Countries worldwide continue to deal with plummeting currencies relative to the U.S. dollar as the Federal Reserve continues on its path to fight inflation by raising interest rates.
However, we are already starting to see the effects of a stronger dollar by liquidity drying up in the U.S. treasury market, which has forced Treasury Secretary Janet Yellen to signal the potential for buybacks of certain U.S. government securities in the $24 trillion market.
This highlights the uncertainty revolving around financial markets today as countries begin to sell U.S. dollars to support their currencies. At the same time, de-dollarization continues to take place all over the world.
Most recently, Egypt announced that its central bank is working on a new currency indicator that will include a set of other currencies and gold in a move away from U.S. dollar fixation.
Even though many investors are frustrated with gold’s performance thus far in 2022 in USD terms, it has held up very well in many countries as it is trading at all-time highs in numerous local currencies all over the world.
Zacatecas Silver: (TSX-V: ZAC)
A situation I remain very excited about is Zacatecas Silver which has a late-stage gold development asset alongside an exciting silver project that continues to deliver great results in Mexico.
The company is targeting near-term production with scalable upside at its flagship asset, which is the Esperanza Gold Deposit.
The deposit hosts a historical measured and indicated resource of 34,352,000 tonnes at 0.98 g/t gold and 8.09 g/t silver (1.11 g/t AuEq.) for 1,083,366 ounces of gold and 8,936,201 ounces of silver (1,223,792 AuEq. Ounces).
The company plans to publish an upgraded resource in the months ahead alongside the ongoing drill program at Zacatecas Silver Properties, which has returned some excellent results in 2022.
The company is guided by Bryan Slusarchuk as CEO, the former President and cofounder of the rapidly growing gold producer K92 Mining, which now has a market cap of $1.6 billion.
Slusarchuk isn’t the only commonality between K92 and Zacatecas as the CEO of K92, John Lewins is on the Zacatecas board, as is K92 Corporate Secretary Nancy LaCouvee.
I recently chatted with Bryan so he could give Gold Telegraph readers an update on the company and how things are progressing.
Hi Bryan, thanks again for joining me to provide the Gold Telegraph readers with an update on Zacatecas.
First off, let’s start with the Esperanza Gold Project. How is the progress for the pre-feasibility study and preparing an updated resource estimate going? When should investors expect these two significant milestones to be completed?
Thanks Alex. While the market environment for gold and silver equities remains challenging, the technical team on the Esperanza Gold Project continues to make excellent fundamental progress.
As a group, we have done a good job at identifying and executing on opportunities in down cycles that have turned out really well, and I’m confident we potentially have that type of situation here.
The resource estimate and PFS are both driven by outside independent firms, so we aren’t able to provide exact timing of course, but my belief is we should see the resource estimate completed this quarter and then the PFS during the following quarter.
These are both very important to the company and I think have the potential to put the relatively unknown Esperanza Gold Project on the map in a big way.
For new readers, can you highlight the historical studies of this project which showcase its high margin potential? Also, does the company plan to conduct any further exploration in the future on this asset?
The previous economics studies (at a PEA level) in 2011 can’t be relied upon, but as has been noted, this work contemplates in excess of 100,000 ounces per annum of gold production at an operating cost below USD $500 per ounce at a gold price of US $1,150 per ounce.
The latest historical resource which (again, we are treating as historic) came in at 1.22 million ounces at 1.11 g/t AuEq, which makes it one of the highest-grade development stage gold oxide projects out there.
We view the project as having the potential to be very high grade, high margin and low cost.
What I would caution people though, is that they should wait for our updated studies to come out. As discussed, we think a current resource estimate and PFS should be completed in relatively short order. This will give people a more up-to-date look at the potential economics of the project.
As to exploration, there are multiple near-mine expansion targets and also regional exploration targets. But, if the upcoming studies do indicate we have several years of mine life and more than 90% of those ounces in the M+I category, exploration in the near term on this particular project is less important than executing the commencement of production based on what is already known.
Shifting gears, how are things progressing at the Zacatecas Silver Project? Can you provide an update on how things are going and elaborate on the recently reported exciting drilling results at El Cristo?
The project keeps getting better. As a starting point, Zacatecas has announced a mineral resource estimate at the Panuco deposit consisting of 2.7 million tonnes at 187 grams per tonne (g/t) silver equivalent (AgEq) (171 g/t silver (Ag) and 0.17 g/t gold (Au)) for 16.4 million ounces AgEq (15 million ounces silver and 15,000 ounces gold).
But since issuing that current resource estimate, we have had multiple excellent intercepts at Panuco North (which, as the name implies, is north of the main Panuco deposit) and also have recently announced some excellent high grade holes at El Cristo.
These are early days for us at El Cristo, but remember this El Cristo area is interpreted to represent an extension of the famous and prolific Veta Grande Vein system onto our property. We are showing in these early high grade hits that the Veta Grande is not only structurally present on our property but also that it is potentially very robust in terms of mineral endowment.
Stay tuned on this because with a lot of attention on Esperanza, I think many people may have forgotten about the excellent silver assets we have. We need to do a better job pointing out just how nicely this silver situation is advancing.
Can you touch on the upcoming drill program at this project? How many metres are planned?
We have put out a lot of data lately with regards to drill intercepts. Right now the team is modeling up what all of these nice hits mean in a broader context and then will emerge with a drill program for the next phase.
During the recently competed phase, we hit at Panuco North, hit at El Cristo and showed that this project regionally and near deposit keeps getting bigger and better. Stay tuned for an update about the next phase of drilling, which will be a follow up to this recent success but very generally, the plan would call for two rigs likely – one at Panuco North and one at El Cristo while also taking advantage of assay waiting time to move the rigs to some of the new regional targets we have identified for some pure exploration work.
Finally, Bryan, what is your current take on the precious metals space and the global economy? Do you think we are close to the general sentiment in our industry changing?
The setup for gold and silver has never been better. That said, with expectations that the USD will stay strong and that the Fed will continue to raise rates, it is tough to get movement from the USD to gold. I think as soon as the Fed blinks or even hints at a pivot, it is game on in gold.
We have seen a shift of gold from west to east and have also seen gold perform well against most paper currencies, which are cracking at an alarming rate.
The USD will be the last shoe to drop in the fiat prop-up game, in my opinion, and that shoe will drop soon, and gold could really go on a face-ripping rally higher.
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