Okay, I guess we'll start our next session. My name is Ovais Habib. I'm a Precious Metals Analyst with Scotiabank. Thanks everyone for joining in our last day of the Mining Forum Europe. Our first company presenting would be Guanajuato Silver, and presenting Guanajuato is going to be James Anderson, Chairman and CEO. James?
Thank you so much. Thank you very much. Thanks to the Denver Gold Group as well for hosting, not only the presentation, but the whole conference. I think they've done, again, a marvelous job. My name is James Anderson, and I am the Chairman and CEO of Guanajuato Silver. I'm going to take this opportunity. We've got about 20 minutes to go through the story, so really only just time to give you an overview of what Guanajuato Silver is, why we think the price of silver might be generally supportive in the next little while. Just to give those people in the audience an overview of where the company's come from in the last five years or so, I took control of a Toronto Venture Exchange-listed shell company five years ago. That company was halted. It had a CAD 3 million market cap.
It had about -CAD 300,000 in the treasury. It had one asset, which is a development asset, something that we still own in Guanajuato, Mexico. I went to Guanajuato for the first time, and I realized that this was one of the great silver mining camps on planet Earth, and had been for about 500 years. What I saw there at that time was a mining camp that was owned by a bunch of different companies. Everything had been chopped up into different ownership structure. I thought to myself, "This is a recipe for success for consolidation in the mining business." That's what we began doing. Why did we want to do that? Well, we wanted a precious metals mining company, and we say right off the bat here, we produce silver, we produce gold.
Not to denigrate any of the fine development and exploration companies that are represented at the conference, but we didn't want to go that route. We wanted to get into mining right away. Some would say perhaps a little too early. But nonetheless, we wanted to be in the mining production business right off the bat. If you're going to build a silver mining company, where do you want to go? You can go to Peru. It's got its own problems. You can go to China. That's not really for me. Mexico continues to produce about a quarter of the world's silver. If you want to build a silver mining company, certainly Mexico has to be on your shortlist. Why do we want to do that? This is the fifth year in a row that silver has a supply deficit.
We believe these numbers, and we believe this is one of the reasons why the price of silver right now is overtaking gold on a percentage basis as they move up together. Why is there a big deficit? Because of the solar industry, fully 17% of all of the silver ounces that get mined in the world today goes into the photovoltaic industry. That number is well-known. It's easy to calculate. If we were talking about a dozen years ago here in this room, that number would be zero. Today, it's 17%. When you talk about the growth in the silver market, the growth for demand, all of the marginal demand comes from the solar industry. I don't think that that's going to change anytime soon. I know that our American friends don't really see the benefit of renewables. My response to that is, so what?
Everybody else on the planet wants to support it. I mean every government in the world wants to support it. Now with the military crisis that's going on in the Middle East, I think that the term energy security for nations, for companies all over the world, that notion changes in a manner that we haven't seen before. That's all great and important. The laser thing doesn't work, but I have brought a pointer stick, which is very fun. Right here we have the state of Guanajuato, Mexico. In that is the capital city of Guanajuato. It's a beautiful place. I'll show you a picture of that in a minute. Most of our producing assets are in and around the city of Guanajuato, Mexico. We'll talk about Cubo, Valenciana, San Ignacio, and Bolañitos.
Bolañitos is a mine that we purchased only in January, so about two months ago. It'll be a bit of a focus for the discussion. We also own one mine further north, about 1,000 km to the north in Durango, Mexico, called Topia. It's a smaller operation, but very high grade, and of course, grade helps. This is the beautiful city of Guanajuato, Mexico, and just to make this conversation and this talk a little bit more two-way, my friend Heini Beretta, who I haven't seen in many, many months. Heini came to visit Guanajuato two years ago, Heini?
Yeah.
Give the crowd 30 seconds worth of your impressions, will you?
I like the contrast that sits in there. The people are poor but happy. Here we're wealthy and miserable. Lovely place to visit.
