Mr. Rob McEwen reports
MCEWEN MINING ANNOUNCES RESOURCE UPDATE AT THE EL GALLO COMPLEX IN MEXICO
McEwen Mining Inc. has released an updated resource estimate for the El Gallo complex (100 per cent owned) in Sinaloa state, Mexico, where phase 1 production is scheduled to begin during the third quarter. New drilling by McEwen Mining from November, 2010, to April, 2012 (approximately 100,000 metres), has increased the level of confidence associated with the mineralization and increased the size of the resource. This update reports both global and in-pit resources. The updated resource estimates were generated using a silver and gold price of $28.50 (U.S.) and $1,500 (U.S.) per ounce, respectively.
EL GALLO COMPLEX RESOURCE HIGHLIGHTS
February, 2011, resource estimate June, 2012, resource estimate
M&I silver: 39.8 million ounces M&I silver: 53.1 million ounces
Inferred silver: 19.7 million ounces Inferred silver: 31 million ounces
M&I gold: 543,728 ounces M&I gold: 566,508 ounces
Inferred gold: 23,764 ounces Inferred gold: 271,081 ounces
Notes:
Detailed tonnes, grade and ounces for each resource category are shown in
the accompanying tables.
M&I is short form for measured and indicated.
"Our exploration team in Mexico has done a tremendous job at El Gallo. This growth in resources is even more important as we look to begin production during the third quarter. The goal for our exploration during the remainder of 2012 is to continue to grow our silver and gold resources," stated Rob McEwen, chairman and chief executive officer.
The first objective of the company's exploration program since the last resource update in February, 2011, was to increase the measured and indicated silver resources. This was done in order to raise the confidence level associated with this mineralization, as the company is currently finalizing production plans for phase 2, which will include the El Gallo and Palmarito (part of the El Gallo complex) deposits. This was successfully achieved, as the majority of the in-pit mineralization has been converted to measured and indicated for these two areas.
The second objective was to establish an inferred resource on a number of new veins that were discovered throughout 2010 to 2012. These veins contain both silver and gold. Although much of the inferred mineralization was closely drilled and high degree of confidence exists, it was given an inferred classification because additional geological modelling is required to gain a full understanding of the mineralization or because it fell outside of the conceptual pit design.
The resource calculations for the El Gallo deposit in the accompanying tables were estimated based on the lower cut-off grade of 12 grams per tonne silver using a heap-leach recovery process. The cut-off grade for mineralization that would be processed at the mill was 23.75 g/t silver. The accompanying table shows the resource estimate for the El Gallo deposit at various cut-off grades that would be contained inside of a conceptual pit in order to highlight the higher-grade core.
El Gallo complex -- in-pit and out-of-pit resource calculation
In order to determine the mineralization that was contained in and out of a conceptual open pit design, the resource models were assigned various mining parameters (located at the end of this news release) such as mining costs, processing costs, silver and gold recoveries, and slope angles. The resource numbers herein show mineralization both in and out of the conceptual pits for each area.
Silver Gold
Tonnage Silver grade Gold grade
Resource (kt) (oz) (g/t) (oz) (g/t)
El Gallo (Cut-off grade 12
g/t Ag)
Measured 17,134 35,966,692 65.3 28,937 0.05
Indicated 2,356 3,307,711 43.7 2,286 0.03
Inferred 6,072 4,564,947 23.4 3,539 0.02
Palmarito (Cut-off grade 30
g/t AgEq)
Measured 4,069 12,045,234 92.1 30,089 0.23
Indicated 129 219,948 53.2 794 0.19
Inferred 10,302 15,562,152 47.0 74,991 0.23
Palmarito (Cut-off grade 44
tailings g/t AgEq)
Measured 147 763,761 162.0 638 0.14
Palmarito dumps (Cut-off grade 26
g/t AgEq)
Indicated 145 805,556 172.5 1,298 0.28
Chapotillo (Cut-off grade 0.44
g/t AuEq)
Inferred 1,475 1,740,941 36.7 21,905 0.46
Haciendita (Cut-off grade 0.44
g/t AuEq)
Inferred 1,649 1,244,510 23.5 42,083 0.79
Mina Grande (Cut-off grade 0.44
g/t AuEq)
Inferred 3,801 2,883,040 23.6 74,179 0.61
Mina Grande (Cut-off grade 0.58
tailings g/t AuEq)
Inferred 463 804,333 54.1 7,523 0.51
San Dimas (Cut-off grade 0.41
g/t AuEq)
Inferred 846 576,580 21.2 19,325 0.71
Los Mautos (Cut-off grade 24
g/t AgEq)
Inferred 965 1,323,642 42.7 3,637 0.12
San Jose del (Cut-off grade 0.38
Alamo g/t AuEq)
Inferred 501 35,539 2.2 13,162 0.82
Las Milpas (Cut-off grade 24
g/t AgEq)
Inferred 678 964,316 44.2 1,724 0.08
CSX (Cut-off grade 27
g/t AgEq)
Inferred 672 1,262,048 58.4 846 0.04
Notes:
Magistral was previously calculated and disclosed in the technical
report titled "Preliminary Economic Assessment for the El Gallo
District," dated Feb. 11, 2012. See the section on technical information.
