Saturday, May 7, 2016

Sting of the Scorpion

The Mesa de Plata deposit is part of the Alacran project optioned by Azure Minerals from Teck (link). I’m intrigued by the project due to its similarities to the Sandra Escobal project being explored by Orex, they appear to have similar styles of mineralisation and quite similar mineralogy (silver bromides).

Azure have included a lot of information in their press releases, including some initial metallurgical test results (PR dated 17th Dec, 2015), that I commented in an earlier post (link). So, I’m going to pick apart the project.

There have been a plethora of press releases stating that “diamond drilling confirms high grade silver discovery: at Mesa de Plata, including:

  • 18m @ 655 g/t Ag

  • 18.7m at 530 g/t Ag

The press release includes the standard industry terms like “Spectacular”, “Excellent”, “consistent high grade mineralisation”, and so on.

However, Azure have provided us with some nice promo sections that start to unravel the story.

On this section we can clearly see that the high grade silver mineralisation is restricted to narrow horizons within a much large, lower grade vuggy silica body. 

Let’s look at hole LM-09 in detail, it graded 39m @ 347 g/t Ag, but the majority (67%) of the silver is found within a narrow, bonanza zone (4.5m @ 2136 g/t Ag). If you take that zone away, the residual grade of the intercept drops to just 113.6 g/t Ag. Bummer.

This is repeated time and time again, and I feel that Azure is using these high grade zones to portray the Mesa de Plata project as a large, medium-high grade, bulk tonnage deposit. It isn’t, it is a weakly mineralised with occasional high grade zones (that are not well understood). 

What is my evidence for this? I’ve compiled as much data as possible and this is what it looks like:

Mesa de Plata - Silver Assays

 The majority of the drill-holes assay less than 50 g/t Ag, with narrow higher grade zones, but there is a small, higher grade zone, but why don't we celebrate the anniversary of the founding of New Orleans and look a bit deeper.

Azure kindly released the initial metallurgical test results from this deposit, that silver recoveries from Mesa de Plate was difficult and poor. They would get around 50-55% recovery with a fine grind and either leaching or floated (i.e. 45% of the silver could not be recovered through a single process) and up to leach and up to 70% with a combination of flotation and leaching

I decided to apply a 60% recovery rate (I’m feeling generous) to calculate a recoverable silver grade:

Recoverable silver grades

When recovery rates are factored in, the majority of the project grades less than 50 g/t Ag_Rec (recoverable silver). Why don’t we take this a step further, and be bad calculate the $value/tonne (using $17/oz for silver) and applying in a “guesstimate mining costs” of $30/tonne (I’ve used the number for Alamo Dorado open pit mine operated by Pan American Silver).
$ value of Mesa de Plata rock (using a $30/tonne mining and processing cost)
Once we’ve factored in the recovery rates and guestimate mining and processing costs we can now see that the majority of drilling at Mesa de Plata has negative values, it is not an economic deposit, and so it will be interesting to read the initial resource, that was promised to be completed in March of this year to see how the resources have been calculated and what they look like.

This project goes woof and has a tail......

All of the data is included in a leapfrog viewer file that you can download and review the data that I used for this article (link).



  1. Thanks TAG. Looking at the value per ton scale, we don't have granularity on how negative uneconomic blocks are (or is it capped at -5? I was not able to find the info with your lfview file and the free version of LF). What back of the envelope silver price you think would make it economic, holding your other assumptions fixed? It sounds to me like Azure is naturally playing the resurgence in PM (much like many other juniors), yet them having tested a composite sample seems to (partially) cap the technical (and management) downside (as you well explain in your other article) if you're looking at investing in the tiny sector of Ag explorers/juniors (presumably because you think silver will move much higher).

  2. Hey Brother. A few very minor thangs. Inca Kola is spelled so. If you tire of your 'favicon'(the HIGHLY ubiquitous 'B' in Orange Square) Find a picture you like then run a 'favicon generator' from the net. When you get that file, go to 'layout'. Right at the top of that you have a button. Stick in your new/improved file there and, presto changeo, we have something cool and personal.