Source finds more gold at Las Minas in Mexico

VANCOUVER — A small drill program has returned a big result for Source Exploration (TSXV: SOP), in the form of a lengthy, well-mineralized intercept from its Las Minas gold–silver–copper project in east–central Mexico.

Hole 14-3 probed the Santa Cruz target, a skarn target near the south end of the known mineral trend at Las Minas. The drill hit into mineralization from surface and returned 97.2 metres grading 1.19 grams gold per tonne, 9.42 grams silver per tonne and 0.79% copper, including 16 metres of 4.39 grams gold, 37.82 grams silver and 2.96% copper. 

The two other Santa Cruz holes in the recent program were also successful. Hole 14-1 returned 114.8 metres grading 0.77 gram gold, 3.25 grams silver, and 0.46% copper; and hole 14-2 cut 32 metres grading 1.08 grams gold, 6.53 grams silver and 0.57% copper. All intercepts started at surface.

Collectively the results extend the known zone of high-grade mineralization at Santa Cruz 75 metres northwest. High-grade mineralization at Santa Cruz comprises chalcopyrite and bornite alongside considerable magnetite and the sulphide zone minerals sit within a large magnetic anomaly. Source president and CEO Brian Robertson noted that the spatial relationship between the high-grade mineralized zones outlined by drilling and the strong magnetic anomaly “is significant” in part because there are other clear mag targets on the property.

Source is also drill-testing the El Dorado target, located 550 metres north along strike. At El Dorado drill hole 14-12 cut 20.4 metres grading 0.7 gram gold, 3.46 grams silver and 0.51% copper, including 6 metres of 1.37 grams gold, 5.1 grams silver and 1.13% copper. 

The hit extended the known downdip reach of the skarn, which runs northeast–southwest underneath a hill and has been tracked over 840 metres strike. Drill intercepts to date have ranged from 20 to 245 metres thick, and the zone remains open in all directions. 

Source has completed the first phase of its 2014 drill program, which totalled 2,740 metres. The company is planning a second phase and hopes to develop an initial resource estimate for Santa Cruz and El Dorado this year.

Las Minas is located 270 km east of Mexico City in Veracruz state. The area has a long and active mining history, starting in the Aztec era when local indigenous people mined gold to pay their taxes to the Aztec empire. Mining continued through Spanish colonial times, with several dozen small operations shipping ore grading 15–30% copper and 20 to 40 grams gold to smelters elsewhere in Mexico. 

Today the district is home to Goldcorp’s (TSX: G; NYSE: GG) Los Filos mine, which churns out 330,000 oz. gold annually from a skarn deposit that offers almost 8 million reserve oz., and the adjacent Morelos gold property where Torex Gold Resources (TSX: TXG) is building a mine to tap into a skarn deposit offering 4.1 million reserve oz. at an average grade of 2.61 grams gold. 

Source believes the mineralization at Las Minas and its association with magnetite are similar to the deposits at Los Filos and Morelos. As at those deposits, mineralization sits in zones along the contact between the overlying limestone and the deeper intrusive rocks. 

Source’s share price lost a cent on news of the latest drill results from Las Minas to close at 12¢. But there is a much more interesting story when it comes to Source’s share price.

In mid-November shares rose dramatically, jumping from 1.5¢ to 9¢ after Source appointed a new chairman and several new board members. Joining as chairman was David Baker, who has 25 years of experience managing and financing junior resource companies. Baker spent his last nine years building Goldbrook Ventures, a Quebec-focused explorer that was acquired by its Chinese joint-venture partners in 2012 for $100 million. 

Within two months the new personnel enabled Source to close a $386,250 financing, putting much-needed funds into a near-depleted bank account. With so little money available Source had been quiet in 2013 and without new funds 2014 would likely have been the same, or worse. Instead, by closing the small raise Source was able to embark on this short drill program, breathing new life into Las Minas.

The company’s share price remained near 9¢ for several months, adding another few cents recently on the first drill results from Las Minas in almost two years. Source has 63 million shares outstanding.