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Hunting For The Next Big Gold & Silver Deposit In The Sierra Madre

Durango Gold

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Offering Type

Regulation CF

Price per share

$1.60

Valuation

$17.4 million

Minimum

$480

OFFERING TYPE: Regulation CF
PRICE PER SHARE: $1.60
VALUATION: $17.4 million
MINIMUM: $504

Pre-IPO Investment Opportunity:

The Quest for The Next Golden

“World-Class Deposit”

The Quest for The Next Golden

“World-Class Deposit”

  • Read on to learn more about the mining exploration project – located 12 hours south of the Texas border – that could become one of the greatest gold deposits in North America…
  • Why this breakthrough mining technique could solve the biggest “profit-killing problems” in gold exploration deals…
  • And how everyday investors now have the chance to own a piece of a gold deposit that could be a prime acquisition target for a major gold mining company.

Want to invest in this company?

Click the button below to get started…

The “Big Idea” In 60 Seconds
The “Big Idea” In 60 Seconds

As the mainstream financial news cheers the stock market higher, Americans everywhere remain blissfully unaware of the great gold drought wracking the mining industry…

And the looming shortages that might one day threaten the economic security of the United States.

It’s called the “Gold Supply Cliff”… and this growing imbalance of supply and demand is putting serious pressure on the top gold mining companies in the world.

The “Gold Supply Cliff” is an industry term for the dwindling amounts of gold it is possible to mine profitably – even at higher gold prices

How did this happen?

As a business model, most majors like to let the junior mining companies take all the risk of finding new deposits…

Then, once the juniors have struck gold, they’ll buy the reserves and develop the mine.

When new deposits are being found, the “growth through acquisitions” model works well.

However, for the past 20 years, explorers have failed to find a single deposit above 30 million troy ounces…

Over the previous three years, there have been zero gold discoveries above 2 million troy ounces…

And the markets are noticing…

The price of gold has climbed from from under $1,200 four years ago to nearly $2,000 today.

However, despite this increase in gold prices, exploration budgets have been decreasing for eight years.

Why? Because Major gold producers are accelerating production of existing resources to take advantage of the higher gold price.

But the tradeoff is they’re exhausting their reserves and resources.

The small number of mines that can generate more than 10 million troy ounces – known as world-class deposits – are running dry…

And because of this large imbalance of “gold demand” vs “gold supply,” experts and analysts are sounding the alarm…

The world is running out of new gold!

And because of a breakthrough mining strategy, they could be months away from getting first confirmation of a deposit so vast it could make the Spanish conquistadors weep.

For more than 500 years, Mexico has been a prolific producer of precious metals; over 10 billion ounces of silver mined and nearly 40 million ounces of gold in total.

One region in particular has produced several high-caliber mines: The Sierra Madre Occidental “Gold-Silver Belt”.

And inside this region in the State of Durango are 121 recorded mines.

Today, there are at least five major mining operations in Durango on the western side of the Sierra Madre…

But across this mountain range to the east, nestled in some of the rockiest terrain in the region, lies a potential hidden gem.

It’s called the Claudia Project.

A world-class deposit and several profitable mines sit just downstream of Durango Gold’s property.

And according to the Durango Gold team, beneath this rocky terrain could lie a literal “mother lode” of gold

An undiscovered gold-silver deposit of the legacy class, which is a deposit capable of sustaining profitable production for decades.

And thanks to a savvy acquisition by the Durango team, this mineral rich property that’s barely been explored is now being developed by their all-star exploration team.

To understand why, you have to understand a few things…

  • Most mines are discovered by explorers — people who use their skill, knowledge and expertise to find new deposits of rich ore.
  • Most mines are developed by miners — small and large companies that don’t like to deal with the risk or difficulty of discovering and defining new gold or other metallic mineral resources. They’re really only good at extracting the stuff.
  • And most miners own huge tracts of land… and only develop a tiny fragment. The fragment that’s already had its resources proven.

That’s why so many valuable plots of land change hands so often.

In the case of the Claudia project — the stretch of the Mexican Sierra Madre that Durango Gold has an option to purchase— the plot of land has changed hands a number of times.

Why? Because the previous operators were small companies focused on cash flow from immediate production, which means focusing on existing, working mines… not exploring for new deposits.

And thanks to the perfect storm of events over the past 30 years, Durango Gold has acquired this “hidden gem” that has remained unexplored for decades.

Based on operating and processing costs for mines with similar gold-silver mineralization in Mexico, Durango Gold believes that a discovery at Claudia may potentially have production costs in the range of $850-$1,150 per ounce of gold…

And if it is, in fact, a world-class deposit – because it would be higher grade than other deposits in the region – it could potentially have production costs in the $500 – $800 range.

At the time of publishing, gold is currently trading at around $1,700.  With this in mind, it doesn’t take much imagination to see the potential.

But why is Durango Gold so excited about this passed over plot of land in the Sierra Madre in the first place?

The answer, believe it or not, is as low-tech as it comes…

When it comes to developing underground veins of ore — and getting metal out of the ground — high-tech solutions have made the process easier, simpler, and cheaper. 

But when it comes to figuring out where to drill in the first place, the answer is astonishingly simple and low-tech…

Look at the ground.

More specifically, search carefully for the presence of quartz veins, limonite, calcite and adularia, and rocks with textural and mineralogical evidence for the past presence of metalliferous fluids. others.

Fragments of rocks with these characteristics are usually strewn about the surface if there’s a rich vein underneath.  Then samples from these fragments are collected and sent for assays in a laboratory.  Elements such as silver, arsenic, mercury, antimony and sometimes copper can be used as pathfinders to underlying gold deposits or veins.

Where these elements are abundant, gold is frequently close by.

In fact, Durango Gold’s head geologist recalls that at least two very substantial gold deposits were discovered when exploration geologists observed some sparkles on the ground, standing outside their jeep, where they had stopped to relieve themselves in the middle of nowhere!

This “boots on the ground” methodology is why Durango Gold’s unique strategy is about to pay off.

You see, most miners bring their own exploration team to search for prospective drilling sites.

However, bringing in outside labor has some problems. Not only do they require local transport and a place to stay, they don’t know – and aren’t acclimated to – the local terrain.

Knowing that, Durango Gold has implemented a simple, yet brilliant, innovation.

Hire the locals.

It seems an obvious solution with obvious benefits…

At first glance, this solution sounds obvious. However, it took a Mexican citizen — 33 year-old CEO Fernando Berdegue — to see the huge potential for this strategy.

After participating in multiple successful exploration operations, he’s now in a position to implement his simple insight.

Creating a more efficient, more effective, and more affordable exploration operation in the process.

His timing couldn’t be better.

Right now, the US is desperate to secure more nearby sources of gold.

Of course it’s true that everyone everywhere is desperate to find more gold. 

Supply is shrinking… 

Demand is growing…

And consequently the price of gold is rising and may keep rising for the foreseeable future.

But the US has another reason to seek out gold in its neighborhood…

Simply put — China is edging the US in the global ‘Resource Wars’ – a new era of geopolitical conflict based on looming scarcities

Of course China (quietly one of the largest producers of gold), is keeping all the metal it finds on its own soil.

But increasingly, thanks to a few decades of infrastructure investment, China is gaining access to any gold produced in Africa as well.

At the same time, the US is bleeding gold. 

Every year, we export more gold than we produce.

Add it all together, and the US has every reason to start looking for gold in its own backyard.

What better place than near-virgin land, surrounded by plenty of proven reserves, only a few miles from the Texas border?

There is, of course, no guarantee that Durango Gold will find a mother lode — a world-class deposit that will produce for decades or longer.

But there are many promising signs…

Indeed, the resource estimate report that has already been produced back in 1994 hints at a potentially large amount of gold underground.

These historical estimates were calculated by Bacis in 1994 and are not current mineral resources in accordance with the CIM Definitions Standards and NI 43-101. A Qualified Person has not done sufficient work to verify these estimates and classify these resources. Accordingly, they should not be relied upon and are provided only for historical completeness. These historical estimates are, based on a silver price of $5.10/oz, and a gold price of $285/oz.

The mapping previous owners and Durango Gold’s team has done shows the potential for many rich veins.

And CEO Fernando Berdegue is the company’s secret weapon.

With years of cordial relations with the local population, and Mexico’s regulatory bodies, Fernando has Durango Gold perfectly positioned to move fast and strike hard.

Durango Gold’s targeted exploration areas are an order of magnitude larger than anything done on the property before.

Not to mention their all-star board of directors and management team:

  • Steve Weiss – Before joining Durango Gold as the Chief Geologist, he worked at GoldCorp as Mexico Exploration Manager, and led the team that more than doubled the mineral resources at the Camino Rojo deposit. 
  • Sean Zubick – Before joining Durango Gold, he was the co-founder and principal investor of New Found Gold Corp (TSXV:NFG): A rocket ship that’s gone from a standing stop to a $1b market cap in under five years.
  • Charles Funk – Charles is the current CEO of Heliostar Metals and VP of exploration at Viszla Resources. His most notable recent success has been at the Panuco Project in Mexico optioned to Silverstone Resources.
  • Alfredo “Fred” Kofman – Fred is the author of the trilogy Metamanagement (2001), Conscious Business (2006) and The Meaning Revolution (2018). He was former VP of executive development at Linkedin, and former VP at Google where he was in charge of advising the CEO’s office on leadership and culture. The so-called “CEO Whisperer” sees so much potential in this project, he’s decided to leave the world of “Big Tech” to help build what could become the exploration company of the future.
All the company needs is the capital to begin digging and proving gold reserves. Even sweeter, that money can go farther than ever before, thanks to advances in gold surveying technology. (Basically, explorers or miners can now drill faster, deeper holes at more extreme angles, requiring less work, less disruption and impact to the environment, while increasing survey accuracy and confidence.)
  • Gold opportunities at this stage of production – with these types of deal terms – are rarely available in the public markets.

But, if the Durango Gold team finds the “legacy line” they believe lies beneath this rocky section of the Sierra Madre, they have the chance to become a world class mining company…

5 Reasons To Consider Investing In Durango Gold

  • REASON #1: Plans to Go Public within 12 months of this offering

For investors looking for a true “Pre-IPO” investment opportunity, Durango Gold plans on going public sometime within the next 12 calendar months (on which exchange has yet to be determined)

This means this Regulation Crowdfunding offering could be the final round of private financing before becoming a publicly traded company!

  • REASON #2: All-Star Management Team with 12+ exits and billions of dollars shareholder value created.
Durango Gold is made up of an experienced team that has been developing mining properties in Mexico for decades.  Combined, they have more than a dozen profitable exits.
  • Fernando Berdegue – Prior to becoming the CEO of Durango Gold, Fernando was part of the team who acquired and explored the historic Comstock Lode in Nevada
  • Steve Weiss – Before joining Durango Gold as the Chief Geologist, he worked at GoldCorp as Mexico Exploration Manager, and led the team that more than doubled the mineral resources at the Camino Rojo deposit.
  • James Stonehouse – A 45-year veteran with a long track record of successful project management, discovery and value creation in both greenfield and brownfield environments, and directing simultaneous operations across Latin America
  • Gustavo Mazon – With deep family ties in Mexico, Gustavo is one of the ultimate “insiders” when it comes to developing minerals in the region.
  • Sean Zubick – Before joining Durango Gold, he was the  co-founder and principal investor of New Found Gold Corp (TSXV:NFG): Today, the company trades at a $1 billion market cap.
  • Charles Funk – Charles is the current CEO of Heliostar Metals and VP of exploration at Viszla Resources. His most notable recent success has been at the Panuco Project in Mexico optioned to Silverstone Resources.

Not only do they have a stellar track record of success, but the founders – along with their friends and family – have personally invested more than $717,000 into this deal already.

  • REASON #3: There’s Already Proven Gold in the Ground, and Five Mines — One a Potential World-Class Deposit — Nearby

There has already been some scattered surveying done on the property — and it confirms the presence of gold veins.

Newer, advanced drilling techniques allow explorers to see deeper, for less money, in less time. And allow miners to produce gold from deeper in the earth, while doing less damage to the surface.

And expert gold prospectors — some of whom have joined the Durango Gold team and put their own money into the project — see all the hallmarks experts look for, when searching out world-class deposits.

There’s no guarantee in gold prospecting. But that said, the Claudia Project is already showing strong potential.

And with more capital to do an exploration program, Durango Gold hopes to prove it.

  • REASON #4: Innovative financial strategy – and savvy dealmaking – put them on a pathway to profitability

Unlike most junior mining and exploration operations, Durango Gold is playing with the deck stacked in their favor. Not only do they have a high-potential property already in hand, with a more than capable management team, their decades of capital markets experience is what really makes this deal shine. 

Instead of foolishly wasting millions of dollars upfront to acquire properties, they’ve structured “win-win” agreements that allow the company to “buy in” as they go. 

Not only does this help them keep tight control over their current cash flows, it puts them in prime position to expand via mergers and acquisitions and pick up other “hidden gems” at a discount. 

Furthermore, as they continue to build a diverse portfolio of “resources under management,” they have the potential to become cashflow positive within the next 2-5 years.

  • REASON #5: Local Connections Can Decrease Costs While Increasing Effectiveness and Community Buy-in

While it helps that Durango Gold is using advanced drilling techniques that don’t disturb the surface as much as traditional drilling…

The biggest reason that Durango Gold is finding support in the community is that the company is bringing jobs and opportunities to the community.

Instead of the traditional foreign company — often viewed as an exploiter — Durango Gold is helmed by a Mexican citizen, Fernando Berdegue, who cares what happens to the community before, during, and after exploration.

Locals are learning valuable skills, and getting paid to help explore the property.

And, because no one knows the area the way the locals do, they are the most effective workforce around, while costing less than outside experts.

Ready to invest in Durango Gold?

Click the button below to get started…

Why Gold (and Why Now?)

For thousands of years, people all across the world have been fascinated by gold.

In some cultures, the yellow metal’s worth was purely decorative. In others, an almost religious conviction on gold’s role as the only legitimate money.

Regardless of your personal views on gold – a proven store of value or a silly shiny metal – the economic case for investing in gold is simple: there’s more demand than supply.

According to Economics 101, when demand is greater than supply, price will go up or a substitute will be used.

Over the past decade, cryptocurrencies – like Bitcoin and Etherum – have been touted as a potential “digital gold.”

An annual 500 metric-ton shortfall is unsustainable… and will lead to gold prices continuing to climb upwards rapidly for the foreseeable future.

While it would be naive to ignore the impact blockchain technologies have already had on today’s financial system… it’s impossible to ignore the millennia of history in the hearts, minds and (sometimes) sock drawers of hundreds of millions of people who believe in gold.

Even Warren Buffet – after decades of bashing gold – recently trimmed several of his banking positions in favor of gold mining company, Barrick Gold Corp.

Perhaps it had something to do with gold outperforming Berkshire Hathaway for the previous 20 years…

Gold has quietly outperformed Buffet’s investment titan.

Or perhaps the Oracle of Omaha knows something about natural resources most retail investors don’t (reflected by his $4 billion purchase of natural gas transmission and storage assets of Dominion Energy, and his recent decision to trip his position in Apple (APPL) and take a $4.1 billion stake in oil company Chevron Corp.

According to several industry experts, relative to equities, commodities haven’t been this undervalued since the 1970’s.

Do 50-year lows mark the dawn of a new golden age?.

In a world where the stock market continues to defy common logic and fundamental analysis, these ratios could suggest a prime opportunity to consider diversifying with commodities. 

But more specifically, a near “perfect storm” of converging forces could set up gold for one of the biggest bull markets in recent history.

Here’s why…

Between the 1970s and 1990s, there was a brief ‘golden age’ of gold exploration.

For three consecutive decades, junior miners discovered at least one 50 million-ounce deposit … Along with more than ten 30 million-ounce deposit discoveries.

However, for the past 20 years, miners have failed to find a single deposit above 30 million-ounces…

And in the last three years, there have been zero gold discoveries above 2 million ounces.

Gold prices have been low for so long, gold majors haven’t found it worth their while to search for new mines and veins. They’ve focused their attention on exploiting their existing reserves to take advantage of upswings.

These upswings have been defined by 3 headline-grabbing bull markets in recent decades:

  • The 1970s – gold spiked to $850 an ounce in January 1980 ($2800 in today’s dollars), a 24x rise over 10 years.
  • The 2000s – a 12 year rally peaked with above $1,900 in September 2011, a rise of more than 650%.
  • The 2010s –After crashing from 2011 highs to a 2013 low of $1180, gold hit a new all time highs in 2020, breaking the $2,000 barrier for the first time ever.

And for the past several years, central banks – and the world’s wealthiest families – have been quietly stockpiling gold.