That'll do. Usually I spend about 40% of my time there. Certainly that was true last year. The city, the food's good, the people are friendly, as Heini points out. The climate's excellent. You're at about 2,200 m above sea level, so it never gets to that terrible, stinky hot that other places in southern Mexico can get to from time to time. More importantly perhaps, this center has close to a 500-year mine history. I was born in Timmins, Ontario, one of the great Canadian mining centers. We're very proud of our mine history there, but soaking wet, it goes back 120 years. Guanajuato, you can count almost five centuries of silver and gold mining. This is our latest acquisition, Bolañitos. Bolañitos, which we bought from Endeavour Silver. Bolañitos is immediately adjacent to one of our other mines.
We see lots of M&A in the mining business that really doesn't make a whole bunch of sense. Things that are being purchased in different continents from where people are focused. This is not that. This is a very focused purchase of a mining asset that we find accretive immediately. In the next few slides, I'll show you why that is. We paid $50 million for it. We did that with $30 million in cash, $10 million worth of our shares, and then about $10 million in contingent payments that we'll pay over the next two years or so. I think one of the important things about the quantum of that figure, that was negotiated about six months before we closed the transaction in January. Let's call it eight months ago from today. Well, that's about $1,500 an ounce for gold and $30 or $35 an ounce for silver.
Did we get a good deal? Yes. I think it's unequivocal. We got a very good deal. This is production numbers from 2025 at Bolañitos. You'll see the current mill utilization rate at 73%. I'll come back to that in a moment as that's an important part of the story. This slide here shows all of the mining assets in Guanajuato. The dolphin-looking structure in gray, that's the city. All of the green claims, that's what we owned prior to the Bolañitos transaction, and all the blue claims are what we purchased with Bolañitos. You can see one, two, three production facilities. What we did is in December, about a month anticipating the closing of the Bolañitos transaction in January, we put this plant at Valenciana on care and maintenance. All of the plants have been running at about 70% capacity.
What we will hope to do by the end of this year is run only just the two plants, Cubo and Bolañitos. They're a little bit bigger than the other one. They are newer and they are east and west, so we think that this is going to be a much more advantageous way to process mineral in Guanajuato. It's a Leapfrog computer model showing the vein systems at Bolañitos and at San Ignacio. It's just a point that we're trying to make. The San Ignacio veins go right into the Bolañitos ones. These two mines should have been being mined together for two decades. They were not, but we have the opportunity to do that now.
I was underground here with the geologists and engineers about two months ago, and there was a genuine excitement from both sides, from both camps, if you will, about being able to drill from one side and into the other, and being able to tunnel from one place to the next without having to worry about claim boundaries. We're already processing material from San Ignacio at the Bolañitos plant, and that'll be very helpful. Sort of one last look at this for those of you that still need convincing. The waste pile in the foreground, that is the San Ignacio waste pile. The waste pile in the background, that is one of the waste piles at Bolañitos. I used to joke with Dan Dickson, who's the CEO of Endeavour Silver. I said, well, Dan, this is like a seven iron golf shot from one side to the next.
We should really be mining these things together. I guess just to square that circle, Endeavour Silver has been building a very large silver mine in western Mexico in Nayarit called Terronera. That's where they've spent about $300 million. They pretty much finished that mid last year, and that's why they decided that this was non-core, the Bolañitos asset, and why we would get a chance to purchase it. For us, of course, further consolidating the Bolañitos or the Guanajuato area made a lot of sense. I think it's genuinely a good transaction for both parties. Valenciana. Valenciana's in the middle of the district. You can see that here on this inset map. Valenciana has been producing silver and gold on and off, but mostly on, for 450 years.
