Vangold Mining

Near-Term Production on the Mexican Silver Belt

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Overview

Vangold Mining Corp (TSXV:VAN; OTC:VGLDF) is a silver and gold mining company focused on developing the historic high-grade El Pinguico mine on the Mexican silver belt in the Guanajuato region.

Unlike traditional mining projects, El Pinguico is unique in that it has over 700,000 tonnes of stock ore—at surface and underground—remaining from historical mining done on the property in the early 1900s that is ready to mill. As Vangold Mining carries the project towards production, the company has been confirming historical assay grades through a diamond drilling program on the underground stockpile. Having concluded the first phase of drilling, the company is now preparing a second phase targeted at exploring the in-situ resource in the El Pinguico Vein.

To date, assay results from Vangold’s 2017 sampling program on the underground stockpile have shown average grades of 1.75 g/t gold and 183.58 g/t silver, which align with results from historical sampling conducted in 2012 by the Servicio Geologico Mexicano (SGM). Average grades on the above-ground stockpile range from 1.5 to 2.0 grams of gold equivalent and the underground stockpile ranges from 4.5 grams to 35 grams gold equivalent. Following drilling in the in-situ resource, environmental assessments, infrastructure development and the creation of a NI 43-101 resource estimate and preliminary economic assessment (PEA), the company expects to begin production in 2019. Production of the stockpiled ore will provide near-term cash flow, enabling further work on the property.

Looking beyond the El Pinguico mine stockpiles, Vangold is also further exploring the property so as to understand its mineralization. A 2017 sampling and mapping program has demonstrated a consistent average grade of 10 g/t gold equivalent at surface and underground, and has outlined multiple parallel and perpendicular vein systems. As Vangold heads towards the production of its stockpile, it will continue to explore and develop the remainder of the property so as to align the launch of new production with the depletion of the stockpile.

Additionally to the El Pinguico mine, Vangold Mining also owns eight more properties that sit on the Mexican silver belt, distributed between its two wholly-owned subsidiaries: Ombras Mineras El Pinguico Holdings SA de CV (OMP) and CanMex Silver SA de CV (CanMex).

Vangold is led by a seasoned team of industry experts with proven experience in bringing projects to production. The team includes Vangold CEO Cameron King, who previously founded a mining engineering firm focused on implementing mining efficiencies; Hernan Dorado, who brings extensive knowledge of the region as well as varied experience on multiple large projects; and David Terry, who brings more than 25 years of international experience in advanced project evaluation, M&A, corporate finance, and design and execution of effective exploration programs.

Investment Highlights

  • Nine strategic properties collectively covering 4,000 hectares on the historic Mexican silver belt
  • Flagship property situated on the Veta Madre vein, which is host to over a billion ounces of silver and millions of ounces of gold
  • El Pinguico project has unique ore stockpile of over 700,000 tonnes, situated both at surface and underground
  • 2017 assay results for the underground stockpile include average grades of 1.75 g/t gold and 183.58 g/t silver
  • Further exploration on the property outlining multiple parallel and perpendicular vein systems
  • De-risked exploration and drilling strategy based on historical work conducted on each property
  • Expert management team with proven operational success across Latin America, Australia and North America

Flagship Project: El Pinguico Property

The El Pinguico project is Vangold’s wholly owned property which was purchased in December 2016. The project is made up by two land concessions covering 71 hectares and sits 6.5 kilometers away from the colonial city of Guanajuato, a jurisdiction rich with mining history and an experienced pool of skilled labor. The property is also easily accessed by roads and highways and is in close proximity to mining infrastructure, water and power sources.

The land package hosts the Pinguico vein, which is considered to be at the top of the 25-kilometer Veta Madre vein system, the primary vein in the Guanajuato silver district and host to significant silver and gold deposits. The Pinguico vein is supported by a fissure of gold and silver mineralization that proves the property’s historical roots and its potential for future production.

vangold-mining-flagship-propertyHistory

The Guanajuato region is one that is rich in mining history, as it was one of the areas explored by Spanish ‘conquistadors’ in the mid-sixteenth century. The discovery of silver led to the development of settlements in the region. During this time, the Veta Madre vein was discovered and this triggered an exploration period that uncovered a number of important silver occurrences. Between 1760 and 1810 the mines in the Guanajuato jurisdiction accounted for 20 percent of the world’s silver production.

