News Summary
The most recent news release dated December 19, 2025, reports high-grade diamond drilling results from the Santiago Deposit at the Tahuehueto Mine in Durango, Mexico. Key results from the 26-hole underground program (6,200 metres completed) include hole DDH25-SGO-08, which intersected 4.1 metres of 8.47 g/t gold, and DDH25-SGO-06, which returned 5.7 metres of 6.1 g/t gold. Management confirmed that mineralization has been extended by over 100 metres to the west and remains open. Every drillhole in this season’s program at Santiago intersected mineralized veins, reinforcing the interpretation that Santiago is a significant component of the broader Perdido vein system.
Material Impact
– Resource Expansion: The extension of high-grade mineralization by 100 metres to the west is a material positive for the long-term mine life of Tahuehueto. These grades (up to 12.2 g/t gold over 2.4m as per headline) significantly exceed current average reserve grades.
– Continuity: The intersection of mineralization in every hole reduces geological risk for the upcoming Mineral Resource Estimate (MRE) update.
– Strategic Context: While the drilling is positive, it must be weighed against the Q3 2025 financial report (Nov 18, 2025), which saw a drastic reduction in 2025 Free Cash Flow guidance—from an initial $30-40 million down to $5-10 million. The positive drilling results do not alleviate the immediate pressure of reduced cash generation and increased capital expenditures ($29.4M vs $27.4M planned).
– Operational Resilience: The news confirms that despite an environmental inspection by PROFEPA in October 2025 that led to a temporary closure of a 0.3-hectare legacy area, exploration and primary mining operations remain unaffected.
Catalysts
– Updated Mineral Resource Estimate: An update for Tahuehueto is expected to incorporate these 2025 drilling results.
– Production Ramping: Monitoring if Campo Morado reaches the 2,400 tpd target and if Tahuehueto maintains throughput above 800 tpd.
– Cash Flow Execution: Verification of whether the revised $5-10 million free cash flow guidance is met by year-end 2025.
– Debt Repayment: Progress on the stated goal of being debt-free by mid-2026.
Materiality Conclusion
The Dec 19 news is Material – Positive because it demonstrates high-grade growth potential at the company’s flagship asset. However, the analyst must remain critical of the fact that exploration success is currently being overshadowed by a 75% cut in annual cash flow guidance and a transition into a negative working capital position.
