Cerro Las Minitas, Durango, Mexico

The Cerro Las Minitas project is located about 70 kilometres to the northeast of the city of Durango in Durango State, Mexico, and is accessed easily by road. The property comprises 25 concessions, totalling approximately 34,450 hectares, and lies within heart of the Faja de Plata (Belt of Silver) of north central Mexico. The belt is one of the most significant silver producing regions in the world, with current reserves/resources and historic production in excess of 3 billion ounces of silver.

Near surface mineralization occurs as massive-sulphide pipes, veins and replacement deposits distributed in the skarn-altered margins of a large intrusive body. To date, Southern Silver has identified four high-grade silver-polymetallic deposits, the Blind zone, El Sol zone, Las Victorias Zone and the Skarn Front Zone, which have been partially delineated, as well as several other high priority targets throughout the property. For a list of select intercepts from all the drilling to date, click here.

The Blind, El Sol and Las Victorias zones are a series of near-surface silver-polymetalic “dyke-replacement style” deposits that occur  in the immediate vicinity of an aplite-monzonite dyke swarm with a NE-SW orientation that occur to the west of the central monzonite intrusion. The Skarn Front Zone is a zone of silver-polymetallic mineralization that is found at or near the boundary between the skarn and marble alteration facies in the halo of the central monzonite intrusion. This mineralization has been delineated up to depths of greater than 1km and is open along strike and to depth.

In 2017, an extensive regional sampling program on the newly staked CLM West claims identified a large, 12km long precious metal enriched epithermal exploration target on trend with the nearby Avino Au-Ag Mines. A total of >5000 rock samples were taken which identified significant potential for a deposit buried under gravel cover. In Q2, 2018, the company drill tested the best targets on the CLM West Property and discovered several encouraging precious and pathfinder metal anomalies which will be subject to follow-up exploration in the future.

Exploration in the Area of the Cerro

Southern Silver explored the property from late 2010 to 2012 and completed airborne and ground geophysics over the project and 15,510 metres of core drilling in 62 drill holes, with Freeport completing another 7,800m of drilling in 13 holes in 2013/14 looking for a copper porphyry system. Mineralization occurs as massive-sulphide pipes, veins and replacement deposits distributed in the skarn-altered margins of a large intrusive body in a similar geological environment to that of major Mexican Carbonate Replacement Deposits (CRDs) such as Santa Eulalia (45Mt of 310g/t Ag, 7.1% Zn and 8.2% Pb) and Skarn deposits such as San Martin (60Mt of 118g/t silver, 0.9% copper and 3.9% zinc).

By the end of 2012, two high-grade silver-polymetallic deposits, the Blind zone and El Sol zone, had been partially delineated and several other high priority targets identified throughout the property Geological modeling of the Blind and El Sol deposit using a nominal 80g/t AgEq cut-off identified multiple distinct mineralized structures with a 820 metre cumulative strike-length, and with depth projections of up to 600 metres below surface.

Between 2012 and 2014, FMEC completed a program of soil and vegetation geochemistry and geophysical surveys over the entire property. FMEC completed three additional lines of deep-penetrating IP geophysics and a gravity survey over the area of the ‘Cerro’ (or hill) that confirmed both the lateral extent of anomalies identified in earlier work by Southern Silver and significantly extended the projection of several of the existing targets to over 600 metres depth.

Summer 2013 drilling targeted the South Skarn area and specifically an offset of drill hole 12CLM-055, which previously identified strongly anomalous gold mineralization over a 20 metre interval within a hematite breccia which averaged 0.8g/t gold and included a 4.3 metre interval averaging 2.8g/t gold and 28g/t silver. A second 4.3 metre interval averaging 1.4g/t gold, 89g/t silver and 1.8% copper was intersected further down hole in an interval of chlorite-garnet skarn. A total of 4 holes were drilled in this area, which extended the strike length to 250 metres and to a depth of 300 metres below surface. This confirmed that mineralization at the South Skarn was still open along strike to the north-northeast and towards the historic La Bocona Mine and at depth.

