Santacruz Silver has been public for over a decade, but the assets in your current portfolio were acquired in the last few years. Could you give us a brief overview of the company today and highlight a few key aspects of your new mining assets?
Santacruz Silver is a multi-asset, multi-metal mining company operating in Latin America, with a focus on underground mining in Bolivia and Mexico. Our Mexican asset was added in 2021, and our Bolivian assets were acquired from Glencore in 2022. We are one of the largest underground mining operators in Bolivia.
Our current portfolio includes six producing mines, one ore feed sourcing business, and one exploration asset. Collectively, these assets produced 18.72M AgEq oz in 2024.
Our portfolio consists of:
- Bolivar Mine (Bolivia): A historic silver-zinc-lead operation producing since 1810, contributing 4.11M AgEq oz in 2024
- Porco Mine (Bolivia): With nearly 500 years of mining history, Porco remains a core operation, delivering 2.06M AgEq oz in 2024 through zinc/silver and lead/silver concentrates
- Caballo Blanco Group of Mines (Bolivia): Comprising the Tres Amigos and Coquechaquita mines, this group produced 4.11M AgEq oz in 2024
- San Lucas Ore Feed Sourcing (Bolivia): Our 100%-owned ore feed sourcing unit partners with local concentrators to process off-spec feed, incurring costs only when profitable. In 2024, it delivered 4.64M AgEq oz. San Lucas also process ore from the Reserva mine, which is wholly owned by Santacruz through its Bolivian subsidiaries
- Zimapan Mine (Mexico): A key producer of silver and base metals, Zimapan contributed 4.35M AgEq oz in 2024
- Soracaya Project (Bolivia): An exploration-stage project located near San Ramon in Potosí, covering 8,325 hectares with grandfathered mineral rights. A total of 29.6km of drilling has been completed since 1999
Earlier in February you announced that your wholly owned Bolivian subsidiary, San Lucas S.A., successfully completed an oversubscribed promissory note offering in the local market, raising $70M Bolivianos (Bs.). Can you share the reasoning behind this decision?
We were really happy with how well it was received, it actually got fully subscribed just 15 minutes after the market opened. There was strong interest from local stakeholders in Bolivia, which was great to see.
We raised a total of 70M, which is about US$10M, at a low interest rate of 6.25%. The notes are unsecured and mature on 15 February 2026, which gives us a solid runway.
For us, this was a pretty straightforward decision. This offering is an efficient way to manage working capital and gives us the flexibility to grow our US dollar treasury. It’s also part of a broader strategy to optimize how we allocate capital, finding better cost structures while also involving the local community more directly in what we’re building.
This was just the first half of a Bs.$140M programme, so we’ve got the option to issue another tranche down the line if we choose. Overall, we’re really encouraged by the strong support from the Bolivian investment community. It fits right in with our focus on running a lean, efficient business, not just in operations, but across everything we do.
Mexico is a well-known silver jurisdiction, but Bolivia is a bit less well-known. What are the key considerations for working in these two countries? What should investors know?
You’re right, Mexico is a well-established silver jurisdiction, known for its rich mining history, excellent infrastructure, and a regulatory environment that’s relatively predictable. It has a skilled workforce, and many of the country’s mining regions, including where our Zimapan Mine is located, are particularly well-suited for underground operations. The country’s experience with silver and base metal mining makes it a stable environment for operations and growth.
On the other hand, Bolivia may not be as well-known as a silver jurisdiction, but it has a lot of untapped potential that makes it very attractive. The country has a deep-rooted mining tradition, and its geological environment is incredibly promising, especially for high-grade silver and base metal deposits. Bolivia offers opportunities in regions where modern exploration has been limited, which gives us a competitive edge in discovering new resources. The cost structure in Bolivia, especially for labour and logistics, tends to be more competitive, which is a positive factor for operating margins.
However, the regulatory environment is more state-involved than in Mexico, but it has proven to be stable. Building strong relationships with local communities and government stakeholders is key to success in Bolivia, and Santacruz has placed significant emphasis on these partnerships to ensure long-term operational success.
With assets in both countries, we are well-positioned to take advantage of the strengths in each jurisdiction, balancing Mexico´s predictability with Bolivia´s high-upside potential. We feel comfortable operating in Bolivia, as Mexico and Bolivia share many cultural similarities, which facilitates our integration and strengthens our ability to build strong local partnerships.
Let’s look at silver market dynamics. The metal has been growing in importance due to its industrial use, and analysts have noted a supply deficit is coming. What’s your sense of the market today?
The silver market is in an interesting but strong spot right now. Demand for silver has been growing, especially with its increasing use in green tech like solar panels, electric vehicles, and electronics. It’s clear that silver isn’t just a precious metal; it’s essential for powering the future of clean energy. In 2024, global industrial demand for silver reached a record 680.5Moz, marking a 4% increase from the previous year. Although overall silver demand fell by 3% to 1.16Boz — mainly due to a drop in investment activity — the robust growth in industrial usage underscores silver’s essential role across a wide range of industrial sectors.
At the same time, silver supply is facing challenges. Miners aren’t keeping up with demand, and the overall supply is projected to decline slightly. This supply-demand gap is driving silver’s price up, right now, it’s trading at about $32.29 per ounce. That’s a solid price, and it’s been climbing due to these ongoing market dynamics.
For Santacruz, this market environment presents a great opportunity. With our diverse portfolio of producing mines in Mexico and Bolivia, we’re well-positioned to capitalize on rising silver prices. Our operations, especially in high-grade silver assets like Zimapan and our Bolivian projects, are well-placed to benefit from the strong market fundamentals. We’re focused on increasing production and continuing to explore new opportunities to expand our resources in this growing silver market.
What are the key upcoming catalysts this year from Santacruz that our readers should be on the lookout for?
One of the key upcoming catalysts for Santacruz this year is the execution of our Voluntary Exercise Acceleration Option Plan, announced in March. This initiative is designed to satisfy the Base Purchase Price owed to Glencore for the Bolivian assets we acquired in 2022, with the goal of achieving savings of approximately US$40M. We kicked off the plan with a successful initial payment of US$10M to Glencore on 20 March 2025. Going forward, Santacruz will make bi-monthly payments of US$7.5M starting in May 2025, with all payments expected to be completed by 31 October 2025. This plan reflects our disciplined financial approach and reinforces our commitment to maintaining strong cash reserves while meeting our obligations.
This year, we are also advancing key operational initiatives focused on maximizing profitability through streamlined and highly efficient operations at our producing mines. At the same time, our expansion and exploration efforts are progressing with the goal of growing reserves, extending mine life, and boosting production. These initiatives are central to our strategy of driving sustainable growth and creating long-term value for our shareholders. In addition to these initiatives, we will now begin disclosing the All-In Sustaining Cost (AISC) on a per-mine basis in our financial statements. Furthermore, San Lucas, our trading company, will be reported separately on a stand-alone basis. These changes will provide investors with greater transparency and enable a clearer evaluation of both our mining operations and our trading activities independently.
