Precious and base metals explorer and developer Minco is in talks to buy a Mexican silver mine valued at an estimated $60 million (€49.85 million), as it benefits from rising prices and demand for the metal.

The mine, built in 1999 at a cost of $45 million, would become Minco's flagship mine in Mexico if talks were successful, chief executive Roger Turner told reporters and shareholders yesterday.

Silver prices rose this week to the highest level since the early 1980s, and analysts have over the past month increased forecasts for the years through 2008, according to Mr Turner.

"The increased number of industrialised uses of silver is making it more of a precious metal than a commodity," he said. "It's outstripping gold now in terms of increases in prices."

Mexico has been the world's largest producer of silver for several centuries. Production in the country is estimated to have climbed 4.7 per cent in 2004, according to Minco.

Mexico is also attractive because it allows 100 per cent foreign ownership of companies, there is little political risk, and there are no major international mining companies present.

Production at Minco's Laguna Zacatecana silver tailings project in central Mexico was last month delayed until next year. The project aims to extract some 2.2 million ounces a year of silver and some gold from a man-made reservoir built in 1836, when the Mexican government dammed the area to create a water source to stimulate agriculture.

The Irish company also said yesterday that a US development bank is considering backing the Laguna Zacatecana project in return for an equity stake.

The current value of the project is $35-$40 million, compared to the initial capital cost of $21.6 million.

"The goal is to get into production as fast as we can" at Laguna Zacatecana, Mr Turner said. "We are looking for other opportunities too."