Southern Silver Exploration (TSXV: SSV; US-OTC: SSVFF) has completed more than 20,000 metres of drilling at its flagship Cerro Las Minitas project in Mexico since its last resource estimate in May 2019, and says it’s on track to update the numbers before the end of August, and kick off a preliminary economic assessment in the fourth quarter.
“We’ve had some fantastic results since we re-started drilling in September,” says Robert Macdonald, the company’s vice-president of exploration. “You’re seeing some very high-grade silver mineralization and complementary metals over significant widths, and mineralization that averages much higher than the average grade of the deposits we have identified so far.”
Cerro Las Minitas, a silver-copper-lead-zinc project in the state of Durango, is one of the largest and highest grade undeveloped silver projects in the world on a silver-equivalency basis, Macdonald says, and sits in north-central Mexico’s “elephant country” — about 250 km from Newmont’s (TSX: NGT; NYSE: NEM) Penasquito mine, 100 km from Grupo Mexico’s San Martin mine, and about 75 km from Mexico’s silver-rich Velderno district.
The deposit, about 70 km northeast of Durango, the state capital and its largest city, is also attractive, Macdonald says, because it is a large sulphide deposit, rather than a mixed sulphide/oxide deposit with grades that are high enough for the project to be mined as an underground operation.
Currently Cerro Las Minitas has an indicated resource of 11.1 million tonnes grading 105 grams silver per tonne, 0.16% copper, 1.2% lead, 3.7% zinc and 0.10 gram gold per tonne (375 grams silver-equivalent per tonne) for contained metal of 37.5 million oz. silver, 40 million lb. copper, 303 million lb. lead, 897 million lb. zinc, and 35,000 oz. gold or 133.9 million silver-equivalent ounces. Inferred resources stand at 12.8 million tonnes grading 111 grams silver per tonne, 0.27% copper, 0.9% lead, 2.8% zinc, 0.07 gram gold per tonne (334 grams silver-equivalent per tonne) for 45.8 million oz. silver, 76 million lb. copper, 253 million lb. lead, 796 million lb. zinc, and 31,000 oz. gold or 138.1 million silver-equivalent ounces.
The resource estimate included mineralization found to a depth of about 1100 metres, or roughly one km from surface. Of the 23.9 million tonne total, 18 million tonnes comes from the Skarn Front zone, and the balance is from three smaller and nearer surface deposits — the Blind zone (comes nearly to surface and then cuts off at around 300-350 metres depth), the El Sol zone, and the Las Victorias zone.
Drill results in the last nine months continue to add value to the project, Macdonald says, and he believes the company could deliver as much as 30% more metal.
“Our objective is to increase the basic metal content with the next resource estimate,” he says. “We currently have 83 million oz. silver and we’d like to see that crest 100 million oz. silver; and the current 2.2 billion lb. of combined lead and zinc to go up to about 2.5-2.6 billion pounds.” Macdonald also notes that the resource update will be based on a silver price of US$20 per oz., compared with the 2019 resource, which was based on US$16.60 per ounce.
Highlights from the 21,389 metres it has drilled at the project in 2020-2021 include 8.0 metres (true width) grading 1,072 gram silver per tonne, o.39% copper, 18.8% lead, 7.5% zinc and 0.61 gram gold per tonne (2,040 grams silver-equivalent) starting from 299.9 metres downhole in drill hole CLM-131; 6.3 metres (true width) grading 134 grams silver per tonne, 2.29% copper, 0.3% lead, 0.6% zinc and 0.47 gram gold per tonne (461 grams silver-equivalent) starting from 384 metres from surface in drillhole CLM-135; and 6.7 metres (true width) grading 625 grams silver per tonne, 0.03% copper, 11.8% lead, 7.5% zinc, and 0.11 gram gold per tonne (1,454 grams silver-equivalent per tonne) from 226.10 metres downhole in CLM- 119.
Southern Silver acquired the project in 2010 and since then has drilled a total of more than 78,000 metres (163 drill holes) — delivering a discovery cost of about 9¢ per silver-equivalent oz., Macdonald says.