And that one hole, (13CLM-066,), was drilled through the Blind Zone as a test for deep skarn mineralization adjacent to the central intrusion. This hole not only successfully intersected the various horizons of the Blind Zone, but also encountered wide intervals of zinc rich skarn mineralization at a depth of 600m which subsequently became part of the newly identified Skarn Front Zone that contains the majority of the resources identified to date on the property.

Additional drilling commenced in November 2013 and targeted deep porphyry style mineralization. Hole 13CLM-073 confirmed the presence of anomalous alteration and mineralization deep within the central intrusion, (see News Release dated February 27, 2014) but did not encounter economic mineralization. Two more deep holes were drilled in this area, both of which encountered wide areas of anomalous mineralization.

In May 2015, Southern Silver announced an earn-in agreement with Electrum Global Holdings L.P. that granted the right to earn an indirect 60% interest in the property by funding exploration and development expenditures of US$5.0 million on the property over a maximum 48 month period. Electrum accelerated the exploration and funding so that it has now earned the 60% interest in the property and further exploration is now proceeding forward on a 60/40 joint venture basis with Southern Silver acting as the operator. Since May 2015, drilling has expanded the Skarn Front Zone that was discovered in 2013 to a depth of >1km and a strike length of ~1.1km. 

Resource Highlights

2016

On March 21st, 2016, the company released an initial 43-101 resource for the Cerro Las Minitas project of 10.8Mozs Ag, 189Mlbs Pb and 207Mlbs Zn (36.5Mozs AgEq) Indicated and 17.5Mozs Ag, 237Mlbs Pb and 626Mlbs Zn (77.3Mozs AgEq) Inferred. Click here for the full summary table and click here for the full report.

2018

On 8th January, 2018, the company released an updated 43-101 resource for the Cerro Las Minitas project of 33.6Mozs Ag, 319Mlbs Pb and 813Mlbs Zn (116.1Mozs AgEq; 1.57Blbs ZnEq) Indicated and 20.7Mozs Ag, 131Mlbs Pb and 870Mlbs Zn (92.7Mozs AgEq; 1.25Blbs ZnEq) Inferred. Click here for the full  summary table and here for the full report. This works out to an approximate exploration cost of $0.07 per oz of silver equivalent in the ground, suggesting a fast and cost-effective upside potential leading to a production decision which the company plans to execute in the coming years.

2019

On 9th May, 2019, the company released an updated 43-101 resource for the Cerro Las Minitas project of 37.5Mozs Ag, 303Mlbs Pb and 897Mlbs Zn (134Mozs AgEq; 2.0Blbs ZnEq) Indicated and 45.7Mozs Ag, 253Mlbs Pb and 796Mlbs Zn (138Mozs AgEq; 2.0Blbs ZnEq) Inferred.(1). Click here for the full  summary table and here for the report. This works out to an approximate exploration cost of $0.07 per oz of silver equivalent in the ground, suggesting a fast and cost-effective upside potential leading to a production decision which the company plans to execute in the coming years.


1. The 175g/t AgEq cut-off value was calculated using average long-term prices of $16.6/oz. silver, $1,275/oz. gold, $2.75/lb copper, $1.0/lb. lead and $1.25/lb. zinc. Metal recoveries for the Blind, El Sol and Las Victorias deposits of 91% silver, 92% lead, 82% zinc and 80% copper and for the Skarn Front deposit of 85% silver, 89% lead, 92% zinc and 84% copper were used to define the cut-off grades. The base case cut-off grade assumed $75/tonne operating, smelting and sustaining costs. All prices are stated in $USD.

The resource update is another substantial milestone in the development of the Cerro Las Minitas project, in that it continues to quantify the potential for development of a major mine. Management set the exploration target for 2018/19 at +20 Mt grading 80‐120 g/t Ag and 4‐8% Pb/Zn (+200 Mozs AgEq)(2). Confirming management’s belief in the project, the January 2018 resource estimate not only shows that this exploration target was met but did so with a higher cut-off value and confirmed the deposit continues to be open at depth and to the north and west of the central intrusion. In 2018-19, as well as commencing preliminary development studies, leading towards a preliminary economic assessment, management’s next exploration target was set at +30Mt grading 80-120g/t Ag and 4-8% Pb/Zn (+300Moz AgEq)(2). The 2019 resource estimate was close to achieving this goal. 2019/20 exploration on the project will attempt to achieve and exceed the exploration target that was not met this year, as well as further derisk the project with advanced metallurgical studies and continue to work towards a preliminary economic assessment.

