Santacruz Silver Mining (TSX:SCZ) - Cash Growth, Production Increase, More Acquisitions Under Review

Arturo Préstamo Elizondo (0:00)

Thank you.

My name is Arturo Préstamo. I am a Executive Chairman and CEO of Santacruz Silver. Thank you for having me here, Matt.

Matt (0:09)

Good to see you again. It's always nice to see you in person. It's very different over interview, isn't it?

Arturo Préstamo Elizondo (0:13)

Always a pleasure.

Matt (0:15)

No, here at Beaver Creek. I heard you've been busy.

Arturo Préstamo Elizondo (0:18)

Oh my, yes.

We have had so far 60 meetings. 60 meetings in three days.

Matt (0:25)

And what type of people are you meeting? What do they want from you?

Arturo Préstamo Elizondo (0:27)

Very interesting question. We've seen institutional funds. The quality of the meetings, in my opinion, has been better than many other years. Institutional funds, family offices. We have seen other banks and institutions.

So yeah, very, very, very broad, different kind of...

Matt (0:50)

Yeah, group of people there, for sure. Group of people, yeah. Now, that's because you're making money. People always like to talk to people who are making money.

What I'd like to talk to you about today is understanding, obviously, where we are with the different projects, because there's obviously you're producing, but there's some optimization work to be done. And some acquisition that you have made, I always want to talk about. And maybe outside of the organic growth, potential for M&A in the space, the time is right, I think. So let's start with, obviously, maybe San Lucas, that's the obvious one. Absolutely.

Arturo Préstamo Elizondo (1:25)

Well, as you point out, Matt, I mean, we're always and continuously trying to achieve efficiencies across all of our assets. And today, for the next year, we see growth by achieving efficiencies in two of our assets, or three, if you allow me, including San Lucas. But from the mines, we see efficiencies at Bolivar, that the watering process is going online, on time.

If you have been following our production results, you see that Q4 last year, we increased production for around 28 percent. Q1 this year, another 32 percent.

Q2, we increased another 20 or 30 percent. Q3 will not be the exception. In a few weeks' time, we're going to put out our production results, and you'll see another increase in Bolivar. And finally, Q4, we're expecting to have Bolivar back on track, as it was previously before the water situation. Right.

Matt (2:28)

Okay. And so the water dewatering is on time, on budget, and getting up to full production. So what does that mean when you're up to full production again?

Arturo Préstamo Elizondo (2:39)

Right. Well, before the water floodings at two of the five veins in Bolivar, the mine was producing around 1 million ounces of silver equivalent on a quarterly basis.

Matt (2:52)

Right.

Arturo Préstamo Elizondo (2:52)

But after we experienced this, I mean, when we immediately experienced this water situation, we turned back and we see where can we get more silver out of Bolivar? So we went back to the historic blueprints, to the historic information, and we found out two very nice blocks with very high content, silver content, 400 to 500 grams of silver.

And we're preparing those blocks to come into production early next year. So with the watering process that is going along in time and in line, the fourth quarter this year, next quarter, the mine will be full of the water, will be at level 380 again, and producing from this high-grade silver, Pomabamba and Nanebains. Plus, we're going to bring into production these blocks I was mentioning with very high-grade content. So early next year, this mine is going to come back even stronger than when it was before the flooding.

Matt (3:56)

Right, so not just getting back to power, but getting beyond. In terms of these two new blocks that you're talking about, have you got a sense of the size? I mean, how does one quantify what the opportunity there is?

Arturo Préstamo Elizondo (4:09)

Well, definitely on a daily basis, we have Greeks working in our properties across all of our mines. We're drilling, we're identifying, we're doing infield drilling, and we're doing drilling for exploration and to increase resources.

So, when we identify these two blocks, we immediately start getting to know them better by drilling. And now we have identified those blocks. We have already built a block model and a mine plan. So we're preparing those blocks for production by early next year.

Matt (4:44)

So, okay, that's interesting. You can bring them into the resource quickly.

Arturo Préstamo Elizondo (4:50)

Correct.

Matt (4:52)

Okay. And again, people like to quantify these things by, you know, you're expected to return on that investment. You get a sense of what it can bring in dollar-wise to the business?