Property Description
The Tejamen Silver Property (“Tejamen”) is the Company’s most advanced project and principal focus for development. As outlined in a Wardrop Engineering Inc. Technical Report dated April 13, 2006, Tejamen has an Inferred mineral resource of 50.8 million ounces of silver in a total of 22.6 million tonnes grading a silver-equivalent of 69.8 grams per tonne (“gpt”).
According to an independent Preliminary Assessment Study conducted by Snowden Mining Industry Consultants Inc. (“Snowden”) (as announced in news release October 3, 2006), Tejamen, a potential open pit heap leach project, has an estimated net present value of US$97.4 million at US$12 per ounce silver and US$155.5 million at US$15 per ounce silver (at a 7% discount).
To date, Oremex has completed 240 drill holes for a total of 37,500 metres of drilling on the property. The Company believes that substantial opportunity remains to increase the resource base through additional drilling programs. The Tejamen mineral resource remains open at depth and along trend.
Location & Accessibility
Tejamen consists of 22 exploration concessions covering 1,672 hectares. The property is located approximately 130 kilometres northwest of the city of Durango, Mexico and is easily accessed by paved highway from Durango to the municipality of Nuevo Ideal and then by good gravel road from Nuevo Ideal to the village of Tejamen. The mineral concessions are held by Minera Montana S. de R.L. de C.V. (“Minera Montana”), a wholly owned Mexican subsidiary of Oremex Resources Inc.
Resource Estimate
In April 2006, the Company released results of a NI 43-101 compliant Technical Report prepared by Wardrop Engineering Inc. The report concluded that Tejamen has an Inferred mineral resource of 50.8 million ounces of silver in a total of 22.6 million tonnes grading a silver-equivalent of 69.8 gpt in two zones, Los Mantos and Cerro Prieto.
Preliminary Assessment Study
In October 2006, Snowden completed a Preliminary Assessment Study of Tejamen. The study concluded that an open pit mine and heap leach process system can sustain a 10,000 tonne per day operation when silver prices average US$8 per ounce and process silver recoveries average 65 percent or greater over the life of the operation.
Metallurgical testing in 2006 on a composite of test material indicated a silver recovery of 73 percent for two columns with modest lime and cyanide consumption. Snowden also concluded that the mineral resource should be considered as Inferred because more geological information and detail cost, mining and process parameters were required to prove that economic extraction is possible.
Within the pit walls defined by Snowden, the two resource areas contain a combined Inferred mineral resource of 21.7 million tones, at an average grade of 51.9 gpt silver and 0.023 gpt gold. The resource is reported at a cut off grade of 20 gpt.
The mine envisaged is an open pit using front end loaders and haulage trucks to move material from drilling and blasting areas to a crusher, where material is crushed and ultimately stocked on heap leach pads.
Call & Nicholas Inc. conducted a geotechnical review at Tejamen during the third quarter of 2006, and concluded that rock strengths can generally support the pit slope angles utilized by Snowden for the open pit design.
Topography & Geology
Topography
Tejamen is located in the eastern part of the Sierra Madre Occidental physiographic province in the Llanuras Altas (high plain) subdivision, on an extensive volcanic plateau that has been affected by horst and graben structures with bounding normal faults.
Elevations on the property average about 2,200 metres, and range from about 2,050 metres in the area of the river Quebrada Escondida to about 2,500 metres in the western part of the property. Elevations up to 3,230 metres occur in the Sierra el Epazote Range to the west of the property with basin and range features in the area generally trending north-northwest.
Quebrada Escondida and its tributaries drain the Tejamen area and flow easterly in Laguna Santiaguillo. A local dam provides a source of water during the dry season. The semi-arid climate produces abundant cactus, napal and agave. Irrigation allows farming of beans, corn and fruit and nut orchards.
Geology
Tejamen’s geology was mapped in 1993 by the Consejo de Recursos Minerales ("CRM"), a Mexican government organization and augmented by company geologists working for Luismin, Tormex, EMISA and Kobex.
The eastern Sierra Madre Occidental is made up of two volcanic sequences separated by a period of no igneous activity. An Upper Volcanic Complex (UVC) is composed of gently dipping rhyolitic ignimbrites and rhyodacite that range in age from 27 to 34 million years. The UVC is part of the largest known ignimbrite cover. An unconformity separates the UVC from intermediate composition volcanic rocks of the Lower Volcanic Complex (LVC). The contact between the UVC and LVC is an irregular surface with local strong relief. The LVC occurs as erosional windows in the UVC. The LVC is formed of andesite flows and pyroclastic units with more siliceous interlayered ignimbrites. The LVC is weakly deformed, altered and intensely faulted, and it is the primary host rock for mineralization. Quaternary alluvial and colluvial deposits cover the volcanic complex in some low-lying areas.
The rocks that outcrop on Tejamen are volcanic rocks of the LVC of the eastern Sierra Madre Occidental. The andesitic to dacitic rocks are intruded by dacite porphyry and interlayered with dacitic and rhyolitic tuffs and ignimbrites. The main fault structures on the property trend northeast and north-south, and control the main vein zones in the Tejamen area. In addition to vein structures, manto style mineralization is controlled by a major shallow dipping structure.
The Cerro Prieto and Los Mantos areas are the best-known mineralized zones on this property, which has over a dozen named vein zones with old mine workings.
