We secured our primary mining contract with Grupo Transismico on May 17. This agreement allows Grupo Transismico to mine the OaxacaStone property, and shields us from any liability related to the mining operation. Marcos Hernandez, the principal of Grupo Transisimico, is also the government contractor responsible for the construction of the "K" rail line running south from the Trans-Ismico Rail Line to Guatemala. This means that he is both Buyer and Mining Company. To date, they have invested over $250,000 in equipment, infastructure, and labor in order to begin the mining.
Having begun even before the agreement was finalized, by mid-May, a 4-acre staging area and roads to the mining site had been cleared for transport trucks to pick up materials. We have added an office and weigh station to scan each truckload as it leaves with material.
Nearly 12 meters of dirt and gravel need to be removed before we can access the basalt rock. Previously, this material removal was going to be an expense, however, Grupo Transismico has agreed to purchase this material for 130 pesos per truckload (7 m3/truck). While that is only about $7 USD per truck, it is a revenue stream, instead of an expense.
Our contract with Grupo Transismico is:
Dirt & Gravel = 130 pesos/truckload (approximately $7.22*)
Basalt Ballast = 210 pesos/truckload (approximately $11.67*)
*using 18 pesos:1usd exchange rate
Purchase orders will be for 15,000 m3 at a time for at least 500,000 m3 of dirt and gravel. Another 1,000,000 m3 are needed of basalt ballast for the rail.
On May 20, dirt and gravel from approximately 5 acres had been stockpiled and the first 60 trucks came to pick up and transport dirt and gravel to the construction site just 14 km away.
Unfortunately, due to construction delays at the railroad site, transportation of the materials were halted immediately. The road and staging area at the consruction site was widened to allow for 2-way traffic, staging, and truck movements. This caused a 3 week delay, which along with the Mexican elections, put the rail project further behind schedule. as a result, Grupo Transismico has contracted with another company to double the number of trucks and operate 7 days per week to catch up on the project timeline.
 While operations began again last week, unusually heavy rains turned the dirt roads into mud and forced further delays. We are expecting that mining and logistics will resume in full over the next few weeks as the weather permits. Â
Once the dirt and gravel are removed, and we are able to access the basalt, Grupo Transismico will install the crushing machines. This will allow us to begin stockpiling basalt rock. We are projecting that revenue will accelerate as we already have buyers waiting for basalt ballast for other rail projects. Once mining activities resume we intend to re-project our mining operation revenues.
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