Los Ricos (Credit: GoGold).
Since co-founding his first junior mining company, Gammon Gold, in his garage in Halifax, N.S., in 1994, Bradley Langille has spent the majority of his career outside of the country – hunting for precious metals and building mines in Mexico.
After about three years in Canada, he shifted his focus to Mexico, where his partner had business connections, and between 1999 and 2007, built two mines: the Ocampo mine in Mexico’s Chihuahua state and the El Cubo mine in the state of Guanajuato.
Ten years later, Langille’s GoGold Resources (TSX: GGD) sold its Santa Gertrudis gold project in Sonora, Mexico, to Agnico Eagle Mines (TSX: AEM; NYSE: AEM) for $80 million in cash and a 2% net smelter return royalty (NSR).
GoGold Resources completed an initial resource on Los Ricos South late last month
It was a big purse, given GoGold Resources had acquired the project in April 2014 for $9 million and only spent about $11 million on a 13,000-metre drill campaign and a preliminary economic assessment. GoGold Resources also sold the NSR later for an additional $12 million.
Meanwhile, the company has been generating cash flow from processing old tailings at its Parral metallurgical facility, 14 km outside the city limits of Hidalgo del Parral, in Chihuahua state.
The tailings were left over from 300 years of mining operations in the area and the city grew around them. GoGold Resources pays the city government between $50,000 and $75,000 a month in exchange for the right to remove and process the tailings.
“It’s a very green project in that we move tailings that are hundreds of years old from a city with a population of about 130,000 people, and we put them in a facility that meets 20th century environmental standards,” Langille says in an interview.
“As far as I know we are the first in the industry who have agglomerated heap leached old tailings. We think we’ve developed something that is low capex and low opex and in the future that’s pretty good technology to apply to cleaning up some of these tailings that exist in these cities.”
While many companies reprocess old tailings, especially in Africa, Langille explains, they are typically re-milled in an agitated leach. What GoGold Resources does, by contrast, is mix a tonne of tailings with about 16-18 kilograms of cement in an agglomeration drum and then applies cyanide. Back-end recoveries involve a Merrill-Crowe separation process.
Langille notes that the facility started operations in 2014, with an estimated 12-year mine life based on reserves of 35 million oz. silver-equivalent (23 million tonnes grading 38.4 grams silver per tonne and 0.31 gram gold per tonne). At a processing rate of 55 dry tonnes a day, there are enough tailings left to sustain the operation for another eight years.
The revenues pay for all of the company’s general and administrative costs and, more importantly, all of its exploration expenditures. In the first quarter of 2020, Parral produced 600,000 oz. silver-equivalent at all-in sustaining costs (AISCs) of $15 per oz., generating $1.9 million in free cash flow.
That’s key because the company is hard at work advancing its flagship Los Ricos project, which Langille says is shaping up to be the most exciting of his career.
The 220-sq.-km project, which it has split into two sections: Los Ricos South and Los Ricos North, 25 km away, is accessible by a paved road and sits 100 km northwest of the city of Guadalajara.
After signing an option deal in March 2019 and amending the deal to acquire 100% of the project in August of that year, GoGold Resources completed an initial resource on Los Ricos South late last month.
Measured and indicated resources stand 63.7 million oz. silver-equivalent grading 199 grams per tonne silver-equivalent contained in 10 million tonnes. Inferred resources add 19.9 million oz. silver-equivalent grading 190 grams per tonne silver-equivalent contained within 3.3 million tonnes.
The company expects to complete a preliminary economic assessment on Los Ricos South before the end of the year, and drilling is underway targeting the northern extensions and at depth.
Los Ricos sits at the southeastern end of a 35 km trend and GoGold holds the majority of the ground in the area
“We see it as primarily an open-pit mine at plus 2 grams silver-equivalent, and you don’t see a lot of those anymore,” Langille says. “A lot of those have been developed and mined or are being mined, so that kind of an open pit operation should have a very good margin, and we see there might be potential for an underground bulk mining scenario later in the mine life.”
One of the reasons the company was able to finish the resource so quickly was because it found boxes of data about Cinqo Minas, a historic mine on the property that operated from 1908 until 1929. The crates had been stored in an archive in Missoula, Mon., by one of the mine’s previous owners, James Watson Gerard, and hadn’t been touched since the 1950s. Gerard co-owned the mine with Marcus Daly Jr., the son of the Anaconda Copper’s Marcus Daly Senior.
“There were crates and crates of data basically telling us what they mined, what they left, areas where they had made discoveries, and that became the starting point,” Langille says. “We had 8,000 data points from the archive, and we had a team of digitizers – all these university students in Hermosillo, who digitized it for us over four months and got it into our model.”
The data helped guide GoGold’s exploration and resource drilling and accelerate its timeline. The 43-101 compliant resource it published essentially covers ground on top and surrounding the mine’s old underground workings. The miners at Cinqo Minas took out one- to five-meter widths of very high-grade ore, the company says, and the resource is essentially the halo around the old workings, which are 15- to 25-metre widths.
Langille emphasized that Cinqo Minas wasn’t shut down because it ran out of mineralized material, but rather its owners were unsettled by political changes at the time in Mexico, when the left-wing was gaining traction and unions were becoming more powerful. “I don’t think they left in 1930 because they wanted to,” he says.
“The big thing here is grade – it has very superior grade for bulk mining in a potential open-pit scenario,” he says.
“And the other big thing would infrastructure. We are about an hour and forty-five minutes outside of Guadalajara, and there’s a main power transmission line right through the project, and we don’t believe water will be an issue because a river crosses the property.”
Los Ricos sits at the southeastern end of a 35 km trend and GoGold holds the majority of the ground in the area, according to the company. Recent drill results from its Los Ricos North project point to more upside. Recent assay results from the first holes drilled at the La Trini silver-gold target include 30 metres grading 532 grams silver and 2.41 grams gold, or 713 grams silver-equivalent, starting from 128 metres, in hole 20-003, and 4 metres of 1.92 grams gold and 225 grams silver, or 369 grams silver-equivalent, from 96 metres in hole 20-001. La Trini is a flat-lying zone and outcrops.
The company currently has three drill rigs at Los Ricos North and two at Los Ricos South.
Langille, the company’s second-largest shareholder, with roughly an 8.5% stake, says he’s thrilled with the headway his team is making at Los Ricos and is looking forward to the next milestones.
“Los Ricos has all the elements of what I believe to be one of the best undeveloped assets left in Mexico, and that’s based on my experience of doing this over a 27-year period,” he says. “As we go through our studies and technical work, I believe that will be born out.”
(Trish Saywell – This article first appeared in The Northern Miner on August 09)
