Gold and silver are in the midst of a record-high run-up, appreciating by 75 and 153 per cent year-over-year, respectively, driven by several macroeconomic factors combining into a strong sense of investor fear and accompanying desire for safe-haven assets. In brief, these are:
- US president Trump’s attempt to overturn global trade through tariffs, as well as military action in Venezuela and Iran.
- Trump’s propensity for chaos resulting in diminishing confidence in the US dollar as reserve currency, prompting central banks to diversify away from the greenback and into gold and other fiat currencies.
- Major conflicts unfolding across the world, such as the Russia-Ukraine War and the Israel-Palestine War, which have led to thousands of lives lost while continuing to roil global markets.
- Persistent global inflation and slowing economic output, suggesting that productivity is headed into a downtrend that interest rates are poised to follow, making gold and silver more attractive to invest in relative to yield-bearing assets.
Price support is expected to remain strong over the coming years, even after this fear and flight to safety subside, with top analyst Ed Yardeni seeing a pathway to US$10,000 gold by 2030 and The Silver Institute predicting industrial silver demand to grow into the next decade, as fiat depreciation and value preservation become increasing concerns in a de-globalizing world.
This macroeconomic backdrop is creating a prospective runway for companies to expedite their paths across the mining lifecycle, while incentivizing investors to identify companies best positioned to translate low costs and consistent development milestones into operational leverage and shareholder value.
Pinnacle Silver and Gold: An accelerated development story
A name systematically putting this precious metals thesis in play is Pinnacle Silver and Gold (TSXV:PINN), market capitalization C$18.92 million, an explorer and developer that has rewarded investors with a 250 per cent return year-over-year, trouncing gold and silver, reflecting consistent progress towards restarting its past-producing El Potrero project in Durango, Mexico.
This article is disseminated in partnership with Pinnacle Silver and Gold Corp. It is intended to inform investors and should not be taken as a recommendation or financial advice.
The project, located in the Sierra Madre Belt, one of the world’s top gold and silver producing regions, hosts a low-sulphidation epithermal vein system untouched by modern exploration and surrounded by four operating mines within a 35 kilometre radius, including:
- The 4,000 tons per day (tpd) Ciénega gold, silver, lead and zinc mine owned by Fresnillo.
- The 1,000 tpd Tahuehueto gold, silver, copper, lead and zinc mine owned by Luca Mining.
- The 250 tpd Topia gold, silver, lead and zinc mine owned by Guanajuato Silver.
- The privately-owned 150 tpd San Geronimo silver, lead and zinc mine.
El Potrero backs up its strategic location with high-grade gold-silver mineralization at the main Dos de Mayo vein structure, which has been traced for 1,600 metres (m) in the northern 10 per cent of the property, including 500 m in strike length aligned with three historic mines that will be the initial focus for production.
This mineralization is highlighted by high-grade underground channel samples at the historic Pinos Cuates mine reaching up to 85.1 grams per ton (g/t) gold and 520 g/t silver, with surface sampling returning comparable gold values and silver grades up to 2,280 g/t, strongly supporting continuous mineralization.
At the historic Dos de Mayo mine, 53 channel samples, in 13 composite channels, established a connection between two levels 25.5 m apart. These efforts yielded assays of 11.2 g/t gold and 179 g/t silver over 3.5 m, 15.55 g/t gold and 222 g/t silver over 1.1 m and 11.93 g/t gold and 190 g/t silver over 1.4 m, with individual assays up to 27.6 g/t gold and 366 g/t silver over 0.6 m. The weighted average of mineralized composites within the connection yielded 6.43 g/t gold and 110 g/t silver.
Similarly, the historic La Dura mine is also bearing fruit, with Pinnacle following up 2025 underground sampling that yielded 1.98 g/t gold and 98 g/t silver over a 12-m strike length with surface sampling extending mineralization to about 45 m, as highlighted by assays of 6.89 g/t gold and 208 g/t silver over a width of 1.4 m and 3.39 g/t gold and 248 g/t silver over 1.3 m.
Additionally, Pinnacle is advancing its understanding of nearby vein systems consistent with the property’s low-sulphidation epithermal geology, with 2025 mapping and sampling substantiating lateral mineral expansion at:
- El Capulin, located 200 m to the southwest, and traced for 375 m along strike, yielding individual samples up to 6.27 g/t gold and 99 g/t silver.
- La Estrella, located 500 m to the southwest, shows two mineralized zones yielding 5.49 g/t gold and 48 g/t silver over an average width of 0.72 m and strike length of 12 m, and 1.87 g/t gold and 51 g/t silver over an average width of 1.1 m and a strike length of 22.5 m.
Both vein systems are at higher elevations than Dos de Mayo and significantly increase El Potrero’s potential to host a large deposit that is only beginning to reveal itself.
El Potrero’s clear path to near-term production
Supported by positive government discussions to bring a powerline to the proposed mine site, as well as a one-year agreement with the local Ejido El Carmen community, Pinnacle is keen to usher El Potrero back to production and foster further shareholder value through both cash flow and the harvesting of exploration upside.
The company envisions an initially small-scale operation, allowing it to self-fund development, be more proactive with shareholder dilution and ultimately benefit from more flexibility on the path to scale.
Pinnacle’s key production catalysts include underground mine workings that can be rehabilitated at low cost, plus an on-site 100 tpd processing plant that can be easily refurbished, offering the company crushing, milling, vat leach and Merrill Crowe circuit capabilities. A 2025 preliminary study on plant refurbishment costs will be updated based on ongoing metallurgical testing.