2. The exploration target is conceptual in nature and relies on projections of mineralization that are beyond the standard CIM classification of mineral resources and should not be relied on as a mineral resource estimate

Resource Parameters

  • The estimate was carried out using a block model constrained by 3D wireframes of the individual mineralized zones. The block model is comprised of an array of blocks measuring 10m x 2m x 10m, with grades for Ag, Au, Cu, Pb and Zn interpolated using Inverse Distance to the Third Power (ID3) weighting. Silver and zinc equivalent values were subsequently calculated from the interpolated block grades.
  • The interpolation was carried out in three passes using progressively larger search radii to a maximum of 150m x 150m x 25m. For all passes, the interpolation was restricted to a minimum of 2 and a maximum of 12 composites, with a maximum of 4 composites from any one drill hole (i.e. a minimum of two drill holes required for +4 composites).
  • Bulk densities were based on a total of 1,103 individual measurements taken by Southern field personnel. Density values ranged from 2.41 t/m3 to 5.33 t/m3. Density values were interpolated on a block-by-block basis using an inverse distance to the second power. An average value of 2.85 t/m3 was assigned to blocks that were not interpolated.
  • Silver composite values have been capped in order to remove the effects of potential overestimation due to statistical outliers. The threshold chosen was 700 g/t silver. In addition, outlier values for the co-product metals were capped at the threshold levels of 1.5 g/t gold, 1.4% copper, 5% lead and 19% zinc.
  • The mineralized zones were initially defined by Southern personnel and subsequently validated and refined by KGL. The mineralized wire frames were defined using a combination of geological constraints, grade boundaries and no minimum thickness. Intervals that were not sampled were assigned a zero grade.
  • For all zones, blocks are classified as Inferred if they are included within 100m of at least one drill hole intercept. Blocks within 50m of the nearest intercept, and estimated by at least two drill holes were classified as Indicated. However, an interpreted boundary is the final determination of indicated resources in order to remove outlier blocks and the “spotted dog” effect.

Table: Summary of Mineral Resources at various cutoffs on the Cerro Las Minitas Project, Durango State, Mexico

Notes:

  1. The current Resource Estimate was prepared by Garth Kirkham, P.Geo., of Kirkham Geosystems Ltd.
  2. All mineral resources have been estimated in accordance with Canadian Institute of Mining and Metallurgy and Petroleum (“CIM”) definitions, as required under National Instrument 43-101 (“NI43-101”).
  3. Mineral resources were constrained using mainly geological constraints and approximate 10g/t AgEq grade domains.
  4. AgEq cut-off values were calculated using average long-term prices of $16.6/oz. silver, $1,275/oz. gold, $2.75/lb. copper, $1.0/lb. lead and $1.25/lb. zinc. Metal recoveries for the Blind, El Sol and Las Victorias deposits of 91% silver, 25% gold, 92% lead, 82% zinc and 80% copper and for the Skarn Front deposit of 85% silver, 18% gold, 89% lead, 92% zinc and 84% copper were used to define the cut-off grades. Base case cut-off grade assumed $75/tonne operating smelting and sustaining costs. All prices are stated in $USD.
  5. Silver Equivalents were calculated from the interpolated block values using relative recoveries and prices between the component metals and silver to determine a final AgEq value. The same methodology was used to calculate the ZnEq value.
  6. Mineral resources are not mineral reserves until they have demonstrated economic viability. Mineral resource estimates do not account for a resource’s mineability, selectivity, mining loss, or dilution.
  7. All figures are rounded to reflect the relative accuracy of the estimate and therefore numbers may not appear to add precisely.

Regional Property-Wide Exploration

In 2017, a regional sampling program on the newly staked CLM West claims identified a large, 12km long precious metal enriched epithermal exploration target. A total of >2200 rock samples were taken which identified significant potential for a deposit buried under gravel cover.

Plans for 2019/20 are to further refine target areas within the 12km mineralized footprint and drill test the best targets with the goal of discovering a buried epithermal deposit similar to Avino or La Preciosa, which would be accretive to the existing resources on the property.

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