Soltoro hot on Jalisco’s potential

SITE VISIT

PUERTO VAL LARTA, JALISCO STATE, MEXICO — Soltoro (SOL-V) has grown in the past few years from a small, nimble Mexico-focused explorer bursting with geological ideas into a company sitting on a shallow, 25-million-oz. primary silver discovery and hard-won wisdom on the mineral potential of its intriguing portfolio of silver, gold and copper prospects situated around the southern edges of Mexico’s Sierra Madre mountains.

Soltoro (a fusion of the Spanish words for “sun” and “bull”) went public in August 2006, with president and chairman Andrew Thomson taking care of business at the Toronto head office, and a team of six geologists tending to the technical side of things from Soltoro’s field office in Jalisco’s bustling capital city of Guadalajara.

After Thomson, the other Soltoro directors are William Mc-Guinty, CFO Douglas Reeson, Phillip Walford and Mark Lawrence. Industry veterans Chester Millar, Lawrence Curtis and Terence Bottrill also serve on an advisory board.

“We’re a pure exploration company that’s stayed focused on bulk-tonnage gold, silver and copper targets,” says Thomson. “The concept is that we really felt the majors would descend on Mexico and we wanted to pick up targets that were in the bulk tonnage category that we could drill and make grassroots discoveries on.”

And, happily, Soltoro has done exactly that at its most-advanced project, the wholly owned El Rayo silver-lead-gold property, much of which was bought by Soltoro from staker and Canadian ex-pat geologist Chris Lloyd in 2005 and then expanded upon. Today, the El Rayo property encompasses 100 sq. km immediately south of the colonial town of Guachinango, which was once Jalisco’s state capital but now has only 3,000 inhabitants. The town is a 3-hour drive up mostly paved road from the humid, coastal tourist city of Puerto Vallarta, and a mere 100 km west of Guadalajara and its population of 4 million.

More broadly, Soltoro’s portfolio of Jalisco properties are in a pretty, picture-postcard region of pastoral highlands that boast a gentle climate and attract many American and Canadian snowbirds, and are less affected by the bloody gang wars that famously plague other regions of the country.

It’s true that Jalisco — Mexico’s geographic “elbow” — isn’t the first state that comes to mind when one thinks of mining in Mexico, but silver extraction just in the Guachinango area dates back to Spanish Conquistador times in 1545, with bursts of silver frenzy in the early 1900s and lead mining by Americans during the Second World War. Today, Soltoro knows of 15 small, abandoned underground mines in the area.

In the 1970s, the El Rayo collection of claims were part of the National Mineral Reserve, and the Consejo de Recursos Metlicos (CRM, the Mexican Geological Survey) carried out an exploration program on them that estimated an historic resource of 1.36 million tonnes grading 169 grams silver per tonne.

The properties were staked by Summex Mines in the mid-1990s, but those claims lapsed a few years later, eventually leading to three watershed events for Soltoro: Lloyd’s staking of a key 38 sq. km of ground in early 2005, the teaming up of Lloyd with Thomson to form Soltoro, and the staged expansion of Soltoro’s landholding to 100 sq. km. In 2007, Soltoro also bought from Fury Explorations the airborne magnetic and electromagnetic geophysical data collected by Summex over the claims.

For Thomson, whose personal interest in the El Rayo area stretches back to the early 1990s, Jalisco’s overlooked status relative to Mexico’s dominant mining states, plus its wholly under-appreciated bulk-tonnage potential provided the new Soltoro vehicle with a rare opportunity to slip in early and maybe get its hands on something big at a small price.

Geologically, the El Rayo property is underlain by Oligocene to mid-Miocene volcanic rocks of southwestern Mexico’s Jalisco Block. The property hosts a Vshaped collection of deeply oxidized, quartz-vein-filled structures, with the 5-km-long gold-silver-enriched El Rayo structure on the left side of the “V” and the 1.7-km-long silver-lead-rich Las Bolas structure (named “the balls” owing to the presence of many ball-shaped rocks in the brecciated structure) on the right side, plus the 1-km-long silver-lead Highway zone just east of the bottom of the “V”, which looks to be a down-faulted offset of the Bolas structure.

The town of Guachinango, which contains all modern conveniences, lies 1 km northeast of the northern end of the El Rayo structure, and a northwest-trending paved road into Guachinango zigzags around and through the Highway zone and Las Bolas structure.

“You can’t communicate the infrastructure enough on this one,” says Thomson. “It’s perfect.”

Spending a sunny day scampering up and down the property’s prominent epithermal mineralized structures and poking around the historic mine entrances, it’s easy for a visitor with a bit of geological or mining training to dream up all kinds of exploration and mining scenarios for Soltoro.

But with a small team and limited funds, Soltoro has had to be pragmatic, and it made getting a National Instrument 43-101 compliant resource on the Las Bolas structure its number-one priority the last couple of years.

Within an intensely hematized structure, the Las Bolas epithermal oxide-silver vein deposit is about 40 metres thick, dips 40 degrees to the northwest, and has now been traced to an open-pittable 300 metres depth along 800 metres of strike length.

“The entire structure is very consistent,” says Thomson. “We’ve put numerous drill holes in and hit mineralization in every hole, so we’re pretty confident.”

After completing some 76 holes totaling 20,000 metres of new diamond and reverse-circulation drilling into Las Bolas between 2006 and 2009, Soltoro released a milestone NI 43-101 compliant resource in May 2010.