The Bank of Canada especially has gone on a gold buying spree. 

Of course, it’s up to each individual to decide if gold holds a place in their portfolio. But if you do believe in the story of gold’s potentially explosive growth opportunity over the coming decade, the more interesting question is this: what is the right way to get exposure to the trend?

For some, the answer is as simple as buying physical precious metals or an ETF like GLD.

However, for those looking for something with greater return potential, the high-risk/high-reward play has typically been with gold mining companies.

You might imagine that digging gold out of the ground is an “easy money” industry.

Far from it.

Miners are extracting a metal with a volatile price, making market conditions very difficult to predict.

A bigger problem is that gold mining companies are having to look harder – and dig deeper – to find new deposits, all while under increasing pressure to minimize carbon emissions and environmental impact.

Not to mention, the bigger a company gets, the more the administrative “red tape” grows, preventing them from being versatile enough to seize new opportunities.

As a result, Majors have underinvested in exploration, and in the 2010s began exhausting their existing reserves.

Investments in mining exploration are at a 62-yr low.

The Majors strategy for fixing this problem was simple: growth through acquisitions. 

That’s why in the 2010s the mining industry started to become consolidated – getting lean and mean by paying down debt, and cutting back on exploration and other expenses.

These changes highlighted how betting on major gold miners is totally different from betting on the physical metal. Successful gold miners offer some things that gold itself cannot, like:

  • Dividends, Cash, Assets, Income statements, and Balance sheets.

Also, most majors don’t just mine gold – as copper, silver and other resources tend to be found together.

The Lassonde Curve: Mining’s ‘wild ride’

Thirty years ago, Pierre Lassonde – a founder of Franco-Nevada, the first gold royalty company – created his famed curve. His model went on to become a touchstone in valuing junior miners. 

The Lassonde Curve models the life of a mining company – from exploration to production – and helps investors gauge market value through each stage of the process. This helps speculative investors understand the mining process, and time their investments properly.

The Lassonde Curve. 30 years old and still defining the junior mining industry.

Beyond precious metals, Lassonde’s curve has become a staple across the mining industry, where mining tends to follow the same 7-step process.

The life cycle of a mineral deposit

Successful mineral mines typically go through a seven-step process, each with their own risks and rewards. As the process continues, more value is created for shareholders, and the project becomes less risky.

  • Step #1: Concept

The deposit is not much more than theory at this point. Geologists work to test the theory, locating the deposit – if it is there at all. The area is surveyed using a range of  geochemical and sampling technology. When confident that the area might be mined profitably, they move to the next step in the process.

TRACKING
  • Step #2: Pre-Discovery

This is where speculative excitement can begin. Geologists coordinate test drilling to establish mineral potentials in the deposit area. The key method is taking below-ground cross-sections (drill core), and having them analyzed for mineral content. Drill cores with good mineral content can lead to further exploration, aimed at the discovery of a mineable deposit.

MINER
  • Step #3: Discovery

When exploration reveals ‘enough’ mineable minerals, new studies prove that mining could be profitable. This changes the business model creating new challenges, such as profitability, construction, and financing.

MINING
  • Step #4: Feasibility

Having demonstrated the deposit’s potential, investors then evaluate whether to advance the project. Speculators often pile in during this “orphan period” while uncertainties about the project remain keeping more conservative investors away.

ANALYTICS
  • Step #5: Development

A rare outcome, as most mineral deposits never make it this far. The next step is a production plan for the mine, including raising capital and building a team. Many risks still remain in the form of construction, budget, and timelines.

EXCAVATOR
  • Step #6: Startup/Production

An even rarer outcome for a mineral discovery. The company begins processing ore and generating revenue.Analysts continue to re-rate the deposit, seeking additional from funds institutional investors and the general public. This is also a good ex, existing investors can choose to exit here or wait for potential increases in revenues and dividends.

GOLD INGOTS
  • Step #7: Depletion

While a rare few mines will last centuries, most are depleted in a matter of decades. As grade levels decline,  operations wind down, and the remaining investors seek exits.

PANNING

There are core differences between gold mining and other resource extraction industries.

Oil, in particular, is a high risk/high reward, often binary process: An oil driller either hits a gusher or they don’t.

Gold mining is different.

 It’s a more iterative process, averaging 10 to 20 years before potential mines start producing refinable ore.

As projects are pushed slowly up the value chain, ongoing iterations, mean that:

  • Valuations of projects and companies can increase incrementally before actually building working mines.
  • Miners can make realistic exploration and drilling budgets, without having to take on too much debt.

But before you consider making an investment into any gold play – much less a junior miner – it’s critical to understand the common and predictable secular trends in the industry.

First, it’s important to understand that gold mining – like almost all industries – is cyclical in nature; it’s a textbook example of boom-bust cycles playing out.

In the last 20 year cycle, it’s been a wild ride for investors and miners alike.

In 2001 gold prices were around $250 per oz and began a linear climb to $1,900 per ounce in September 2011… before a dramatic fall in prices.

Meanwhile, the gold mining industry was on its usual rollercoaster ride.

Gold price increases during the 2000s led to a dramatic increase in the amount of mining industry acquisitions: around 1,000 deals, with a combined value of about $120 billion.

CEOs were paying premiums of 30 percent and above, and a lot of capital projects were announced – with a majority exceeding budgets by significant margins.

Then the 2011 gold price crash happened.

That forced the industry to clean up. Many mining companies were overleveraged with bloated cost structures. This led to dramatic cost-cutting, paying down debt, and often the firing of exploration teams.

The wild swings in gold mining stocks continue to this day.

But with gold prices rising again, management teams and investors are wondering if we are near the bottom of the cycle, gearing up for a new growth trend…

Perhaps even a new era for gold.

Why does it happen?

It has to do with the capital intensive nature of the business. Or more simply put, projects cost a lot of money and take a long time to get up and running.

Because of this, we see five predictable stages that drive these dramatic booms and busts.

The 5 Predictable Stages of Booms & Busts

Just like in any other commodity cycle, the most obvious way to profit is to understand where in the “Boom Bust” cycle the industry is in…

And position yourself in the right opportunities to capitalize.

This brings us to the two obvious question we must answer:

  1. Where in the “Boom Bust” are we?
  2. What options do investors have to capitalize on the trend?

To answer the first question, some analysts are predicting a “New Era of Gold”.

Others are suggesting this could be just the beginning of gold’s inevitable climb to $10,000 per troy ounce and beyond…

Which brings us to the second question…

If you believe that gold prices will only continue to move higher as demand increases …

Mining companies provide the opportunity for the largest upside.

And any company that can unearth a new “World-Class Deposit” that can satisfy this growing demand for gold could stand to make a fortune.

The gold mining industry needs a fabled ‘world-class deposit’ – but America might need one even more.

That’s why this veteran team of junior miners – Durango Gold – could hold the keys to ensuring a new U.S. ‘Golden Age’ is backed by gold in the ground.

A new ‘world-class deposit’ could allow the US to lead the Americas through an era of possible dollar decline, and a dwindling supply of gold.

That said, investing in junior mining companies is not for the faint of heart, or the unsophisticated.

These are high risk plays.

Although a couple dozen junior mining stocks trade on public exchanges, to get access to the upper echelon of exploration opportunities … the informed investor must step into the walled-garden of private deals.

With this in mind, we present for your consideration an exploration company that is searching for what could become the largest mine discovered in North America in more than 100 years.

Hitting the Mother Lode

If you’ve ever heard someone say they “hit the mother lode,” you probably know it refers to the discovery of a huge prize of some kind.

But here’s what most people don’t know about this expression: it first became popular during the California Gold Rush.

In fact, The California State Mining Bureau published a bulletin written in 1900 by A.S. Cooper, a state mineralogist, described the “Mother Lode Region of California.”

According to Cooper…

“Throughout the entire length of the great synclinal trough of the Gold Belt are found the gold-bearing veins which constitute the so-called Mother Lode. 

It seems unfortunate that the name was ever given to this portion of the Gold Belt as it conveys to the minds of those unfamiliar with the geological structure and veins of the region, an impression of a continuous, unbroken vein.

That such a condition does not exist is well known to those familiar with these mines.”

Later, in 1934, Clarence A. Logan of the State of California Division of Mines, also published a bulletin on the Mother Lode Gold Belt of California; he described discovery of the area as a result of a…

“search in the 1850s and 60s to find the so-called ‘mother’ vein or lode as the source from which the gold in the gravels had been derived by Nature’s process of erosion.”

He went on to note that the term…

“lode is particularly applicable to this vein system as most of the mines show two or three practically parallel veins, often with subordinate spurs, all occurring within generally definite walls, but with no vein traceable as a rule for any great length of the strike.”

George Nordenholt, the Director of State Department of Natural Resources at the time, described this area as…

“not a single vein or lode, but a zone or belt up to a mile wide for a distance of 120 miles from northwest to southeast, within which are separate and discontinuous veins of gold-bear quartz.”

We bring this up to highlight an important aspect of exploration opportunities. Unlike oil wells, finding – and recovering – precious metals isn’t as simple as drilling a hole in your backyard and hitting a gusher.

Instead, it requires a more methodical process of understanding geological formations.

To make things more challenging, mineral deposits don’t “lay flat” like oil wells do; they typically flow through the earth’s crust at an angle.

As mentioned earlier, Durango Gold is searching for an opportunity with massive upside potential …

A world-class deposit that can turn their exploration efforts into a life changing return on investment.

At the time of publishing, nine of the ten largest active gold mines are located outside North America…

However, big gold mines are increasingly becoming old gold mines; The most productive mines were all discovered decades ago:

  • 1958 – Muruntau Gold Mine in Uzbekistan. The world’s second biggest gold deposit is also the world’s largest open-pit gold mine. It produces around 66 tons (approx. 2,121,949 troy ounces) annually, after being discovered in 1958.
  • 1961 – Nevada’s gold mines produce around 116 tons (approx. 3,729,456 troy ounces) every year – comfortably the highest global total. The Carlin trend is a large, low-grade deposit, discovered in 1961.
  • 1975 – The Olimpiada gold deposit Russia was discovered in 1975 and its output is the third-largest worldwide with 43.2 tons (approx. 1,382,482 troy ounces) each year.

Which brings us to an important question of searching for the next “mother lode” of gold…

Mexico is historically a gold rich region. It has an older mining industry than the US (where mining primary deposits started in the late 19th century).

In fact, Mexico’s centuries-old mining industry ranks 4th globally for foreign investments in mining… and is an important part of the economy, promising existing infrastructure to new companies.

In 2019, total production was $12.7 billion, and the industry supports 2 million jobs directly and indirectly.

Annual Mexican gold production has dipped in recent years from a high of 132,413 kilograms (approx 4,257,176 troy ounces) in 2015. This is in part, to historic underdevelopment of Mexico’s industry and the ‘bust’ phase of the gold mining cycle.

However, the region remains one of the most attractive investment opportunities for investors.

The fact is that great natural wealth remains untapped and unexplored in Mexico – with estimates that 70% of Mexico’s surface area has impressive geological potential for mining.

A Brief Overview of Mexican Mining Law

Mexico is extremely wealthy in minerals, but also relatively unexplored and underdeveloped.

This is partly due to slower economic development before the 1990s, when the Mexican Mining Law – which regulates all mining activity in Mexico and covers the use, expiration and cancellation of mining concessions – was enacted to encourage Foreign Direct Investment into Mexico’s mining and other industries.

Under these laws, all minerals found under Mexican soil are owned by the nation, but private parties may exploit these minerals (except oil and nuclear fuel minerals) through concessions granted by the federal government.

According to ICLG.com

Mexican mining companies may be 100% owned by foreign investors, which can be either individuals or entities. Mexican mining companies that are 100% (or less) owned by foreigners are considered Mexican entities and have the same rights as a Mexican doing business.

Exploitation of minerals has been given preference over other uses of land. Exploration and extraction of mineral resources requires government issued concessions. Concession holders are also legally required to negotiate with surface land owners to access resources beneath. Concessions are issued in three categories, with different time spans:
  • Exploration concessions are granted for six years (not renewable).
  • Mining concessions are not time-limited.
  • Production concessions are granted for 50 years and can be renewed.
All concessions may specify levels of capital expenditure, as well as minimum environmental, health and safety standards. The tangible benefits of these new laws were to:
  • Remove restrictions on foreign ownership of Mexican mining companies and resources
  • Revoke mining-specific royalties and taxes
  • Simplify the complex web of mining regulations
This brought a wave of investment into the Mexican mining industry, and as a result, private investment became a driving force in the Mexican economy. The new laws stated that international mining companies had to:
  • Be incorporated under the laws of Mexico
  • State exploration or exploitation of minerals as their corporate purpose, and
  • Establish their corporate domicile within Mexico.
Coupled with a stable political structure and a skilled workforce, Mexico quickly emerged as one of the leading investment destinations for mining companies.

Despite Mexico’s vast mining potential, the region has been affected by well-publicised violence and illegal gold mining.

These factors could reduce confidence and hinder the development of Mexico’s mining industry

However, President Andrés Manuel López Obrador (commonly known as AMLO) has proposed new laws that, according to insiders, will help the country move past the recent wave violence.

A key step to secure mines and ore – and give investors peace of mind – was the 2020 announcement of a new police force, tasked with protecting mining operations.

The plan is to have a team of at least 1000 especially trained officers to satisfy demand from mining companies.

According to Durango Gold’s management team…

“When you buy real estate, you want to be in a ‘Triple A’ region. Durango hosts the biggest players in Mexico. We’re in the best zip code in the best region of the best country with the best regulatory regime”

Durango Gold holds an option to purchase up to 47.25% of an exciting property in the Sierra Madre Occidental mountain. This is a region with one of the richest histories of precious metal discoveries in Mexico – where mines such as Tio Tita and San Dimas have operated continuously since the 1600s.

The mines are clustered around Sonora and Durango – in a region known as Mexico’s ‘gold belt’.

This mountain range was made famous outside Mexico and forever connected to the idea of gold in the 1948 Hollywood classic ‘Treasure of the Sierra Madre’.

Durango Gold is currently exploring the potential ‘world-class deposit’ at the Claudia project.

The Claudia Project is nestled in the eastern hills of the famed Gold Belt in Mexico, and is surrounded by some of the most exciting potential mines in Mexico.

Other notable precious metal mines and prospects in the area are:

  • Fresnillo’s La Cienega (mine in production)
  • Great Panther’s Topia (mine in production)
  • Capstone’s Cozamin (mine in production – mostly copper)
  • Minero Bacis’ Bacis (mine in production)
  • Gold Corp’s El Suazal
  • First Majestic’s Bolaños

So you can see why geologists see potential for discoveries of world-class deposits in this region.

Which brings us to the next question…

Beyond its location in Mexico’s prime gold mining neighborhood, we can also look to a long history of ‘missed opportunities’.

Throughout the history of gold-mining – and Mexican gold mining in particular – there has been an ongoing pattern of major prizes sitting idle, unexplored and underdeveloped.

One cause is that small scale miners are often focussed heavily on cash flow. As a result, they often lack the capital required to fund longer term exploration efforts the industry desperately needs.

The Claudia project shows potential to end Mexico’s long cycle of missed opportunities, and become a world-class deposit.

“This happens quite often in this industry. Properties are overlooked for decades, centuries, then wind up being the most profitable assets on a company’s books”

 –Craig Auringer, Founder Bonsai Capital

The small Aguilaréna district around Claudia is full of what Durango’s Gold’s Chief Geologist Steve Weiss describes as ‘Hidden Gems … Long lost mines that locals worked from the 1800s. Each had their own little piece of ground, but lacked the resources to really figure it out.’

So how did this opportunity – now worth potentially billions of dollars – fall into Durango’s hands? 

The first main phase of modern exploration at Claudia at Aguilarena began in 1991 when the asset was in the hands of Minero Bacis – a small, Mexican, family-owned mining company (currently producing under the name Grupo Bacis). Minero Bacis consolidated the district (put together different claims) – in the early 1990s. 

But, being a small, cashflow driven company, Bacis could not affordnor wanted – to explore or develop the property in a more holistic way. They went after the “low hanging fruit.”

“Bacis drilled the first 30 holes and took samples when the workings were still accessible, they’ve shown that the gold and silver are there. We know how to turn it into something bigger. ” –Steve Weiss

Bacis’ initial drilling hinted at 130,000 thousand tons of ore, comprising of:

  • 756,000 ounces of silver
  • 14,000 ounces of gold.

According to Durango Gold’s CEO: “That’s a nice tiny mine, but only a fraction of the potential we see for the Claudia Project.”

Bacis was eventually forced to sell under pressure in the 1995 downturn. They had a large portfolio of resources, but weren’t bringing in sustainable profits.

