The project, situated in Sonora state, is envisioned as an open-pit, heap-leach operation.
To date, Corner Bay Silver (formerly Corner Bay Minerals) has outlined 117.5 million oz. silver and 447,700 oz. gold, or 142.8 million oz. silver-equivalent, contained in a resource of 79.6 million tonnes grading 45.9 grams silver and 0.18 gram gold per tonne.
Prior to Corner Bay’s optioning of the property in September 1997, no modern exploration had been carried out; nor were there any records of past production, though there is evidence of a few old adits in the general area. Corner Bay has since completed three separate drilling campaigns for a total of 71 holes, including 67 reverse-circulation holes representing 18,985 metres and four large-diameter core holes totalling 1,386 metres.
A prefeasibility report, completed by Tucson, Ariz.-based Mintec in September 2000, placed minable reserves at 52.5 million tonnes grading 63 grams silver and 0.23 gram gold, equal to 106.5 million oz. silver and 394,200 oz. gold, or 129 million oz. silver-equivalent. (Silver-equivalent is calculated at a 57-to-1 silver-to-gold ratio using a silver price of US$5.28 per oz. and a gold price of US$300 per oz.)
The overall stripping ratio is 1.82-to-1. During the first few years of operation, the starter pit is expected to have a stripping ratio of less than 1-to-1.
Alamo Dorado is 67 km southeast of the town of Alamos, near the border with the state of Sinaloa. The 54-sq.-km project is connected to Alamos by a well-maintained gravel road.
The property occurs in a package of metamorphic rocks ranging in age from Cretaceous to Paleozoic. The host rocks comprise tuffs and porphyritic felsic rocks that underwent a metamorphic event. The intrusion of the Sonoran batholith has further fractured and faulted these metamorphosed rocks.
The main mineralized zone, visable at surface, occurs in a 30-to-50-metre-wide zone of oxidized, fractured rocks described by company geologists as gneisses and schists. The main zone sits atop and within a prominent north-south-striking ridge that rises some 250 metres from the valley floor. A series of smaller ridges surrounds the Main zone, and Corner Bay says these merit further exploration.
Drilling has traced the zone 600 metres along strike and up to several hundred metres in width. The zone dips shallowly to the west.
Several major faults are observed in the area, though, in the central mineralized area, no major faults appear to have affected the distribution of mineralization. The eastern edge of the deposit is limited by a steep feature that could be either a high-angle fault trending to the north-northwest or the result of strong silicification in the rocks making up the cliffs in this section of the deposit.
The mineralization is fracture-controlled. Fractures and microfractures have been filled with quartz, quartz-pyrite or pyrite. The primary silver mineral appears to be chlorargyrite, a silver complex associated with quartz-pyrite minerals. The gold mineralization is likely linked to the microcrystalline presence of pyrite.
Metallurgical column-leach tests by Tucson-based Metcon on large-diameter core samples concluded that:
– the Alamo Dorado silver-gold mineralization is amenable to heap-leaching;
– reagent consumptions are within acceptable commercial levels;
– no percolation problems were observed in the columns; and
– optimum recoveries occur on material crushed to 100% of the sample passing through a 3/8-inch screen.
Average recovery rates are estimated at 67% for silver and 77% for gold. Recoveries for high-grade material averaged 75% for silver and 76% for gold, following a 206-day leach period.
Based on the mining of 15,000 tonnes of ore per day (or 5.5 million tonnes per year), Alamo Dorado is expected to produce an average of 7.1 million oz. silver and 30,300 oz. gold annually over a 10-year mine life. Production in the first two years will be almost double the average annual output, owing to the higher-grade starter pit. Cash costs over the life of mine are projected at US$2.96 per oz. silver-equivalent, with starter pit costs pegged at US$1.55 during the first few years.
Estimated capital costs of US$45 million demonstrate a payback of just 18 months.
Corner Bay remains a top pick of Canaccord analyst Graeme Currie, who continues to rate the shares a speculative buy with a 12-month target price of $4.50. With 17.7 million shares outstanding, the issue is trading at $1.50-1.35 in a 52-week range of $3.25-1.27.
“Corner Bay is truly an undervalued junior that offers the prospects for near-term exploration upside,” states Currie in a research report. “Given the robust nature of this project, we also consider Corner Bay to represent an attractive takeover candidate for a small-to-intermediate gold or silver producer.”
Corner Bay kicked off a drilling program at Alamo Dorado in late February. The initial phase of the 2001 program will include infill drilling in the area of the proposed starter pit and at the fringes of the known mineralization. Corner Bay will also follow-up on high-grade intercepts near the southernmost limits of the deposit, where hole 49 intersected 52.5 metres grading 697 grams silver and 0.41 gram gold, and where hole 12 cut 52.5 metres grading 341 grams silver and 0.25 gram gold. The company believes that these previous holes may have hit the upper portion of a feeder system.
Corner Bay has also initiated a property-wide study to determine the controls on mineralization and assist in developing further exploration targets. These targets will be evaluated later in the year.
“Any further expansion of the Main zone, particularly at the higher-grade southern end of the zone, or discovery of additional silver-gold targets elsewhere would, in our view, be material to this junior,” Currie says. “With the added benefit of the exploration upside, we continue to view Corner Bay as representing one of the best-leveraged and undervalued juniors within the mining sector today.”
Corner Bay recently completed an airborne topographic survey, which will assist in planning for site infrastructure, as well as for leach-pad design and an environmental baseline study. All of the work now under way will be incorporated into the final feasibility study, which is due by year-end.
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