Mr. Graham Clark reports
UNITED SILVER CORP. RELEASES POSITIVE PRELIMINARY ECONOMIC ASSESSMENT AND REPORTS UPDATED ESTIMATED RESOURCES
United Silver Corp. has released the results of an
updated National Instrument 43-101-compliant resource estimate
and preliminary economic assessment for its Crescent mine
located in the Big Creek drainage of Shoshone county in the Silver
Valley of north Idaho. This National Instrument 43-101
technical report, which was independently prepared by SRK Consulting
(U.S.) Inc. of Reno, Nev., determined that USC's Crescent
project silver deposits demonstrate strong economics at the PEA level.
The updated resource estimate indicates the in situ measured and
indicated resources increased 8.7 per cent and the inferred resources increased
28.4 per cent on an ounces basis at a silver cut-off grade of eight ounces per short
ton as compared with the resources in the SRK National Instrument 43-101
technical report filed on SEDAR May 31, 2010. The 2013 resource estimate
is informed by a larger drill database and the addition of over 2,300 feet of production data from recent development drifting. USC also provided a
more extensive database of density determinations, which resulted in an
increase in the average density for the deposit.
Highlights:
- PEA mineralized tons processed (diluted): 601,000 tons;
- Silver recovered: 6,108,000 ounces;
- Internal rate of return at $20 (U.S.) silver: 31 per cent posttax;
- Net present value at 8-per-cent discount: $8,834,000;
- Cash cost per ton mill feed mined $99.93 per ton;
- Cash cost per ounce recovered: $9.83 per ounce silver;
- Preproduction development cost: $12,121,000;
- Total capital cost: $13,993,000.
SRK concludes that the property merits the expenditure of additional
funds to complete the secondary egress, the completion of additional
development drifts on structure to further define and delineate the
three mineralized veins identified to date, implementation of diamond
drilling to assist with further resource delineation within the three
veins, exploration drifting on structure to explore mineralized veins
along strike and additional metallurgical testwork to try to enhance
the recoveries achieved to date on 12,607 tons of mineralized material
mined from development and exploration headings.
The 2013 updated mineral resource was prepared by SRK's Jay Pennington,
CPG, with 28 years of exploration and resource geology experience in
precious and base metals and a qualified person with respect to
mineral resource estimation under National Instrument 43-101.
MINERAL RESOURCE STATEMENT FOR THE CRESCENT SILVER DEPOSIT,
SRK CONSULTING (U.S.), JULY 22, 2013
Cut-off Grade Contained
Mineralized vein Category oz/t Ag Tons (undiluted) oz/t Ag Moz Ag
South vein Measured and indicated 8 oz/t 236,000 14.4 3.4
Alhambra vein Measured and indicated 8 oz/t 152,000 13.2 2.0
Jackson vein Measured and indicated 8 oz/t 132,000 15.9 2.1
------ ------- ---- ---
Total M&I 8 oz/t 520,000 14.4 7.5
South vein Inferred 8 oz/t 152,000 18.4 2.8
Alhambra vein Inferred 8 oz/t 118,000 10.2 1.2
Jackson vein Inferred 8 oz/t 260,000 17.7 4.6
------ ------- ---- ---
Total inferred 8 oz/t 530,000 16.2 8.6
Notes:
1. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
2. No measured or indicated mineral reserves have been defined.
3. The cut-off grade for mineralized zone interpretation was four ounces per ton.
4. The block cut-off grade for defining mineral resources was eight ounces per ton.
5. The silver price used was $20 (U.S.) per troy ounce, mining and processing costs of $99.93 per
ore ton, and 92-per-cent mill recovery were used to define the eight-ounce-per-ton cut-off.
6. The resources reported above are non-diluted.
7. Measured resources required blocks to be informed by a minimum of eight composites and those
blocks must be less than 120 feet from previous production.
8. Indicated resources required blocks to be informed by composites from a minimum of two drill
holes and distance from data less than 300 feet.
9. The resources mined from the intermediate drifts have been deleted from the 2013 updated
resources.
No measured or indicated reserves of any category were identified.
Although a conceptual preliminary economic assessment was
completed, no formal economic or engineering work that would enable
identification of mineral reserves has yet been carried out.
Mineral
resources are not mineral reserves and by definition do not demonstrate
economic viability.
There is no certainty that all or any part of
the mineral resources will be converted into mineral reserves.
