Wednesday 21st August 2019

Resource Clips

It’s Better In Mexico

Soltoro Has 58 Million Ounces Silver and Counting

By Ted Niles

Andrew Thomson believes he has a distinct advantage over rivals elsewhere. “What the majors want,” the President and CEO of Soltoro Ltd declares, “are primary silver plays, and they want them in either Mexico or Peru.” Soltoro has a substantial silver play in Mexico, and it also enjoys the considerable benefits of a more stable jurisdiction.

“Peru had a little bit of a knock of late,” Thomson explains. The knock to which he refers is the June 5 election of Ollanta Humala, former military rebel and leader of the Peruvian Nationalist Party. Humala’s election raises the possibility not only of higher royalties but also of quasi-nationalization. “Mexico, as a result, has become more attractive,” Thomson argues.

Soltoro Has 58 Million Ounces Silver and Counting

Soltoro’s 10,000-hectare El Rayo silver-gold project is located on the Trans-Mexican Volcanic Belt in Jalisco State. Soltoro acquired the property in 2005 and has focused mostly on the Las Bolas structure and the Highway Zone, for which the company released an NI 43-101 in-pit resource estimate June 14 of 58.3 million ounces silver measured and indicated and 300,000 ounces inferred, both at a 20 g/t cut-off. This more than doubles the initial resource, released May 2010, and Thomson expects it to get even bigger.

“We’re continuing with expansion drilling,” he says, referring to the work currently being done on the Soledad structure—an area of the property not included in the new resource estimate. “In the very short term, I’m really trying to reach the 100-million-ounce silver target. The company announced a 15,000-metre drill program, and there’s serious consideration being given to increasing that.”

June 21 Soledad assays include 300 grams per tonne silver over 43.7 metres, 222 g/t over 43.7 metres, 115 g/t over 53.7 metres and 198 g/t over 33.5 metres. May 30 assays included 388 g/t silver over 21.6 metres (including 1,010 g/t over 7 metres) and 527 g/t over 6.9 metres (including 1,070 g/t over 1.6 metres). Thomson comments, “These are just the initial holes going into the structure; we have yet to step back on these holes to really start building tonnage. So we’re pretty excited. We’re getting into high-grade zones. We’re basically now a bulk-tonnage play in addition to a high-grade play, and it’s very consistent mineralization.”

Given the potential, Thomson expects suitors to come calling. He reports, “We’re going to try to grow the resource to something that’s more in the two-million-ounce gold-equivalent range. At that point we’ll have to make a decision. I think there’s going to be a mergers-and-acquisitions period coming up where the majors are finally going to really start looking down the ladder and acquiring juniors, and I suspect if we get to that level, we’ll probably be taken out.”

He adds, “But I’m not ruling out trying to put it into production ourselves. In fact, we have an acquisition that we’ve been looking at that would take us there very quickly. So there is some thought being given to it, but I would feel more comfortable at a slightly higher market cap.”

We’ve got a lot of majors looking at us right now, and we’re becoming more attractive by the day —Andrew Thomson

Between the promise of the deposit, infrastructure which “couldn’t be better,” and its location—with the cities of Puerto Vallarta and Guadalajara on either side of it (“Guadalajara is hosting the Pan Am Games this year, so it’s quite safe”)—Thomson is confident. “It’s one of those good-looking-girl-at-the-dance situations,” he muses, “you can pick and choose who you want to dance with. We’ve got a lot of majors looking at us right now, and we’re becoming more attractive by the day. I think it’s still a really great time to be a silver explorer in Mexico, and we happen to have a project that’s far more advanced than a lot of the projects out there.”

At $43.5 million, Thomson considers Soltoro undervalued. “People are really only valuing us on this one property when there are all sorts of other things going on in the company that are pretty exciting.” Among those is Soltoro’s Chinipas gold project in southwest Chihuahua State, 14 kilometres from Coeur d’Alene’s currently producing Palmarejo Mine, for which a 2,000-metre drill program was announced June 5. “It’s a separate gold property that we’re not seeing too much about,” explains Thomson. “We staked the ground four or five years ago, and there’s been $1.5 billion put into the local infrastructure. So we’re really trying to get our secondary project on stream.”

At press time, Soltoro trades at $0.88 per share with 49.4 million shares outstanding. Thomson concludes, “I think we’re in the middle of a fairly intense bull market, and we’re seeing a lot more interest from the US. The US contingent—whether it’s retail or institutional—is expecting a 20% drop in their currency. There’s a lot of cash looking for homes, and they want to get into hard assets.”

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