Quaterra doubles resource at Nieves in Zacatecas, Mexico

Quaterra Resources (QTA-V, QMM-X) has properties in Mexico and across the United States in Nevada, Utah and Arizona, but it’s the junior’s Nieves silver project in Mexico’s northern Zacatecas state that is getting all the buzz recently.

In August Quaterra doubled its silver resource at the project and is now embarking on a 6,000-metre drill program that chief executive Thomas Patton says will be finished by the end of the year, followed by a preliminary economic assessment to be completed in the first half of 2011.

“Our big news is Nieves,” Patton said in an interview. “We’ve doubled the resource and we’ve got great metallurgical results…We want to get enough drilling done to figure out how big the thing can be.”

A preliminary metallurgical assessment on a 99 kg composite sample of coarse rejects from the company’s recently completed core drilling program demonstrated an average grade of 79 grams silver per tonne, a specific gravity of 2.74 and a Bond ball mill work index of 10.8 kWH/tonne (moderately soft rock). Open circuit flotation testing recovered 86% of the silver into a final concentrate assaying 2.3 kilograms per tonne silver.

“The rock is relatively soft on the hardness scale so it’s all good news,” Patton says, noting that softer rock means crushing costs should be “reasonable.”

“I always try to look for fatal flaws in a project but you can start crossing them off when you get good results like our metallurgical ones.”

Patton believes Nieves has the potential to become an open-pit silver mine. “It’s relatively shallow and we think it will make a nice open pit,” he said, adding that open-pit silver mines are hard to come by.

Nieves, which is about 96.5 km north of Fresnillo‘s (FRES-L) producing Fresnillo gold-silver mine, has an indicated resource of 4.5 million tonnes averaging 103.4 grams silver per tonne containing 15.26 million oz. silver.

Inferred resources at the La Quinta zone on the deposit’s Concordia vein, and the North zone on San Gregorio vein, total over 14.5 million tonnes averaging 83.8 grams silver for an additional 39.1 million oz. silver.

Initially the company thought Nieves was a smallish high-grade prospect, but further investigation soon convinced its exploration team otherwise. “

There were several theories at first,” Patton explains. “Before we thought that Concordia and San Gregorio might be one vein offset by faulting, but the IP has demonstrated they are two parallel veins. There are also some strong anomalies extending out to the West that haven’t been drilled on San Gregorio…and the Concordia vein is open to both the east and the west with strong anomalies, so we think we’ve got a good chance to expand the resource significantly.”

Nieves is looking like a very strong asset in Quaterra’s portfolio, particularly given rising silver prices. Silver outperformed gold last year with a 48% price gain, and so far this year it has set record highs and added over 26%, Mark Bulsing, a strategist at UBS Wealth Management noted in a Sept. 27 research note.