Western Silver hits hot hole at Peasco (May 17, 2004)

Drilling by Western Silver (WTC-T) has returned a wide swath of high-grade gold mineralization at the Peasco zone on the Peasquito property in Mexico’s Zacatecas state.

Hole 112 returned 8.4 grams gold and 51 grams silver per tonne over 160 metres beginning at a depth of 378 metres, including 8 metres (from 442 metres below surface) averaging 26.7 grams gold and 70 grams silver, and 10 metres (from 466 metres) of 35.7 grams gold and 69 grams silver.

Some 50 metres to the west, hole 117 paralleled hole 112 and cut 50 metres (from 402 metres) grading 4.3 grams gold and 81 grams silver, as well as a 6-metre section (from 570 metres) of 23.6 grams gold and 36 grams silver.

The holes, along with four others, were sunk at 50-metre intervals to test the continuity of mineralization in the northeastern quarter of the Outcrop breccia (one of two breccia pipes on the Peasquito property). The remaining holes generally returned 0.5-3 grams gold and 30-100 grams silver over widths of 20-500 metres. The holes also yielded 0.5-1% lead and 0.5-3% zinc.

Gold mineralization at Peasco occurs along the top of a large mineralized hydrothermal breccia, with higher grades found along sheeted, high-angle zones.

The company says the 600-by-700-metre zone comprises the entire eastern half of the Outcrop breccia pipe. Mineralization remains open at depth. Peasco appears to be zoned, with an upper gold-enriched zone grading downward into silver-lead-zinc mineralization around the margins of the breccia.

Drilling on the eastern side of the Peasco target cut significant oxide gold-silver mineralization, including hole 108, which surrendered 60 metres (from 9.5 metres) grading 0.85 gram gold and 81 grams silver, including a 26-metre section of 1.4 grams gold and 141 grams silver. Western Silver says the shallow (up-to-150-metre-wide) oxide zone may wrap around the northern, eastern and southeastern margins of the Outcrop breccia pipe.

The Outcrop breccia pipe is 1.7 km northwest of the Chile Colorado zone. An independent prefeasibility study concluded that Chile Colorado 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.

The company figures that Peasco could be mined during development at Chile Colorado to provide early cash flow. The zone may also be amenable to underground mining.

Peasco’s oxide and sulphide zones will likely be included in a full feasibility study, slated for completion in 2005. A resource estimate of Peasco is expected in several months.

The latest round of drilling also tested the El Sotol, NE Azul and El Chamisal prospects. Hole 105 at El Sotol, about 1 km to the northeast, was sunk northwest of previous drilling on the zone and cut 44 metres (from 32 metres) of oxide mineralization grading 0.2 gram gold, 25 grams silver, 0.5% lead and 0.5% zinc. The hole then ran into 86 metres of sulphides averaging 0.4 gram gold, 17 grams silver, 0.3% lead and 0.6% zinc.

About 1 km in the other direction, at Azul NE, hole 114 cut 132 metres (from 216 metres) of 0.2 gram gold and 31 grams silver, with minor lead and zinc values. At El Chamisal, 1.8 km to the east, hole 113 managed to cut 2 metres (from 226 metres) of 2.2 grams gold, 166 grams silver, 2.3% lead, and 3.7% zinc.