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  • Writer's pictureSmallCapInvestor

Zacatecas Silver (TSXV:ZAC) - A Multi-Asset Gold-Silver Developer with Exploration Upside

Zacatecas Silver is a company I have been following since their initial debut on the TSXV last year. The company started trading in March 2021, at around $1.50 and has come down almost 70% since — hovering around the $0.50 - 0.60 range today.

I initially decided to pass on the deal last year; however, upon revisiting, I have started to establish a starter position and will likely add to it moving forward. As is the case with most new issues, I usually like to wait for the dust to settle before jumping in, and with Zacatecas, I believe that time is now. Despite making significant progress since their trading debut, today the company is sitting at a fraction of that price.

Given recent developments, the name ‘Zacatecas Silver’ does not really tell the whole story.

Initially, the company started off with the Zacatecas Silver Property as a pure-play silver developer/explorer (which has been delivering great results, mind you); however, in April of this year the company decided to expand their project portfolio by acquiring a late-stage gold development asset — The Esperanza Gold Project.

So now, not only does the company have significant exploration upside, but investors can also take comfort in the fact that the company is in possession of a +1.2M oz gold deposit to go along with it.

THE ESPERANZA GOLD PROJECT - A High-Margin Development Project with Upside Potential

The Esperanza Gold Project is a low technical risk, near-surface oxide gold-silver deposit — that is most likely amenable to bulk open pit mining, and gold and silver recovery, via conventional heap leach method.

Zacatecas Silver acquired the project in April of this year for an initial consideration consists of USD $5 million in cash, 12,140,000 common shares of Zacatecas (with a value of US$10 million) and a silver stream in favor of Alamos valued at US$6 million. The total consideration of the transaction was approximately US$60 million with most of the payments not made until significant steps towards commercial production are achieved. A very well negotiated deal on behalf of Zacatecas.


The Esperanza Gold Project boasts a historical resource consisting of:

  • 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).

  • Historical inferred resource of 718,000 tonnes at 0.80 g/t gold and 15.04 g/t silver (0.80 g/t AuEq) for 18,375 ounces of gold and 347,192 ounces of silver (18,437 AuEq. Ounces).

So, there is over 1.2M ounces of gold equivalent in the ground here, with over 90% of that in the measured & indicated category. Plus, given the fact that this is an oxide resource, the grades here actually make this one of the highest-grade development stage oxide projects out there.

A Preliminary Economic Assessment (“PEA”) was actually completed on the project previously, but was based on the historical resource, so it cannot be relied upon today. To put things into perspective, the work done in that PEA contemplated 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.

Although the company has not done sufficient work to classify this historical resource as current, I do expect this to change in the very near-term.


Given the near-surface and tabular nature of mineralization of the deposit, it is likely that it will be amenable to open pit mining and heap leach gold extraction. Thus, I would expect to see some juicy economics with a relatively low AISC, once a PFS is completed.

View of the Esperanza Deposit showing historical drill pads and drill roads. The deposit is near surface – comprising a large part of the hill.


There are multiple high priority exploration targets immediately adjoining the Esperanza Deposit — and at least six high priority exploration targets within adjoining mining concession — offering exploration upside.


Baseline environmental work and proactive indigenous community engagement is ongoing in support of the project's Environmental Impact Assessment and Social Standing.

There is obviously a significant amount of informal support from the local community and it will be interesting to see if this informal support can somehow be formalized, which would be a potentially excellent sign for the market, in the near future.


In July of this year, Zacatecas Silver engaged a mining consultancy firm to begin work on a PFS for Esperanza. Given the timing here, I would expect to see an updated resource coming out in the next couple of weeks which classifies the historical resource as current. Beyond that, this will likely set the stage for a PFS on Esperanza to come out in the first half of 2023.

THE ZACATECAS SILVER PROPERTY - Inferred Resource and Robust Exploration Potential

Although the main reason for my entry into ZAC at this level is due to the value in Esperanza and the recent progress being made there, there is still a ton of upside at the Zacatecas Silver Property — which was the asset that the company initially went public on.

The Zacatecas Silver Property covers 7826 ha of concessions hosting multiple, silver-gold-base metal mineralized, epithermal vein systems — and well over 10 strike km of largely untested veins at the Panuco, El Cristo, Muleros and San Manuel-San Gil vein systems.

There is definitely some risk here, as there is no measured and indicated resource (yet). Although, there is an inferred mineral resource estimate at Panuco of 2.7 million tonnes at 187 g/t AgEq (171 g/t Ag and 0.17 g/t Au) for 16.4 million ounces of AqEq — with mineralization open in all directions.

In addition, community access agreements are in place for most areas and drill permitting is streamlined and efficient.

Diamond drilling is currently ongoing so expect to see some results here shortly.


The company is still being run by a highly experienced management team which includes Bryan Slusarchuk and John Lewins — who helped take K92 Mining from a tiny ~$40M market cap gold developer into a multi-billion dollar gold producer — not to mention, in a very tough jurisdiction. This group has a strong history of success, even when the odds are stacked against them.


The Zacatecas Silver management team has done a fantastic job of keeping the share structure tight and maintaining a strong cash position since listing. There are only ~82M basic shares outstanding (~96M fully diluted) and the company still has over $10M cash, so no need for a financing any time soon. Large shareholders in the company include Alamos Gold Inc., Mr. Eric Sprott and management, with Alamos being largest shareholder (owning 12,140,000 common shares).

Looking at recent SEDI filings for the company, we can see that Bryan Slusarchuk has been consistently adding to his position. Since April, he has purchased over 500,000 shares in the open market.


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