Salazar Resources Drill-Ready In Ecuador

AFTER10 months lying idle, Salazar Resources ( srl-V,SRLZF- O)IS champing at the bit to get drills turning again at its El Domo target in Ecuador on the company’s Curipamba property, about a three-hourdrive from Guayaquil. It

had just diverted a second drill to the volcanogenic massive sulphide ( VMS)discovery last spring when the Ecuadorian government banned drilling, exploration and development on all mineral properties in the country while it considered a new mining law and purged land speculators of their concessions. At

the end of April 2008, a few days after the ban passed through Ecuador’s National Assembly, Salazar Resources’ shaken president and CEO Fredy Salazar wrote to shareholders that ” itwas a shock and a surprise to all of us.” A week later, he announced the company’s exploration program in Ecuador was at a standstill and, worse, that it was terminating 90% of its workforce in the country. Passing

the mid-yearmark, however, some optimism began peeking over the horizon. In a corporate update, Salazar Resources noted it was ” encouraged”by Kinross Gold’s ( k-T,KGC-N)BILLION-dollartakeover of Aurelian Resources for its Fruta del Norte property in Ecuador and that the country’s president was talking about supporting a ” responsible”mining industry. But

there could be no cure to the uncertainty plaguing the Ecuadorian mining industry until a new mining law was passed and regulatory details had been hammered out in writing. That finally came in January, first as a legislative commission considered and assented to a new mining law, and then when the law was formalized in the Ecuadorian government’s legislative gazette on Jan. 29. BY In a recent release, Salazar Resources notes the new law provides certainty on a number of land-tenure issues. The law, it says, allows an exploration company, foreign or domestic, to hold as many concessions as it wants (maximum concession size is 50 sq. km) and that it is only at the exploitation stage that the government limits ownership to a total of 50 sq. km. Salazar Resources also says companies can hold concessions for 25 years and may renew them for an additional 25 years under the new law. The initial exploration cost per hectare is US$5.45.

Those rules appear to safeguard Salazar Resources’ title to its 710- sq.-km Curipamba property, which is made up of 16 concessions and where last year the company began to drill into VMS targets such as El Domo in the Las Naves Central area of its property.

Although the corks aren’t popping yet — exploration and mine development cannot officially begin until the government publishes regulations of the new mining law, an event that Salazar Resources says should occur by June 29 — the company is nonetheless in a highly anticipatory mood.

Although its phase-one drill program at El Domo was cut short, by the end of April 2008, Salazar Resources had pulled enough core from the ground to calculate an inferred resource estimate.

Based on 13 holes, the company pegged El Domo at 4.1 million inferred tonnes grading 3.49 grams gold per tonne, 76.33 grams silver, 2.51% copper, 0.47% lead and 4.55% zinc. Salazar says the mineralization is rich in chalcopyrite, sphalerite, galena and pyrite and that the sulphide content ranges between 60% and 100%. It occurs at a depth of between 50 and 100 metres and so far, it is about 5 to 19 metres thick, 450 metres long and 150 metres wide.

As the mineralized area is still open to the north, south and west, Salazar sees potential for expansion — once it gets the green light to drill again. Equally important for the company in the discovery of El Domo is that it has validated the correlation between its geophysical/ geochemical program and its drill campaign. The company says the geophysical surveying suggests that massive sulphides encountered in its drill program “are part of a much larger system.”

At El Domo, the company describes three large potential VMS bodies and several smaller ones along a 1-km-long trend. Within a 4 by 2-km area, Salazar also encountered 12 significant geochemical anomalies at surface and a further five geophysical ones.

To explore the potential of the Las Naves Central area, Salazar, which as of Sept. 30, 2008, had about $6.8 million in cash, is planning a phase-two drill program and continued geophysical exploration. The program includes 4,500 metres in 30 holes at El Domo (including infill drilling), 22 holes at Sesmo Sur, another target it was well into drilling up until last April, and 14 holes testing new anomalies. At Sesmo Sur, for instance, it drilled as much as 15 metres grading 2.54 grams gold and 50.11 grams silver in hole 5.

At the same time, the company says it will begin metallurgical testing at El Domo as it moves the project towards a proposed prefeasibility study. And to that end, Salazar recently reminded investors in a release that when the government inks mining regulations this spring, the company will be drill-ready and its technical team is standing by, ready to begin the second-phase work program.