Silver Standard inks Challacollo option (July 26, 2002)

Vancouver — The results from a due diligence drill program has prompted Silver Standard Resources (SSO-V) to keep working the Challacollo silver-gold property in northern Chile.

The junior completed the 2,500-metre program to test for mineralization below the historical workings at the Lolon vein, as well as reconnaissance drilling the Challacollo Sur and San Francisco veins.

Collared at the northern end of the Lolon vein, nine of the holes defined a 600-metre long section of high-grade silver. Highlights include hole 15, which returned 350.9 gams silver per tonne over 8.6 metres at a down-hole depth of 128 metres, hole 16, which cut 9 metres averaging 232.4 grams silver from 123 metres downhole, hole 22, which hit 15.8 metres grading 218.3 grams silver from 116 metres downhole and hole 23, which cut 290.4 grams silver over 11.5 metres at 37 metres down-hole.

Moving 800 metres southwest, hole 20 tested the Francisco vein and returned 1.4 metres grading 561 grams silver from 143 metres downhole.

At last count, the Lolon vein holds an indicated resource of 1.38 million tonnes grading 231.6 grams silver and an inferred resource of 4.7 million tonnes grading 244.2 grams silver. The latest drill results will be included in an updated resource calculation expected later in the year.

Mineralization is hosted in rhyolites, dacites and andesites that are overlain by conglomerate, sandstone and shale. The property holds four structurally controlled north-south-striking veins that lie 100-200 metres apart and cover a length of more than 2 km.

Based on the drill results, Silver Standard has elected to proceed with its option to purchase the project. Under the deal, the junior must pay US$1.5 million in staged payments to Sociedad Contractual Minera Challacollo (SCMC) over two years. The Chilean company retains a 2% net smelter royalty on the property that can be purchased for US$1.5 million

Challacollo lies 130-km southeast of Iquique at an elevation of 1,500 metres above sea level.