Due to the uncertainty that may be attached to inferred mineral
resources, it cannot be assumed that all or any part of an inferred
mineral resource will be upgraded to an indicated or measured mineral
resource as a result of continued exploration. Confidence in the
estimate is insufficient to allow the meaningful application of
technical and economic parameters or to enable an evaluation of economic
viability worthy of public disclosure. Inferred mineral resources are
excluded from estimates forming the basis of feasibility or
prefeasibility studies.
The updated resource estimate was informed by 279 drill holes and 1,357
chip channel assays from three intermediate drifts completed on the
South vein and one intermediate drift on the Alhambra vein that were
completed since the 2010 resource update was filed. Estimation was
carried out using inverse distance weighting of declustered
full-vein-width composites. Independent vein wireframes were used to
code block percentages into model blocks with dimensions 25 by 25 by 50 feet (X, Y and Z,
respectively).
The technical report identifies, estimates and summarizes resources in
the three veins incorporated in this updated resource estimate. The
three veins are the Alhambra vein which prior to 2011 has produced over
25 million ounces at an average grade of 27 ounces per ton silver. The South vein,
a structure whose existence has been known for more than 50 years, but
was not known to host potential economic-grade mineralization until
surface drilling intercepts identified that mineralization in 2007. The
Jackson vein, a newly identified vein that was not distinguished from
the South vein during the 2007 through 2010 drilling campaigns. This
vein was modelled as a separate vein during the updated resource estimate
based on mapping and assay data obtained from three of the intermediate
drifts completed during underground exploration and development work in
2011 and 2012. There is a strong indication that the Jackson vein may be
a link vein between the South vein and the Alhambra vein which generates
a new and focused exploration target for future diamond drilling and
underground development.
The deposit model identified strike and dip extensive zones of
mineralization on both of the narrow vein structures hosting the
Alhambra (2,000 feet on strike and 2,000 feet down dip) and South veins
(2,000 feet on strike and 1,800 feet down dip). The Jackson vein was
identified over a smaller area (1,400 feet on strike and 1,500 feet
down dip). Mineralization averages 3.5 feet wide on the South vein but
varies from less than one foot to 18 feet wide. The Alhambra vein averages
three feet wide and varies from less than one foot to 10 feet wide. The Jackson
vein averages 2.5 feet wide and varies from less than one foot to five feet wide.
Silver mineralization in all three of these veins is hosted in St. Regis
rocks, a lithologic rock unit known to be a favourable host for high-grade silver mineralization in other mines along the silver belt.
Crescent mine resources
In this National Instrument 43-101 resource update, SRK lowered the block model cut-off
grade from 11 ounces per ton to eight ounces per ton and used a silver price of $20 per ounce. The
lower cut-off grade is supported by recent collaborative mine planning
and cost estimation carried out by USC and SRK.
SUMMARY OF PEA MINERAL RESOURCES BY RESOURCE CATEGORY
Mineralized Cut-off Tons Grade Contained
vein Category oz/t Ag (undiluted) oz/t Ag Moz Ag
South vein Measured and indicated 8 oz/t 169,000 15.4 2.6
Alhambra vein Measured and indicated 8 oz/t 104,000 13.5 1.4
Jackson vein Measured and indicated 8 oz/t 44,000 18.2 0.8
------ ------- ---- ---
Total M&I 8 oz/t 317,000 15.1 4.8
South vein Inferred 8 oz/t 71,000 16.2 1.2
Alhambra vein Inferred 8 oz/t 43,000 10.7 0.5
Jackson vein Inferred 8 oz/t 20,000 12.5 0.3
------ ------- ---- ---
Total inferred 8 oz/t 134,000 13.9 1.9
Chief executive officer Graham Clarke of United Silver commented: "USC continues to
deliver on its plan to return the Crescent property to commercial
production and profitable mining operations. This NI 43-101 resource
update confirms the presence of three veins that host silver
mineralization averaging from 12.6 to 15.9 ounces per ton using a cut-off grade of eight ounces per ton. The material considered for mine planning and the PEA economic
evaluation consists of a measured and indicated resource of 317,000 tons
containing 4.8 million ounces at an average grade of 15.1 ounces per ton silver and
an inferred resource of 134,000 tons containing 1.9 million ounces of
silver at an average grade of 13.9 ounces per ton.
"The PEA economic model
indicates that when using a silver price of $20 per ounce, the project
has an IRR of 31 per cent and an NPV of $8.8-million using an 8-per-cent discount rate.
