MEXICO AND CENTRAL AMERICA — Silver Standard gains new Mexican project

Silver Standard Resources (SSO-V) has acquired its fourth Mexican silver project, in the Gulf Coast state of Veracruz.

Comprising 84 ha, the Morelense property lies 150 km east-southeast of the port city of Veracruz in the region known as Los Tuxtlas.

In 1993, the Vancouver-based junior decided to concentrate on bulk silver deposits, especially in Latin America, though it is also developing properties in Nevada and the Russian Far East.

Last month, the company acquired from the Serna family an option to explore the Morelense property, as well as the right of first refusal on all concessions now staked by the family. These extend out to a radius of 50 km from the perimeter of the property.

Silver Standard’s other Mexican projects are in northern and central Mexico, in areas of historic silver production — Dios Padre in Sonora state, San Miguel in Chihuahua, and San Acacio in Zacatecas.

Silver Standard has US$11 million in working capital and 13.5 million common shares issued and outstanding (14.7 million shares on a fully diluted basis).

Teck (TEK-T) is the company’s largest shareholder, with a 20% interest.

“Since three years ago, when the company began focusing on silver exclusively, we’ve been interested in acquiring properties hosting between 20 and 50 million oz.,” company spokesman Paul LaFontaine tells The Northern Miner.

“An obvious place to start is to look at former producing regions, and Mexico is one of the great ones,” he adds. “Typically, many operations that have been worked in Mexico were under-capitalized. Many of these haven’t been re-examined using modern methods.”

One such operation is Dios Padre, 130 km southeast of Hermosillo, where mining dates back to the 17th century.

Silver Standard, through its wholly owned Mexican subsidiary, has rehabilitated old workings at Dios Padre and outlined a zone 200 metres long, 40 metres wide and averaging 180 grams silver per tonne.

In order to test a brecciated granite intrusive which hosts high-grade sulphide mineralization, the company completed seven diamond drill holes.

Results of the 1,000-metre program were not available at presstime.

The company can acquire the property by paying US$300,000 in instalments and issuing 300,000 common shares over three years. Silver Standard must also complete a prefeasibility study and reserve calculation by June 30, 1999, as well as pay the vendor a royalty of US5 cents for each proven and probable ounce of silver, to a maximum of US$6 million.

Based on 1995 drilling, LaFontaine says the best-defined resource is at San Acacio. The 398-acre property, 6 km north of the city of Zacatecas, is in a region known for its historic silver production and which has, since 1548, produced more than 700 million oz. silver and 3 million oz. gold.

The Veta Grande vein extends for more than 5 km through the San Acacio mine and historically has produced 180 million oz. silver.

“We’ve outlined 14.4 million oz. silver in a zone 200 metres long to a depth of 100 metres,” says LaFontaine, who adds that the structure is open at depth and along strike. The resource consists of an estimated 2.5 million tonnes grading 182 grams silver, based on a 68.6-gram cutoff.

The 800-ha San Miguel project, in the northern border state of Chihuahua, benefits from its proximity to roads and other infrastructure. The property covers a collapsed, fault-bounded, caldera structure with a central rhyolitic intrusive.

A limited drill program on the San Miguel vein and related breccia has identified a resource of 1.4 million tonnes grading 145 grams silver. The vein is part of a complex system of mineralized fractures and breccias related to the caldera.

The company has completed 1,000 metres of trenching over four zones at the property. The Breccia zone has a total strike length of 2,700 metres, whereas the San Miguel vein system has a strike length of 1,200 metres. Silver Standard is planning a first-phase program of diamond drilling consisting of 10-12 holes totalling 1,500 metres. That program is set to begin in December, pending “further work” on the site, LaFontaine explains.

At La Morelense, Silver Standard has just agreed to invest a minimum of US$750,000 in exploration and pay US$155,000 over the 4-year option period.

Afterwards, the company will hold a 100% interest in the property, subject to an additional payment of US$50,000 when production begins and a 2.5% net smelter return royalty capped at US$4 million.

Discovered in the 1950s, mineralization on the property occurs in young andesitic volcanics. Three mineralized horizons averaging 1-2 metres in thickness occur in a 25-metre-thick sequence of fine-grained andesitic lapilli tuff containing 3% disseminated sulphides.

One of the mineralized horizons was intermittently channel-sampled and averaged 709 grams silver per tonne over a 1.2-metre width along 200 metres of exposed strike length. Silver Standard says ground work with drilling needs to be done to determine the potential of the silver-bearing mineralized horizons.

The company says the property also shows evidence of “significant barite resources,” which, given the proximity of major oil fields along the Gulf Coast, is regarded as a source of potential revenue.