Things Much Worse for investing in Mexico silver mines, Royalty increases and open pit ban back on the table
Jurisdiction Alert : Avoid Mexico for now
Mexico's government has proposed increasing mining royalties in its 2025 federal budget bill, citing rising metal prices as justification. The plan includes raising two key taxes:
The special tax on mining profits from 7.5% to 8.5%
The extraordinary tax on revenues from gold, silver, and platinum sales from 0.5% to 1%
These proposed increases have sparked concern within the mining industry. The Mexican mining chamber, Camimex, warns that the hikes could potentially block over $6.9 billion in investments over the next two years.
This comes at a time when the sector has already experienced reduced contributions and investments due to various challenges.
The government argues that the increases are necessary to capture a fair share of profits from non-renewable resources.
However, industry experts caution that the higher tax burden could make Mexico less competitive compared to other mining destinations like Chile, Peru, and Canada.
The mining sector is crucial to Mexico's economy, contributing 2.5% to GDP and supporting 400,000 direct jobs.
The country is the world's leading silver producer and a major supplier of gold and copper. However, the proposed tax increases, combined with other regulatory changes such as reduced concession terms and stricter water-use permits, may discourage new investments and impact the sector's growth
Our colleague Lobo Tiggre weighs in today on twitter
OOOOPS: The Open Pit Mining Ban is BACK
I only endorse an elite group of miners and have had to turn down projects in Mexico (this is a temporary hold but it keeps being extended)
My endorsement is based on the following:
Ore grade
Volume of ounces underground
Metallurgy
Jurisdiction
Management Talent
Their Balance sheet
This is why I love these top 3 picks (None in Mexico)
1. Andean Precious Metals | OTCMKTS: ANPMF
Andean Precious Metals, through its subsidiary Manquiri, operates the San Bartolomé plant near Cerro Rico, collaborating with artisanal miners to formalize their operations
This partnership has proven effective over years of consistency, processing ore from approximately 4,800 individual miners.
The Potosí region, including Cerro Rico, is historically prolific, having produced an estimated 60,000 to 90,000 tonnes of silver since its discovery in 1545.
2. Aya Gold & Silver, Morocco | OTCMKTS: AYASF
The Zgounder silver mine is a world-class deposit with exceptional silver grades, boasting Measured and Indicated mineral resources of 9,765,000 tonnes at 306 g/t Ag for 96,057,000 ounces of silver.
Located in Morocco's Anti-Atlas mountains, Zgounder is the country's second most important silver mine and is currently undergoing a significant expansion that will quadruple its production to 6.8 million ounces of silver annually at an impressively low all-in sustaining cost of $9.58 per ounce.
The deposit's unique geological characteristics, including its Neoproterozoic epithermal hypogene system and similarities to the giant Imiter silver deposit, make it a highly promising and economically attractive silver project with substantial long-term potential
3. KUYA Silver | OTCMKTS: KUYAF
They are Producing already! Mine started production a few months ago, and they have already sold their first truckloads of concentrate for a steady revenue stream. Yet, the market still has not woken up.
The company is valued like a junior explorer that will never go into production.
KUYA has Skin in the game. David Stein, the CEO, has personally funded the company for many years ($2 MM+) and still retains a significant 10% ownership. This demonstrates our management's full alignment with shareholders, all working towards increasing the stock price.
This mine is a true silver mine, with the vast majority (~75%) of our production coming from silver. This provides silver investors with the best exposure to potential increases in silver prices, making our company an exciting prospect for growth.
Most “silver” miners derive most of their revenue or resource value from gold or zinc.
The Bethania project, with its fantastic economics, boasts some of the lowest All-In Sustaining Costs (AISC) in the world. Once the initial stage is ramped up in mid 2025, margins should be over 60%+ at current silver prices, making it a highly lucrative investment opportunity.
Expansion capital is modest so that the mine can grow through internal cash flow.
It is also important to remind my readers that as a shareholder, you get another 100% owned high-grade silver project called SilverKings, which is still in the development phase but shows astounding promise with its high-grade silver reserves and potential for significant future revenue.
Not financial advice