Pinnacle Silver and Gold is currently advancing its flagship El Potrero project in the state of Durango, Mexico (covering 1,074 hectares in 8 concessions of which 7 are contiguous) and holds two further exploration assets, the North Birch Gold and Argosy Gold Mine projects in Ontario, Canada. The El Potrero property hosts a high-grade gold and silver vein system, multiple mine workings and infrastructure from past production and has a good chance to restart gold and silver production in the near term. The Canadian assets have seen substantial exploration work carried out in the past, which yielded promising results. The company’s focus at the moment is to bring El Potrero into production as soon as possible.
Figure 1: Map showing the location of the flagship El Potrero property
The El Potrero property hosts three historic mines (Dos de Mayo, La Dura, Pinos Cuates), some processing infrastructure and is reportedly used to process material grading 7-8 g/t gold and 170-200 g/t (around 10 g/t gold equivalent). The site requires some refurbishment, but with modest capital expenditure, it should be able to resume operations at the 100 tpd facility within a short time frame. The high per-ton value of the ore should allow Pinnacle Silver and Gold to operate the mine at a very healthy cash margin, enabling it to repay potential lenders to the project and generate sufficient free cash flow to pursue exploration activities on the property and possibly acquire further projects elsewhere.
Investment Highlights
- Pinnacle Silver and Gold (“PINN”, or “Company”) is advancing its flagship El Potrero project, a past-producing gold and silver mine, towards production in the mining-friendly state of Durango, Mexico.
- Near-term cash flow potential: With modest capital expenditure, the asset could be brought back into production within 18-24 months. Head grades from metallurgical testing are anticipated to be 7-8 g/t Au and 115-120 g/t Ag with 100 tpd processing capacity, indicating the potential to achieve significant free cash flow.
- Exploration upside: Only 10% of the property has been explored, and a cohesive modern-day exploration strategy is being carried out across the property. Planned drilling aims to delineate material for near-term extraction and demonstrate the extension of mineralization both laterally and at depth.
- Experienced Management Team: The team at Pinnacle Silver and Gold has experience in developing exactly this type of project in the same jurisdict ion, bringing the required know-how and industry network to the company.
- Attractive industry partnerships: El Potrero is the type of project that attracts interest from trading and royalty companies. These might provide non-dilutive means of funding that could greatly benefit shareholders
- We are initiating coverage with a positive outlook for the company over the next 12-month period with a target price of $0.33.
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1. In the last 24 months, Couloir Capital Ltd. has been retained by the subject issuer under a service agreement that includes analyst research coverage.
2. The views of the Analyst are personal.
3. No part of the Analyst’s compensation was directly or indirectly related to the specific ratings as used by the research Analyst in the Reports.
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