Apogee’s Bolivian Pulacayo project moves ahead

The Bolivian Government and Ministry of Environment and Water have given the go-ahead for Apogee Minerals (APE-V) to finalize environmental studies that are required to get permits to build and operate a mine at Pulcayo in southwestern Bolivia.

The approval is an important administrative step necessary in the process to have the project categorized for development.

“Essentially it lays out the terms of reference for the final permitting requirements, the studies that we have to do, and normally that’s a process that can be done within a year,” David Gower, Apogee’s chief executive, explained in an interview.

In the meantime, the company is advancing towards an updated resource estimate and a scoping study that together will be completed early in the first quarter of 2010.

The Pulacayo-Paca project is near the city of Uyuni, 460 km south of La Paz in the historical San Cristobal-Potosi silver belt, a wide mineralized zone of historical silver producers, including the three largest silver deposits in Bolivian history, Potosi, San Cristobal, and Pulacayo.

The Pulacayo-Paca project includes the property that covered the Pulacayo mine, the second-largest silver mine in the country’s past with production of more than 600 million ounces of silver, 180,000 tonnes of zinc and 180,000 tonnes of lead, between 1883 and 1959. The Paca project is about 5km north of the Pulacayo mine and town site.

Revenue from the Pulcayo mine funded the first cross-border railway line to Bolivia, connecting the mine to the port of Antofagasta in Chile in 1888. Underground production was mainly from the non-outcropping Tajo vein system, which was mined to a depth of 1000 meters and averaged 30 ounces of silver per tonne over a strike length of 2500 meters.

The mine was then shutdown in the late 1950s or early 1960s for a number of reasons.

“They hit a depth where they couldn’t manage the water with the technology they had at the time,” Gower explained. “Around that time most of South America also started nationalizing assets and once it [Pulcayo] was taken over by the government it only lasted for another five or six years.”

In 2002, Apex Silver completed an exploration program and discovered several additional zones of silver-zinc-lead mineralization within the vein system at the Pulacayo mine and drilling also outlined the potential for an open-pit target.

Apogee has the option to joint venture with Golden Minerals (AUM-T) (formerly Apex Silver). Apogee can earn up to a 60% interest in the project by completing a feasibility study.

The government and cooperative miners in the area are also partners in the project and will receive a royalty from it, which will see revenues flowing back into the community, Gower noted.

“It’s one of the major mining camps and we have very strong community support,” Gower said. “The social licence to operate there is very important. There are other projects that are held up right now because they have community issues and this is one where the community was established there when mining started in the mid-1800s. [Now] it’s essentially a mining town waiting for a new development and we work very closely with the cooperative miners in the area. The community is a strong lobby in favour of the project.”

As far as risks operating in Bolivia are concerned, Gower said he believed things have stabilized in the country since 2007.

“It went through a process of revising its mining act and its tax system [in 2007] and that created a lot of uncertainty, but the outcome of that process is fairly well known now,” the Toronto-based chief executive explained. “They are, however, going through a process of writing the laws around their new mining act and that is probably going to be another — well it could be months or years – [but] it’s been a reasonably stable environment to work in since that time.”

“Changing laws in this country [Canada] probably doesn’t take any longer” than it does in Bolivia, Gower added as an afterthought.

As far as the location of the project is concerned, as an area of historical mining, it has “excellent infrastructure,” with a railway for shipping concentrate less than 30 km from the Pulcayo-Paca property.

“There is power, we have water reservoirs in place and there are existing milling operations nearby owned by various other companies. We may start with a custom milling operation and then transition to a standalone – we don’t know yet.”

Pulcayo has a National Instrument 43-101 underground and open-pit resource estimate. For the open-pit portion of the project, indicated resources currently stand at 6.57 million tonnes grading 49 grams silver per tonne, 1.41% zinc and 0.63% lead. In the inferred category the deposit contains an estimated 8.35 million tonnes grading 64 grams silver, 1.48% zinc and 0.62% lead.

In the underground portion, indicated resources tally 3.20million tonnes grading 93 grams silver, 1.88% zinc and 0.94% lead. Inferred resources are 5.19 million tonnes grading 116 grams silver, 1.79% zinc and 0.84% lead.

For the Paca deposit 5 km to the north of Pulcayo, inferred resources stand at 18.42 million tonnes grading 43 grams silver, 1.16% zinc and 0.68% lead.

At presstime Apogee was trading at 12¢ per share and over the last 52 weeks has traded in a range of 4¢-17¢ per share. The Toronto junior has 95.4 million shares outstanding.