Torren, Mexico — At 63,400 tonnes, it may be small, but bonanza silver grades have persuaded
A small test program began in September, when the company started driving an underground ramp, which has now advanced some 40 metres.
Two years earlier, Roscoe Postle Associates (RPA) pegged Platosa’s indicated resource at 63,400 tonnes grading 2,346 grams silver per tonne (68.5 oz. per ton), plus 15.2% lead and 11.9% zinc. There is also an inferred resource of 2,100 tonnes grading 1,433 grams silver per tonne (41.9 oz. per ton), 18.2% lead and 14.9% zinc. The estimates employ a net smelter return cutoff of US$30 per tonne, and silver assays were capped at 10,000 grams per tonne, or 292 oz. per ton. The resource remains open in all directions.
The resource is contained in what was originally a single, continuous deposit, which was later broken up by post-mineralization faulting into the Upper 4, No. 4, Lower 4, No. 5A and No. 6 (A and B) mantos. The mantos are lined up in a northeasterly direction, parallel to the Zorra-Platosa trend.
“Platosa is in the northern part of Mexico’s silver belt, which is the most productive piece of real estate in the world for silver,” says Peter Megaw, Excellon’s consulting geologist and exploration manager in Mexico. “It has produced in excess of ten billion ounces of silver over the past five-hundred years.”
The belt’s major deposit types are veins and carbonate replacement deposits (CRDs) of silver-lead-zinc (plus lesser amounts of copper and gold). Platosa is a replacement deposit in one of the most productive portions of the belt.
CRDs are characterized by cylindrical chimneys and flat-lying, ribbon-like mantos of mineralization. The mantos can extend over horizontal distances of up to 3 km, and over 1 km vertically. Megaw compares them to linguine composed of extremely high-grade mineralization stretched out within the stratigraphy.
Sulphide mineralization at Platosa is typically massive, banded, disseminated and fracture-filling, fine- to coarse-grained galena and sphalerite, with accessory pyrite. The primary silver mineral is thought to be acanthite.
Plans call for underground development headings to progress at the rate of 200-250 tonnes of ore per day, which will allow for some flexibility as the characteristics of each manto are defined. The 4.5-by-5-metre main ramp is being driven at a grade of minus 15% and will travel 600 metres from the portal before reaching the first mining level at manto 4C. That manto has a chimney structure, and will be mined from the bottom to take advantage of gravity. The ramp will next gain access to manto 5A as it advances at the daily rate of 5.6 metres.
Manto 5A is home to the bulk of Platosa’s tonnage, as well as the highest grades: 24,500 tonnes averaging 3,912 grams silver per tonne (114 oz. per ton), 22.3% lead and 6.5% zinc. Manto 4C is next in line, with 19,600 tonnes grading 1,276 grams silver per tonne (37 oz. per ton), 11.1% lead and 16.4% zinc. Access to the two will be reached early on, to provide the best and largest possible target for exploration.
Mining will then move on to mantos 6A and B, 4A and B, and will wrap up with post pillar recovery in 4B, 4C, 5A and 6A. In all, the plan envisages nearly 3 km worth of underground development.
Ore and waste will be trucked to two surface stockpiles, where ore from each manto will be kept separate. From there, ore will be crushed in a portable crusher and trucked for milling via public roads.
Metallurgical processing will include a gravity circuit for recovery of native silver followed by a bulk sulphide flotation to produce a lead-silver concentrate running 52% lead and 225 oz. silver per ton. The remaining zinc concentrate would run about 56% zinc and 28 oz. silver. Metal recoveries in the lead-silver concentrate are estimated at 90% for lead and 87% for silver, and 80% for zinc and 7% for silver in the zinc concentrate.
Excellon expects to begin hauling ore to the surface early next year; the known resources would be mined out by the end of the second quarter of 2006.
The company is considering whether to buy one of several nearby mills, mill on a toll basis, or sell the ore directly to mills or smelters.
“Platosa is ideally situated in terms of infrastructure, and we’re fortunate to have Peoles’ smelter forty to forty-five kilometres away,” says Joy Merz, Excellon’s general manager in Mexico. “I’ve worked at mines in sixteen countries but never on a property that has rail lines, paved highways, and high-tension power lines. There’s also an international airport about an hour and a half away.”
