Esperanza Resources (TSX-V: EPZ) (OTC QX: ESPZF) is a company with a primary focus of developing Cerro Jumil, a gold and silver mine located 110 kilometers south of Mexico City in the central Mexican state of Morelos. Initially funded in early 2012 through an equity offering that yielded gross proceeds of C $34 million, Esperanza also has a 26% equity interest in Global Minerals (TSX-V: CTG) with a market value of C$10 million, a 1% NSR interest in a Silver Standard Resources (NASDAQ: SSRI) project in San Luis, Peru, and, until January 14, 2013, a host of mineral concessions in eight additional Peruvian sites. Esperanza management hopes to use the success of Cerro Jumil as a springboard for adding more operations which will produce a wider variety of precious metals in the years ahead.
Esperanza CEO Gregory Smith and COO Laurence Morris were appointed to their roles on May 2, 2012. Both came over from Minefinders where they played key roles in that company’s sale to Pan-American Silver (PAAS Nasdaq/TSX) for Cdn $ 1.5 billion 2 months earlier.
Prior to joining Esperanza, Smith served as CFO at Minefinders Corporation and worked in management for both Goldcorp and the KPMG mining practice in Vancouver. He is a Chartered Accountant by trade and obtained his Bachelor of Commerce degree from the University of Victoria in British Columbia.
Laurence Morris is a mining engineer and geologist with more than three decades worth of history in mining and metals. With a background in all phases of mine operation from planning through construction and on to operation, Morris will be heavily relied upon as Esperanza guides the Mexican project to production. Much of his experience was gained internationally in Mauritania, Zambia and elsewhere in Mexico so he will have firsthand knowledge in how to navigate foreign regulatory and cultural hurdles.
Moves at the onset of 2013 indicate the Cerro Jumil project is progressing at a rapid pace. On January 14, Esperanza announced they sold certain non-core mineral claims to Pucara Investments Corporation. These were undoubtedly valuable assets, as Pucara is led by former Esperanza Vice President J. Stephens Zuker who is CEO in addition to former Esperanza Chief Geologist Aristedes Chavez L who fills the role of Vice President of Exploration. This transaction, which may foreshadow similar moves in the next few years, fulfills Greg Smith’s pledge to focus on the core Morelos project. “The sale of these non-core properties is consistent with our focus on advancing our Esperanza gold project to production,” Smith said in a release. Esperanza retains a 1% net smelter returns royalty and ownership of approximately 10% of outstanding shares in Pucara. Esperanza management feels these assets are more than enough to take them through the early development stages and into a time when other funding options such as conventional debt, a silver stream, convertible debentures or equity can be utilized.
With an initial production target of late 2014, Esperanza is looking for Cerro Jumil to generate an annual output of 100,000 ounces of gold through the end of 2020. While Cerro Jumil is Esperanza’s initial effort in the Esperanza Gold Project, other recent occurrences bode well for providing Cerro Jumil some company on Esperanza’s To Do List. Exploration on additional test locations within the 15,025 hectare Esperanza Gold concession area which includes Cero Jumil has revealed 10 additional sites that Esperanza is exploring further. With a Measured and Indicated resource of 1.47 million ounces of gold and 16.01 million ounces of silver, more sites may soon appear on the horizon.
Global Minerals, the company that Esperanza holds a 26% stake in, is channeling their efforts on developing the Striebrona Project in Slovakia. The high grade silver and copper vein deposit looks to yield 14.3 million ounces of silver and 48.1 million pounds of copper that are classified as measured and indicated with another 13.5 million silver ounces and 29.8 million copper pounds classified as inferred. The 1% share Esperanza holds in Silver Standard Resources Peruvian venture rests on a promising site with an projected output of 273,000 gold ounces and 6.51 million silver ounces in the first 3.5 year mine life.
Further down the shaft one might say are three additional Mexican locales and one Peruvian site that bear watching. The El Canario project in Nuevo Leon sits amidst several multi-million gold and silver deposits and Esperanza has identified three exploration sites. Many other mines operate in the area, which is near both a major city and highway.
The Biricu plot in southwest Mexico sits on the Guerrero Gold Belt while Gallos Blancos is situated in San Luis Potosi. Both projects are further away from yielding results but Esperanza management are encouraged by test results at both locations. Esperanza holds a 51% stake in the Pucarana site in southern Peru. The two concessions that make up Pucarana sit within 10 miles of some of the most profitable gold mines in South America.
The profile of Esperanza Resources is one of a company that is pragmatically setting the stage for a larger and more diverse set of operations in the years to come. Analysts will definitely be keeping an eye on this company.