Capstone, a Canadian mining company, bought five properties from Bacis’ – Cozamin, Promontorio, Montoros, Copala and Claudia.

In 2004, Capstone had the Claudia Project mapped and sampled, which showed high-grade gold and silver mineralization.

But because Capstone was backed by financial institutions, they also prioritized the immediacy of cash flow over the risk of exploration; like Minero Bacis, they did not prioritize exploring – or optimizing – the value of the asset.

Also, because they weren’t local operators, they had little “shared value” with the communities around Aguilaréna.

A few years later Capstone – needing to raise capital for other efforts – decides to sell off the asset.

After years of neglect, this underexplored property was acquired for a freakishly low price, due to strange twists of fate.

Here’s how it happened…

Silverstone Resources SA de CV – a Mexican mining company that was even smaller than Bacis – was offered the right to purchase all of Capstone’s exploration assets, except for Cozamin.

Wanting to unload the asset at any price, Capstone agreed to sell the asset for $1 million. To the surprise of the small mining company, they now owned the Claudia project – and the three other mine properties – for an unbelievably low price.

Then, in 2017, Claudia was introduced to Durango Gold’s CEO Fernando Berdegue.

After more than three years of negotiations, Durango Gold entered into a joint venture with Silverstone to explore and develop the asset.

How To Make Money From Gold Exploration Opportunities in 3 Easy Steps

For those unfamiliar with investing in exploration opportunities, the process for generating investment returns is simple…

According to Steve Weiss, Durango Gold’s Chief Geologist:

“Discover ounces of gold and silver for a few dollars per ounce. Turn around and sell them for a hundred dollars an ounce – to a miner who will then reap the profit, hopefully a margin of three or four hundred dollars per ounce on the spot market at the time of production.”

Or more simply put, the business model of many juniors is:
“Find it. Define it. Develop it.”

STAGE 1: FIND IT

It’s not just about finding gold, but finding the best, fastest, least expensive way to get the gold.

According to Steve Weiss…

“If you’re an exploration manager, the way you get graded by your boss is by finding the most ounces with the fewest number of feet of drilling. So a really successful exploration program doesn’t just hit the gold – it’s with the fewest number of holes possible and the fewest number of dollars spent doing that.”

STAGE 2: DEFINE IT

Once the deposit is discovered, now it’s time to figure out how much gold potentially lies beneath the surface.

According to Steve Weiss…

“We want to define the size and shape of the “treasure chest” and how many tons of gold/silver are in there, and what the average grade is.”

Next, it’s time to define the lateral and vertical extent of the deposit, define the average grade, and determine whether or not it has enough metal value to justify sinking a shaft or digging a big open pit.

Then, it’s time for the moment investors have been waiting for…

STAGE 3: DEVELOP IT

As the project progresses – and ounces of gold are accumulatedvalue is unlocked and valuation goes up.

Once the team has confirmation on the reserves, now it’s time to start digging…

And as more gold is pulled out of the ground – and then sold on the market – the company generates new cashflow…

Or, the asset can be sold for a hefty sum of money to another mining company.

In an early 2021 report Bank of America (BofA) stated they believe M&A deals have become a shortcut for major gold miners who desperately need to replace more than 50 million ounces of reserves in 2021.

BofA believes the need to replace gold reserves means the M&A market will be a seller’s market this year, with majors desperate for world class assets.

BofA also sees attempts at ‘desktop analysis’ of potential targets to become standard and replace ‘boots on the ground’ due diligence site visits.

This will likely serve as a catalyst for even more mergers and acquisitions, as gold “exploration” conducted from office desktops has contributed to the huge problem majors are trying to buy their way out of. 

In 2020 gold mining M&A activity was dominated by mergers between smaller companies – unlike 2018-19 which saw industry giants Barrick-Randgold and Newmont-Goldcorp merge.

The mining sector in Mexico remains the leader in M&A activity. 

There were 12 announced transactions in June 2020, representing 20.6% of the total announced M&A activity in that period.

Some other notable Mexico-based gold mining M&A activity: 

  • Mexican Junior gold company Magna Gold acquired the San Francisco mine (in Mexico) Magna bought the resource from Timmins Gold, a subsidiary of Alio Gold.
  • Southern Silver Exploration, a Canadian mining exploration company announced the acquisition of the Cerro las Minitas Project, an asset comprising silver deposits, for US$15 million.
  • In April 2020, Midland Exploration, a Canadian mining company announced the acquisition of 23 claim blocks in Mexico for an undisclosed amount.

Bank of America listed Mexico’s Torex gold on a list of top potential junior mining targets with “intriguing assets”.

While the rewards for discovering a world-class deposit can be substantial, it’s important to understand the facts about mining deals…

According to Steve Weiss…

“For every 1000 mineral occurrences, 100 become exploration projects, 10 achieve a development stage, and only 1 becomes a profitable mine.”

However, before you let these daunting odds deter you from considering an investment in Durango Gold, it’s critical to understand…

Durango-goldarrow-120h
The 5 Profit-Killing Problems That Destroy Investor Returns

No matter how optimistic we are about any exploration project, for an investor, the path to returns is simple: the less money spent trying to find and define the “treasure chest” of resources, the more profit you’re likely to make when it’s sold.

However, as stated previously, exploration is a high-risk / high-reward play.

Exploration projects can take up to 10 years to find anything worthwhile, and require a large amount of financial resources and expertise in many disciplines – e.g. geography, geology, chemistry and engineering.

The likelihood of a discovery leading to a mine being developed is very low – less than 0.1% of prospected sites will lead to a productive mine. And only 10% of global gold deposits contain sufficient gold to justify further development.

The likelihood of a discovery leading to a mine being developed is very low – less than 0.1% of prospected sites will lead to a productive mine. And only 10% of global gold deposits contain sufficient gold to justify further development.

As the saying goes, “time is money.”

It is expensive to maintain a company, especially one that does not yet produce income.

Expenses add up quickly; management needs to focus their efforts – and money – on activities that generate value for shareholders.

That’s why as an investor, it’s crucial to understand the major challenges all exploration companies must overcome…

And by extension, the costs they must diligently manage in pursuit of investor returns.

One of the unfortunate realities of gold explorations? All of the easy deposits have already been found.

Anything that’s left is likely to be found in the oldest rocks in places where the earth crust has undergone the most extensive changes; elevations, folding, tilting, faults, fissuring and also volcanic action, with resulting changes in the composition and texture of the rocks.

Or more simply put, it means exploring challenging, mountainous terrain like this.

The Sierra Madre is a mountain system that is part of the American Cordillera, a chain of mountain ranges that consists of an almost continuous sequence of ranges that form the western backbone of North America, Central America, South America and West Antarctica.

Even if one does believe they’ve identified a potential site, that is only the beginning of the challenges.

While there’s been decades of advancements in exploration related technology – like satellite remote sensing, geological mapping and seismic techniques – surveying the site is only the beginning of this multi-year process to strike gold.

Traditional ‘boots on the grounds’ exploration methods (such as rock and soil sampling), although detailed, can only cover some 15–30 kilometers per day. Larger scale mapping via helicopter, plane and satellite fails to provide sufficient resolution to efficiently map small-scale (<1 km2) geological features. 

A dizzying array of new technologies are being touted, promising to take the leg work out of gold prospecting. Solutions like:

  • Mineral &  geological mapping
  • Seismic techniques
  • Hyperspectral flights
  • Aerial geophysics
  • Multispectral imaging
  • Thematic mapping

Not to mention the always optimistic predictions from a new generation of quants, PhDs and experts in geology, physics, data science… and their continued pursuit to use data to disrupt the gold exploration business.

While AI, cloud computing, open source algorithms, machine learning and other technologies can potentially identify patterns that lead to minable deposits of gold…

Durango Gold’s geologist Steve Weiss, prefers to skip the fancy technology and do the thing that’s worked best for him (and plenty of his colleagues):

“A.I. approaches can be productive, but we’re going after hidden gems that have been overlooked for a variety of reasons.

A strength of Durango Gold is that we apply tried and true ‘boots on the ground’ approaches to making a world class discovery.

We’re using simple. cost effective, proven technology, getting the knowledge from the face of the drill bit as soon as possible

Once a site has been identified, now it’s time to conduct detailed geophysical studies and later, a detailed drilling, sampling, assaying and mineralogical study.

Gold deposits are sought with many techniques, but they are based on geochemical studies. Commonly more than one method is employed. With these methods, the geologist is looking for anomalies. Perhaps, the most important techniques are photogeology and seismic techniques.

Of the huge sums allocated to gold exploration, only a small proportion has been spent on geochemical surveys. That is largely due to the typically uneven distribution of gold particles in nature.

This problem can be addressed by collecting large samples, but extensive drilling can get very expensive.

The process always starts with the same first step: drilling.

Mineral exploration is a methodical process of drawing a subsurface picture with the tip of a drill bit.

With drilling costs of between $70 and $120 per meter, making holes in the ground can get very expensive, very fast.

Geoscience helps increase the value of those drilling dollars because it provides accuracy; Miners cannot afford to drill in the wrong spot (or direction) for any longer than they have to.

And one way to reduce the risk of drilling “dry holes” follows common sense; look for a region with a history of great discoveries, or a region that shares a geology similar to other mining districts.

According to Warren Rehn CEO of Golden Minerals Company (which operates in Mexico):

“Low operational costs add to the benefits … Diamond drilling is one third of the cost in Mexico compared to the US, and half of that in Argentina … its geography is spectacular. Mining is in Mexico’s blood.”

Soil sampling is another core technique of mineral exploration.

Cheaper and faster than drilling, sampling can be used to quickly establish the existence and extent of hoped for mineralization.

Testing is another area of opportunity to reduce costs. Accurate laboratory data is necessary, however, it can take from three weeks to three months to get results. Geochemical testing on-site costs between $1 to $3 per meter, whereas laboratory analysis and sample preparation can cost up to $40 per meter.

A key takeaway for those investing in junior miners is this…

  • There is no substitute for proper due diligence and verifiable reports.

That’s why it’s important to have at least a basic understanding of how a company “finds” and “defines” their resources… and at what cost.

According to Donald Hulse Vice President of Mining at Gustavson Associates…

“Good basic geology and engineering work seems to get lost when developing mining projects.” He says that there is a great deal of public attention on financing and on who invests where, prompting people to follow the money. “Investors often want to bet on a certain region without really understanding the projects.” 

Not surprisingly, commodity rich countries don’t always welcome foreign investors. Given the bloody history of Mexico’s mining past, it’s not a stretch to imagine why this is the case.

In fact, Mexico was closed to foreign investment until 1992.

That’s why it’s crucial for outside companies to establish positive relationships with the host country.

One component in planning to find huge returns is being able to work on the ground, and that requires social license in the local area.

According to Durango Gold’s management team…

“We can have all the favorable indications, but if we don’t obtain and maintain a good social license with the local communities, we simply won’t be able to make the big discovery and prove it up with drill holes.

A lot of exploration people, until recently, said “that’s not my job, I don’t need to worry about that.”

But this “head in the sand” approach to local relationships creates real – and costly – problems for any exploration project.”

Mining operations have a significant impact on the local community. Good companies look to make mutually beneficial partnerships of equals with local communities.

Ignoring or failing to respect the local community will jeopardize a mining project at every stage of its mine life. Local communities that don’t want mining to occur can derail even the best laid plans.

Furthermore, a successful exploration operation needs to understand how to navigate the ever-changing regulatory landscape and political powers of the time.

As noted by Doug Ramshaw President of Minera Alamos…

“A company can have all the money it requires to build something, but if it does not have the permits, it cannot do anything.”

Currently, the power to provide permits resides with Mexico’s López Obrador government, which came to office in December 2018 following a landslide election win.

For the new administration, boosting growth, combating corruption and lifting millions of Mexicans out of poverty were key campaign pledges… 

And to support these objectives, a thriving mining section will be fundamental it’s success.

However, the new regime has sent mixed signals to the industry; a problem for investors who prefer more clarity and confidence in what is an extremely capital-intensive activity that can take up to 10 years before producing returns.

Here are some of the notable regulatory issues every investor should be aware of as part of their due diligence process.

In August of 2019, President López Obrador made a rather controversial announcement: no new mining concessions.

López Obrador complained that concessions were being held for “financial speculation” rather than production purposes.

Although Mexico would not cancel existing mining claims, no new ones would be issued.

Naturally, investors seeking access to Mexico’s rich resources were less than thrilled.

According to Juan Manuel Gonzalez, Partner at DBR Abogados…

The new administration faces great challenges to restore the trust of the mining sector and its investors. We need to push for the creation of clearer and more effective regulations to foster exploration and production and for the enforcement and compliance with the rule of law. In our opinion, mining is over-regulated. A first action should be to tie up criteria and regulations associated with the industry and to simplify the procedures between government agencies.

[Note: Durango Gold has concessions already in place and does not require any new concessions for this project.]

According to Bernardo Remirez, Partner at Chevez, Ruiz, Zamarripa y Cia: “there have been growing concerns around tax legislation governing gold mining. The lack of clarity has created a variety of interpretations and, in some cases, created risks for miners.”

Since 2013, ongoing amendments to the legal framework make it more difficult to jump through the tax authorities’ hoops.

Here are some of the major taxation challenges the industry faces in Mexico:

  • PRE-OPERATING EXPENSES Before 2014, pre-operating expenses were deductible through a one-time deduction. Removing this incentive ignores the industry’s cyclical nature and does not consider the required financial support to develop a mining venture.
  • SPECIAL MINING DUTY Mining concession holders are levied a special mining duty at a 7.5 percent rate. However, the determination is technically imprecise, and can be subject to wildly different interpretations.
  • EXCISE TAX ON DIESEL For many years, there were tax incentives for those buying diesel fuel for business activities. In 2019, this tax credit was limited – in another example of decreasing incentives for the industry, and a lack of legal certainty.
  • DEDUCTIONS CRITERIA This legislation does not reflect realities the mining industry faces. Mining companies have significant infrastructure expenses for work performed at mines. Legal uncertainties have led miners into legal conflict and controversy.
  • UNIVERSAL OFFSETTING A temporary provision was introduced in 2019, suspending the possibility to offset one favorable tax against another. Then the government proposed the final repeal of provision. Such measures have a negative impact on the financials of all Mexican taxpayers by generating potentially severe liquidity deficits.
  • BORDER REGION BENEFITS Other examples of a subpar fiscal framework are the lack of specific rules in the application some incentives – in those cases where miners must pay costs incurred by third parties abusing the tax system.

Carlos Barcena, Minister of Economy of Zacatecas adds: 

“Mining companies have adapted to the [new taxes] … But Mexico is losing competitiveness because it is impossible to deduct exploration expenses within a reasonable period of time.

Other countries in Latin America are more competitive in this regard. There must be a fiscal incentive where both the state and the companies win and exploration is boosted.”

Gabino Fraga, Director General of Grupo GAP, warns that if not managed correctly, land negotiations can create headaches for  companies pursuing mining projects in Mexico:

“Issues often arise from a lack of clear information regarding the land owners the project will impact.”

In order to sit down and negotiate with landowners, mining companies must understand both their rights and duties.

While the Mexican judicial framework for land access is comprehensive, mismanaged negotiations can result in just one claim-holder stopping a project.

And as companies are sometimes totally ignorant of these obligations, social conflict can easily occur.

“It is fundamental to get expert advice to ensure effective communication of commitments the company is willing to make.”

Despite technological advances and efforts to improve existing regulations, the mining industry still experiences many accidents.

According to Napoleon Gomez Urrutia Senator of the Republic… 

Mexican labor law is directed at ensuring fairness and union democracy. Protection of the freedom and privacy of workers is a key goal, and – according to officials – any reforms will likely be in the direction of protecting workers’ rights. 

Rafeal Cereceres Partner at Cereceres Estudio Legal adds:

Labor relations that fully comply with the law are of capital importance for a healthy mining company. I cannot emphasize enough the importance of labor law in this new era of mining in Mexico.

Understanding these changes in unions and labor law has become crucial for the industry for two main reasons:

  1. Companies must navigate new legal realities, and changing relations with workers.
     
  2. Companies must carry out preventative measures to head-off future issues.

 
Legally compliant and harmonious labor relations are crucially important for successful mining companies. And labor law will likely  play a key role in this new era of Mexican mining.

Security is another concern for those considering investing in Mexico.

“The Mexican mining industry is second to none in many respects, but a recurring issue is having the confidence to invest given the pervasiveness of organized crime in the country.” This issue is effectively holding back the development of regions with world-class potential” 

“The Mexican mining industry is second to none in many respects, but a recurring issue is having the confidence to invest given the pervasiveness of organized crime in the country.” This issue is effectively holding back the development of regions with world-class potential” 

– Darren Blasutti, President and CEO of Americas Gold and Silver Corporation.

