TORONTO (miningweekly.com) – NYSE- and TSX-listed McEwen Mining on Wednesday announced the results of a new technical report on the El Gallo Phase 2 project in Mexico, lifting the National Instrument 43-101-compliant measured and indicated silver resource by 20% and increasing the gold resource by 215%.

The company said the drill programme’s main aim was to convert inferred resources to the measured and indicated categories in order to start work on an updated El Gallo 2 reserve estimate and mine plan.

The total measured and indicated silver resource now totalled 63.9-million ounces and gold ounces totalled 201 750 oz. The precious metals are contained in 34.3-million tonnes, grading 58 g/t silver and 0.18 g/t gold. The measured and indicated resource on a 52:1 gold-equivalent basis totalled 1.4-million ounces contained in 34.3-million tonnes, grading 1.3 g/t gold equivalent.

The measured and indicated resources for El Gallo 1 and 2 on a gold-equivalent basis now totalled 2.1-million ounces contained in 48.2-million tonnes, grading 1.37 g/t gold equivalent.

The inferred resource equalled 14.5-million ounces of silver and 66 550 oz of gold contained in 8.5-million tonnes, grading 52.7 g/t silver and 0.24 g/t gold. The inferred resources on a gold-equivalent basis equalled 345 042 oz contained in 8.6-million tonnes at 1.26 g/t gold equivalent.

The company said the block models for the main El Gallo and Palmarito deposits remained relatively unchanged since the last resource update in June 2012. The cutoff grades at El Gallo had been increased to 14 g/t silver from 12 g/t silver and, at Palmarito, to 33 g/t silver equivalent from 30 g/t silver equivalent.

Changes to the cutoff grades were based on lower precious metals price assumptions of $23.50/oz of silver and $1 425/oz of gold, as compared with $28.50/oz of silver and $1 500/oz of gold. These price assumptions and updated metallurgical recovery data had resulted in a slight reduction of the resources.

McEwen said the resource classification was modified for the El Gallo deposit, which resulted in a small portion of the inferred resource being upgraded. Also, the resource for Palmarito had been changed to include both openpit and underground resources. Previously, all resources at Palmarito were stated solely as openpit. This change represented less ounces but at a higher silver grade for the deeper portions of the deposit.

Since the last El Gallo 2 resource was published in June 2012, infill and exploration drilling had been completed on several of the other resource areas, including Chapotillo, CSX, Haciendita, Mina Grande and San Jose Del Alamo.

These areas were previously classified as inferred and excluded from the feasibility study. Now, the majority of these inferred resources had been converted to the measured and indicated categories and would be studied as part of an updated reserve estimate and mine plan for the project.

No infill drilling was completed on Los Mautos nor Las Milpas, owing to timing constraints, resulting in these resources remaining in the inferred category.

Further, the San Dimas deposit had been removed from the El Gallo 2 resource estimate, owing to additional metallurgical testing having shown that San Dimas could be processed at the El Gallo 1 mine. It was, for that reason, included in the El Gallo 1 resource estimate.

The company said that, in order to upgrade the newly classified measured and indicated resources to proven or probable reserves, it would need to complete a slope stability analysis for the planned openpits and conduct additional testwork to better estimate silver and gold recoveries.

This work was, however, not expected to start until the company had made a final determination on the El Gallo 2 process method. Tests were currently being completed to see if the majority of the mineralisation could be heap leached to reduce capital costs.