Golden Tag Resources Ltd is a Toronto-based mineral resource exploration company focused on properties in Mexico.
The company holds a 100% interest - subject to a 2% NSR (net smelter royalty) - in the San Diego Project in Durango, which is among the largest undeveloped silver assets in the country and is located within the prolific Velardeña Mining District.
Exploration and mining in the Velardeña district extend back to at least the late 1500’s or early 1600’s. The mines were first worked by the Spanish with the high-grade ore mined by hand and processed on small scale by direct smelting.
The Velardeña district is located at the easternmost limit of the Sierra Madre Occidental, on the boundary between the Sierra Madre Oriental and the Mesa Central sub-provinces. Both of these terranes are underlain by Paleozoic and possibly Precambrian basement rocks. Most of Mexico’s high-grade silver mines are located in the Mesa Central, near this contact.
Proactive asked Golden Tag management for more details about the company and its opportunity.
Can you give us a brief introduction to Golden Tag and the team at its helm?
The board members & management team at Golden Tag are ideally suited to move the asset forward and deliver value for shareholders. Combined we have extensive experience advancing a project right from exploration, into discovery, through financing and ultimately putting into production.
Greg McKenzie - Director, President and CEO
Greg McKenzie is a former senior investment banker with more than 20 years of experience in financing, M&A, financial advisory, valuation, and strategic advice to mid-cap companies. He has held positions with Morgan Stanley, CIBC World Markets and Haywood Securities, and has been involved in transactions valued in excess of $18 billion. In addition to his capital market experience Mr. McKenzie previously practiced corporate law with a leading Canadian securities and M&A law firm.
Will Ansley – VP Corporate Development & IR
With over 20 years of experience, Will Ansley has been involved with the development and construction of seven mines in the Americas, including six mines in Ontario; he was the Director of Business Development for FNX Mining Company Inc., Vice President of Corporate Planning & Strategy for Lake Shore Gold Corp, and was the Chief Operating Officer of Mineral Streams Inc. where he helped orchestrate its successful sale to AuRico Metals Inc. in 2015.
Bruce Robbins – Independent Qualified Geologist
Bruce Robbins is a geological consultant that has been active for over 30 years having worked in various phases of exploration and development of metallic and industrial mineral projects owned by Imerys, Kennecott Exploration, Luzenac, Rio Tinto Minerals, Rio Tinto Exploration, US Borax, and many others.
The flagship San Diego project is one of Mexico’s largest undeveloped silver deposits in Mexico. Why has the property been overlooked until now?
For seven years the project was essentially on care and maintenance, a function of a very low silver price environment over a sustained period from 2013 until mid 2020. During this seven-year period, it was very challenging for silver companies to secure any funding to advance their projects.
Prior to this, in 2012 Golden Tag made a significant discovery when they drilled into the Fernandez zone, a large bulk tonnage zone that has been identified over a vertical extent of around 700 metres. A resource was issued in 2013 which outlined the Fernandez zone hosting approximately 45 million ounces of silver equivalent in the indicated category and 81 million ounces of silver equivalent in the inferred category. Unfortunately, the company depleted their remaining cash balance and subsequent to issuing the maiden resource statement (2013) no additional fieldwork has been performed, until we came on board in 2020 and recapitalized the company.
What drew you to the property? What kind of potential do you see there?
When we evaluated getting involved with the property, silver was still out of flavor, but we were convinced that eventually silver would regain momentum. The sheer size of the current resource is amazing, the vertical extent of the zone as currently outlined is 30% higher than the CN Tower. With all that silver, and we believe there is a lot more to be found and with a rebound in silver prices, there is an incredible leverage proposition to this property. Not to mention it is located in a well established mining camp that hosts ongoing precious metal mining for over 100 years.
What is the company’s plan to advance the project in the early part of 2022?
In the first half of 2021 we completed a 4,500 metre (m) drill program that had tremendous success, including the discovery of a new epithermal zone intersecting 892 g/t Ag.Eq (grams per ton silver equivalent) over 10m. We extended the Fernandez Zone 40m closer to surface drilling 104.64 g/t Ag.Eq over 50.2m, and drilled 111 g/t Ag.Eq over 191.57m in the upper northwestern side of Fernandez, which represented a 34% improvement in grade over the closest hole within this area of the zone.
Furthermore, we discovered a brand new zone, called the 1849 Zone, returning 116.76 g/t Ag.Eq over 66.04m within a broader interval of 91.86 g/t Ag.Eq over 134.37m. The 1849 Zone currently has a vertical extent of over 500m and is open along strike and dip, a new broad zone of skarn mineralization with bulk tonnage potential located only 120m northwest of the Fernandez Zone.
We are in the process of drilling a 4,500m follow-up program and aim to have the work completed in Q1 2022. Key targets include the new epithermal zone, as well as testing the eastern & western flanks within the upper portions of the existing Fernandez Zone, as well as some near-surface disseminated mineralization which could potentially reside immediately above the current Fernandez Zone.
In 2022, we would like to carry out some metallurgical testing on the Fernandez Zone, because there has not been any performed to-date, and likely drill another 5,000-8,000 metres.
The balance sheet looks strong heading into the new year with over $6 million cash on hand and no debt. Will this be sufficient for your exploration plans in the new year?
Golden Tag does have a strong balance sheet, and we will continue with that philosophy. Our current exploration program will only cost approximately $1.5 million, which could be repeated or expanded in 2022 depending on market conditions.
Anything else you’d like to add?
Silver price volatility remains high, and we do not see foresee extended periods of weakness in the silver price given the industrial demand component, as well as the underlying investment demand driven by continued negative real interest rates.
Contact Angela at angela@proactiveinvestors.com
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