Elemental acquired a 1% NSR royalty on the Mercedes gold-silver mine in July 2018, providing estimated average annual revenues of $0.9Mpa from ~2022 after a 450kOz production hurdle has been met.
The Mercedes mine is a 2ktpd underground operation located in the State of Sonora in northern Mexico, 250km northeast of Hermosillo and 300km south of Tucson, Arizona. The mine was acquired by Premier Gold Mines Limited (TSX: PG) in 2016 and consists of 39 mining concessions covering approximately 692sq km and encompassing 45km of mineralised faults.
The geology of north-central Sonora displays a complex history of tectonic and magmatic activity. Gold-silver mineralization at Mercedes is hosted within epithermal low sulphidation veins, stockworks, and breccia zones. Over 15km of veins have been identified within or marginal to andesite-filled basins which constitute the primary exploration target. Premier has developed three new orebodies since acquisition to increase the number of available ore sources as a precursor to increased production, and has identified several additional exploration targets to extend the mine life with an extensive drill programme ongoing.
The operator’s 2019 production guidance for Mercedes is 75,000 – 85,000 Oz Au & 225,000 – 250,000 Oz Ag at an AISC of US$900 – 950/Oz.
In addition to the large Resource base available for conversion into Reserve, which will likely only be done progressively just prior to mining due to access / drilling costs, recent new discoveries of new veins and small very high grade zones (>1Oz/t) near both new and old developments provide encouragement for ongoing Reserve replacement.
For further information please visit the Premier Gold Mines website.