Vizsla financing will test market's silver appetite

A long string of flashy drill results, many of which contain intervals of more than 1kg of silver equivalent, and a drilling programme with nine rigs currently (down from 13 earlier this year) have seen the company rack up more than 210,000m of drilling and a growing resource.In March, the company released a resource which featured an indicated resource of 5 million tonnes grading 191gpt silver, 2.08gpt gold, 0.26% lead and 0.5% zinc for a 383gpt silver equivalent containing 30.5 million ounces of silver, 331,100oz of gold, 13,000 tonnes of lead and 24,600t zinc. The estimate was based on 445 holes for 124,915m completed between November 2019 and December 2021 at an all-in discovery cost of US$23c/oz.A resource update is planned for December to include some 120,000m of drilling this year, with a similar amount of drilling planned for 2023 to keep growing the resource. There is also talk of a preliminary economic assessment kicking off in mid-2023 although that may depend on market conditions. Vizsla Silver's VP exploration Jesus Velador talks exploration at the Panuco project in Sinaloa, Mexico Vizsla has courted interest due to its potential for scale and above average grade for Mexican silver exploration projects, with multiple intercepts of more than 1kg/t silver equivalent and even over 3kg/t, with the company billing the Copala structure as, "a monster in the making". The Copala component of the March 2022 resource was based on the sum total of eight holes. Now, 81 holes have been drilled into it with a weighted average grade of 496gpt AgEq over an average true width of 9.96m, with mineralisation traced over 1,000m of strike and 400m down dip. Just 300m of strike was included in the resource. Vizsla has three drill rigs working on step out holes in this area as well as some infill drilling on 25m centres."There have been multiple events of quartz brecciation and stockwork zones [at Copala]. The pinkish colouring is associated with high grade. The widths of the structure rang from 3m to 24m with grades of 300gpt AgEq to over 2000gpt. The structure is complex in a good way," VP exploration Jesus Velador said.The company expects the Copala resource to show meaningful growth in the next resource update, with company geologists using a range of adjectives such as "super" and "amazing". Importantly, they are see potential for the Copala area to keep growing due to the presence of the north-south trending Cristiano vein, which intersects the northwest-southeast trending Copala structure.Cristiano is the most recent vein discovery by the company and is thought to extend further to the north. It is thought to be an epithermal vein emplaced on a reactivated fault. It is currently defined by 14 holes to date over 500m of strike and 850m down dip with an average grade of 841gpt AgEq over 1.88m true width. "This is becoming a very significant resource," Valador said. There has also been little exploration between Cristiano and the Tajitos vein a little to the west, which also heads into Copala. "There is a big area to test between Cristiano and Tajitos," Velador said.It also looks possible that Tajitos, which has a northeast-southwest trend had has been traced for 1.5km and 500m deep with average 3m width, could intersect with the Napoleon vein to the south, although the area in which this may occur is beyond Vizsla's concession boundary in a free area currently not held by anyone. However, getting this concession seems to be unlikely during the administration of the Andres Lopez. "Napoleon and Tajitos may converge but the government has said it will not auction any more exploration concessions in Mexico," Velador said.Napoleon is an epithermal vein with intermediate sulphidation, with an average width of 3.5m over a 2.5km strike length, vertical extent of 550m, and base metals concentrations, which is typical of vein systems in Mexico. Two drill rigs are working at Napoleon; one on infill drilling and a directional rig exploring the vein to depth. "We see multiple splays at depth to the south where there is a system of veins called a horsetail structure. We see continuity of grade in the main Napoleon vein and expect to come up with multiple vein splays with mineralisation at depth. The trend of mineralisation goes deeper to the south and drilling this year has confirmed that it plunges to the south," Velador said.Geologically, the Panuco district contains intermediate to low sulphidation epithermal silver and gold deposits related to siliceous volcanism and crustal extension in the Oligocene and Miocene. Host rocks are mainly continental volcanic rocks correlated to the Tarahumara Formation. Company geologists hypothesize that there is a relationship between the epithermal mineralisation and a rhyolite dome. "There is a dome right next to the Animas zone in the centre of the property, which was the epicentre of past production," Velador said.It seems the company will favour continuing to explore