More high-grade silver at La Preciosa

Vancouver – With close to 200,000 metres of drilling already completed at the La Preciosa silver project, Orko Silver (OK-V) and Pan American Silver (PAA-T, PAAS-Q) are likely pleased but not too surprised to hit more high-grade silver on the property.

The latest drill results from the project near Durango, Mexico, confirm rich silver mineralization and bring the companies ever closer to the feasibility stage.

In the main resource area at La Preciosa, hole 413 hit a true width of 51.2 metres grading 0.47 gram gold per tonne and 242.7 grams silver per tonne, starting at 230 metres and including 3.3 metres grading 1.6 grams gold and 1,300.1 grams silver.

Hole 472 cut a true width of 39.4 metres grading 0.51 gram gold and 251.5 grams silver, starting at 227 metres and including 6 metres carrying 1.97 grams gold and 1,101.4 grams silver.

The latest results are part of the 43,000 metres of diamond drilling Pan American has completed since becoming involved in the project through a joint venture last spring. Pan American took a 55% interest in the project by committing to provide 100% of the funds necessary to develop and construct an operating mine, while Orko kept a fully carried 45% interest.

Orko released a sixth resource update for La Preciosa shortly before Pan American came on board and it is still the most current. The deposit hosts 10.64 million indicated tonnes grading 0.27 gram gold and 185 grams silver using a cut-off grade of 100 grams silver-equivalent. The inferred resource contains 12 million tonnes grading 0.25 gram gold and 185 grams silver using the same cut-off.

Last year Orko significantly increased its land package in the area. The company added three concessions totaling 31,289 hectares adjacent to the La Preciosa property, which itself spans 1,134 hectares.

Mineralization at La Preciosa is found in stockworks, breccias, veins, vein breccias, and veinlets. The project lies 47 km northeast of Durango in Mexico’s Durango State.

In December Pan American completed the first phase of metallurgical testing for La Preciosa. The testing found simple cyanide leaching yielded average silver recoveries of 91%, which could be further improved with the use of oxidants. The company was able to reduce cyanide use to 1.6 kg per tonne and found that through the use of oxidants it could reduce leach cycle times to 48 hours with minimal reduction in silver recovery.

The La Preciosa property was subject to limited mining in the late 1800s with roughly 30,000 tonnes removed but has remained undeveloped since. Luismin S.A. de C.V. conducted a small exploration project in 1981-82 before entering a joint-venture agreement with Orko Gold in late 2003.

Luismin was later acquired by Goldcorp (G-T, GG-N), which in turn acquired an equity interest in Orko in exchange for Orko gaining a 100% interest in La Preciosa. Orko has no other projects.

For the year ahead, the joint venture will continue with delineation and exploration drilling. Pan American has budgeted $10 million for the 2010 program that includes roughly 51,000 metres of diamond drilling and further and metallurgical testing. The companies have begun to investigate water sources and community outreach is ongoing.

Pan American is also working to determine the best mining method, with open pit, underground or a combination of the two all still options. The company expects to complete a feasibility study near the end of the year.

Orko’s share price was up 7¢ on the news to close at $1.64 with 115 million shares outstanding. Pan American’s share price was up 43¢ to close at $26.64 with 107 million shares outstanding.