It tallied, within an 850-metre, andesitic portion of the structure, 9.47 million indicated tonnes grading 69.4 grams silver per tonne for 21.1 million contained oz. silver, using a cutoff grade of 40 grams silver, a 65% recovery rate and US$16 per oz. silver.

A further 1.8 million inferred tonnes grading 67.4 grams silver add 4 million contained ounces silver to the Las Bolas deposit, and a southern extension to it, called the Matachines deposit, hosts 400,000 inferred tonnes at 65 grams silver for 850,000 contained ounces silver.

The resource was calculated by the independent Toronto-based firm Agnerian Consultants, using assay data from ALS Chemex Laboratories.

Soltoro’s limited and first-ever drilling into the Highway zone suggests an open-pittable resource there in the neighbourhood of 2 million at similar grades, but the zone still lacks a NI 43-101 compliant resource.

Meanwhile over on the heavily silicified, southernmost end of the El Rayo structure, there are the bones of the old Catarina underground silver mine, which was the largest mine developed so far in the camp, extending 500 metres in length and to 250 metres in depth. Here, Soltoro has had early success with its mapping, trenching and drilling programs, building on past work that included government surveying during the late 1970s and early ’80s.

The 1.1-km-long northwestern end of the El Rayo structure has both gold and silver potential in a large, intensely hydrothermally altered flexure. Soltoro’s drilling of eight holes in late 2009 over a 250-metre-long portion of the flexure to a depth of 150 metres outlined a preliminary 1 million tonnes grading about 1 gram gold and 14-15 grams silver per tonne.

Soltoro continues to expand Las Bolas via the drill bit, reporting in late September that a 10-hole step-out drilling campaign has “doubled the depth, doubled the width and extended the known silver oxide zone down to a 250-metre depth from surface.”

With eight of 10 holes encountering significant intercepts, highlights include two diamond drill holes: no. 46 which returned 260 metres grading 50 grams silver pe
r tonne; and no. 41, which cut 173 metres of 46 grams silver.

In August Soltoro contracted Reno-based Kappes Cassiday & Associates to carry out metallurgical testing to improve on the conservative 65% gold-silver recovery rate assumed in the May resource estimate. Early results suggest recovery rates in the high 70s are possible.

Additional mineralogical work recently completed at the University of Toronto found that the silver at El Rayo is primarily in the form of the common silver ore mineral acanthite, along with lesser amounts of the silver-copper sulphide mckinstryite. Other significant minerals present are galena, the lead carbonate cerrusite, mimetite, chalcocite, covellite, malachite-azurite, sphalerite and hawleyite-greenrockite (a cadmium mineral).

Thus, with the inclusion of the latest drill results and metallurgical work, Soltoro’s upcoming, revised resource estimate — which will also likely include for the first time material from the Highway zone — should substantially increase the Las Bolas structure’s tonnage and silver tally. These numbers will be incorporated into a future scoping study.

“We’re pretty happy: we’ve put about $3 million into the (El Rayo) project so far, and we’re coming out with a ten-cent-an-ounce 30 million ounces,” Thomson says. “With time, Jalisco will come forward. There’s still this perception that Jalisco doesn’t have the right geology, but I’m of the opinion that the drill bit is going to prove it does.”

Elsewhere in Jalisco and beyond, Soltoro is methodically advancing grassroots exploration programs at its Victoria, Quila, Tortuga, Pea Grande, Chinipas and El Santuario projects.

At Victoria in Jalisco’s historic Mascota-Navidad mining district, Soltoro recently carried out a 1,500- metre diamond drill program to probe gold-silver targets below the historic Lupita mine and a nearby gold-in-soil anomaly. Soltoro acquired the 1.2-sq.-km mine property in March 2010, to complement its existing 110-sq.-km Victoria claims that were staked by Soltoro in 2006.

Quila in Jalisco was until recently a joint venture with former optionee Southern Silver Explorations (SSV-V), with potential iron ore-copper-gold (IOCG) and gold-silver systems.

“We feel there’s a good chance this may all be IOCG,” says Thomson, describing how Japan’s Sumitomo took an interest in carrying out induced polarization surveying at Quila in a joint venture with Soltoro before backing out at the onset of the recession in 2008.

Tortuga in Jalisco, meanwhile, “could be either a porphyry system or an IOCG system,” Thomson says. “One of the things that first struck me about the area was the large amount of copper and gold over such a large area,” with copper showings over 49 sq. km.

Thomson says that when it comes to groups such as German and Chinese metal companies in Mexico, “they’re all looking for iron. Everyone goes out and looks at the iron properties and sees that they’re only 25% iron. And 25% iron for a pure iron mine doesn’t fly. It’s gotta be 65% iron. And they’re all contaminated with copper. So they leave them.”

Soltoro, Thomson stresses, needs to “go in and re-evaluate them with an eye to the IOCG model of things, and basically see if there’s enough copper and/or gold to justify further work. That’s what we’re finding on our Tortuga and neighbouring properties.”

The 317-sq.-km Pea Grande property in San Luis Potosi state hosts bulk-tonnage, polymetallic potential, but is only in the earliest stages of work.

Soltoro has 35.05 million shares outstanding and recently traded at 39¢ within a 52-week trading range of 17¢-55¢, for a $14-million market cap with $600,000 in the treasury. The stock has doubled since early August, and Soltoro is weighing its options with respect to the next stage of financing.

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