Cash flow
Test mining is expected to generate a pretax net cash flow of US$13.5 million, based on metal prices of US$4.80 per oz. silver, US25 per lb. lead, and US40 per lb. zinc. At metal prices closer to today’s levels (US$6.25 per oz. silver, US33 per lb. lead, and US45 per lb. zinc), the net cash flow estimate climbs to US$20.6 million.
“The tail of the elephant is high-grade enough to justify, and pay for, exploration of the rest of the system,” says Megaw. “We’re in elephant country, so we have good, long-range potential.”
Earlier this year, Excellon renegotiated a joint-venture agreement that will see
The renegotiated deal also sees the 147-sq.-km Platosa project divided into three areas. The 3.7-sq. km Core area is home to Platosa’s existing resource. Excellon now owns all of the Core area, as well as 51% of some 9.8 sq. km adjoining the Core area to the north, east and south. Apex holds the remainder and can pick up an additional 2% by paying up to US$1 million.
Excellon can also acquire the 4.6-sq.-km Saltillera properties, which adjoin the core area to the west, by paying US$236,000 in cash and spending US$800,000 on exploration by April 23, 2006. The land package is subject to a 3% NSR, which can be trimmed to 1.5% for US$2 million.
Excellon had previously sold half of its stake in the joint venture to Destorbelle Mines, which it recently took over by issuing 25.6 million shares and paying $4.7 million.
Scratching the surface
Excellon’s underground development will facilitate a 7,500-metre underground drilling campaign designed to expand the Core area’s known resource. Some of that drilling is also designed to trace what the company believes could be a new manto horizon. Hole 77, part of a 12-hole, 1,170-metre condemnation-drilling program for the ramp, cut 0.3 metre of galena and sphalerite-bearing sulphide sand at a depth of 50 metres, some 50 metres higher than any sulphides found so far. Excellon has already sunk four holes on the new target.
Results from condemnation drilling have not led to any significant changes to the ramp design.
Excellon’s exploration plans also call for 3,000 metres worth of surface drilling aimed at testing longer offsets of mineralization not accessible by underground drilling. District-scale geologic mapping is planned in anticipation of a 6,000-metre program of surface drilling which will test for larger-scale mineralization in unexplored parts of the project. In all, 16,500 metres are planned for the next 18 months.
Megaw says a soccer field would handily cover Platosa’s known resources. “So far, ninety-five per cent of the work has been done in a restricted area, all probably with two-hundred and fifty metres of the discovery hole, no. 5, that returned 7.45 metres averaging 36.4 oz. silver per ton, 35.2% zinc and 14.4% lead. We’ve been focused on a single tree, and we’re now getting ready to take out that tree and beg
in looking for the rest of the forest.”
The deposits are surrounded by a halo of dolomitization, which is common among many major CRD districts. At Platosa, dolomitization is strongest around mantos 4, 5 and 6 and tails off to the east. Drilling to the west has cut wider zones of more pervasive dolomitization, and reconnaissance mapping has turned up large areas of pervasive dolomitization running for several kilometres northwest of Platosa.
Carbonate replacement deposits can typically weigh 10-50 million tonnes. Megaw compares Platosa to Peoles’ Santa Eulalia deposit, 370 km to the northwest: both deposits initially had little surface expression. Likewise, Excellon hopes to trace Platosa’s deposits to a much larger, but lower-grade, source.
In operation for more than 300 years, Santa Eulalia has produced 500 million oz. silver from ores averaging 350 grams silver, 8.2% lead and 7.8% zinc. The Platosa area has also been the site of historic production; the company believes the Spanish discovered the oxide portion of the deposits in the 16th or 17th century. The most recent mining at Platosa was done in the early 1970s and was estimated to total 25,000-50,000 tonnes.
Small-scale production of less than 10,000 tonnes was carried out on the Saltillera properties. The Saltillera and Socorro mines targeted high-grade gold-silver vein mineralization; the Zorra mine exploited a 100,000-tonne massive sulphide chimney of high-grade copper-zinc-lead-silver.
Excellon recently raised gross proceeds of US$9.9 million by selling 9,000 silver units; a unit consists of one US$1,100 secured debenture and 1,000 warrants. The debentures, which do not bear interest, mature on June 9, 2007. The certificates are redeemable for the principal amount or silver bullion at a rate of 200 oz. per principal amount. The warrants are good for one Excellon share at 32.5 apiece any time before June 9, 2006.
Proceeds will be combined with cash flow from test mining to fund exploration in all three areas.
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