Scorpio has visions for Nuestra Seora

By the nature of its mining history — from colonial times to the Institutional Revolution — Mexico has a bagful of old mines rendered dormant, and sometimes forgotten, by the ups and downs of the metal markets and the ins and outs of its politics. One such, in northern Sinaloa state, is the Nuestra Seora silver project, now being drawn into the 21st century by Scorpio Mining (SPM-V, SMNPF-O).

Scorpio, which has been drilling and sampling at Nuestra Seora since 2000, is now doing sampling, mine rehabilitation, and dewatering work that will go toward a scoping study on the economics of resuming mining.

Asarco — now part of Grupo Mexico (GEMXICOB-M), but then an American-based miner — produced from three underground mines and a small mill on the Nuestra Seora property between 1954 and 1965, when the Mexican government passed a law requiring that mining operations in Mexico have a minimum of 51% domestic ownership. Before Asarco, French interests had operated direct-shipping silver mines and in colonial times, the Spanish had mined as early as the 1600s.

The Nuestra Seora deposits — copper, lead, zinc and silver in skarns — belong to the Laramide orogenic belt, that string of Mesozoic and younger mineral deposits through the North American Cordillera that owes its origins to continental igneous activity. The Nuestra Seora skarns are in limestones intruded by granodiorite and that Laramide staple, quartz-feldspar porphyry. The mineralization is in the contact skarns and in replacement bodies in the limestone; the replacements are often higher-grade material.

The property hosts four deposits. Nuestra Seora and two others — Candelaria and Santo Domingo — were mined by Asarco, although only Nuestra Seora saw development on multiple levels. A fourth deposit, Santa Teresa, was mined in the early days, but has seen no development since the beginning of the 20th century.

Scorpio’s work started with drilling on Candelaria but has shifted to underground exploration of the Nuestra Seora since 2004. Scorpio has driven a ramp 800 metres into the deposit and done over 500 metres of drifting off it, and the underground access has allowed the company to drill about 12,000 metres from underground.

In February, Scorpio published an outside consultant’s resource calculation that put the size of the indicated resource at Nuestra Seora at 1.1 million tonnes grading 203 grams silver per tonne, with 3.47% zinc, 0.91% copper, 1.44% lead, and 0.24 gram gold per tonne. There is an inferred resource of 978,000 tonnes that grades 229 grams silver, 4.07% zinc, 0.92% copper, 2.72% lead and 0.35 gram gold per tonne.

The resource rests on a database including the 12,000 metres of underground drilling and another 10,000 metres Scorpio did from surface. It is cut off at a gross metal value of US$70 per tonne, based on prices of US$7.50 per oz. for silver, US$460 per oz. for gold, US$1,250 per tonne for zinc, US$3,080 per tonne for copper and US$880 per tonne for lead.

A resource figure published last November had estimated the size of the deposit at 1.2 million tonnes, all inferred, at average grades of 219 grams silver, 3.79% zinc, 1.23% copper, 1.13% lead and 0.25 gram gold per tonne. The new resource contains about 75% more silver (in indicated and inferred categories) than the old one.

Most recently, following the successful drilling campaign of 2005, Scorpio has been sampling workings it had dewatered in Asarco’s old Nuestra Seora mine. Underground mapping showed that the mineralized zones are about 150 metres wide on the mine’s No. 8 Level, mainly in endoskarn (skarn material inside the intrusive contact between granodiorite and limestone). Very high-grade samples are common in the workings; one 29-metre channel sample in the No. 8 Level’s western drift ran 495 grams silver and 1 gram gold per tonne, with 8.79% zinc, 6.68% lead, and 1.64% copper. Another, in the eastern drift, ran 527 grams silver and 0.7 gram gold per tonne, with 4.1% zinc, 2.47% lead and 2.31% copper over a metre.

Scorpio has also found mineralized material in remnants and pillars at higher levels of the mine.

Candelaria

At Candelaria, about 500 metres northeast of the Nuestra Seora mine, Asarco took out about 150,000 tonnes of ore in the 1960s. Scorpio had done enough drilling by 2003 on Candelaria to put together a measured and indicated resource of 131,000 tonnes grading 521 grams silver, 3.81% zinc, 1.88% lead, 0.84% copper and 0.9 gram gold per tonne. Another 49,000 tonnes, running 659 grams silver, 6.5% zinc, 2.52% lead, 0.98% copper and 1 gram gold per tonne, was inferred. That represented only a part of the mineralization, which had been traced along a 200-metre strike length and down to a depth of 180 metres.

Subsequently, Scorpio went underground on Candelaria, and did 14,500 metres of diamond drilling. Most intersections in the underground holes were a fraction of a metre to about 3 metres wide, with silver grades ranging from 100 to 1,000 grams per tonne and combined base metal grades mostly around a few per cent. Hole UG-22, perhaps a good example, ran 299 grams silver, 0.17% zinc, 1.94% lead, 0.27% copper and 1.8 grams gold per tonne over 1.7 metres.

Still, the mineralized zones opened out in a number of places, providing occasional wide, high-grade intersections. One hole, UG-14, cut a 10.7-metre core length grading 987 grams silver, 11.3% zinc, 3.96% lead, 2.03% copper and 1.6 grams gold per tonne; another, UG-16, averaged 1,125 grams silver, 5.49% zinc, 5.99% lead, 0.69% copper and 1.44 grams gold per tonne over 27.4 metres.

Scorpio’s property includes the other two known deposits, Santo Domingo, about 200 metres west of Candelaria, and Santa Teresa, about 200 metres northwest. There was limited work on these two occurrences though what can be said is that Santo Domingo hosts manto-style mineralization in the limestone country rock, while Santa Teresa is a strongly developed skarn, suggesting a nearby intrusive contact. Scorpio has title to 134 sq. km of exploration concessions surrounding the main mining properties. An airborne geophysical survey in 2001, flying magnetic, electromagnetic and radiometric instruments, located over a thousand conductive zones.

Scorpio recently arranged a brokered private placement of 15 million shares at $1.00 per unit, each with half a warrant attached. A full warrant entitles the holder to buy one share at $1.25 for the two years following closing.

T.N.M. Nugget

Scorpio Mining’s Nuestra Seora Project

OWNERSHIP:

Scorpio Mining 100%

PROPERTY:

134 sq. km, northern Sinaloa state, Mexico

PRODUCTION:

Asarco, 1954-1965,

about 1.7 M t from three orebodies

RESOURCE:

Nuestra Seora, indicated 1.1 M t at 203 g/t silver, 3.47% zinc, 0.91% copper, 1.44% lead,

0.24 g/t gold; inferred 1 M t at 229 g/t silver, 4.07% zinc,

0.92% copper, 2.72% lead,

0.35 g/t gold; Candelaria, measured and indicated 130,000 t at 521 g/t silver, 3.81% zinc, 0.84% copper, 1.88% lead,

0.87 g/t gold;

small inferred resource.

ECONOMICS:

Scoping study under way; resource cutoff US$70 per tonne, based on US$7.50/oz silver, US$460/oz gold,

US$1,250/t zinc.