Notes from my visit to the Nuestra Senora Mine in Mexcio with Scorpio Resources:
I am finally getting caught up again this week and have begun writing my article on SPM, but there are many details that I won't have room to include in the story, and I wanted to share some of the info that may be of interest to investors here.
The mine itself is located in a series of jagged limestone ridges, with a narrow dirt road servicing the area. There is some difficulty during the rainy season washing out the road, but otherwise it is about an hour and a half to drive from the mine office to the top of the ridge where the Candalaria Mine is located. It is only about half an hour to drive to the lower end of that ridge to visit the Nuestra Senora Mine, and the road is a bit better for that part of the trip.
The Candalaria Mine is located about 150 meters above the Nuestra Senora, and given the lack of good road access the engineers have decided to just sink a decline ramp from the lower workings to connect with the Nuestra Senora internally. This is also appealling because it means they will likely encounter ore zones along the way as part of this development, and also will open up new drilling stations for further exploration.
I witnessed for myself how you can walk along for hundreds of meters underground with just barren host rock, and then suddenly come upon a zone of breccia with very high grade sulphide mineralization that can go on for meters. There are also clearly defined, wide vein structures that have been opened up by drifting, and drilling has verified that they extend for dozens of meters.
Within the old workings of the mines there are several areas that have been mined out, amounting to huge volumes of rock, so knowing that so much ore remains to be produced is an eye opener once you have seen the wide caverns of past production. One particular part of the mine near surface, from about the 3rd level, has been blasted away all the way to the surface, for about 30 meters in width, and probably 50-75m high. The remaining rock has very high assay values, so there is on doubt that the entire property has the potential to produce a huge tonnage of ore as they continue to follow the structures that generate the deposit.
The rock supporting the mine workings is very strong, and even some areas that have been excavated over 100 years ago remain in place with no cave-ins. That is important as it means that the operations will be less likely to suffer interuption from unstable rock falls, or require significant bracing as they extend development.
The town is supportive of the mine, and the company is going out of their way to be good corporate citizens, by hiring local workers, funding a local university classroom, and they are even building a new access road to the mill site so that trucks do not have to disturb the local residents that live along the main road. Water quality monitoring was underway while I was there, and they are not contributing any pollution to the environment. The company has also funded the construction of a new bridge and they will contribute to help clean up some toxic tailings that were left by a previous operator of the mine, although it is not their liability.
The property is very large, and has seen almost no exploration except for the small area near the existing mines. This property would probably represent an entire mining camp if it was located in Canada, with many companies exploring the hell out of it. In Mexico, we have title to the entire district, with no back in rights, so there will be ongoing opportunities for growth even after they have developed the current mines. The mill is being constructed so that it will have potential for increased capacity to allow for new mines to be built in the area.
SPM is getting a very thorough understanding of the structural controls that govern the emplacement of the deposit. The entire area is underlain by a large batholith structure, which is a magmatic intrusive that served as both the heat source, and probably the source of mineralizing fluids that were injected into the host limestone to create the skarns and hydrothermal deposits. Thrust faults that occur across the property, trending to the northwest, have opened the conduits to allow the fluids to reach close to the surface and deposit the metals. So the company is working to trace new exploration work along these thrust faults, and in the process they are uncovering new high grade ore zones. This is important to understand, as it will give them the exploration model to follow up completely new discoveries on their property holdings in the future. Also, they will have the option to bring in a partner just for the current mines, and then explore the remainder of their 100% owned district with the revenue coming from the mines.
I am convinced that we have excellent people running the operation, and the project itself is a crown jewel for any junior to control. The size of the resource we have outlined is bigger than just about any other junior operating in Mexico, with the exception of ECU Silver. We will have a modern mill and recovery plant up and running by the end of the year. I would not at all be surprised if a takeover offer comes along as the market continues to heat up, but otherwise I think SPM is a no-brainer to buy and hold. There will be frustrating times when the share value stutters and retraces, but almost every successful company will go through that on the way up.
I have put a great deal of time into researching the various investment options that are operating in Mexico and I truely believe that SPM is one of the best companies to own, and I think it will probably support a much higher share value in the future. I do not take the responsibility to issue recommendations, but I am happy to share my experience and opinions and hope that it will assist other people in their DD.
cheers!
COACH247 |