Additionally, block modelling has identified large target areas for
exploration between widely spaced drill holes (from 200 to more than 500
feet) that will be explored and developed using both underground mine
development and diamond drilling. The exploration program is designed to
increase both the quantity and quality of resources as development
drifting is completed. As soon as additional financing is completed USC
will begin implementing SRK's recommendations."
Highlights of the preliminary economic assessment at $20-per-ounce
silver
SRK's National Instrument 43-101-compliant technical report contains a PEA of the
Crescent mine project, which means the report is a preliminary
assessment study that includes an economic analysis of the potential
viability of mineral resources developed at this early stage of the
project. While a typical PEA is accurate to plus or minus 35 per cent, the Crescent PEA
cost estimation is considered by SRK to be of higher confidence, and was
developed from a combination of actual costs from recent underground
development work and first principals consisting of best available
estimates from mine/mill cost and designs in conjunction with the National Instrument 43-101 updated resource estimate. Because a PEA is not a feasibility or
formal economic study, inferred resources were utilized in the
assessment. It was completed in support of the National Instrument 43-101 resource update.
Previous underground development work produced slightly more than 12,607
tons of material that was milled at the New Jersey Mining Company
mill. Milling costs and silver recovery were based on costs and
results from that work. Smelting and refining charges are based on
actual costs for the concentrates produced.
OPERATING PARAMETERS UTILIZED
Mining costs $55.09 per ton
Processing cost (including haulage, mine to mill) $26.76 per ton
General and administrative $18.08 per ton
--------------
Total costs $99.93 per ton
Dilution 33 per cent
Mill recovery 92 per cent
Production rate 400 tons per day
Mining schedule 7 days per week
Silver price $20 per ounce
Cost per ounce produced $9.83 per ounce
Preproduction development costs include mine development capital with a
25-per-cent contingency, costs for test mining, exploration drilling and initial
working capital. These costs will be offset by $1,856,000 income from
processing of mineralized material produced from test mining.
The mine plan is based on a 34-week mine development schedule to tie the
upper Countess decline to the lower Big Creek No. 4 crosscut. Normal mine
production will begin as soon as these headings intersect, enabling a
second means of egress from the mine. During this period there will also
be some additional development from the Countess decline to access the
South vein for stope development on additional mining levels.
Production is scheduled from the South, Jackson and Alhambra veins. The
South and Jackson veins will use a mechanized mining system
incorporating primarily uncemented waste rock for backfill. The plan
allows for the mineralized material to be blasted first and removed from
the stope. Waste will then be blasted and left in the stope for backfill
and to make sufficient room for mechanized equipment to work in the
stope. A one-foot cemented backfill cap will be placed on the backfill
to minimize loss of mineralized material into the fill. One foot of
dilution at zero grade has been incorporated into the schedule and
economics. It is expected that Jackson vein mining will be similar to
that for the South vein.
The Alhambra vein will be mined using a conventional overhand cut and
fill stoping method. Each stope will incorporate two manways into the
stope to allow for ventilation and alternate egress and an ore chute.
The blasting and moving of mineralized material will be similar to the
South vein with allowances for the narrower vein expected along the
Alhambra vein. Mineralized material will be moved to the chute using
slushers. LHDs will haul the material from the chutes to the ore pass
where it will fall to the Big Creek No. 4 level and be hauled in railcars
to the surface.
Opportunities and recommendations
The project is very sensitive to silver prices; a decrease in the silver
price to $18 per ounce lowers the IRR to 5 per cent. Increasing the silver price to $22
raises the IRR to 55 per cent. Each $1 increase in the price of silver will
improve the IRR approximately 12.5 per cent.
SRK recommends diamond drilling from current underground workings to
increase the confidence in the mineralized grade and thickness of
underexplored areas of the current resource that are included in the
mine plan.
Additional exploration drilling and drifting are recommended following
completion of the secondary exit to resume exploring underexplored areas
along the strike lengths of both the Alhambra and South vein structures.
With the presence of the Jackson vein as a possible link vein between
the Alhambra and South vein, exploration should be conducted for
additional link veins.
Additional metallurgical testing is recommended to improve silver
recovery in oxidized portions of veins, primarily those areas within
about 500 feet of the surface. Testing is also recommended to determine
how to improve concentrate grades. USC also plans to investigate other
smelter alternatives to achieve more favourable smelter terms.
The technical aspects of this press release have been reviewed and
approved by Michael P. Gross, MS, PGeol, chief operating officer of
United Silver, who is the qualified person for this project as
defined by National Instrument 43-101 regulations.
We seek Safe Harbor.
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