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DISCOVERY METALS ANNOUNCES MOBILIZATION FOR 35,000m DRILL PROGRAM AT ITS CORDERO PROJECT

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September 10, 2019, Toronto, Ontario - Discovery Metals Corp. (TSX-V: DSV) (“Discovery” or the “Company”) is pleased to announce mobilization for a Phase 1 diamond drilling program on its newly acquired and 100%-owned Cordero project (“Cordero” or “the Project”) located in Chihuahua State, Mexico. Drill permits are in place and Discovery will begin its drill program in the coming days, approximately five weeks ahead of the anticipated commencement date. Discovery’s plan is to drill approximately 30,000-35,000m over the next 12 months with the focus of: (1) delineating and discovering the highest-grade phases and domains of the mineralized system; and (2) testing new high priority areas.

Discovery acquired the Cordero project through its acquisition of all of the issued and outstanding shares of Levon Resources Ltd. (“Levon”) (see Discovery news release of August 2, 2019). The mineral resource estimate and Preliminary Economic Analysis (“PEA”) supporting the disclosure in the news release were completed by Levon, now a wholly-owned subsidiary of Discovery. These documents are available on Levon’s SEDAR profile at www.sedar.com and on Discovery’s website at www.dsvmetals.com.

Taj Singh, President and CEO, states: “In just a few short weeks we have made great strides at Cordero. We have integrated our teams, progressed well through our review of historic drilling, planned our first holes, and accelerated the start-up of our drill campaign. We are very excited to be aggressively exploring one of the world’s largest silver projects against a backdrop of rising silver prices and we are confident that our high-grade and high-margin approach at Cordero will add significant value.”

Background of the Cordero Project

Cordero is located on the eastern edge of the Sierra Madre Occidental mountains within the northern extent of the Central Mexican Silver Belt. The Project is also located in one of Mexico’s premier porphyry and carbonate replacement deposit districts, and is similar to well-known nearby bulk-tonnage precious metal operating mines (e.g. Newmont Goldcorp Corporation’s Peñasquito Mine) and projects (e.g. Orla Mining Ltd’s Camino Rojo project).

The bulk-tonnage potential of the Cordero deposit was first recognized in 2009 by Levon Resources Ltd (“Levon”) and the resource area was tested with 132,000m of drilling in 292 holes. The resource estimate for the Project, as currently stated, captures a massive inventory of silver-zinc-lead-gold, making it one of the largest undeveloped silver deposits in the world and thus providing exceptional leverage in a rising silver market. Within this extraordinary in-situ resource, Discovery has identified a compelling opportunity to delineate and expand areas of higher-grade silver that occur through the deposit.

Below in Table 1 is a sensitivity analysis showing the mineral resource, with additional information on grade and tonnage for higher cut-off grades. This table shows that a significant portion of the resource remains even at significantly higher cut-off grades.

Table 1: 2018 Cordero resource summary – Cutoff grade sensitivity1

AgEq1 (g/t) Cutoff

Tonnage & Grade within Mineral Resources Pit Shell

Total Contained Ag Mozs

Total Contained AgEq1 Moz

Class

Tonnes x1000

AgEq1g/t

Ag g/t

Zn %

Pb %

Au g/t

15

(used in PEA)

Indicated

990,054

32

13

0.4

0.2

0.04

407.8

1022.0

Inferred

282,217

56

21

0.8

0.3

0.04

187.5

513.5

25

Indicated

467,298

46

19

0.5

0.3

0.06

278.4

685.9

Inferred

182,649

77

28

1.0

0.4

0.05

163.3

450.7

50

Indicated

99,217

95

40

1.0

0.6

0.11

128.4

302.8

Inferred

100,003

112

41

1.5

0.7

0.06

131.1

360.3

Within the Cordero drill database, there are 285 individual intervals with AgEq2 values above 500 g/t and 1,416 individual intervals with AgEq2 values above 200 g/t. A selection of examples of high-grade intervals and the longest natural intervals with grades over 200 g/t AgEq2 at Cordero are shown in the Table 2 and Table 3 respectively. These two tables illustrate both the high-grade selective (underground) and high-grade bulk-tonnage (open-pit) potential of the Project. 

