Denarius Metals’ Colombian Gold/Silver Project Ready for Takeoff

“We've launched Colombia's next gold mining operation at Zancudo,” Michael Davies CFO of Denarius Metals Corp. (Cboe CA: DMET) (OTCQX: DNRSF) proclaimed. “It's real. It's going to be a very rich mine. And we’re only at the start of the journey.”  

With gold at or near an all-time high, there couldn’t be a better time to restart production at Colombia’s oldest mine.  

The Zancudo project adheres to a well-established Denarius formula. Like other successes for this management team, this is a high-grade property that has seen past exploration and production, which can be restarted in a relatively short time frame with minimal risk.  

Given Zancudo’s history, Denarius had a pretty good understanding of what was in the mine - a resource that currently consists of 860,000 ounces of gold and 14.1 million ounces of silver, equivalent to one million ounces gold equivalent.  

The Zancudo project is being run by a management team that has a tremendous track record in Colombia, finding success with Gran Colombia Gold (also known as GCM Mining and now as Aris Mining). The experience that they have accumulated through these projects has proven to be invaluable.

“As our Executive Chairman Serafino Iacono likes to say, ‘It's the know how and the know who,’” Davies recalls. “We definitely learned the know how over the course of several projects in Colombia, and with our team based in the country, we’ve also built a number of valuable relationships.”

Members of the Denarius management team have had their eyes on the Zancudo project since 2010, and for good reason. The property is an underexplored asset that sits on the Cauca Belt in the Antioquia region, a prolific jurisdiction that hosts GoldMining’s La Mina project, the Marmato Mine owned by Aris Mining, and the Buritica Mine owned by Zijin, among several others.

Zancudo is approximately 190 km from the Port of Buenaventura and is in the process of being connected to a major highway via a 4 km bypass, eliminating the need for trucks to travel through two small communities. It also has access to the national power grid, as well as a ready supply of skilled labour.

“People in the town are really excited about this coming back to life, because they hear how good it was in the old days when there were mines in the valley,” Davies said. “So, it's got good community support.”

Zancudo is also equipped with a 500 tonnes a day crushing plant which is now in operation, as well as a partnership Denarius has with an experienced local contract miner that will carry out the mine development and mineral extraction. Meanwhile, plans for a new processing plant are already in the works. When completed, it will provide a larger 1,000 tonnes a day capacity for the production of high-grade gold and silver concentrates.  

While production is just getting started at Zancudo, Denarius already has a long-term off-take agreement in place with the Trafigura Group, a multinational commodities trading company. The Trafigura deal will help generate some early cash flow from mining while the plant construction is being completed. Initially, the mining rate is starting at less than 100 tonnes a day, but as development opens new fronts, volume is expected to climb to roughly 500 tonnes a day by Q1 2026. The goal is to ultimately hit 1,000 tonnes by early 2027.

With all the required funding already in place, the only risk that remains relates to day-to-day management and execution.

So far, only about 20% of Zancudo’s 1,054 hectares has been explored, and its geological team believes there's a lot more upside potential.

“We're committed to an ongoing drilling program in 2025,” Davies said. “In the meantime

we're updating our mineral resource estimate to reflect drilling over the last year, and we expect to report it following Q2 2025, along with an updated mine plan. It will reaffirm the grades that we've seen in the early work and upgrade a portion of the mineral resource from inferred to indicated. This project has the propensity to become much bigger than the million-ounce gold equivalent we currently have on paper.”  

The same management team that has brought you Zancudo is also in the process of developing another very compelling asset in Spain called Aguablanca.  

Aguablanca is a high-grade nickel/copper mine that has been out of production since 2015. This property has a rich history that started with Lundin Mining until 2016. In late 2023 Denarius got involved with a 21% stake in the project, and was appointed by their local joint venture partners as its operator. Like Zancudo, it’s well advanced, and comes with infrastructure already in place that can be leveraged to reduce capital startup costs.  

The final hurdle to production was removed recently, when local authorities provided Denarius a long-awaited permit to de-water the underground mine. Refurbishing the turnkey 5,000 tonnes per day processing plant and removing the water from the underground mine should take six to nine months, and the mine is expected to be back in operation within a year.

Another important development occurred this past March, when the European Commission came out with its first list of strategic projects under the European Critical Raw Materials Act. Aguablanca was one of the 47 projects named because it is one of the few nickel-producing mines in Europe. It’s a designation that should provide the company with immediate advantages when it comes to financing and the approval of permits, should any be required.  

Aguablanca currently has an expected six-year mine life, but with further exploration, that timeframe could be extended to ten years.  

Denarius has two other ventures in early development that are worth keeping an eye on - the Lomero and Toral projects, both situated in Spain.

Metallurgical studies at Lomero last year revealed the potential to improve gold recoveries, an important development as Lomero has some of the highest gold grades in Spain’s Iberian Pyrite Belt, in addition to an extensive copper, zinc and lead resource. If everything goes according to plan, production should begin at Lomero within the next two to three years, with processing planned for Aguablanca, which is less than 100km away.

At Toral, an updated resource model based on drilling to date is being completed, while work on a scoping study is expected to start in the second half of this year.  

According to Davies, it’s hard not to question the valuation of the Denarius stock when you consider all this activity together. “Look at the net asset value of the Zancudo project alone. The NPV₅ in our 2023 PEA study based on $1,800 gold was over $200 million U.S. Now gold is over $3,000, so I’m confident that a re-rating of the stock will happen as Zancudo’s production ramps up and cash flow improves. If all plans come to fruition, this has the makings of a tremendous opportunity for anyone who gets in on the ground floor.”

Based on the company’s track record, it’s a claim that demands our full attention.  

For more information on Denarius Metals Corp. (TSX.V: DSLV, OTCQX, DNRSF) please click the request investor info button.

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