¶ Intro / Opening
Hello and welcome to Kitco Mining with me, Paul Harris, here at the 2026 Prospectors and Developers Association conference in Toronto. We are talking silver mining in Mexico, and a great pleasure to be joined by James Anderson, CEO of Guanajuato Silver, which trades on the TSXV under the ticket GSVR. James, welcome to Kitco.
Great seeing you again, Paul. Thanks for the opportunity.
You're more than welcome, James. Um let's start right at the beginning. And what's the origin story of G Silver, Guanajuato Silver, and how did you come into the business?
So it was about six years ago I took control of a venture exchange listed shell company. It had about a three million dollar market cap. It had negative $300,000 in it. And it had one little development project that we still have in Guanajuato. And I felt that consolidating the Guanajuato silver and gold mining district would be a good idea. So six years later, we've uh purchased a total of five mines, uh, four production facilities in Mexico, and we continue to increase
¶ Bolañitos Acquisition and San Ignacio Synergies
our silver and gold production and can continue to consolidate the Guanajuato mine district.
Excellent. Now uh you've done about $80 million worth of asset acquisition since 2021. You recently bought the Bola Nitos mine uh from Endeavour Silver for 50 million. That's the biggest uh operation you've you've uh bought and it's the the biggest deal you've done. Uh this is bigger uh than the rest of your portfolio. It's got a milling capacity of uh what 1,600 tons per day. That's correct. Um what what are the what are the plans there? This is obviously the jewel of your your portfolio now.
So what's the plans going forward?
I think the the the way that I'd like to answer the question really is like we we see a lot of uh mining MA in our business where they're the synergies are questionable. Um, you know, where a company with an asset in Quebec buys something West Africa, you know, as an example. Um our San Ignacio mine is immediately adjacent to Bolonitos. These mine are they're they're the same structures, the same vein systems that run through our claims go right over onto Bolognito.
So I I think these two mines should have been mined together for many years. They weren't, they were always owned by different companies. And Endeavor Silver, Dan Dixon, the the CEO, and myself, you know, found a way to come up with a deal that worked well for both parties. Uh we're already um processing material from San Ignacio at the Bolinitos plant, and which is you know noteworthy because we only closed the transaction on January 15th.
Um in past years we've taken all of the material from San Ignacio, trucked it about 30 kilometers to one of our other processing facilities in Guanajuato. So that's a it's an immediate um obvious synergy between the the two operations.
I was underground at both operations about a month ago, and the the excitement from the geologists and mining engineers from both sides about finally being able to, you know, not have to worry about crossing um claim boundaries and you know being able to to have all of those assets uh working simultaneously and and together. Uh the the excitement was palpable, so that's very exciting.
So um you you got some operational efficiencies because of that and how you ship all from one operation to the next. Um it sounds like you you're gonna have some geological opportunities by not being not being constrained if by by property boundaries.
Correct, and those geological opportunities are production opportunities where you know we know with 100% certainty that the vein structures continue across property boundaries. We're no longer constrained for that. Uh also exploration opportunities where uh maybe we can drill from our claims
¶ Bolañitos Integration and Operating Cost Impacts
onto the Bolonitos claims and vice versa. So uh a lot of opportunities open up um because of this.
Now you you said, James, you you've took possession of Bolognese in January, so I I guess you're still sort of working through the integration, but uh do you have a sense of what impact this integration may have on your your your unit costs, your audience sustaining costs?
Yeah, and uh absolutely we've got a lot of work to do. It's you know um all fun and games for me to wave my arms and and say, you know, the this is instantaneous, but we've got a lot of work to do underground and corporately. It's you know, uh the two operations are held in two different subsidiaries. So how that works from a tax perspective and an organizational perspective, um we will be working through that, I would think, for m for many months.
But in terms of um unit costs, uh, I don't I don't want to cuff any numbers here for you today, Paul, but I again I think it's quite obvious if we're not move the the material from San Ignacio, if we're not trucking at 30 kilometers and we were only trucking at two kilometers to have a process, um there's uh obvious immediate benefits to that. Here's a um at l at least for from previous years, the cutoff grade that Bolonitos was using was 145 silver equivalent.