Table 2:  Cordero project – Selection of historic high-grade intervals

Hole

From (m)

To (m)

Length (m)

Ag g/t

Zn%

Pb%

Au g/t

AgEq2 (g/t)

C10-66

256

258

2

3,230

11.4

2.3

0.08

3,878

C11-141

472

478

6

993

27.3

14.6

0.29

2,887

C12-251

230

232

2

1,150

7.7

20.4

0.52

2,779

C14-271

470

472

2

1,179

7.3

12.4

0.20

2,311

C10-29

122

126

4

925

4.1

19.9

0.21

2,002

C17-284

466

468

2

134

2.6

2.1

17.95

1,865

C10-39

72

74

2

732

14.0

7.5

0.53

1,738

C10-32

280

286

6

547

11.5

13.9

0.30

1,732

C11-139

72

76

4

846

1.5

16.7

0.71

1,639

C12-236

54

56

2

830

1.6

17.2

0.30

1,581

 

Table 3: Cordero project – Selection of longest natural intervals > 200 g/t AgEq2

Hole

From (m)

To (m)

Length (m)

Ag g/t

Zn%

Pb%

Au g/t

AgEq2 g/t

C14-267

216

272

56

68

3.6

1.0

0.14

292

C09-5

132

180

48

193

3.2

3.0

1.31

562

C10-26

224

264

40

167

2.3

2.2

0.47

398

C11-113

320

360

40

61

3.4

1.1

0.06

272

C11-165

428

466

38

56

2.7

2.2

0.11

277

C10-31

176

212

36

317

2.4

5.5

0.85

700

C10-39

44

78

34

92

1.4

1.3

1.50

322

C11-190

588

620

32

41

3.8

0.1

0.02

234

C14-275

112

140

28

180

2.4

1.3

0.09

353

C10-60

246

274

28

37

3.3

0.7

0.02

227

 

A summary of the most recent economics of the Project can be found in Section 1.14 of the 2018 Preliminary Economic Analysis (“PEA”)1. The PEA contemplates a 29-year conventional open-pit truck-and-shovel operation with a life-of-mine strip ratio of 0.94, with essentially all of the ore being sulphides. Testwork indicates the ore responds well to a standard crushing / milling / sequential lead and zinc flotation concentration process. Discovery’s goal is to undertake intensive drilling in advance of updating the resource and PEA. Discovery believes that a focus on drilling and defining higher-grade areas of the Cordero deposit and subsequent improved geological modelling and improvements in mine planning, mining methods, process engineering and logistics, may vastly improve the economics of the Project by lowering capital and operating costs.

 

Table 4 below outlines the economics of the 2018 PEA and, although Discovery intends to significantly rescope the Project, it is mainly shown to illustrate the excellent leverage the Project has to higher silver prices (all metal prices other than silver are kept constant; the same as used in the PEA1).

 

Table 4: 2018 Cordero PEA – Post-tax economic sensitivities to silver prices1

Ag Price (US$/oz)

NPV5% (US$M)

NPV7.5%  (US$M)

IRR (%)

Cash Costs (US$/oz AgEq1)

$20

$700

$426

16.5

$9.70

$25

$1,118

$754

22.6

$10.65

$30

$1,536

$1,081

28.3

$11.39

$35

$1,953

$1,408

33.8

$11.99

Project update and plans

In the five weeks since acquiring the Project through its acquisition of Levon, Discovery has:

  • successfully completed the integration of the technical teams, under the overall supervision of Gernot Wober, Discovery’s Vice-President of Exploration. Discovery’s Roman Solis continues to serve as Country Manager, and Dave Greenan, who has been on the Cordero project since the discovery in 2009, will continue to act as the Cordero Project Exploration Manager.
  • initiated a relogging and review of historical drill core in order to develop a better understanding of the distribution and controls on mineralization, such that high-grade mineralization within the relatively sparsely drilled portions of the deposit can be targeted. To date, the geological team has relogged approximately 30% of the previous Cordero holes.

Discovery’s focus over 2019 and 2020 can be split into two key areas: Cordero deposit and Property-wide. The current plan calls for approximately 20,000-25,000m drilling at the Cordero deposit and 10,000m Property-wide for a total estimated budget of C$7-8M.

