Mining companies diversifying away from Mexico

Mining companies have diversified out of Mexico in a string of deals this year, amid growing concerns over the country’s attractiveness to investors.

BNamericas has identified at least eight acquisitions by Mexico-focused miners and explorers targeting assets outside the country – mainly in the US and Canada.

While it is too early to tell if the transactions are part of a growing trend, they come at a challenging time for mining companies in Mexico.

Despite Mexico’s strengths, including mineral wealth, skilled workforce and long mining history, political uncertainty under the Morena party administration is holding back investment, according to mining chamber Camimex.

Recent developments have added to the problem.

The decision to scrap the mining undersecretary post in an austerity drive was widely condemned by industry groups, while the senate is set to debate reforms to pave the way for the nationalization of the emerging lithium sector, which is likely to provoke further jitters.

DIVERSIFICATION DEALS

1. Argonaut Gold – Alio Gold

Argonaut accelerated its northward diversification with its acquisition of Alio Gold in July.

The deal adds the Florida Canyon gold mine in the US to its El Castillo complex and La Colorada assets in Mexico.

Argonaut has since sold the Ana Paula Mexican gold project – Alio’s other main asset – to raise cash to advance its Magino project in Canada.

The deal was completed after Alio sold its San Francisco mine in Mexico to Magna Gold.

Argonaut also signed a JV agreement with UrbanGold Minerals to develop the Troilus gold-copper project in Canada in June.

The company has run into permitting setbacks at its San Antonio and Cerro del Gallo projects in Mexico.

2. Excellon Resources – Otis Gold

Excellon added the Kilgore and Oakley primary gold projects in the US to its Mexico-heavy pipeline through the acquisition of Otis Gold in April.

The deal was aimed at amplifying Excellon’s exposure to precious metals in the early stages of a bull market, the company said at the announcement of the tie-up in February.

Excellon’s Platosa silver-lead-zinc mine in Mexico is currently the company’s sole producing asset.

While the main focus is on precious metals, Excellon also stated that the deal “diversifies asset base into the favorable mining jurisdiction of Idaho and positions Excellon for further growth in the US.”

3. Premier Gold – Getchell project, US

Premier continues to look at growth opportunities north of the border.

Most recently, the company announced plans to acquire the Getchell gold project in Nevada for US$50mn.

Measured and indicated resources are put at 23.6Mt grading 1.93/t, for contained metal of 1.465Moz.

Premier’s Hasaga gold project in Canada is also a key focus for exploration, with a 25,000m drilling campaign ongoing.

The company also confirmed in August that it is evaluating a possible spin-out of its US subsidiary which holds its Nevada assets, which include its interest in the South Arturo mine and the McCoy-Cove project.

4. MAG Silver – Deer Trail project

MAG – whose main focus is the Juanicipio 44:56 JV with Fresnillo, which is under construction – announced an agreement to earn a 100% interest in the Deer Trail silver project in Utah.

The company must spend Cdn$30mn (US$22.8mn) and pay Cdn$2.0mn in royalties over 10 years.

5. Gold Resource – Golden Mile project

Gold Resource has continued to invest in Nevada since reaching commercial production at its Isabella Pearl gold mine in the US state last year.

The company acquired the Golden Mile exploration-stage gold project in June, its fifth Nevada property, which increased its land package there by 51%.

Prior to the start-up of Isabella Pearl, Gold Resource was a single-producer miner, focused on its Oaxaca unit in Mexico, which produces gold, silver, lead and zinc.

6. Silver Bull Resources – Beskauga project, Kazakhstan

Silver Bull announced a planned option agreement to acquire the Beskauga copper-gold project in Kazakhstan, hailing the country as an emerging go-to mining jurisdiction.

“Unlike many governments around the world today, the Kazakh government is very supportive of the mining sector, a view which is highlighted by the fact that numerous major mining companies have recently set up an office in the country and acquired exploration licenses,” Silver Bull said in August.

Silver Bull’s Sierra Mojada primary silver project remains under a blockade by a local mining cooperative, it said in the same release.

7. QcX Gold – Quebec properties

QcX has shifted exploration efforts to Quebec through acquisitions of the Golden Giant, Fernet and Fernet East projects in 2020.

The deals spurred the company to change its name from First Mexican Gold in July.

8. Mexican Gold-New Found Gold

Mexican Gold reached an agreement to merge with New Found Gold in January, combining two single-asset companies with projects in Mexico and Newfoundland, Canada.

The company – to be renamed Bonanza King Mining – will host the Las Minas asset in Mexico and Queensway in Canada.