Mexico: A Silver ‘Crest’ Diminishes Investor Nerves

‘AIRTIGHT’ GOV’T TAKEOVER CASE FIZZLES

TCRs,

We are seeing some ‘scar’ tactics, and ‘scare’ tactics, regarding the nationalizing of silver mines in Mexico. 

Burst. Diminished. Fizzle.

After Friday’s Couer Mining CDE intention to purchase SilverCrest Metals SIL, which has two mines in Mexico, the idea of an airtight case that Mexico will start nationalizing, or privatizing, existing silver (and gold) mines peters out — yes? See report of $1.7 billion share offer.

Moving on to r-e-a-l-i-t-y, I think Doug Ramshaw, to his credit, used his 20 Minera Alamos minutes at the Denver Gold Summit in Colorado Springs to herd the “Mexico elephant in the room.”

“If you believe the headlines, you know, there will be no open pits in Mexico. If you believe the headlines, you know, the sky is falling and it’s going to become Venezuela and arguably judicial reform they passed was not a good, good move … but it’s actually a lot more nuanced than that. There are open pit mines. There will be open pit mines in the future.” Doug Ramshaw, Minera Alamos MAI

Doug was and is reacting to speculation, some of it painstakingly researched (Silver Academy’s, for instance — here), that the recent court reforms and a new president as of this week are an “air-tight case” that Mexico will ban open-pit mining and appropriate silver mines already operating by pub-cos (and for that matter, why not gold mines and copper mines?).

In contrast, Doug Ramshaw’s reasoning is one of the most viewed webcasts/videos for the annual Americas Forum. This before word of the Coeur-SilverCrest intention.

MINERA ALAMOS shares, and select other share-damaged silver miners in Mexico, rose as much as 16% Friday after Coeur’s offer for SilverCrest.

Minera Alamos is one of dozens of Canada-listed and U.S.-listed miners/explorers in Mexico.

“People in the precious metals business get very touchy over the subject of nationalization,” the Silver Academy piece states. For good reason; just as government takeover talk rattles pub-cos in Argentina, in Venezuela (a lost cause there?), in Niger, yes, even in Yukon in the case of Victoria Gold’s Eagle Gold Mine.

Silver Academy, I must point out, delivers a useful and pragmatic feed for miners, for gold and silver investors. I give it an 8 out of 10. See this pro-silver piece, for example.

Its material and research is worth tracking. But this “silver Mexico” report is off base.

“The new president (Claudia Sheinbaum Pardo) is pro-business, pro-mining and has dropped all talk of such things, including talk of banning open pit mining. Mexico is open for business, recognises mining’s importance to the economy and it can be seen in the performance of Mexico exposed mining companies share prices.” Craig Parry, Mexico investor, Inventa Capital, Canada

I can count at least five or six times in the past 12 years when my visits to mines and sites in Mexico ‘scared,’ or scarred me, into believing the citizens of Mexico – communal ejidos, for one — could influence national legislators and leaders to restrict or take back the properties of foreign interests. Nothing came of it — except, as we are seeing in parts of Mexico, in Peru and elsewhere — that the communities won more attention to their generational rights.

Thus, a clearer path to benefit from their own ground, whether leased to a pub-co or not. Which as we see also in Peru, in Chile, in Mexico, in Colombia and so on, also leads inevitably to administrative delays of mining permits and national or provincial U-turns in mining policies.

So: take in the nationalizing talk — governments will be seizing more and more profitable ops in their nations as precious metals gain yet more favor with investors. But make sure to listen to the operators, too.

To watch, or listen to: Minera Alamos President Doug Ramshaw: https://www.goldforumamericas.com/company-session/3623/

Here is a broader landscape of discussion points:

— Why would nationalization be limited to silver? If the government takes any action, other western-operated non silver mines will stop operating as a precaution. Peñoles would be sanctioned if Mexico refines nationalized metals. Other Mexico corporations might face progressive sanctions in retaliation, like no securities trading in U.S., or no US mining equipment.

— Nationalizing any Canadian and American assets will threaten Mexico’s preferential trade status through NAFTA. If Mexico does go through with nationalization, its factories will not sell another product into the U.S. and Canada, and remittances will be taxed massively — along with enforced citizenship testing for employees. These measures are more probable with America’s GOP calling the shots, but the Democrats might lean the same way.

Nationalization will produce the same outcome as PDVSA in Venezuela – deteriorating production as capex is squeezed to siphon cash to the elite.

TCRs, more comments from silver miners?

“Silver and other existing mines for Mexico — the government wants these to operate environmentally soundly but to stay operating and paying people, paying taxes, and giving to the communities. A tilt of nationalism for inclusion of the local indigenous populations is strong and needs to be now offered ownership, participation, a piece of the pie,” says John-Mark Staude longtime Mexico explorer centered in and around Hermosillo, Sonora with Riverside Resources RRI.

As an observer, I see little chance the nationalizing of miners in such a rich metals nation as Mexico could occur overnight. My only meaningful Mexico holding is Alamos Gold AGI.

Oh, also for the record:, I am a lifelong New York Mets (baseball)fan.

“I would not pay too much attention to this talk. Quite a jump there (in nationalizing arguments): a goal of securing Mexico’s energy future means Mexico nationalizes silver.” — Michael Wood of Mexico miners Reyna Silver RSLV and Reyna Gold.

— Thom Calandra