First Majestic grows La Encantada reserves by 187%

Vancouver – A 6,700-metre drill program at the La Encantada mine in the northeastern Mexican state of Coahuila has paid off for First Majestic Silver (FR-T, FRMSF-O).

Coupled with development of 6,100 metres of underground workings, the drilling campaign resulted in 187% more proven and probable reserves at La Encantada.

A January resource estimate pegged La Encantada at 1.2 million proven and probable tonnes grading 312 grams silver per tonne, 1.77% lead and 0.81% zinc for 12.1 million contained oz. of silver.

But with the latest batch of results from 29 drill holes First Majestic now pegs La Encantada at 5.2 million proven and probable tonnes grading 208 grams silver, 2.42% lead and 2.33% zinc for 34.7 million contained oz. of silver.

While measured and indicated resources decreased by about 20% to 4.9 million tonnes grading 156 grams silver, 1.15% lead and 0.87% zinc, First Majestic grew inferred resources by more than 50% to 2.6 million tonnes grading 220 grams silver, 1% lead and 1% zinc.

The increased reserves come at an opportune time as First Majestic also reports it should finish construction of a 3,500-tonne-per-day cyanidation plant at the mine by April, 2009.

Currently First Majestic operates a 1,000-tonne-per-day mill at the mine. Once the new one is on line, however, the company reports yearly silver production at La Encantada will quadruple to 4 million oz. silver.

If it achieves that production goal First Majestic’s overall silver production would more than double. In the year ending Sept. 30, First Majestic produced a total of 2.7 million oz. silver. Each of its three mines, La Encantada, La Parilla and San Martin, accounted for about a third of that.  

First Majestic will depend on La Encantada’s new mill for increased production more than it had previously planned.

Citing market conditions, in November the company announced planned mill expansions at La Parilla and San Martin were going on hold.

It also shelved the Cuitaboca silver project, for the time being, and reduced activities at its Del Toro silver property.

At Del Toro First Majestic says an environmental assessment is still going ahead and that it will determine a construction schedule for the project later on. First Majestic has said it expects Del Toro to become its fourth operating mine.

In October the company pegged Del Toro’s sulphide and oxide resources at 1.4 million measured and indicated tonnes grading 269 grams silver, 4.69% lead and 4.80% zinc. The resource combines estimates from two past-producing silver mines on the property, the San Juan and Perseverancia mines.

On news of the increased reserves First Majestic’s share price had lost 2¢ and was trading at $1.67 at presstime.