  • In 2015, a gang robbed almost 10 pounds (4.5 kilograms) of gold-silver mix from a silver and gold mine in northern Mexico. The Fresnillo mining company said armed men pulled over a company truck and stole the metal, but none of its employees were harmed. 
  • In 2018, Canada’s Pan American Silver Corp. temporarily cut back some operations at its mine in northern Mexico due to safety concerns. At one point employees were holed up at the mine, afraid to leave because of threats by armed groups and some employees were evacuated on private planes.
  • In 2019, there was an illegal blockade of Newmont Goldcorp’s Penasquito Mine: The blockade impacted third quarter production by around 11,000 gold ounces and 1.7 million silver ounces. Through September 30, this represents a major production shortfall.

In some extreme cases, there’s risk of organized criminal activity – typified by Mexico’s cartels. Generally, the better the miners’ relationship with the host country, the more likely it will help defend their interests.

According to Ramon Davila, Minister of Economic Development of Durango

“Today, Durango is considered the third-safest state in the country. All these factors help us to provide stability to companies that decide to set up and operate here. In addition, we offer incentives.

When a company decides to establish in Durango, we try to help it through different incentives related to their activity, like the elimination of the payroll tax, which has a maximum duration of six years depending on the investment the company is willing to make.”

Even more important, there are positive tailwinds in Mexico investors can feel optimistic about. 

According to FRANCISCO QUIROGA, Undersecretary of Mining at the Ministry of Economy, for the industry competitiveness, “we must reduce all cost factors without impacting Mexico’s development.“ 

Adolfo Calatayud, Partner at PwC, explains how Mexico could fall behind:

“By now, it is evident that Mexico has become more expensive than other mining jurisdictions.”

A point reinforced by the new trend of Mexican national champions – like Peñoles or Grupo México – investing abroad in Chile and  Peru. 

With this in mind, potential investors should have confidence that Durango is as good a place as any for gold exploration companies to be in.

Mining companies can do everything right – develop a promising asset, put together a great management team, and achieve good community relations – but if they don’t have capital in place, everything stops.

This ties in with a major trend in exploration: declining levels of investment. 

Smaller miners are often cashflow focused, and rarely have the capital required to develop potential “world-class deposits” under their control. That’s why it’s critical for any exploration company to have access to sufficient capital to keep operations running.

Otherwise, they could end up selling a property long before its potential is realized, causing investors to miss out on possible windfall gains.

And that’s exactly how Durango Gold wound up with the Claudia Project in the first place: the previous owners never bothered to develop this plot and eventually sold the property for pennies on the dollar.

So what are the best financial discipline practices for a mining company to achieve healthy and organic growth?

According to James Bannantine, President and CEO of Great Panther Mining the key metric is All-In Sustaining Costs (AISC):

“We measure everything in cash flow based AISC, which is all of our capital and all of our operating costs. We need to make sure we have positive cash flow today from operations … For example, we want to get our AISC to US$1,000 per ounce today and to try and take it to below that level per ounce next year.” 

Rodrigo Barbosa (President and CEO of Aura Minerals) shows how financial discipline can give miners great credibility in debt markets:

“On the equity side, the market is still slow and it is difficult to find cash … The debt market, however, has been improving and there is a great deal of liquidity there. For us, credibility is important to ensure a sustainable cash flow for our operations. Our goal is to have a consistent plan that provides consistent results. We never promise our investors anything we cannot deliver.” 

As in most business ventures, credibility is the key ‘currency’ for miners looking to access capital to achieve healthy growth.

In all the main metrics – the management team’s track record, history of the project, and where they are in the cycle Durango Gold is well positioned for maximum credibility.

This problem is only made worse by the true technological barrier that stands in the way of mass adoption…

An open-pit mining operation the Ukraine.

There’s no way around it, gold mining can affect the environment in negative ways; including the release of large amounts of exhaust from heavy equipment and transport and toxic drainage into nearby waterways.

Gold is most commonly mined from open pit mines and underground mines.

Even in the richest open pit mines, the gold content is a tiny fraction of the material dug up. In underground operations, the gold content in the rock is generally higher.

That means huge volumes of rock and earth get processed;  Earthworks estimates that, to produce enough gold to make a single ring, 20 tons of rock and soil are dislodged and discarded.

Huge quantities of waste rock must be transported for disposal, causing fossil fuel emissions. This waste also contains toxic metals that don’t biodegrade, creating hazards at disposal sites.

Mining operations are a mere blip compared to more polluting industries such as energy, transportation, manufacturing and construction.  

Gold mining sites can be set up to support healthy ecosystems, if miners have the capacity and foresight to mitigate impact through every stage of a mine’s lifecycle.

According to Koen Langie, Head of Mining Program at Engie’s Hydrogen Business Unit:

“Being innovative and socially responsible does not mean you cannot be profitable or that you have to lose productivity. Mining companies need to have more vision and acknowledge all the benefits they could obtain.” 

All over the world, governments are pushing hard against environmental violations by gold miners. Some recent examples:

  • OceanaGold (OGC) were fined US$100,000 for breaching environmental rules at its Haile Gold Mine in South Carolina.
  • Chile is suing Barrick Gold over 10 environmental violations announced, committed between 2013 and 2015.
  • The Brazilian mining giant Vale has agreed to pay $7 BILLION compensation for a deadly dam collapse that killed 272 people.

That’s why now, more than ever, a commitment to sustainable mining practices is key to profitability. The downside risk is too great to do otherwise.

Mexican environmental regulations have become increasingly stringent in recent years as a result of international agreements, including:
  • The North American Agreement on Environmental Cooperation (parallel to NAFTA),
  • The United Nations Framework Convention on Climate Change
  • The Convention on Biological Diversity.
Mining companies must now obtain environmental impact permits from SEMARNAT (Mexico’s environment ministry) before commencing any mining or exploration activities. After that mining activities need ongoing environmental permits covering water extraction, wastewater discharge and tailings disposal, and myriad other protections.

¨Mining companies did not recently suddenly discover ESG … the investors did,”– Bradford Cooke, CEO of Endeavour Silver

Mining companies are the forefront of a major effort to bring Environmental, Social and Governance (ESG) guidelines into their work.

These factors directly affect natural and human environments, so ESG is no longer a superficial “green wash” that has more to do with PR than mining.

Companies applying ESG have new competitive advantages in many jurisdictions, with growing potential to offer investors better outcomes.

Geology plays out over eons, but in the human time scale, bad management can quickly lose opportunities and investor money if close attention is not paid to the demands and expectations of the jurisdictions they work in. 

Investors now demand that miners prove that their operations are as sound as they can be.

Opportunities in Mexico are largely determined by successful ESG management, particularly community engagement.

Unfortunately, bad ESG management has been common in Mexico – with a history of disregard – and worse – for local communities.  

However, these kinds of abuses are increasingly impossible and unacceptable, and that is one reason that Durango Gold with its commitment to working with locals through its ‘Shared Value’ philosophy could be set up better than most for a new era of Mexican mining.

Renato Urrestra, principal consultant at ERM notes, “that responsible behavior results in more profitable businesses.” 

He explains that social strategies eventually pay off in enhanced reputations – as legal difficulties, fines and blockades are avoided.

As mines are often in remote areas with outdated or incomplete registries, it is also vital that mining companies get completely clear on who actually owns the land.

Understanding the intricacies of a community’s property rights must become part of every company’s strategy. 

Other practices to foster productive relationships between companies and communities:

  1. Invite ongoing feedback from locals. The rules of engagement have to be clear, and agreements between all parties must be transparent and easy to understand.
  2. Only make commitments that can be honored. A common challenge is that junior miners (in the exploration phase) sometimes make promises that are difficult to keep.
  3. Strengthen relationships with communities. These relationships are as important as operational processes, because a blockade can stop operations with very serious consequences.

In the following section, we’ll present Durango Gold’s unique method for addressing all these challenges in the pursuit of a profitable investment opportunity for all stakeholders involved.

Ready to invest in Durango Gold?

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Introducing: “Durango Gold’s Shared Value System”

A modern approach to profitable gold exploration

DURANGO’S CORPORATE STRATEGY

Know the territory: Identify dormant, unnoticed or unexplored highly prospective ground by leveraging our unmatchable local knowledge and network

Innovative Exploration: Ideas based on field information and theory, using historical data to go to extents others will not.

Offer best development solutions to owners: Properties secured under favorable terms committing money to the ground rather than the owners’ pockets.

Creative Financing: An innovative structure that provides capital in good time to yield the best results.

Shared Value: We add value to the environment in order to extract a greater shareholder value.

Solution #1:

Perhaps the single greatest advantage Durango Gold has is their team of industry insiders…

Fernando BerdegueCEO of Durango Gold – is a Mexican native with a proven track record of success, an extensive knowledge of his home country’s laws and regulations, and all of the right political connections required for an operation like this.

And when you examine the long list of heavy hitters on both the management team and their board of directors… it’s basically the “who’s who” of gold deals (note: full bios of all members are listed later in this document)

But their star studded roster isn’t their only unique advantage…

Unlike other exploration deals in the middle of nowhere, the Claudia Project is accessible by a paved road.

The project is only about 70km from 2-3 major precious metal deposits owned by well-capitalized companies.
  • This means they won’t have to spend tens of millions of dollars to build out infrastructure to get materials to – and from – the site.

Even better, the nearest population center, Santiago Papasquiaro, is a city of approximately 26,000 inhabitants and is less than one hour by car from the Claudia project.

  • Fuel, supplies, communications, accommodations and rural health clinics, as well as a skilled labor force are available in Santiago Papasquiaro.

Diesel construction and mining equipment, and engineering, banking, and mining services are available in the city of Durango, which has a population of approximately 570,000, about three hours by car from the project. 

There is a large labor pool with mining, construction, administrative and engineering skills in the city of Durango. Drilling and contract mining companies are located in Durango, and there is a large and modern commercial assay and metallurgical laboratory there as well.

As stated previously, the logic behind using locals is obvious. However, the exploration industry isn’t historically one that is open to new and innovative thinking.

And the strangest innovation?

Work with “amateur geologists” i.e. someone that is not an expert in the field but is passionate about it and has just enough knowledge as to allow him to approach things from a different angle.

“I was in another company where we were exploring a historic district in the United States. My solution to the problem to define drilling targets sooner was to bring in a historian who wrote a book about the area.

People in the office thought I was an idiot because we are paying top geologists huge sums of money. But what happened shocked everyone; most of the drilling was based on the research of someone who wasn’t a trained geologist.

Now, that same mindset and out of the box thinking applies here.

What are the challenges here? The terrain. How do you mitigate that? Work with the locals.”

– Fernando Berdegue, CEO & Chairman of Durango Gold

“I was in another company where we were exploring a historic district in the United States. My solution to the problem to define drilling targets sooner was to bring in a historian who wrote a book about the area.

People in the office thought I was an idiot because we are paying top geologists huge sums of money. But what happened shocked everyone; most of the drilling was based on the research of someone who wasn’t a trained geologist.

Now, that same mindset and out of the box thinking applies here.

What are the challenges here? The terrain. How do you mitigate that? Work with the locals.”

– Fernando Berdegue, CEO & Chairman of Durango Gold

The Durango Gold team is a rare breed of experienced professionals who continue to challenge conventional thinking and try new things.

With this mindset, they’ve been able to see problems in new ways, and create new solutions to hard problems that are cost efficient and effective.

Solution #2:

One of the big improvements in the last 15 years is that new drills are very efficient and do not have a large environmental impact. Instead of a one-acre drill site, they now only require a flat spot that is 3m x 4m (~12ft x 16ft).

This innovation has also unlocked new terrain that was previously inaccessible or cost prohibitive to explore.  Instead of needing huge, heavy earth moving equipment, they can drill with far more focus (and at far less cost than conventional methods).

According to Durango CEO Fernando Berdegue…

“Some of these we can build by hand with local help, local field crew, who earn a wage where there is a lot of unemployment. We can employ local people to build drill sites at these new modern drill sites.

From a purely cost standpoint, it allows you to drill more and test more targets. That combined with the gold price allows you to go deeper if needed… it’s more forgiving vs decades ago where you were a small company with a limited budget.”

However, like with any tool, a skilled operator with a proven track record of success is key to producing superior results.

Their decades of experience and skill will prove vital to managing costs of this project and keeping it on track.

According to Fernando Berdegue…

“We have a combination of new technology and highly experienced operators who really understand how to use it in the best and most cost effective way.

Basically we can say ‘bigger sample sizes are better’. And thanks to this new technology, we can get larger sample sizes for the same or less cost than the other drilling and less environmental footprint, Less destruction to the landscape.

So the community doesn’t go, ‘oh, these guys are tearing up our place.’”

With that said, perhaps the biggest advantage this project has? All of the data that’s already been collected by the previous owners.

Durango Gold believes that these historical estimates highlight the under-explored character of the Claudia Project.

And with additional “boots-on-the-ground” direct targeting using proven geologic methods, the team can bring the project areas to a decision point as quickly and efficiently as possible.

  • The Claudia property consists of 36 contiguous mining concessions covering approximately 6,400 hectares in the El Papanton Mining District, close to 135km from from the city of Durango.
  • Gold-silver mineralization is found in a northwest-southeast trending, 9km long by 4km wide array of veins. At least 9 small historical mines of unrecorded and likely small production were operated and abandoned in the early 1990s.
  • 40 core holes were drilled between 1994 and 2007.
  • Assays of channel samples spanned a range of 0.3g Au/t to 10g Au/t, with silver grades generally in the range of 10Ag/t to 350g Ag/t. The highest grade sample, in the Aguilareña vein, had 31.5g Au/t and 1,159g Ag/t over a width of 0.7m.
  • Durango Gold believes that these historical estimates highlight the under-explored character of the Claudia Project.
  • The team proposes that focused and systematic exploration of this property has the potential to generate much more significant gold-silver resources and shareholder value.

“In the world of modern day profitable underground mining, silver grades need to be above about 100 grams per ton of silver and gold grades above 3 grams per ton of gold.

All the samples in this part of the plot demonstrate that in places those grades are actually there, those are the kind of grades that can make a profitable mine.”

– Steve Weiss, Chief Geologist, Durango Gold 

“In the world of modern day profitable underground mining, silver grades need to be above about 100 grams per ton of silver and gold grades above 3 grams per ton of gold.

All the samples in this part of the plot demonstrate that in places those grades are actually there, those are the kind of grades that can make a profitable mine.”

– Steve Weiss, Chief Geologist, Durango Gold 

Solution #3:

Perhaps the single biggest cost saving measure the Durango Gold team has implemented is their unique Cielo Azul Shareholders Agreement with land owners; Durango Gold provides the team, expertise, and working capital in exchange for the rights to explore the property.

Instead of buying the property with cash up front, instead, the company “earns in” to the joint venture as capital is invested into the project.

This, in turn, provides Cielo Azul with all of the required concessions… and makes it significantly more affordable to acquire all of the necessary suitability studies and permitting, and advance the project stages quickly and efficiently.

According to Durango Gold’s CEO…

“Normally, communities own the land. That’s why you have surveys and studies and get permits before you can do anything else.

However, because we’re doing mapping, survey, sampling… low impact stuff… we don’t need any additional permitting until we move to the drilling stage.”

The next step of the process is to do what’s called an impact study, which as the name suggests, is to determine the environmental impact the project could have on the local community.

Durango Gold hired Sacramento Corral, phD., the same expert who has done the impact studies for all the other major players in the region. As a result, the team is very optimistic this should be completed without problems or unnecessary delays.

Once this step is complete, the Durango Gold team then makes any payments to the community on a per acre basis, which covers the impact of things like cutting down trees…

And then, it’s time to start drilling.

Speaking of financing, the other major advantage Durango Gold brings to the table is…

Solution #4:

You might not be aware of this, but Durango Gold is the very first junior gold miner to raise equity capital under the Regulation Crowdfunding exemptions outlined in the 2012 JOBS Act, and recently updated March 15th, 2021.

According to Durango Gold management…

The combination of people and pipeline make it already unique, if we manage to make the Reg CF and Reg A+ a successful source of capital in terms of reliability, not only we will be innovating in the mining industry, but we will be giving everyday investors the opportunity to be a part of this potentially lucrative project.

This source of “friendly capital” is a critical advantage to the success of the project. Instead of having to rely on potentially predatory sources of capital, by inviting the “crowd” into the opportunity, it gives the founders the opportunity to raise capital at favorable terms that give the project a higher chance of success.

And when you look at the strategy holistically, it’s perfectly in alignment with the philosophy of what’s known as “Shared Value”.

