Prime Mining is exploring its flagship Los Reyes project in Mexico’s prolific Sierra Madre Belt, which hosts many major mining operations. Are you seeing any similarities between your project and those of peers? Can you touch on what makes this mining jurisdiction favourable?
The Los Reyes area has been a prolific historic mining area dating back to the 1700s. Mining is a part of the cultural fabric of Mexico, a country which has produced excellent skilled geologists, miners, and operators. It is also a relatively low-cost country in which to operate, which allows for higher margins.
The Sierra Madres Occidental is home to many excellent existing operations that make for good comparisons as to how Los Reyes may evolve. The Sierra Madres hosts many similar gold and silver epithermal deposits along the west coast of Mexico. Examples include Pinos Altos, Palmarejo, La India, El Sauzol, and more. Los Reyes has a few competitive advantages over these peers: in general, it is lower-sulphidation, meaning fewer base metals and simpler metallurgy. This reduces process plant complexity and processing requirements while still indicating very high recoveries. Our terrain is hilly, but not mountainous.
The westernmost edge of Los Reyes is about a 40-minute drive from Cosalá. There are other industrial operations that use Cosalá as a home base, and it provides an excellent centre from which we can operate. Cosalá is considered a Pueblo Magico (or magical town) and attracts significant national tourism. Our geologists and their families call Cosalá home.
The company reported high-grade gold expansion drilling results from the Los Reyes project in early February. What are the key takeaways from the results in advancing the project? What do the results suggest for the potential of the resource here?
Prime Mining published its latest Resource update in May 2023, this update was based on drilling up until the end of 2022. Since that drilling cutoff date, we have drilled over 70,000m of additional exploration holes and the phenomenal results have attracted significant attention. For example, in 2023 and early 2024 we have press released excellent intercepts across the property, both in known, previously reported resource areas, as well as in generative or newer discovery zones.
2023 drilling and related news releases have focused on how we have advanced the project by:
- Expanding high-grade mineralization at Z-T by 350m along strike and multiple high-grade shoots by several hundred metres down dip.
- Growing the mineralized grade shells at Central and Guadalupe Trends, where we have discovered several new high-grade antithetic veins.
- Continuing to develop generative targets, with particular success at Las Primas, as well as several other zones including Fresnillo, Mina, Mariposa and the 300 Trend.
Additionally, a couple of last drill highlights from 2023 were released in the first quarter of this year, including:
- At Tahonitas, located at the south-east end of the Z-T Trend: 3.74gpt gold-equivalent (“AuEq”) (0.99gpt Au and 212.5gpt Ag) over 5.7m estimated true width in hole 23TA-100, including 10.94gpt AuEq (2.97gpt Au and 616.0gpt Ag) over 1.3m estimated true width, reflecting a new high-grade mineralized zone 350m beyond the current resource pit.
- Drill hole 23GE-147 at Guadalupe East returned one of the highest-grade intercepts ever recorded at the project, with 45.3gpt Au and 2,723gpt Ag over 4.75m (80.6gpt AuEq over 3.90m estimated true width). 23GE-147 expands the very-high grade mineralization along several antithetic structures within the 2023 resource pit and returned substantially higher grades than previously estimated in many instances.
- At Las Primas, a relatively new generative drilling area approximately half way between the Central and Guadalupe trends, we intercepted 15.6 gpt AuEq over 4.5m etw, including 56.3g/t AuEq (or 41.90g/t Au and 1,111.0g/t Ag) over 1.1m etw.
- Finally, in 2023, we advanced our metallurgical, geochemical, geotechnical, and project understanding through testwork and field studies.
In 2024, Prime is targeting a 40,000m drill programme and will continue to evaluate drilling plans using our success-based approach. This evaluation will also include prioritization of targets based on probability of resource development and generative area discovery potential.
2024 exploration is focused on:
- Extending the high-grade Z-T Area shoots that remain open at depth, as well as along strike, both north and south.
- Expanding the known high-grade mineralization at Guadalupe East.
- Increasing the Central Area resource through additions at Noche Buena and its connection to San Miguel East.
- Generative target drilling of high-grade intercepts at Las Primas, Mariposa, Fresnillo, Mina, and others to further develop the resource potential at Los Reyes.
Gold surpassed the US$2,000 mark due to a decrease in the dollar value and Treasury yields, with spot prices reaching new all-time highs of over US$2,150. What will this positive turnaround mean for Prime stakeholders?
It’s worth noting that Prime has, so far, conservatively measured reported resources using US$1700/oz, well below current spot prices. Increasing the assumed gold (and silver price) could add significant resources to the Los Reyes estimate.
Perhaps more broadly, and more importantly, record high gold prices have re-generated some interest in gold equities. This has led to a near-term increase in Prime’s stock price, with potentially greater realization still to come. Higher gold values would also indicate higher return on investment in a project construction consideration, increasing the fundamental value of the Los Reyes property.
Prime has established strong community relations and stakeholder engagement through a robust approach to ESG. What is this approach?
With respect to the ‘social’ aspect of ESG, Prime takes pride in being a contributing member of the communities we operate near and influence. Our team has planned and coordinated many ejido (or community) events. These events have included providing support to local schools through infrastructure and school supply contributions. In the field, we have provided water and other assistance to farmers and ranchers near our exploration area.
The company also has a stable, long-term agreement in place with the three ejidos that have land within the Los Reyes claim. Our agreement was negotiated with third-party legal assistance provided to these communities and envisions exploration, construction, and operation. These agreements are for two 15-year terms, or 30 years in total.
More broadly, and incorporating the environmental aspect of ESG, Prime employs the United Nations Guiding Principles on Business and Human Rights, as well as Sustainable Development Goals in keeping with International Council on Mining and Metals Principles. We are currently working on our second annual ESG report. Prime acts as an environmental steward of the area and is developing a water policy this year.
Finally, in terms of governance, Prime is pleased to have graduated this December from the TSX Venture exchange to the TSX main board — a sign of the governance controls in place at the company. Prime has a strong, experienced, and independent board of directors.
Why should investors keep Prime Mining top of mind?
While Prime has produced a multi-million ounce resource estimate, it continues to add value through exploration drilling. 2023 drilling identified several areas of potential resource growth that we are focusing on in our 2024 drill programme.
The strength and experience of the management team will continue to guide drilling on the property following our highly regarded success-based drilling approach. At the same time, we are continuing to de-risk key technical aspects of a potential future project through partnering with well-known engineering consultants. Work is focused on metallurgy, infrastructure, and mining options. Given the grade and continuity of the resources at Los Reyes, there exists potential to consider underground mining in addition to open pits.
We are in strong financial situation, ending 2023 with over C$30M of cash following a significant and well over-subscribed equity financing in late 2022/early 2023. We have an extremely cost effective and efficient drilling programme and cost structure in place.
