La Cigarra Silver Project
PROJECT HIGHLIGHTS
- Significant land package (over 18,000 hectares) located within a highly prospective mineral belt in the state of Chihuahua; 26 km from the historic silver mining city of Parral;
- Property has good road access, gentle topography, power and water sources nearby;
- The mineralized system at La Cigarra has been traced over approximately 9.0 kilometres and outcrops at surface as a silver soil anomaly with numerous historic surface workings along strike;
- Results from 171 drill holes totaling over 30,935 metres clearly outline a continuously mineralized portion with a strike length of 4.4 kilometers encompassing the La Borracha, San Gregorio and Las Carolinas Zones; click the following link to view the comprehensive results of all the drill holes completed to date: La Cigarra Drill Results;
- The resource estimate incorporates data from 156 of 173 drill holes competed within a potentially surface minable mineralized area comprised of the San Gregorio and Las Carolinas mineralized zones, which combined form a total strike length of 2.4 kilometres;
- The Property's current NI 43-101 mineral estimate hosts 51.5 million ounces of silver in the Measured & Indicated categories grading 86.3 g/t silver and 11.5 million ounces of silver in the Inferred category grading 80.0 g/t silver constrained within resource pit shell utilizing a $22 /oz silver price and reported at a 35 g/t silver cut-off grade, including metallurgical recoveries of 84% silver;
- Current measured and indicated mineral resources represent a 14% increase in grade from the 2013 Resource Estimate with inferred mineral resource representing a 31% increase in grade from the 2013 Resource Estimate:click the following link to view the Technical Report: NI 43-101 La Cigarra Technical Report; Resource Statement for the La Cigarra silver project located in Chihuahua State, Mexico: GeoVector Management Inc., Effective Date January 14, 2015, Authored by Allan Armitage, PhD, P. Geo. and Joe Campbell, B.Sc., P. Geo., of GeoVector Management Inc. and can be found on Northair Silver Corp. SEDAR profile filing date February 27, 2015.
- Total ounces of the current mineral resource represents an increase of 17% in total ounces from the 2013 Resource Estimate;
- Higher than average grade is found in outcrop, which could improve project economics in the early years with significant by-products including gold, lead and zinc;
- The deposit remains open along the 9.0 kilomertre strike and at depth with potential to also expand near surface mineralization along the outer perimeter of the deposit;
- The purchase of surface rights and a twenty (20) year lease agreement signed with the Ejido Estanzuela allows Kootenay to conduct exploration activities on the Property as well as future construction, mining and processing
- La Cigarra was acquired by Kootenay Silver from the acquisition of Northair Silver Corp ("Northair"). To date, all technical reports have been prepared for Northair.
OVERVIEW
The La Cigarra silver project is located in the state of Chihuahua in the renowned Parral Mining district in north central Mexico. The project lies in close proximity and on trend to several of the district’s top silver producers, including; the close by San Francisco Del Oro and the Santa Barbara mines, that together have produced over 800 million ounces of silver to date. The project is close to power and has good road access, topography and infrastructure. To date, reconnaissance, sampling and drilling confirm numerous silver occurrences traced over a 9.0 kilometer trend of mineralization. This includes the recent discovery of a substantial new mineralized zone that management believes displays distinct geological characteristics of other major deposits in the region. Supported by an ongoing multi-phase drill program and a new resource re-modeling plan, La Cigarra is a rapidly maturing silver project that already contains a large potential open-pittable mineral resource. La Cigarra’s current NI 43-101 Mineral Resource Estimate comprises 51.5 million ounces of silver in the Measured & Indicated categories grading 86.3 g/t silver and 11.5 million ounces of silver in the Inferred category grading 80.0 g/t silver. The La Cigarra silver deposit also contains appreciable gold, lead and zinc values.
LA CIGARRA RESOURCE ESTIMATE
"La Cigarra technical report dated January 14, 2015, authored by Allan Armitage and Joe Campbellcan be located under the SEDAR profile of Northair Silver Corp. SEDAR profile filing date February 27, 2015.
