Terneras feasibility study on track

In the late 1500s, Spanish explorers began finding high-grade polymetallic mineralization in the San Lorenzo mountains in north-central Mexico.

More recently, Canadian joint-venture partners William Resources (ME) and Minorca Resources (VSE), through their 80%-owned Mexican subsidiary BLM Minera Mexicana S.A. de C.V., have returned to the area to reopen mines that were discovered during colonial times.

Situated 95 km southwest of Torreon in Durango state, the Terneras project consists of three claim blocks. The Terneras block hosts the past-producing Terneras, Santa Juana and San Mateo silver-gold-lead-zinc mines, while the other two claim blocks encompass the old workings of the Cobra and San Diego mines.

In a visit to the 66-hectare project, which is operated by William, The Northern Miner was shown core from a recent drill program, as well as the underground workings and geology of the Santa Juana and Terneras mines. Plans to develop the Terneras and Santa Juana mines further, as well as to refurbish the mill, were also discussed.

Mineralization at the project is related to epithermal vein systems hosted within the Aurora limestone and diorite intrusives, according to Project Geologist Jeff Kenwood.

“The mineralized vein systems were intruded along an axial planar cleavage formed during a regional folding event,” Kenwood explained. “Sulphide veins are usually found within the diorites while the oxidized veins are generally found within the metasomatised limestones.”

The three vein systems which host the mines are spaced roughly at 200-metreAZ intervals, striking in an east-west direction and dipping steeply to the north. Each vein system is composed of several parallel en echelon veins varying from 0.5 to 1.5 metres in width.

One of the interesting features at the Santa Juana mine is the presence of thick zones known as chimneys.

“These chimneys, which can be up to a few metres in width, are formed at the intersection of two veins or as a result of intense folding of one vein,” Kenwood said. “So far we’ve mapped two of these, but I expect that we’ll find more.”

In addition to the chimneys, BLM Mexicana is finding previously unknown veins as a result of exploration drilling perpendicular to the drift. Most of the development at the Terneras project was initiated in 1902 when Asarco (NYSE) purchased the mines and mill from a small Mexican mining company. Asarco operated the property, concentrating on the sulphide rather than the oxidized veins. The narrow vein deposits were mined by removing the oxide material and blasting out the sulphide ore. A secondary blasting of waste material from one side of the vein was then completed to maintain working access. This waste material, known as rezagas, also hosts economic mineralization. Asarco operated the project until low metal prices forced closure of the mine in 1929.

Mining started once again during the late 1960’s, and consisted largely of removal of the rezagas and ore from old mine dumps. In 1992, milling of ore from the Santa Juana returned average grades of 4 grams gold and 400 grams silver per tonne, 7.6% zinc, 5.9% zinc and 1.0% copper.

William and Minorca became involved in the project with the purchase of the three claim groups. The remaining 20% is owned by a Mexican family. Together William, Minorca and the Mexican interest formed BLM Mexicana. William and Minorca can buy the Mexican interest for US$1 million over a 5-year period. BLM Mexicana recently completed a 25-hole, 2,100-metre drill program as well as mapping and channel sampling at the Santa Juana and Terneras mines as part of the feasibility study at the project.

Preliminary ore resource calculations, based on old data as well as data from 11 of the 25 holes, indicate the Santa Juana mine hosts 910,000 tonnes of possible and probable ore averaging 6.19 grams gold and 403 grams silver, 2.42% zinc, 2.69% lead and 0.59% copper. The total probable and possible resource hosted on the Terneras project is now estimated to be 2.846 million tonnes averaging 3.8 grams gold and 326.3 grams silver per tonne. The resource is composed mostly of rezagas material as well as in situ sulphide and oxide reserves.

Tim Henderson, project manager, said the key to future development, beyond the next 8 years, is finding additional sulphide ore. Ongoing exploration is expected to prove up 1.5 million tonnes of sulphide ore.

Once the $500,000 feasibility study is completed and approved, BLM Mexicana plans spend US$1.5 million refurbishing the underground workings as well as increasing the capacity of the exisiting mill.

Initial mining, at a rate of 907 tonnes per day, will be from sulphide ore above level 12 and oxide and sulphide ore found below level 16. The average head grade is expected to be 4 grams gold, 381 grams silver and 12% combined lead, zinc and copper.

Shrinkage stoping with pneumatic hand-held drills, pneumatic mucking loaders and electric powered scrapers will be used to mine the veins at a mining width of 0.65 metres. Contract mining costs are expected to be in the US$30 to US$40 range.

The existing mill and flotation plant, built in 1989, are capable of producing a precious-metals-rich lead concentrate as well as a zinc concentrate, both of which are suitable for delivery to a smelter in Torreon. Once cash flow from the Terneras project starts, exploration will then be focused on the developing reserves at the El Cobra and San Diego mines. BLM Mexicana also holds interests in four other properties in Mexico. The La Negra gold-silver property in the state of Zacatecas underwent 500 metres of drilling and assay results are pending. Three other properties, namely the Reyas gold-silver property in Durango, the Miguel Auzo gold-silver property in Zacatecas and Jimulco copper-gold porphyry property in Coahuila will be explored at a later date.