The Business Year

While the industry as a whole has seen a slowdown, smaller producers with local headquarters and a measured understanding of the social and political ramifications of long-term exploration have survived and thrived.

J. Antonio Berlanga

CEO & Director, Telson Mining

The new Undersecretary of Mining has been consistent and offers a good structure for the sector. He has clearly presented his working plan and analysis of the sector and has a good direction. We hope the congress considers the needs of the mining sector as well. An underlying issue is that many of these concessions have been cancelled or are stuck in bureaucratic processes, and concessions are in places that other companies could use. The government is talking about solving this problem. Some companies that entered the Mexican market are now considering the country to be less attractive, since many concessions seem on the verge of cancellation, and exploration is no longer tax-deductible. The mining sector also experienced a steep drop in prices that negatively impacted many, but those who survived were already producing or had advanced projects. Many of these survivors also have local headquarters, which helps reduce costs, increase their presence in the country, and bring them closer to operation.

Darren Blasutti

Americas Silver has two main added values to offer. First, we have recently acquired Pershing Gold, and the Relief Canyon Project in Nevada, US. This project brings the company significant leverage to precious metal production and cash flow for 2020 and beyond. Gold production from the project is expected to catalyze a re-rating of the share price and increase liquidity of the company’s shares as a larger, precious metal-focused company with operations focused in North America. Second, we have options embedded in our silver mines, namely high-grade silver and low-grade copper, which we adjust according to the prices in the market. In 2013, we produced almost four million ounces of silver when prices were optimal, but because of low prices, in 2019 we are going to produce a little less than two million. To complement our portfolio during low silver prices, we will produce 40 million pounds of both zinc and lead, minerals we were not producing four years ago. So, we have options to change our product mix as certain prices go up or down.

Bradford Cooke

CEO, Bradford Cooke

The new administration may have their heart in the right place, but the ability to execute their plans has so far been bumpy. For starters, we are concerned there has been a rise in the political risk profile. When we talk to our investors and propose to build more mines in Mexico, they want more clarity about what the risk is here, and if we are going to see longer permit times, higher taxes, or more unionism. However, we continue to see Mexico as a desirable jurisdiction for the discovery of new ore bodies. There is a reason for that, because it was closed to foreign investment for many years. Only when NAFTA was signed in 1993 did Mexico open up. We have seen a major influx of investment for decades in the mining sector, and the result was an explosion of new discoveries. From the company’s point of view, there have been good financial returns. From the country’s point of view, there has been significant new tax income.

Paddy Nicol

President, CEO & Director, Evrim Resources

We are always optimistic; I think that no matter what administration is in power, the government is always going to be proactive in helping develop the mining economy. Mining is an important part of the economy, especially in certain regions. For 2019, our perspective is to achieve the same sort of growth that we have had over the past several years. We did that by acquiring projects in early stages, working them up, and bringing in larger mining companies to advance the targets we generate onto further development. There are a significant number of opportunities, and we have a great team consisting of highly skilled geologists, administrators, and accountants. We are in Mexico for the long haul. Our budget on a global level is just over a million dollars, roughly half of which is allocated to Mexico. Our focus within Mexico is primarily on the central western areas such as Sonora, Chihuahua, Jalisco, and Nayarit. Over the next couple of years, we are expecting to spend roughly USD2 million in Mexico.

Tony Rovira

Managing Director, Azure Minerals

The Mexican mining industry is in reasonable shape at the moment. There was a downturn for a few years in terms of investment, exploration, and new mining ventures as a result of the global macroeconomic situation, but now there is a general perception that Mexico is a great place for exploration and mining. The country has strong rule of law, and the mining legal system is first class. We particularly invest in the state of Sonora, which offers great potential for the sector. The industry is well accepted by local communities as well as the government, which are two important factors. The industry is a common part of life in the state and it attracts skilled people. As for our specific projects, we were previously exploring a cobalt project, but decided not to focus on this metal and are now selling this project. Our best project in Mexico is the Oposura zinc-lead-silver project in Sonora, which we acquired in 2017.

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