Precious and base metals exploration company Minco has had to change the mining strategy at its silver mine in Mexico because the lake under which it was to drill has run dry.
Minco's Laguna Zacatecas project has had to abandon hydraulic mining methods as the 200-hectare man-made reservoir remained completely dry between June and August - which is in the middle of Mexico's traditional rainy season.
The rainy season is now almost finished and the Laguna currently has little water, the company said at its agm yesterday.
The company's board of directors was questioned by shareholders dismayed at Minco's falling share price and small market capitalisation, which means it falls outside the radar of institutional investors.
Minco, which is listed on London's Alternative Investment Market (AIM), expects that the Laguna project will eventually yield around 32 million ounces of silver. It has decided to use a "vat leaching" extraction method instead of floating dredges. It has also scaled back the extent of its operation so that it does not have to seek international finance.
Minco said the dry lake made exploration easier and that a dam could easily be built before the 2007 rainy season.
Chief executive Roger Turner said it would need to look to the market for more capital to complete the project, now estimated to cost $5-$8 million (€3.92-€6.28 million) instead of $32 million.He said the company was concerned by the fall in its share price, which has dropped from £14.50 at the start of 2006 to £11.00 on the AIM yesterday. Last September, the company was trading as high as £18.50.
