MEXICO AND CENTRAL AMERICA — Sierra Nevada Gold assigns grade, tonnage to Promontorio deposit

With the first phase of drilling complete, Sierra Nevada Gold (SDD-V) has outlined what appears to be a substantial resource at its Promontorio copper-gold-silver property in northern Mexico.

The Main zone, which consists of the Santiago, Mina Vieja and Veta Grande veins, is estimated to hold 524,000 tons of drill-indicated ore grading 2.5% copper, plus 0.06 oz. gold and 1.61 oz. silver per ton. (Using a higher cutoff grade, the calculation changes to 345,000 tons at 3.98% copper, 0.078 oz. gold and 2.35 oz. silver.)

Additional drilling will be required to elevate the resource to the category of proven reserves. Nevertheless, Sierra Nevada is already considering the possibility of putting the Main zone into production.

“Our plan is to develop the deposit’s near-surface potential,” says President Bonnie Lee. “At this point, we feel we can put together a profitable mine at 250 tons per day,” and she speculates that future drill results could bump up projected capacity to between 500 and 1,000 tons per day.

Soon, drilling will resume on the Main zone in a program aimed at testing the high-grade intersection of the Mina Vieja and Veta Grande veins.

At present, however, the company is busy proving up the Cascada vein, northwest of the Main zone. Three holes have been drilled on the structure, which has both open-pit and underground potential, and three more are planned. Results are pending.

The Cascada area was previously worked by Can Mex, the Mexican subsidiary of Placer Dome (PDG-T), which outlined 800,000 tons grading 0.16 oz. gold.

Sierra Nevada is acquiring the project from Can Mex through a series of cash and royalty payments totalling US$5 million.

Comprising 47 ha, the property occupies the Promontorio and Hidalgo claim blocks, 30 miles west of the town of Tomochi in Chihuahua state.

A classic epithermal vein system, the Promontorio is hosted in an older generation of altered andesitic volcanic rocks which are exposed in windows beneath younger volcanic tuffs. In all, at least 10 veins are exposed on the property.

Much of the mineralization consists of pyrite, sphalerite, galena and enargite. Copper mineralization is associated with chalcocite, enargite, tennantite, bornite and chalcopyrite. Some of the drilling has encountered zones of massive sulphides, which run as high as 34% copper and 1.2 oz. gold.

Gold occurs as electrum (77% gold and 23% silver).

Exploration drilling has intersected mineralization down to 300 ft., and the deposit remains open at depth, where, Lee believes, there is potential for a buried porphyry deposit. In preparation for more detailed exploration underground, the company has begun dewatering a development shaft in the Santiago tunnel. A map from 1929 indicates the shaft extends to only 142 ft., though Sierra Nevada believes it may actually be much deeper.

The company is considering acquiring more ground in the Promontorio area. In addition, it is exploring the 512-acre Guadalupe property, 200 miles southwest of Chihuahua City.