Gold, silver, copper, and zinc are all hitting record high prices. There will be corrections along the way, but the best is yet to come.
Last September I told you about my top five picks in the sector. One of those was (and is) Luca Mining. Trading symbol in Canada is LUCA and in the U.S. is LUCMF.
Luca owns two operating mines in Mexico. Campo Morado does gold, silver, zinc, and copper. And Tahuajueto does gold and silver.
When I was doing some research in October, I realized that the Campo Morado mine is actually really close to our house in Valle de Bravo. Only about 170 kms (105 miles) away, but of course that's about a four hour drive in this area!
So I contacted the company, explained that I was a shareholder, and asked if we could visit the mine. The CEO himself, Dan Barnholden, got back to me (I was impressed, and I think I bought even more shares that day!) and we had a few email conversations to set things up.
Entrance to Campo Morado.
So at 7:30am yesterday morning, Pablo, one of the Mexican geologists at the mine, came to pick us up. It was a 45 minute drive through some very scenic territory and on the top of a hill we came to the Campo Morado mine site.
We were introduced to the Vice President of Exploration, geologist Paul Gray. He's a Canadian originally from Halifax, but now based in Vancouver.
I should mention that they are not used to hosting a couple of tourists! They occasionally do group site visits for analysts and institutional investors, but otherwise, we were a very special case for them. Hopefully our visit wasn't too disruptive!
We sat down and watched a safety video.
Me, all geared up for safety!
And then Paul and Pablo took us out to show us around.
The Campo Morado area has been mined since the late 1800's. But most of the current infrastructure was build around 2009. The current team at Luca Mining took over in 2023, and have been rebuilding. There hadn't been any exploration done since about 2014, but the previous operators had done a lot of drilling back then and of course all of the data is still available. But with Paul now in charge of exploration, and the mine making money, they now have allocated funds to continue drilling.
We started the tour a bit backwards and visited the mill first. This is where all the processing is done. In very basic terms (which is about all I understand!), I'll explain how it works.
The primary crusher.
The rock is brought up from the mine site down below, loaded into a primary crushing circuit where it is turned into gravel, then it runs through the ball mill that grinds the rock into a fine powder. The powder is loaded into a tanks for a process called "froth flotation" and mixed with water and chemicals. Air bubbles are blown through the mixture, and the zinc sticks to the bubbles and float to the top. Waste rock sinks to the bottom.
But there is also a copper circuit. I'm not quite sure how, but the copper is separated from the zinc and they are both shipped out as concentrates to be refined. Part of the refining process also separates gold and silver byproducts.
The ball mill.
Wow. There is a whole lot going on in here!
It looks like a frothy sludge.
It's looking really bubbly here!
This vat is copper concentrate.
And this one is zinc concentrate.
This is a press of some kind that dries and compresses the concentrate for shipping.
Next, we visited the camp. The mine operates 24 hours a day! We can't remember the exact figure, but about 200 people work on site. 20% of them are women! Some of them commute every day on a bus from Arcelia, and others do shift change from the further away city of Iguala. And some live at the mine site. For example, Pablo stays at the mine, but gets a 10 day block where he can go back to visit his wife and daughter at home once a month.
The camp is actually really nice.
The dining room.
There is a well equipped gym.
A basketball court, and a soccer field.
Next we went down to the actual mine itself. We had agreed that we didn't need to go inside... we've been in tourist mines before... it's just a bunch of tunnels and rock, and it would have disrupted the mining to have visitors in there.
The entrance to the mine. There are probably 30 kms of tunnels inside the mountain!
The next stop is where it gets interesting from an investment perspective.
Yes, this is an operating mine, so it is making money and has growing cash flow, especially at the current metals prices. And of course they also own another operating and profitable gold and silver mine. But the market cap (the total value the market is placing on the whole company) is currently only $520 million CAD. ($377 million USD).
For perspective, it would cost about that to replace the infrastructure at Campo Morado.
Then you can add in the exploration upside. There is a lot going on with exploration at both mines, but there is one area at Campo Morado called the Reforma zone that is pulling out cores that are rich in gold and silver. That zone alone would probably be valued at $250 million if this was solely an exploration company!
They are processing a lot of drill cores. They have two surface drill rigs operating here, and one underground.
Drill cores ready to be shipped to the lab.
This is what the rock looks like.
But it contains zinc, copper, gold, and silver.
Interestingly, Campo Morado was built as a zinc mine. But at current metals prices, it's actually the silver that is bringing in the most revenue!
Drill cores.
There is the drilling rig heading into the mine.
Interesting stuff! And with this visit, we are even more confident in our investment. The share price is currently around $1.95 CAD, and I can easily see it hitting the $3 CAD mark at some point in 2026.
They are working on transitioning Campo Morado to a primary precious metals mine when they actively start mining the Reforma zone. It's likely an 18 month process, but that will make the mine much more valuable. And, metals prices will continue to rise during that time. Eventually, over the next 3-4 years, Luca (and most other miners) will become overvalued, because that's what happens during all boom and bust mining cycles. That's when we'll sell!
In the meantime, it's one of the cheapest producing miners out there, with a lot of upside ahead of us through exploration.
Ruth, Paul, Kevin, and Pablo.
We said goodbye and thanks to Paul, and Pablo drove us back into town.
The scenery where the mine is located.
Looking back up at the mine site.
Arrived back at Igor, parked outside the municipal police station.
Big thanks to the team at Luca Mining for setting this up for us!
This is so interesting and I appreciate all the things I learn from you and Ruth during your adventures!
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