Sierra Metals turns up the heat in Mexico

Mining engineers lead an underground  tour through Sierra Metals' 82%-owned Yauricocha mine in Peru. Source:  Sierra MetalsMining engineers lead an underground tour through Sierra Metals' 82%-owned Yauricocha mine in Peru. Source: Sierra Metals

In July, Sierra Metals (TSX: SMT) appointed as its vice-president of exploration Matthew Wunder — a geologist who during  his career was part of a group at Rubicon Minerals (TSX: RMX; NYSE-MKT: RBY) that discovered and developed the F2 gold deposit in Red Lake, Ont.

The explorer and his colleagues David Abramson, Ian Russell, Terry Bursey and Crystal McCullough were honoured in 2012 with the Colin Spence award for Excellence in Global Mineral Exploration — joining a list of recipients that include mining titans Ross Beaty, Roman Shklanka, Charles Forster and Mark Rebagliati.

Mark Brennan, Sierra Metals’ president and CEO, was travelling and unavailable for an interview, but noted at the time of Wunder’s appointment that the geologist’s “extensive knowledge and experience with precious metal and polymetallic ore systems are tailored to exploit the considerable geological opportunities that the company sees available at all of its operations.” 

The operations in Mexico consist of two producing underground mines: its 100%-owned Bolivar copper-silver-gold mine, which began commercial production in November 2011, and its 100%-owned silver-lead Cusi mine, which achieved commercial production in January 2013. 

The Cusi mine, in central Chihuahua state, is 135 km south of Chihuahua City, while Bolivar is situated in southwestern Chihuahua, 255 km southwest of Chihuahua City and 1,250 km northwest of Mexico City.

Sierra also has a number of exploration properties in Mexico, including the Bacera silver project in the state of Sonora, and the Batopilas gold project in Chihuahua. 

Altogether, Sierra’s land package in Mexico totals more than 1,420 sq. km.

Outside Mexico, Sierra owns 82% of the Yauricocha mine in Peru, as well as the Adrico gold project, the Victoria copper-silver project and the Ipillo polymetallic project.

This year Sierra has earmarked US$9 million for an exploration program that will drill 75,000 metres across all three operating mines, and another 4,000 metres on two exploration targets in Mexico. The program is aimed at expanding and upgrading the reserves and resources at its mines, and follow up on high-priority targets.  

Most of the drilling will be done in Mexico, with 21,210 metres at Bolivar split between resource expansion drilling (8,710 metres) and exploration drilling (12,500 metres). At Cusi, Sierra intends to drill 37,711 metres, with 33,382 metres dedicated to resource expansion drilling and 4,329 metres on exploration. Another 4,000 metres will be earmarked for exploration at the Bacerac and Batopilas projects.

At Bolivar, the company will conduct step-out drilling on the copper-silver manto orebodies and further delineate the high-grade La Sidra gold-silver vein. At Cusi, drilling is adding reserves and resources to quantify the dimensions of future expansion plans.

Underground drilling at Bolivar in 2014 expanded the copper-gold-silver mineralization at Bolivar NW, while surface sampling and drilling highlighted the La Sidra silver-gold quartz vein system. Surface mapping and sampling last year traced the silver-gold quartz vein system over a 2,500-metre strike length. Drilling in 2014 over 150 metres of the vein intersected up to 5 grams gold per tonne, 440 grams silver per tonne, 2% lead and 5% zinc, over up to 5 metres wide.

Previous work at Bolivar also returned grades of up to 0.3% copper over 14 metres of core length at Lilly Norte, a 300-by-150-metre, tourmaline-rich breccia pipe that hosts disseminated copper mineralization. 

At Bolivar’s Nathalie fault, drilling this year will test the extent of mineralization. Drilling within the upper skarn horizon near the Nathalie fault in 2013 returned 13.6% zinc and 0.9% copper over an estimated 10.1-metre true width.

The drill program this year will continue resource expansion at Bolivar NW, Alta Ley and step-out zones, as well as surface exploration drilling on the La Sidra target.

Measured and indicated resources at Bolivar add up to 15.4 million tonnes grading 19.4 grams silver per tonne, 0.8% copper, 1% zinc, 0.20 gram gold and 1.3% copper-equivalent. Its inferred resource measures 6.2 million tonnes averaging 18.1 grams silver, 0.7% copper, 0.9% zinc, 0.30 gram gold and 1.2% copper-equivalent. The resources used a copper-equivalent cut-off grade of 0.7%.

At Cusi, the 2015 drill program will more than triple the total metres drilled in 2014 and expand the current resource at both the Promontorio and Santa Eduwiges mines — which are 600 metres apart — as well as surface exploration in five areas: San Nicolas Central, Milagro, Candelaria, the La India/Candelaria junction and San Juan. Drilling will also explore Azucarera, a silver-rich stockwork breccia in the Promontorio mine.  

Last year, surface and underground drilling expanded and upgraded the resources for the Promontorio and Santa Eduwiges mines, and tested for depth extension of several veins. Underground development at Promontorio also exposed several hundreds of metres of mineralized shoots, some of which lie outside the resource estimate.

Cusi has an indicated resource of 1.7 million tonnes grading 231.9 grams silver, 0.5% lead, 0.5% zinc and 0.08 gram gold, and an inferred resource of 2.7 million tonnes grading 227.5 grams silver, 0.3% lead, 0.3% zinc and 0.08 gram gold. The resource was based on a 90-gram silver per tonne cut-off grade.

Regional exploration in Mexico will target the San Patricio mineralized breccia zone, a 400-by-500-metre area of historical workings at the Bacerac property in northeastern Sonora, where confirmation sampling over 8.3 metres yielded 2.3 grams gold and 1,722 grams silver, along with copper and lead values. A drill intercept in 2012 returned 1.2 metres grading 368 grams silver per tonne, 3.79 grams gold per tonne, 0.03% copper, 0.3% lead, 0.02% zinc and 0.01% manganese.  

At the Batopilas property in southwestern Chihuahua, meanwhile, exploration drilling will target the Corralitos prospect, a molybdenum-copper deposit that was partly drilled by a previous owner in 1997, and by Sierra in 2011. 

The drilling confirmed stockwork copper-molybdenum mineralization over a 1.5 sq km area that is open in all directions. 

Sierra says the mineralization is controlled by north- to northeast-trending faults and lies within a much broader area of alteration covering several square kilometres. Core drilling in 2011 returned a 6.1-metre intercept grading 1.1% copper, 0.002% molybdenum, 5.80 grams silver and 0.07 gram gold.

In the first half of 2015, Bolivar produced 9.2 million lb. copper, 195,454 oz. silver and 1,218 oz. gold, at cash costs of US$1.45 per payable lb. copper, and Cusi produced 432,068 oz. silver, 142 oz. gold and 365 lb. lead, at cash costs of US$8.16 per payable oz. silver.

At press time, Sierra traded at $1 per share within a 52-week range of 84¢ to $2.13. The company has 161 million shares outstanding.


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