Precious Metals: Production and Exploration
Restarting past producing mines to meet future demand
Gold and silver remain on the fringe of mineral production in Arizona, with these precious metals being more abundant in neighboring Nevada. At present and since 2018, Elevation Gold’s Moss mine is the only operating gold mine in Arizona, while several silver deposits are in development. But despite limited precious metals activity and being renowned as the Copper State, there is no shortage of opportunities for Arizona to grow its development and production of precious metals.
A five-month declining trend in gold price up to September 2022, pressured by higher yields and a stronger dollar amidst an inflationary cycle, did not prevent gold from remaining a top-performing asset in 2022. Traditionally viewed as a hedge against price pressure and a bastion in unpredictable markets, the World Gold Council anticipates the commodity to remain reliable, particularly as prospects of a formal recession increase. With gold price expected to end 2022 around the US$1,723 mark, this environment could be a catalyst for gold producers and developers in Arizona.
Most silver produced in Arizona is a by-product of copper, gold, lead and zinc mining, but explorers in Arizona appear intent and capable of accelerating the pace of discoveries in a context of growing demand pushed by the green transition. Indeed, despite not being officially deemed a strategic metal like rare earths, lithium or cobalt, silver’s high connectivity properties make it crucial in the production of solar panels and electric vehicles.
“Silver is often a by-product of copper, gold and zinc production, and there is a lot of environmental and political restrictions on these commodities. But we are confident about the future prices of silver, climate change is real, we need to get into a green revolution and silver can be one of the components leading the way.”
Gregory Crowe, President and CEO, Silver One Resources
Gold and silver production amidst inflationary pressures
Elevation Gold’s flagship Moss mine is the standout gold and silver project in Arizona. The project is in Mohave County, at the heart of gold and silver production in the state in the Oatman district, an area with an historical production of 2 million ounces gold (oz Au), and most of the output coming from the Gold Road and Tom Reed-United veins. Crushing around 11,000 t/d, Moss mine has measured and indicated mineral resources estimated to contain 490,200 oz Au and 5.75 million oz of silver (Ag) grading 0.39 g/t Au and 4.6 g/t Ag. Elevation Gold expects gold sales to reach 34,000 oz/y in 2022.
Despite high metal prices, FY2022 has so far been challenging for miners’ capex. For the leading majors, capital expenditure is expected to increase in total by more than 20% this year, a rate not exceeded since 2014, according to GlobalDataPlc. For other players, rising costs impact day-to-day operations, particularly inputs in diesel power that fuels most of mine operations’ heavy machinery. Elevation Gold’s president Tim Swenseid commented: “Fuel prices are up 50% compared with a year ago. This is affecting input commodities, and open pit mining requires significant amounts of fuel.”
Looking ahead, Florence Hill, located halfway between Moss mine and Gold Road mine, is a potentially promising gold project for Elevation Gold. Tim Swenseid expanded: “Florence Hill has been known as a good target for over a decade. We are finding encouraging structural, vein, and alteration features.”
Having started exploration drilling in July 2022, Exploration Gold is planning around 3,800 meters (m) of oriented diamond core drilling and is expecting assay results to determine mineral grades in Q1 2023.
“Our flagship property is our Philadelphia project, in the quickly emerging Oatman district in Arizona: there are two operating mines within 10 miles. The jurisdiction had been missed by explorers during years: everybody believed Nevada had silver and Mexico had gold.”
Mike Stark, President and CEO, Arizona Silver Exploration
Reviving old mines
Arizona is home to several past-producing mines and restarting these is a way for mining firms to capitalize on growing precious metals demand. The state is a particularly attractive operation ground for miners willing to restart a mine, as companies can operate proven deposits in a mining-friendly jurisdiction, and use existing infrastructure, permits and licenses. Arizona Silver Exploration’s Philadelphia flagship is a prominent example of this process. President and CEO Mike Stark explained: “Philadelphia mined approximately 44,000 oz Au strictly high-grade mining. Our recent results, as high as 41 g/t Au on a high-grade vein and 250 m of 1.32 g/t Au and subsequent grams of silver indicate that Philadelphia will likely develop into an open pit”.
Two promising projects could also bolster Arizona’s silver production in the coming years. Firstly, Silver Bullet plans to put the Buckeye mine back into production. “In September, Silver Bullet Mines began processing high grade ore at our 100% owned, 125 t/d mill near Globe, AZ”, specified Peter Clausi, VP capital markets at Silver Bullet, which has signed an initial contract for the delivery of silver doré bars.
Globe is a familiar area for silver explorers, as it located within the Arizona Silver Belt at the heart of which sits the Phoenix Silver project. Touching upon the recent sample results collected there, Gregory Crowe, president and CEO of Silver One Resources, explained: “When we do get our permit to drill there, we will test those extremely high-grade silver targets. We are getting values of up to 459 g/t Ag”.
The presence of past-producing mines, a mining-friendly jurisdiction and existing infrastructure all contribute to the competitiveness of Arizona in its attempt to carve itself a slice of the precious metals market.