JOHANNESBURG (miningweekly.com) – New core drilling at TSX- and NYSE-listed Paramount Gold & Silver’s 100%-owned San Miguel project in northern Mexico continues to expand the potential size of the bulk minable San Francisco deposit.
The US-based exploration and development company reported on Wednesday that three new holes intersected shallow oxide mineralisation in areas with limited or no previous drilling.
Paramount explained that a definitive true width estimate would require additional drilling but was expected to be about 90% of the reported intercept.
The three prospective holes at San Francisco were in addition to two other recently reported holes also intersecting wide zones of oxide precious metal mineralisation close to surface in the San Francisco deposit.
Together, Paramount expected these five holes to increase the size of the San Francisco resource and pit configuration contained in the San Miguel preliminary economic assessment (PEA) released on August 25, 2014.
“The San Miguel PEA proposed adding a heap leaching operation to what had previously been a mill-only development scenario for San Miguel, based on successful heap leach metallurgical tests. Adding a heap leach operation to the front end of the production scenario brought down initial capital costs while helping to fund underground mining and related mill construction from cash flow,” the company explained.
The new PEA also featured a substantial increase in resources compared with the 2013 PEA as it included relatively lower-grade material from bulk mineable deposits like San Francisco.
The PEA and its resource estimate established a 9 g/t silver equivalent cutoff grade for the openpit heap-leach scenario at the deposit San Francisco and a 0.15 g/t gold equivalent grade.
“The current drilling is intersecting good widths of material, grading at least three times this cutoff grade in areas outside the PEA pit design. This drilling should enable an increase of the resource and connect several smaller openpits into a single, larger pit with better mining economics,” noted Paramount.
About 18% of the underground minable material in Paramount’s PEA was inferred, with the aim being to have 100% of the resource converted to measured and indicated so that it would qualify as reserves in a preliminary feasibility study.
The current drill programme at San Miguel had four priorities – to test new, recently identified targets like the Dana discovery; convert inferred resources within the proposed underground mine plan to measured and indicated; acquire material for further metallurgical testing and geotechnical studies and increase resources.
Paramount was currently continuing its drill programme with four core rigs on San Francisco, the new discovery on Dana and Don Ese.