Mexico again a prime target for silver miners

Mining on the old Mexican silver belt is seeing something of a revival as North American headquartered mining companies look at bulk mining the lower grade material ignored by many of the old Mexican mine operators.

LONDON - 

At the MCL 20:20 Silver Day held in London this week it was perhaps significant that of the seven companies making presentations to the audience of brokers, analysts, fund managers, press and fellow miners, four (First Majestic, Arian, Excellon and Scorpio) were focusing almost entirely on Mexico and were already producing silver or had late stage projects in progress, while two others, Hecla and Sterling, were looking to Mexico as a route for expanding silver output additional to their existing North American projects and operations.

Historically Mexico has always been one of the world's top silver producers, primarily from the country's silver belt trending mainly northwest/southeast and centred on the city of Zacatecas in the centre of the country.  But much of the mining has been relatively small scale on some of the extremely high grade material which has been found along this silver trend which runs for hundreds of miles.  Now with the recent runup in the price of silver, North American companies in particular have been attracted to this area which has the advantage of boasting good local infrastructure, a potential workforce with good mining experience and a relatively stable political environment.

Few of these old mining properties have anything approaching a modern standard resource estimate, but the initial determinations by the companies involved suggest that the amount of silver still in the ground is very substantial indeed - most of it being considered too low grade to mine in the old days, but nowadays with modern mining and processing techniques can be mined extremely profitably, particularly with the sliver price at the current high levels.  Indeed many observers view the outlook for silver as being far better than that for gold - and the outlook for the gold price is generally considered extremely bullish.

Some of the resources being exposed by this new generation of Mexican mine operators are quite substantial.  With most of the deposits being vein deposits, but surrounded with disseminated mineralisation, some of the tonnage potential for bulk mining operations on surface and underground makes for strong mining cases.  Yet there is still good high grade material to be found too - as witness Excellon's 1,546 g/tonne silver (with associated lead and zinc) average grade over the past year and a half of production.

Old mine tailings are also proving an attraction with material grading 200 g/tonne or more not unheard of.

With the precious metal mineralisation being worked nearer the surface, some geologists suggest that grades may decrease at depth, with base metals grades increasing, but others say that the good silver mineralisation continues at depth.  This makes for additional potential as the older Mexican mines seldom went deep - indeed some stopped at the water table.

What does seem to be possible in this area is to set up and generate a cash flow rather faster than would be the case in most parts of the world.  The area is used to mining activity and there doesn't tend to be some of the local and environmental opposition to new mining operations which might be seen in virgin territory.

One can expect some good, and relatively quick, returns from the miners working the old silver belt particularly if the prognosis for the silver price is as good as many seem to think.

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