Solution #5:

“The Ecosystem of Shared Value” was originally introduced to the masses in the October 2016 issue of the Harvard Business Review. The thesis is simple, yet powerful:

“If business could stimulate social progress in every region of the globe, poverty, pollution, and disease would decline and corporate profits would rise.”

–Mark Kramer and Marc Pfitzer

As stated several times now, the decision to hire locals and establish a “social license to operate” isn’t just a feel good marketing gimmick…

It’s the pathway to a more profitable operation that chooses to create value for all participants in the ecosystem.

Shared Value Company Proposition:
To create a network of people and an ecosystem from local communities through education that support the objective of the company and that will increase the probabilities of exploration success while improving the regional general state of wellbeing.

Now brings the important question: how do you train the locals to be productive members of the team? 

Treat them like students, not cheap labor.

Apart from establishing a culture for education – and creating a program that will be designed by geology experts – there will be a geology professor assigned to each project in order to teach basic geology and equip local community members with the sufficient knowledge as to perform exploration activities.

The result: People with limited opportunities are receiving quality scientific and technical education while the company is covering extraordinary areas of land.

  • Productivity and reach: Locals are used to moving in extremely rough terrain and are familiar with the different areas.
  • Empowerment: Opening doors for people that may want to pursue other opportunities after the experience.
  • Consciousness: Generating appreciation for science and the mining activity as a form for achieving wellbeing.
  • Reward & sense of belonging: Generating a healthy competitive atmosphere with upside incentives attached to the discovery.

This innovative approach is what drives many of the innovative – and cost saving – measures used by the Durango Gold team in this project.

And now, for the first time ever, you have the opportunity to invest in this junior gold mining team who could…

DurangoGold-logo-gold

The Quest For The Next Golden

“World-Class Deposit"

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Investment Documents, Risks & Disclosures
An investment in the Company involves a high degree of risk. You should carefully consider the risks described above and those below before deciding to purchase any securities in this offering. If any of these risks actually occurs, our business, financial condition or results of operations may suffer. As a result, you could lose part or all of your investment.

An investment in the Company involves a high degree of risk. You should carefully consider the risks described above and those below before deciding to purchase any securities in this offering. If any of these risks actually occurs, our business, financial condition or results of operations may suffer. As a result, you could lose part or all of your investment.

Risks Related to the Company

We have a limited operating history upon which you can evaluate our performance, and accordingly, our prospects must be considered in light of the risks that any new company encounters.

We were incorporated under the laws of the State of Nevada on November 9, 2020. We have limited operations and no operating revenue to date.  We are in the development stage, and our future operations are subject to all of the risks inherent in the establishment of a new business enterprise.  The likelihood of the success of our company must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the development of an entity in the business of precious metal exploration. There can be no assurance that we will be able to generate revenues, that future revenues will be significant, that any sales will be profitable or that we will have sufficient funds available to complete our marketing and development programs or to market any new products which we may develop. We currently have operating losses, have no substantive source of operating revenue, are unable to self-finance operations, have limited resources, and there can be no assurance that we will be able to develop such revenue sources or that our operations will become profitable.

Our Company has a history of incurring losses.

We have a history of incurring losses and we incurred net losses of -$32,575 for the year ended December 31, 2020. The extent of any future losses and whether or not the Company can generate profits in future years remains uncertain.  The Company currently does not generate sufficient revenue to cover its operating expenses. If we fail to generate sufficient revenue and eventually become profitable, or if we are unable to fund our continuing losses by raising additional financing when required, our shareholders could lose all or part of their investments.

We will need additional financing to execute our business plan, which we may not be able to secure on acceptable terms, or at all.

We will require additional financing in the near and long term to fully execute our business plan. Our success depends on our ability to raise such additional financing on reasonable terms and on a timely basis. Conditions in the economy and the financial markets may make it more difficult for us to obtain necessary additional capital or financing on acceptable terms, or at all. If we cannot secure sufficient additional financing, we may be forced to forego strategic opportunities or delay, scale back or eliminate further development of our goals and objectives, operations and investments or employ internal cost savings measures.

In order for our Company to compete and grow, we must attract, recruit, retain and develop the necessary personnel who have the needed experience.

Recruiting and retaining highly qualified personnel is critical to our success. These demands may require us to hire additional personnel and will require our existing management personnel to develop additional expertise. We face intense competition for personnel. The failure to attract and retain personnel or to develop such expertise could delay or halt the development and commercialization of our product candidates. If we experience difficulties in hiring and retaining personnel in key positions, we could suffer from delays in product development, loss of customers and sales and diversion of management resources, which could adversely affect operating results. Our consultants and advisors may be employed by third parties and may have commitments under consulting or advisory contracts with third parties that may limit their availability to us.

Our Company’s success depends on the experience and skill of the board of directors, its executive officers and key employees.

In particular, our Company is dependent on Fernando Berdegué, who is the CEO, Steven Weiss, who is the Chief Geologist, and James Stonehouse, who is the COO. The loss of Fernando Berdegué, Steven Weiss and James Stonehouse or any member of the board of directors or executive officer could harm the Company’s business, financial condition, cash flow and results of operations.

Our operations and business have been affected by the COVID-19 pandemic, and may be materially and adversely impacted in the future.

Our Company faces risks related to health epidemics and other outbreaks of communicable diseases, which could significantly disrupt its operations and may materially and adversely affect its business and financial conditions. In December 2019, an outbreak of a novel strain of coronavirus (“COVID-19”) emerged and has since spread worldwide, posing public health risks that have reached pandemic proportions. In March 2020, the World Health Organization declared COVID-19 a pandemic. The COVID-19 pandemic has disrupted global supply chains and workforce participation, including our own, and created significant volatility and disruption of financial markets. A prolonged economic downturn and adverse impact to global economies or a sustained slowdown in growth or demand could have an adverse effect on the commodity prices and/or demand for metals produced at Durango’s operations.

Our business could be adversely affected by health epidemics. In late March 2020, the Mexican government declared a national health emergency due to increasing infection rates from the COVID-19 pandemic. Pursuant to the health emergency declaration, the Mexican government ordered a temporary suspension of all “non-essential” operations nationwide in Mexico, including mining operations, in order to help combat the spread of COVID-19. In response to the order, we implemented health protocols, allowed most administrative and technical services employees to work remotely, reduced mining and milling, completed project enhancements and finalized a mine plan upon reactivation of mining activities after the temporary suspension. This has been lifted since the third quarter of 2020 and mining companies are operating with basic sanitization protocols.

In late May 2020, the Mexican government designated mining an essential service and allowed mines to resume production, subject to deploying COVID-19 prevention protocols. In order to maintain social distancing and best practice protocols, public areas, such as the residential camps’ cafeterias, limited the number of personnel. Food service periods were extended with employees assigned specific times for meals. Face masks are required in offices and other public areas. Daily working shift times are staggered to limit the number of employees in changing areas and pre-shift work meetings. All individuals entering the Mine site are subject to a rapid test to screen for COVID-19 and, if an individual tests positive on the rapid test and on a secondary molecular test, the individual will be subject to quarantine protocols and removed from the mine site. In the event of an outbreak of COVID-19 on site, we could determine that a full suspension of our operations is necessary for the safety and protection of the workers. We don’t have an active mining site so we are subject to less protocols.

At any point management or the Board may determine that operations pose an increased risk to Durango’s workforce or host communities, and may further reduce operational activities and limit activities to essential care and maintenance procedures including the management of critical environmental systems. Such reductions in our operational activities could have a material adverse impact on our business, or financial condition, results of operations and cash flows. Additionally, while day-to-day operations at certain of the Company’s sites have been disrupted, the Company has incurred and will continue to incur labor costs, costs related to infrastructure, environmental management, security and other COVID-19 specific costs. Despite the cost of these efforts, the Company’s employees and contractors and host communities may be impacted by COVID-19. In addition, the continued spread of COVID-19 may impact employee health, workforce productivity, access to skilled employees and experts and increase medical costs and insurance premiums. New and changing government actions to address the COVID-19 pandemic have been occurring on a regular basis.

Management and the Board have been closely monitoring the COVID-19 pandemic and its impacts and potential impacts on our business. However, because of the rapidly changing developments with respect to the spread of COVID-19 and the unprecedented nature of the pandemic, the Company is unable to predict the extent and duration of the adverse financial impact of COVID-19 on its business, financial condition and results of operations. However, future developments could impact our assessment and result in material impairments to our long-lived assets or goodwill.

Depending on the duration and extent of the impact of COVID-19, this pandemic could materially impact the Company’s results of operations, cash flows and financial condition. The impact of this pandemic could include additional sites being placed into care and maintenance. The Company’s management and board of directors will also continue to monitor Durango’s future quarterly dividends and timing of future share buybacks as it monitors the ongoing evolution of the COVID-19 pandemic. Other impacts of changing government restriction could include additional travel restraints, more stringent product shipment restraints, delays in product refining and smelting due to restrictions or temporary closures, other supply chain disruptions and workforce interruptions, including loss of life, and reputational damage in connection with challenges or reactions to action or perceived inaction by the Company related to the COVID-19 pandemic, which could have a material adverse effect on the Company’s cash flows, earnings, results of operations and financial position.

The full extent to which COVID-19 impacts the Company will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning COVID-19 and the actions required to contain or treat its impact, among others. Investors are cautioned
that operating and financial performance may vary from the expectations of management and our previously issued financial outlook as a result of the evolving COVID-19 environment.

The Company is engaged in the mineral exploration business, which is highly speculative and has certain inherent risks which could have a negative effect on the Company.

Mineral exploration is highly speculative in nature, involves many uncertainties and risks and is frequently unsuccessful. It is performed to demonstrate the dimensions, position and mineral characteristics of mineral deposits, estimate mineral resources, assess amenability of the deposit to mining and processing scenarios and estimate potential deposit value. Once mineralization is discovered, it may take a number of years from the initial exploration phases before production is possible, during which time the potential feasibility of the project may change adversely. Substantial expenditures are required to establish additional proven and probable mineral reserves, to determine processes to extract the metals and, if required, to construct mining and processing facilities and obtain the rights to the land and resources required to develop the mining activities.

Development projects have no operating history upon which to base estimates of proven and probable mineral reserves and estimates of future operating costs. Estimates are, to a large extent, based upon the interpretation of geological data and modeling obtained from drill holes and other sampling techniques, feasibility studies that derive estimates of operating costs based upon anticipated tonnage and grades of material to be mined and processed, the configuration of the deposit, expected recovery rates of metal from the mill feed material, facility and equipment capital and operating costs, anticipated climatic conditions and other factors. As a result, actual operating costs and economic returns based upon development of proven and probable mineral reserves may differ significantly from those originally estimated. Moreover, significant decreases in actual or expected commodity prices may mean mineralization, once found, will be uneconomical to mine.

Metal and mineral prices are subject to dramatic and unpredictable fluctuations.

The market prices of precious metals and other minerals are volatile and cannot be controlled. If the prices of precious metals and other minerals drop significantly, the economic prospects of the Company’s operating mines and projects could be significantly reduced or rendered uneconomic. There is no assurance that even if commercial quantities of ore are discovered, a profitable market may exist for the sale of same. Mineral prices have fluctuated widely, particularly in recent years. The marketability of minerals is also affected by numerous other factors beyond the control of the Company, including government regulations relating to royalties, allowable production and importing and exporting of minerals, the effect of which cannot be accurately predicted.

The Company has not entered into any hedging arrangements for any of its silver or gold production but has from time to time sought arrangements to price silver and gold content of its production in advance of contractual pricing periods which can be two to three months from the time of shipment. The Company may enter into similar arrangements in the future.

Claudia Project only has estimated inferred resources identified, there are no known resources, and there are no known reserves, on any of our properties.  There is no assurance that we can establish the existence of any mineral reserve on any of our properties in commercially exploitable quantities.  Until we can do so, we cannot earn any revenues from these properties and if we do not do so we will lose all of the funds that we expend on exploration.  If we do not discover any mineral reserve in a commercially exploitable quantity, the exploration component of our business could fail.

Within the mining properties that we may potentially acquire a certain level of ownership interest, none of them contain any mineral reserve according to recognized reserve guidelines, nor can there be any assurance that we will be able to do so.  There is a high probability that the mineral properties we try to acquire do not contain any “reserves” and any funds that we spend on exploration could be lost.  Even if we do eventually discover mineral reserves on one or more of the properties, there can be no assurance that they can be developed into producing mines and extract those minerals.  Both mineral exploration and development involve a high degree of risk and few mineral properties which are explored are ultimately developed into producing mines.

The commercial viability of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral deposit, the proximity of the mineral deposit to infrastructure such as a smelter, roads and a point for shipping, government regulation and market prices.  Most of these factors will be beyond our control, and any of them could increase costs and make extraction of any identified mineral deposit unprofitable.

Joint ventures and other partnerships may expose us to risks.

We may enter into joint ventures or partnership arrangements with other parties in relation to the exploration, development and production of certain of the properties in which we have a potential interest.  Joint ventures can often require unanimous approval of the parties to the joint venture or their representatives for certain fundamental decisions such as an increase or reduction of registered capital, merger, division, dissolution, amendments of constating documents, and the pledge of joint venture assets, which means that each joint venture party may have a veto right with respect to such decisions which could lead to a deadlock in the operations of the joint venture.  Further, we may be unable to exert control over strategic decisions made in respect of such properties. Any failure of such other companies to meet their obligations to us or to third parties, or any disputes with respect to the parties’ respective rights and obligations, could have a material adverse effect on the joint ventures or their properties and therefore could have a material adverse effect on our results of operations, financial performance, cash flows and the price of the common stock.

We may be classified as an investment company in the future.  Classification as an investment company would have a material adverse effect on our business, operations, financial condition and prospects.

We are not engaged in the business of investing, reinvesting, or trading in securities, and we do not hold ourselves out as being engaged in those activities. Under the Investment Company Act of 1940, as amended, or the 1940 Act, however, a company may be deemed an investment company under Section 3(a)(1)(C) of the 1940 Act if the value of its investment securities is more than 40% of its total assets (exclusive of government securities and cash items) on a consolidated basis.

Pursuant to the Cielo Azul Shareholders Agreement, we expect to invest up to $7 million in Cielo Azul and receive a 45% interest in Cielo Azul; provided that if we invest less than $7 million we would own a proportionately lower equity interest in Cielo Azul.  Under the Shareholders Agreement, we will have the right to appoint a majority of directors upon making a total investment of $7 million and our chief executive officer is responsible for Cielo Azul’s day to day operations and the operations of the Claudia project.  We do not yet own any interest in Cielo Azul and therefore could not currently be deemed to own any investment securities.  However, we will begin to acquire equity in Cielo Azul as we continue to contribute capital to Cielo Azul.  Notwithstanding that our ownership level in Cielo Azul may not give us control over Cielo Azul, we believe that since our CEO will be responsible for the day to day operations of Cielo Azul and that we will operate the Claudia project on behalf of Cielo Azul, that the equity securities of Cielo Azul that we will acquire in the future will not be deemed to be investment securities and, therefore, we will not be deemed an investment company under the 1940 Act.

Section 3(a)(1)(C) of the 1940 Act defines an investment company as any issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of the issuer’s total assets (exclusive of U.S. Government securities and cash items) on an unconsolidated basis, which we refer to as the 40% test. Excluded from the term “investment securities,” among other things, are U.S. Government securities and securities issued by majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company set forth in Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act.

If a determination is made in the future that our ownership of a minority interest in Cielo Azul violates the 40% test, we may be classified as an investment company.  Classification as an investment company under the 1940 Act requires registration with the SEC. If an investment company fails to register, it would have to stop doing almost all business, and its contracts would become voidable. Registration is time consuming and restrictive and would require a restructuring of our operations, and we would be very constrained in the kind of business we could do as a registered investment company. Further, we would become subject to substantial regulation concerning management, operations, transactions with affiliated persons and portfolio composition, and would need to file reports under the 1940 Act regime. The cost of such compliance would result in the Company incurring substantial additional expenses, and the failure to register if required would have a materially adverse impact to conduct our operations.

Mining and mineral exploration have substantial operational risks.

Mining and mineral exploration involves many risks, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. These risks include but are not limited to:

  • major or catastrophic equipment failures;
  • mine failures and slope failures;
  • failure of tailings facilities;
  • ground fall and cave-ins;
  • deleterious elements materializing in the mined Mineral Reserves and Resources;
  • environmental hazards;
  • industrial accidents and explosions;
  • encountering unusual or unexpected geological formations;
  • labor shortages or strikes;
  • acceptance by local communities or changes in attitudes of these communities;
  • civil disobedience and protests; and
  • natural phenomena such as inclement weather conditions, floods, droughts, rockslides and earthquakes.

