Luca says drilling expands Campo Morado footprint

New drilling at Luca Mining’s (TSXV: LUCA) Campo Morado polymetallic mine in Mexico’s Guerrero State has expanded high-grade mineralization beyond the deposit’s current resource footprint.

Hole CMUG-26-38 in the Largo Norte zone cut 118 metres grading 2.53 grams gold per tonne, 77.89 grams silver, 0.76% copper, 0.57% lead and 1.99% zinc from 179.9 metres depth, Luca said Tuesday in a statement. Another hole, CMUG-26-39, cut about 101 metres of 2.80 grams gold, 90.72 grams silver, 0.59% copper, 0.71% lead and 2.59% zinc from 113 metres downhole.

Campo Morado is one of two Mexican mines – along with Tahuehueto – where Vancouver-based Luca is targeting extensions of known mineralization by spending a combined $25 million (C$34 million) on 80,000 metres of underground and surface drilling. The current drill campaign at Largo Norte is a key component of that strategy, focusing on zones that could be rapidly integrated into the existing operation.

“Results remain supportive of further resource growth at Campo Morado,” National Bank Financial mining analyst Alex Terentiew said Tuesday in a note to clients. They “remain consistent with our thesis that Campo Morado is transitioning toward a gold- and silver-weighted asset, with Largo Norte emerging as an increasingly important source of incremental near-mine tonnes.”

Mine-life extension

Tuesday’s results demonstrate the potential to delineate additional mineable resources close to existing infrastructure, which could support production growth and a mine-life extension at Campo Morado, Luca said. Drilling is focused on infill and step-out holes designed to upgrade resources and incorporate new zones into an updated mine plan.

Exploration drilling operations at Campo Morado are continuing, with two surface drill rigs and one underground drill rig now turning, Luca said. Some 38 priority targets have been identified on the property.

Located about 160 km southwest of Mexico City, Campo Morado is a producing underground mine with a processing capacity of about 2,500 tonnes per day. The operation hosts multiple sulphide lenses and has seen more than 700 historical drill holes outlining a substantial mineralized system.

Campo Morado hosts 16.6 million measured and indicated tonnes grading 4.01% zinc, 0.80% copper, 0.93% lead, 123 grams silver and 1.70 grams gold, according to a November 2017 resource. That translates into 700,000 oz. gold, 62 million oz. silver, 200 million lb. copper, 300 million lb. lead and 1.2 billion lb. zinc of contained metal.

Technical update

A technical study on the mine’s potential expansion, scheduled for release in the second half, should include a resource update. The study will target improved recovery rates, notably for precious metals, plus potential for higher throughput from additional grinding capacity, Raymond James analyst Craig Stanley said last week.

“We expect this study to lay out a transformative expansion plan that we expect will drive game-changing free cash flow growth by 2029,” Haywood Securities mining analyst Jamie Spratt said Tuesday in a note. “Exploration and resource expansion potential at Campo Morado is compelling.”

Other highlights released Tuesday include hole CMUG-26-37, which intersected 77 metres of 2.31 grams gold, 47.05 grams silver, 0.77% copper, 0.24% lead and 0.96% zinc from 182 metres depth.

Hole CMUG-26-41, meanwhile, cut 71 metres of 1.57 grams gold, 20.12 grams silver, 0.72% copper, 0.07% lead and 0.39% zinc from 113.5 metres downhole – with all of the mineralized intercept sitting outside of the Largo Norte resource.

Luca shares fell 2.9% to C$1.36 Tuesday morning in Toronto, valuing the company at about C$374 million ($273 million). The stock has traded between C$1.09 and C$2.16 in the past year.