Drills expand Trevali’s Santander deposits

VANCOUVER — A 12,500-metre drill program at the Santander silver-lead-zinc project in Peru designed to boost confidence in the known resource, expand the deposits down-plunge and towards each other, and prove up the existence of east-west footwall feeder zones has found success on all fronts for Trevali Resources (TV-C, TREVF-O).

The 61-hole effort tested all three of the deposits at Santander, known as Magistral North, Central and South. Drills also tested an exploration target to the north known called Puajanca zone and returned silver-lead-zinc mineralization.

The Magistral deposits are steeply-dipping, parallel zones of silver-lead-zinc mineralization, created as the lenses of a carbonate-replacement deposit. Each deposit has been drill tested to roughly 400 metres depth.

At Magistral North recent drilling designed to test the midsection of the deposit, where low drill densities resulted in gaps in the 2009 resource estimate, intercepted some of the thickest and highest-grade intercepts from the zone to date. Hole 109A cut 31.8 metres grading 116.6 grams silver per tonne, 4.86% lead and 9.96% zinc, while hole 116 returned 24.1 metres of 53 grams silver, 4.16% lead and 4.22% zinc.

Trevali also tested for additional mineralization above the current resource with three holes and all three returned broad mineralized intercepts, including the highest combined-grade intercept from the project to date: 1.2 metres of 268.9 grams silver, 17.3% lead, 20.9% zinc and 0.64% copper in hole 119, within 16.2 metres carrying 72.4 grams silver, 5.81% lead and 7.43% zinc.

And in pursuing its third exploration focus, Trevali drilled in search of a footwall feeder zone and hit a new zone of mineralization: 2.3 metres of 282.2 grams silver, 11.55% lead, 10.07% zinc and 0.34% copper. The company believes the intercept comes from a feeder zone perpendicular to the main Magistral North deposit and “critically, the intercept opens up a significant east-west trending structural target zone. . . similar high-grade ‘feeders’ should be present in both the Magistral Central and South deposits.”

At Magistral Central previous drilling had, like at the North deposit, left the midsection of the deposit as a low-grade, inferred area. And like at the North deposit, drills testing that middle portion to increase confidence in the mineralization returned some of the deposit’s best intercepts to date, including 9 metres of 18.52% zinc within 41.3 metres carrying 68.6 grams silver, 0.8% lead, 8.2% zinc, and 0.11% copper in hole 123. Nearby, hole 153 cut 130 metres of semi-massive to massive sulphide mineralization including 23.7 metres carrying 69.7 grams silver, 0.38% lead, 6.93% zinc and 0.16% copper.

Hole 127 hit the southern edge of the deposit and returned 6 metres of 148.4 grams silver, 1.99% lead, 5.06% zinc and 0.19% copper, opening the Central deposit up towards Magistral South. And hole 126 tested for footwall “feeder zone” mineralization and hit 6.8 metres averaging 98.8 grams silver, 4.6% lead, 3.94% zinc and 0.1% copper.

And the consistent returns continued at Magistral South, where Trevali reports that drilling returned multiple zones of zinc-rich mineralization in areas outside of the current resource.

For example, hole 124 hit the best zinc grade from the South deposit to date — 10.9 metres grading 10% zinc — and the hit came from 40 metres north of the current resource boundary. Subsequent to that, hole 162 hit a footwall zone carrying 25.8 grams silver, 2.83% lead and 1.46% zinc across 6.4 metres followed by 31.7 metres of 4.9 grams silver, 1.93% lead and 0.24% zinc.

And at the Puajanca zone, 1 km north of Magistral North, initial drilling confirmed the presence of further mineralization. Hole 104 returned 35.3 metres grading 1.26% lead and 1.71% zinc, including values as high as 320 grams silver, 8.29% lead and 5.13% zinc. And hole 155 cut 4.3 metres grading 61.7 grams silver, 2.91% lead and 5.24% zinc. To date, Trevali has traced the Puajanca South zone along 40 metres strike, across 15 metres width, and to 100 metres vertical extent. The nearby Puajanca North zone has not yet been drill tested but is apparent on surface as a series of galena veins stretching along 500 metres strike extent.

Trevali acquired the Santander project in late 2007. The property sits 200 km northeast of Lima and is home to the past-producing Santander mine, which tapped into the Santander pipe. The mine operated from 1958 until 1991, producing 8 million tonnes of ore grading 7% zinc, 1-4% lead and 60 grams silver.

By May 2009, Trevali had discovered the three Magistral deposits, proving up a combined resource of 5.3 million indicated tonnes grading 3.34% zinc, 1.27% lead and 38 grams silver plus 2.2 million inferred tonnes averaging 2.92% zinc, 0.5% lead and 18 grams silver. In addition, the tailings impoundment from the old mine has 1.7 million indicated tonnes grading 2.74% zinc.

On the heels of its first resource estimate, the company signed a memorandum of understanding with commodity trader Glencore International. The deal, which has not yet been finalized, will see Glencore provide and operate a 2,000-tonne-per-day concentrate plant for Santander, providing its operational expertise on a contractor or toll basis.

Trevali will be able to acquire the plant and associated infrastructure over time through the tolls paid; the junior will also maintain complete ownership over the project.

In addition, Glencore will buy 100% of the Santander project area life-of-mine production at benchmark terms.

The partners plan to start by processing the old tailings and then transition into hard rock mining.

The historic mine left behind considerable infrastructure. Trevali rehabilitated a 1,000-person camp, creating a modern 200-person camp, and the project also boasts an ore-processing plant including various crushers, mills and cell houses. And the project is connected to the Tingo hydroelectric power plant, which Trevali also owns.

Tingo currently produces 1.6 megawatts (MW); Trevali plans to increase its output to 10 MW and sell the 5-6 MW of excess power into the Peruvian power grid.

News of the final results from Santander boosted Trevali’s share price 12¢ in a day to reach $1.45. The company has a 52-week trading range of 60¢-$1.80 and 53 million shares outstanding (66 million fully diluted). As of the end of March, Trevali had $4.2 million on hand.