Sunshine Mining advances high-grade silver property in Colorado

In what may be the only exploration program being conducted in Colorado, Sunshine Mining & Refining (SSC-N) is returning to the southwestern part of the state for another look at its high-grade silver deposits.

The company is working on a prefeasibility study on the Revenue-Virginius project, 8 miles south of the town of Ouray.

“It’s not going to be a big mine,” says Allan Young, Sunshine’s vice-president of development. “Nevertheless, it is a source of high-grade silver with byproduct gold, copper, lead, zinc, and possibly antimony, that could significantly add to the company’s bottom line.”

By combining its own drill results with historic records, the company recently tallied a resource estimate of 6.2 million oz. silver within 260,000 tons of material grading 24 oz. silver and 0.6 oz. gold per ton, plus 5.9% combined copper, lead and zinc.

According to Young, the company would require twice the tonnage currently hosted in the deposit before it would consider a production decision.

Sunshine plans more drilling on the 517 acres of patented claims that make up the Revenue-Virginius property. To date, Sunshine has completed fewer than 15 holes on the property, all of them from surface. Snow conditions (the property is in the San Juan Mountains at 11,000 ft. above sea level) limit the drilling season.

The company is also conducting metallurgical testing as part of the prefeasibility work, and will begin a program of test mining to establish cost estimates for the operation, Young says.

Sunshine expects to modify the previous mining method, known as resuing, that had been used to access the narrow veins of ore. Traditionally, miners would cut a drift adjacent to the veins and mine out the ore from the drift wall.

Sunshine plans to use a mini-jumbo to mechanize the method, blasting the vein for easier hauling.

Because of the nature of the narrow veins (often less that 3 ft. wide), Young expects mining costs to be relatively high on a per-ton basis, but low on a per-ounce basis.

After sinking US$12-15 million into development, the company expects to produce as much as 3 million oz. per year. Net cash costs would be about US$4 per oz.

Though the vein structures in the district are laterally extensive and remain open at depth (some 2,000 ft. below the surface), Young expects the mine would never get far ahead on reserves. However, it is not uncommon for underground operations to prove up reserves for only a few years in advance yet continue to produce for decades. Young cites his company’s Sunshine silver mine in northern Idaho as a prominent example.

If the prefeasibility work is positive, Sunshine expects to refurbish the mine portal and some of the underground workings, as well as drive ramps down toward the deposit.

Revenue-Virginius hosts several narrow high-grade silver veins associated with the development of the Tertiary Silverton caldera. Mineralization is found within the San Juan volcanic breccia, and also in the Telluride conglomerate below.

The Revenue-Virginius mine has been inactive since a fire destroyed the mill in 1912. Most of the production records were lost, though between 1895 and 1906 the mine is known to have cranked out 14.5 million oz. silver, 123,000 oz. gold, and 63 million lbs. lead from one series of veins, including the Terrible and Yellow Rose veins.

Sunshine’s return to southwestern Colorado is part of its search for additional sources of high-grade silver concentrates that could be processed at its Sunshine complex facilities. Young says the Revenue-Virginius was a good match because much of the silver is locked within tetrahedrite, making production of a high-silver concentrate possible.

Nevertheless, the company is being careful not to step on any toes while exploring in Colorado, which soured on mining after the discovery, in 1992, of environmental problems at Galactic Resources’ Summitville gold mine. Young says Sunshine also recognizes that Ouray is a tourist town whose residents are unlikely to back any project that threatens the town’s reputation.