Vancouver – Joint venture partners Fortuna Silver Mines (FVI-V) and Continuum Resources (CNU-V) are hitting good gold and silver grades all around the defined resource at the San Jose project in southern Mexico.
Previous small-scale mining operations exploited some 800 metres of the Trinidad vein system to a depth of roughly 180 metres. Fortuna and Continuum have been exploring the remaining Trinidad deposit, as well as working to define the San Ignacio zone discovered in late 2006.
Hole 60, in the San Ignacio zone, hit 25.1 metres grading 10.9 grams gold per tonne and 588 grams silver per tonne. Another hole in the San Ignacio area, hole 55, intersected 11.9 grams gold and 1151 grams silver over 2.5 metres.
Following a resource estimate that came out in March, Fortuna and Continuum are also working on infill drilling at Trinidad to upgrade and increase resources. Hole 63 returned 4.4 grams gold and 1224 grams silver over 2.6 metres, and hole 56 hit 0.75 metres of 8.4 grams gold and 577 grams silver. The main Trinidad vein has been traced over 3 km north-south, with several northwest to southeast trending splays.
The news pushed Fortuna up 5 to close at $3.60 and boosted Continuum 6 to close at 55 in July 16th trading.
A March 2007 resource estimate, which only covered the Trinidad zone, pegged indicated resources at 1.47 million tonnes grading 262.6 grams silver and 2.2 grams gold, for 12.4 million oz. contained silver and 103,500 oz. contained gold.
An additional 3.9 million tonnes of inferred resource averaging 260.6 grams silver and 2.6 grams gold were also estimated giving around 32.7 million contained oz. of silver and 321,500 oz. of gold. The study used a 150-gram silver-equivalent cut-off grade based on a 51-to-1 silver-to-gold ratio (factored from a US$10.30 per oz. price for silver and US$525 per oz. for gold).
Mineralization at San Jose, which is located in the Taviche silver district of southern Oaxaca, consists of silver sulphosalts (pyrargyrite, proustite and tetrahedrite), native silver and gold occurring within epithermal quartz veins and breccias, hosted in andesitic volcanics.
San Jose is now owned 76% by Fortuna and 24% by Continuum under a new agreement that superseded a prior deal that had Continuum earning an 80% interest with Fortuna acquiring up to 70% share of Continuum’s ownership. The revised deal saw Fortuna pay the full purchase price of US$8 million, US$250,000 worth of its shares and US$250,000 worth of Continuum shares it held.
Continuum kicked in additional concessions in the area on which it holds options.
Looking to advance the project to production this year, the JV partners recently purchased the plant that previously processed ore from San Jose. The fully permitted operation is located about 12 km from the deposit and has a 150-tonne-per-day capacity. Upgrades are underway to bring the capacity up to 360-tonnes-per-day.
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