July 26, 2016 Striking It Reach

Volume 11 | Issue 1

It's original intention was to offer services to foreign companeis looking to open their own mining operations in Mexico. But Minera Reyna Mining and Engineering found a better gigi: entering into partnerships with those foreigh companies and taking a stake in the mines themselves. Pete Krupa reports.

So in 2005, with an initial investment of $250,000, REYNA MINING AND ENGINEERING hung out its shingle and set to work. The services it offers are full, thanks to the company’s wide range of expertise. On the financial side, REYNA MINING AND ENGINEERING can do everything from feasibility studies to cost estimates to investment estimates to market studies.
The company can do a whole range of geological studies to estimate, analyze, and model a mining site. The company also offers civil engineering services, environmental impact studies, legal assessments, surface and underground mine design, and promotion of the mining project.

“There aren’t many companies that offer this kind of service in México,” Berlanga explained. “Basically, because the job is so specialized, there are few that do it.”

At least two Mexican companies compete with REYNA MINING AND ENGINEERING, and there are several multinational companies – Bateman, Mackintosh, and 3M – involved in the market as well, but as Berlanga puts it, “The problem is that, though they are companies with a lot of prestige and they are also sending support everywhere else in the world, normally they are slow and expensive”

FIRST CUST0MERS
So it wasn’t long after hanging out its shingle that Reyna
Mining and Engineering got its first gig. Minco, a UK company based in London, hired Reyna Mining and Engineering to do a soil study and metallurgy analysis for processing old ore tailings that contained some mercury, gold and silver in the central Mexican state of Zacatecas. Bringing to bear its financial division, REYNA MINING AND ENGINEERING did an investment estimate for the tailings processing plant. The company then designed the new waste deposit site as well as the plant that would process the
old tailings.

Business continued. Continuum Resources, a Canadian company, hired REYNA MINING AND ENGINEERING to do mineral exploration in the southern state of Oaxaca, as well as research and development and market studies for the projects. Later on, REYNA MINING AND ENGINEERING was hired by Farallon Resources Corporation to do an infrastructure study, design access roads, and perform a market study for the company’s copper mine. For some time REYNA MINING AND ENGINEERING also participated in the company’s engineering group.

BETTER IDEA
While providing services for other companies is a decent business, Berlanga said that soon, the company wanted to get into some mining on its own to provide a steadier stream of revenue. Mines, however, are rather expensive propositions, and although REYNA MINING AND ENGINEERING had been doing well, exploring, designing and exploiting a mine from scratch was financially out of the question.

Besides, the company’s directors had a better idea. One of Mexico’s largest mining companies, Industrias Peñoles, the world’s largest silver producer, doesn’t have the time to operate small-scale mines with small-scale profits. That’s why, although the company has done exploration and initial investments on dozens of small mines throughout the country, many of them have been shut down. That’s where REYNA MINING AND ENGINEERING saw
its opportunity.

LA NEGRA
With its eye on purchasing one of the wayward Peñoles projects, REYNA MINING AND ENGINEERING got in touch with Canadian mining company Aurcana Corporation. A small company listed on the Vancouver stock exchange, Aurcana was looking for mining investments, yet didn’t have the expertise to carry out production projects all by itself. Perfect, said REYNA MINING AND ENGINEERING.

The company had its eye on a small mine called La Negra in the central Mexican state of Querétaro. The mine promised good exploration potential and an estimated 800,000 metric tons of mineable material with silver, lead, zinc and copper.

Owned by Peñoles, the mine had been out of operation for several years due to its small size. REYNA MINING AND
ENGINEERING, however, believed it could turn a profit, and using its many connections in the Mexican mining world, made Peñoles an offer.

For a total of $3 million, Aurcana and REYNA MINING AND ENGINEERING were able to purchase Minera la Negra S.A. de C.V. Mining operations officially launched in June 2006. One year later, after a re-engineering, they were processing 25,000 tons of ore per month, the mine’s capacity.

NEW PROJECTS
The deal so far has been good for all companies involved. Aurcana’s stock has gone from 10 cents a share to close to $2. Meanwhile, REYNA MINING AND ENGINEERING now has its first mining operation up and running and for Peñoles retains purchase rights of the mined material, as well as royalties.

REYNA MINING AND ENGINEERING and Aurcana are looking to replicate the success of La Negra with two similar projects. They recently purchased a mine called Rosario in the state of Sinaloa. Formerly owned by México Group, the country’s largest mining company, Rosario was closed in 2000 for similar reasons as La Negra. The mine contains good potential and mineable ore with gold, silver, copper, lead, and zinc. At a potential 250,000 metric tons of material per year, it is somewhat smaller than La Negra.

Still, REYNA MINING AND ENGINEERING and Aurcana think they can make it a workable project. Once again, REYNA MINING AND ENGINEERING put in $3 million for the mine, and total investment is expected to be between $20 million and $25 million when all is said and done, said Berlanga. The mine is still in the design and construction phase, and should be up and running within 18 months.

NEW PARTNERSHIPS
Other projects are in the pipeline, including the purchase of another mine from México Group. This time the company is going to be partnering with Skeena Resources Limited, another Vancouver company. The company plans to buy 100 percent of the Malpica gold and copper mine located 30 km. east of Mazatlan. REYNA MINING AND ENGINEERING will hold a 10 percent interest in the new entity, Skeena México S.A. de C.V.

“We appreciate the trust these Mexican and Canadian companies have in us,” Berlanga said.
Though the company started with the idea of offering services to foreign companies, Berlanga said its resources are so tied up managing its own projects that there isn’t much time to expand the services side of the business, “although if we’re able to grow and get more people, we’ll do them,” he added.

In the meantime, the company’s goal is to open up five more mines in the next five years. Together with its partners, the company plans to consolidate the gains it has made and keep moving forward until it can call itself a heavy hitter in the Mexican market. Berlanga estimates that may take as long as five years, and that by then the company will probably be expanding to Central and South América as well.

With its experienced board of professionals that have already seen decades in the mining business, REYNA MINING AND ENGINEERING looks ready to stay the course.

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