Salazar Resources drill-ready in Ecuador

Vancouver – After ten months lying idle Salazar Resources (SRL-V) is chomping at the bit to get drills turning again at its El Domo target in Ecuador on the company’s Curipamba property, about a 3-hour drive from Guayaquil.

It had just diverted a second drill to the volcanogenic massive sulphide (VMS) discovery last spring when the Ecuadorian government banned drilling, exploration and development on all mineral properties in the country while it considered a new mining law and purged land speculators of their concessions.

At the end of April, a few days after the ban passed through Ecuador’s National Assembly, Salazar Resources’ shaken president Fredy Salazar wrote to shareholders that “it was a shock and a surprise to all of us.” A week later he announced the company’s exploration program in Ecuador was at a standstill and, worse, that it was terminating 90% of its workforce in the country.

By the end of summer, however, some optimism began peeking over the horizon. In a corporate update Salazar Resources noted it was “encouraged” by Kinross Gold‘s (K-T) billion dollar takeover of Aurelian for its Fruta del Norte property in Ecuador and that the president of the equator-straddling nation was talking about supporting a “responsible” mining industry.

But there could be no cure to uncertainty plaguing the Ecuadorian mining industry until a new mining law was passed and regulatory details had been hammered out in writing. That finally came in January, first as a legislative commission considered and assented to a new mining law, and then when the law was formalized in the Ecuadorian government’s legislative gazette on Jan. 29.

In a recent press release Salazar Resources notes the new law provides certainty on a number of land tenureship issues. The law, it says, allows an exploration company, foreign or domestic, to hold as many concessions as it wants (max. concession size is 5,000 ha.) and that it is only at the exploitation stage where the government limits ownership to a total of 5,000 ha. Salazar Resources also says companies can hold concessions for 25 years and have an option to renew them for an additional 25 years under the new law. The initial exploration cost per hectare is US$5.45.

Those rules appear to safeguard Salazar Resources title to its 71,000 ha. Curipamba property which is made up of 16 concessions and where last year the company began to drill into VMS targets such as El Domo in the Las Naves Central area of its property.

Although the corks aren’t popping yet – exploration and mine development cannot officially begin until the government publishes regulations of the new mining law, an event which Salazar Resources says should occur by June 29 – the company is nonetheless in a highly anticipatory mood.

Although its phase 1 drill program at El Domo was cut short, by the end of April, 2008, Salazar Resources had pulled enough core from the ground to calculate a gold-silver-polymetallic inferred resource estimate.

Based on 13 drill holes the company pegged El Domo at 4.1 million tonnes grading 3.49 grams gold per tonne, 76.33 grams silver per tonne, 2.51% copper, 0.47% lead and 4.55% zinc. Salazar Resources says the mineralization is rich in chalcopyrite, sphalerite, galena and pyrite and that the sulphide content ranges between 60 and 100%. It occurs at a depth between 50 and 100 metres and so far it is about 5 to 19 metres thick, 450 metres long and 150 metres wide.

As the mineralized area is still open to the north, south and west, Salazar Resources sees potential for expansion – once it gets the green light to drill again. Equally important for Salazar Resources in the discovery of El Domo is that it has validated the correlation between its geophysical/geochemical program and its drill campaign. The company says the geophysical survey of the area suggests that massive sulphides encountered in its drill program “are part of a much larger system.”

At El Domo there are 3 large potential VMS bodies and several smaller ones along a 1,000 metre long trend, the company says, and within a 4 km by 2 km area Salazar Resources also encountered 12 significant geochemical anomalies at surface and a further five geophysical ones.

To explore the potential of the Las Naves Central area, Salazar Resources, which as of Sept. 30, 2008, had about $6.8 million in cash, is planning a phase 2 drill program and continued geophysical exploration. The program includes 4,500 metres in 30 holes at El Domo (including infill drilling), 22 holes at Sesmo Sur, another target it was well into drilling up until April, and 14 holes testing new anomalies. At Sesmo Sur, for instance, it drilled as much as 15 metres grading 2.54 grams gold and 50.11 grams silver in hole 5.

At the same time Salazar Resources says it will begin metallurgical testing at El Domo as it moves the project towards a proposed prefeasibility study. And to that end in its latest press release Salazar Resources says that when the government inks mining regulations this spring it will be drill-ready and its “technical team is in place to immediately begin the Phase 2 work program.”