Resource Statement for the La Cigarra silver project located in Chihuahua State, Mexico: GeoVector Management Inc., Effective Date January 14, 2015, Authored by Allan Armitage, PhD, P. Geo. and Joe Campbell, B.Sc., P. Geo., of GeoVector Management Inc.
The resource estimate was calculated based on results from 156 of 173 holes totaling 27,617 metres drilled along the open ended La Cigarra mineralized system which has a defined strike length of at least three (3) kilometres. The 156 holes included in the Property's resource estimate were positioned within a potentially surface minable area comprised of the San Gregorio and Las Carolinas mineralized zones, which combined form a total strike length of 2.4 kilometres. The resource estimate was constrained by a constrained pit shell utilizing a $22 /oz silver price and reported at a 35 g/t silver cut-off grade, and considers metallurgical recoveries of 84% silver. A summary of the mineral resource estimate is listed below:
| Resource Category* |
Tonnes | In-Situ Grade | Contained Metal | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Ag (g/t) | Au (g/t) | Pb (%) | Zn (%) | Ag (oz) | Au (oz) | Pb (lbs) | Zn (lbs) | ||
| Measured | 3,620,000 | 88.9 | 0.074 | 0.14 | 0.19 | 10,340,000 | 9,000 | 10,920,000 | 15,510,000 |
| Indicated | 14,930,000 | 85.7 | 0.068 | 0.13 | 0.18 | 41,130,000 | 33,000 | 42,950,000 | 59,260,000 |
| Meas + Ind | 18,540,000 | 86.3 | 0.069 | 0.13 | 0.18 | 51,470,000 | 41,000 | 53,870,000 | 74,770,000 |
| Inferred | 4,450,000 | 80.0 | 0.058 | 0.13 | 0.16 | 11,460,000 | 8,000 | 12,680,000 | 15,610,000 |
Below is a 3D image of the La Cigarra silver resource looking southwest:
The La Cigarra mineral resource is sensitive to cut-off grade. To illustrate this, the block model quantities and grade estimates within the conceptual pit are presented in the following table at different cut-off grades utilizing a $22/oz silver price.
| Resource Category* |
Cut-off grade | Tonnes | Ag (g/t) | Ag (oz) | Au (g/t) | Pb (%) | Zn (%) |
|---|---|---|---|---|---|---|---|
| Measured | > 50 Ag g/t | 2,670,000 | 105.7 | 9,060,000 | 0.082 | 0.15 | 0.20 |
| > 40 Ag g/t | 3,250,000 | 94.7 | 9,900,000 | 0.077 | 0.14 | 0.20 | |
| > 35 Ag g/t | 3,620,000 | 88.9 | 10,340,000 | 0.074 | 0.14 | 0.19 | |
| > 30 Ag g/t | 3,980,000 | 83.8 | 10,720,000 | 0.072 | 0.13 | 0.19 | |
| > 20 Ag g/t | 5,020,000 | 71.6 | 11,550,000 | 0.067 | 0.12 | 0.17 | |
| > 10 Ag g/t | 6,950,000 | 55.6 | 12,430,000 | 0.062 | 0.09 | 0.14 | |
| Indicated | > 50 Ag g/t | 10,700,000 | 102.9 | 35,410,000 | 0.075 | 0.14 | 0.20 |
| > 40 Ag g/t | 13,390,000 | 91.2 | 39,280,000 | 0.071 | 0.13 | 0.19 | |
| > 35 Ag g/t | 14,930,000 | 85.7 | 41,130,000 | 0.068 | 0.13 | 0.18 | |
| > 30 Ag g/t | 16,490,000 | 80.7 | 42,770,000 | 0.066 | 0.13 | 0.17 | |
| > 20 Ag g/t | 19,820,000 | 71.3 | 45,430,000 | 0.063 | 0.12 | 0.16 | |
| > 10 Ag g/t | 28,240,000 | 54.1 | 49,180,000 | 0.059 | 0.09 | 0.13 | |
| Inferred | > 50 Ag g/t | 3,080,000 | 97.1 | 9,600,000 | 0.063 | 0.15 | 0.19 |
| > 40 Ag g/t | 3,950,000 | 85.4 | 10,850,000 | 0.060 | 0.14 | 0.17 | |
| > 35 Ag g/t | 4,450,000 | 80.0 | 11,460,000 | 0.058 | 0.13 | 0.16 | |
| > 30 Ag g/t | 5,010,000 | 74.8 | 12,040,000 | 0.057 | 0.13 | 0.15 | |
| > 20 Ag g/t | 6,830,000 | 61.2 | 13,440,000 | 0.056 | 0.13 | 0.13 | |
| > 10 Ag g/t | 10,450,000 | 44.7 | 15,030,000 | 0.052 | 0.10 | 0.11 |
The development of the comparative tables above has relied on the work of experts. The following factors should also be noted:
