Issue link: http://resourceworld.uberflip.com/i/1239546
38 www.resourceworld.com A P R I L / M A Y 2 0 2 0 MINING Santacruz Silver Mining's [SCZ-TSXV; 1SZ-FSE] goal to become a mid-tier silver producer was in sight at the end of 2019. Silver production reached 2.8 million equivalent ounces – a 346% increase over the previous year. Investors were rewarded by a stock that appreciated five times to a high of C $0.21 cents from a low of C $04.5 cents and construction was underway to support an increase in milling tonnage for 2020. The company was firing on all cylin - ders as they say. Then, in mid-March, this year the company announced it was suspending operations of the processing facility at its Veta Grande Mine for six-months to do upgrades and the market responded with surprise. Management deemed the shutdown necessary to make improvements at the processing plant while constructing a new tailings storage facility (TSF). Chief Operating Officer, Carlos Silva, said some of the upgrades to the crushing plant, flo - tation circuits and ball mills were already underway. "While we are continuing with the geotechnical evaluations and assessments of the remaining capacity at the exiting TSF, we have made the decision to sus - pend processing at Veta Grand," he said. "This will provide us the opportunity to safely engage in improvements at the processing plant concurrent to the con- struction of the new TSF." The market reacted by cutting the com- pany share price by half to a low of C$0.6 cents – half of the C$0.12 per unit cost of a C$734,150 private placement closed in February, despite Sliva's insistence the company would offset 70% of the Veta Grande production by the end of May by increasing mill throughput at its other mines, Zimapan and Rosario. Herein lies the opportunity. Santacruz has a successful track record with two producing silver projects (Rosario, Veta Grande) and two prospec - tive exploration properties, the Minillas property and Zacatecas properties. In addi- tion, the company owns 100% of Carrizal Mining S.A. de C.V, a private Mexican mining company, the principal asset of which is a 20% working interest in the Veta Grande Project. Carrizal Mining has the right to operate the Zimapan Mine until December 31, 2020 under a mining lease agreement allowing time for manage - ment to work towards finalizing a formal acquisition agreement with Grupo Penoles, S.A.B de C.V. (Peñoles). The company's silver-equivalent pro- duction increased 346% from 2018 to 2.8 million ounces in 2019, due to its acquisi- tion last year of private company Carrizal Mining which has the rights to operate Zimapan until December 31, 2020. Zimapan produced 1.6 million oz Ag-eq for Santacruz in 2019, compared with Veta Grande's 761,262 oz Ag-Eq and Rosario's 465,576 oz. If the formal acquisition agreement with Peñoles comes to fruition, investors could expect much of the same for 2020 as they saw in 2019. "Santacruz had a record year in 2019 following the successful acquisition and integration of Carrizal Mining. In addi - tion to this transformative event, the Veta Grande and Rosario mines increased their annual production substantially, while at the same time maintaining significant development activities and advancing exploration plans as a pathway to keep improving our production at all mines and expanding mine resources." Silva said. What galvanizing events should specu - lative investors be watching for over the next six months? First, if the acquisition agreement with Santacruz Silver Mining BUILDING AN INTERMEDIATE SILVER PRODUCER IN MEXICO by Robert Simpson The Veta Grande Mine in Zacatecas State, Mexico. Source: Santacruz Silver Mining Ltd.