Preliminary metallurgical tests indicate average gold recoveries of 95.09 per cent and silver recoveries – lower because of more complex mineralogy – averaging 54.68 per cent, with a second round of testing underway to optimize these results. That said, head assays of a five-sample Dos de Mayo composite yielded 7.7 g/t gold and 116 g/t silver, indicating economical grades for future production.
The next step on El Potrero’s path to production involves the enlargement of access adits, sub-levels and drill stations, which has already begun, allowing modern drilling equipment to be brought in and safely installed.
An underground drilling program comprising approximately 2,423 m across 107 drillholes at the Pinos Cuates and Dos de Mayo mines will follow in April, following up on mapping and sampling to better delineate mineralized zones and facilitate a preliminary mine plan.
Concurrently, Pinnacle is planning a surface drilling program, keen to fill in gaps that cannot be reached from underground, step out along strike on the Dos de Mayo vein, as well as test the Capulin and Estrella veins.
A promising permitting pathway
Having established El Potrero’s prospectivity in the field, Pinnacle has turned its attention to the bureaucratic side of project development, engaging in positive discussions with SEMARNAT, the federal environmental ministry, CONAGUA, the federal water agency, and CFE, the federal electrical commission, leading to the filing of numerous preliminary permitting submissions.
Pinnacle anticipates receiving a green light for surface drilling potentially within the next 60-90 days, following which applications will be submitted for specific aspects of mine development, plant and tailings facility reconstruction. A feasibility study is underway for a 4.5-kilometre extension of the powerline to the site and will be submitted to the CFE upon completion.
The company is also in advanced discussions with potential offtake and/or financing partners, positioning it to rapidly ramp up production and capitalize on elevated gold and silver prices.
Pinnacle will earn an initial 50 per cent interest in El Potrero upon commencing production, with the option to acquire the project in full through staged payments totaling US$6.5 million (US$500,000 paid) and 2.5 million shares (issued), subject to the vendor’s option to participate with a 10 per cent interest or convert it into a 2 per cent net smelter return royalty. The company intends to exercise its option and fund future cash payments and project development with internal cash flow, keeping shareholder dilution to a minimum.
A leadership team fit to deliver ounces to market
El Potrero’s multi-deposit potential, backed by an abundance of avenues for mineral expansion, is in the hands of an accomplished leadership team, spanning both exploration and mineral processing, highly aligned with shareholders at 24 per cent insider ownership.
At the helm we have Robert Archer, Director, President and Chief Executive Officer, whose more than 45-year mining career has taken him across the Americas, including the co-founding of Mexico-based Great Panther Mining, ushering the company from concept to mid-tier precious metals producer with a $600 million market cap. Archer benefits from a talented supporting cast with directly applicable backgrounds. Let’s meet them now:
- Colin Jones, Non-Executive Director, has spent 45 years as a mining, exploration and consulting geologist working in different geological environments on all continents.
- Dave Salari, Non-Executive Director, is a metallurgical engineer with more than 45 years in mining and mineral processing, including global experience designing, building and operating extractive metallurgical plants. He is currently the President and CEO of DENM Engineering.
- Dave Cross, CPA, CGA, Chief Financial Officer and Corporate Secretary, brings more than 21 years in the junior mining sector focused on finance and corporate governance. He is currently a partner of Cross Davis and Company LLP Chartered Professional Accountants, a specialist in accounting and management services for private and publicly-listed mining companies.
- Carlos Castro Villalobos, Project Manager, is a mining engineer who has built and operated mines for several companies across Mexico, including seven years as General Manager of Great Panther Silver’s Guanajuato Mine.
- Finally, Jorge Ortega, Project Manager and Exploration Manager, currently the Qualified Person for El Potrero, previously served as Exploration Manager for Great Panther and Vice President of Exploration for Excellon Resources.
Pinnacle’s leadership team, well-versed in the Mexican mining industry, effectively ties the company’s value proposition together, having proven itself capable of advancing precious metals projects across the mining lifecycle to capitalize on favorable market conditions.
How, then, should investors calibrate their expectations about the company’s near-term future?
Pinnacle is on track for a transformational re-rating
With gold and silver slated to remain on investors’ radars into the next decade, Pinnacle should benefit from numerous catalysts to generate positive news flow, tap into this sentiment and create further shareholder value for years to come. Here’s a recap:
- Readying the 100 tpd onsite processing facility to transition into a cash-flowing entity and substantially broaden market appeal, given that most junior mining companies are pre-revenue, facing investors with the esoteric task of valuing them based on sampling, drilling and survey data.
- Low production costs, driven by high grades, high gold recoveries and onsite processing.
- Following up on expansive high-grade leads across El Potrero’s known vein systems with near-term drilling.
- The fact that initial production encompasses only the northern 10 per cent of El Potrero’s more than 1,000-hectare land package, speaking highly of the rest of the project’s potential upside.
- These catalysts are in addition to a pair of Canadian projects that offer early-stage, data-driven opportunities to replicate El Potrero’s success.
Should Pinnacle secure partnerships to deliver on these catalysts, we believe the stock will continue to build on its exponential past twelve months, rewarding investors willing to wait for low production costs to translate into strong income statements that put the company on a path to profitability.
Of primary importance, anticipated cash flow will, in turn, increase leadership’s flexibility to evaluate new projects that fit El Potrero’s development profile, setting the foundation for Pinnacle to outgrow its micro capitalization and garner attention from index providers and institutional investors.
With drilling about to get underway as gold and silver test new highs, the time for due diligence is now.
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