The Panuco Project is a predominantly silver-gold mine with zinc and lead resources, located in the Sinaloa State of Mexico.
An early-stage exploration project, the mine is owned 100% by Vizsla Silver.
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Panuco is an emerging high-grade discovery project and is being developed in two phases. Vizsla published two technical reports of the project in March 2022 and September 2023.
The project is divided into two underground mines, Copala and Napoleon, due to the distance between the various geological deposits.
The Copala Mine is larger than Napoleon and accesses the Cristiano, Copala, and Tajitos deposits. The Napoleon Mine lies towards the west of the Copala Mine and accesses the La Luisa, Napoleon, Cruz Negra, and Josephine deposits.
An updated mineral resource estimate for the project was announced by Vizsla in January 2024. It was followed by a Preliminary Economic Assessment (PEA) in July 2024.
The PEA provides that the project is a long-life and high-margin underground precious metals mine with initial low capital requirements and fast production timeline.
As per the PEA, the project will have a production rate of 3,300 tonnes per day (tpd) for the first three years, expandable to 4,000tpd in the fourth year with an initial mine life of 10.6 years and an estimated total cost of $496.7m.
Contractor underground mining is the basis of the PEA with an estimated Life of Mine (LOM) cost of $47.21 per tonne milled.
In August 2024, the owner provided update for the project expansion by outlining exploration plans to test new high-priority targets in the central and eastern areas of the district.
The key exploration objectives include the completion of over 10km of exploration drilling in the central and eastern areas, over 5km of resource expansion/infill drilling in Copala central, and mapping 70% of the Panuco district.
The other objectives will be the completion of an airborne mag, radiometric, and Versatile Time domain Electromagnetic (VTEM) surveys on 950 I-km of the property and preparation of an updated resource estimate planned in Quarter 4 (Q4) 2024.
Vizsla is going forward with a permitted bulk sample test-mine and a Feasibility Study (FS) of the project. The fully funded test-mine will start at Copala in the fourth quarter of 2024.
The FS is targeted to be completed in the second half of 2025. The production decision will be taken after the release of a positive FS.
Panuco Project Location
Panuco is located in the Panuco-Copala mining district of Concordia municipality in the southern Sinaloa State near Mazatlán city.
The mine lies along the western margin of the Sierra Madre Occidental physiographic province (SMO), western Mexico.
The project consists of 117 approved mining concessions in 19 blocks covering 5,869.87 hectares (ha) and two mineral concessions totalling 1,321.15ha. All concessions are 100% owned by Vizsla Silver.
The mine area can be reached from Mazatlán by travelling from Federal Highway 15 to Villa Union and then by travelling from Highway 40 for 56km (a one-hour drive).
Highway 40 and Toll Highway 40D cross the project area. Additionally, local dirt roads provide access to the site and some roads need repairs.
Ownership History
Concordia was founded by Capitan Francisco de Ibarra in 1565. The production on the project has been continuing over the last 460 years, but no records are available.
The first recorded modern mining on the project started in the late 20th century by the Mineral Resources Council (Consejo de Recursos Minerales [CRM], the predecessor of the Mexican Geological Service [SGM]).
CRM optioned and sold many concessions in the Panuco-Copala mining district in 1989, including to Grupo Minera Bacis (Bacis).
Subsequently, several claims were acquired by Bacis from other active parties in the area, including Minas del Oro y del Refugio.
Bacis drilled 19 holes along the Animas-Refudio corridor totalling 2,822.8m. Minera Rio Panuco (MRP) explored the Animas–Refugio and Cordon del Oro structures from 1999-2001. MRP drilled 45 holes totalling 8,358.6m.
The Bacis concessions were optioned by Capstone Mining in 2004. In 2005, Capstone drilled 131 holes totalling 15,374m on the Animas-Refugio vein.
Capstone transferred the Copala, Claudia, Promontorio, Montoros, and Martha project claims to Silverstone in 2007.
In 2009, Capstone merged with Silver Wheaton. Silver Wheaton sold the shares of Silverstone to Mexican owners. Silverstone and MRP optioned their mineral concessions to Canam Alpine Ventures in 2019.
Vizsla closed a share purchase agreement with Canam in November 2019. Vizsla acquired Canam for CAD$45,000 ($33125.85) with 6 million common shares and 12 million common shares upon completing two milestone events.
The first event includes 6.5 million shares upon exercising any defined options. The second event includes 5.5 million shares upon defining a resource greater than 200,000 Gold Equivalent (AuEq) ounces (oz).
The shares are subject to voluntary pooling restrictions and will be released at 12.5% per quarter.
In July 2021, Vizsla signed a binding amending agreement with Minera Rio Panuco and executed a binding option exercise notice with Silverstone Resources. Pursuant to the agreements, the project was 100% acquired by Vizsla.
