San Sebastian is a silver and gold mine, and began mining ore in December 2015. 澳门澳门贵宾厅’s concession holdings at San Sebastian are located in the middle of the prolific Mexican Silver Belt and cover approximately 42,000 hectares (162 square miles). Within this land position is the Francine Vein, Hugh Zone, Middle Vein and Don Sergio-Andrea vein systems as well as multiple prospective exploration targets.
Last year, San Sebastian produced 1.9 million ounces of silver at a cash cost, after by-product credits, per silver ounce of $8.02 (a non GAAP measure) and 15,673 ounces of gold. (1). The mill operated at an average of 479 tpd for the year. Silver production in 2020 is expected to be 0.8 – 1.0 million silver ounces at a cash cost, after by-product credits of $3.00 – $4.25 an ounce (1) and gold production is expected to be 7,000 – 8,000 ounces.
(1) Cash cost, after of by-product credits, per silver ounce represents a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found in the legal page of this website.
The East Francine, Andrea, Middle and North veins now define nearly five miles of mineralized strike length and are open along strike and at depth. In addition, near-surface portions of the East Francine, North and Middle veins contain mineralization that are suitable to open pit mining. San Sebastian contains 2.8 million ounces of proven and probable silver reserves. San Sebastian also contains 14.7 million ounces of measured and indicated silver resources and 22.9 million ounces of inferred silver resources. In addition, there are 23,000 ounces of proven and probable gold reserves and 115,000 ounces of measured and indicated gold resources as well as 143,000 ounces of inferred gold resources.
Underground mining began in January 2018. The mill lease has been extended through 2020. Capital investment is minimized by renting of a nearby, third-party mill and using contract miners.
澳门澳门贵宾厅 operated the underground San Sebastian mine on this property from 2001-2005. During that time, the mine produced 545,476 tons of ore containing 177,541 ounces of gold and 11.6 million ounces of silver from the Francine Vein with an average grade of 0.32 oz/ton gold and 22.5 oz/ton silver, making it one of the highest-grade producers in Mexico. 澳门澳门贵宾厅 geologists have long recognized the potential for the district to host similar high-grade mineralization, and a systematic, ongoing exploration effort has been in place since 澳门澳门贵宾厅 took control of the district in 1999.
Mineralization in the district is structurally controlled and hosted in sedimentary rocks. Historical production from the Francine vein (2001 to 2005) was from a high-grade silver vein with significant gold mineralization. Production from the Don Sergio vein was from a near-surface, high-grade gold vein with known silver mineralization.
The Hugh Zone was discovered in 2005 and is the high-grade down dip extension of the past-producing Francine vein. The Hugh Zone in combination with recent new discoveries in the district is currently the focus of a pre-feasibility study that will analyze the potential for re-initiating production at the project. The new study will consider operational synergies with the nearby East Francine, Middle and North veins, where numerous high-grade drill intercepts were reported from 2012 to the present.
Mineralization in the district is structurally controlled and hosted in sedimentary rocks.
The mining technique focuses on shallow, near-surface pits on the East Francine, Middle and North veins, targeting high-grade material. The pits are expected to be small, extending to a maximum of about 270 feet in depth. Near-surface material is weathered, and should be easily excavated. Drill and blast techniques are contemplated for deeper material.
The 澳门澳门贵宾厅 is using a contractor for mining operations.
澳门澳门贵宾厅 has secured the use of a Merrill-Crowe processing plant near Velardeña in the State of Durango, Mexico, as announced on July 15, 2015. Under the terms of the agreement, 澳门澳门贵宾厅 has exclusive use of the mill for 18 months, with the potential to increase for up to another 12 months. Located within 100 miles of San Sebastian, the mill was previously used by 澳门澳门贵宾厅 to process ore when it mined on the property from 2001 to 2005. The mill has been updated to meet the standard 澳门澳门贵宾厅 uses for environmental protection and best practices in milling standards.
|(year ended December 31)|
|Cash cost per silver ounce, after by-product credits, ($/oz) (1)||$6.71||$(3.35)||$(3.36)||$9.69||$8.02|
|(historical, years ended December 31)|
- (footnotes)(1) Cash cost, after by-product credits, per silver or gold ounce is a non-GAAP measurement. A reconciliation of cash cost, after by-product credits, per silver or gold ounce to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found in the legal page of this website.
