The initial hole, no. 05-01, yielded 5.1 metres (beginning 121 metres below surface) grading 0.6 gram gold and 85.3 grams silver per tonne, including 2.1 metres (from 123.5 metres) of 1.1 grams gold and 157.1 grams silver. The company says the hole was “diminished” owing to strong faulting.
Hole 05-02 returned 8.7 metres (from 126.5 metres below surface) of 2.3 grams gold and 233.1 grams silver, including the first 1.8 metres running 8.9 grams gold and 798.1 grams silver. Individual samples from the hole run up to 2,570 grams silver per tonne and around 35 grams gold per tonne. Capstone says the hole also indicates a true thickness of more than 10 metres for the Animas-Refugio quartz vein.
The holes cut the Animas-Refugio vein some 30 metres and 75 metres downdip of historical workings of the San Carlos mine.
The 51-sq.-km Copala project is home to several northwest striking epithermal veins with lengths varying from 2-4 km.
Some 3,200 metres worth of drilling by previous operator
The San Carlos mine workings stretch around 300 metres and are developed over a vertical extent of 125 metres. Underground channel sampling by Bacis in the lowest levels of the mine in the 1990s returned up to 2.5 grams gold and 300 grams silver. The work also indicated an average true width of 4.5 metres for the Animas-Refugio vein.
The San Carlos mine is situated at the south end of a 2-km-long section of the vein, which is also host to three other areas of historic underground workings on claims controlled by Capstone.
Capstone believes the initial drill results suggest that mineralization extends at depth. The ongoing drill program is slated to wrap up in November.
Capstone can take a 90% interest in Copala by spending US$1 million on exploration and development. The property is subject to a 1.5% net smelter return royalty.
Historic measured and indicated resources at Copala amount to 719,220 tonnes running 1.9 grams gold and 246 grams silver per tonne. Another 1.7 million tonnes of inferred material grades 1.7 grams gold and 184 grams silver. The estimates do not comply with the standards set out under National Instrument 43-101.
Capstone says the existing 160-tonne-per-day flotation plant remains operational, and can be upgraded. Preliminary cyanidation tests indicate recoveries of 92.2% for silver and 76.2% for gold.
Meanwhile, Capstone is in the midst of a 110-hole, 18,000-metre underground definition drilling campaign on the advanced Cozamin copper-silver-zinc deposit, 3 km north of Zacatecas city, Zacatecas. So far, 81 holes (totalling 9,000 metres) have been sunk, with the latest batch of 21 highlighted by:
– hole U45 — 10.5 metres averaging 106.6 grams silver, 2.9% copper, and 1.3% zinc;
– hole U46 — 12 metres of 193.2 grams gold, 3.4% copper, and 1% zinc;
– hole U54 — 7.7 metres running 70.6 grams silver and 3.9% copper; and
– hole U62 — 16.2 metres of 90.2 grams silver and 3.3% copper.
The remaining holes generally returned slightly lower grades over narrower intervals. Two holes failed to yield significant mineralization.
Capstone currently has four drill rigs turning underground, with the aim of completing 29 deeper holes (for another 9,000 metres) by the end of the year. The company also expects to table a National Instrument 43-101-compliant resources estimate by year-end.
Historic (pre-NI 43-101) measured and indicated resources total 2.8 million tonnes grading 85 grams silver and 0.5 gram gold, 0.95% copper, 3.16% zinc, and 0.88% lead. Another 3.1 million tonnes of inferred material runs 103 grams silver, 0.5 gram gold, 1.41% copper, 3.21% zinc, and 0.85% lead.
The company has advanced a drift to the east on level 9 into the mineralized vein; drifting will continue for another 400 metres. The company has also advanced a decline from level 9 some 34 metres, and expects to reach level 10 by mid-December. The portal of the San Ernesto surface ramp has been prepared and the ramp to level 8 advanced 30 metres.
The property sports a 750-tonne-per-day flotation plant that was previously employed by Bacis to process 250,000 tonnes of ore resulting in 2,370 tonnes copper, 495,000 oz. silver, 2,013 oz. gold, 2,802 tonnes zinc and 856 tonnes lead.
Capstone says the mill could be expanded to 1,200 tonnes per day for around US$1.4 million, with another US$1.3 million required to boost capacity to 2,000 tonnes per day. Metallurgical test work indicates a 95% recovery rate for copper and 79% for silver.
Cozamin has seen intermittent production from the San Rafael, San Bernabe and San Roberto mines. With predevelopment ongoing, Capstone hopes to begin producing from San Roberto in early 2006. The mine covers 2 km of the 5.5-km-long Mala Noche vein.
Copala and Cozamin are among six properties optioned from Mexican mining conglomerate Grupo Bacis in late 2003. Bacis retains a 1.5% net smelter return royalty (NSR) and a 10% interest in the properties, which also include Claudia, Montoros and Promontorio, all of which have historical gold and silver resources.
Under the deal, Capstone must spend US$10 million on exploration and development over a 5-year period. Upon a positive production decision, Bacis can maintain their 10% stake by covering their share of the production costs or be reduced to a 1.5% NSR. Capstone can buy back a portion of Bacis’ 10% stake under certain provisions.
Capstone has approximately 40 million shares outstanding and is well-financed with no long-term debt.
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