Written by Brian Boutilier
Bullion BullsCanada
1 Nov 2011
My tour of the operations for Great Panther Silver (TSX: GPR) and Endeavour Silver (TSX: EDR) in Guanajauto, Mexico (which I had the good fortune of attending with my wife, Susan) is now history. There is much to report. I was happy to muck around the mines with 12 of the 25folks in a larger group consisting of investment bankers, analysts and writers.  Some of these intrepid souls are quicker writers than I, and have already published their own accounts of this event.
I would like to begin by offering our heart-felt thanks to the respective management and staffs of Endeavor and Great Panther.  They were kind, generous and very approachable.  While courtesy, safety and community relations were a constant, I found these two operations strikingly different. From my point of view, the ore bodies of the respective mines set the tone.  So as to understand the challenge of underground mining, I’d like you to visualize descending these mines with me.  As something which is still newto me, it was a visceral, confusing, yet exciting experience.In this article, I will focus on Great Panthers underground mine, and follow up with Endeavor’s operations in another installment (and those wanting even more detail can visit our forum). 


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Our morning started with the “meet and greet” with Great Panther’s CEORobert Archer, and Robert Brown (VP Exploration) along with the Mineand Safety Managers. We were briefed on operations, underground exploration, some surface exploration annual production and efficiency data. They showed us what they had accomplished, and were honest about operational challenges they faced. We were informed that our tour would only extend to a few of the more recent areas ofexploration/development for the Guanajauto Mine Complex, We would see the Cata mill, and the surface drilling ongoing at San Ignacio, andthe core shack. We would not visit Topia operations. Importantly there were coffee and stacks.  The coffee was good.


In Guanajuato they have an SGS (i.e. their own “lab”) with 24-hour turnoverassays generated by the underground exploration.  Outside ofthat, they contract with independent labs for surface exploration, and for QA/QI redundancy for their underground resources.
Separate, andin addition to this complex, are the Topia mine/mill with 270tpd capacity and boasting a 19M oz resource, The Topia mill is currentlyworking at 200tpd at a cost of 14-15$/Oz. The high cost is due to “community outreach”, a program where Great Panther purchases orefrom local miners at a premium.  They combine this with their own ore production.


GreatPanthers Cata plant capacity is an impressive 1200 tpd with recoveryrates of 88% for Au and 91% for Ag.  Current mine production is approximately 600 tpd.  The cost of production is less that 8$/Oz Ag equivalents.  This leaves the Company with significantexcess capacity. 


