ALAMOS, MEXICO — Thanks to a late rain, it’s unusually green on the Sierra de Alamos as we drive onto Minaurum Gold’s (TSXV: MGG; US-OTC: MMRGF) Alamos silver property in late November 2018. We enter via the small town of La Aduana — an old mining town, where the Spanish settled when they came to the region in the 1600s.
The Alamos project is in the southern part of Mexico’s Sonora State. Minaurum optioned it in 2016 for cash payments totalling $600,000, 6 million shares and $3 million in work expenses. The company has since quadrupled the project to 164.4 sq. km and amassed 14 vein systems ranging from 500 metres to 2.5 km in length. It aims to make at least a couple more big hits: vein discoveries that are wide, high grade and far apart.
When the company began exploring the property, it knew of several veins hosting the historic Promontorio, Minas Nuevas and La Quintera mines, where, between 1680 and 1930, various miners produced more than 150 million oz. silver.
“They probably produced a larger amount,” Minaurum vice-president of exploration Stephen Maynard says during a site visit hosted by the company. “But that’s the minimum.”
The La Quintera Mining Co. mined Quintera-Promontorio in the late 1800s and early 1900s, moving ore via a tram system down to La Aduana for smelting. It closed its mine in 1907 after the silver price collapsed. The area saw minor production afterwards.
“The reason it wasn’t mined more recently is the mining claims were fragmented and hard to consolidate,” Maynard says. “The family who optioned it to Minaurum was able to do that consolidation.”
Promontorio has a strike length of 800 metres. The company has drilled it to a depth of 200 metres. It remains open along strike to the south and at depth.
Minaurum tested it with two holes in 2017. Those cut 154.1 grams silver per tonne, 0.2 gram gold per tonne gold, 0.5% copper, 2.3% lead and 6.8% zinc over 20 metres from 82 metres downhole, and 81 grams silver, 0.1 gram gold, 0.14% copper, 3.23% lead and 2.72% zinc over 8.5 metres from 124 metres downhole.
“This is not what’s going to make us, but it’s worth looking at, because it’s instructive,” Maynard says. “This is not where the glory is for us, but I’m not saying forget about it. This is part of the inventory.”
Minaurum president and CEO Darrell Rader adds that “in this market, you get taken over for new, high-grade discoveries, so that’s what we’re looking for. At Promontorio we planned to drill through the historic vein in order to test new targets to the east. We lost both holes after discovering a new vein in the hangingwall.”
By the end of 2017 the company had found several new veins — including Amalia, Tigre and Europa-Guadalupe — through geological mapping and sampling. It was trying to understand the system’s geological framework, and drilled Europa-Guadalupe in December 2017.
Continued mapping and sampling has added new vein zones. The Alamos vein footprint now covers a 50 sq. km area. Its newest vein system, Alessandra, covers 1.1 km in strike length. Maynard thinks Alamos might be able to extend it another kilometre. If it can, Alessandra will become the project’s second-longest vein system, after Europa Guadalupe, which has a 2.5 km strike length.
“The point is to develop an inventory of these vein zones,” Maynard says. “We plan to drill a hole or two into each new vein and then step back and say, ‘how do we prioritize these?’”
Minaurum recently sampled 102 grams gold and 4.6% copper at Alessandra, which lies in the eastern part of the project, 1 km southeast of the Ana zone. Alessandra stretches more than 4 metres wide in surface exposures. The company says it could extend another 1 km southeast. Rock samples at Alessandra, however, register low silver values. A float grab sample graded 35 grams silver and an outcrop chip samples graded 29 grams silver.
The company drilled 2,770 metres across eight holes in its 2017 drill program. Maynard calls hole 7, drilled west of La Quintera, the campaign’s most significant hole. It shows mineralization like that historically mined at La Quintera, in terms of grade and width.
Hole 7 cut 8 metres grading 1,760 grams silver, 0.06 gram gold, 1.6% copper, 1.48% lead and 2.6% zinc from 535 metres downhole in the Europa-Guadalupe vein system. Surface sampling along Europa returned assays as high as 1,205 grams silver, 3.19% copper, 1.9% lead and 1.44% zinc.
The company has drilled another six holes at Alamos this year, and is in the midst of a 5,000-metre drill program. The company will drill at least seven untested veins, including Pulpito, Cotera, Tigre, Ana, Amalia and Promontorio Sur. Those veins combine for more than 5 km of strike length, with samples from Pulpito and Cotera grading as high as 1,495 grams silver and 3.81% copper, and 1,370 grams silver and 3.39% copper.
“We don’t see the 5,000-metre program as a limit,” Maynard says. “It’s actually minimum 5,000 metres.”
The drill program will probe new vein areas and test the company’s “piano key” model. The company hypothesizes certain blocks of Alamos are up-thrown and others are down-thrown, like piano keys. Up-thrown blocks include La Quintera and Promontorio. In those blocks, gold and silver mineralization is closer to surface, or even exposed.
It says the down-thrown blocks also contain gold-silver mineralization, but deeper underground. It says it has made multiple discoveries in down-thrown blocks — like the Europa Guadalupe discovery, which it intersected 325 metres below surface, and the Minas Nuevas target, where it cut 95.9 grams silver over 18 metres from 72 metres downhole, as well as 53.7 grams silver over 13 metres from 76 metres downhole in 2017. The company spaced those two holes 150 metres apart and says the target could host a bonanza zone at depth.
“We’re drilling for structure hoping that we hit a silver shoot,” Rader says. “At Europa-Guadalupe we were lucky and hit a shoot along with a number of veins not exposed on surface.”
He says the company aims to quantify the size potential at Alamos before drilling off a resource at the project.
Part of the company’s Alamos property sits on a reserve area subject to stricter exploration regulations. The company is not allowed to drill at night on the reserve area, for example, although it expects that will change. It also takes a little longer to permit drill pads in the reserve — about a month and a half — but Minaurum doesn’t see that as much of a concern, either. It has already permitted more than 100 drill pads inside the reserve.
The idea behind the reserve is that natural resources within its boundaries are exploited sustainably, and don’t negatively affect future generations.
Alamos sits near Pan American Silver’s (TSX: PAAS; NASDAQ: PAAS) past-producing Alamo Dorado silver mine, Coeur Mining’s (NYSE: CDE) Palmarejo silver-gold mine and Agnico Eagle Mines’ (TSX: AEM; NYSE: AEM) Pinos Altos gold-silver mine — among others. It shares a border with Cobre del Mayo’s Piedras Vierdes copper mine.
Although the site visit focused on Alamos, Minaurum has several other Mexican silver properties. Its nearby Adelita silver-copper skarn and porphyry discovery borders the Alamo Dorado silver mine. The company drilled 5,000 metres at Adelita in 2010 and 2012. Its targets remain open along strike and at depth.
Mexico’s Oaxaca-Chiapas region hosts the company’s Santa Marta gold-copper project and Aurena gold project. The company is in the last stages of drill permitting at Santa Marta.
Shares of Minaurum are trading at 47¢ with a 52-week range of 20¢ to 67¢. The company has a $145-million market capitalization.
Its board includes MAG Silver’s (TSX: MAG) Peter Megaw and geologist David Jones, who discovered Leagold Mining’s (TSX: LMC) Los Filos gold deposit.
It has $7.5 million in the treasury, and anticipates having $9.5 million by year-end.