Could you provide an overview of Santacruz Silver’s asset base?

In Bolivia, we have three mines (Bolivar, Porco, and the Caballo Blanco complex), as well as one ore trading company (San Lucas). We bought these mines from Glencore in March 2022. In Mexico, we own the Zimapan mine. We produce between 18 and 19 million oz/y of silver equivalent (AgEq). Our largest producers are Bolivar, Zimapan and San Lucas. Santacruz is cash-flow positive, with no debt, no streams or royalties, and therefore very healthily positioned for today’s buoyant market.

What role does the San Lucas Ore Trading company play in consolidating and formalizing local silver supply?

Most of the silver in Bolivia is produced in the states of Oruro and Potosi. By buying the ore from small local miners, we help bring these players into the formal economy. This not only generates meaningful contributions to public finances but also provides clear benefits to the miners themselves. Many of them now recognize the advantages of formalization — including access to credit. Some have already used financing to invest in better equipment and expanded their operations. It’s become a virtuous cycle of growth and positive impact.

What is the ownership structure of your mines?

The Caballo Blanco group of mines, as well as San Lucas, and of course the Zimapan mine are 100% owned by Santacruz Silver, but two of our mines, Bolivar and Porco, operate under a net profit interest structure with the Bolivian government through COMIBOL (state-owned Company). Santacruz is the full operator, independently managing all aspects of the operations, with full discretion over how the mines and the mills are run. At the end of each fiscal year, we calculate the net profit after taxes and capital expenditures, and we share a portion of that profit with the government. 

Santacruz Silver ammended the terms of sale of the Bolivian assets with Glencore. Could you explain?

In October last year, we announced a restructuring or simplification of the agreement with Glencore, which covers two main components. The first is a cash payment option: we could either pay US$40 million in a lump sum on or before November 1, 2025 or choose to make annual payments of US$10 million over eight years, starting from the same date. Economically, the second option carries an implied interest rate of around 15%, which makes the $40 million upfront payment more attractive. We’ve already committed to that route. In fact, we already paid the first US$10 million in March 20th and second payment for $7.5 million in May 6th, and will continue amortizing the remaining US$22.5 million in bi-monthly installments of US$7.5 million. The second component is tied to Conditional Value Rights (CVRs). These only come into effect if the zinc price exceeds US$3,850 per tonne. If that happens, we’ll pay Glencore US$1.3 million per month, capped at a total of US$77 million.

Under the revised terms, we are also entitled to recover around US$58 million in VAT from the period when Glencore operated the mines. Second, we eliminated the 1.5% NSR (Net Smelter Return) royalty on all producing assets — saving us an estimated US$9–10 million annually at current metal prices. And finally, we retained US$9 million worth of finished goods inventory.

What are some areas of growth for Santacruz Silver in the coming years?

There are two main paths for growth. The fastest one would be to buy another milling facility in Bolivia. Currently, we process ore from small miners through our San Lucas trading company, which temporarily reduces capacity at our own mills each month. However, with mine production already running at full milling capacity and showing over 30% growth, we could reserve the existing mills exclusively for our higher-grade, more profitable in-house ore. By acquiring an additional mill, we could offload San Lucas processing to the new site and unlock significant organic growth. This could add around 4 million oz/y, pushing total production to roughly 22 million oz/y. 

The other pathway is through exploration; our most advanced exploration asset is Soracaya in Bolivia. This is a pure silver, permitted mine, partially developed by Glencore, that could produce 450 t/d. In fact, according to the PEA produced by the previous operator, it could scale up to 850 t/d, producing 4 million oz/y AgEq. We are evaluating initially processing the ore through San Lucas to generate cash flow that could later fund a dedicated mill, or, alternatively, we could form a partnership with operators like Pan American Silver’s San Vicente mine, located just 4 km away. 

Santacruz initiated a debt listing on the local Bolivian stock exchange. What has driven this move?

We issued a one-year promissory note as part of a broader debt program for 140 million Bolivanos. In the first tranche, we raised 70 million Bolivianos (around US$10 million), which was oversubscribed and placed just 15 minutes after opening. The funds will be used to finance our working capital needs and increase our US dollar-denominated treasury. The note carries a 6.5% interest rate in Bolivianos, which is a very attractive return in the local market.  

What are the operating differences and similarities between Mexico and Bolivia?

Mexico and Bolivia share many similarities, not only culturally, with the same television shows or similar cultural notes, but also from a mining perspective, both countries having a long mining legacy. Our Bolivar mine, for example, has been in continuous operation for over 200 years, while Porco is actually the oldest mine in the Americas — it has been running for more than 500 years without interruption. Mexico’s mining industry also goes back five centuries, but it has experienced pauses during periods like the revolution.