Written by Dave Skarica, at StockChartoftheDay on Youtube:
For years, Mexico was one the most mining friendly destinations. Billions poured in from Canadian mid tiers and juniors and created a huge boom in industries full of finds which turned into economic minds, employing millions of people. However, Mexico’s recent regime passed all sorts of laws which restricted exploration and development. This is outlined below from a recent article on mining,com
The reforms introduced last May by President Andrés Manuel Lopez Obrador (known by his initials as AMLO), require pre-consultation with communities before exploration, impact studies and cash bonds in case of damage that junior explorers may find difficult to raise. Authorities can cancel exploration concessions after two years if no work is completed and critics say water allowances have become harder to get. AMLO has also nationalized the country’s still-developing lithium sector and proposed a ban on open pit mining.
Source: https://www.mining.com/mexicos-supreme-court-could-strike-down-presidents-mining-reforms-next-week/
Exploration and investment in 2012 was $1.2 billion a year by Canadian juniors and this had dropped to $720 million by 2022 as a combination of a decade-long bear market in the sector and these new mining laws hit new investment. Mexico’s mining production was valued at $16.7 billion in 2021, according to the U.S. Department of Commerce. Camimex says the new law will cost the country $9 billion in investment and 420,000 jobs.
However, in a recent turn of events, it is now expected that the Mexican supreme court will overrule these new rules as they are seen as unconstitutional. You need 2/3rds approval from the congress in Mexico to pass such new laws and right now AMLO only has 273 of 500 seats. In addition, there is set to be a new election in Mexico and as in many Latin American countries AMLO can only serve one term and his replacement the former mayor of Mexico City is seen as much more moderate and to the centre.
Therefore, I suspect in the coming weeks or months we will see this mining law revoked , and as this will coincide at a time when Gold and Silver prices are rising and the industry needs new funds after years of pulling back.
One of the companies I think that will benefit from all these things in Mexico is Regency Silver. Regency is located in an area near producing mines.
Regency Silver recently expanded its Gold-Copper-Silver Regency-Silver Discovery at its Corp. Dios Padre Property in Mexico
Drills large gold zone including 38 metres of 7.36 g/t gold in hole REG 23-21, 36 metres of 6.84 g/t gold,
0.88% copper and 21.8 g/t silver in hole REG 22-01 and
29.4 m of 6.32 g/t gold in hole REG 23-14. Zone is open in all directions.
The stock is sitting around 19 cents as I write with a market cap of roughly 17 million dollars. When this new mining law is revoked I expect Regency (which has raised nearly 3 million dollars in the past few months for drilling) to start a drilling campaign and for some producers to be interested in what they are doing.
The CEO Bruce Bragagnolo already has a history of success in Mexico. He took Silvermex Resources from a market cap of $7 million to $175 million before selling it to First Majestic.
Mr. Bragagnolo was a director of Continuum Resources Ltd. when it acquired the San Jose Mine in Oaxaca, Mexico. Continuum Resources Ltd. merged with Fortuna Silver in 2004 and the San Jose Mine is now its flagship asset with 2022 production of 5.76 million ounces of silver and 34,000 ounces of gold.
Finally, I really like the chart of Regency Silver. There is a saying in technical terms the longer the base the more space. Regency has had a long term base of well over a year in roughly the 15 to 25 cent range. If this breaks to the upside I would expect a large move. More information is in the chart.