These occurrences could result in environmental damage and liabilities, work stoppages and delayed production, increased production costs, damage to, or destruction of, mineral properties or production facilities, personal injury or death, asset writedowns, monetary losses, loss of or suspension of permits as a result of regulatory action, reputational damage and other liabilities. The nature of these risks is such that liabilities could exceed policy limits of the Company’s insurance coverage, in which case, the Company could incur significant costs that could prevent profitable operations.

Mineral reserve and mineral resource calculations for the Claudia Project is only an estimate.

Calculations of mineral reserves for the Claudia project is only estimate and depend on geological interpretation and statistical inferences or assumptions drawn from drilling and sampling analysis, which might prove to be materially inaccurate. There is a degree of uncertainty attributable to the calculation of mineral reserves and mineral resources. Until mineral reserves and mineral resources are actually mined and processed, the quantity of metal and grades must be considered as estimates only and no assurance can be given that the indicated levels of metals will be produced. In making determinations about whether to advance any of our projects to development, we must rely upon estimated calculations for the mineral reserves and mineral resources and grades of mineralization on our properties.

Estimated mineral reserves and mineral resources may have to be recalculated based on changes in metal prices, further exploration or development activity or actual production experience. This could materially and adversely affect estimates of the volume or grade of mineralization, estimated recovery rates or other important factors that influence mineral reserves and mineral resources estimates. The extent to which mineral resources may ultimately be reclassified as mineral reserves is dependent upon the demonstration of their profitable recovery. Any material changes in volume and grades of mineralization will affect the economic viability of placing a property into production and a property’s return on capital. We cannot provide assurance that mineralization can be mined or processed profitably.

Mineral reserve and mineral resource estimates have been determined and valued based on assumed future metal prices, cut-off grades and operating costs that may prove to be inaccurate. Extended declines in the market price for silver, lead and zinc may render portions of our mineralization uneconomic and result in reduced reported volume and grades, which in turn could have a material adverse effect on our financial performance, financial position and results of operations.

In addition, inferred mineral resources have a great amount of uncertainty as to their existence and their economic and legal feasibility. You should not assume that any part of an inferred mineral resource will be upgraded to a higher category or that any of the mineral resources not already classified as mineral reserves will be reclassified as mineral reserves.

Our processing ability may be adversely impacted by certain circumstances.

A number of factors could affect our ability to process the quantities of metals that we recover and our ability to efficiently handle certain quantities of processed materials, including, but not limited to, the presence of oversized material at the crushing stage; material showing breakage characteristics different than those planned; material with grades outside of planned grade range; the presence of deleterious materials in ratios different than expected; material drier or wetter than expected, due to natural or environmental effects; and materials having viscosity or density different than expected.

The occurrence of one or more of the circumstances described above could affect our ability to process the number of tons planned, recover valuable materials, remove deleterious materials, and produce planned quantities of concentrates. In turn, this may result in lower throughput, lower recoveries, increased downtime or some combination of all of the foregoing. While issues of this nature are part of normal operations, there is no assurance that unexpected conditions may not materially and adversely affect our business, results of operations or financial condition.

Actual capital costs, operating costs, production and economic returns may differ significantly from those we have anticipated and there are no assurances that any future development activities will result in profitable mining operations.

The actual operating costs for the Claudia project will depend upon changes in the availability and prices of labor, equipment and infrastructure, variances in ore recovery and mining rates from those assumed in the mining plan, operational risks, changes in governmental regulation, including taxation, environmental, permitting and other regulations and other factors, many of which are beyond our control. Due to any of these or other factors, the operating costs may be significantly higher than we previously expected. As a result of higher capital and operating costs, production and economic returns may differ significantly from we previously expected and there are no assurances that any future development activities will result in profitable mining operations.

We may be materially and adversely affected by challenges relating to slope and stability of underground openings.

Our underground mines get deeper and our waste and tailings deposits increase in size as we continue with and expand our mining activities, presenting certain geotechnical challenges, including the possibility of failure of underground openings. If we are required to reinforce such openings or take additional actions to prevent such a failure, we could incur additional expenses, and our operations and stated mineral reserves could be negatively affected. We have taken the actions we determined to be proper in order to maintain the stability of underground openings, but additional action may be required in the future. Unexpected failures or additional requirements to prevent such failures may adversely affect our costs and expose us to health and safety and other liabilities in the event of an accident, and in turn materially and adversely affect the results of our operations and financial condition, as well as potentially have the effect of diminishing our stated mineral reserves.

The mineral industry is highly competitive.

The mining industry is very competitive. Much of our competition is from larger, established mining companies with greater liquidity, greater access to credit and other financial resources, newer or more efficient equipment, lower cost structures, more effective risk management policies and procedures and/or a greater ability than us to withstand losses. Our competitors may be able to respond more quickly to new laws or regulations or emerging technologies, or devote greater resources to the expansion or efficiency of their operations than we can. In addition, current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties. Accordingly, it is possible that new competitors or alliances among current and new competitors may emerge and gain significant market share to our detriment. We may not be able to compete successfully against current and future competitors, and any failure to do so could have a material adverse effect on our business, financial condition or results of operations.

Commodity prices may not support corporate profit.

The resource industry in general is intensely competitive and there is no assurance that, even if commercial quantities of minerals are discovered and developed, a profitable market will exist for the sale of same.  Factors beyond the control of the Company may affect the marketability of any minerals discovered.  The price of natural resources are volatile over short periods of time, and is affected by numerous factors beyond the control of the Company, including international economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates and global or regional consumption patterns, speculative activities and increased production. If the Company is unable to economically produce minerals from its projects, it would have a negative effect on the Company’s financial condition, or require the Company to cease operations altogether.

Our insurance may not provide adequate coverage.

Our business and operations are subject to a number of risks and hazards, including, but not limited to, adverse environmental conditions, industrial accidents, labor disputes, unusual or unexpected geological conditions, ground control problems, cave-ins, changes in the regulatory environment, metallurgical and other processing problems, mechanical equipment failure, facility performance problems, fires and natural phenomena such as inclement weather conditions, floods and earthquakes. These risks could result in damage to, or destruction of, our mineral properties or production facilities, personal injury or death, environmental damage, delays in exploration, mining or processing, increased production costs, asset write downs, monetary losses and legal liability.

Our property and liability insurance may not provide sufficient coverage for losses related to these or other hazards. Insurance against certain risks, including those related to environmental matters or other hazards resulting from exploration and production, is generally not available to us or to other companies within the mining industry. Our current insurance coverage may not continue to be available at economically feasible premiums, or at all. In addition, our business interruption insurance relating to our properties has long waiting periods before coverage begins. Accordingly, delays in returning to any future production could produce near-term severe impact to our business. Any losses from these events may cause us to incur significant costs that could have a material adverse effect on our financial performance, financial position and results of operations.

Our business is sensitive to nature and climate conditions.

A number of governments have introduced or are moving to introduce climate change legislation and treaties at the international, national, state/provincial and local levels. Regulations relating to emission levels (such as carbon taxes) and energy efficiency are becoming more stringent. If the current regulatory trend continues, this may result in increased costs at some or all of our business locations. In addition, the physical risks of climate change may also have an adverse effect on our operations. Extreme weather events have the potential to disrupt our exploration at our mines and may require us to make additional expenditures to mitigate the impact of such events.

Suitable infrastructure may not be available or damage to existing infrastructure may occur.

Mining, processing, development and exploration activities depend on adequate infrastructure. Reliable roads, bridges, port and/or rail transportation, power sources, water supply and access to key consumables are important determinants for capital and operating costs. The lack of availability on acceptable terms or the delay in the availability of any one or more of these items could prevent or delay exploration, development or exploitation of our projects. If adequate infrastructure is not available in a timely manner, we cannot assure you that the exploitation or development of our projects will be commenced or completed on a timely basis, or at all, or that the resulting operations will achieve the anticipated production volume, or that the construction costs and operating costs associated with the exploitation and/or development of our projects will not be higher than anticipated. In addition, extreme weather phenomena, sabotage, vandalism, government, non-governmental organization and community or other interference in the maintenance or provision of such infrastructure could adversely affect our operations and profitability.

Changes to Mexican mining taxes have occurred.

New federal Mexican laws regarding mining taxes and royalties took effect on January 1, 2014. The changes include an additional 0.5% royalty on gross revenues from precious metal production and a 7.5% special mining royalty on earnings before interest, taxes, depreciation and amortization (“EDITDA”). The new law also increases annual taxes on certain inactive exploration concessions by 50-100%. These changes may result in increased holding costs to the Company for its existing mineral concessions, and the new taxes and royalties may also materially and adversely affect the potential to define economic reserves on any Mexican properties. These changes may result in the Company’s Mexican properties being less attractive to potential optionees or joint-venture partners and the Company may reduce in size, or relinquish outright, some or all of its Mexican exploration projects.

Actual capital costs, operating costs, production and economic returns may differ significantly from those we have anticipated and there are no assurances that any future development activities will result in profitable mining operations.

The actual operating costs for the Claudia project will depend upon changes in the availability and prices of labor, equipment and infrastructure, variances in ore recovery and mining rates from those assumed in the mining plan, operational risks, changes in governmental regulation, including taxation, environmental, permitting and other regulations and other factors, many of which are beyond our control. As a result of higher capital and operating costs, production and economic returns may differ significantly from those set forth in the Claudia project report and there are no assurances that any future development activities will result in profitable mining operations.

The Company will require additional financing which could result in substantial dilution to existing shareholders.

The Company, while engaged in the business of mineral exploration, is dependent on additional financing for planned exploration programs as outlined herein.  Management anticipates being able to raise the necessary funds by means of equity financing.  The ongoing exploration of the Company’s properties is dependent upon the Company’s ability to obtain financing through the joint venturing of projects, debt financing, equity financing or other means. Such sources of financing may not be available on acceptable terms, if at all.  Failure to obtain such financing may result in delay or indefinite postponement of exploration work on the Company’s exploration properties, as well as the possible loss of its interest in such properties. Any transaction involving the issuance of previously authorized but unissued shares of common or preferred stock, or securities convertible into common stock, could result in dilution, possibly substantial, to present and prospective holders of common stock. These financings may be on terms less favorable to the Company than those obtained previously.

If we are unable to retain key members of management, our business might be harmed.

Our exploration activities and any future development and construction or mining and processing activities depend to a significant extent on the continued service and performance of our senior management team, including our Chief Executive Officer, Fernando Berdegué. We depend on a relatively small number of key officers, and we currently do not, and do not intend to, have key-person insurance for these individuals. Departures by members of our senior management could have a negative impact on our business, as we may not be able to find suitable personnel to replace departing management on a timely basis, or at all. The loss of any member of our senior management team could impair our ability to execute our business plan and could, therefore, have a material adverse effect on our business, results of operations and financial condition. In addition, the international mining industry is very active and we are facing increased competition for personnel in all disciplines and areas of operation. There is no assurance that we will be able to attract and retain personnel to sufficiently staff our development and operating teams.

We may fail to identify attractive acquisition candidates or joint ventures with strategic partners or may fail to successfully integrate acquired mineral properties or successfully manage joint ventures.

As part of our development strategy, we may acquire additional mineral properties or enter into joint ventures with strategic partners. However, there can be no assurance that we will be able to identify attractive acquisition or joint venture candidates in the future or that we will succeed at effectively managing their integration or operation. In particular, significant and increasing competition exists for mineral acquisition opportunities throughout the world. We face strong competition from other mining companies in connection with the acquisition of properties producing, or capable of producing, metals as well as in entering into joint ventures with other parties. If the expected synergies from such transactions do not materialize or if we fail to integrate them successfully into our existing business or operate them successfully with our joint venture partners, or if there are unexpected liabilities, our results of operations could be adversely affected.

Pursuant to the agreement we have with Silverstone Resources, we must jointly approve of certain major decisions involving the Claudia project, including decisions relating to the merger, amalgamation or restructuring of the Claudia project and key strategic decisions, including with respect to expansion, among others. If we are unable to obtain the consent of Silverstone Resources, we may be unable to make decisions relating to the Claudia project that we believe are beneficial for its operations, which may materially and adversely impact our results of operations and financial condition.

In connection with any future acquisitions or joint ventures, we may incur indebtedness or issue equity securities, resulting in increased interest expense or dilution of the percentage ownership of existing shareholders. Unprofitable acquisitions or joint ventures, or additional indebtedness or issuances of securities in connection with such acquisitions or joint ventures, may adversely affect the price of our common stock and negatively affect our results of operations.

We may be subject to claims and legal proceedings that could materially and adversely impact our financial position, financial performance and results of operations.

We may be subject to claims or legal proceedings covering a wide range of matters that arise in the ordinary course of business activities. These matters may result in litigation or unfavorable resolution which could materially and adversely impact our financial performance, financial position and results of operations.

Our directors may have conflicts of interest as a result of their relationships with other mining companies.

Our directors are also directors, officers and shareholders of other companies that are similarly engaged in the business of developing and exploiting natural resource properties. Consequently, there is a possibility that our directors may be in a position of conflict in the future.

The Mexican government, as well as local governments, extensively regulate mining operations, which impose significant actual and potential costs on us, and future regulation could increase those costs, delay receipt of regulatory refunds or limit our ability to produce silver and other metals.

The mining industry is subject to increasingly strict regulation by federal, state and local authorities in Mexico, including in relation to:

  • limitations on land use;
  • mine permitting and licensing requirements;
  • reclamation and restoration of properties after mining is completed;
  • management of materials generated by mining operations; and
  • storage, treatment and disposal of wastes and hazardous materials.

The liabilities and requirements associated with the laws and regulations related to these and other matters, including with respect to air emissions, water discharges and other environmental matters, may be costly and time-consuming and may restrict, delay or prevent commencement or continuation of exploration or production operations. We cannot assure you that we have been or will be at all times in compliance with all applicable laws and regulations. Failure to comply with applicable laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of cleanup and site restoration costs and liens, the issuance of injunctions to limit or cease operations, the suspension or revocation of permits or authorizations and other enforcement measures that could have the effect of limiting or preventing production from our operations. We may incur material costs and liabilities resulting from claims for damages to property or injury to persons arising from our operations. If we are pursued for sanctions, costs and liabilities in respect of these matters, our mining operations and, as a result, our financial performance, financial position and results of operations, could be materially and adversely affected.

Any new legislation or administrative regulations or new judicial interpretations or administrative enforcement of existing laws and regulations that would further regulate and tax the mining industry may also require us to change operations significantly or incur increased costs. Such changes could have a material adverse effect on our financial performance, financial position and results of operations.

The Mexican properties are subject to regulation by the Political Constitution of the Mexican United States, and are subject to various legislation in Mexico, including the Mining Law, the Federal Law of Waters, the Federal Labor Law, the Federal Law of Firearms and Explosives, the General Law on Ecological Balance and Environmental Protection and the Federal Law on Metrology Standards. Our operations at the Mexican properties also require us to obtain local authorizations and, under the Agrarian Law, to comply with the uses and customs of communities located within the properties. Mining, environmental and labor authorities may inspect our Mexican operations on a regular basis and issue various citations and orders when they believe a violation has occurred under the relevant statute.

If inspections in Mexico result in an alleged violation, we may be subject to fines, penalties or sanctions, our mining operations could be subject to temporary or extended closures, and we may be required to incur capital expenditures to re-commence our operations. Any of these actions could have a material adverse effect on our financial performance, financial position and results of operations.

In late March 2020, in response to the COVID-19 pandemic, the Mexican government ordered a temporary suspension of all “non-essential” operations nationwide in Mexico, including mining operations. In late May 2020, the Mexican government designated mining an essential service and allowed mines to resume production, subject to deploying COVID-19 prevention protocols. However, there is no certainty that the Mexican regulators will not require further limitations on, or even a full shut down of, the operations at the Cerro Los Gatos Mine in connection with COVID-19. The potential costs of complying with these COVID-19 requirements is unknown and could have a material adverse effect on us.

We are required to obtain, maintain and renew environmental, construction and mining permits, which is often a costly and time-consuming process and may ultimately not be possible.

Mining companies, including ours, need many environmental, construction and mining permits, each of which can be time-consuming and costly to obtain, maintain and renew. In connection with our current and future operations, we must obtain and maintain a number of permits that impose strict conditions, requirements and obligations, including those relating to various environmental and health and safety matters. To obtain, maintain and renew certain permits, we have been and may in the future be required to conduct environmental studies, and make associated presentations to governmental authorities, pertaining to the potential impact of our current and future operations upon the environment and to take steps to avoid or mitigate those impacts. Permit terms and conditions can impose restrictions on how we conduct our operations and limit our flexibility in developing our mineral properties. Many of our permits are subject to renewal from time to time, and applications for renewal may be denied or the renewed permits may contain more restrictive conditions than our existing permits, including those governing impacts on the environment. We may be required to obtain new permits to expand our operations, and the grant of such permits may be subject to an expansive governmental review of our operations.

