Ermitaño - a low key resource

We got a rather low-key PR from Evrim about the maiden resource at Ermitaño (link), which was surprising as there have been several PRs with some very good drill results recently (link).

Realistic metal prices....not!

This equates to approx. 3.5Mt @ 4.0 g/t Au and 68 g/t Ag or 4.93 g/t AuEq (358 g/t AgEq), which represents 95% of all new inferred resources found by First Majestic.

Lol

It looks very interesting, especially for an initial resource. However, there isn't  much information on the project, all we get is a simple plan map...

and a long section..

Low grade zones always are on a diet, whereas high-grade area (like small dogs) expand to fill as much space as possible...

These holes are very widely spaced (>100m), and have First Majestic inflated the tonnages by using a very big search radius (i.e. using all of the drill-hole data no matter how far apart they are)?

Here is a Leapfrog view of the data (link). I had to use trigonometry to estimate the hole lengths and dips, and so they will be a bit out.

My long section (looking north - east to the right). Showing DH intercepts and 50m, 100m and 200m radius buffers.

Drill-hole spacing to define a resource varies by the deposit style and metal distribution, so here are some examples for similar (Epithermal) deposits to see what they used for inferred resources:

La Guitarra - First Majestic


Los Gatos (Sunshine Precious Metals)


San Jose (Quintana Resources)


San Martin (First Majestic)


Santa Elena (First Majestic)


We can see that there are many different criteria, but in general we get:

• Indicated Resources ~50m sample/drill-hole spacing
• Inferred Resources >50m (but anything massively over 100m is unrealistic).

So First Majestic do seem to be pushing the limits for the resources limits at Ermitaño, nothing major, but a hole drilled between 06 and 10 would be a good idea to increase confidence, especially in the western area where the few, high-grade holes are >100m apart.

The fact that First majestic plan to drill 18,000m at Ermitano is very positive, it shows that they are confident in finding new zones and expanding on the known resources, but it would be nice to have a bit more information (e.g. where the heck is the Aitana vein located) showing targets and proposed exploration areas.

Hermosa - January Update

AZ released some spiffy new drill-results today (link)



When you look at the accompanying plan map, you can see why the results from hole 396 were good, and the other holes didn't really hit much, just a few narrow zone and veins, so we'll ignore them.

high grade zone circled in red

When we zoom in, we can actually see that hole 396 wasn't a huge intercept of medium grade mineralization but a series of narrower high grade (>10%) zones within a large zone grading between 2.5-5% Zinc.

Red >10% Zinc; Blue 2.5-5% Zinc

Hole 396 was drilled to follow-up on the thick intercepts in holes 333, 334, 335 and 374. When you step back you can see that there are a couple of areas where the mineralization is much thicker than everywhere else.

Central zone centered on hole 333, 334 and 396; second zone centered on hole 104

You can see that there are 2 distinct orientations to the zinc mineralization:

1. Predominant - A series of sub-horizontal (dipping down to the left or northwest) zone related to rock contacts and the basal low angle fault.
2. Vertical pipes (?) of base metal mineralization - most likely related to vertical faults being used as conduits for mineralized fluids.

This is important as for accurately calculating the resources you need to model each zone separately, with their own bias to the direction (search ellipse) that the mineralized intercepts are joined together to link adjacent drill-holes. This is important for fault hosted mineralization (the vertical stuff) as the fault zone could be very narrow (a few tens of meters) and very high grade.

Check out the copper distribution:



The copper appears to show a bit of zonation. the deeper mineralized horizon is much richer than the upper Zinc horizons, except where you see those nice thick intercepts, is that telling us something? You would expect to see elevated copper in the hotter parts of the system, deeper or nearer the source intrusive, but also where you get zones of weaknesses where fluids will be focused.

In Summary, a good hole, but not an unexpected one. I'll be guessing that we'll be seeing a lot more holes being drilling into this zone over the coming months.