Information with respect to proven and probable ore reserves, measured, and inferred resources is set forth below.
|(As of December 31, 2019 unless otherwise noted)|
|(000)||(oz/ton)||(oz/ton)||(%)||(%)||(%)||(000 oz)||(000 oz)||(Tons)||(Tons)||(Tons)|
|Proven Reserves (1.2)||35||4.8||0.08||-||-||-||166||3||-||-||-|
|Probable Reserves (1,2)||66||10.9||0.07||-||-||-||716||5||-||-||-|
|Proven and Probable Reserves||100||8.8||0.08||-||-||-||881||8||-||-||-|
|Measured Resources (3,4)||–||–||–||–||–||-||–||–||–||–||–|
|Indicated Resources (3,4)||2,846||6.3||0.05||2.2||3.3||1.4||17,952||155||30,300||45,660||19,900|
|Inferred Resources (3,5)||3,518||6.3||0.04||1.7||2.4||0.9||22,189||147||13,250||19,200||7,440|
- (footnotes)Note: All estimates are in-situ. Resources are exclusive of reserves. Totals may not represent the sum of parts due to rounding.
(1) The term “reserve” means that part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination. The term “economically,” as used in the definition of reserve, means that profitable extraction or production has been established or analytically demonstrated to be viable and justifiable under reasonable investment and market assumptions. The term “legally,” as used in the definition of reserve, does not imply that all permits needed for mining and processing have been obtained or that other legal issues have been completely resolved. However, for a reserve to exist, 澳门澳门贵宾厅 must have a justifiable expectation, based on applicable laws and regulations, that issuance of permits or resolution of legal issues necessary for mining and processing at a particular deposit will be accomplished in the ordinary course and in a timeframe consistent with 澳门澳门贵宾厅’s current mine plans.
(2) Mineral reserves are based on $1,300 gold, $14.50 silver, $0.90 lead, $1.15 zinc, unless otherwise stated. The NSR cut-off grades are $127/ton ($140/tonne) for underground and $90.72/ton ($100/tonne) for open pit reserves at San Sebastian.
(3) Mineral resources are based on $1,500 gold, $21 silver, $1.15 lead, $1.35 zinc and $3.00 copper, unless otherwise stated. Cut-off grades are as above unless otherwise stated.
(4) Indicated resources reported at a minimum mining width of 5.9 feet (1.8 m) for Hugh Zone, Middle Vein, North Vein, and East Francine Vein and 4.9 feet (1.5 m) for Andrea Vein using a cut-off grade of $90.72/ton ($100/tonne). San Sebastian lead, zinc and copper grades are for 1,376,500 tons of indicated resource within the Middle Vein and the Hugh Zone of the Francine Vein.
(5) Inferred resources reported at a minimum mining width of 5.9 feet (1.8 m) for Hugh Zone, Middle Vein, North Vein, and East Francine Vein and 4.9 feet (1.5 m) for Andrea Vein using a cut-off grade of $90.72/ton ($100/tonne). San Sebastian lead, zinc and copper grades are for 792,900 tons of inferred resource within the Middle Vein and the Hugh Zone of the Francine Vein.
Reporting requirements in the United States for disclosure of mineral properties are governed by the SEC and included in the SEC’s Securities Act Industry Guide 7, entitled “Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations” (Guide 7). However, the 澳门澳门贵宾厅 is also a “reporting issuer” under Canadian securities laws, which require estimates of mineral resources and reserves to be prepared in accordance with Canadian National Instrument 43-101 (NI 43-101). NI 43-101 requires all disclosure of estimates of potential mineral resources and reserves to be disclosed in accordance with its requirements. Such Canadian information is being included here to satisfy the 澳门澳门贵宾厅’s “public disclosure” obligations under Regulation FD of the SEC and to provide U.S. holders with ready access to information publicly available in Canada.
