Soho drilling boosts Tahuehueto gold potential

SITE VISIT

Durango, Mexico — Persistence is one quality that Soho Resources (SOH-V, SHRJF-O) can attest to, having stuck with its polymetallic Tahuehueto project, in northwestern Durango state, Mexico, since 1997, through poor mining markets and volatile commodity cycles.

A believer in the project’s potential to host a significant deposit, the company has been systematically exploring and evaluating the numerous known epithermal vein systems and past workings, with an eye towards identifying extensions of the gold-silver-base metal mineralization.

Recent drilling has proved fruitful, demonstrating the continuity and depth of the metal-bearing structures — and aiding Soho’s goal of building tonnage at the project.

Since the mid-1960s, previous operators recognized the high-grade mineralized veins on the project and spent several million dollars on underground workings, road infrastructure and a small mill and flotation circuit. More than 5,000 metres of underground development and exploration workings tested the El Creston, Cinco de Mayo and El Ray vein systems at Tahuehueto.

The geology

Tahuehueto is situated in the Barrancas sub-province of Mexico’s Sierra Madre Occidental Belt, which hosts a large number of the country’s significant mineral deposits and mines. Epithermal mineralization on the project is hosted in a lower volcanic sequence predominantly composed of andesites. A younger, upper volcanic series unconformably overlies the lower sequence and consists mostly of rhyolites and rhyodacitic ignimbrites. The prospective lower volcanics underwent periods of faulting and tilting before they were capped by the younger flows.

The area is intersected by a couple of northwest-southeast-trending faults creating a series of block faults through the mineralized structures. The fault-offset blocks have been down-dropped up to several hundred metres into the local valley.

Geological analysis indicates a number of the separate mineralized zones at Tahuehueto were likely part of larger structures prior to faulting. Polymetallic mineralized epithermal veins are primarily related to a steeply dipping northeast-southwest fault system. Gold, silver, lead, zinc and copper mineralization occurs both in the silicified veins and in breccia-stockwork systems.

One of the more dominant visible features on the project, observed during a recent site visit by The Northern Miner, is the El Creston vein. The structure forms a distinct, resistive ridge on the valley wall with 750 metres of strike, extending 500 metres vertically. It is composed of strongly silicified (stockwork quartz veins) and chloritized andesite. Ten horizontal levels, part of the historic workings, enter the structure; several are accessible.

Historical averages of the vein (pre-National Instrument 43-101) were reported at 5.7 grams gold per tonne, 71 grams silver per tonne, 1.2% lead and 1.2% zinc in the upper oxide zone. The sulphide zone reportedly averaged 7.4 grams gold, 101 grams silver, 3.4% lead and 6.5% zinc.

About 1.5 km southwest of El Creston lies the Cinco de Mayo zone, a vein system hosting similar mineralization and averaging about 1.5 metres in width. Past chip sampling in underground workings (every 15-20 metres along 138 metres of the vein) averaged 4.9 grams gold.

The 2.5-km El Creston-Cinco de Mayo trend is split by a large area of talus that obscures any outcrop. However, geophysical analysis shows a strong induced-polarization anomaly indicating continuity potential along the structure that has since been confirmed by recent drilling.

South of, down slope, and parallel to the El Creston-Cinco de Mayo trend, is the Texcalama vein system, thought to be an additional fault-offset extension to the main zone. The vein exhibits similar alteration assemblages to El Creston.

A number of historic adits enter the structure over about 300 metres of exposure; sampled material grades 7.8 grams gold, 83 grams silver, 0.7% copper, 4.7% lead and 4.6% zinc over an average vein width of 0.6 metre.

Soho’s work

Upon acquiring the project in 1997, Soho conducted an extensive mapping and channel-sampling program (over 1,200 samples) in most of the underground workings.

Much of Soho’s recent exploration effort has been directed towards drill programs on the El Creston-Cinco de Mayo trend with a number of holes intersecting high-grade gold values (up to 6.1 metres of 37 grams gold in hole RC-18) within broader mineralized zones.

The company added a core rig in late 2005, and twinned a number of previous reverse-circulation (RC) holes to verify results. The diamond drilling closely mirrored results from the RC holes. Stepout drilling along strike on the El Creston trend has cut significant mineralization, with DDH-23, a 300-metre southerly stepout hole, intersecting 13.7 metres grading 3.8 grams gold, 50.4 grams silver, 2% lead and 2.2% zinc, including a 6.1-metre higher-grade section of 7.4 grams gold, 83.4 grams silver, 3.4% lead and 3.5% zinc.

Soho’s drill and sampling programs have been successfully testing the lateral and depth extensions of the main El Creston structure and other veins, building a case for a significant mineralized body en route to producing a resource estimate.

Company president and CEO Ralph Shearing is enthusiastic about recent exploration results.

“Underground and surface sample results are very exciting as they confirm ore-grade mineralization is present in the northeastern part of the property, along the trend of the various zones in and around the El Creston-Cinco de Mayo trend,” he said. “What was once believed to be 2.5 kilometres may now have been significantly increased to over four kilometres.”

“Tahuehueto is one of the better mineralized systems I have visited in Mexico,” said chief Goldcorp (G-T, GG-N) consulting geologist and Soho Resources advisor, Art Freeze, following the recent site visit. “The strength of mineralization, continuity of structures, number of structures and width of mineralized veins within those structures, is particularly impressive. . . I believe all the right conditions with respect to mineralization exist to make a mine at Tahuehueto.”

The company is in the midst of having an engineering report and mineral resource estimate compiled for the project, and anticipates results in the second quarter of this year.

Soho holds its 21-sq.-km Tahuehueto project through a 90%-owned Mexican subsidiary.

With 59.6 million shares issued, Soho posts a $30-million market capitalization based on its recent trading level of 50 per share, in a 52-week trading range of 17-70.