Minerva options Mexican property

After months of intense negotiations, a Mexican company owned 49% by Minerva Gold Mines (VSE) has emerged with an option agreement to purchase the La Conquista property located entirely within the boundaries of the producing San Martin mine in the state of Zacatecas, Mex.

The property is small — seven claims totaling 33.3 hectares — but it is strategically located within the boundaries of the 7,000-ton-per-day San Martin mine, the largest underground producer of zinc-copper-silver-lead-gold in Mexico.

The mine is in turn located within a district considered to be a world-class producer of silver-lead-zinc-copper-gold minerals. The deposits within the San Martin district occur as veins and mantos, with the latter occurring at depth and providing the major source of ore.

Because two of the main producing veins from the San Martin mine project onto the La Conquista claims, Minerva and its Mexican partners are of the view that the property holds “excellent” potential for development of base-precious metal reserves similar in grade to that of the major producer. The company is hoping to quickly prove up sufficient reserves to ensure steady production, and then negotiate to have the reserves processed at an existing operation to “alleviate capital costs and enable an early startup of production.” The district is reported to have considerable excess milling capacity.

La Conquista was selected as the prime property for acquisition by the Mexican company which is owned and funded 51% by three prominent Mexican businessmen. Together, the group spent more than $300,000 evaluating mineral properties in Mexico.

Under the terms of the recent agreement, the Mexican company paid US$33,000 for an option (to January, 1993) to determine the extent of the ore potential within the property boundaries. Once this is accomplished, the property can be purchased outright from the owner, a Mexican family, for an additional US$222,000.

Minerva management views this agreement as “very favorable,” particularly because recent drilling by the operators of the San Martin mine near the common boundary returned significant copper-lead-zinc-silver values comparable to those being mined.

The hole is reported to have returned a 17-ft. intersection grading 9.9 oz. silver per ton, 3.5% lead and 3.87% zinc. The San Martin mine is reported to have proven reserves of 23.8 million tons grading 4.5 oz. silver, 0.42% lead, 1.04% copper and 4.3% zinc, plus a further 7 million tons of similar grade classed as drill-indicated reserves.

Historically, mineralization at San Martin extends down to 2,500 ft., with both grades and widths increasing with depth.

Two shafts provide underground access to the La Conquista property, which has never been drilled. But based on the operating experience of San Martin, Minerva is of the view that the property has potential for 3-11 million tons, which would support a mining operation of 300-1,000 tons

per day.

Minerva representatives are now meeting their Mexican partners on site. The immediate objective is to compile all available data and start a diamond drill program to determine the extent of the mineral potential of the veins and mantos within the La Conquista property.

Because the property is located in the heart of an established mining camp that was discovered in 1548, infrastructure already exists. The San Martin district has paved roads, electric power and a skilled labor force, and a smelter is located in nearby Torreon.