The Magistral gold resource totals 502,466 ounces measured and indicated
(10,397,000 tonnes at 1.5 g/t) and 8,167 ounces inferred (223,000 tonnes
at 1.14 g/t).
Tonnes are stated in metric tonnes and equal to 2,205 pounds.
El Gallo complex -- in-pit resource calculation
In order to determine the mineralization that was contained in and out of a conceptual open pit design, the resource models were assigned various mining parameters (located at the end of this news release) such as mining costs, processing costs, silver and gold recoveries, and slope angles. The resource numbers herein show only the mineralization that is contained within a conceptual pit for each area.
Silver Gold
Tonnage Silver grade Gold grade
Resource (kt) (oz) (g/t) (oz) (g/t)
El Gallo (Cut-off grade 12
g/t Ag)
Measured 17,134 35,966,692 65.3 28,937 0.05
Indicated 2,356 3,307,711 43.7 2,286 0.03
Inferred 170 436,216 79.8 107 0.02
Palmarito (Cut-off grade 30
g/t AgEq)
Measured 4,069 12,045,234 92.1 30,089 0.23
Indicated 129 219,948 53.2 794 0.19
Inferred 2,980 6,258,456 65.3 18,491 0.19
Palmarito (Cut-off grade 44
tailings g/t AgEq)
Measured 147 763,761 162.0 638 0.14
Palmarito dumps (Cut-off grade 33
g/t AgEq)
Indicated 145 805,556 172.5 1,298 0.28
Chapotillo (Cut-off grade 0.44
g/t AuEq)
Inferred 845 1,388,412 51.1 15,652 0.58
Haciendita (Cut-off grade 0.44
g/t AuEq)
Inferred 1,252 1,055,983 26.2 36,421 0.91
Mina Grande (Cut-off grade 0.44
g/t AuEq)
Inferred 2,713 2,514,179 28.8 61,130 0.70
Mina Grande (Cut-off grade 0.44
tailings g/t AuEq)
Inferred 462 804,333 54.1 7,523 0.51
San Dimas (Cut-off grade 0.41
g/t AuEq)
Inferred 788 548,322 21.7 18,700 0.74
Los Mautos (Cut-off grade 23.8
g/t AgEq)
Inferred 767 1,170,406 47.5 3,026 0.12
San Jose del (Cut-off grade 0.41
Alamo g/t AuEq)
Inferred 167 10,842 2.0 6,636 1.24
Las Milpas (Cut-off grade 24
g/t AgEq)
Inferred 399 620,467 48.4 1,157 0.09
CSX Inferred 438 1,017,155 72.2 417 0.03
Notes:
Magistral was previously calculated and disclosed in the technical
report titled "Preliminary Economic Assessment for the El Gallo
District," dated Feb. 11, 2012. No in-pit resource was calculated for
Magistral in the technical report, and its resource has been excluded
from the table. See the section on technical information.
Tonnes are stated in metric tonnes and equal to 2,205 pounds.
EL GALLO COMPLEX -- EL GALLO DEPOSIT VARIOUS CUT-OFF GRADES
INSIDE CONCEPTUAL PIT
Silver Gold
Tonnage Silver grade Gold grade
Resource (kt) (oz) (g/t) (oz) (g/t)
El Gallo (Cut-off grade 12
g/t Ag)
Measured 17,134 35,966,692 65.3 28,937 0.05
Indicated 2,356 3,307,711 43.7 2,286 0.03
Inferred 170 436,216 79.8 107 0.02
El Gallo (Cut-off grade 20
g/t Ag)
Measured 13,284 34,033,372 79.7 26,879 0.06
Indicated 1,638 2,935,712 55.8 1,795 0.03
Inferred 135 418,439 96.6 66 0.02
El Gallo (Cut-off grade 40
g/t Ag)
Measured 8,434 29,522,668 109.1 22,464 0.08
Indicated 644 2,037,257 98.4 1,013 0.05
Inferred 74 367,533 152.7 48 0.02
Details on the parameters of the resource estimates are as follows:
-
The resource estimation was based on data from 2,150 holes totalling 284,381 metres of drilling completed by the end of April, 2012.