If you want, you can download the 3D model from here (link).

Las Chispas - You're only given a little spark of madness. You mustn't lose it.

Silver Crest have been releasing some interesting results from Las Chispas, we've been getting a steady stream of results from the 1st phase of drilling and underground sampling programs, which has propelled them to current market cap of ~90M and they have raised $10M recently (link) to fund future exploration programs.

For comparison - Regulus Resources, with Anta Kori (just containing 3.4Moz Au, 3 billion pounds of copper) have a market cap of 'only' $68M. So is Las Chispas any good?

The very short answer - no, not really

Summary.

Everything that Silver Crest are telling us about Las Chispas is that:

• Gold and silver found in a number of narrow (~1m wide) veins.
• dilution will be an issue.
• High grade (read economic) zones exist but are found as very small, discrete shoots.
• hard to define significant resources
• have the old workings sterilized large portions of the veins?
• may be impossible (or at least very expensive) to remove residual blocks.

Exploration upside

• Mapping, drilling and sampling has identified multiple high-grade, narrow gold-silver veins.
• They have only been partially explored/exploited
• There is an unexplored area to the NW of the Las Chispas Mine (series of shafts and dumps). I haven't found any info on this area in any of the reports/presentations or press releases.

I was going to say something clever about drill-holes LC16-05 and 08, as the grade and thickness of the Las Chispas vein appear to be getting thicker where the splay vein (unnamed vein) joins to eh main vein, but then I realized that that is where the majority of the historic workings are located. So it probably was good, but no is only useful for bats.

Question - Why appear to be assaying the entire length of each drill-hole, Why? Is it because the mineralization is hard to see and they HAVE to assay everything? This could be a major issue when they come to mining (or taking a 100,000 tonne bulk sample).

You can download the 3D model here (link) and I've also included a Google Earth file with the property boundary, veins, faults and the surface workings with the 3D model as well.

Note: to view the 3D model you'll have to download the latest Leapfrog Viewer - 4.7 from here (link)

Problem 1 - Narrow veins

Here are some photos of the Las Chispas veins. 

Varela Vein - narrow

Las Chispas Vein - narrow

William Tell vein - narrow. Can you mine the stock-work zone?

Why is this a problem:

You need a lot of drilling to define significant resources, and if I was looking to invest in a silver exploration company, I want to see that there is a potential to define >50Moz of AgEq resources.

For mining, thin veins means that there will be a lot of dilution, you can do a quick check to see how robust the grades are over a proper mining width - 1.25m for selective mining and 2.5m for mechanized mining.

I've also included my excel file as well so you can play around with the numbers.

You can see that when we apply these mining widths (and assuming that the country rock is unmineralized) that a large number of the reported samples fall below 300 g/t AgEq that is a convenient cut-off grade for small scale underground mining (or bulk sampling).

Problem 2 - small ore shoots

Here is a long section of the Las Chispas Vein.

Red lines - areas where samples grades >400 g/t AgEq. Note the first number is the strike length (the length of the line)

here's another from William Tell.

Add caption

We've been told that Silver Crest have the taken in excess of 5,000 samples from Las Chispas, that basically means that they are sampling everything. We are also told that they have results from 2055 samples, but only 301 (15%) gave assays of >150 g/t AgEq. That means on the sections, the ONLY areas of reasonable assays are those area underlined by a red line.

Challenge - join the red lines together to form the ore-shoots!

Here is an annotated version of the Las Chispas Section

dark grey = areas mined historically

I've made it a bit easier to see where the historic mining was on the Las Chispas vein. It appears they mined some very small, erratic ore-shoots. Was this because:

• The economic gold-silver mineralization is restricted to small, erratic shoots
• They were focused on mining the highest grade areas (i.e. the high grade core)

Look where the 'good' samples that Silver Crest have taken have come from.

dark grey = mined areas, red bars = areas of good samples

It looks like all of the decent samples came from within (remnant blocks) or immediately adjacent to those historic stopes. Basically where there isn't a red line means that samples contained less than 150 g/t AgEq!