We were using 185 in order to, you know, reflect the the extra transportation costs. So the uh the San Ignacio cutoff grades can obviously go a little bit lower. We can also fill the plant. The plant has a 1,600 ton capacity. In previous years, it's only been um used as about 1,200
¶ Consolidating the Guanajuato Mining District
tons capacity. So we can um uh certainly increase our throughput at the Bolinitos plant.
Now, right at the top, you you spoke about the the business plan being consolidating the Guanajuato camp. Do you now have that critical mass to have you effectively realized your vision there?
Well, I think the there's th this camp is 450 years old. So everywhere you go there's um other opportunities, either owned by you know small entities um of you know that maybe have dormant um old mines, uh maybe dormant uh old tailings facilities or or waste piles that perhaps didn't make grade a hundred years ago but do today. So there's those opportunities.
The other opportunity that we you know aspirationally see is that Fresneo owns a lot of dormant old mines in the neighborhood as well to be able to really fully consolidate the um the district. I think something needs to be done there, but uh you know that that may take well maybe it'll never happen, but uh that may take some time uh going you know into the future as well.
With with what you've done so far, do you feel that you perhaps now have the the critical mass, the size, the seriousness? You've been in the district long enough for Fresneo to have the confidence to engage with you and perhaps do something with you with what they have there.
Yeah, I mean we we we continue to have a very good relationship on many um levels, but um uh I would not want to speak for Fresneo. It's it it is the planet's largest
¶ Fill-the-Mill Strategy and Plant Capacity
silver mining company. They've got other things that they're looking at, so I I I I wouldn't want to answer for them.
Okay, fair enough. Well, let's talk about production goals going forward. Uh you mentioned the the Bolognetos uh mill. You've got spare capacity, all your milling operations. Bolognitos, I think, is 73% capacity utilization, 66% at Kubo, 60% at Topia. Um do you have a let's say a fill-the-mill strategy now?
So the the short answer is yes. Just uh to to be clear, Topia, uh that's the one in Durango and and considerably further north, like a thousand kilometers further north. However, uh we've got three production facilities in Guanajuato, and in December, anticipating the closing of the Bolonitos transaction, we put the Cata plant, which is at Valenciana, on care and maintenance. So, really just two plants now at Kubo and Bolonitos in the east and in the west,
¶ Pinguico Mine Restart Plan
and I think we can come very close to running those at capacity as we get into 2026.
Okay. Going forward a little bit more, Penguico, you're looking at a uh a restart to that mining operation, I think, in 2027. What do you need to do to be able to achieve that?
So uh a lot of development work. Uh we and that's that's been sort of going, you know, start start and stop for for a couple of years now. Uh we were doing some additional development work in the fall. When we realized that we were going to be able to close the Bolinitos plant, we m curtailed that activity just to make sure that we weren't doing too many things all at once. And I think we've got our hands full right now with all of the the Bolinitos synergies that we're talking about.
But we'll be back doing uh additional development work and driving towards a fairly substantial underground stockpile that we know exists at Pinguico. That's only eight kilometers
¶ Silver Price Leverage and Profitability Outlook
away from the Kubo plant. So moving that material and processing at Kubo, I think is something that we can do sooner rather than later.
Okay, uh James, I've been following Kwanavata Silva for a number of years, as you know. I think we did a side visit uh just after COVID, wasn't it? Right. So that would have been what 2021, some maybe.
Maybe three and a half years ago.
And one of the aspects of the company is you know the silver price you could argue is never quite high enough for you to be sustainably profitable. And I know you know a number of investors have been frustrated by you having to go back to the market every once in a while to top up treasury.
Uh with with silver at $80 per ounce now and with the Bolognitos now within the the the the portfolio, does that mean uh you know you are getting to that sustainability level and that the days of equity raises are behind you?
Yeah, I think um so let me answer that in a couple of different ways. Fir first of all, $25 silver is you know uh a lot different for our company than $80 silver, $70 silver, uh $93 silver where we closed on Friday. So this is a totally different environment. The these have always been relatively small, underground, and relatively high cost producers. Um but in a uh a running market for for the metals, well the the high cost producers, those are the ones that can have the most impact.
So I think that's what you see with with Guanajuato Silver. One thing that um that I would say too, though, um, you know, with with all you know respect to some of the other companies in our space, so yes, we've gone back to the market a few times, raised money, but we have purchased and put back into production five silver and gold mines over that period of time.