On the Property-wide exploration, Discovery intends to follow up on numerous exploration targets that have been defined outside of the resource area, and to carry out reconnaissance programs to define new targets on the remainder of the property. Prior to Levon’s exploration program for bulk tonnage silver-zinc-lead-gold deposits, exploration focused on:

  • Narrow, high-grade underground vein and intrusive contact deposits;
  • Bulk tonnage porphyry copper and molybdenum potential;
  • Gold skarn and porphyry gold deposits.

Currently there are six regional targets outside of the Cordero deposit that require follow-up work and drill testing. A conceptual plan view map of the Cordero property and various target areas is shown in Figure 1.2 of the 2018 PEA1.

Historical mine workings and prospects at Cordero date back to the 17th century. There are about 40 shallow, vertical shafts with associated open stopes at Cordero, generally developing outcropping, narrow (1-2 m), high-grade silver, zinc, lead and gold veins as well as high-grade skarn mineralization. Local artisanal miners report most of the past and recent production was direct shipping ore, which was hand-sorted, shipped, and processed in the nearby town of Parral. The La Luz mine was the largest mine and was active in the 1940's. Remnants of a small six-cell floatation mill built by ASARCO remain at La Luz mine.

For further information contact: Discovery Metals Corp., #701 - 55 University Ave, Toronto, ON Canada M5J 2H7, [email protected].

On Behalf of the Board of Directors

“Taj Singh”

Taj Singh, M.Eng, P.Eng, CPA

President, Chief Executive Officer, and Director

ABOUT DISCOVERY METALS

Discovery is exploring one of the world’s largest silver resources at its 100%-owned Cordero Project in Chihuahua State, Mexico. The 37,000-hectare property covers an entire porphyry district that hosts the announced resource and numerous exploration targets for bulk tonnage diatreme-hosted, porphyry-style, and carbonate replacement deposits. In addition, Discovery is focused on discovering and advancing high-grade silver-zinc-lead deposits in a land package of approximately 150,000 hectares covering a historic mining district in Coahuila State, Mexico. The portfolio of three large-scale, drill-ready projects and several earlier-stage prospects, all with shallow, high-grade mineralization, is situated in a world-class carbonate replacement deposit belt that stretches from southeast Arizona to central Mexico. The land holdings contain numerous historical direct-ship ore workings with several kilometers of underground development, but there was no modern exploration or drill testing on the properties prior to the work carried out by Discovery.

 

 

REFERENCES

1 PEA by M3 Engineering, Resource by IMC, Mar. 1, 2018, Resource commodity prices ($US): $17.14/oz Ag, $1.11/lb Zn, $0.96/lb Pb, $1,262/oz Au; Mine plan uses a subset of Indicated and Inferred Resources at 15 g/t AgEq cutoff. AgEq grades do not consider metallurgical or smelting recoveries.

2 AgEq calculated using (USD): $16/oz Ag, $1.15/lb Zn, $0.85/lb Pb, $1,250/oz Au. AgEq grades do not consider metallurgical or smelting recoveries.

TECHNICAL NOTES

QualifiedPerson:Gernot Wober, P.Geo, V.P. Exploration, Discovery Metals Corp., is the Company's designated Qualified Person for this news release within the meaning of National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and has reviewed and validated that the information contained in this news release is accurate.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Forward-Looking Statements

This news release may include forward-looking statements that are subject to inherent risks and uncertainties. All statements within this news release, other than statements of historical fact, are to be considered forward looking. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those described in forward-looking statements. Factors that could cause actual results to differ materially from those described in forward-looking statements include fluctuations in market prices, including metal prices, continued availability of capital and financing, delays in receipt of required permits, timing of commencement of drilling, and general economic, market or business conditions. There can be no assurances that such statements will prove accurate and, therefore, readers are advised to rely on their own evaluation of such uncertainties. We do not assume any obligation to update any forward-looking statements except as required under applicable laws.

 

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Swiss Resource Capital AG will use the information you provide in this form to keep in touch with you and to provide you with updates and marketing information. To receive our news, you still have to give us permission to send you E-Mails below.

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