Silver Standard expands Manantial Espejo

Vancouver — Following a drill program at the Manantial Espejo silver-gold deposit in southern Argentina, Silver Standard Resources (SSO-V) has increased its indicated silver-equivalent resource at the Karina-Union vein by 44%.

The 5,142-metre program, completed in early winter of last year, focused on the Karina-Union vein system. Measured and indicated resources from the deposit now total 4.39 million tonnes grading 263.8 grams silver and 4.51 grams gold per tonne, which represents a 9.9% increase in silver-equivalent resources.

The inferred resource stands at 1.59 million tonnes grading 258.2 grams silver and 3.65 grams gold per tonne. Measured and indicated resources represent 73% of the total resource.

Drill results included bonanza grades over narrow widths (6,189 grams silver per tonne and 26.4 grams gold over a 1-metre interval in hole 176), as well as high-grade results over longer intervals (hole 178 intersected 444.3 grams of silver and 4.92 grams of gold per tonne over 18.6 metres). Lakewod, Colo.-based Pincock Allen & Holt reviewed the resource data.

Black Hawk Mining (BHK-T) will hold a 90% interest in the Manantial Espejo project as soon as it completes its purchase of 20% from Barrick Gold (ABX-T). Silver Standard will hold the remaining 10% interest, with an option to earn a further 40% from Black Hawk in return for paying US$1.5 million (now paid) and spending US$4.5 million on exploration by 2002 (extendible to 2003 under certain conditions). Underlying vendors retain two royalties, one of which is tied to production but can not exceed $600,000. The other is a 0.5% net smelter return.

Discovered in 1989 in Santa Cruz province, the project consists of eight concessions covering 225 sq. km. It is accessible via a good public all-weather gravel road. The property is 160 km west of the tidewater port of Puerto San Julian.

Geologically, the property is underlain by Jurassic-aged andesitic flows and agglomerates covered by felsic tuffs and ignimbrites. Silver and gold mineralization is associated with northwest-trending fault zones. Silver and gold mineralization is generally confined to continuous shoots in quartz veins. The silver-to-gold ratio is reportedly consistent at 100-to-1.

The best metal recoveries averaged 85% for silver and 95% for gold, and were achieved by agitated leaching using cyanide.

According to preliminary calculations, Manantial Espejo is capable of generating a 20% return on investment, assuming a capital cost of US$45 million. This estimate is based on a 500,000 tonne-per-year mining operation and silver and gold prices of US$6 and US$325 per oz., respectively.

Silver Standard and Black Hawk have purchased two ranches totalling 280 sq. km for US$575,000, including buildings, payable over three years.

The ranches cover the main areas of defined mineralization at Manantial Espejo. The surface ownership will provide assured access to mining operations when metals prices warrant development and production.