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Article on Mexican Silver Mining

posted on Jul 15, 08 07:35AM

Could Mexico Reclaim #1 Silver Producer Status?

Mexico and Peru have gone back and forth as the #1 silver producers in the world. Currently Peru is #1, but one newsletter writer recently said that Mexico could soon reclaim that spot - without any new discoveries.

The point of the argument (put forth by Scott Wright of Zeal LLC, who does GREAT research) was that Mexico has so many old silver producers that are now being rehabilitated with new money and new exploration. If many of these assets come into production - and they are - then Mexico could produce A LOT more silver.

Mega Silver came out with new exploration results yesterday that epitomized this trend. They and JV partner Silverstone are looking to develop an old producer in northern Mexico called Promontorio - it was a small producer, but the old mine does have 14 levels. Previous production graded a remarkable 3500 g/t silver and 20 g/t gold.

VP Exploration Dave Tupper said he had high hopes for this program, and was looking for kilos of silver, not grams.

And that's what he got.

The first four holes came back with great grades, with the best hole being over 2.6 kilos per ton silver - 2679 g/t silver AND 66 g/t gold - TWO OUNCES per ton gold - over two metres.

This was an initial reconnaissance program of 12 holes, and Mega Silver did hit some dusters. The point is, these former producers have a lot of very high grade mineralization left in and around the old mines that can be exploited much more easily with modern exploration and development techniques.

For many years foreign companies could not own 100% of a mining property in Mexico, so the regulatory environment wasn't there for junior exploration companies. And after that, it took many many years for the silver price to get high enough to warrant spending that money. So the silver rush in Mexico over the last five years comes after decades, when only the high grade bonanza silver would be economic.

For Mega Silver, this was a great start. Hitting high grade mineralization adjacent to and underneath old workings means that if a resource can be put together, mining could start up again at this former producer more quickly and cheaply than a new site.

And in the bigger context, these drill results show that companies like Mega Silver - part of the Mexican silver rush - still have a lot of discovering and developing to do, which should keep investor interest high.

Gord Zelko, Publisher

www.mineralstox.com

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