Reporting requirements in the United States for disclosure of mineral properties under Guide 7 and the requirements in Canada under NI 43-101 standards are substantially different. This website contains a summary of certain estimates of the 澳门澳门贵宾厅, not only of proven and probable reserves within the meaning of Guide 7, which requires the preparation of a “final” or “bankable” feasibility study demonstrating the economic feasibility of mining and processing the mineralization using the three-year historical average price for any reserve or cash flow analysis to designate reserves and that the primary environmental analysis or report be filed with the appropriate governmental authority, but also of mineral resource and mineral reserve estimates estimated in accordance with the definitional standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in NI 43-101. The terms “measured resources”, “indicated resources,” and “inferred resources” are Canadian mining terms as defined in accordance with NI 43-101. These terms are not defined under Guide 7 and are not normally permitted to be used in reports and registration statements filed with the SEC in the United States, except where required to be disclosed by foreign law. The term “resource” does not equate to the term “reserve”. Under Guide 7, the material described herein as “indicated resources” and “measured resources” would be characterized as “mineralized material” and is permitted to be disclosed in tonnage and grade only, not ounces. The category of “inferred resources” is not recognized by Guide 7. Investors are cautioned not to assume that any part or all of the mineral deposits in such categories will ever be converted into proven or probable reserves. “Resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of such a “resource” will ever be upgraded to a higher category or will ever be economically extracted. Investors are cautioned not to assume that all or any part of a “resource” exists or is economically or legally mineable. Investors are also especially cautioned that the mere fact that such resources may be referred to in ounces of silver and/or gold, rather than in tons of mineralization and grades of silver and/or gold estimated per ton, is not an indication that such material will ever result in mined ore which is processed into commercial silver or gold.
At San Sebastian, the 174,713 tons processed at the mill contained 2.06 million ounces of silver and 18,520 ounces of gold. Proven and probable reserves are currently 881,400 ounces of silver and 7,600 ounces of gold. At the end of the year there was an ore stockpile containing 165,800 silver ounces and 2,700 ounces of gold. The total underground reserves in the Middle Vein are 597,800 ounces silver and 2,400 ounces gold and represent 68% and 32% of the silver and gold reserves, respectively. The total open pit reserves in the North Vein are 117,800 ounces silver and 2,500 ounces gold and represent 13% and 33% of the silver and gold reserves, respectively.
Indicated resources increased from 2018 by 44% to 17.9 million ounces for silver and 42% to 154,500 ounces for gold. Indicated resources are separated into ‘Oxide’ and ‘Polymetallic’ mineral styles; oxide is cyanide-amenable material and polymetallic is base-metal-sulfide-rich material amenable to a flotation milling process. The ‘Oxide’ portion of the measured and indicated resources contain 56% of the silver (9.98 million oz) and 88% of the gold (135,400 oz). The recently discovered El Toro Vein system south of the main mining area contains 52% of the ‘Oxide’ silver (5.23 million oz) and 38% of the ‘Oxide’ gold (51,800 oz) in the measured and indicated class. Polymetallic resources represent 44% of the silver and 12% of the measured and indicated gold resources and have associated lead, zinc, and copper. Inferred resources are essentially unchanged from 2018 with 22.2 million ounces of silver and 147,300 ounces of gold. ‘Oxide’ resources account for 84% of the silver and 95% of the gold in the Inferred resource.
Open pit mining continued in 2019 in the expanded North Pit to the west and at depth and an additional smaller ‘satellite pit’ to the west and mining of this pit is expected to continue into 2020. New high-grade, precious metal resources on the El Toro Vein south of the main mining area are being evaluated for open pit and underground mining. Test mining and milling of the polymetallic resource in the Hugh Zone of the Francine Vein during 2019 produced encouraging results for possible conversion to reserves during 2020.
During the fourth quarter of 2019, three surface core drill rigs operated at San Sebastian focused on an in-fill drilling program along the shallow, potentially open pit minable, portions of the El Toro and El Toro Hanging Wall veins. Mineralization at the El Toro Vein has been identified over 5,000 feet of strike length and over 900 feet down dip. Recent core drilling includes intersections of 10.7 oz/ton silver and 0.14 oz/ton gold over 16.3 feet, 18.5 oz/ton silver and 0.14 oz/ton gold over 10.6 feet, and 12.1 oz/ton silver and 0.10 oz/ton gold over 14.4 feet.
In the first quarter of 2020, grid pattern Short Vertical Reverse Circulation (SVRC) drilling is planned to continue to explore through cover for new veins and near-surface oxide mineralization by sampling overburden and bedrock west of the current El Toro resource area. During the year, additional exploration core drilling will follow up on additional vein systems near El Toro.
Underground mining began in early 2018.
澳门澳门贵宾厅 has entered into a toll milling agreement with Excellon Resources Inc. in which sulfide ore from San Sebastian would be trucked 26 miles to Excellon’s Miguel Auza flotation mill facility, in Zacatecas for processing. Excellon will provide 440 tons per day of milling capacity to 澳门澳门贵宾厅 and, in due course, the mill will be upgraded to include a copper flotation circuit. A review of sulfide ore is underway, including a bulk sample from the Hugh Zone to test for suitability for sulfide production. San Sebastian sulfides have the potential for five years of mine life and considerable upside with the recent exploration discoveries.
125 Years of Mining (Spanish)