As Sketch accurately predicted a few weeks ago upon hearing of Penoles unprecedented IPO: They are going for more silver. So lo and behold that is now exactly the case. With Penoles being neighbors with mega-deposit ECU, I just wonder who they might have their eye on for a joint venture???

Well done Sketch - VHF

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Penoles Silver Unit May Use IPO Proceeds for Deposits

By Brett Foley

May 2 (Bloomberg) -- Industrias Penoles SAB, the world's largest primary silver producer, may use some proceeds from a share sale next week in London to buy companies that have deposits in Mexico.

Penoles's Fresnillo Ltd. unit plans to complete an initial public offering to raise more than $900 million and start trading in London on May 9. About $150 million of the money raised will be spent on expansions and acquisitions, Chief Executive Officer Jaime Lomelin said. The rest will be used to pay debt, he said.

``Our aim is to buy properties that can be upgraded,'' Lomelin said in an April 29 interview in London, where he was meeting potential investors. ``We think we have the technology to develop some properties that are not well operated.''

Fresnillo operates the Mexican mine of the same name, the world's largest with silver as its primary product, which was first excavated by the Spanish in the 1550s. It plans to double output after silver prices quadrupled in five years, outpacing gold and base metals including aluminum and zinc.

That expansion will come from the company's existing projects and doesn't take into account acquisitions, Lomelin said. There are as many as 300 so-called junior mining companies exploring for precious metals in Mexico, he said.

``Their intention is to find and then sell what they find to let others develop and open the mine,'' said Lomelin, who was previously CEO of Penoles for 21 years. ``We have complete knowledge of the value chain, from exploration to evaluation to development and operating the mine.''

Three Mines

Fresnillo mined 34.4 million ounces of silver from its three Mexican mines. Based in Mexico City, Fresnillo will sell new shares for $900 million and an unspecified number of existing shares. Penoles will retain 75 to 77 percent of the unit.

Fresnillo may have a market value of $8 billion following the IPO, the Financial Times reported April 12. JPMorgan Cazenove Ltd., Citigroup Inc., UBS AG and Canaccord Adams Ltd. are advising the company.