According to chief executive Bob Archer, Pinnacle Silver and Gold’s medium-term plan is to build a 35,000 tonnes per year operation at the El Potrero project in Mexico.
That would mean ballpark throughout of around 100 tonnes per day.
Not a huge operation, but not chickenfeed, either, given the high-grade material that the company is now encountering.
The most recent results, from channel samples taken at the historic Pinos Cuates mine on El Potrero returned grades of 19.4 grams gold and 266 grams silver over 4.1 metres, with individual samples assaying up to 37.3 g/t gold and 346 g/t silver.
These are highly encouraging numbers, and form part of a wider set of results that have helped delineate a wide, robust vein breccia system with exposed widths exceeding 10.46 metres and 8.5 metres on the upper and lower levels of the old mine respectively.
And that’s not all.
Surface mapping on the Dos de Mayo vein system has traced a 1.6 kilometres strike. In ground between Pinos Cuates and Dos de Mayo, where there are no previous workings, the company sampled 13.2 grams gold 2,280 grams silver. Visible gold and the more typical ‘ginguro’ mineralization were observed.
This isn’t a bad start for a company that’s relatively new to these assets.
But Archer is keen to press on.
He’s just taken several consultants down to El Potrero with a view to thinking about next steps.
Most straightforwardly, there’s a plan to drill El Potrero in the fall.
First, Pinnacle will fly LiDAR. Then the rigs will go in.
But having said that, the plan isn’t to develop a huge resource.
Rather, the company is looking for enough to get it up and running – specifically to provide feed to the old plant, which it hopes to re-commission.
How much of an undertaking that will be remains to be seen. The consultants will have their say, and Pinnacle will report in due course.
For the time being, though, what we do know is that the plant was originally set up as a vat leach operation augmented by a Merrill Crowe plant. Initially, and based on historic data, Pinnacle was expecting that grades through the plant might run at around 12 grams per tonne gold equivalent.
Now, though, in the light of recent work, Archer says the grade of sampling at Pinos Cuates turns out to have been was “higher than we thought” - which bodes well for the project.
Plenty of work will be needed before that can become a reality, though. It’s likely that significant portions of the plant will need refurbishment or replacement, and the company also needs to verify if vat leaching and Merrill Crowe remains the optimum processing method.
In due course there will need to be an assessment of potential recovery rates, and a proper flow sheet will need to be drawn up.
But the wheels are now in motion for all that, and Archer is confident that rapid progress can be made.
“Given the initial size of this operation, at the beginning we can just bootstrap these assets into production,” he says.
“I think we can do all the physical work and upgrades within a two-year frame. The unknown is the permitting.”
But on that last score, Durango is very pro-mining, and these are previously worked assets, which usually makes permitting easier. What’s more, Archer has been here before. As the co-founder of Great Panther, he built up considerable expertise and value in Mexico, and he knows his way around this process.
Indeed, El Potrero is just a two hour drive away from a mine he used to run in his days at Great Panther – Topia.
And any investors wondering where this is all heading could do worse than look to the example of Great Panther. There, Archer started with a fairly modest project and gradually built and built.
It’s no secret that he’s pursuing the same model here.
So, El Potrero will be the foundational asset – a small project initially, with potentially high-margin cashflow that can be deployed to fund further growth, both on the project itself and on additional assets.
It’s been done before.
But not when gold was trading at over US$3,400 per ounce. In that sense, we are in a completely new world.