Overview
Mexico
The Company is focused on developing the Cerro del Gallo gold/silver project in the central state of Guanajuato, Mexico, to deliver attractive long term cash flows to the company. The project is owned jointly with Goldcorp (66% Cerro Resources and 34% Goldcorp). The property is located in a historic gold-silver mining district and has only recently been subjected to modern exploration techniques. This work identified several targets and has led to the delineation at Cerro del Gallo of a NI 43- 101 Mineral Resource of 4.5 million ounces of gold, 202 million ounces of silver and 1.4 billion pounds of copper.
A higher grade gold zone within the resource consisting of three different ore types: weathered (or oxidised), partly weathered and fresh (or sulphide). A positive feasibility study on heap leaching weathered and partly weathered rock has been completed and is being upgraded to bankable feasibility status. This is stage 1. Stage 2 involves the addition of a carbon-in-leach (CIL) plant to process the fresh ore and some of the partly weathered ore. A scoping study and preliminary assessment was completed in April 2011
Highlights of the two stage project show an initial in-pit resource of 77.2M tonnes of 1.66M/oz of gold at 0.67 g/t Au and 35.3M oz of silver at 14.2 g/t Ag (using a gold price of $1,020 US/oz and a silver price of $16.40 US/oz) over a 14 year mine life with a recovery of 1.1Moz Au and 10M oz Ag, with upside potential. (Ref: NI 43-101 Technical Report of May 2011).
Mine construction could potentially commence in early 2012 with production expected for early 2013.
Namiquipa
The Namiquipa silver project is the exploration highlight for the Company. A core drilling project commenced in May 2011 and targets have been identified early in an area of proven historical production from richly mineralized vein systems. As of December 31, 2011 approximately 22,000 m of drilling was completed.
Espiritu Santo
In October 2011, the Company announced the option to acquire 100% of the Espiritu Santo gold/silver project in the Mascota-Navidad Mining district in Jalisco State. This area is considered to contain excellent exploration potential in the heart of this gold-silver district in Western Jalisco, Mexico. Personnel were on-site October 2011 to commence evaluation and preliminary work in order to design a work program to commence Q1 2012.
Queensland, Australia
The Company maintains an active working focus on the promising Mount Philp Iron Ore (haematite) project in the Mt Isa region, Queensland, Australia. Preliminary metallurgical test results from the project returned excellent initial beneficiation results. A resource drilling program commenced in April 2011. It will test the depth continuity in each of the three zones and is aimed to drill-out the 3.7 km long mineralized structure with the objectives of preparing an inferred resource estimate during 2011.
The Company also maintains an interest in the Kalman exploration project, near Mt Isa. An initial 60Mt molybdenum/copper/gold/rhenium resource has already been identified in a small area of this tenement package to date, and the company's exploration holdings are regarded as having excellent further exploration potential. Comminution and flotation test work has been completed on the Kalman project which produced excellent results for the flotation recovery of gold, copper, molybdenum and rhenium.
In May 2011 the company agreed to farm out the Kalman project to its existing joint venture partner Syndicated Metals.
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Additional Information
The Company’s advanced Cerro del Gallo deposit, in Mexico, provides a fast route to gold and silver production via a well defined and large resource, good local infrastructure and access to skilled populations. In addition Cerro del Gallo is a base for multiple exploration targets, all in a mining friendly jurisdiction.
The Namiquipa Silver project along with the acquisition of the Espiritu Santo gold-silver prospect offers considerable exploration potential and shareholder value.
