A review of different scenarios, metal prices, designs and operating cost assumptions based on a new resource estimate for the Cachinal silver project, in Chile, indicates a “reasonable prospect” for an open-pit mine on the property to a depth of about 150 metres, Valencia Ventures (VVI-V, VVIVF-O) reports.
SRK Consulting also concluded that mineralization below 150 metres was amenable to an underground mining operation at the deposit, about 200 km southeast of the port city of Antofagasta in northern Chile.
Valencia’s 100%-owned Cachinal deposit contains an indicated resource of 5.7 million tonnes grading 101 grams silver per tonne (for a total of 18.41 million oz. silver), 0.13 gram gold and 0.22% zinc, according to a new resource estimate.
The deposit also has an inferred resource of 800,000 tonnes grading 115 grams silver per tonne (3.02 million oz. silver), 0.12 gram gold and 0.22% zinc.
Valencia kicked off exploration at Cachinal in 2004 and released its first National Instrument 43-101 resource estimate in February 2007.
The new estimate was reported at a cutoff grade of 40 silver-equivalent grams per tonne to a depth of 150 metres (assuming an open-pit mine scenario) and at a cutoff grade of 150 grams silver equivalent below 150 metres depth (assuming an underground mining operation).
The cutoff grades were based on assumptions of US$12.50 per oz. silver, US$650 per oz. gold and metallurgical recoveries of 85% for silver and gold. (Zinc does not contribute to revenues.) The silver-equivalent grades were determined using a gold-to-silver ratio of 50:1.
The estimate was calculated using data from 22,780 metres of reverse-circulation drilling in 176 drill holes, 588 metres of core from five diamond-drill holes, and 36 surface trenches over a strike length of 2,250 metres.
SRK has also identified 12 exploration targets and recommended Valencia Ventures launch a 14,000- metre drill program. The program will start immediately, with two rigs scheduled to arrive by the end of March, the company says.
The deposit is situated within the flat, barren Atacama Desert region at an altitude of 2,850-3,150 metres.
Cachinal is a low-sulphidation, structurally controlled silver (gold-zinc) deposit in Chile’s Paleocene gold belt.
In the same belt, 60 km northeast, Yamana Gold (YRI-T, AUY-N) operates its El Penon silver-gold mine, a low-sulphidation-style epithermal silver-gold deposit and one of the world’s lowest-cost gold producers. The Guanaco gold mine, a similar type of deposit owned by Diamond Rose, is 12 km south.
The first silver mining at Cachinal began in 1862. Historical production has been estimated at about 32 million oz. silver. Old workings extended to depths of about 320 metres, although most of the workings only went down to depths of 120-150 metres — generally within the oxidized zone.
Historical grades apparently averaged 500-600 grams silver per tonne with an unknown quantity of trace gold, the company says.
Valencia has completed detailed definition drilling over a strike length of about 2,250 metres; the zone is still open along strike to the north and at depth.
The junior’s shares are currently trading at about 38.5 a share within a 52-week range of 32-85. The company has 59.9 million shares outstanding.
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