WTC moves ahead at Penasquito

Vancouver — With preliminary test work indicating the potential to lower capital costs by using heavy media separation, Western Copper Holdings (WTC-T) is set to launch a 6,800-metre drill program over its wholly owned Penasquito silver property in Mexico’s Zecatecas state.

Slated to begin in early April, the planned 18-hole program is aimed at up grading the mineralization in the Chile Colorado zone to the reserve category. Western Copper feels that the Chile Colorado zone holds the promise to become one of the largest and lowest cost silver deposits in the Americas. A sink-float test program completed by Tucson-based Mountain States R&D indicates that more than 90% of the metals in the medium and high grade portions of zone can be recovered by crushing to 1 inch with the rejection of 72 and 60 weight % in the float product, respectively. The lower grade material showed that 80% of the metal could be recovered by crushing to 1 inch with the rejection of 55-weight % in the float product. The results could yield savings in capital, operating and environment costs by using heavy media separation on 30-to-75-weight % of the total mill feed.

Covering 32.5 sq. km in the historical Concepcion del Oro district, Penasquito hosts a 9-sq km mineralizing system lying 30 metres below alluvial cover. Modern day exploration over the prospective ground began in 1994 with Kennecott, a subsidiary of mining giant Rio Tinto (RTP-N) completing several geochemical and geophysical surveys, as well as drilling a total of 71 holes. This work led to the discovery of polymetallic mineralization, rich in silver hosted in Cretaceous sandstones at the Chile Colorado zone, 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 of 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, a preliminary economic evaluation using a 20,000 tonne per day operation over a 14 year mine life generates a positive internal rate of return at metal prices of US$4.50 per oz silver, US$280 per oz gold, $0.45 per lb zinc, $0.22 per lb lead.

Data compilation suggests that the zone may mark the southern lobe of a much larger system, which extends north for 1,200 metres.