El Quevar
Drill Results
The Company controls mineral and surface rights to approximately 67,000 hectares at its 100% controlled El Quevar project. There are currently 11 targets with surface expressions of at least 100 grams per tonne silver identified in the El Quevar project area. The Company began its expanded drilling program during the fourth quarter 2010, and currently has three diamond drills operating at the El Quevar project.
The drilling program is focused on priority targets at the El Quevar project. Two drills are now operating at the Carmen target, located approximately 300 meters north of the Yaxtché deposit and one drill is providing infill data on the western portion of the Yaxtché deposit. When a fourth drill arrives it will be used at the Mani Sub target, located approximately 500 meters south of the Yaxtché deposit. The Carmen and Mani Sub targets are potentially parallel structures to the Yaxtché deposit. Drilling is also planned during 2011 for the eastern extension of the Yaxtché deposit. Drill hole QVD-217, located on the eastern extension of the Yaxtché deposit, where limited drilling has occurred to date, reported a two meter intercept of 970 grams per tonne silver and a two meter intercept of 489 grams per tonne silver. As previously reported, this intercept suggests that the main Yaxtché deposit may extend farther east than previously believed. The Yaxtché deposit remains open along strike and the West Yaxtché is open both up and down dip.
Six holes (2,000 meters) were completed at the Sharon target during 2010. The Sharon target is located in the Quevar Norte area of the El Quevar project, approximately three kilometers north of the Yaxtché deposit. Drill hole QVD-236 intercepted 333 grams per tonne of silver over two meters. Additional exploration activities may be conducted in the Quevar Norte area in the future; however the current focus will be on the higher priority targets in the Quevar Sur area.
Over 60,000 meters in 275 diamond drill holes have been completed to date at the El Quevar project, including over 200 holes drilled on the main Yaxtché deposit. Micon International Limited ("Micon") used data from 168 drill holes from the Yaxtché deposit in its August 10, 2010 Canadian National Instrument 43-101 ("NI 43-101") compliant resource estimate. The Micon resource estimate reported 8.9 million ounces of silver in the indicated category at a grade of 310 grams per tonne, and 51.5 million ounces of silver in the inferred category, at a grade of 336 grams per tonne of silver. The Micon resource estimate was constrained in that it assumed a minimum three meter mining width and capped the silver grade at 3,000 grams per tonne. Micon will prepare an unconstrained global resource estimate, based on the same data used for the existing resource estimate. In addition, the Company plans to update its NI 43-101 resource estimate with additional drilling results during the second quarter of 2011, following receipt of pending and new drill hole results.
Summary of Indicated and Inferred Resources,
Yaxtché
Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues. The quantity and grade of reported inferred resources in this estimation are conceptual in nature. There has been insufficient exploration to define an indicated mineral resource on the property, and it is uncertain if further exploration will result in discovery of an indicated or measured mineral resource on the property.
The mineral resources in this estimate were calculated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council on December 11, 2005.
Under standards promulgated by the SEC,
a deposit reported as "mineralized material" does not qualify as a reserve until comprehensive evaluation, based upon unit costs, grade, recoveries, and other factors concludes economic and legal feasibility. The Yaxtché deposit
may never be classified as reserves under SEC standards and
it may not be economically feasible to extract any portion
of the deposit.
Cautionary Note regarding Estimates
of Measured, Indicated and Inferred Resources: The United
States Securities and Exchange Commission permits mining
companies, in their filings with the SEC, to disclose only
those mineral deposits that a company can economically and
legally extract or produce. We use certain terms in this
presentation, such as “indicated” and “inferred resources” that the SEC guidelines strictly prohibit us from including in our filings with the SEC. US investors are cautioned not to assume that any or all of measured, indicated or inferred resources are economically or legally mineable or that these resources will ever be converted into reserves. US investors are urged to consider closely the disclosure in our Form 10-K and other SEC filings. You can review and obtain copies of these filings from the SEC’s
website at http://www.sec.gov/edgar.shtml.
