Rio Grande Mining Co.

Rio Grande Mining Co. expects great things from its newest project, the Shafter Mine in Texas. Project Manager Sandy McVey says the company believes the mine – one of the most historic silver mines in North America – will be the lynchpin for the company’s continued success. “The Shafter project, in our strategy, is going to be our calling card, if you like,” McVey says.

The mine represents the transition of Rio Grande – owned by Vancouver-based Aurcana Corp. – from an exploration firm into an operating company. It also represents the renewal of the Shafter Mine, which has a history of silver mining dating back to 1883. Shuttered by the War Act in 1942, the mine has been closed for production ever since, although it saw several attempts at exploration between 1977 and the present day.

McVey says Rio Grande hopes to demonstrate its resourcefulness and capabilities by turning the Shafter resource into a producing mine on time and on budget. From there, he says, the company believes its success on the Shafter Mine will serve as notice to investors and provide the platform for future success.

Excellent Opportunity
Located in southwest Texas near the Mexican border, the Shafter Mine produced nearly 2.3 million tons of ore containing 35 million ounces of silver between 1883 and 1942. After the mine was closed due to World War II, exploration work was restarted in 1977, but was halted due to the decline in the price of silver. Rio Grande acquired the property in 1994, and additional exploration and studies were carried out. Aurcana acquired the property and Rio Grande in 2008.

McVey says Shafter will be an excellent project for Rio Grande to make the transition to production. This is not only because of the 22.8 million ounces of inferred silver resources contained within, but also because of the established infrastructure on site. The property has an electrical substation, a major power line and 5,100 feet of underground development already in place, McVey says.

“We have a highway that runs right through the site, it’s in the United States and it’s in one of the better states for mining in terms of being pro-business and pro-mining,” according to McVey.

Along with the extremely high price of silver right now, McVey says conditions couldn’t be better for Rio Grande to reopen this historic mine. “Everything is laid out in front of us,” he says.

Positive Impact
Not only does Rio Grande expect the Shafter Mine to be a success for itself, but it also expects the project to have a substantial positive impact on the surrounding community. The company has resolved to do all of the mining itself, without the aid of outside contractors. Utilizing its in-house expertise, Rio Grande expects to train more than 150 local recruits to work in the mine, with the remainder hired away from other operations.

“The main strategy is that we will be using local labor to the greatest extent possible,” McVey says. The area surrounding the mine has been hit hard by the economy and the Mexican drug cartels, with few legitimate opportunities for workers, and Rio Grande says area leaders have welcomed the project with open arms because of the boost it will give the local economy. The company also has resolved to use local vendors and suppliers whenever possible.

Building the mine from day one with its own work force also provides Rio Grande with other advantages, according to McVey. He says viewing the mine as a construction project rather than an engineering project to be handed off to an outside contractor will save the company time and resources. “Even if we were to accept the higher cost of getting contractors in we would still come to a point where we would have to say goodbye to the contractors and begin to train up our own people,” McVey explains.

“We’ve probably taken several million dollars out of the project by doing it this way.”

The mine will be under construction through spring 2012, McVey says, and production is expected to begin in May 2012. “It’s a pretty straightforward project,” he says.