The complete La Cigarra drill hole database includes 173 drill holes (15 RC and 158 core) for a total of 30,443 metres and 22,064 assays. This includes 17 drill holes (4,817 m) completed in 2014 in the Las Chinas, Las Venadas, San Gregorio, Las Carolinas and La Borracha zones. Of the 173 drill holes, 156 drill holes (11 RC and 145 core) were used in the preparation of the resource models and resource estimate.
The database used to construct the San Gregorio/Las Carolinas resource models utilized 27,617 metres and 20,022 sample assays. Subsequent to the previous resource estimate, an additional 13 drill holes totalling 3,975 metres were completed. Of this drilling, 7 holes were positioned in the San Gregorio zone and 6 holes in the Las Carolinas zone. The resource estimate was constrained by a Whittle(tm) pit shell and is reported at an economic cut-off grade of 35 g/t of silver.
Grade control models (a high grade and a low grade silver model) of the San Gregorio/Las Carolinas deposit were constructed which involved outlining the limits of mineralization on 50 metre spaced cross sections based on histograms of silver, gold, lead and zinc values. Polygons of mineral intersections were made on each cross section and were wire framed together to create a contiguous resource model in Gemcom GEMS 6.6.0.1 software.
The grade control models were constructed to define silver mineralization, as controlled by interpreted geology and structure. A high grade core silver model was created to capture mineralization generally above a grade of 15 to 20 g/t silver. In addition a low grade envelope, which encompasses the high grade core model was defined to capture mineralization above a grade of 5 to 10 g/t silver. The modeling exercise incorporated predicted controls of the deposits dominant geology and geologic limits. The resource model extends for approximately 2.4 kilometres on a 320° trend with an average dip of 45° to the northeast. Mineralization extends from surface to depths of up to 380 metres.
For the resource estimate a block model with dimensions of 10 x 10 x 10 metres was utilized as were composite samples of 1.5 metres in length. Grades for silver, gold, lead and zinc were interpolated into resource blocks by the Ordinary Kriging ("OK") interpolation method.
Mineral resources were estimated in conformance with the CIM Mineral Resources definitions. The confidence classification of the resource is based on an understanding of geological controls of the mineralization, and the drill hole pierce point spacing in the resource area. Three passes were used to interpolate grade into all of the blocks in the wireframe. Mineral resources were classified as Measured if at least two drill holes were found within a 35 x 35 x 20 metre search radius. Blocks were classified as Indicated if two drill holes were found within a 60x60x30 metre radius and blocks were classified as Inferred if at least one drill hole was found within a 120x120x60 metre search radius. The Principal azimuth of the search ellipse is oriented at 059º, the Principal dip is oriented at -44° and the Intermediate azimuth is oriented at 325°.
Due to the lack of specific gravity data, average specific gravity ("SG") values were used for the resource estimation. Values used include: 2.45 for oxide mineralization, 2.55 for sulphide mineralization and 2.57 for waste. The average SG values are based on limited SG testing (406 samples from within the mineralized zones) of representative mineralized core that intersect the resource model.