I would suggest that we've um spent that money pretty well and have assets that are you know in today's market that we purchased at pennies on
¶ Balance Sheet, Treasury, and Credit Facility
the dollar, and the value of those assets is multiple times more than what we've paid for them over the years.
Okay. Let's talk a little bit about capital allocation balance sheet, uh, cash debt. What what are they looking like? You've got a credit, uh, sorry, a gold credit facility. Um are you able or you think of accelerating paying that off in this current environment?
So um again, we just closed Balonitos in January, right? So I I want to be able to see at least a few weeks, maybe a number of months of production and you know make sure that we're uh on the right uh track with that. Um let me answer it this way as well. In the fall, we raised um, well, 40 million Canadian dollars, let's call it 30 million US, and we'll just stick with US dollars for the time being.
Well, ultimately, this wasn't exactly the plan at the time, but we took 30 million and paid, you know, that was our our cash portion of buying Bolonitos. After that, we we've now have about 25 million dollars, uh US dollars in the treasury right now. So I think we've done, again, a pretty good job of managing um the ups and
¶ Stock Performance, Warrants, and Share Overhang
downs of the of the market, all of our capital allocation, and um you know, and purchasing the new mine.
Okay. Um Guanajuato silver hasn't jumped in the market as much as other silver companies have. Um from your comments, it sounds like you know, you you've uh as a higher cost producer, you've perhaps got more leverage. So now that the silver prices are moving higher, do you expect to sort of catch up and perhaps even go past?
Well, um as the CEO of a silver mining company, of course, our shares are never quite high enough. Um but I mean let me seriously answer that in a couple of different ways. First of all, we just got a uh an award from the TSX Venture uh Exchange for share price appreciation and volume. Uh we are one of, if not the volume leader on the venture exchange all the time. So I think you know there's a there's a certainly a lot of interest in the in the company and what we're trying to do.
We also got an award from the OTC capital markets for roughly the same sort of thing from how we trade in the United States. So I I think there's all that. I do think, though, that you know your your other comment about, well, you've had to go back to the market a couple of times. Um so you know, I think that perhaps there'll be still some um trading that needs to take place in order to to cut through some of the uh the share overhang.
Uh we do have a fair number of warrants outstanding that the market is absorbing as as we go forward. But um I have a lot of respect for the for the capital markets, and I I think that the the stock market wants to see Guanajuato Silver very profitable at these prices. Um and I I would suggest that in the months ahead we'll be able to show better numbers
¶ Security Risks for Mining in Mexico
and and really be able to deliver what the market wants, which is sustained uh profitability.
Excellent. Now it's it's been a a violent start to 2026 in Mexico, including tragic news from one of your peers there. Um what what is your take on what is going on? How is that potentially changing how you operate today and going forward?
So um I I think it's a very serious situation. Um yes, one of our peers had a number of miners kidnapped. Uh I it's tragic that you know people in the mining business have to worry about their safety in this in this manner. Uh underground mining in Mexico is already dangerous enough, thanks very much. Um and the violence last week uh in um in Jalisco uh really extends that.
Um I don't want to be sanguine about it, these are very serious situations, and we're doing everything that we reasonably can to keep our people safe in the mines but also uh on the roads
¶ 2026 Growth Catalysts and Strategy
um between between the mines and between um Guanajuato and Manzanillo where we ship our concentrates.
Okay. Uh let's uh end with a sort of more positive note, James. Uh what are some of the key catalysts our viewers should be watching out for from Guanajuato Silver this year?
Well, we like to call ourselves Mexico's fastest growing silver mining company. We've uh acquired and uh and put back into production five mines over the last five years. I think that that in and itself is noteworthy. And what I would suggest is that um more of the same. We're not big enough yet. We've got um other business to do to be able to make the company bigger and stronger going forward. So more of the same.
Well, hopefully you'll come back and share with us as and when you're taking those next steps. James Anderson, thank you very much for joining me today. Thank you so much, Paul. It was a pleasure. And as a reminder, Guanuwatu silver trades on the TSXB under the ticket GSVR. We have a lot more to come from the 2026 Prospectors and Developers Conference here in Toronto, so stay tuned and hit that subscribe button. I'm Paul Harris, and this is Kiko Mining.