The junior explorer now owns 100% of the project, but previously had earn-in agreements with Freeport-McMoRan (NYSE: FCX) and the Electrum Group. (Since acquiring the project more than a decade ago, the company and its former partners have spent a total of US$27 million on exploration, including acquisition costs.)
“Freeport completed a US$5 million earn-in between late-2012 to 2014, drilled 11 holes, and then decided the project wasn’t for them,” Macdonald says. The Electrum Group came in with another US$5 million earn-in agreement in 2015. Electrum completed its earn-in and then spent an additional US$3-4 million on exploration as part of a joint-venture on the project. “At that point Electrum was very busy on other projects and they felt they wanted to wait a little bit to advance it,” Macdonald says. “For exploration companies like ourselves, that didn’t work too well, so we negotiated to buy-out Electrum’s 60% interest for US$15 million in cash and share payments. We now have 100% ownership and full control.” (Of the $15 million, Southern Silver has paid a total of $11 million and will make the last payment in September).
“The transaction with Electrum is transformative,” he says. “It gives us 100% ownership, it increases our market cap and makes us a much more attractive takeover target.”
The company also has about $18 million in cash in the bank, following brokered and non-brokered financings this year totaling $12 million, which is “more than enough cash to meet those obligations.”
“We’re fortunate to have a project like this that continues to build and grow into a world-class asset,” Macdonald says. “We’ve worked on this for a decade now and have been able to continue to get money into the ground and continue to develop the resource. We’ve now identified shallow high-grade mineralization to the east about 1 km away from the previous mineral resource and that’s going to be an important complement to the current resource and new discoveries on the project.”
Mineralization at Cerro Las Minitas is largely located in the skarn altered halo around a large central intrusion. From 2011 to 2019, most of the drilling focused on the west side of the intrusion, and was the basis of the 2019 resource estimate. At that point, the company had only drilled 15 holes in total on the east side of the intrusion, but these weren’t incorporated into the resource estimate.
The 2020-2021 drill program has targeted holes on the east side of the intrusion and these new results will be incorporated into the upcoming resource estimate. “We’ve drilled the Mina La Bocono target to a depth of about 450 metres. It has a higher concentration of gold and silver, and we’ve identified two high-grade chimneys,” Macdonald says, “and we have just finished drilling a third area which has additional potential.”
“The idea was to step off the higher grade zones encountered in earlier drilling and continue to build shallow resources that would sit within the top 200 to 400 metres of surface. That is, shallow mineralization which could be developed early in the mine plan.”
At its South Skarn target on the east side and to the south of the Front Skarn deposit, the company has identified over 400 metres of strike to a depth of 450 metres, which Macdonald says is “the basis of a brand new deposit.”
“We already have four deposits and we’ll be adding at least two more, but there may even be more sub-deposits,” he says. “Early thinking is that development could start on the shallower and higher grade eastern deposits and transition over time to the western zones.”
The company plans to drill another 3,000 to 4,000 metres in greenfield exploration during the remainder of this year.
As far as working in Mexico is concerned, Macdonald notes Cerro Las Minitas is in a safe location on the plains. “We’re not in the mountains, we’re on the plain out in the open, so it makes it a very safe jurisdiction to operate in,” he says, noting that in the last decade the company has never had any serious security concerns.
In addition to Cerro Las Minitas, Southern Silver owns 100% of the Oro project, a copper-gold-molybdenum porphyry project with an adjacent near-surface gold target, in New Mexico, U.S.
Over the last year, Southern Silver has traded in a price range of 29.5¢ and 70¢ per share, and at presstime in Toronto was trading at 38.5¢.
The junior has a market cap of about $99 million based on 278 million common shares outstanding.
The preceding Joint-Venture Article is PROMOTED CONTENT sponsored by Southern Silver Exploration and presented in partnership with Canadian Mining Journal. Visit www.southernsilverexploration.com for more information.