If you ask a Mexican geologist what do you think about Valenciana, he will know the story of Valenciana. He or she will have been there, looked at it, studied it. This is one of the great storied mines in Mexico. We are about to commence a pretty significant drilling program here to find more material, and that will be part of a announced 75,000-meter drill program that we're doing at all of our operations. During the downturn, and when I say the downturn, I mean those two or three years where silver was kind of stuck at $22, $23, $24, we certainly didn't make very much money.
Finding the capital necessary to be able to put these older underground mines back into production, into 21st-century standards, that was very difficult, but we've done that now and this company was built with a surge in silver and gold mining prices in mind. This is the time for Guanajuato Silver. There's Cubo. Just speaking about the swing in prices between the top of the market and the bottom of the market in the mining business, the previous owner paid $200 million for this asset. They put it on care and maintenance in 2019 because silver had reached about $17. We bought it in 2021 for $15 million. They spent $35 million bucks building this plant. We spent about $7 million refurbishing it.
I think, again, I think it's without question that we have bought all of these assets for pennies on the dollar at a really good time in the market. Now we can begin to prove to people that we can make a lot of money in the mining business. That may take another couple of quarters for everybody to get it, but I can tell you that is happening. Topia. Topia is a little bit different for us. It's not in Guanajuato, it's in the state of Durango. It's about 1,000 km to the north of our other operations. It is small, but very high grade. You can see the resource down here. It's about one kilo of silver equivalent per ton. Routinely in the plant, we're processing 750-800 silver equivalent. Very helpful indeed. This is consolidated production for 2025. This includes the Bolañitos asset.
What you see here is silver, gold, and 2.7 and 3.3 million pounds of lead and zinc. Like many of the other companies we have in the past talked about silver equivalents. The problem with that now, last year's silver equivalent numbers were calculated at 85/1. This year, well, right now, it's about 62/1. It gets very difficult to try and compare last year's production and this year's production. What you will see from Guanajuato Silver going forward is much less talk about equivalents and much more talk about how much silver we produced, how much gold we produced, and how much base metals we produced. Now, the base metals, and this is a very important distinction for Guanajuato Silver to other mid- to small-cap Mexican producers.
Many of them produce a lot of base metals, lead and zinc and copper, along with their silver. We are very much a precious metals producing company. These numbers are from the Q3 . Once we factor in Bolañitos and the higher metal prices for silver and gold, what you'll end up seeing is about a 60% revenue from silver, about 37% for gold, and only 3% for lead and zinc. The lead and zinc comes from Topia. All the concentrates that we produce in the Guanajuato area are gold and silver only. We're quite proud of this slide. In an industry that often measures success in decades, we've managed to put this company together with five producing mines, four processing plants, although only three of them are actually working right now. We've done that in a five-year period. Expect more. We're not done yet.
Our company certainly isn't big enough yet. Opportunistically, when we can acquire things that are truly accretive to shareholder value, you will see us make moves like that. We are not timid about doing that sort of thing. This is a one-year chart of our shares. Maybe I'll just jump to major shareholders for a minute. Fidelity, that's the Fidelity Gold and Silver Select Fund out of Boston. It is a very big fund. Usually, they don't come down market to something the size of Guanajuato Silver. I managed to convince them to buy some shares a couple of years ago. That wasn't a very good idea for the first year, so they were a little bit underwater. However, they're doing very well now and happy about it. Ocean Partners is the group that we sell about 90% of our concentrates to.
Ocean Partners has been a terrific partner all the way along. They have provided debt capital and equity capital to the growth of this company every step of the way. Endeavour Silver, by virtue of the fact that we gave them some shares for Bolañitos. We put in the Sprott logo, but it's really Eric Sprott. Eric has written a couple of big checks to the company on a couple of different occasions as we've expanded the company. Pardon me. Myrmikan Capital is a Connecticut-based fund. Dan Oliver is the Fund Manager. He's also on our Board of Directors. Myrmikan invests strictly in micro-cap gold and silver companies. They've got a pretty good idea of our potential success. Let me just make one more comment before we go on. This is a 12-month chart.