Geology and Mineralisation
Panuco lies along the western edge of the SMO, a Large Igneous Province (LIP) with magmatic activity from the Late Cretaceous to the Miocene in three episodes.
The first episode is the Lower Volcanic Complex (LVC) comprising of intrusive bodies like Sonora, Sinaloa, and Jalisco batholiths and andesitic volcanic rocks with minor dacite and rhyolite tuffs and ignimbrites.
The second episode is the Upper Volcanic Supergroup (UVS) comprises rhyolitic ignimbrites and tuffs.
The third episode includes post-subduction alkali basalts and ignimbrites connected with the Gulf of California opening between the Late Miocene and Pleistocene-Quaternary.
The mine area is dominated by north-northwest trending transtensional and extensional faults reactivated or developed during the Basin and Range tectonic event.
The mineralisation of the project consists of various epithermal quartz veins. The veins have narrow envelopes made of argillic alteration and silicification marked by clay gouge.
The propylitic alteration includes patchy epidote-chlorite and veins affecting diorites and andesites.
The primary mineralisation comprises hydrothermal quartz breccias and veins with four or five different quartz stages: mostly grey, white, translucent, varying grain size from amorphous-microcrystalline-coarse, and a late amethyst quartz stage.
Panuco Mineral Resource Estimate
At 150 grams per tonne (g/t) Silver Equivalent (AgEq), the total indicated mineral resource estimate of the Panuco Project is 9.5 million tonnes (Mt) containing 88,192 thousand ounces (koz) silver at a grading of 289g/t, 736koz gold at a grading of 2.41g/t, 25.4 kilo tonnes (kt) lead at a grading of 0.27%, 79.9kt zinc at a grading of 0.84%, 155,841koz AgEq at a grading of 511g/t, and 2,076koz Gold Equivalent (AuEq) at a grading of 6.81g/t.
The total inferred mineral resources of the mine are 12.2Mt containing 93,653koz silver at a grading of 239g/t, 758koz gold at a grading of 1.93g/t, 35.4kt lead at a grading of 0.29%, 125.3kt zinc at a grading of 1.03%, 169,647koz AgEq at a grading of 433g/t, and 2,261koz AuEq at a grading of 5.76g/t.
The total (indicated + inferred) mineral resource estimate of Panuco is 21.7Mt.
Mining and Processing Methods
The proposed mining methods as per the July 2024 PEA for Panuco are cemented rock backfill and uncemented rock backfill methods. The project will also be mined using paste backfill for stope support.
The primary mining method for all project deposits is long hole stoping. For mining the northern part of the Copala North Zone under the Copala township, drift-and-fill method was selected.
To reduce upfront capital and ensure higher productivity, contractor mining is proposed for the project.
As per the PEA, the mill development will be a two-phased approach. Phase 1 will have an initial throughput of 3,300tpd.
Phase 1 assumes crushing, screening, and grinding of the Run-of-Mine (ROM). The grinding will be done by a ball mill.
The ground material will be sent to the leach circuit. It will remain in the circuit for 96 hours. From the whole ore leaching tank, the discharge will gravitate to the counter-current decantation circuit.
The decantation circuit will clean the leached solids of the pregnant solution by a series of counter-current thickeners to allow extraction and recovery of silver and gold by cyanide leach-Merrill Crowe process.
The recovered gold and silver will be refined into doré bars. A portion of the plant tailings will enter the paste plant. The rest will be deposited onto a wet tailings storage facility.
The process plant will be expanded to process 4,000tpd in Phase 2. Additionally, a flotation and concentrate leaching circuit will be installed in the flowsheet for improved recoveries from the fourth year.
Project Infrastructure
The past-producing district covering 7,189.5ha has 35km of underground mines and more than 86km of total vein content.
The scale camp of the past-producing district has substantial infrastructure including permits, roads, skilled workforce, and power.
The new infrastructural facilities of Panuco will include a process plant with associated facilities and a tailings storage facility.
Panuco Project Contractors
The July 2024 PEA of the Panuco Project was prepared by Ausenco Engineering Canada with support from SGS Canada and Entech Mining.
SGS Geological Services and Ausenco Engineering Canada completed the September 2023 mineral resource estimate of the project.
The January 2024 mineral resource estimate report was prepared by SGS Geological Services. Ausenco and Maunula & Associates were contracted to complete the March 2022 maiden mineral resource estimate.
In August 2021, Vizsla selected ALS Canada with the support of Ausenco to conduct a preliminary metallurgical test on the composited material (around 330 kilograms, kg) mined from the Napoleon vein.
SRK Consulting was awarded a contract by Vizsla in August 2021 to design and lead the preliminary data collection program of the project area.
EM Geophysics conducted a geophysical survey at the project site in May 2021. Maza Drilling and Bysla Drilling delivered drilling rigs for the project.
In 2016, MRP selected Geophysical Surveys to conduct an airborne magnetics survey on the project area.
