Western Copper moves ahead at Penasquito

Vancouver — Western Copper Holdings (WTC-T) is about to launch a 6,800-metre drill program on its Penasquito silver property in Mexico’s Zecatecas state, following tests which indicate potential for lowering capital costs by using dense media separation.

The 18-hole program will attempt to upgrade mineralization in the Chile Colorado zone to the reserve category. Western Copper says the zone promises to be one of the largest and lowest-cost silver deposits in the Americas.

Tests by Tucson-based Mountain States R&D indicate that more than 90% of the metals in the medium- and high-grade portions of zone can be recovered.

Covering 32.5 sq. km of the historical Concepcion del Oro district, Penasquito hosts a 9-sq.-km mineralized system lying 30 metres below alluvial cover. Modern-day exploration over the prospective ground began in 1994 with Kennecott, a unit of Rio Tinto (rtp-n), completing several geochemical and geophysical surveys and drilling 71 holes. This work led to the discovery of polymetallic mineralization rich in silver, hosted in Cretaceous sandstones at the Chile Colorado zone, as well as two large breccia pipes and numerous, as-yet-untested anomalies.

Western Copper entered the picture in 1998 by acquiring the property as part of a deal that included eight projects scattered throughout Zacatecas, San Luis Potosi and Guanajuato states. The Dale Corman-led junior subsequently drilled nine holes on the property before dealing it to Lima, Peru-based Mauricio Hochschild & Cia in August 2000.

Last year, Western Copper reacquired its 100% stake in the project after Hochschild dropped its option to earn a 68% interest. Hochschild spent more than US$1 million on exploration, mostly at the Chile Colorado prospect, where 11 core holes were drilled. As a result, silver-lead-zinc mineralization was delineated over an area of about 500 by 350 metres and to a depth of 300 metres. The weighted average of the mineralized intervals from 19 holes drilled at Chile Colorado by Kennecott, Western Copper and Hochschild is 0.54 gram gold and 100 grams silver per tonne, plus 0.8% lead and 1.8% zinc. Based on the results, Western Copper proposes a 20,000-tonne-per-day operation over a 14-year mine life. The operation would generate a positive internal rate of return at metal prices of US$4.50 per oz. for silver, US$280 per oz. for gold, US45 per lb. for zinc, and US22 per lb. for lead.

The zone is believed to mark the southern lobe of a much larger system, which extends north for 1,200 metres.