A new management team for Oremex Resources (TSX.V:ORM) means a 50 million ounces silver deposit that has been languishing due to relationship issues with the local people appears to be finally moving closer towards production.

John Carlesso, the new chairman of Oremex explained the company’s plans in a telephone interview this week.

“Oremex is something of a turnaround story, or in a sense, a restructuring. Previously, the company was based in Vancouver, and this year we moved the company to Toronto coincident with a new board of directors and executive team”, he said.

The Tejamen Silver deposit consists of 21 claims covering an area of 1,672.05 hectares and is situated in the municipality of Nuevo Ideal, State of Durango Mexico. Carlesso thinks the company can get the project to feasibility within 18 months, assuming the market remains stable and investors can be attracted to the project.

“A Preliminary Economic Assessment completed by Snowden in October of 2006 demonstrated very strong economics for an open-pit heap-leach operation with a comparatively low capital cost”, he said. “A higher grade feeder structure has potential to add considerably to the next resource calculation which will be part of a planned feasibility study. With almost 37,000 meters of drilling completed to date, this is a very advanced asset with a tremendous amount of existing data.”

From the results of the Preliminary Assessment, Snowden concludes that a surface mine and heap leach processing system can sustain a 10,000 tonne per day operation when silver prices average $US 8 per ounce and silver recoveries average 65 percent over the life of the operation.

According to the report at a silver price of US$15/oz and a gold price of US$650/oz, the expected cash flow from the project generates a Net Present Value of US$155.5 million.

The project was stalled in 2007 when the operators of Oremex encountered difficulties with the local villagers. This resulted in resistance to their continued work at the Tejamen project, essentially bringing development to a halt, explains Carlesso. “Since the new team has taken over, we’ve made great strides repairing the local relationship to the point where in April we announced that the company had been formally invited back into the community.

The area is very poor, even by Mexican standards, and the economic benefits from the development of this mine have made it something of a priority for the town.”

“Regaining access to the community is a very significant achievement within a relatively short period of time and reflects the focus and dedication brought by our entire team to resolving this critical, longstanding issue. We can now begin the long-overdue development process at Tejamen that we expect will bring meaningful economic and social benefits to the local area,” Carlesso added.

“I think over the past couple of years the market has perceived Oremex to be a company with a 50 million ounce deposit that wasn’t likely to ever make it to production. Our view is that, not only does the deposit have the potential to be much larger, we are putting it on a path to become a mine in a relatively short period of time.”

The company has appointed Michael Smith as President and CEO to head the development of the project.

Smith is a geologist with significant mining operations experience both in the United States and internationally. He served previously as Chief Mine Geologist for Barrick Gold Corp (NYSE:ABX). at the Goldstrike Mine in Nevada, and subsequently became General Manager of Exploration and Development for Barrick Gold in South America. Mr. Smith has managed the design and operational aspects of engineering geology and has been involved in all aspects of ore reserve calculations, parameters and block modeling.

“We believe we can advance the project to feasibility within the next 12 to 18 months,” said Carlesso. “We raised a small amount of money $600,000 in January. We’re in the midst of a $1.5 million raise that we feel we could put to very targeted use in expanding the resource at Tejamen and moving the whole project closer to feasibility.”

The company has a portfolio of 7 other properties throughout Mexico that are prospective for gold, silver and base metals, but the company plans to focus on the Tejamen property exclusively for the near term.

The company has a total of 50.3 million shares outstanding. Learn more by visiting the company’s web site at www.oremex.com .

Source: Midas Letter Daily Edition (June 15th, 2009)