Following historic gold vein key to de-risked mining strategy for Vangold
A lot of mining projects are situated in historic mining districts. Massive efficiency gains in all aspects of mining technology from shovels, haulage and milling means that yesterday’s dirt is today’s gold mine, literally.
Vangold Mining Corp.’s (TSXV: VAN) El Pinguico project is in an historic gold and silver mining district, however, it does not fit the traditional mould of a long-ago abandoned mine. In 1913, the American owners of the Pinguico Mines Company fled the site, 10 kilometers away from the colonial city of Guanajuato, before Pancho Villa planned an attack during the Mexican Revolution. The owners, expecting to return to the site after the violence, left hundreds of thousands of tons of gold and silver-rich ore in underground stopes and even on the surface. They never got it back.
Vangold CEO Cameron King picked up the rights to the mining claims in April 2017, 104 years afterwards. A ban on foreign mining companies helped maintain El Pinguico as a ghost mine for most of that time, and the current owners never reached a deal with Mexican majors Fresnillo and Grupo Penoles. King, a former M&A investment banker, followed a couple of Canadian exploration companies into negotiating with the landowners in more recent times, and landed the site after a three month negotiation process in a stock and cash deal.
The nine properties obtained from Exploraciones Mineras Del Bajio (EMDB) intersect the massive Veta Madre epithermal vein structure which has been mined by the Spanish since the Middle Ages. Silver majors including Fresnillo Plc, Great Panther Silver and Endeavour all hold silver and gold projects or operating mines in the same district, according to Vangold. Underground stockpiles have average grades of 1.75 grams a ton of gold and 183.58 g/t of silver, according to the company. However, a 1959 study of the same stockpile showed much higher ore content, meaning the more recent samples might have been affected by waste rock debris falling on the surface of the stockpile.
“That’s what we have as a value proposition for a junior, an incredible amount of near term production that can last for 5 years plus,” King told InvestorIntel.
Vangold’s near-term strategic options offer two routes. Firstly, the company plans to raise finance, through an equity round or an offtake agreement, to drill underground targets to determine the thickness of the length of the main vein. Second, the company intends to install a heap leach pad at the mine site to process 200,000 metric ton of surface ore that was left by Pinguico Mines Co. The same leach pad could be used afterwards to treat the bumper underground stockpile, pending the construction of a decline shaft that will provide access. The company expects to obtain a permit in a matter of weeks to start processing.
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Investors from the world of finance are particularly attracted to the opportunity of processing the stockpiles and accessing a source of near-term cash flow, King said. Investors focused on mining companies want to see drill results, he said.
This route, to better understand the vein structure at El Pinguico, could potentially attract the interest of a larger competitor, he said. Many of the variables about the veins at El Pinguico are known because of detailed historic plans of the site. Vangold made available a 1906 report on Pinguico by geologist Robert Hill.
“It’s a de-risked mining strategy because we know where the vein is,” King said. “We know the variables. If we drill this, we know the thickness and the length, and we plug that into program to figure out where we need to be.”
Matt Craze works with New York-based management consultancy 10EQS and is the founder of Spheric Research, a firm dedicated to global seafood industry research. Matt ... <Read more about Matt Craze>