We may not be successful in obtaining such permits, which could prevent us from commencing, continuing or expanding operations or otherwise adversely affect our business. Renewal of existing permits or obtaining new permits may be more difficult if we are not able to comply with our existing permits. Applications for permits, permit area expansions and permit renewals can also be subject to challenge by interested parties, which can delay or prevent receipt of needed permits. The permitting process can vary by jurisdiction in terms of its complexity and likely outcomes. The applicable laws and regulations, and the related judicial interpretations and enforcement policies, change frequently, which can make it difficult for us to obtain and renew permits and to comply with applicable requirements. Accordingly, permits required for our operations may not be issued, maintained or renewed in a timely fashion or at all, may be issued or renewed upon conditions that restrict our ability to conduct our operations economically, or may be subsequently revoked. Any such failure to obtain, maintain or renew permits, or other permitting delays or conditions, including in connection with any environmental impact analyses, could have a material adverse effect on our business, results of operations and financial condition.

We may be responsible for anti-corruption and anti-bribery law violations.

Our operations are governed by, and involve interactions with, various levels of government in foreign countries. We are required to comply with anti-corruption and anti-bribery laws, including the U.S. Foreign Corrupt Practices Act, or the FCPA, and similar laws in Mexico. These laws generally prohibit companies and company employees from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. The FCPA also requires companies to maintain accurate books and records and internal controls. Because our interests are located in Mexico, there is a risk of potential FCPA violations.

In recent years, there has been a general increase in both the frequency of enforcement and the severity of penalties under such laws, resulting in greater scrutiny and punishment to companies convicted of violating anti-corruption and anti-bribery laws. A company may be found liable for violations by not only its employees, but also by its contractors and third-party agents. Our internal procedures and programs may not always be effective in ensuring that we, our employees, contractors or third-party agents will comply strictly with all such applicable laws. If we become subject to an enforcement action or we are found to be in violation of such laws, this may have a material adverse effect on our reputation and may possibly result in significant penalties or sanctions, and may have a material adverse effect on our cash flows, financial condition or results of operations.

We may be required by human rights laws to take actions that delay our operations or the advancement of our projects.

Various international and national laws, codes, resolutions, conventions, guidelines and other materials relate to human rights (including rights with respect to health and safety and the environment surrounding our operations). Many of these materials impose obligations on government and companies to respect human rights. Some mandate that governments consult with communities surrounding our projects regarding government actions that may affect local stakeholders, including actions to approve or grant mining rights or permits. The obligations of government and private parties under the various international and national materials pertaining to human rights continue to evolve and be defined. One or more groups of people may oppose our current and future operations or further development or new development of our projects or operations. Such opposition may be directed through legal or administrative proceedings or expressed in manifestations such as protests, roadblocks or other forms of public expression against our activities, and may have a negative impact on our reputation. Opposition by such groups to our operations may require modification of, or preclude the operation or development of, our projects or may require us to enter into agreements with such groups or local governments with respect to our projects, in some cases causing considerable delays to the advancement of our projects.

Risks Related to the Company’s Securities and this Offering

Affiliates of our company, including officers, directors and existing stockholder of our company, may invest in this offering and their funds will be counted toward our achieving the minimum amount.

There is no restriction on our affiliates, including our officers, directors and existing stockholders, investing in the offering. As a result, it is possible that if we have raised some funds, but not reached the minimum amount, affiliates can contribute the balance so that there will be a closing. The minimum amount is typically intended to be a protection for investors and gives investors confidence that other investors, along with them, are sufficiently interested in the offering and our company and its prospects to make an investment of at least the minimum amount. By permitting affiliates to invest in the offering and make up any shortfall between what non-affiliate investors have invested and the minimum amount, this protection is largely eliminated. Investors should be aware that no funds other than their own and those of affiliates investing along with them, may be invested in this offering.

We intend to use some of the proceeds from the offering for unspecified working capital.

This means that we have ultimate discretion to use this portion of the proceeds as we see fit and have chosen not to set forth any specific uses for you to evaluate. The net proceeds from this offering will be used for the purposes, which our management deems to be in our best interests in order to address changed circumstances or opportunities. As a result of the foregoing, our success will be substantially dependent upon our discretion and judgment with respect to application and allocation of the net proceeds of this offering. We may choose to use the proceeds in a manner that you do not agree with and you will have no recourse. A use of proceeds that does not further our business and goals could harm our company and its operations and ultimately cause you to lose all or a portion of your investment.

We are not subject to Sarbanes-Oxley regulations and lack the financial controls and safeguards required of public companies.

We do not have the internal infrastructure necessary, and are not required, to complete an attestation about our financial controls that would be required under Section 404 of the Sarbanes-Oxley Act of 2002. There can be no assurance that there are no significant deficiencies or material weaknesses in the quality of our financial controls. We expect to incur additional expenses and diversion of management’s time if and when it becomes necessary to perform the system and process evaluation, testing and remediation required in order to comply with the management certification and auditor attestation requirements.

The securities being sold in this offering will not be freely tradable until one year from the initial purchase date. Although our securities may be tradable under federal securities law, state securities regulations may apply, and each investor should consult with his or her attorney.

You should be aware of the long-term nature of this investment. There is not now and likely will not be a public market for our securities. Because our securities have not been registered under the Securities Act or under the securities laws of any state or non-United States jurisdiction, our securities have transfer restrictions and cannot be resold in the United States except pursuant to Rule 501 of Regulation CF. It is not currently contemplated that registration under the Securities Act or other securities laws will be effected. Limitations on the transfer of the securities may also adversely affect the price that you might be able to obtain for our securities in a private sale. Investors should be aware of the long-term nature of their investment in the Company. Each investor in this offering will be required to represent that it is purchasing the securities for its own account, for investment purposes and not with a view to resale or distribution thereof.

Neither the offering nor the securities have been registered under federal or state securities laws, leading to an absence of certain regulation applicable to us.

No governmental agency has reviewed or passed upon this offering, our company or any Securities of our company. We also have relied on exemptions from securities registration requirements under applicable state securities laws. Investors, therefore, will not receive any of the benefits that such registration would otherwise provide. Prospective investors must therefore assess the adequacy of disclosure and the fairness of the terms of this offering on their own or in conjunction with their personal advisors.

There is no guarantee of return on investment.

There is no assurance that an investor will realize a return on its investment or that it will not lose its entire investment. For this reason, each investor should read the Form C and all Exhibits carefully and should consult with its own attorney and business advisor prior to making any investment decision.

We have the right to extend the offering deadline.

We may extend the offering deadline beyond what is currently stated herein. This means that your investment may continue to be held in escrow while we attempt to raise the minimum amount even after the offering deadline stated in this offering statement is reached. Your investment will not be accruing interest during this time and will simply be held until such time as the new offering deadline is reached without our company receiving the minimum amount, at which time committed funds will become immediately available for withdrawal from the investor’s brokerage account maintained with the Intermediary without interest or deduction, or until we receive the minimum amount, at which time it will be released to us to be used as set forth herein. Upon or shortly after release of such funds to us, the securities will be issued and distributed to you.

Your ownership of the shares will be subject to dilution.

If we conduct subsequent offerings of securities, issue shares pursuant to a compensation or distribution reinvestment plan or otherwise issues additional shares, investors who purchase securities in this offering who do not participate in those other stock issuances will experience dilution in their percentage ownership of our company’s outstanding shares. Furthermore, shareholders may experience a dilution in the value of their underlying shares depending on the terms and pricing of any future share issuances (including the underlying shares being sold in this offering) and the value of our assets at the time of issuance.

Management has discretion over proceeds of this offering.

We expect to use the net proceeds of this offering, over time, for general marketing and advertising, leasing costs, debt repayment and general working capital.  However, we have no current specific plans for the net proceeds of this offering other than as outlined in the use of proceeds section of this offering statement.  As a result, our management will have the discretion to allocate the net proceeds to uses that investors may not deem desirable.  There can be no assurance that the net proceeds can or will be invested to yield a significant return.

There can be no assurance that we will ever provide liquidity to investors through either a sale of our company or a registration of the securities.

There can be no assurance that any form of merger, combination, or sale of our company will take place, or that any merger, combination, or sale would provide liquidity for investors. Furthermore, we may be unable to register the securities for resale by investors for legal, commercial, regulatory, market-related or other reasons. In the event that we are unable to effect a registration, investors could be unable to sell their securities unless an exemption from registration is available.

The offering price in this offering may not represent the value of our securities.

The price of the securities being sold in this offering has been determined based on a number of factors and does not necessarily bear any relationship to our book value, assets, operating results or any other established criteria of value. Prices for our securities may not be indicative of the fair market value of our securities now or in the future.

Company Information & FAQ’s

FERNANDO BERDEGUÉ – Chairman & CEO

Fernando Berdegué has extensive experience in the mining sector. He recently played in a vital role in acquiring and exploring the historic Comstock Lode property in Nevada. Prior to this, he was the founder of the DSPC private equity fund in South Africa. Fernando is also co-founder of Blue Marlin Capital, a venture capital entity focused on the natural resources space.

He holds a degree in Finance with a specialization in corporate law (ITESM), and a Masters in Management (IE Business School), and holds certificates in mining studies (UBC) and advanced corporate finance (LSE).

SteveWeiss4

STEVE WEISS PhD CPG – Chief Geologist

Steve has worked as a minerals exploration geologist in the mining industry since 1979, serving in roles from generative to senior project management, and has enjoyed much success in Mexico. In 2003, working with Glamis Gold, Steve led exploration at the El Sauzal gold mine and in the surrounding Sierra Madre Occidental.

He then worked for Goldcorp as Mexico Exploration Manager, and led the team that more than doubled the mineral resources at the Camino Rojo deposit.

Since departing Goldcorp in 2013, Steve has provided independent exploration consulting services for companies with projects in the US and Mexico.

Stonhouse

JAMES STONEHOUSE – COO

James Stonehouse is a geologist with comprehensive experience in the exploration and development of gold and silver mines. His career spans forty-five years, twenty of them at the level of Vice President.

He has led exploration teams with track records of discovery and value creation in both greenfield and brownfield environments, working for companies including Bunker Hill Mining Corp (TSX:BNKR) and Americas Gold and Silver Corp (NYSE:USAS).

In these roles he has a long track record of successful project management, successfully directing simultaneous operations across the continent, including Latin America.

Holds both a BA and an MA in Geology from Dartmouth College, New Hampshire.

Mazon

GUSTAVO MASON – Executive Director for Business Development

Mr. Mazon is acting CEO for the Mazon family group. He is an experienced executive and successful entrepreneur with a strong focus in growth. He is an expert in good management practices, control implementation and corporate governance. He has had exposure in a wide variety of industries and engaged in large scale infrastructure projects; from energy to agriculture, real estate and mining.

He is Co-Founder in Tonogold Resources and Chairman of the Board for Ranchero Gold. He also acts as executive director for business development at Minera Puma, a private mining prospector owned by the Mazon family group.

Zubick

SEAN ZUBICK – Non-Executive Director

From 2013 to 2020,  Mr. Zubick grew a $1M personal investment portfolio into one of Canada’s leading resource focused merchant banks, Palisade Global Investments.

He is also the co-founder and principal investor of New Found Gold Corp TSXV:NFG): A rocket ship that’s gone from a standing stop to a $1b market cap in under five years. The company specializes in initial geological theory and staking through to discovery (intersecting at 19m of 92.86 g/t au).

Auringer2

CRAIG AURINGER

Craig Auringer is a venture capitalist of over two decades of experience, and a founding partner at London-based investment firm Bonsai Capital Ltd.

As a corporate development consultant both independently and with Bonsai Capital, Craig has worked across a wide variety of sectors such as mining, oil and gas in Canada, the US and Mexico. His familiarity with the domestic mining market in Mexico will be a huge asset to Durango Gold.

Craig has also worked in the health and biotech sectors, focusing his efforts on funding and advising companies searching for treatments for cancer and Alzheimer’s. Over his career, he has helped raise more than $150 million for these businesses in both public and private markets.

Bauer

RON BAUER – Director

Ron Bauer is a Venture Capitalist and Principal Investor with over 20 years’ experience, focusing on the natural resources and life sciences sectors.

Ron was the co-founder of Turkana Energy, which merged with Africa Oil (TSX:AOI) in July 2009. Africa Oil grew to become one of Canada’s most successful oil and gas exploration companies after discovering one of Africa’s largest oil sources this century. Africa Oil grew to a market cap of more than $3 billion at its peak, having raised over $1 billion of equity to develop the project on Turkana’s concession.

He has been a principal and founding investor in many publicly-listed biotech companies that include 180 Life Sciences (NASDAQ: ATNF), Hemogenyx Pharmaceuticals (LSE: HEMO), and Cognetivity Neurosciences (CSE: CGN).

Ron holds an MBA from the University of Cambridge and is currently enrolled in a Doctorate of Business Administration program at Durham University.

Funk

CHARLES FUNK – Technical Advisor / Advisory Board

Mr. Funk has over 14 years of industry experience for major and junior mining and companies including Newcrest Mining and Evrim Resources. Charles is a geologist specializing in business development for gold, silver and copper projects from early stage to production. Charles has led or supported multiple deposit discoveries in Mexico and Australia and contributed to over $60 million dollars in capital raisings. Charles serves as CEO of Heliostar Metals and VP exploration at Viszla Resources. His most notable recent success has been at the Panuco Project in Mexico optioned to Silverstone Resources.

Kofman

ALFREDO M. KOFMAN

Fred Kofman is an executive coach and advisor on leadership and culture. PhD. in Economics from the University of California, Berkeley. He is founder and president of the Conscious Business Center. 

Fred founded his global consulting company, Axialent, which delivered leadership programs to more than 15,000 executives around the world. In 2018, Fred accepted a position as Vice President at Google in charge of advising the CEO’s office on leadership and culture. And during the same year he partnered with Tecnológico de Monterrey to create the Center of Conscious Leadership. Previously, he was Vice President of executive development at LinkedIn. Fred is the author of the trilogy Metamanagement (2001), Conscious Business (2006) and The Meaning Revolution (2018).

The Comstock Lode was thought to be finished and Fernando and the other founding partners of Tonogold managed to do a regional consolidation of the district, taking the major operator out on a creeping takeover for their land package and processing plant all based on an economic theory.

A multidisciplinary approach was utilized where Fernando proposed the utilization of a Historian, Greg Crouch, the Author of the Bonanza King to help developing drilling targets along the Historic Comstock Lode. Today, there is a 30,000 meter program active in the district that has been discovering new structures and resources.

Steve was instrumental in the development of El Sauzal just after discovery was made when at Glamis and then they were taken over by Gold Corp, at that time already a major producer. Steve then was in charge of developing Camino Rojo and DOUBLED its resources.

James expertise is in developing mines in old districts, most notoriously in the case of San Rafael at the Nuestra Señora and Guadalupe de reyes Cosala district and Tomy with Bolivar Goldfields in Venezuela.

James has been involved in 7 different new mine developments.

Denis LaViolette discovered the Queensway deposit in 2020 and is probably the greatest discovery of the decade in Canada. He leveraged his target on Gold Spot´s machine learning which he created with a team of scientists.

Yes.

Yes, Glamis with Gold Corp and James was part of the Gran Colombia group with Bolivar Goldfields.

The management team is formed by a group of successful professionals with proven track records in the mining space.

The combination of these individuals provides the company a strong exploration expertise for discovery and resources development all the way to feasibility, operations and a strong presence in Mexico.

The team is multigenerational, combining young and energetic entrepreneurs already with great achievements under their belts together with well seasoned experts that have decades of experience providing solutions for mining projects.

We are the precious metal exploration company with the best presence in Mexico and we will to take advantage of that by leveraging on our culture, network and property pipeline in order to get the best commercial terms that allows us to position the company at an advantageous position towards discovering the next lecagy mine of Mexico and developing resources in the process to increase shareholder value organically and protect it with a solid rising floor.

Our pipeline is formed by properties that have not been exposed to the public markets and all have been underexplored and mismanaged.

Our primary goal is to discover a “world-class deposit”–  a discovery that would be so substantial, we create a dominant company for decades to come

We have a fantastic team of industry veterans who know this business well, know the right people in Mexico, and have a proven track record of success.

We plan on leveraging our culture, network and property pipeline in order to get the best commercial terms that allows us to position the company at an advantageous position towards discovering the next legacy mine of Mexico and developing resources in the process to increase shareholder value organically and protect it with a solid rising floor. 

  • Establish solid drilling targets by Q2 2021 and commence drilling at the Claudia project.