If you went back 24 months, the 12 months prior to what you're seeing here right now, the stock just kind of bounces along the bottom. I think the market correctly was curious about whether we could ever make some money with these assets. As we get into 2025 and then into 2026, the market decides, yeah, this is going to work at these progressively higher prices. What kind of company do you want to buy when you have rapidly increasing prices? Well, you want to buy the marginal producer. We are that company. This is the team. I won't bore you or bother you. I probably just about out of time anyway, with everybody on this list. What I will say is that the strength of the team is that we all come from very different backgrounds and different parts of the industry.
We've got geologists, engineers, finance people, administrators, all contributing to the growth and the success of the company. I'll do this here. Because of the nature of how we've acquired all of the mines over the last several years, all of the resources are kind of in a different state. Over the last couple of years, we've had a program to do new 43-101 resource calculations at all of the assets. We started with San Ignacio, then we went on to Cubo, Valenciana. The next one you will see is Bolañitos. There are regulatory considerations. We've got to publish one of those within about 45 days from now, so you'll see that, and you'll see a new Topia 43-101 compliant resource estimate towards the end of this year as well. That is all that I have to say. You want to entertain questions?
Sure.
A moment or two?
We have one question. Yeah.
Management owns about 8% of the company. If we back up, oh, sorry, there we go. Control of the company is in the marketplace. Our shares trade really well. It's a retail story that really resonates with people. We were given an award about a month ago. We were the number one volume leader on the Venture Exchange last year. Routinely our stock trades three, four, five million shares a day. All of these groups, although they're large shareholders, Fidelity might only own 8% of the company.
Another question there?
Yes. If I'm correct, you've been drilling a lot, maybe about 75,000 m of drilling. Is most of this infill drilling for existing production, or is it to look for completely new opportunities for the future?
Yeah, great question. Of the 75,000 m, expect about 40% of that will be infill, 30% will be extensional drilling, and about 30% will be real, what you and I would consider exploration drill holes. I'll make this point, too. During the downturn, we really didn't have the money to do very much development work, or not nearly as much as we should've been doing, or exploration work. Today is vastly different, so we've got big programs like that, which we're executing on right now. We've got six drills turning as we speak. We will continue to do that through the year and play catch up just a little bit for the last couple of years. If I can make one more point here, just regarding exploration. We do have one asset, which doesn't usually get into the presentation slide or talked about too much.
This is called El Horcon. El Horcon is about 85 km in a straight line northwest of Guanajuato. It is a past producer. Seems like every square inch of Mexico is a past producer. It was a pretty important producer about 100 years ago. There's still about five kilometers worth of underground drifting that you can get in. We did 1,100 channel samples last year at El Horcon. It's really good gold grades. In fact, the system itself, there's about 12 en echelon veins, and then there's cross-cutting features, there's vertical features that are really high-grade gold. For the first time, we will start a comprehensive drill program in June. As an explorationist at heart, I'm quite excited about seeing some results from it.
The 40,000 m that you mentioned as infill drilling, is that given you enough of a view and insight into production? How much production do you think you can be comfortable with for next year and this year? How many ounces?
Right.
Of silver?
Just to clarify that, 40% of the 75,000 m.
Yeah.
That's what would be infill drilling.
Yes.
We've been doing that. That really commenced about six weeks ago. It'll be ongoing from now till Christmas time.
What would be your estimated production for 2026 and 2027 in millions or whatever, ounces?
I'm not.
Thousands of ounces.
Yeah. I'm not going to give you a 2027 number. I don't know. We don't have anything regarding guidance like that. What I will say, these are your 2025 numbers. This includes Bolañitos. That's your baseline. Imagine a number that's 10%-15% higher than this. Those are our targeted production values for 2026.
James, thank you very much. We are out of time, but I'm sure James is going to be around if there are any additional questions. Thank you very much.
Cheers. Thank you very much for your attention.