Reserves still on the rise at Pallancata

VANCOUVER–For the second time in five months, International Minerals (IMZ-T, IMZLF-O) and Hochschild Mining (HCHDF-O, HOC-L) have proved up a significant reserve and resource boost at their Pallancata gold-silver mine in southern Peru.

Pallancata now hosts 5.9 million tonnes of proven and probable reserves grading 330 grams silver per tonne and 1.2 grams gold. In addition, inferred resources stand at 852,000 tonnes grading 369 grams silver and 1.2 grams gold.

The new reserve adds 80% to the estimate from March, or a 450% increase compared with the mine’s first reserve estimate, which was part of a prefeasibility study in August 2007. International Minerals discovered the deposit in 2003.

Hochschild owns 60% of the mine and acts as operator; International Minerals holds the remaining 40%. The joint-venture partners started production at Pallancata in September 2007, at which time the mill processed 500 tonnes per day. Efforts to ramp up production started immediately; by the end of 2008, the partners expect to have the mill chewing through 2,000 tonnes per day.

The ramp-up efforts have already lifted production numbers significantly. In the second quarter of 2008, the mine produced 829,000 oz. silver and 3,230 oz. gold, increases of 66% and 67%, respectively, compared with the first quarter of the year. The average grades for the 83,517 tonnes of ore processed over the quarter were 339 grams silver and 1.7 grams gold.

International Minerals’ 40% share of the mine’s cash flow is expected to cover its portion of the expansion cost, which is estimated at around $7 million.

International Minerals is also advancing its wholly owned Rio Blanco gold-silver project in Ecuador. In late June, the company released a set of drill results from the Bolivar West zone, just 350 metres north of the Alejandra North vein. An underground mining operation for Alejandra North was in the permitting stage before changes to the mining law in Ecuador forced a 180-day halt to all mining activities.

At Bolivar West, good results of late include 9 grams gold and 235 grams silver over 3.2 metres in hole 380, 8.6 grams gold and 78 grams silver over 3.6 metres in hole 391, and 12.1 grams gold and 52 grams silver over 3.6 metres in hole 394. Mineralization at Bolivar West comprises an east-west-trending vein system delineated along 1.5 km of strike, remaining open to the west and at depth.

At Alejandra North, International Minerals has drill-defined proven and probable reserves of 2.15 million tonnes grading 8.8 grams gold and 62 grams silver. A resource estimate for Bolivar West is expected within a few months’ time; drilling at the project is currently on hold due to the nationwide suspension of mining activities.

And, on a third and final note, International Minerals has decided to return the Antabamba gold-silver property in Peru back to joint-venture partner and property owner Barrick Gold (ABX-T, ABX-N). International Minerals’ exploration efforts in the area identified high-grade but narrow mineralized shoots within the known veins on the property and management considers the potential to develop significant tonnage limited.