Augusta, Lundin back Highland Silver Peru aims

Highland Silver has become one of the most talked about junior silver explorers, having agreed to acquire the San Luis gold-silver project in Ancash, Peru, from SSR Mining in late 2023, in a transaction backstopped by the Augusta Group and members of the Lundin family.

The Augusta and Lundin firepower helped Highland win a competitive tender process for San Luis. The terms include an initial US$5 million cash payment, with staged cash payments of up to $37.5 million due upon the completion of various milestones - including $2.5 million after the commencement of an initial drilling program - and a 4% net smelter returns royalty. The Augusta group owns 41.5%, and Lundin family owns 16.5% of Highland.

At San Luis, SSR discovered the Ayelen-Ines vein system with a 700m strike length hosting a historical measured and indicated resource of 484,000t grading 22.4gpt of gold and 578gpt of silver containing 460,000 of gold equivalent from a 2020 feasibility study. Historical drill intercepts include 10.0m grading 60gpt gold and 1037gpt silver.

"San Luis is very exciting. The feasibility SSR did was on one low sulphidation gold-silver vein that is open in multiple directions. That story isn't over by any means. The vein is 700m long with an average width of over 3m, a good width for underground mining. The property is 230km2, and SSR produced other compelling targets with high-grade gold at the surface, with rock samples of over 4gpt," Highland Silver chief executive David Fincham told Mining Journal.

The La Bonita prospect, south of the resource area, had two historical drill holes, including 35.25m grading 5.54gpt gold and 25.43gpt silver, and a drill permit granted in December 2023.

However, rather than rushing to drill extensions to the known veins, Highland will spend 2024 mapping and sampling to follow up on and rank several targets identified by SSR to define a drill program. This includes seven additional mapped and sampled gold-silver vein targets within 2km of the historical resource area.

Drilling at San Luis will likely happen in 2025 once this work and another equity raise have been completed, as in addition to funding the drilling costs, Highland will have to make a $2.5 million payment to SSR upon the commencement of drilling.

"In the western part of the property, the area of interest as we understand it today, we want to develop the full picture this year. There is impressive blue sky potential to find more veins, and the prize is so big in a vein field like this that we want to be sure we are exploring the best prospects first, so we need to understand the complete context, prioritise and then start to permit some of the highest priority targets," Fincham said.

Fincham knows silver, having previously worked for Apex Silver Mines as a project geologist at San Cristobal in Potosi, Bolivia, one of the largest open pit silver-zinc-lead projects in the world, which Sumitomo subsequently purchased.

La Estrella

Highland will be drilling this year at its La Estrella silver-gold property in Huancavelica, Peru, an intrusive dome-related epithermal deposit.

"La Estrella is also a very compelling opportunity whose news flow can be complementary to what is going on at San Luis. We want to drill into the system in areas with less drilling to expand the mineralisation and target structural zones with potential for higher-grade mineralisation," said Fincham.

Highland is moving towards drilling as the government of Peru is looking to reduce the time it takes to obtain permits through the creation of a single digital window to reduce red tape and duplication of paperwork.

The drill permitting at La Bonita took just under a year to complete, and Fincham anticipates that permitting for San Luis should be quicker as it is not in an environmentally sensitive area and will require an FTA (environmental technical sheet) rather than a DIA (environmental impact declaration).

"It is very welcome that the government is allowing the parallelisation of some of the processes. Overall, the signal is that they want exploration and investment and want to make the conditions better," Fincham said.

Shares in Highland Silver are trading at 43c, valuing the company at C$26 million.