BASE METALS — Valerie determined to find gold mine in Mexico

In spite of disappointing drill results, Valerie Gold (VLG-V) is persevering in its exploration efforts on the Mamantla polymetallic property in south-Central Mexico.

The company’s stock price reached a high of $28.90 a year ago but has since fallen steadily. It recently sank below $2, following the release of new diamond drill results from Mamantla.

“A year ago, the market reacted to the first hole we announced [from the Capire zone],” says Arthur Troup, Valerie’s vice-president for exploration and development. “Initially, the market was hoping — and we were hoping — we would have a high-grade deposit for underground and open-pit mining.” That first hole returned a 6-Metre massive sulphide intersection grading 5.67% zinc, 2.38% lead and 0.66% copper, as well as 0.4 gram gold and 445 grams silver per tonne. However, subsequent results suggested that an open-pit mine plan was more realistic, he says.

The junior acquired the Mamantla Mineral Reserve, which lies in the Campo Morado region, 160 km southwest of Mexico City, in 1994. Valerie, which is one of an number of companies run by veteran mining promoter Frank Lang, is the first non-Mexican outfit to explore the property.

The most recent results were recovered from seven areas.

Results from the Capire zone include: 4 metres of 0.37% lead, 1.17% zinc and 0.07% copper, as well as 0.19 gram gold and 43.5 grams silver, in hole 37; 2 metres of 0.82% lead, 3.35% zinc and 0.19% copper, as well as 0.24 gram gold and 79 grams silver, in hole 46; and 4 metres of 0.16% lead, 33% zinc and 0.04% copper, as well as 0.16 gram gold and 34 grams silver, in hole 51.

Holes 45 and 50 returned insignificant values.

“In the Capire area, where we’ve done half of the drilling, the zone seems to be 10 to 15 metres thick, on average,” says Troup.

Results from drilling at Los Mantos, 3 km to the north, include the following: * Hole 1 — 13 metres of 0.21% lead, 0.38% zinc and 0.05% copper, as well as 0.11 gram gold and 94.77 grams silver (including two higher-grade intercepts of 2 metres of 0.92% lead, 1.55% zinc and 0.25% copper, as well as 0.55 gram gold and 562.5 grams silver) and 1 metre of 1.51% lead, 2.63% zinc and 0.48% copper, as well as 1.03 grams gold and 1,101 grams silver;

* Hole 2 — 1.18 metres of 0.07% lead, 0.15% zinc and 0.02% copper, as well as 100 grams silver; and

* Hole 3 — 17.27 metres of 0.49% lead, 0.79% zinc and 0.08% copper, as well as 0.2 gram gold and 82.06 grams silver (including 0.38 metre of 5.78% lead, 9.77% zinc and 2.31% copper, as well as 0.69 gram gold and 1,200 grams silver).

At Yerba Buena, hole 10 returned 2 metres of 2.06% lead, 2.21% zinc and 0.05% copper, as well as 0.58 gram gold and 75 grams silver. Hole 11 intersected 5.3 metres of 1.46% lead, 1.77% zinc and 0.06% copper, as well as 0.06 gram gold and 51.53 grams silver.

Two deeper intersections in the latter hole returned 1.8 metres of 1.55% lead, 2.42% zinc and 0.08% copper, as well as 0.1 gram gold and 65 grams silver, and 1 metre of 2.73% lead, 4.46% zinc and 0.05% copper, as well as 0.41 gram gold and 62 grams silver. No significant results were reported in hole 9.

.SSan Carlos

At the San Carlos zone, holes 1, 2 and 3 returned insignificant values.

Hole 4, however, returned 1 metre of 0.42% lead, 0.37% zinc and 0.1% copper, as well as 0.65 gram gold and 17 grams silver. Hole 5 returned 1.7 metres grading 0.14% lead, 0.91% zinc and 0.02% copper, as well as 0.31 gram gold and 10 grams silver.

Hole 6 intersected 1.4 metres grading 1.24% lead, 2.44% zinc and 0.01% copper, as well as 0.1 gram gold and 27 grams silver. A deeper, 2-Metre intersection returned 0.57% lead, 1.6% zinc and 0.01% copper, as well as 7 grams silver.

Hole 7 returned 1 metre grading 0.19% lead, 3.07% zinc and 0.02% copper, as well as 0.07 gram gold and 10 grams silver. A deeper, 3.3-Metre intersection returned 1.62% lead, 3.37% zinc and 0.01% copper, as well as 0.02 gram gold and 24.82 grams silver.

Drilling at the Azulaquez and Tlanilpa zones returned no significant results.

Valerie owns 100% of the 20,800-ha concession, though the Mexican government would receive a 3% net smelter return royalty on silver and gold and a 1% royalty on lead, zinc and copper.

Last year, Toronto-based TVX Gold (TVX-T) agreed to manage exploration and development in return for the right of first refusal. Some $6 million has been spent on the project since 1994.

“[TVX is] looking at it as a low-grade deposit,” explains Troup. “They need 40 million tonnes at the current grade. Below that, they would be looking for a higher-grade deposit.”

Campo Morado covers a geological region called the Teloloapan Subterrane, the geology and mining history of which have also attracted such foreign companies as Farallon Resources (FAR-V), Teck (TEK-T) and Newmont Gold (NGC-N).

“There are two types of mineralization, says Troup — laminated mineralization in the sedimentary unit, and stringer-Type at Yerba Buena.” The laminated mineralization occurs in the upper 30 metres of a 100-Metre-Thick sedimentary unit, which lies between upper and lower volcanic units.

.SAnomalous areas

The laminated body is stratigraphic and associated with a prominent geological contact zone between sedimentary rock and overlying volcanic rock.

According to Troup, the contact has been traced for 10 km through geological mapping.

“We currently have a number of anomalous areas along that contact,” he says.

“It appears the rocks are folded, deformed and sheared. Consequently, the thickness of the mineralized zone is varied along that contact. We plan to use geochem to find the thickest area of mineralization.”

About 40% of Mamantla has been covered by mapping. Valerie geologists, over the next three months, will use that data to trace the favorable contact across the rest of the property. The work will be followed by geochemistry, soil sampling and induced-polarization surveys.

The company plans some 8,000 metres of drilling and expects to have spent US$1.5 million between May and the end of July. “Because of the requirement that we have a fairly large tonnage, we’re giving priority to larger anomalies along that contact,” explains Troup.

Owing to the approaching rainy season, much of the drilling will be done over the next month. During the summer, the company can drill areas that are accessible by road.

“There are several small farms on the property,” he says. “The farmers don’t want us building roads through their farms because, during rainy season, those roads become rivers.”

Valerie has 14 million shares outstanding on a fully diluted basis. Although Troup admits that Valerie is concerned about its stock price, he says the company has almost $20 million in the treasury. “We are well-financed for the next stage of exploration,” he insists.