viewCandelaria Mining Corp.

Candelaria Mining looking to bring two exciting projects into production in Mexico


The company says its main aims are to begin production at Pinos and increase the resources at Caballo

Candelaria Mining Corp. - Candelaria Mining Corp looking to bring two exciting projects into production down in Mexico

Quick facts: Candelaria Mining Corp.


Price: 0.55 CAD

Market Cap: $71.38 m
  • Two projects with delineated resources in Mexico
  • Moving ahead to develop Pinos and La Paila projects
  • Working with Empire Metals to acquire its Georgian asset

What Candelaria Mining Corp does:

Candelaria Mining Corp (CVE:CAND) is a gold-focused explorer, whose flagship asset is the 198 square kilometres (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 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 Mines Limited (NYSE:AEM) has invested C$9.75 million in Candelaria and owns 9.95% of the company.

How is it doing:

Candelaria Mining kicked off 2021 with new additions to its board and executive team in anticipation of it executing construction of the Pinos Gold Mine and an ambitious exploration program at its Caballo Blanco asset.

In February, Mike Struthers was named CEO and a board director while former Lundin Mining Corporation executive Neil O’Brien took a seat on the board as its non-executive chairman.

The appointments came as Candelaria plans to commence an aggressive 12-month exploration program in mid-2021 to test all high-priority targets and further expand the resources at La Paila, with results from high-potential targets adjacent to the Cabollo Blanco outcrop expected by year’s end.

Depending on exploration results, the company will then update resources for the license area and develop concepts for a series of open pits with a centralized processing facility. In parallel, the company will frame and execute a robust CSR program during 2021.

In addition, the company is about to start the construction of its first producing gold mine in Zacatecas. The fully permitted Pinos Gold Mine will be an underground cut-and-fill operation on multiple high-grade epithermal quartz-gold veins, followed by comminution, agitated leach, counter-current decantation, and Merrill Crowe Au-Ag (gold-silver) precipitation.

Mill equipment for Pinos is already available, with the majority of former mine development accessible with minor rehabilitation. Major construction contracts are ready for execution, with an operations team already assembled.

With a 12 to 14 months construction schedule, Candelaria expects to commence construction in Q2 2021 at Pinos, with resource expansion and exploration drill programs defined.

Meanwhile, the company has also revealed that it is still in talks with Empire Metals Ltd to acquire its Georgian asset.

In October 2020, the exploration firm inked a deal to acquire Empire’s subsidiary GMC Investments Ltd, which holds a 50% interest in the Bolnisi gold and copper project in the Republic of Georgia. Bolnisi spans an 860-square-kilometer area in the prolific Tethyan belt, which hosts numerous high-grade deposits and producing mines. The deal is subject to a right-of-first-refusal clause in favour of Empire’s Georgian partner Caucasian Mining Group Ltd (CMG).

However, Candelaria says that while CMG has indicated an interest in exercising their right, they have yet to provide Empire with an acceptance of the offer.

Under the terms of the deal, Candelaria will pay C$2 million worth of shares priced at C$0.50 to Empire. The company will pay an additional C$1 million in shares once a reserves report on the Kvemo Bolnisi East project is approved by the State Reserves Committee in Georgia, and an additional C$2 million in shares once there is a NI 43-101 technical report on the Dambludi project or another project that is not Kvemo Bolnisi East. 

Both payments will be calculated in shares based on the previous 10-day average closing price. In addition, Candelaria will pay another C$2 million in shares upon the completion of a feasibility study and final investment decision on Kvemo Bolnisi East.

Candelaria says Empire is confident it will receive the full consideration of nearly C$7 million in shares offered by Candelaria, as the companies continue to seek a resolution to the situation.

To finance the Pinos Gold Mine and exploration activities at the Caballo Blanco District, the company recently launched a private placement to raise up to $25 million.

So far, it has received aggregate commitments of about $13 million from certain investors, including Agnico Eagle Mines Limited which has indicated that it wants to own about 9.95% of the basic shares outstanding on a partially diluted basis. Agnico Eagle currently owns 10,120,000, or 7.9% of the company’s common shares.

Inflection points:

  • Launch 12-month exploration program at La Paila in mid-2021
  • Commence construction at Pinos in 2Q 2021
  • Close deal with Empire Metals to acquire its Georgian asset

What the boss says:

On news of his appointment, new Candelaria Mining CEO Mike Struthers said: "A goal for the next 12 months is to successfully execute the Pinos project and bring that mine back into production, in parallel with executing what we believe could be a very successful exploration program at the company’s flagship asset, the Caballo Blanco mineralised district."

He added: "We expect that Candelaria will evolve into becoming a producer in early 2022, and this will provide a strong platform for further development of the Company in 2022 and beyond. I look forward to sharing more information on these activities in due course," 

Contact the author: patrick@proactiveinvestors.com

Follow him on Twitter @PatrickMGraham

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