VANCOUVER — Emerging producer Santacruz Silver Mining (TSXV: SCZ; US-OTC: SZSMF) added more quality in-situ silver equivalent ounces to its books on Dec. 18, when it released an initial resource estimate on its Gavilanes polymetallic project, which lies 110 km due west of Durango City, Mexico. The company is aiming to generate positive cash flows from its Rosario underground mine by year-end, with Gavilanes fleshing out a strong project pipeline that also includes the San Felipe property in Sonora state.
Gavilanes includes six mining concessions covering 79 sq. km in the rugged Sierra Madre Occidental mountain range. The project hosts epithermal mineralization associated with veins from rhyolitic dykes. Mineralization is found mainly in veins and gaps of quartz with galena–chalcopyrite–argentite–sphalerite. Gavilanes hosts seven known veins, with Santacruz’s resource incorporating the Guadalupe, Descubridora and San Nicolas veins, as well as the El Hundido stockwork.
Gavilanes’ resource estimate relies on 12,600 metres of drilling over 750 metres of strike length, and runs to a nearly 300-metre depth.
The project’s resources lie mostly in the inferred category, which totals 5.4 million tonnes grading 125 grams silver per tonne, 0.12 gram gold per tonne, 0.09% copper, 0.4% lead and 0.34% zinc for 28.3 million contained oz. silver equivalent. Indicated resources add 953,000 tonnes grading 165 grams silver, 0.09 gram gold, 0.06% copper, 0.42% lead and 0.41% zinc for 6.14 million contained oz. silver equivalent.
Exploration is scheduled to resume at Gavilanes in the second quarter of 2014, with the objective of upgrading and increasing resources to develop a mine plan and outline mill requirements. In a release, president and CEO Arturo Prestamo noted that drilling has only focused on a small part of the overall Gavilanes property package, and that Santacruz hopes to get drills turning at the project, as Rosario begins to generate cash flow.
Meanwhile, Santacruz’s main production ramp at Rosario hit the Rosario I vein during the third quarter. The company reports that production levels have increased, with the mine now humming along at 135 tonnes per day. Initial assays taken across 2-metre vein widths also demonstrated higher grades than those in Rosario’s initial resource calculation, including: 1,055 grams silver, 0.13 gram gold, 7.8% zinc and 6.1% lead over a 2-metre width.
Four high-grade producing stopes at the Rosario I vein and three stopes at the Rosario II vein are feeding the mill. Two new producing stopes will be sequenced into current production, as Santacruz advances towards a 500-tonne-per-day throughput target.
The company has a strong balance sheet to see it through ramp-up at Rosario, with US$9.8 million in working capital at the end of the third quarter. Santacruz has traded within a 52-week window of 85¢ and $2.20, and closed at $1 per share at press time. The company has 91 million shares outstanding.
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