its land package rather than commit to completing a PEA in an unreceptive market. "The real catalyst this year is the discovery potential. We are doing the most aggressive drilling programme for an explorer in all of Mexico," Pettingell said. Vizsla Silver keeps its geologists buys with 120,000m of drilling at its Panuco project in Sinaloa, Mexico Vizsla has separated its concessions into three areas with most of the drilling in the west block. Thick vegetation cover makes mapping challenging and with just 45% of the project mapped to 1:1000, the company expects to add more vein structures with six geologists focusing on mapping. Some 78 prosects have been identified with only 30% of the concessions explored to date with 16-18 vein targets are in the pipeline for drilling.To facilitate its exploration work, Vizsla has exploration and access agreements with all five ejidos in the area including a 30-year agreement with three of them over the western and central portion of its concessions.Vizsla optioned the past-producing Panuco district in late 2019 and has since defined over 86km of total vein extent. The project also includes a 500 tonne per day mill, 35km of underground mine workings, tailings facilities, a paved highway through the property, two power lines which pass through the property and some permits.DevelopmentWhile a PEA may not be coming in the immediate future, COO Martin Dupuis has plenty to think about. "Initial studies suggest it may not be worthwhile trying to start with an open pit so we may look at ramp or portal to the shallow mineralisation," Dupuis said.Initial metallurgical testing on Napoleon indicates that a conventional flowsheet of crush, grind and flotation will be effective as it is elsewhere in the country. Initial metallurgical testing for Copala is due to start in December. The company is also well advanced on its environmental baseline work with 1.5 years of data collected although the authorities only require one year of data.Panuco is 56km from Mazatlan, which has an international airport and port facility. Some 70% of the workforce lives in the nearby town of Concordia. However, while 400kv and 240kv powerlines cross the property being able to connect to these in a timely manner when the time comes could be a challenge given that they are government owned. Vizsla thinks it could have an alternative option in the shape of a nearby hydroelectric generating centre, which it could also potentially connect to.Vizsla has been a market darling for much of the past two years. In 2021, it raised C$73.2 million in two rounds of equity financings allowing for accelerated exploration and to exercise its property earn in agreements, consolidating the entire Panuco-Copala district. This included a C$69 million bought deal financing in June 2021. A year previously, Vizsla raised C$30 million in July 2020 which including C$10 million from Mr Silver, Eric Sprott.With some C$11 million in its treasury, a C$2 million a month burn rate and aC $20-24 million 2023 drill programme to finance, the coming weeks could test how much market support the company has at a time when precious metals junior explorers are suffering from falling share prices and a market which doesn't seem to care.With a share price currently around C$1.66 the company is likely to miss out on the exercise of 16.1 million warrants in December priced as it did with a similar number in July. "We don't want to extend or reprice these. We could have done that with the July warrants, and we didn't," VP business development and strategy, Michael Pettingell told Mining Journal during a site visit.For now, completing the updated resource estimate and raising more funds are the priorities. With a fund raise in the air, the site visit attracted several mining analysts [seven analysts cover Vizsla] and a couple of investment bankers, although fewer than the number who participated in a site visit a year ago.Shares in Vizsla Silver are trading at $1.66, valuing the company at $257 million.

ABOUT

SOLUTIONS

LEGAL

SOCIAL

PRECIOUS METALS

Vizsla financing will test market's silver appetite

Already have an account? Sign in here

MORE ON THIS TOPIC

FROM OUR PARTNERS

RESOURCE STOCKS

Forsys Metals' pipeline of catalysts to excite the market

RESOURCE STOCKS

The largest mineable measured uranium deposit in the USA

MOST POPULAR

MINERS

Anglo American shares tumble on planned production cuts

MINER'S RIGHT

Iron ore's unexpected boom rumbles on, defying experts

EXPLORATION & DEVELOPMENT

Ivanhoe quadrupling exploration budget for 2024

ENERGY MINERALS

Hopes rise that China's lithium price rout will end soon

RESEARCH

Premium subscribers only

View more

Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

Mining Journal Intelligence Mining Equities Report 2023

Mining Journal Intelligence Global Leadership Report 2023: Social licence

Mining Journal Intelligence Project Pipeline Handbook 2023

THE ASPERMONT BRAND PORTFOLIO

Login

Not a Subscriber?

Subscribe Now