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The first instances of exploitation on the El Pinguico property began in 1904, when it was held by the Guanajuato Development Company—later named the Pinguico Mining and Milling Company. The Pinguico mine was in production from 1908 to 1913, producing 2.3 million ounces of silver in 1909 alone. The mine then closed down due to the Mexican revolution, leaving 700,000 tonnes of stockpiled ore that is located both at surface and underground.

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In 1959, the Consejo de Recursos Minerales (CRM) conducted a topographic survey of the stockpile and estimated a total 103,415 tonnes with an average grade of 3.2 g/t gold and 288 g/t silver, and a cutoff grade of 15 g/t gold equivalent. They also determined that there were 4,921 tonnes in situ, with average grades of 5.4 g/t gold and 424 g/t silver. These results were validated in 2011 by EMBSA, which set out to compare its own results against those of the CRM.

In 2012, EMBSA requested that the Servicio Geologico Mexicano (SGM) develop a (non-NI 43-101) reserve certification and additional topographic survey on the same stockpile. The results from this certification showed average grades of 1.67 g/t gold and 167 g/t silver in 25,600 tonnes and a potential 96,828 tonnes in the total stockpile. The company has determined that the discrepancy between these results and the CRM results are viable as the stockpile might not have been so diluted by falls of waste rock from the walls of the mine in 1959.

Exploration efforts

Focused on its near-term production plan for the mine, Vangold conducted a trenching sampling program on the stockpile, which runs for over 500 meters and 200 meters in depth. With the aim of comparing their results against those produced by the CRM and SGM, the company collected 57 samples from hand dug trenches in the same areas as the historical samples. The NI 43-101-compliant results are aligned with those produced by SGM in 2012 and include average grades of 1.75 g/t gold and 183.58 g/t silver. The results from the program are indicative of probable mineable-grade mineralization at depth within the stockpile.

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Additionally to the exploration work conducted on the stockpiled ore, Vangold also conducted extensive surface and underground mapping, surveying and compiling an additional 383 samples, the results of which will be used to identify grid spacing and drill locations. Assays from surface and underground samples consistently showed 10 g/t gold equivalent, showing extensive multi-vein mineralization. Detailed mapping on the property also demonstrated that there are multiple parallel and perpendicular vein systems that run across the land package.

2018 diamond drilling program

In January 2018, Vangold began its initial diamond drilling program on the property. The first phase of the program was focused on drilling 5 holes within the underground stockpile. The goal of this phase was to define the existing mineralization for a potential inferred resource estimation covering the available stockpile. In parallel, the company also conducted metallurgical tests to understand the recovery rates for gold and silver. Following the determination of the NI 43-101 resource, Vangold will develop a PEA for the stockpile.

A second phase of drilling is set to begin in April 2018, this will target the in-situ resource at three drill stations across the Carmen adit Level 4. Additional drill infrastructure will be set up at level 7 once it is deemed safe enough. Using 3D modeling data, this second phase will focus on drilling the lower El Pinguico vein extension, at below 320 meters from the surface. The vein is estimated to continue at depth to over 600 meters, and the drill stations have been built to target that potential depth.

“The drilling program is to define and expand the potential mineralization at El Pinguico,” said Vangold CEO Cameron King. “Phase 2 drilling is the start of Vangold’s future growth strategy, proving the El Pinguico vein system continues at depth adds years of development and production.”

A planned third phase of drilling will focus on the surface, targeting areas identified in the ongoing field work extending over the 2.1-strike length of the El Pinguico vein. The program will cover 7,000 meters with holes reaching a depth of 750 meters. The goal will be to identify the extent and grade of the mineralization of El Pinguico and any parallel veins. The primary target has been identified as the intersection of the El Pinguico and Veta Madre epithermal vein system.

A fourth phase of exploration will target the San Carlos property, which is adjacent to El Pinguico and hosts what is believed to be the intersection of two major epithermal systems that converge at approximately 450 meters at depth. The program will begin with three drill stations and cover a total nine exploration holes.

Moving El Pinguico towards production

Working towards near-term production in 2019, the company will continue drilling the property and develop an inferred NI 43-101 resource and PEA for the stockpile. Furthermore, Vangold will be working on acquiring its permits and commencing the construction of a decline to the level on which the stockpile sits.

