Vangold to Resuscitate the El Pinguico Gold Mine
Dead for a century, the El Pinguico mine in the State of Guanajuato, Mexico, looks set to finally be restored after Vangold Mining Corp. (TSXV: VAN) (“Vangold”) successfully negotiated the rights to operate the deposit. The mine produced gold and silver between 1906 and 1913 before civil unrest caused by the Mexican Revolution (1910–1920) forced its closure. Amid the social upheaval at the time, massive stockpiles of mineral-rich ore were abandoned both on the surface and in the lower reaches of the excavation, featuring gold worth around US$170,000,000 at today’s prices.
Numerous hopefuls have failed to secure a satisfactory deal with the current owners, but Vangold’s offer of a 4% net smelter return royalty, 15% of the revenue generated from the stockpiles, as well as 3% of all future production was enough to convince the proprietors to finally allow geologists onto the land. Vangold reckons it can generate revenue quickly from the operation by having nearby miners process the ore until the company can construct its own mill. This early work should provide cash flow substantial enough to process the entire land package in due course.
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Outcropping silver veins were first discovered by Spanish explorers in the 1550s, including the main vein (Veta Madre/Mother Vein) that supported the largest silver-producing mine in Mexico, Valenciana, which operated for 350 years and provided 25% of the world’s silver during this time. The Valenciana mine and El Pinguico share the same epithermal vein system, and the Veta Madre is the backbone of the whole area. El Pinguico is located only 11 km from Valenciana and so, considering high-grade material has already been identified on-site, it is reasonable to expect further economical mineralisation at from the region.
Vangold expects to be producing new material as early as March 2021 from the bottom of the underground stockpile. The company could spend up to $2.5 million on a drill program in the first quarter of next year to properly delineate the area, but has already attracted $1.5 million through an offering earlier this year. Another financing is expected soon, and a further $7-10 million will be sought via offtake or streaming deals, but it does not seem as if Vangold will struggle to fund such a prospective historical mine.
The company recently purchased a further seven claims close to El Pinguico on the same geological structure. The claims are strategically located 1,500 metres west of the El Pinguico project, providing a possible extension of the mineralized zone and bringing the total land package of the project to 747 hectares. These properties are, of course, consistent with the company’s focus of building assets within the Mexican silver belt, with excellent roads and access to electrical and water supplies.
The mother vein in the historical Guanajuato Silver District has been providing ore to Mexico for the last 500 years, coughing up over a billion ounces of silver. It is associated with a mega fault that outcrops for 25 kilometers, and the El Pinguico Vein is one of the most important veins of El Pinguico-Carmen Mine. The fact that 700,000 tonnes of mineralized ore has already been extracted and left standing at the site means that, should Vangold find a willing partner, management could be delivering shareholder value far sooner than would normally be expected.
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