Mexico's Mining Rebound to Be Driven by Metal Prices and the Sierra Madre Occidental Gold Belt

Mexico's Mining Rebound to Be Driven by Metal Prices and the Sierra Madre Occidental Gold Belt

PR Newswire

NEW YORK, Nov. 10, 2020

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NEW YORK, Nov. 10, 2020 /PRNewswire/ -- Held back earlier in 2020 by ongoing COVID-19 challenges, Mexico's mining sector is set for a major rebound spurred by a surge in metals prices. Much of the rebound will leverage the strong jurisdictions such as the Sierra Madre Occidental gold belt, which includes major producing mines such as the Mulatos Mine, which produced more than 2 million ounces of gold and generated more than $400 million in free cash flow since 2005. The Sierra Madre occidental range also contains a significant silver belt that's attracting investment and further exploration and development. The region is enticing international investment through a range of miners that includes Tarachi Gold Corp. (CSE:TRG) (OTCPK:TRGGF), Alamos Gold (NYSE:AGI) (TSX:AGI), Agnico Eagle (NYSE:AEM) (TSX:AEM), Pan American Silver (NASDAQ:PAAS) (TSX:PAAS), and Endeavour Silver Corp. (NYSE:EXK) (TSX:EDR).

With the right to acquire 100% of the high-potential mineral concessions known as the Tarachi project in Northwestern Mexico's Sierra Madre occidental gold belt is Tarachi Gold Corp. The project's significance is highlighted by previous exploration that delivered extremely high-grade drill results that included 34.5 g/t Au over 5.0 meters, 24.3 g/t Au over 3.0 meters, and 110.0g/t over 1.3 meters.

But perhaps more impressive has been recent channel sampling by Tarachi geologists that returned 6.34 g/t Au over 62.55 meters—which provides significant size and grade for future resource calculations. The company quickly answered those results with the announcement that it had begun its 5,000 meter diamond drilling program on the project at the end of August.

"Drilling is the most exciting phase of mineral exploration and the Company is looking forward to developing its understanding of the gold zones along strike and to depth and the potential in discovering new zones," said Tarachi CEO Lorne Warner. "The Company's recent geological and structural mapping and rock sampling program has provided new interpretations to the controls of the gold mineralization in several prospects which will greatly aid our drilling program towards success."

The project lies in the shadows of the Mulatos Mine owned by Alamos Gold (NYSE:AGI) (TSX:AGI), and the La India Mine owned by Agnico Eagle (NYSE:AEM) (TSX:AEM).

In 2020, Mulatos is projected to produce 140,000-150,000 oz of gold, at a total cash cost of US$840-880 per ounce. The profitability of the operation stands to increase with a forecasted gold price set to rally, as central banks around the world continue to flood markets. Ultimately, many see a $30 per ounce silver price, and a $2,000 per ounce gold price in sight.

Agnico Eagle had production costs of under $800, at $799/oz gold in 2019, producing 82,190 oz gold and 132,833 oz silver last year. In 2020, the company's guidance has those costs dropping to $790 across all their operations.

Looking to further capitalize on Mexico's gold rebound, Tarachi announced on October 15 that the company has entered into a non-binding letter of intent to acquire the Magistral del Oro tailing processing plant in Durango, Mexico. By acquiring this facility, Tarachi would potentially be able to take advantage of current high resource values by entering near term production and generating free cash flow.

Gaining Added Momentum on the Strength of Silver

While much of the attention on precious metals has been given to gold, it's Mexico's strength in silver that's largely responsible for its international mining presence. Mexico is the world's largest silver producer, producing 6,300 metric tons of the metal in 2019.

This has driven revenues for multiple mining giants, such as the primary-silver producing Pan American Silver (NASDAQ:PAAS) (TSX:PAAS), which is the world's 4th largest silver producing entity. According to the company's operations page, 31% of its revenue was generated from Mexico in 2019.

Two of the company's producing mines (La Colorada and Dolores) are located in Mexico, both of which are silver-gold producers—with La Colorada also producing zinc and lead.

Located in the heart of the famous Sierra Madre Mountains is the Guanacevi operation from Endeavour Silver Corp. (NYSE:EXK) (TSX:EDR). Back in June, the company intersected new high-grade gold-silver mineralization on the El Curso Property at the Guanacevi Mine in Durango, Mexico, which included 1,085 g/t silver and 3.25 g/t gold over 10 meters true width.

Back in April, the silver supply as a whole was placed in a jeopardizing situation, when Mexico halted mining operations. Between Mexico and Peru, almost 40% of the world's silver supply is derived.

However, by the end of May, groups such as Endeavour were able to restart their mining operations in the country. Pan American was quick to follow at the start of June.

Earning a 100%-Owned Mexican Mine the Right Way

At the end of August, Tarachi Gold Corp. announced the beginning of its 5,000 meter diamond drilling program at the Tarachi Gold Project in Sonora, Mexico.

The announcement was significant, given the potential for the project, and the company's goal of earning 100% of the project through a back-weighted 5-year option.

Recent channel sampling by Tarachi geologists returned 6.34 g/tonne gold over 62.55 meters from the historic La Dura mine underground workings. The company's next step is to initiate the exploration and drill test high-priority targets on the project for high-grade gold.

The district itself in 2019 produced more than 450,000 oz Gold. The Eastern Sonora Mining District has significant advanced projects with reserves up to 9.6 million ounces of gold.

The Tarachi Gold Project is strategically located, with multiple showings with high-grade open mineralization in channel samples and drill holes.

The 2020 exploration program is set to drill test several high-grade gold showings to determine their strike and down dip extents. It will also evaluate potential gold bearing structures previously untested by diamond drilling.

To get more information on Tarachi Gold Corp. please visit here.

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