It has increased underground exploration in the main complex, and workers are stoping and ramping for more ore access. To get a feel for thatvolume shortfall, picture an additional 600 one-ton capacity carts orseveral mucking vehicles with multi-ton capacity being hauled up fromdepths of up to 500 meters every day. Some of this is over uneventerrain, which at times can be knee-deep with water. While 500 metersis not considered “deep” using current technology, even withmodern equipment this is still difficult in the narrow, uneven or steep areas of this older mine. Given this, it seems unlikely theycould efficiently bridge this throughput shortfall with the Main Complex alone. 
While thereis an ore production shortfall, there is definitely no paucity of ore, There are many active areas of underground exploration including Guanjautito Deep,Valenciana Deep, Cata Deep, Los Posos and Promontorio. Resource expansion will be generated from underground drilling in theseareas.  The Guanajuato mines currently account for 3 millionoz’s of silver (“Proven and Probable”), 3.7M (“Measured andIndicated”) and a 726K “Inferred” resource.   Thesenumbers can and will grow significantly.  All of the undergroundand surface resources at Topia, San Ignacio and the Guanajuato together account for 30M oz.  This overall number will also expand going forward with the additional surface exploration.This means that mine life is growing faster than the production rate.
GreatPanther’s GuanajuatoMine Complex has two operatingshafts and three ramps currently.  It is host to many historicworks over its 400 years of production, including Guanjautito, thehistoric Valenciana, Cata, Rayas and Promonotorio zones.  Thestrike length of these producing areas exceeds 2 miles. They collectively have been the source of approximately 1 billion oz’sof silver production over the last several hundred years.Valenciana is the single most productive silver mine in modern history.
We began ourphysical tour of the mine complex after a brief on safety.  Istrained yet again to understand the impressive, but broken English of the Mine Manager.  I must say that craning my neck doesn’t improve my comprehension of Spanish, yet I found myself doing itanyway.   With safety concerns addressed, we suited up withcoveralls tucked in knee high boots, hardhats, glasses, earplugs, Wewore belts carrying an air filtration system incase of undergroundfire.  
After our last, nervous bathroom breaks, we walked a couple hundred feet to thelift at the Cata shaft, while getting adjusted to our new kit.(pic) We were lowered 5 at a time down the CATA lift for a couple of hundred meters. We were told that this was in fact, the largest diameter shaft in the world.  It was hand dug, and rough-hewn. While waiting for the others to arrive, I took stock of the weatherdown below.  My wife Susan was a veteran of mining tours being a Geology undergrad. She warned me that things would be hot, humid and loud. I was undaunted, for the temps were around 70F with afollowing, cool, dry breeze of 1-2 knots off the starboard quarter, quite pleasant really.  (Whatdoes she know?
After being warned to keep our appendages in the vehicle, we progressed via Kubota 4 wheeler through Cata, then we rolled further down to Santa Margarita and some of the Veta Madre Structures (Alto veins). We pivoted our heads/headlamps on the signs painted on the walls ofthe switchbacks and intersections.  They point out depth, and the direction to get out in case of trouble. To my eyes, there waslittle indication of where we were.  Oh I knew how deep I was,but there was no, Santa Margarita Placard with a “you are here”or “x marks the spot”.  
The passage-ways were convoluted with many sharp switchbacks. Occasionally, the turns were narrow enough where the vehicle had tomake a 3-point turn to negotiate them.  This is an older mine,well developed, with many backfilled areas from old stopes.  Ifone worked in a deep zone, it would take about an hour on foot to getthere at the beginning of a shift.   Actually, it may befaster on foot.  Nothing is quick or easy. What your carried in,you carried out.
We puttered along intermittently in the 4-wheelers for a couple of hours.We were jostled along over the uneven ground, and thankful for the hearing protection as we passed by exhaust points in the ventilationsystem.  (These whistled much louder than a teapot on fullboil).  We stopped intermittently, to muck around in shin deepwater, and dutifully hacked off ore samples from bearing faces with arock pick.  Red paint marked the spots.  The geos trained among us picked, gathered, and kept shining their lamps on the various samples.  They commented on the intrusives, thesulphidization or “squiggly bits.”  Frankly, I found thatthe higher-grade mineralization wasn’t always that obvious, so Inodded my head and took their words for it. I was comforted to findfrom Mr. Brown, that the workers had the same trouble and often letthe lab assays guide their progress.
As a visitor, admittedly things were visually confusing.  I couldn’t always discern what was active stoping, where the active exploration areaswere versus what drilling was being done to blast the actual head orfootwall.  Most of the ore is oblique in its orientation, sothey often had to create stopes around the back of the ore body togain access, while leaving pillars for support.  There werezones where this was clear to see, but it wasn’t consistently obvious to me.
The deeper we went past 400 meters (progressing to the newer areas about 500 metersdown) the darker it got. We encountered many workers, usually a brief smile or nod as we passed, careful to avert their eyes from ourheadlamps and preserve their night vision. In fact, I couldn’t helpthe feeling that we were disturbing nocturnal animals.  Pictureshining a light on a meerkat, pupils dilating, eyes avert quickly.We knew we were disrupting their work in these underground“burrows”.  I was informed that they work 8-hour shifts, 7days a week, for 3 weeks, then take a week off.
