding US$1.5-million debt. The debt relates to outstanding loans Cortez took on in 2014 to build the Altiplano plant. Starcore expects to have 197 million shares outstanding once it pays that off.

In February 2015, Starcore bought the bankrupt firm Creston Moly for $2 million. Formerly a subsidiary of Mercator Minerals, Creston Moly owned three molybdenum-copper projects, with the most advanced being El Creston in Sonora, Mexico. “It’s a $194-million project, which we bought for $2 million,” Eadie says.

Starcore kicked off its fiscal 2015 shopping spree with an all-share takeover of American Consolidated Minerals last December. Under that deal, three American Consolidated shares were exchanged for one Starcore share, totalling 5.9 million Starcore shares.

Through this transaction, the miner received three exploration projects, including the Toiyabe gold property in Nevada and a 50% interest in the Sierra Rosario project in Sinaloa, Mexico.

While the company intends to joint-venture some of its newer assets, San Martin remains its sole producer. 

On Aug. 19, Starcore reported a 6% improvement in quarter-over-quarter production at the San Martin mine.

For the fourth quarter ending in July, the mine churned out 4,694 equivalent oz. gold from 77,279 tonnes grading 2 grams gold per tonne and 19 grams silver per tonne.

The equivalent gold production is up 6% from the third quarter’s 4,400 oz., partly due to a 13% increase in silver grades. Gold grades stayed relatively flat over the quarter.

While the recently discovered high-grade manto mineralization has contributed to the improved quarterly performance, the company has also increased sampling and attention to detail when it comes to processing, Eadie says.

For the 12 months ended in July, Starcore churned out 19,635 equivalent oz. gold, down 18% from the same period last year. The drop likely resulted from lower overall gold and silver grades.

Over the period, it processed 311,897 tonnes at 2.14 grams gold and 18.24 grams silver, compared to 308,610 tonnes averaging 2.55 grams gold and 24.2 grams silver a year earlier.

Eadie says grades could return to 2013–14 levels by the end of this year. He highlights that for the fiscal year ending in July, Starcore reduced its operating costs and improved its operating efficiency. The 2015 financial results should be out in November.

In the near term, Eadie says the company intends to focus on its San Martin operation, commission the Altiplano plant and sell the real estate property that it received through its 2007 acquisition of San Martin. He adds that the miner is still open to new acquisitions.

The stock closed Sept. 1 flat at 10¢ per share.