Esperanza Resources plans a 'big year'

Despite a looming royalty tax and security issues, CEO Greg Smith at Esperanza Resources says Mexico is "still a great place to be."

The company is working on a bankable feasibility study for its Esperanza gold project, an open pit heap leach project with a resource of 1.5 million ounces of gold and 16 million ounces of silver.

In February the company signed a big deal with Pan American Silver. Esperanza agreeed to acquire three advanced gold projects from Pan American all in Latin American in return for a $35 million investment and a $15 million credit facility.

Smith said the Esperanza gold project remains the company's flagship asset.

"It's a big year for us. With the deal with Pan American, we'll be announcing the closing of the deal by the end of the second quarter and then some developments on that deal going forward."

One of the advanced projects is La Bolsa in Mexico, what Smith calls a great place to mine.

"They have great mining legislation, a great mining culture. The government is supportive of mining."

Smith, part of the ormer management team of Minefinders Corp., admits to some head winds.

"Recently security has been more of a challenge. The government has been contemplating a royalty, a net profits royalty."

A 5% royalty scheme is wending its way through the Mexican legislature. A miner's pre-tax profits would be be shared with the federal government, municipalities and states. The royalty should raise between US$250 million and $500 million a year. Mining companies in Mexico currently pay general corporate taxes and fees per hectare of land in mining concessions.

The bill was approved Mexico's Congress in April and now sits with the Senate. It would have to be signed into law by President Peña Nieto.

esperanza resources gold project

Esperanza Resources flagship gold project is located in Morales, Mexico.