Defiance Silver raises some cash as it moves to spruce up a 250 tpd mill in the Zacatecas silver district and explore the storied Veta Grande vein.
The lack of lift in the junior financing market is evident in Defiance Silver's latest financing, which just closed and raised about C$900,000 in two tranches. The junior had hoped for as much as $10 million back in mid-2012, an amount that would enable it to earmark about $4 million to get its 250-tonne-per-day silver mill, under option from Impact Silver, online and "up to first world standards," as Darrell Rader, Defiance Silver's chairman put it to me a few months ago. The mill is next to the storied Veta Grande silver vein in Mexico in the Zacatecas silver district, a vein along which Defiance controls about two thirds its nine-kilometre-long strike length on grounds also under option.
While Defiance didn't hit the $10 million mark, the initial financing still marks a solid start. It's safe to say the market isn't in the habit of feeding turkeys these days. Rather, while juniors like Defiance find supporters in a financing world marked by scarcity, those unable to raise funds may find themselves as Thanksgiving menu items. Headless and roasted.
For Defiance, the funds give it cash to continue with refurbishments at its mill and, perhaps more importantly, secure it funds to make good on option payments on its main properties. The crux to Defiance is a combo of assets: a concession over much of the storied Veta Grande mine, including some historically mined portions that hold 15 million ounces silver @ 182 g/t silver in historic resources (by Silver Standard back in 1995) and then the small Santa Gabriela mill next door.
The two assets haven't been under the same junior roof before. Indeed, Impact Silver, a major Defiance shareholder, had the Santa Gabriela mill in the past, but not the almost adjacent San Acacio property, which has been in the hands of a single family for a couple decades short of a century.
The head of the Mexican family, 80 years old, has not wanted to part with the property in the past, at least at prices that may have been on offer. But Bruce Winfield, Defiance president and CEO, worked on getting a deal done with the Mexican patriarch for the better part of a year and said the octogenarian had his five children in mind in deciding to work with Defiance.
"This is in effect estate planning for him," Winfield said.
The combination is pretty logical, making for a nice package with possible near term production from dumps at the mill, and then possibly with mine backfill and other feed from the Veta Grande mine, and then the obvious exploration potential beyond. The San Acacio concessions cover about four kilometres of the Veta Grande vein to the east of mine workings, an area that is little explored, in part because of sparse outcropping.
Of course there's no guarantee Defiance will find anything along strike to the southeast, but it has good reason to hope it might. As Winfield pointed out, a few years back MAG Silver announced it had drilled the Veta Grande vein to the southeast of the concessions Defiance now has under option. The MAG Silver hits were blind targets in the sense they were under 150 metres of cover, in an area without outcrop. The drillholes, if not showing widths as broad as in parts of the old Veta Grande mines to the north, still had strong intercepts with as much as 850 g/t silver over a metre.
Given the hits to the south, the question of what lies on Defiance-controlled land is very much an open one. As Defiance spruces up its Santa Gabriela mill, maybe starting off with silver production in the 100,000-ounce range a year, it aims to find an answer.
