Vancouver —
Known as Penasco, the zone contains visible gold starting at a depth of 250 metres and would appear to increase the prospect for an underground mine in conjunction with an open pit.
A recently completed prefeasibility study did not include the Penasco zone but instead focused on the Chile Colorado zone. Penasco will be included in the full feasibility, to be completed in 2005.
Six holes drilled at Penasco intersected free gold and gold-silver tellurides. Western Silver reports wide intercepts of more than 1 gram gold per tonne and narrower intervals of more than 10 grams gold over at least 400 metres in a north-south direction and to a depth of 400 metres. The east-west extent of the zone could be as great as 300 metres.
Hole 166 intersected gold mineralization at a depth of 424-526 metres at the breccia contact. Within this interval were: 62 metres averaging 0.82 gram gold and 41 grams silver per tonne, plus 0.49% lead and 0.79% zinc; 2 metres containing native gold and argentite assaying 536 gram gold and 8,280 grams silver, 4.27% lead and 8.51% zinc; and 24 metres of 5.78 grams gold, 161 grams silver, 1.82% lead and 4.98% zinc.
Other significant intersections include the following:
— hole 152 — 458 metres grading 1.61 grams gold, 46 grams silver, 0.49% lead and 1.17% zinc from a depth of 296 metres;
— hole 160 — 348 metres grading 1.67 grams gold, 51 grams silver, 0.56% lead and 1.14% zinc from a depth of 382 metres;
— hole 170 — 2 metres of 17.15 grams gold, 393 grams silver, and insignificant levels of lead and zinc.
Western Silver’s chairman, Dale Corman, says gold in the Penasco zone is visible from 5 ft. away.
Drilling is testing the vertical and lateral extent of the high-grade gold zone at a spacing of 50 metres east-west and 100 metres north-south. Four rigs have been turning on the Penasco zone since mid-August in an attempt to outline the resource.
Chile Colorado
The prefeasibility study concluded that the Chile Colorado zone can be economically mined to generate an estimated after-tax internal rate of return of 15.3% with a payback period of about five years.
Plans call for open-pit mining of 20,000 tonnes per day over a life of 13 years. The oxide material is believed to have heap-leach potential.
The total capital investment is pegged at US$164.4 million.
Resources at Chile Colorado are divided into three categories: measured (81.2 million tonnes grading 43.4 gram silver, 0.36 gram gold, 0.37% lead and 0.98% zinc); indicated (67.5 million tonnes grading 23.4 grams silver, 0.31 gram gold, 0.18% lead and 0.67% zinc); and inferred (28.8 million tonnes of 21.9 grams silver, 0.23 gram gold, 0.18% lead and 0.5% zinc). All estimates are based on a US$3.75 cutoff.
The zone has a proven and probable reserve of about 98.4 million tonnes grading 39.65 grams silver, 0.36 gram gold, 0.34% lead and 0.93% zinc. Again, the estimate is based on a cutoff of US$3.75.
Western Silver hopes to produce 1.4 million tonnes zinc concentrate and 509,000 tonnes lead concentrate at Penasquito. Contained in those concentrates would be 103 million oz. silver, 626,000 oz. gold, 287,000 tonnes lead, and 835,000 tonnes zinc.
The Penasquito property comprises 390 sq. km.
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