Leading North American companies looking for oil head to Canada’s oil sands or the Bakken Oil Shale formation in the U.S. Most major gold miners have properties near Red Lake in Canada or in Nevada. Those hunting silver head to Mexico, the largest silver producing country on the planet. Over the past five centuries, Mexico has provided nearly one-third of the world’s silver with production regularly eclipsing 100 million ounces each year nowadays. Last year, roughly 130 million ounces were produced; equally more than $4 billion in silver at today’s prices.
Industry behemoths Penoles and Grupo dominate the space; together producing nearly two-thirds of all silver in Mexico each year. Looking to capitalize on silver in Mexico as well as a past-producing Penoles’ project is British Columbia’s Victory Resources Corporation (TSX-Venture:VR), a quickly emerging junior miner with projects in Canada and Mexico. The company’s 100%-owned Au/Wen property lies in the Nicola Belt in BC near the prolific Princeton and the Afton copper deposits near Kamloops. While the Canadian project is known to host strong quartz mineralization and offers a solid grass roots opportunity as a mining investment, Victory also is currently proving-up reserves and nearing production in Mexico as well.
Victory’s main focus is on the Reforma property, which was formerly owned by Penoles and covers a total area of 7,226 hectares located at the common boundary of Sinaloa and Chihuahua States in west-central Mexico. The property borders the Tyler/Bahuerachi Copper deposit and Santo Tomas Copper deposit. Victory will earn a 70 percent undivided interest in the Reforma property as part of an option agreement. Documentation shows that between the years 1968 to 1980, the Reforma mine processed 1.8 million tonnes grading an average of 91.62 grams per tonne silver, 1.90 percent lead, 7.44 percent zinc and 0.63 percent copper.
Victory is employing a business strategy of evaluating the existing tailings from Penoles’ production while also conducting drilling programs to further evaluate reserves on the property. Advanced processing technologies and increased metal prices over the last decade have made it extremely profitable to re-process tailing from past producing mining operations. To date, drilling and sampling has proven significant reserves for the company. Victory’s testing has shown elevated values of silver in the tailings ranging from 4.20 ppm to a high of 60.8 ppm as well as some high values of zinc.
Drilling has intercepted grades as high as 23.2 ppm silver, 17.05 percent iron, 12.45 percent zinc, 0.88 percent copper, 1.445 percent lead and 0.89 ppm gold. Further drilling in the Stage 2 program is exploring the downward extension of the iron skarn mineralization as well as confirming its continuity along strike to the south. Further testing the tailings, Victory has identified a grid of 20 by 20 meters, with a total of 93 drill holes planned with a depth of 15 meters on average. This 1400 meter drill program is expected to be complete by mid-May. Moreover, the equipment is on site for Victory to conduct underground rehabilitation of the Reforma main tunnel and the Reforma South underground workings. The rehab will allow for deeper diamond drilling of underground targets.
A particularly compelling aspect of processing tailing is that it is easy mining with only a front loader and a backhoe required to rapidly move the company towards becoming a producing miner while extensive exploration is conducted in both British Columbia and Mexico. As said by Wally Boguski, President and CEO of Victory Resources, "The potential of an economically viable resource in the tailings pond will be an important milestone in our development of the Reforma mine site."
With its strong management, advisory staff and tight share structure, the investment community has steadily taken notice of Victory Resources and its holdings. Two years ago, shares could be grabbed at only a nickel each, but the acquisition agreement for Reforma and other developments have carried shares upward on a smooth climb to its current levels between 40 and 50 cents. All-time highs for shares of VR are 58 cents. The technical chart has a solid upward trend since late in 2009 and is threatening to move to new levels; keeping this chart firmly on radar for a blue-sky breakout.