  • Make a discovery in the property that confirms the lateral extension of currently known mineralization in the order of miles and vertical extension in the order of hundreds of feet.

  • To make a discovery in the property of a wider type mineralization such as stockworks that allows bulk mining.

  • That an extremely successful first drilling campaign allows ramping up drilling operations immediately and so we do not have to space the two year drilling plan into two different campaigns.

  • To have a mineral base projection in the order of millions of tons at economic grades to start estimating resources in Q4 2021 at the Claudia project.

  • To be in a position to close neighboring assets of interest that may generate synergies with Claudia.

Our “Shared Values” philosophy is at the core of our business. It not only gives us a competitive advantage, but it’s the right way to do business.

Instead of thoughtlessly extracting resources with no care for the environment… we choose to create a network of people and an ecosystem from local communities through education that support the objective of the company… and that will increase the probabilities of exploration success while improving the regional general state of wellbeing.

We add value to the environment in order to extract a greater shareholder value.

Ready to invest in Durango Gold?

Durango-goldarrow-120h

Not at this time.

Yes. To the highest level if needed.

On February 9. 2021, Durango entered into an agreement (the “Cielo Azul Shareholders Agreement”) between it and the shareholders of Cielo Azul Resources, S.A. de C.V. (“Cielo Azul”).  

Pursuant to the Cielo Azul Shareholders Agreement, Silverstone Resources, S.A. de C.V. (“Silverstone”) agreed to contribute 32 mining concessions relating to the Claudia project to Cielo Azul.  The Claudia property consists of 36 contiguous mining concessions covering approximately 6,400 hectares, or about 14,000 acres in the El Papanton Mining District, close to 135km from the city of Durango.

On April 9, 2021, Silverstone transferred the mining concessions to Cielo Azul and Cielo such that Cielo Azul now owns 32 concessions in the Claudia project. Durango Gold has agreed to contribute a total of $7 million to Cielo Azul in exchange for a 45% equity interest in Cielo Azul.  We must make this contribution on or before February 9, 2023 (within two years of the effective date of the Cielo Azul Shareholders Agreement); provided, however, that we must contribute (1) $1 million by June 8, 2021 (within 60 days following Silverstone’s contribution of the aforementioned mining concessions), (2) $4 million on or before February 8, 2022 (during the first 12 months of the term of the Cielo Azul Shareholders Agreement), and (3) $2 million on or before February 9, 2023 (within two years of the effective date of the Cielo Azul Shareholders Agreement).  Notwithstanding the foregoing, the minimum amount that we must contribute to Cielo Azul under the Cielo Azul Shareholders Agreement is $5 million.  If we do not satisfy this minimum contribution on or before February 8, 2022, we will receive a pro rata portion of the equity in Cielo Azul, but would be in breach of contract and could lose our entire investment in the Claudia Project and Cielo Azul.  Although we will ultimately own only 45% of Cielo Azul, the Cielo Azul Shareholders Agreement provides our company with the right, after we contribute $7 million, to appoint members to the board of directors and gives our Chief Executive Officer, Fernando Berdegué de Cima, the right to control the operation of  Cielo Azul and the Claudia Project. 

The Cielo Azul Shareholders Agreement also gives Silverstone the exclusive right to exploit 130,000 tons of minerals located in the Tiro Agulareña area of the Claudia Project.

As of today, we have not obtained the full ownership of any concessions. We have a right to purchase them as discussed in the above section.

The Claudia property consists of 36 mining concessions that total 6,435.4 hectares and are registered with the Mexican mining authority, the Direccíon General de Minas (“DGM”). The total area of the property is 6,437 hectares. Details of the individual concession names, title numbers, claim area and expiration dates are listed in Appendix A as extracted from the January 18, 2018 title opinion by Sr. Rafael Cereceres Ronquillo and information from Tonogold dated August 20, 2018

The holding company “Durango Gold Corp” is registered as a Nevada corporation in the US; the country headquarters has been established in Mazatlan (Int. Airport and connectivity) 5 hours drive from the project and with an onsite camp that will be built starting March. Geos will be renting accommodation nearby the project until then (one month).

The city of Santiago Papasquiaro in the state of Durango is a very well known and established mining community. From there, there is access to the Papanton Mining district where the Claudia property is, Topia, Tepehuanes and San Miguel del Cantil 135km further east. Promontorio is another district south east about 90km.

Fresnillo at La Cienega Mine whom is a subsidiary of Peñoles (Mexican precious metals major), Great Panther at Topia mine, La Sorpresa mine from IMSL (private), Telson Resources, First Majestic with San Dimas (Tayoltita mine), Chesapeake with Metates, etc.

All of the above, its elephant country, there is potential for further discoveries of world-class deposits (major scale).

Yes, the Cienega, Topia and Bacis.

In the other of Millions of gold and Silver ounces plus Millions of Lead and Zinc pounds. Topia and la Cienega are polymetallic mines.

This question does not have a straightforward answer because as we know every deposit is unique in every way; geometry, grades, mineralization, location, tonnage, etc.

We have identified that a producer at the high cost percentile (worst case scenario) running an 800 tpd agitated leach plant with a cut and fill mining operation on narrow veins (1m width) has an All-in-sustaining-cost (AISC) per ounce of about $1100.

FYI- This particular producer had to stop production in 2019 (not named in the producers list) because of their marginal operation. With this price, they will be back on track sooner than later. Low case may be something around $850 AISC but it’s relative.

The Claudia Project

6,400 hectares or about 14,000 acres, yes they are contiguous (claim block map attached).

Yes, it has good access with a road crossing through the north portion of the property, access to water and power runs through the road all the way to Topia.

Early-stage with a little over 6,000 meters. The challenge has been the quality of the data and access to all of the data because of poor data management practices from previous owners. Data review is still work in progress to see If we can get new information from surface sampling assays and improve the drilling tables.

Yes, there is a plant site built in the 80s for a small-scale operation of which we don’t know much about.

In the 90s Bacis (Mexican private small-scale mining company) sank a 90m vertical shaft and developed 3 levels for a total of about 3,000 mts north and south.

Channel sampling was conducted on mineralization on three levels and we have some of the results. Some of the drilling data we have as well.

======

Exploration History Pre-1991

The Claudia property includes nearly all of the historic El Papantón mining district (Figure 6.1), where at least nine small mines of un-recorded and likely small production were operated and abandoned prior to the early 1990s. It is not known when mining began in the district, but for some time between about 1900 and the 1960s the mines of the district were owned by José Ramón Valdes (Luevano et al., 2002).

1991 – 2003 Exploration by Compania Minera Bacis

In 1991, Compania Minera Bacis, S.A. de C.V. (“Bacis”) optioned the Claudia property. Bacis drilled 33 diamond-core holes for a total of 3,126.70m in 1994, testing the Aguilareña – Tres Reyes vein system (16 holes), the Guadalupana vein near Mina Vieja (6 holes), and the area of the Providencia mine (5 holes), but data for some holes has been lost (Christopher, 2005). 

Bacis acquired the property after the drilling and, in 1994, completed 3,057m of drifts, raises, and the 94m Aguilareña shaft (Christopher, 2005). Drilling carried out by Bacis is summarized in Section 10.0.

2004 – 2007 Capstone and Silverstone Exploration

Capstone Mining Corp. (“Capstone”) optioned the Claudia property from Bacis in January of 2004. The property ownership was transferred from Bacis to Silverstone S.A. de C.V., a Mexican subsidiary of Capstone, under the terms of a restated option agreement dated November 30, 2005.

Capstone and then Silverstone carried out surface mapping and sampling between 2004 and 2007. The surface traces of portions of the major veins of the property were delineated and sampled, including veins in the El Cristo area and the Lizeth area. According to Christopher (2005), 757 rock samples were collected by Capstone geologists during May through October of 2004 and analyzed by ALS Chemex, but the sample data is not available or has been lost.

A map of the central 1/3rd of the property, dated 2007, a sketch map of the Lizeth area, and a sketch map of the Aguilareña area comprise the only surface geologic data recovered from the historical exploration as of the date of this report.

Silverstone drilled 10 core holes in 2007 in the Aguilareña area for a total of 1,945m. Silverstone’s drilling results are summarized in Section 10.0. MDA has no records of any further work conducted on the property by Silverstone following completion of the 2007 drilling.

In June 2009 Silverstone was purchased by Silver Wheaton Corp.

Late in 2009, Silver Wheaton sold Silverstone to a group of private Mexican investors.

MDA is not aware of any work done on the Claudia property from 2009 through 2017 and infers the property was idle. Ownership of 32 of the claims was retained by Silverstone.

====

Up until now, very little of the exploration work was focused on those spots. Most of the work was done under the old artisanal spots.

The first main phase of exploration took place in 1991 by Minera Basis, a cashflow focused operation that went to the old shaft, deepened it to 94m and started underground sampling they could put into production immediately.

They didn’t take the time to explore and test the wider zones of possibilities. They focused on the old workings.

They tried to develop a vein 300-400m very close to the surface. We are looking for something that is 1000m long and extends down 300-400m and has an average width of 3m.

If we can find something like that with a grade of 10g/ton, we are looking at something that could contain on the order of 700-800,000 oz of gold and maybe 7m ounces of silver.

The drilling that was done there already shows there are minerals in the small area.

We’re going to expand the drilling to step out and extend the gold/silver from the small area to the big area.

One of the things we don’t know is what shape the line is.

What we have to do on the ground is figure out which direction the line is.

This involves making maps, taking samples at the surface, and finding out where it gets hotter and cooler in terms of gold/sliver values.

If this discovery exists, there is no guarantee it’s there. We have clues from the old work that it’s there, but it’s speculative.

We’re going to drill a bunch of holes and it will cost a bunch of money. It might work, it might not.

In 2021 Durango Gold completed a technical report on the Claudia Project which showed the following historic resource estimate:

Fed-April: Mapping, systematic sampling and target definition.

  • May or June until Sept: Drilling 10,000 meters (30,000+ feet).
  • Sept-Dec: Interpretation or follow-up drilling based on results.
  • Budget: $3.5M

This is not a question that can be answered at this moment but based on current information, we expect to be at a lower AISC than the example we are referring to ($1,100 cost). We are seeing higher grades and wider zones. But again, it’s too early to establish this.

Yes, there is potential for a regional consolidation.

The veins consist mainly of finely-banded, crustiform to cockade textured and locally drusy, clear to light grey quartz, with small amounts of calcite and minor chlorite in places.

Zones of silicified and vein-cemented, brecciated wall-rocks ± fragments of earlier-formed quartz vein material are present within and/or as borders to the veins in places.

Textures characteristic of bladed calcite replaced by quartz, and quartz-after-calcite boxwork textures, are locally present in the veins.

Much of the quartz is very fine-grained but varies to medium-grained and comb-textured locally.

Petrographic studies indicate the veins, where unoxidized and mineralized, contain small quantities of pyrite ± lesser amounts of native gold, electrum, sphalerite, argentite, native silver, galena, and chalcopyrite (Luevano Pinedo et al., 2002 and references cited therein).

Presently known gold-silver mineralization in the Claudia project is located in dominantly quartz-filled veins with geological, textural, and mineralogical characteristics typical of the low-sulfidation class of volcanic-rock hosted, epithermal gold-silver deposits.

At Claudia these include fault-controlled fissure veins, vein-breccias, sheeted veins, and stockworks.

Limited fluid-inclusion homogenization temperatures of 195°C to 204°C presented by Luevano Pinedo et al. (2002) are consistent with vein formation within the range of temperatures attributed to low-sulfidation epithermal deposits.

Based upon the nature of the veins, the alteration and vein mineralogy, and the geologic setting, the gold and silver mineralization at the Claudia project is best interpreted in the context of the volcanic-hosted, low- sulfidation type of epithermal model.

This model was first developed by Lindgren (1900) based on his first-hand studies of the veins and altered wallrocks in the mines of the De Lamar Silver City district in southwestern Idaho.

The epithermal deposit model was first developed by Lindgren (1900) based on his first-hand studies of the veins and altered wallrocks in the mines of the De Lamar Silver City district in southwestern Idaho.
Since then, the model has been expanded and refined to encompass a great variety of mineral deposits worldwide (Simmons et al. 2005).

Epithermal deposits are important sources of gold and silver that
form at <1.5km depth and <300°C in high-temperature, mainly subaerial hydrothermal systems.

Such systems commonly develop in association with calc-alkalic to alkalic magmatism. Precious metal mineralization develops in zones of high paleo permeability. Veins with steep dips are common and these tend to host high-grade mineralization (Simmons et al., 2005).

MDA believes that the volcanic-hosted, low-sulfidation type of epithermal model is the proper geological model to apply for exploring within the Claudia project area.

All of the drilling summarized in this section was completed by historical operators during 1994 and 2007.

The information presented in this section of the report is derived from multiple sources, as cited. The author has reviewed this information and believes this summary accurately represents drilling done at the Claudia project.

Maps and other records indicate a total of 6,293m have been drilled in 40 diamond-core holes as summarized in Table 10.1. According to Christopher (2005), Bacis drilled 33 core holes, but presently available records account for only 30 holes drilled (Table 10.1).

MDA has constructed a drilling database with the information provided. Assays were found in electronic files for all 10 of the Silverstone drill holes. There are no records of the Bacis drilling assays with down-hole depths and sample numbers that MDA is aware of.

Records of at least some of the Bacis drilling assays were found on a copy of a one-page print-out with hole numbers, collar information, and interval lengths with gold and silver values, but interval depths are missing from all but three of the 30 holes. For the 27 holes missing interval depths, it is not known if the listed assays represent a single sample from a single interval, or averages of multiple samples taken from multiple intervals.

Similar information appears as annotations next to the Bacis hole traces on Silverstone plan maps and on longitudinal sections in Christopher (2005), but the down-hole depths of the noted intervals are not shown. Therefore, the MDA database contains only the 10 holes drilled by Silverstone, for which sample and assay data is available.

Minimum $7M USD, but in case there are regional consolidation opportunities or successful drill results, we will want to ramp up. The F&F seed round, the Reg CF and the Reg A +.

$17K Month. It will scale up based on budget. CEO and Chief Geologist are not taking cash salaries.

$15K for COO at the moment. The rest is all stock.

Yes, a very successful one.

The founders, directors, and employees, inclusive of friends and family, have invested ~$717,000.

No, just people that represent institutions and institutional investment.

We are targeting a 3-10X return from this current round’s valuation.

Confirmation drill holes on old workings, exploration success on new drill targets and add additional projects.

The plan is to take the company public within the next 12 months.

List the top seven reasons why someone would want to invest in your company:

A multigenerational team of people with great track records and values.

The project holds all the characteristics of a great exploration asset that could become a commercial operation.

Very strong presence in Mexico

Unique project pipeline to expand

A company DNA for innovation with the mindset for using technologies such as Gold Spot Discovery Machine Learning and test exploration ideas (Think out of the box) that will increase the probabilities of making the discovery.

The company is also committed to expand on its Shared Value strategy which focuses on adding value to the environment in order to increase profitability. In this case, in the form of better exploration, resource development and social licensing.

We will be cost efficient all the way and invest most of the money into the ground for shareholder value.

Invest in Durango Gold Now

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communication forum

  • John Hwung

    Hi Durango Gold Team,

    I read the following in the FAQ section:
    1) Q: What should an investor expect in return for their investment?
    A: We are targeting a 3-10X return from this current round’s valuation.
    2) Q: What is the exit strategy?
    A: The plan is to take the company public within the next 12 months.

    Do the above two Q&A’s mean that there is a potential of 3-12X return when Durango Gold goes public in the next 12 months? (Of course, this is only a projection and cannot be guaranteed)

    Thank you!
    John Hwung

    • Investor Relations at Durango Gold

      Hi John,

      Thank you for your question.

      We are planning to go public in the next 12 months and the potential is 3-10X return after the IPO. Upon being public in the US capital markets, we are expecting reasonable trading volume.

      Value creating will derive primarily from drilling results and other project exploration results.

      We hope we have answered your questions,

      Durango Gold Team

  • Terry Foust

    hello Durango Gold Team . terry here, maybe i have missed the question . but how much are you asking for an investment into your company?

  • Investor Relations at Durango Gold

    Hi Terry,

    Great question. The minimum investment is $480 and the price per share is $1.60.

    Let us know if you have any other questions,

    Durango Gold Team

  • Edward Jim

    Have investments in GMTNF , NFGFF & SILV . If I move & Investment over, looks like better use for return or Capital correct? ED

    • Investor Relations at Durango Gold

      Hi Edward,

      Thank you for your question.

      Unfortunately, we are not allowed by law to give financial advice but we are very excited about Durango’s future.

      Let us know if you have any other questions,

      Durango Gold Team

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