Cerro Prieto Mineralization
At Cerro Prieto, a narrow, high grade silver-lead-zinc vein was developed in the 1970s via an 80-metre deep shaft. Grades at Cerro Prieto, based on 56 rock chip and channel samples from all six levels, were reported by Luismin to average 0.0979 gpt Au, 405 gpt Ag, 2.32% Pb, and 1.97% Zn over an average vein width of 1.38 metres. The ore minerals are galena, sphalerite, and pyrite with minor chalcopyrite, tetrahedrite and argentite in a gangue of quartz, calcite, barite and iron and manganese oxides. Mineralization is present as veins, veinlets and breccia zones related to a northeast-trending and northwest-dipping high angle structure. Sampling by Luismin in 1991, of a Level 4 cross-cut driven into the footwall of the Cerro Prieto vein, returned 43.65 metres grading 160 gpt Ag, 1.26% Pb and 3.18% Zn. Drilling by EMISA and hole KTJ-3 drilled by Kobex, contained wide zones of low grade silver in an envelope of stockwork veining around the main vein structure.
Los Mantos Mineralization
In the Los Mantos area, higher angle veined feeder structures intersect lower angle structural zones resulting in shallow dipping mantos being formed. Propylitic alteration is widespread but argillic, potassic and siliceous alteration appears to occur in envelopes up to 80 metres wide around feeder vein structures.
Los Mantos has similar mineralization as the Cerro Prieto zone, but solutions encountered a N40ºE structure dipping 20 to 40ºE and mineralization spread laterally parallel to layering in the host LVC. Mineralization consists of galena, sphalerite, pyrite, and minor chalcopyrite, tetrahedrite and argentite in a gangue of mainly quartz and clay minerals. Native silver and free gold are reported to occur in strongly oxidized areas.
History & Previous Workings
The Tejamen area was explored by Gambusinos (small or informal miners) from 1885 to 1900. In 1900, the Compania Minera La Eureka and, in 1906, the company El Duraznito were founded to work the La Eureka, Melchor Ocampo, Matilde, La Fama, Providencia, La Cuna, and El Duraznito mines. In 1908, La Eureka installed a 50-ton per day mill and cyanide recovery plant. Mining activity was halted in 1910 due to the Mexican Revolution.
In the 1970s, Cerro Prieto was in production at 30 tons per day with the production shipped to the Parrilla concentrator plant of Comision de Fomento Minero. The Cerro Prieto Mine was developed on five levels from a main 80-metre vertical shaft.
From 1978 to 1981, Consejo de Recursos Minerales ("CRM"), Luismin Mining Corp. (now part of Wheaton River Minerals), and Tormex, S.A. (an affiliate of Lacana Mining Corporation) conducted geological and sampling programs on Tejamen. Tormex conducted a second sampling program in 1985, and Luismin conducted additional sampling and underground sampling in 1990. From 1992 to 1994, Exploration y Minera Independencia de Mexico S.A. ("EMISA"), an affiliate of Independence Mining Company, explored the property with surface and underground, geological, geophysical and sampling programs and completed 12 reverse circulation holes totaling 2,030 metres, and 24 diamond drill holes totaling 5,065metres. The EMISA drilling demonstrated the presence of a large, low grade silver-bearing system with some high grade feeder veins.
Kobex Resources Ltd., a Vancouver, B.C. based junior mining company ("Kobex"), explored the property in 1998 and 1999 with an induced polarization survey and drilled four diamond drill holes totaling 997 metres.
Previous drilling by EMISA and Kobex had demonstrated a large silver system situated in and around structures that cut Lower Volcanic Complex rocks in the easterly part of the Sierra Madre Occidental. Several EMISA diamond drill holes contain significant near surface results that suggested good open pit potential.
Minera Montana acquired the rights to purchase the Tejamen Property in 2000 and staked additional claims in 2001 and 2002 to protect extensions of known vein zones.
Recent Activity
During the third quarter 2007, Oremex announced positive assay results from a 10 hole diamond drill program at Tejamen, which was completed in late 2006. Four holes drilled in the Cerro Prieto Zone showed good correlation to previous drilling. Two holes were drilled in Los Mantos Zone, intercepting mineralization consistent with the grade and thickness of prior drilling. Four holes were drilled near the proposed mine pit walls for geotechnical purposes.
The Company also announced results of an internal management study of the two mineralized zones at Tejamen. Based on data and cost estimates from the Snowden report, the internal study supports initial production from the Los Mantos Zone, the most southern zone of mineralization. Los Mantos contains approximately 70 percent of the silver defined on the property to date and it also offers significant exploration potential for the addition of silver resources on the property. The study suggests that the Company could begin production at the Los Mantos, which precludes the need to move the Ejido of Tejamen (the governing authority for the village and surrounding lands) in the near term. Disturbance to the village would be minimal under this plan of operations and production could proceed for a minimum of four years.
During the second quarter of 2007, the Company announced the appointment of Javier Rojas as Project Development Manager for the Tejamen and the Company’s other projects in Mexico. Mr. Rojas has extensive mine development experience in Mexico.
Under guidance of the Company’s Project Development Manager and the new operating team in Mexico, discussions are ongoing with the Ejido of Tejamen for the right to access the surface for an extended term and for expanded use of the property to include mining. Oremex management believes that significant progress has been made, and they are optimistic that an agreement may be reached soon so that exploration drilling can recommence in the Spring of 2008.
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