EXPLORATION 1999 – Excellon eyes silver mine in northern Mexico — Drill results underscore potential at past-producing La Platosa deposit

Toronto-based Excellon Resources (EXN-V) is focusing its exploration efforts in northern Mexico, where it has a 35% interest in La Platosa, a past-producing carbonate replacement silver-lead-zinc deposit.

The 20,000-acre property is in Durango state, about 5 km northwest of the town of Bermijillo and 1.5 km from a major highway and railroad. Both a power supply and smelter-refinery are within 35 km of the deposit.

La Platosa is a joint venture between Excellon and the Mexican subsidiary of Denver-based Apex Silver Mines (SIL-X). The latter is the operator and stands to earn a 65% direct interest in return for US$1.3 million in property payments and a minimum of US$1.5 million in exploration expenditures, to be made over a 5-year period.

(Apex owns the San Cristobal project in southern Bolivia, which contains a proven and probable reserve of 259 million tonnes grading 70 grams silver per tonne, 1.57% zinc and 0.55% lead, equivalent to 509 million oz. silver, 4.1 million tonnes zinc and 1.4 million tonnes lead.)

Over the next 4.5 years, Excellon is required to pay US$973,000 to the Villalobos family, the original vendors of La Platosa. There are no underlying property royalties.

Initial reconnaissance by International Mineral Development & Exploration, Excellon’s geological consultant, included geochemistry, geological interpretation, mapping and sampling. Forty-seven samples were taken.

Mineralization is typical of replacement-skarn deposits throughout northern Mexico, and the property is only 25 km from the Ojuela mine, near Mapimi, which produced 5-6 million tons grading in excess of 3.5 grams gold, 475 grams silver, 15% lead, 10% zinc and 0.2% copper.

Mining at La Platosa dates back to colonial times. Although no tonnages or grades were recorded, Excellon estimates that 75,000 tons of high-grade ore were recovered.

Most of the silver, lead and zinc were mined from a series of mantos, which were probably about 15-20 metres wide, up to 10 metres thick and 220 metres long.

Excellon took five samples from the existing underground workings, assays of which ranged from 5.1% to 39% zinc, 12% to 19% lead, and 1% to 3% copper, plus 960 to 1,600 grams silver and 0.3 to 9.6 grams gold per tonne.

The style of mineralization, combined with abundant gypsum, indicates that the mineralization represents the distal portion of a larger replacement-skarn system. Sulphur isotope studies of gypsum veins indicate that the gypsum is hypogene in origin.

Excellon says the presence of abundant gypsum suggests that the Platosa mine represents a near-surface environment and that economic mineralization may lie at depth. There is also high potential for additional mineralization along the 5-to-10-km strike length of the Platosa structural zone. The zone is characterized by numerous structures that host mineralized veins, mantos and breccias, all of which warrant further investigation.

Apex has completed an initial program of geological mapping, sampling and drilling.

The company collared five diamond drill holes, totalling 800 metres. Four of these were drilled at shallow angles of minus 51-66, and collared east of the historic mine workings. They were drilled toward the west and targeted the area below existing underground workings.

Drill holes 1 and 2 were collared 120 metres east of the historic Coloradas shaft and were drilled from the same pad. Both holes intersected weak mineralization (less than 1% sulphide).

Holes 3 and 4 also returned disappointing results. Hole 3 was collared 40 metres south of holes 1 and 2, whereas hole 4 was collared 120 metres northwest of the two initial holes.

Hole 5 was collared 20 metres east of holes 1 and 2; it was drilled vertically in order to test for chimney, or manto, mineralization. Hole 5 intersected massive sulphides over a 7.4-metre interval that averaged 1,132 grams silver per tonne, 35.2% zinc and 14.4% lead, starting at a down-hole depth of 74.7 metres.

The overall core recovery averaged 53% for the 7.5-metre interval. This is not unusual for manto deposits, as the core material is typically loose, unconsolidated or sandy. Assays were performed by Barringer Laboratories and checked by American Assay Laboratories.

“We are encouraged by developments so far,” says Apex President Kieth Hulleycer. “One drill hole, of course, does not make a deposit, but we have indeed found a piece of what we were looking for. The high grade and width of the intersection ensure that the property will be further explored to determine whether the tonnage is there to make a mine.”

The significance of the massive sulphide intersection in hole 5 will be determined only after additional drilling demonstrates how extensive the mineralization is. First, however, Apex will conduct a geophysical survey in an attempt to delineate the shape and extent of mineralization.

Apex reported a loss of US$11 million (or 42 cents per share) in 1998, compared with a loss of US$15 million (72 cents per share) in the previous year. At the end of 1998, working capital stood at US$25.5 million. The company currently has a deficit but is expecting an influx of capital resulting from the expiry of 587,500 warrants priced at 40 cents each. Apex has 16.6 million shares on a fully diluted basis.