Project of the Week: Guanajuato Silver's El Cubo and El Pinguico prospects

23th June 2021

Guanajuato Silver Co (TSXV:GSVR) is an exploration and development junior, with mineral exploration projects in the Guanajuato region of central Mexico. The company previously traded under Vangold Mining on the Toronto Venture Exchange until recently and are headed up by Chairman and CEO James Anderson, whom I spoke to this week regarding their flagship prospects, El Cubo and El Pinguico. Mr Anderson and the rest of G Silver’s board boasts nearly a century of combined experience in geology and operations in Mexico.

The Company’s namesake, the nearby town of Guanajuato, lies 7 km to the NW of the prospects and is a UNESCO world heritage site (figure 1). The region is well known for it’s historic and present gold and silver production, and as well as G silver, there are several other miners working in the area. The target for G silver and others is epithermal Ag-Au veins, known for their “bonanza” grades and narrow mineralised zones.

Localities of Guanajuato Silver’s main prospects.
Figure 1. Localities of Guanajuato Silver’s main prospects.

The two prospects Guanajuato Silver are particularly excited about currently are the El Pinguico and El Cubo mines. These formerly producing mines are principally hosted by rhyolitic flows and tuffs, with associated volcano-sedimentary and intrusive units. The association of these lithologies is typical of the district, with one difference: the composition of the extrusives. Most other deposits in the region are found in associated with andesitic tuffs, which can result in a narrower vein system. The deposits are textbook low-sulphidation epithermal deposits, with abundant adularia-sericite alteration and 1-2 m wide multi-generational vein system ore zones. Silver is the primary economic mineral at these localities and occurs in dark sulphide and sulphosalt-rich bands which are strongly controlled by vein intersection.

Underground at El Pinguico.
Figure 2. Underground at El Pinguico.

El Pinguico has been sporadically mined for well over 100 years, with the majority of activity taking place near the turn of the 20th Century. You can read more about El Pinguico here; but in brief, it can supply ~40% of mill feed for the first 36 months of production through exploitation of waste rock left by old timers on the surface and below ground. Sampling done on these stockpiles has enabled Guanajuato to estimate that the cut off grade used in ore control in the early days of the mine was as high as 15 g/t AuEq. In today’s money and metal prices, that is a much more attractive number, when 100 years ago wasn’t considered high enough grade to process. In addition to surface waste rock, an underground stockpile that contains at least 25,600 t @ 301 g/t AgEq has been identified and tested extensively in the last year. These two easily accessible resources are easy and cheap to process, and with the recent El Cubo purchase including a purpose-built mill and flotation plant, should provide substantial cash flow for the company before hard rock mining begins.

More recently, in a shrewd move by G Silver, March of this year saw the closure of the purchase of the El Cubo mine complex from Endeavour Silver Corp at the knock-down price of $15m. Endeavour ceased production at the mill complex in 2019 after spending $200m acquiring and $40m developing the mine, after exhausting what they class as economic reserves underground. The mine and mill complex is currently undergoing recommissioning by Guanajuato’s local team to begin production in Q4 2021.

Endeavour used mechanised mining to target the epithermal vein clusters of El Cubo with the aim of processing 1500 t of material daily. The difference between Endeavour and Guanajuato is that James and the G Silver team are planning to use smaller scale cut and fill mining method to target the narrow, high grade veining, which inevitably leads to less waste and higher metal recoveries. He believes that this change will unlock the value of the deposit and allow many more years of profitable mining. And this seems to be the case, as a recent combined PEA for both El Cubo and El Penguico calculates a NPV of $79m for the project and a payback period of just 1.87 years.

So, what do Guanajuato Silver aim to have accomplished by the end of this year? James tells me that they have drill rigs on site now and have 10,000 m of drilling planned, with about 6,000 earmarked for El Cubo, mostly on infill material to assess if this is worth recovering. In addition, they have Q4 set in their sights for the renovation of the mill complex to be completed and have started initial production. This would be a massive achievement for the company, and if they can achieve this they would become Mexico’s newest gold and silver producer.

Ball mill prior to renovation at the El Cubo mill complex.
Figure 3. Ball mill prior to renovation at the El Cubo mill complex.

A huge thank you to James Anderson for taking the time to chat this week, it’s great when management are genuinely excited by their new prospects and I expect to hear good things from Guanajuato Silver in the next 12 months.


All information in the above article is taken from the Guanajuato Silver website (see below) and materials within, as well as personal communications with James Anderson (CEO & Chairman, Guanajuato Silver).

Sources and extra reading:

Guanajuato Silver:

El Cubo  NR:

NI 43-101 El Cubo:

Featured Image: The El Cubo mine and mill complex. Guanajuato District, central Mexico.