Candelaria Mining looking to bring two exciting projects into production down Mexico way

Two projects with delineated resources in Mexico Near term development project at Pinos Three-year value creation plan What Candelaria Mining Corp does: Candelaria Mining Corp (CVE:CAND) is a gold-focused explorer, whose flagship asset is the 198 square kilometre (sq km) Caballo Blanco project, which lies on the eastern coast of mining-friendly Mexico. It also holds the fully permitted Pinos underground gold development project, which spans 3,816 hectares, in Zacatecas, which is the second biggest gold producing state in Mexico after Sonora. The firm, which has a market cap of around C$63 million, says its main aims are to begin production at Pinos and increase the resources at Caballo where seven 'high impact' targets have already been identified. Caballo already boasts an NI 43-101 indicated resource of 521,000 ounces of gold and 2.17 million ounces of silver, while the inferred category holds 95,000 ounces of gold and 590,000 ounces of silver. The project is seen as a simple open-pit heap leach operation and there is potential to increase resources via continued drilling and exploration. The deposit, the discovery of which is relatively new for this region of Mexico, remains open to the south, southwest, northeast and at depth and the current oxide resource is contained in just one zone called La Paila. Meanwhile, the Pinos project consists of concessions covering 17 kilometres of veins containing gold and silver. More than 80% of the district has yet to be explored. The resource is put at around 90,000 ounces at 4.7 grams per ton (g/t) gold equivalent, with potential to expand that to up to between 300,000 and 500,000 gold equivalent ounces. A robust preliminary economic assessment (PEA) for this property was completed in September, last year which envisaged a 200 tonnes per day (tpd) operation, ramping up to 400 tpd, with a seven-year mine life from production start. Initial capital expenditure is low at US$13.5 million, while the after-tax internal rate of return (IRR) was put at 25% based on gold prices of US$1,250 an ounce. The company is targeting annual production from Pinos of around 13,000 ounces of gold equivalent beginning in the third quarter of 2021. Notably, mining major Agnico Eagle (NYSE:AEM) has invested C$9.75 million in Candelaria and owns 9.95% of the company. How is it doing: In June this year, Candelaria closed a US$9 million medium-term loan with Accendo Banco SA to help finance Pinos' construction.  The loan is secured against the group's assets and bears interest of 13% per year with a 60-month term starting at the draw date. Candelaria may draw US$1.5 million once it executes the facility, with the balance to be made once final loan documentation is completed. Back in April, the group closed a private placing, bringing in around C$1.1 million for general working capital. Directors and officers collectively subscribed for more than 2.4 million units in the financing. In July, Candelaria named its president and director Ramon Perez as the group's interim chief executive, while it said former CEO Curtis Turner had been retained as a strategic advisor after he stepped down to pursue other opportunities. In the same update, the group also revealed it had retained Venture Liquidity Providers Inc (VLP) to help in maintaining an "orderly trading market" for the shares of the company. Inflection points: Further exploration results at Cabollo Blanco Finalizing a deal and start of construction at Pinos Precious metals moves What the boss says: At the time Candelaria secured the US$9 million loan with Accendo, its then CEO Curtis Turner said: "The announcement represents a major catalyst that provides substantial economic development for the municipality of Pinos in Zacatecas state, according to Turner. "The facility also provides key features sought by Candelaria through its solicitation process: a simple debt instrument with limited financial covenants, including a flexible structure allowing for early drawdown and pre-payment of principal. Accendo’s in-depth knowledge of the Pinos project is expected to result in an expedited timeline to closing." Contact the author at giles@proactiveinvestors.com