Mexico-focused junior leaps 28% on mine restart

Cyprium Mining (TSXV:CUG) had a banner day on the markets Wednesday after announcing that it has put the Potosi silver mine back into production after a four-year hiatus.

Investors raced in at about six times average volumes, with the penny stock gaining 28.5% or two cents to close at $0.09 per share on the Toronto venture board.

The announcement comes about a year after Cyprium signed a series of agreements to acquire a 53% interest in mineral rights and concessions for the Potosi mine property, located in Chihuahua State, Mexico from Minerales Nacionales de Mexico S.A. de C.V. (Minamex) and the Valenzuela family. Production will initially focus on the "Tunel" mineralized body, accessible from the recently-rehabilitated Potosi No. 3 shaft. Tunel is found on levels 1 to 4 of the mine and Cyprium is confident the Santo Domingo body located at levels 9, 10 and 11 has good exploration potential.

"We are very pleased that it took only six months and less than a million dollars to return the Potosi Mine to production. This nicely validates Cyprium's business plan of acquiring and inexpensively restoring past producing mines to generate cash flow for expanded development and exploration," chairman and CEO Alain Lambert said in a statement.

The company expects to start blasting by end of July and is currently extracting 20 tons per day with a goal of producing 80 tons a day by mid-August. Mineralized ore mined from Potosi will be shipped to the Aladama flotation plant 42 kilometres away for processing.

The mine is located in the district of Santa Eulalia, where mining has taken place since the 1500s. According to Cyprium the area is one of Mexico's primary silver and base metals-producing areas, having yielded over 500 million ounces silver, plus lead and zinc. Silver grades in Santa Eulalia are estimated to be between 125 and 350 grams per tonne. An NI 43-101 report is expected by the end of the year.

Cyprium's announcement comes at a prescient time for silver investors, with all signs pointing to a bull market for the white metal.

Silver prices hit a two-year high Monday, climbing above $21 an ounce, as the precious metal continues to gain from the safe-haven rally following the UK referendum, driven mostly by a sudden jump in Chinese demand. Precious metals have risen on anticipation of further monetary stimulus measures from central banks in the wake of the UK’s vote to leave the European Union.