One of the biggest exploration programs in Mexico underway at Vizsla’s Panuco project

Panuco project area. Image from Vizsla Silver.

Vizsla Silver (TSXV: VZLA) faced some challenges when it began its first drill program at its Panuco silver-gold project, in Mexico’s Sinaloa state, in early 2020.

The junior had just signed a $43-million option agreement for Panuco in September 2019, after listing on the TSX Venture Exchange the year before.

“We hadn’t really hit what we were looking for,” said Vizsla president and CEO Michael Konnert in an interview with Canadian Mining Journal. “We were able to find high grade and drill some good ore shoots, but it wasn’t really that home run yet.”

Then came the pandemic, which forced a two-month shutdown of exploration at the 94-sq.-km project.

During that time, the company’s geologists went back to their desks and spent time reviewing their work. That break away from the project paid off when they were able to return to drilling in May, with a focus on the Napoleon vein system and Cordon del Oro vein corridor at Panuco.

“On our second hole back, we made our first discovery at Napoleon and then on our seventh hole we drilled one of the highest grade silver intercepts in recent history in Mexico,” Konnert says.

That second hole, reported last June, cut 8.2 metres of 1,544 g/t silver-equivalent (738.9 g/t silver and 11.06 g/t gold) from 108.6 metres downhole. The interval included a 2-metre section of 3,348 g/t silver-equivalent (453.8 g/t silver and 9.2 g/t gold).

Vizsla Silver chairman Craig Parry and president and CEO Michael Konnert at the Panuco silver-gold project in Sinaloa, Mexico. Credit: Vizsla Silver

The ultra-high-grade hole followed in July, with hole NP-20-07 returning 6 metres of 8,078 g/t silver equivalent (1,808.2 g/t silver, 66.8 g/t gold, 2.99% lead and 3.3% zinc) from 69 metres.

Vizsla now has more than 68,000 metres of drilling under its belt (28,500 metres last year and 40,000 metres for the first half of 2021), as well as C$89 million in its treasury. It also counts Eric Sprott as a major shareholder, with a 12% interest in the company.

The junior is conducting one of the biggest exploration programs in Mexico, with 35 geologists and eight drill rigs onsite at Panuco. In June, it announced it was adding two more rigs for a total of 10.

The bulk of the drilling this year is dedicated to resource drilling in the western portion of the property, with five rigs at the Napoleon and Tajitos veins.

Eric Sprott is a major shareholder, with a 12% interest in the company

But despite the torrid pace of drilling, the company isn’t in a rush to compile an initial resource at Panuco.

“The next step for us is to find the natural edges of mineralization at Napoleon,” Konnert says. “We could put out a resource for Napoleon and Tajitos, but it’s not the right move until we find the natural edges of the mineralization and include all of that in a resource.”

That could happen next year, but Konnert says there’s no set timeline.

So far, Napoleon has a strike length of 3 km, and has been drilled 950 metres along strike and 350 metres at depth. The vein width averages 4 metres true width, but varies up to 15.3 metres. Mineralization plunges shallowly to the south, where it widens and returns higher grades, and is open at depth. The three most recent holes drilled at Napoleon, to the south of previous drilling, had an average true width of 7.4 metres with an average weighted grade of 673 g/t silver-equivalent.

Tajitos, which was historically mined, extends for 575 metres of strike and 250 metres depth, and is open to the northeast, southwest, and at depth. The average vein width of mineralization (encountered in 32 drill holes) is 3 metres with a weighted average grade of 505 g/t silver equivalent (329 g/t silver and 2.1 g/t gold).

Vizsla is also conducting exploration drilling on targets (assays are pending for five new targets across four vein corridors) generated by its mapping and prospecting team, and conducting geophysical surveys to identify prospective areas.

Property acquisition

Vizsla’s 2019 option agreement to acquire Panuco, located 45 minutes away from Mazatlan, consolidated a land package that previously was split between two different operators. Over a term of seven years, the earn-in agreement will see the company pay $43 million for the land package.

“The big reason we were able to do it is because silver prices were quite low, $14 or $15 an oz. At those prices, the Mexican companies weren’t making much money,” Konnert says.

The property includes a permitted 500 t/d mill (likely to be expanded), tailings facilities, underground mines, roads, powerlines and permits. The company has the option to accelerate the earn in period.

After an initial resource is established, Vizsla will move onto economic studies.

“The exciting part is that we don’t have to spend two or three years permitting a mill, we don’t have to spend much time permitting a tailings facility, we don’t have to build power lines or roads – all that is there on the property, permitted and operational.”

The epithermal silver-gold project is located in the prolific Sierra Madre Occidental belt. Vizsla describes the geology and mineralization style at Panuco as near identical to First Majestic Silver’s (TSX: FR; NYSE: AG) San Dimas mine (acquired from Primero Mining in 2018 for $320 million), 80 km away in Durango.

While both districts share a history of mining going back centuries, however, Panuco has not seen any modern, systematic exploration until Vizsla came along.

“Sinaloa has been overlooked for exploration,” Konnert says. “I think that’s the only reason that this district was available to us. If it was over the border in Durango or one of the more established mining jurisdictions, I think it would already be in a Fresnillo or a Penoles.”

While Mexico has lost some of its shine for Canadian miners in recent years because of cartel violence, as well as uncertainty stemming from a court case challenging Almaden Minerals’ (TSX: AMM) mining claims in Puebla state, Konnert says Vizsla’s experience with both the local government and communities has been positive.

“We’re happy to be there – we’re thankful for the communities that host us,” he says of Copala and Concordia areas of Sinaloa.

Vizsla Copper

In other news, Vizsla recently received shareholder approval for a spinout of its copper interests – the Blueberry copper project in central British Columbia’s Babine porphyry belt and an option to earn 60% in the Caruthers Pass copper project 200 km north of Smithers. The spinout is expected to be completed in July.

(This article first appeared in the Canadian Mining Journal)