Small-scale production helps Impact explore large Mexican project

Vancouver – Impact Silver (IPT-V) has slowly been ramping up production from its small-scale mines in central Mexico, giving the company the cash it needs to explore more of its large land holding in the area. And results from recent drill campaign indicate that, despite a long mining history, the region is still home to precious and base metals.

Impact just completed a 5,000-metre drill program probing the Noche Buena-Carlos Pacheco mining camp, which is part of its Royal Mines of Zacualpan silver district in central Mexico. Impact’s Guadalupe processing plant, which already processes ore from four small mines, is 4 km to the northeast. More generally, Noche-Buena-Carlos Pacheco is a 30-sq. km area in the middle of Impact’s 272-sq. km Royal Mines of Zacualpan land package.

Since acquiring the Noche Beuna-Carlos Pacheco camp two years ago Impact geologists have worked to document and sample 114 old mine and exploration workings, including prospect pits, mine shafts, and tunnels. And Impact keeps finding old workings on its property, which is no surprise considering records suggest mining in the area dates back to 1746. Larger-scale mining got underway in 1900 but lasted only until the Mexican revolution of 1910.

The camp is dominated, geologically, by two northerly-trending veins. The Noche Buena vein to the west has been traced for 1.7 km; the Carlos Pacheco vein on the east side to date runs 2.6 km. Steep topography allowed Impact to sample both veins over a 500-metre vertical extent. It seems Carlos Pacheco carries higher grades of gold and copper at lower elevations while higher up the vein’s silver grades increase. Silver dominates mineralization in Noche Buena throughout.

Results from the first set of holes into the Carlos Pacheco vein returned interesting results. Hole 68 hit a 2.9-metre interval grading 19.6 grams gold per tonne, 68 grams silver per tonne, 0.29% copper, and 0.11% zinc at 86 metres depth. Hole 66returned 3.1 metres grading 0.8 gram gold, 48 grams silver, 0.72% copper, and 0.54% zinc from 101 metres depth. And hole 65 cut 1.5 metres of 5.1 grams gold, 46 grams silver, 0.28% copper, and 0.12% zinc from 120 metres downhole, and then hit 2.1 metres grading 11.3 grams gold and 18 grams silver at 131 metres depth.

More recently Impact released the first set of results from the Noche Buena vein, where drills actually hit the Noche Buena vein, a nearby vein called Noche Buena del Bajo, and several new veins as yet unnamed. For example, hole 70 hit Noche Buena del Bajo at 22 metres depth, returning 8.6 metres grading 0.24 gram gold and 204 grams silver, then intercepted a new vein at 104 metres depth that returned 1.3 metres of 0.27 gram gold and 248 grams silver.

Similarly, hole 71 hit Nocha Buena at 97 metres depth, returning 1.3 metres of 0.16 gram gold and 150 grams silver, then cut a 4.3-metre intercept grading 0.7 gram gold and 233 grams silver from Noche Buena del Bajo 10 metres later, and 10 metres after that hit a new vein that returned 0.41 gram gold and 106 grams silver over 1.6 metres.

Impact tried to hit the Noche Buena veins further north with two holes but poor ground conditions all but stymied those attempts. One drill got as far as Noche Buena and returned 116 grams silver over 1.9 metres.

Impact also just wrapped up a drill program in the Mamatla district. Mamatla is a much larger segment of the Royal Mine of Zacualpan property, specifically the 200 sq. km south of Nocha Beuna-Carlos Pacheco. Impact has identified some 70 mineral prospects within the Mamatla. The two most advanced targets, Aurora I and Capire, are volcanogenic massive sulphide prospects 250 metres apart. They lie 45 km from and along the same belt as Farallon Resources’ (FAN-T) Campo Morado mine, where production from the high-grade G-9 deposit is just getting underway.

Results have been released from a 24-hole program at Aurora I, which after drilling remains open to the south and east. Hole 1 cut 9.9 metres grading 196 grams silver, 0.5 gram gold, 0.2% copper, 1.7% lead, and 3% zinc from just 9 metres depth. Hole 2 returned 389 grams silver, 2.3 grams gold, 0.2% copper, 0.6% lead, and 1% zinc from 7 metres below surface. And hole 11 hit 4.1 metres averaging 320 grams silver, 1.3 grams gold, 0.3% copper, 2.3% lead, and 4.2% zinc.

The Aurora I-Capire program was Impact’s first drilling effort in Mamatla; the company acquired the land in early 2007 and has focused on prospecting, mapping, and sampling until now. Results from the Capire program are pending.

Impact’s production flows through the 500-tonne per day Guadalupe facility. Just over half of Impact’s silver production at present comes from the Chivo mine, which is a high-grade, underground operation. Operations are currently limited because there is only one adit accessing the deposit but Impact has almost completed a second adit that will boost production. Drilling in 2008 expanded the mineralized zone at Chivo to over 300 metres strike, still open for expansion. Strong results included 3,902 grams silver, 3.96% zinc, and 2.16% lead over 1.9 metres on the south extension and 1,118 grams silver, 5.45% zinc, and 1.5% lead over 1.4 metres on the north extension.

The Guadalupe and Gallega mine account for most of the rest of Impact’s silver production. Underground exploration efforts at Guadalupe delineated a new zone, called Kena-Dolores, as well as several nearby veins that will provide higher-grade feed. As a result the company is rebuilding tracks in the mine to access the new areas; production has been curtailed until the redevelopment work is complete.

In the third quarter of 2008 Impact produced 169,273 oz. silver to bring in gross revenues of $2.24 million. Falling prices for silver, lead, and zinc resulted in a small net loss of $233,000. As of the end of September the company held cash and equivalents totalling $7.1 million and net working capital of $8.4 million. The company expects to finance the majority of its exploration expenditure through cash flow from mining operations.

For the third quarter Impact’s mine operating cost per tonne averaged out to $59.27. It’s a number that has risen significantly from 2007 as mining shifted from lower-cost bulk mining at Guadalupe to underground mining at Chivo. In the first nine months of 2008 the company spent $1.4 million on its Guadalupe plant and $4.1 million on exploration and mine development.

News of the latest results from Noche Buena lifted Impact’s share price 10¢ to 63¢. The company has a 52-week trading range of 17.5¢ to $1.75 and has 48 million shares outstanding.