The updated Measured, Indicated and Inferred mineral resource estimate was prepared by GeoVector and is disclosed in compliance with NI 43-101 and was estimated in conformity with generally accepted CIM "Estimation of Mineral Resource and Mineral Reserves Best practices" guidelines, including the critical requirement that all mineral resources "have reasonable prospects for economic extraction".
The "reasonable prospects for economic extraction" requirement generally implies that the quantity and grade estimates meet certain economic thresholds and that the mineral resources are reported at an appropriate cut-off grade taking into account extraction scenarios and processing recoveries. In order to meet this requirement, GeoVector considers that major portions of La Cigarra mineralization are amenable for open pit extraction.
In order to determine the quantities of material offering "reasonable prospects for economic extraction" by an open pit, GeoVector used Whittle(tm) pit optimization software and reasonable mining assumptions to evaluate the proportions of the block model (Measured, Indicated and Inferred blocks) that could be "reasonably expected" to be mined from an open pit.
The optimization parameters, found in the table below, were selected based on benchmarking against similar projects. Two phases of scoping level metallurgical testing were conducted in 2011 and 2012. These results are summarized in the table below and are discussed in detail in the 2013 Resource Estimate report.
The reader is cautioned that the results from the pit optimization are used solely for the purpose of testing the "reasonable prospects for economic extraction" by an open pit and do not represent an attempt to estimate mineral reserves. There are no mineral reserves on the La Cigarra Project. The results are used as a guide to assist in the preparation of a mineral resource statement and to select an appropriate resource reporting cut-off grade.
| Parameter | Value | Unit |
|---|---|---|
| Silver Price | $ 22.00 | US$ per ounce |
| Gold Price | $1,250.00 | US$ per ounce |
| Lead Price | $ 0.95 | US$ per pound |
| Zinc Price | $ 0.95 | US$ per pound |
| Mining Cost | $ 2.00 | US$ per tonne mined |
| Processing (Sulphide material) | $ 15.00 | US$ per tonne of sulphide feed |
| Processing (Oxide Material) | $ 12.00 | US$ per tonne of oxide feed |
| General and Administrative | $ 1.00 | US$ per tonne of feed |
| Overall Pit Slope | 45 | Degrees |
| Silver Recovery | 84 | Percent |
| Lead Recovery | 62 | Percent |
| Zinc Recovery | 55 | Percent |
| Gold Recovery | 17 | Percent |
| Dilution | 10 | Percent |
Sensitivity Analysis for the La Cigarra Mineral Resource Estimate
A +/- 30% price sensitivity analysis was prepared using a downside scenario silver price of $17/oz reflective of today's spot price as well as an upside scenario at $29/oz silver price, with the latter also serving as a comparison to the 2013 Resource Estimate.
The following table summarises a Whittle(tm) pit constrained resource calculated at a $17/oz silver price and reported at a 35 g/t silver cut-off grade:
| Resource Category* |
Tonnes | In-Situ Grade | Contained Metal | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Ag (g/t) | Au (g/t) | Pb (%) | Zn (%) | Ag (oz) | Au (oz) | Pb (lbs) | Zn (lbs) | ||
| Measured | 3,050,000 | 93.7 | 0.075 | 0.14 | 0.19 | 9,180,000 | 7,000 | 9,250,000 | 12,540,000 |
| Indicated | 11,990,000 | 92.2 | 0.072 | 0.13 | 0.18 | 35,540,000 | 28,000 | 35,160,000 | 46,750,000 |
| Meas + Ind | 15,030,000 | 92.5 | 0.072 | 0.13 | 0.18 | 44,720,000 | 35,000 | 44,410,000 | 59,290,000 |
| Inferred | 3,680,000 | 80.2 | 0.062 | 0.12 | 0.14 | 9,480,000 | 7,000 | 9,900,000 | 11,320,000 |
For the purpose of comparison, a Whittle(tm) pit optimization was also prepared for the current resource utilizing a silver price of $29/oz and a cut-off grade of 35 g/t. The results are as follows:
| Resource Category* |
Tonnes | In-Situ Grade | Contained Metal | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Ag (g/t) | Au (g/t) | Pb (%) | Zn (%) | Ag (oz) | Au (oz) | Pb (lbs) | Zn (lbs) | ||
