All glitter and grit

In the 1950s, students began performing outdoor plays (dubbed entremeses) from classical Spanish theatre and literature.

A favourite was de Cervantes's epic, Don Quixote. It blossomed into a festival, which bloated into the world-renowned Cervantino. An estimated 150,000 visitors now soak up the opera, dance, book readings and musical performances across 70 venues.

Post-festival, Guanajuato doesn't sink into a slumber.

One of Mexico's liveliest university cities, students account for more than one-fifth of its 90,000 population, and a youthful buzz spikes the city's cobbled streets, language schools and myriad bars and cafes, day and night.

After dark, a popular pastime is to follow estudiantinas, young, charismatic black-cape-clad guides, who lead tourists through Guanajuato, imparting risque jokes and local legends.

While the tours are aimed at Mexicans (or those with a good grasp of Spanish), anyone can join in.

Dodge the shoe shiners and mariachi musicians around Jardin de la Union, the tiny, laurel hedge-skirted central square, and make a beeline for an estudiantina.

For about 100 pesos ($7), they'll give you a porron (ceramic drinking vessel), which they top up with wine as you wander.

However, you don't need a guide, or alcohol, to appreciate Guanajuato. World Heritage-listed by UNESCO, it's wedged into a canyon, 2000 metres above sea level, and has a feast of pink-and-yellow Baroque churches, ornate stucco-clad mansions and opulent, neo-classical theatres, as well as prosaic, colourful box-like homes that crawl up the slopes of the rugged mountains surrounding the city.

They're linked by atmospheric webs of tunnels, twisting stairways, side streets and back alleys, the most evocatively named being the Callejon del Beso (the Alley of the Kiss). At just half a metre wide, it's a haven for romantics, who enjoy the tight squeeze and the fact that, from the upper-storey balconies, they can exchange kisses across the street.

Central Guanajuato has several galleries and museums to enjoy, including one housed in the birthplace of Diego Rivera, arguably Mexico's most famous painter.

A treat at ground level, Guanajuato's majestic setting is best savoured from up high, particularly in the shadow of Monumento al Pipila, a giant statue of one of the heroes of Mexico's War of Independence with Spain.

A funicular chugs up there, but we somehow miss the entrance (we later discover it's just behind the Church of San Diego), so we huff and puff our way through a maze of steep lanes and arrive at the top breathless. Our efforts, however, are rewarded. From here, Guanajuato is a vast postcard-perfect canvas, a riot of colour, a sublime blend of the natural and the man-made. In a word: magnificent. The Spanish initially had no interest in this semi-arid area of the Bajio region.

Guanajuato was known to the indigenous people as Quanax-huato (meaning Mountainous Place of Frogs; amphibians were rife here and still feature in T-shirts, sculptures and artwork sold in boutiques and markets). However, by the mid-16th century, huge deposits of gold and, especially, silver were found.

Over the next three centuries, these riches transformed Guanajuato into the wealthiest city in Mexico, bankrolling many of its architectural jewels and filling the coffers of the Spanish Crown (plus the mine owners).

With its lavishly furnished rooms and 17 gardens, designed in various styles from Moorish to Roman, the Ex-Hacienda de San Gabriel de Barrera flaunts the wealth of one leading 19th-century silver baron. Though it now operates on a vastly reduced scale, you can still don a hard hat and look inside La Valenciana, once the most profitable mine in Mexico. Neighbouring it is San Cayetano Church, adorned with a sumptuously intricate facade and interior.

Despite such prosperity, most people lived in poverty, subservient to the city's Spanish-blooded elite. In 1810, in the nearby town of Dolores, a priest, Miguel Hidalgo y Costilla, considered "the Father of Mexico", started the Mexican independence movement.

Guanajuato saw one of the war's first - and most savage - battles, with local insurgents massacring royalist forces in an old grain storage building (the Alhondiga). They found it hard to break down but a miner, nicknamed Pipila, set fire to the granary's wooden doors, martyring himself in the process. He's now revered in that mighty hill-top statue.

Today the granary houses a museum covering the conflict and its aftermath. Regrouped, the royalists retaliated in fierce fashion, capturing, and killing, Hidalgo and three of his co-conspirators. As a warning to other dissidents, their heads were placed on the four corners of the granary, where they remained until Mexico sealed its independence a decade later.

Back at our guesthouse, Carmel brings out the tequila and, afterwards, insists we take the rest of the bottle as a memento. Our alarm rings at 4 o'clock the next morning. We've an early bus to Mexico City and sneak downstairs, trying not to wake our loveable landlady. I'm about to write a thank-you note, when I hear a door creaking.

"Hola chicos," says Carmel, in her now familiarly endearing morning welcome. She's carrying a bag of fruit and freshly made sandwiches. "For you, chicos," she says, giving us hugs and kisses, and ushering us into the taxi.

As we pull away, we agree that our memories of Carmel, and Guanajuato, will stay with us long after we've drunk the very last drop of Patron.

Trip notes

Getting there

Flight Centre has a return fare from Sydney to Mexico City via Los Angeles for $1631 with Delta Airlines; flightcentre.com.au. Deluxe buses for Guanajuato leave more than 20 times a day from Mexico City's terminal Norte. Primera Plus does the five-hour journey for MX400 ($28) one way; primeraplus.com.mx.

Staying there

Rooms at El Hogar de Carmelita are priced from about MX550; twins, doubles and family rooms available; hostelhogardecarmelita.com.

An upmarket Guanajuato choice, the Camino Real has doubles from MX1450; caminoreal.com/guanajuato.

More information

visitmexico.com.