- In total, 131,045 samples were assayed. The samples were assayed
by ALS Laboratory Group for gold, silver and 32 other elements. Gold was
assayed by fire assay with atomic absorption finish, and overlimit
intervals were analyzed by fire assay with gravimetric finish. Silver
and other elements were assayed using ICP with a four-acid digestion. Overlimit silver intervals were assayed by fire assay with gravimetric
finish.
-
All estimates were done using ordinary kriging (OK) interpolation,
except for Magistral, which used inverse distance.
-
In-pit mineral resources for the El Gallo deposit were estimated by
Pincock, Allen and Holt, and all other mineral resources were estimated
by McEwen Mining using the CIM (Canadian Institute of Mining, Metallurgy and Petroleum) standards
on mineral resources and reserves, definitions and guidelines, prepared
by the CIM standing committee on reserve definitions.
-
The Magistral resource was previously calculated and disclosed in the technical report titled "Preliminary Economic Assessment for the El
Gallo District," dated Feb. 11, 2012, by Pincock, Allen and Holt. See
the section on technical information.
-
Mineral resources, which are not mineral reserves, do not have
demonstrated economic viability.
-
The quantity and grade of reported inferred resources are uncertain in
nature. There has been insufficient exploration to classify these
inferred resources as indicated or measured, and it is uncertain if
further exploration will result in upgrading them to an indicated or
measured category.
-
A silver price of $28.50 (U.S.) per ounce and a gold price of $1,500 (U.S.) were used to establish
the in-pit resource using a Whittle or Vulcan shell.
-
Mining costs for mineralized material were estimated at $1.75 per tonne
and $1.65 per tonne for waste material. These costs are based on actual
mining costs at the El Gallo phase 1 area.
-
Silver and gold processing costs for milling were estimated at $18.50
per tonne. Costs for silver heap leaching were $6.50 per tonne. Costs for gold heap
leaching were $13.20 per tonne. Costs for milling and silver heap leaching
are based on estimates used to establish a reserve estimate in the
upcoming El Gallo phase 2 feasibility study. Costs for gold heap leaching are
based on estimates being used for El Gallo phase 1 production.
-
Gold and silver recoveries were based on metallurgical tests or, in some
cases, were estimated based on similarity of mineralization type to
areas with established recoveries based on metallurgical testing.
-
The maximum overall slope angle used to establish the in-pit resource
was 60 degrees, based on feasibility-level geotechnical studies and
current mining experience.
-
Search parameters on high-grade composites for silver and gold at the El
Gallo deposit were restricted compared with previous estimates. The search
radius was reduced to an average 19-metre influence for composites
greater than the third standard deviation.
-
Density values and silver/gold recoveries varied based on each
particular area, and are shown in the accompanying table.
Resource Density Silver Gold Process
recovery recovery method
(%) (%)
El Gallo milling 2.50 85% 75% Mill
El Gallo heap leach 2.50 60% 60% Heap leach
Palmarito 2.58 68% 88% Mill
Palmarito tailings 1.51 50% 60% Mill
Palmarito dumps 1.20 85% 80% Mill
Chapotillo 2.49 85% 88% Mill
Haciendita 2.59 85% 88% Mill
Mina Grande 2.59 85% 88% Mill
Mina Grande tailings 1.51 80% 73% Mill
San Dimas 2.60 80% 94% Mill
Los Mautos 2.50 85% 85% Mill
San Jose del Alamo 2.50 72% 25% Heap leach
Las Milpas 2.50 85% 75% Mill
CSX 2.35 75% 85% Mill
Gold zone 2.40 85% 75% Mill
Magistral was previously calculated and disclosed in the technical
report titled "Preliminary Economic Assessment for the El Gallo
District," dated Feb. 11, 2012. See the section on technical information.
Technical information
The technical contents of this news release have been reviewed and approved by John Read, CPG, senior geological consultant to the company and a qualified person in accordance with National Instruments 43-101, standards of disclosure for mineral projects. In-pit resources for the El Gallo deposit, which is one of the mineralized areas that make up the El Gallo complex resource, were prepared by Brian Hartman, PGeo, and signed by Richard J. Kehmeier, CPG, of Pincock, Allen and Holt, each an independent qualified person in accordance with National Instrument 43-101. All other resources were prepared by Mr. Read. Mr. Read is not considered independent of the company.
Mr. Read has visited the property on numerous occasions and most recently visited during January, 2012. Mr. Read has reviewed resource modelling, the drill hole database, and quality assurance and quality control for verification of silver and gold grades. Site visits, data review and quality assurance/quality control revealed no issues of concern regarding the resource estimate.
We seek Safe Harbor.
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