We saw drill teams doing in-fill drilling.  We observed “jack teams”resting while we passed. These jacks were all turned-off to spare thechaos, and our hearing.  I was informed that the drill jackswere powered pneumatically via compressed air, and water lines keptthe tips cool while penetrating the ore face. The water and air-lineswere draped along the tunnel walls.  Unfortunately, I didn’t witness ore being jacked, blasted, mucked or transported - wrongshift evidently.  Perhaps it would have been too chaotic orunsafe to drill, blast or muck out ore while we were there.Evidence of overhead bolting, and cagingwas abundant to prevent cave-ins.
The deeper we went the warmer it got, as we encountered new areas of explorationwith active epithermal venting from drilling.  Indeed, Susan wasright (she usually is). It was dripping hot water from above down the backs of our necks, glasses fogging, and brows dripping.  In fact it was “raining”nearly as hard inside our suits due to the maxed-out humidity.  Butwe were a stoic group, all wearing our best poker faces. There wasnary a complaint uttered.
As the sweatstarted rolling off my brow, my mind wandered, imagining what is was like to grind away for an 8-hour shift fully suited up underground in the dark with only the lamp on my head for light.  I tried toget a feel for how hard it would be to communicate with earplugs in,while maintaining the focus necessary to drill, catalogue and stayoriented to task.  Having been deployed in Iraq (in my previous life), I know how the heat load can affect operations.  These workers are tough and acclimatized.
After a couple of hours, we began our ascent back, grinding our way up the switchbacks.  The air gradually got cooler, less humid.Slowly the tunnels got lighter, until we saw the rail-head.  We squinted at the brighter light, and felt that lovely 2 knot wind onceagain, this time on our faces.  Up the lift we went, to anotherrail area.  We walked our way out in and along the rails.
The first four of us gathered outside, milling about, waiting for the rest ofthe group and staff.  We passed some time looking over our rocksamples.  I had grabbed a chunk with some amethyst (silly, thatin a silver mine). I caught the eye of a worker on break. He had beenwatching me admiring this bit of ore but was polite enough not todraw attention to my dubious “trophy”.  He shifted his gaze,and leaned back to soak in the noon sun for a few more moments.   Heput out his cigarette, gathered his things, gave the group a nod andwent back to work.  It was there that I learned volumes aboutthe miners for Great Panther: dedicated to their work, and harboring no hostility toward the foreign visitors to their workplace.
Since the tour, I’ve had a chance to mull over what I witnessed, and what Iwas told.  GPR is working historic areas, and going deeperunderground to find new ore access (400-500 meters currently).This means they have to haul ore out over a greater distance.Deeper also means it is hotter, wetter and requires ventilation and power to go further, this takes time, money and engineering. Having such a great distance to travel underground is in itself anoperational challenge.
GreatPanther’s workings in the Guanajuanto complex are just that, complex.  They have a unique challenge with the orientation ofthe veins, and yet have consistently “answered” that challengefor the past 6 years. 
The veins areoblique in orientation meaning that the stoping, exploration andblasting requires considerable care and skill, and can betime-consuming.  Great Panther has done a great deal ofunderground exploration, and is identifying new ore bodies.They spent last year working new stopes.  They also expressedtheir intention to build an additional ramp connecting to new areasfor ease of transportation of ore and equipment, which should lead toslightly improving production numbers. Under these conditions,returning to increasing ore production at the Main Complex next yearwould be impressive.
How will theCompany continue to grow reserves and more importantly close the gapin excess production capacity? The answer lies in the exploration and development of San Igancio.   Admittedly, I previously thought of San Ignacio as the “side-show” outside of town. However, this land package is abutting the Endeavour’s Cebada mine.  They are both about 5Km from town as the crow flies.They will have to truck ore right past Endeavor’s Lucero Ramp andclose to the Bolanitos Mill. Realistically for a dump truck, it wouldbe up an hour drive down the winding dusty road.  Permitting forthe trucks in town are details needing to be ironed out.Importantly, at San Ignacio, they are working the same basicepithermal shear system that Endeavor is at Cebada, promising, but that is the topic of the next installment.
Great PantherStaff and Management are a reflection of their mineralization andmine. They are more than meets the eye. While being modest abouttheir accomplishments, one senses a fierce determination to overcomethe challenges they face, and improve operations and conditions foryet another year. Finally, they are an integral part of thecommunity, and of the history of this area. They are mining the same“Valenciana” that created a great deal of wealth Spanishnobility. With CPR its not just about profits, they are being noble. They are not taking undue risks their workers to reap personal rewards.
We completed our tour by meandering around the historic Valenciana smelter. GreatPanther is working with local artisans and officials to create acommunity center and museum on these historic works. They are honoring the history of the people and land of Guanajauto, In doingso, they are helping write a much brighter chapter for these hardworking people.

For a better copy complete with pics
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