War Eagle cuts wide high-grade zinc at Tres Marias (November 19, 2007)

Vancouver — It looks like past mine operators left behind some pretty decent rock at War Eagle Mining’s (WAR-V, WARGF-O) Tres Marias zinc-germanium project, in Mexico’s Chihuahua state.

Underground drilling has hit high-grade mineralization — returning up to 15.1 metres (from the drill collar) grading 31.25% zinc and 100 grams germanium per tonne in hole TE-40. Drilled from the 6.5-level, the hole included additional mineralized intercepts of 4.5 metres averaging 33.4% zinc and 0.5 metre of 35.3% zinc.

Another strong intercept, in hole TE-45, averaged 37.7% zinc and 226 grams germanium over 3.9 metres.

The company recently received assay results for 23 underground drill holes; mineralized sections of the holes averaged 18.8% zinc and 75 grams germanium using a 5% zinc and 50-gram germanium cutoff grade.

War Eagle is finished almost two-thirds of a 90-hole drill program budgeted at about $10 million.

The company notes that while zinc grades tend to remain similar in sulphide, silicate and oxide material, germanium values are generally higher in sulphide mineralized zones.

Tres Marias is a former high-grade zinc and germanium mine first put into production in the late 1940s and operated until the early 1990s. It produced about 125,000 tonnes of high-grade oxide and sulphide zinc-lead-germanium ore reported to average about 20% zinc and 300 grams germanium per tonne.

Although it was not mined out, Tres Marias was shut down in 1992 with the closure of the smelter that processed ore from the mine.

War Eagle is compiling data for a resource estimate from its definition drilling and underground sampling programs. The company is aiming to identify a half-million tonnes of mineralized material so it can restart operations next year.

War Eagle is applying for a mine development permit to build a roughly 3 by 4.5-metre, 2-compartment shaft sunk to about 150 metres depth, below the existing seventh level of past workings.

Mineralization at Tres Marias is associated with a low-temperature style of Mississippi Valley-type geology. Zinc, lead and germanium were deposited into Cretaceous-aged Santa Elena limestones, which included reef formations comprised of shells and seawater. Oil field brines containing sulphur, zinc, lead, iron, germanium and hydrocarbons migrated from adjacent basins and mixed with the seawater in the reef zones.

Chemical reactions in the mixing brines caused formation of breccia bodies, collapse zones and deposition of sphalerite (also containing germanium), galena, iron sulphides and gypsum.

Collapse structures provide an identifiable surface expression usable as an exploration tool. Aerial examination of the Tres Marias area shows dozens of such structures, or depressions, within a 9 by 2-km zone, giving the company additional targets.

Primarily a byproduct of sulphide zinc mining, germanium is a hard, greyish-white material that is a semi-conductor and has unique optical properties. It is principally used in the manufacture of fibre-optic networks and infrared night vision systems, and as a polymerization catalyst.

Demand for the element is robust, with sustained growth in infrared security products, silicon-germanium based wireless telecommunications networks and the manufacturing of light-emitting diodes. Germanium’s market price has risen to about US$1,250 per kg from about US$250 per kg in 2003.

Shares of War Eagle closed up 22% on the high-grade assays at 59 apiece. The stock has a 52-week trading range of 46-89.

The company is also boosting a previously announced financing to $4.25 million. Through the non-brokered private placement, it is selling 8.5 million units at 50 apiece with each unit comprising a share and half a warrant. Full warrants are exercisable at 75 for 18 months.