VANCOUVER — The latest batch of drill results from Arizona Mining’s (TSX: AZ) Hermosa zinc-lead-silver project, 81 km southeast of Tucson, Ariz., could change how the company develops the project, chief operating officer Donald Taylor says.
Drilling was aimed at the Taylor Deeps zone, a northeast-dipping bed of metal-drenched limestone that is separated from the company’s flagship Taylor sulphide deposit by a low-angle thrust fault.
Two of the seven reported drill holes, 446 and 447, targeted the southeastern, updip extension of Taylor Deeps, 183 and 305 metres from its resource boundary.
The holes were designed to infill the area between the resource and a 457-metre stepout hole drilled in April — 435 — which returned 18.6 metres of 16.5% zinc, 13.8% lead and 307.5 grams silver per tonne.
Both holes hit similar grades and thicknesses, with results including 20.4 metres of 20.5% zinc, 18.1% lead and 234.4 grams silver in 446, and 45.4 metres of 4.7% zinc, 6.2% lead and 134.4 grams silver, including a 13.1-metre zone of 11.4% zinc, 18.6% lead and 384.4 grams silver in 447.
“The up-dip part of Taylor Deeps is thick, high grade and closer to surface — about the same elevation as the Taylor sulphide deposit,” Taylor tells The Northern Miner during a phone interview. “These results could affect our mine plan. If we can bring the southeast end of Taylor Deeps up front in the mine plan, the high grades will boost the economics considerably. It has wonderful grades to start a mine.”
In the northwest, drilling intercepted the target horizon, with assays returning mixed results. Intercepts include 4.9 metres of 0.8% zinc, 6.3% lead and 868.8 grams silver in a 600-metre stepout from the resource boundary (410); 1.2 metres of 2.8% zinc, 1.3% lead and 290.6 grams silver in a 75-metre stepout (451); and 5.9 metres of 4.1% zinc, 2.4% lead and 28.4 grams silver located 400 metres southwest (420).
“Mineralization in the northwest looks really good, but it’s sitting a kilometre below the surface. It will be 15 years before it comes into the mine plan, so it won’t affect the net present value of the project — not like the southeast zone will. We’ll continue to drill this year, but we don’t need to put a lot of effort into it quite yet,” he says.
With nine drill rigs on the property, and potentially ramping up to 11 in the coming months, Taylor says the company is in good shape towards producing a feasibility study in June next year.
“We haven’t even found the edges of the system we’re drilling, so there’s a lot of work to do,” he says. “We’re going to infill the southeast zone and see how far it goes, then we’ll build up the inferred tonnes and get that into measured.”
The study would supersede the project’s preliminary economic assessment, which envisaged a 10,000-tonne-per-day underground operation over a 19-year mine life using resources from the Taylor sulphide deposit, which contains 50.1 million tonnes of 4.9% zinc, 4.2% lead and 53.1 grams silver, and a part of Taylor Deeps.
Taylor Deeps contains 15.7 million measured and indicated tonnes of 2.8% zinc, 4.8% lead and 78.1 grams silver. Inferred resources add 12.1 million tonnes of 2.1% zinc, 3.5% lead, 84.4 grams silver.
The economics highlighted a US$1.3-billion, after-tax net present value, assuming an 8% discount rate, and a 42% after-tax internal rate of return, based on US$1.10 per lb. zinc, US$1 per lb. lead and US$20 per oz. silver.
“A lot of what we do in the feasibility study will be predicated on drilling results and what we find. The system here is so robust and the metal budget is just tremendous. I could say with great confidence that we haven’t found the only deposit on our land package — I know there will be more. This is a 100-year district. It won’t be a single mine,” he says.
Taylor adds that the company is working to obtain permits to drill on unpatented mining claims. The claims limit the company from drilling north of the reported drill holes in the southeast zone.
(According to Rick Goshen, geologist at the Coronado National Forest, there is no time frame for permits, as it depends on input from the general public, the specifics of the individual claims and the scope of any proposed work.)
Shares of Arizona Mining have traded in a 52-week range of $1.58 to $3.49, and closed at $2.80 at press time. The company has 297.1 million shares outstanding for an $819-million market capitalization.