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Impact Silver continues to find new silver/gold areas at Zacualpan

Exploration at Impact Silver's operations at Zacualpan in Mexico continues to define new veins with very promising silver and gold values.

Author: Lawrence Williams
Posted: Thursday , 28 May 2009

LONDON -

Impact Silver, with an existing profitable silver mining operation near Zacualpan in Mexico has huge ground holdings in the area which it is exploring systematically. It is a historic mining area dating back to the Conquistadores, about 3 hours drive northwest from Mexico City. The area is littered with old mining operations, but miners historically went for what was then high grade material and there is plenty seemingly worth mining nowadays in the old mines, while modern exploration is exposing new unworked veins across a huge area.

The latest discoveries are in the Nido de Oro area, only 4.5 km from the company's Guadalupe mine processing plant on what is known as the Horqueta vein which has been traced on surface for 1.9 km while a series of southwesterly dipping veins, including the Armadillo and Nido de Oro Veins, have been found 50 m to the west.

Surface samples from hand trenching of the Horqueta Vein over a 550 m length have returned values up to 639 g/t silver and 0.5 g/t gold over a 0.9 m width. The Armadillo vein has been mapped and sampled in historic underground workings over a 100 m strike length and has returned values up to 679 g/t Ag and 1.4 g/t gold over a width of 0.5 m. The Horqueta Vein mineralisation is open for expansion to the north and additional drill pads have been constructed for further drilling.

The first drill hole on the area is very promising including a 6.5 m intersection (true width 5m) grading 227.8 g/t silver, 2.2 g/t gold, 1.18% lead and 3.71% zinc including a 2m true width section running at 342.9 g/t silver, 5.22 g/t gold, 1.24% lead and 4.08% zinc.

Meanwhile at the Las Aguilas area, located 4.2 km southwest of the Guadalupe plant, which is host to a series of southwesterly dipping veins that are partially exposed in historic underground workings and in outcrops, rock chip samples have returned up to 287 g/t silver and 3.25 g/t gold.

Impact is the only operator in the area and has an enormous amount of ground to cover over the old Royal Mines of Zacualpan and the neighbouring Mamatla area. There is definitely a plethora of unworked silver veins across the properties, some with important gold values too, but these can be difficult to mine economically with variable, mostly quite narrow, widths and tenors.

Impact runs a very low cost operation there utilising mostly secondhand plant in its narrow vein underground mining with ore being trucked to the plant for processing from its surrounding small mines, and it has been successful in defining and opening up some previously unworked areas and maintaining supplies to its mill. It would seem that mining at this kind of scale could be continued almost indefinitely as new veins are drilled and sampled - the question is whether at any stage Impact may expand its mill and add throughput, but while it remains profitable - probably even more so as silver prices have come way off their 2008 lows - it may be disinclined to spend the capital necessary to do this.

As it also generates income from its lead and zinc, which is associated with most of the silver veins, it is likely to wait for a major improvement in base metals prices before looking at any significant expansion, but one advantage of narrow vein mining at a number of locations is that grades can be closely controlled to reflect the prevailing markets.

However there is still spare capacity at the existing mill which will allow some production expansion. Q1 throughput was at 329 t/d while the mill capacity is rated at 500 t/d and Impact intends to build up to that level, although the timescale for so doing has not been specified.

Silver output is currently running at record levels and the company was profitable in the first quarter despite the strike at the Penoles smelter/refinery where the Impact concentrates are treated. Impact thus only shipped concentrates for the first five weeks of the quarter, leaving 59% of first quarter production stockpiled at the end of the perod. Even with the majority of production not being sold, net income of $68,000 was realized, compared to a net loss of $256,000 in the fourth quarter of 2008 when results were affected by the extraordinarily low metal prices. Second quarter earnings should thus receive a substantial boost with the shipment and treatment of the stockpiled concentrates now the Penoles strike is over.