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Additional Properties

Expanding their presence in Mexico, Vangold has also acquired 100 percent of eight other highly prospective properties on the Mexican silver belt that they plan to carry through to production: San Carlos, Patito I and II, Analy I and II, Camilla, Ysabela and El Ruso. The first three are managed by OMP and the latter five by CanMex. Some of the properties are briefly described below.

Patito I and II

The Patito I and II properties make up 646 hectares on strike with the Veta Madre vein and include several structures that could be a possible parallel vein system to the Veta Madre and El Pinguico veins. Historical sampling on the property has shown numerous gold-silver rock chip anomalies and the mineralization is associated with brecciation and epithermal quartz veining.

Analy I and II

The Analy properties are two land claims that add up to 722 hectares near the town of San Miguel de Allende, in the center of the Guanajuato mining region. The properties have presented significant quartz sulfide oxidation from surface samples and host several adits, which show evidence of historical hand mining performed by local workers. The properties also host an extensive tunneling system that follows the high-grade silver vein at surface.

Ysabela

The Ysabela project sits on mountainous territory in close proximity to the town of Rio Blanco and adjacent to an active mercury mine being mined by locals. Peter Swiridiuk, Vangold Geophysicist, has confirmed that mercury is a precursor of gold and silver, which is usually found at lower depths than the mercury.

As no significant mining has been conducted on the property to date, Vangold’s initial plan is to begin a mapping and soil sampling program to identify any anomalies on the property. In the meanwhile, a collection of rock samples from the surface have been acquired and are in the process of being assayed.

El Ruso

The El Ruso property is located on the eastern border of the Guanajuato mining district and on the base of the Sierra Gorda. While the property has limited to no historical mining data, it does host geologically significant aspects such as substantial quartz structures within basement source rock and an ore body that travels up a limestone wall structure on the eastern border of the property.

Vangold’s initial plans for the property include an four-week mapping and sampling program conducted by a geologist and local labor team.

Camila

The Camila project is a 700-hectare property located on mountainous terrain on the edge of the Queretaro mining region, which hosts a number of high-grade historical mines that were active up to 50 years ago. The property also sits nearby the town of Rio Blanco, which provides a skilled labor pool of artisanal miners.

The Camila mine was known having been high-grade copper mine, and the local geology seems to show potential for a large deposit. Further drilling and exploration is needed to confirm this, however. Vangold plans to commence a 43-101 compliant exploration program to confirm historical data and determine the property’s potential.

Management

Cameron King—President, CEO and Director

Cameron King brings over 25 years experience in investment banking strategy, mergers and acquisitions and building corporate development relationships. He was a member of the Corporate Banking team with the Bank of Nova Scotia specializing in M&A and Senior VP Mid-Market Finance with Jendens Financial, London UK. Throughout his career, he has held director positions with Petro Novus AG, Endeavor Energy, Quest Oil and Holloman Energy Corporation. He founded the mining engineering firm Camline Mining Wear Technologies Ltd in 1994, specializing in mineral processing, operations and efficiencies. He obtained his MBA in 1991 from Lake Superior State University, Michigan and holds a degree in Chemical Engineering and Bachelor of Commerce from McMaster University.

Hernan Dorado—Director

Hernan Dorado Smith is a fifth generation mining engineer and possesses 15 years of underground and open pit mining experience. He has in-depth and local knowledge of the El Pinguico mine and the surrounding geological formation. He has worked with several world class producers on major projects, such as, New Gold at Peak Mine, Australia and Rainy River, Canada; Panamerican Silver at Navidad, Argentina and La Preciosa, Mexico. His experience at the various stages of mining, pre-feasibility, feasibility, construction and operations bring considerable value to Vangold. He graduated as a Mining Engineer from Universidad de Guanajuato in 2003, received an Executive MBA from Escuela Europea de Negocios, Salamanca in 2013, and is a member of the Mining of the Mineral and Metallurgical Society of America (MMSA).

Jonathan Challis, FIMMM, PEng, BSc., MBA—Director

Jonathan Challis is a Mining Engineer with over 30 years’ experience in the operation, management, financing and analysis of mining projects around the world. Starting his professional career as a Mining Engineer with Gold Fields of South Africa and as a Mining Analyst and Project Financier for several European institutions. He has been involved in several Canadian resources companies in the roles of CEO, President and Director. He has an honors degree in Mineral Exploitation from University College, Cardiff and an MBA degree from Cranfield University.

