Silver Standard ups Manantial Espejo resource

Vancouver — Silver Standard Resources (SSO-V) has upped indicated silver-equivalent resources at the Karina-Union vein on the Manantial Espejo silver-gold deposit in southern Argentina by 44%, thanks to a 5,142-metre drill program completed early last year.

Measured and indicated resources from the deposit now stand at 4.39 million tonnes grading 263.8 grams silver and 4.51 grams gold per tonne. This is a 9.9% increase in silver-equivalent resources. Another 1.59 million tonnes running 258.2 grams silver and 3.65 grams gold lie in the inferred category. The measured and indicated resources account for 73% of the total resource.

Drill results included bonanza grades over narrow widths (6,189 grams silver and 26.4 grams gold per tonne over a 1-metre interval in hole 176), as well as high-grade results over longer intervals (hole 178 intersected 444.3 grams silver and 4.92 grams gold per tonne over 18.6 metres).

Pincock Allen & Holt reviewed the resource data.

Black Hawk Mining (BHK-T) will hold a 90% interest in the Manantial Espejo project as soon as it completes its purchase of 20% from Barrick Gold (ABX-T). Silver Standard will hold the remaining 10% interest, with an option to pick up another 40% from Black Hawk in return for paying US$1.5 million (which is now paid) and spending US$4.5 million on exploration by 2002 (extendible to 2003 under certain conditions).

Underlying vendors retain two royalties. One is tied to production and cannot exceed $600,000. The other is a 0.5% net smelter return.

The 225-sq.-km, eight-concession project in Santa Cruz province was discovered in 1989. It is accessible via a good, public, all-weather, gravel road and sits 160 km west of the tidewater port of Puerto San Julian.

Geologically, the property is underlain by Jurassic-aged andesitic flows and agglomerates covered by felsic tuffs and ignimbrites. Silver and gold mineralization is associated with northwest-trending fault zones and is generally confined to continuous shoots in quartz veins. The silver-to-gold ratio is reportedly consistent at 100-to-1.

The best metal recoveries averaged 85% for silver and 95% for gold. They were achieved by agitated leaching using cyanide.

According to preliminary calculations, Manantial Espejo is capable of generating a 20% return on investment, assuming a capital cost of US$45 million. This estimate is based on a 500,000-tonne-per-year mining operation and silver and gold prices of US$6 and US$325 per oz., respectively.

Silver Standard and Black Hawk have purchased two ranches (including buildings), totalling 280 sq. km, for US$575,000, which is payable over three years. The ranches cover the main areas of defined mineralization at Manantial Espejo.

The surface ownership will provide assured access to mining operations when metals prices warrant development and production.