What is the problem with this? Well, it makes it hard to define nice big resource blocks. You can see the issue, to define a large amount of resources you need lots of thin veins (at Curraghinalt has at least 16 separate veins) to have a large resource.

Problem 3 - Is the mineralization is hard to see?

When I read the technical report I was stunned to see that Silver Crest submitted 4332 samples from the phase 1 drill program. They only drilled 6558.1m in 22 holes. That means that each sample assayed 1.5m of core, so it looks like they are sampling the entire drill-hole. For vein deposits this is overkill, why are they doing this? could it be:

1. They are going to use the assay data to map out alteration and mineralization zonation?
2. Checking to see if there is bulk tonnage disseminated halo around the veins
• Normally you sample the entire length of 1 drill-hole see what you get and if there is no evidence for a disseminated halo you assay 5-10m either side of veins, faults, structures etc. 
3. It is damn hard to see where the mineralization is - i.e. no obvious mineralized structures

Fortunately, we have a few photos of the gold-silver zones

this assayed 4.6 g/t Au and 621 g/t Ag

I can't see an obvious vein, do you? I'm guessing it is the lighter grey rocks.

A bit more veining, but nothing you would say is impressive -  this ran 2.4 g/t Au and 311 g/t Ag

wow, a 1 cm whopper

You can see that there is a bit of veining, but nothing that jumps out and rapes your eyeballs and screams this vein is going to give you a silver enema.

Now the silver lining

It is early days, the first phase of drilling got decent results on the 2 main veins, may have found a a decent grade block on the extension of the William Tell veins and also discovered a few more veins, splays with some decent gold and silver grades.

I also check the area on Google Earth to see what 'culture' you can see at surface.


There are a load of dumps and shafts to the NW of the Las Chispas and William Tell vein systems. When I check the technical report and all the info on the website I can't find anything mentioned about this area, but it hints that there are other vein systems that are still waiting for the Silver Crest geologists to get to them.

The results from Las Chispas have been interesting, but we are still early in its story, but I haven't seen anything that screams "big mineralized system with big potential". My feels for SC's market cap is that people are buying into the management team and hope that they can deliver another success. 

Sandra - has a driller knocked you up?

Are you pregnant? Cuz you're late

• 166 days - 5 and a half months since you awarded the contract for the 43-101 calculation (link)
• 121 days - 4 months since you teased us in a PR about metallurgical studies (link)

I'm sure that there is nothing to worry about, let us check out REX.V!

ohh, nasty....

OK, a 50% drop since 50% since September. Nothing to panic about, I'm sure you did the same as your peers and took advantage of when you share price was high to raise some cash.

oh, you didn't, oh dear

Well I hope those metallurgical results are good, but just a quickie - will you get them before the New Year (and I don't mean the Chinese one)?

Here is a funny chart - here are the PR headline grades from the Sandra PRs

They've become a bit average of late, can you drill some more good stuff, please?

XXXxxxXXXxxx 

TAG

The lowest grade mines in the world - Silver

This is part 2, focusing on silver projects. Silver is typically a nuisance by-product from mines producing important metals like copper, lead and zinc or valuable metals like gold. There are relatively few primary silver mines (even the Fresnillo mine has significant gold, lead and zinc credits). I've tried to focus on mines that have >50% of their production value or resource value in silver.

Again, this is a guide so that you can check you favourite silver project against the list to see how they compare, and remember, with operating mines, what they are mining now is NOT the same grade as when the mine started.

Open Pit

These are probably all the open pit silver mines in the world! Rochester - WTF, why are you still operating? It is because it squeaks out a small profit (or doesn't lose too much) but accounts for 30% of Coeur's silver production.

