Defiance Silver (TSXV: DEF; US-OTC: DNCVF) is having drilling success at its past-producing San Acacio silver mine in Zacatecas, Mexico.
The junior kicked off its first drill program last December to test the project’s San Acacio vein and expand the current resource, which lies within 200 metres of surface, along a 1 km strike length.
“The whole idea behind this drilling program was that we could drill below the old workings and below the current resource, and intersect the vein and come up with good grade intersections over wide widths. And that is exactly what we found in the first three holes,” Defiance’s president and CEO Bruce Winfield says in an interview.
Those holes, reported in late January, have extended mineralization by 140 metres below the current resource. All three holes tested the western limit of the resource, with the best intercept returning 16.7 metres of 235.5 equivalent grams silver per tonne, including a 3.2-metre interval of 499.4 equivalent grams silver.
In early July, Defiance published results for another three holes. Two of those holes intersected the San Acacio vein over wide widths and extended the high-grade mineralization by 100 metres to the southeast of the initial three holes. (All five holes hit mineralization below the existing resource.) The sixth hole appears to have cut a new vein, which returned 7.2 metres of 674 equivalent grams silver.
The high-grade intercept could extend a relatively narrow cross vein to the main San Acacio vein called the “Navidad vein” that Winfield says the company has intersected “in an area where it is blossoming out into wider widths, and very nice grades.”
The geologist-turned-executive points out that the six holes announced to date have higher grades than the current resource grade of 192.50 equivalent grams silver per tonne. This supports the company’s geologic model by showing that the high-grade material continues below the current resource, while confirming “an expected increase in base metal content at depth,” he says.
Looking at the mineralization mix at the San Acacio deposit, it is silver-rich near surface, with less silver but more gold, zinc and lead at depth.
Using Capstone Mining’s (TSX: CS; US-OTC: CSFFF) nearby Cozamin copper-silver mine as an analogy for the depth potential at San Acacio, Winfield says Cozamin’s main vein, which is different from San Acacio’s, carries mineralization to 600 metres deep, while mineralization in the mine’s secondary vein reaches 1 km deep.
“Those are the sort of depths that can be possible,” he says.
But Defiance won’t know how deep the mineralization is at San Acacio unless it keeps drilling.
With its treasury recently replenished, the junior has enough funds to keep working. It finished a $1.2-million raise this June, where it issued 12 million units at 10¢ in a non-brokered private placement. Each unit consists of a share and a half warrant. A full warrant is exercisable for one share at 15¢ apiece.
Defiance intends to use proceeds to keep expanding San Acacio’s resource base.
A January 2015 resource update shows the San Acacio deposit contains 2.9 million inferred tonnes at 192.50 equivalent grams silver for 17.9 million equivalent oz. silver, using a 100-equivalent-gram silver cut-off. This replaces an earlier inferred and indicated resource estimate that the previous owner based on an open-pit model, whereas Defiance envisions mining the deposit from underground.
“We decided that underground mining would be the way to go, and we recalculated a resource using a higher cut-off,” Winfield says, noting the company excluded some of the lower-grade stockwork mineralization that was in the previous estimate.
The latest resource lies within 1 km of the 5.6 km long San Acacio vein and has widths of up to 20 metres. Defiance explains over 4 km of this vein have not seen any modern exploration.
The San Acacio vein is actually part of the larger 8.5 km long Veta Grande vein system, one of the three major vein systems within the Zacatecas silver district. The famed district has delivered more than 700 million oz. silver since 1548, of which more than 200 million oz. came from Veta Grande. Half of the ounces came from the past-producing San Acacio mine.
Defiance is earning a 100% interest in San Acacio from a private Mexican company. Last October it extended its payment options by three years to September 2018, under which $350,000 is due this September. To gain some financial flexibility, the junior hopes to pay this in quarterly installments, the company’s corporate development manager Sunny Pannu says.
Backing up the junior is Windermere Capital, a Montreal-based investment firm, and Defiance’s largest shareholder at 54.5%. “To us the benefits are tremendous that we have this major shareholder who is enthusiastic, believes in the concept and wants us to be successful,” Winfield says.
The company also added two directors to its board last November: mine-builder Roger Scammell, who worked as the country manager in Mexico for Teck Resources (TSX: TCK.B; NYSE: TCK), and metals trader Paul Smith, who has spent most of his 36-year career in the non-ferrous mining and smelting industry.
Defiance recently closed at 15¢ per share, with a $9.4-million market capitalization. Assays from another two holes should be out shortly.