David Terry PhD, BSc, PGeo, QP—Director

Dr. David Terry is a professional economic geologist, senior executive and corporate director with more than 25 years of international experience in advanced project evaluation, M&A, corporate finance, and design and execution of effective exploration programs. In the course of his career he has held executive positions and directorships with a number of publicly-listed and private mineral resource companies. He holds a B.Sc. and Ph.D. in geology from Western University in Ontario and is a member of the Association of Professional Engineers and Geoscientists of British Columbia.

John Budreski—Advisor

John Budreski has over 30 years of extensive capital markets and executive management experience. Mr. Budreski has a professional history of advancing and accelerating businesses, as well as tangible engineering experience. He was formerly a Vice Chairman of Cormack Securities Inc. from 2009 to 2012 and President and CEO of Orion Securities Inc. from 2005 to 2007, prior to its successful sale to Macquarie Bank. He has filled the roles of a Managing Director of Equity Capital Markets and Head of Investment Banking for Scotia Capital Inc. from March 1998 to February 2005 after starting out as a Managing Director of US Institutional Equity Group for Scotia Capital. He also held senior roles in investment banking and equity sales and trading for RBC Dominion Securities. Mr. Budreski is currently a Director of Sandstorm Gold Ltd., Alaris Royalty Corporation and Input Capital. He is also the Chief Executive Officer and a Director of Morien Resources Corporation and Executive Chairman of EnWave Corporation.

Greg Hawkins—Advisor

Greg Hawkins has been involved in the Mining Exploration and Investment industry since 1969. He has been variously responsible for the identification and/or delineation of 10 mineral deposits (Gilt Edge, Andacolla, Kubi Village, Tabakoto, Twangiza, Namoya, Skukum Creek, Goddell Gulley, Kobada, Harper Creek) in Canada, USA, Chile, Ghana, Mali and Zaire (DRC). He has lived in Canada, Nigeria (1980-81) and Ghana (1993-2007) while pursuing his career. In acting as Founding Project Consultant and/or Founding Director of seven public and private Exploration/Development ventures (Brohm Mining, Dayton Mining, Nevsun Resources, Banro Resource Corp., Tagish Lake Gold Corp., African Gold Group, Yellowhead Mining Inc.) he has participated in or been responsible for the definition of at least one resource/reserve in every case with six cases resulting in production in the USA, Chile, Ghana, Mali and DRC. These ventures collectively have accounted for over $2.1 Billion in market cap at their respective peaks. In 1990 he started CME, an international full service consultancy and contracting firm which grew to include Spectral International Geophysics, Eagle Drilling and ATS Inc. The CME Network has served over 100 clients in 25 countries and has employed over 3000 people. He has authored and presented a number of papers on exploration, exploration philosophy and mineral economics since 1979. In 2004 Greg was awarded the Frank Woodside Past Presidents Award by the British Columbia and Yukon

Chamber of Mines in recognition of his outstanding contribution to the mining industry and joined the Honourable Service Roll of AMEBC in 2007.He holds a BSc in Geology from the University of Alberta (1973) and an MSc in Mineral Economics from McGill University (1979).

R. Stuart (Tookie) Angus—Advisor

Stuart Angus is an independent business advisor to the mining industry and is presently Chair of San Marco Resources Inc., K92 Mining Inc.  and Kenadyr Mining (Holdings) Corp. He was formerly Head of the Global Mining Group for Fasken Martineau. For the past 40 years, Mr. Angus has focused on structuring and financing significant international exploration, development and mining ventures. More recently, he was managing Director of Mergers & Acquisitions for Endeavour Financial and was responsible for merger and acquisition mandates. Mr. Angus is the former Chairman of the Board of BC Sugar Refinery Limited, he was a Director of First Quantum Minerals until June 2005, a Director of Canico Resources Corporation until its takeover by Brazil’s CVRD in 2005, a Director of Bema Gold Corp. until its takeover by Kinross Gold Corporation in 2007, a Director of Ventana Gold Corp. until its takeover by AUX Canada Acquisition Inc. in 2011 and a Director of Plutonic Power Corporation until its merger with Magma Energy Corp. in 2011.  He recently resigned as Chair of Nevsun Resources Ltd. following its acquisition of Reservoir Minerals.


 

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