Underground

Impact has been successfully losing money at Zacualpan since 2015 2014 2013 2012! They had an unfashionable case of profitability in Q4, 2015, but fortunately they are back to losing money again!
Avino - best word is - Breakeven.

Development Projects

These are all proposed to be open pit operations.

Care and Maintenance

Both these mines were underground operations and close because they couldn't meet their base metal streaming agreements.

Here are a couple of open pit examples



I'll try and make this list dynamic, so if you have any suggestions, I'll try and include them.

It was interesting looking through all this data. I was amazed at how many silver mining companies are:

1. Mainly gold or base metal miners
2. Very good at losing money - several haven't been profitable for YEARS
3. Raised crap loads of money recently to essentially stay afloat

TL:DR version - if you want to invest in mining/exploration companies - go for ones with gold and copper projects!

Sandra Escobar - Sept 28th results update

Summary

1. I was wrong and Orex are correct, the silver is horizontal, with an small lower zone of disseminated mineralisation (killing my idea of vertical feeders)
2. A review of a couple of similar deposit suggest silver recoveries at Sandra in the upcoming metallurgical study will be around 50-60%.
• Is that too low for it to be mined? 
• Probably, unless the deposit gets a lot larger (i.e. >100Moz Ag).
• It will be interesting what cut-off they will used for the resource calculations.
• 50 g/t lower cut-off to reflect the low recoveries
• 20 g/t cut-off to maximise the resources
• If the recoveries are crap, what is plan B for this project?

Orex released some more results from Sandra (link), and here is the updated model (link).
I'm going to revise my earlier idea. Originally I though that there were vertical feeder structures feeding int silver mineralisation into a horizontal porous unit (the rhyolite tuff). However, the new data indicates that it looks like there is a second, deeper silver zone. It is much narrower and lower grade, but Orex was right and I was wrong, the silver is horizontal.

A narrow, lower grade silver zone at depth - hole 19 may not have completely drilled through the silver zone.

Is the silver zone open to the SW beyond hole 16-048?

So where did the silver come from? It would be interesting to see if there is zonation in the other metals, but we'll wait for the technical report if they hint at that.

Basically the results from the 28th are in-line with earlier results, the high grade zones are slightly smaller than I originally thought.

We'll ignore the drilling for now, as I've been think more about the metallurgical study. It has been 3 months since Orex awarded the metallurgical testing contract to SGS Mineral Services, and we should be getting some news in the not too distant future.

However, I couldn't wait, I decided to do some research to see if I could find similar deposits with disseminated silver mineralisation and see what recoveries they got, so I could have a benchmark against which the Sandra results could be compared.

They say that all the best nuts come from California, and that also appears to be true for disseminated native silver deposits. In the foothills of the majestic Calico Mountains (check out the old mining town - link), nestled against the San Andreas Fault (yes that one) are the Waterloo (Pan Am Silver) and Langtry (Athena Silver) silver deposits.

There is SFA on Waterloo, but Athena released a 43-101 report on Langtry (link) outlining ~60Moz Ag, that included a section on the mineralogy (which minerals the silver is in), and results from several metallurgical studies.

Mineralogy

I managed to snag this image from a PhD done on the district.

Langtry

Sandra

Hmm, microscopic silver in both, what were the recoveries like?

The short answer - Crap - 50%-ish.

The long answer

Metallurgical studies

Crap

Craper

Crapest

Their conclusions were:


Remember this data is NOT from Sandra, but from a deposit that appears to be similar. It shows that recovery in disseminated silver deposits can be low, require a lot of study and may need to crush the ore very fine or use relatively specialised/non-standard (i.e. more expensive) processing techniques to increase silver recoveries.

I'll put a mark down and say that Orex will get 55% silver recovery from cyanidation with a fine grind (-325 mesh).

This is just a guide, It will be interested to see how close we get.

For reference this website has some good info on different processing techniques (https://www.911metallurgist.com).