MINING IN MEXICO — San Fernando proceeds on its own

Shunning a joint venture with several interested majors, San Fernando Mining (VSE) is proceeding on its own at the San Fernando project, 45 miles northeast of Culiacan, Mexico.

In the summer, the company announced it was negotiating with American Barrick to acquire the mining property, known also as La Fortuna. Harvey Stark, a director of San Fernando, said some major companies were interested in the property but that the junior decided to proceed with a first phase of drilling before considering an option deal. In doing so, San Fernando hopes to increase the value of the property.

The terms of the acquisition include the assumption of US$600,000 in debt, plus payment of US$202,000 and 300,000 shares. The vendor is also entitled to receive additional shares equal to 5% of the net value of drill-proven ore outlined by future programs.

Mining at La Fortuna dates back to the late 1800s and includes mine workings on eight 65-100-ft. levels, three of which were accessible by adits and three by internal shaft.

The gold-silver-copper mineralization occurs in a large, stockwork, porphyry-style setting which hosts two distinct, steeply dipping, higher-grade zones.

Previous drilling returned wide intersections, indicating underground bulk-tonnage mining could be used.

Typical drill results include 0.16 oz. gold per ton over 66 ft., 0.13 oz. over 171 ft., 0.39 oz. over 57 ft. and 0.16 oz. over 72 ft.

Consultant Fluor Daniel Wright did a preliminary evaluation two years ago, outlining a probable mining reserve of about three million tons grading 0.16 oz. gold and 1.05 oz. silver plus 0.24% copper.

San Fernando is planning an initial phase of surface and underground sampling, underground bulk sampling and about 10,000 ft. of drilling in an effort to expand reserves on strike and to depth.

The program is expected to get under way shortly and will also include surface work on other promising targets on the property.

Stark said the company also plans to begin drilling at its Viruela project, 18 miles west of the Sonora-Chihuahua border in northern Mexico. Three heap-leach gold targets have been identified within a large, epithermal, gold-silver system.