| Measured | 3,940,000 | 85.8 | 0.072 | 0.14 | 0.19 | 10,870,000 | 9,000 | 11,740,000 | 16,730,000 |
| Indicated | 16,270,000 | 83.6 | 0.067 | 0.13 | 0.18 | 43,720,000 | 35,000 | 46,200,000 | 65,060,000 |
| Meas + Ind | 20,200,000 | 84.0 | 0.068 | 0.13 | 0.18 | 54,590,000 | 44,000 | 57,950,000 | 81,790,000 |
| Inferred | 5,950,000 | 75.7 | 0.052 | 0.12 | 0.16 | 14,480,000 | 10,000 | 16,050,000 | 21,440,000 |
The above sensitivity analysis illustrates the robust nature of the deposit particularly at today's spot price of $17/oz demonstrating a 20% increase in the average M&I grade to that reported in the 2013 Resource Estimate with no loss in total ounces. Additionally there is an overall increase of approximately 30% in total contained silver ounces at the upside scenario of $29/oz. The 2015 figures presented in the context of this sensitivity analysis should not and are not intended to be interpreted as a current resource.
RESOURCE EXPANSION POTENTIAL
Kootenay’s Management sees three parts to further drill testing of the project leading to a Resource Estimate and Preliminary Economic Assessment:
- testing of the strike extension of the La Cigarra Resource starting outside the northern end of the current Resource boundary (La Borracha Zone) as well as outside the southern end (known as the Las Carolinas extension);
- testing of separate mineralized trends starting at the RAM Zone extending south towards Nogalera; and
- drilling to test the strike extension of the current Resource with particular focus on grade.
METALLURGICAL INFORMATION
Three phases of metallurgical testing between 2011 and 2015 to investigate the recovery of silver from the La Cigarra silver project.
The Phase 3 test program completed in June 2015 was designed to a Preliminary Economic Assessment level and initiated to study the metallurgy of the entire resource comprising both the San Gregorio and Las Carolinas Zones. The test program culminated in significant improvements to the flow sheet and metallurgical performance developed in Phase 2. Positive findings from the Phase 3 test program include the following:
- A significant increase to 88% overall silver recovery (concentrates and leaching) compared with 82% in the 2012 Phase 2 program; producing a high grade lead-silver concentrate of 34% lead and 23,000g/t silver;
- An increase in the primary grind size to 80% passing106 microns (up from a grind size of 80% passing 75 microns in 2012);
- A more streamlined flow sheet with the elimination of the previous pre-flotation circuit for organic carbon removal;
- The reduction in the number of lead cleaner flotation stages from 3 to 2;
- The option of adding a zinc recovery circuit to produce a zinc-silver concentrate of up to 58% zinc and 2,500 g/t silver (referred to as Flow Sheet Option 2 - see Northair Silver news release dated June 29, 2015).
Tests on the oxide material were completed on a composite covering 9 drill holes in San Gregorio and 11 drill holes in Las Carolinas. The silver in oxide is more amenable to whole ore leaching than flotation. Approximately 88% of the silver was extracted from material containing 78 g/t silver in 96 hours of whole ore cyanidation at a grind size of 55 microns.
In comparison, the 2012 whole ore leach on the oxide extracted approximately 90% of the silver in 48 hours at 60 micron grind size from a head grade of 59 g/t silver.
GEOLOGY
The La Cigarra mineralized system is hosted within sedimentary rocks and can be traced in outcrop for upwards of 6.5 kilometres on strike. The mineral system strikes northwest and dips moderately northeast and mirrors the strike and dip of the host sediments. Mineralization is spatially associated with narrow diorite to granodiorite sills. Silver and base metals occur in sulfides hosted within quartz-vein stockwork zones and silicified breccias containing disseminated sulphides. The recognition of disseminated style of mineralization strongly enhances the economic potential of the Project.
WORKED PLANNED
The Company is currently assessing the next phase of its ongoing exploration program at La Cigarra.