Pinnacle updates on viability of plant re-start at El Potrero, as well as sampling and permitting, following site visit

Surface and underground mapping and sampling continues at Pinnacle Silver & Gold’s El Potrero project in Mexico.

The project was the subject of a recent site visit undertaken by consultants. The consultants assessed the condition of the El Potrero processing plant and will provide guidance on potential permitting procedures.

“We continue to make excellent progress in moving the Potrero project forward,” said Robert Archer, Pinnacle’s chief executive.

“I joined our consultants in a comprehensive site review last week that provided valuable guidance for permitting and a plant re-build and we are encouraged on both fronts. In parallel, our geological team is making significant strides in their interpretation of the gold-silver mineralizing system at El Potrero and we are commencing plans for an underground drilling program in addition to surface drilling.  To date, we have taken in excess of 600 rock samples from underground and surface, with the latest batch in the SGS lab in Durango, and are starting to get a good understanding of the geology that will be critical in the planning stages going forward.”

Most recently, a review was conducted with the geological team in which the importance of a quartz-feldspar porphyry dyke was recognized as it follows the same structure that hosts the mineralized quartz breccia vein system already delineated.

These types of dykes, and their potential association with rhyolite domes, are commonly associated with epithermal systems.

The dyke is pre-mineral, as evidenced by the presence of quartz veinlets and associated weak gold-silver values within. It may have provided a competency contrast with the host andesitic volcanics and/or opened up the structure for the injection of mineralizing fluids. As such, the presence of the dyke appears to be an important component in localizing gold-silver mineralization within the breccia and may well become a critical exploration feature.

In particular, it was observed that some of the underground workings are entirely within the dyke. Accordingly, the presence of potentially mineralized vein breccia, presumably in the wall of the workings, needs to be drill-tested. The possibility of doing this via an underground drilling program is currently being assessed.

Follow-up sampling is being conducted in the areas of high-grade gold-silver mineralization that has been identified to date, including the upper level of the historic Pinos Cuates mine where composite channel samples returned up 19.4 grams per tonne gold and 266 grams per tonne silver over 4.1 metres, with individual samples returning up to 37.3 grams gold and 346 grams silver.

Additional channel sampling is also being conducted in areas that were previously restricted by accessibility. First pass sampling of the Dos de Mayo mine is complete, with 167 samples taken and submitted to the SGS lab in Durango. Underground mapping and sampling will now progress to the easternmost La Dura and La Dura 2 workings, where fine-grained visible gold and ginguro (grey-black bands of electrum and silver sulphides) were observed on the site visit.

Surface prospecting, mapping and sampling along the main Dos de Mayo vein system is continuing, with cleaning and sampling of historical trenches in areas of interest such as the old pit. Vein material here has shown visible gold and ginguro and produced assays of 13.2 grams gold and 2,280 grams silver in two grab samples.

A program of combined underground and surface diamond drilling is being devised in order systematically to test the Dos de Mayo vein system. Underground drilling would consist of short, closely spaced holes drilled into the walls of the underground workings and would be designed to test the width, continuity and grade of the breccia vein. 

Results would be used to guide future mine development. Surface holes would be more widely spaced and would be designed to give a more complete cross-section through the 500 metre mine area as well as test the continuity of the vein structure and mineralization along strike of the historic mines. 

Access roads to the project and the area around the plant have been completely cleaned up. In that context, an inspection was conducted by a plant consultant to assess the approximate cost and schedule to get the plant ready for production again. A final report will be submitted to the company within approximately 3-4 weeks. But the initial determination was that the basic infrastructure appears to be sound, thereby significantly reducing both costs and time to get it production-ready. 

As such, future costs required will be focused on specific equipment such as new/refurbished crushers, ball mill, pumps, leaching and solution recovery equipment, and the Merrill Crowe circuit. 

Metallurgical testing will also be undertaken and once all the equipment has been sized and a new flowsheet designed, water balance and connected power requirements will be determined that will, in turn, provide the basis for permitting and discussions with the Comision Federal de Electricidad – the federal electrical commission. The existing power line comes to within about three kilometres of the plant, but a new or upgraded substation may be needed to provide sufficient power to the site. Potential areas for a dry-stack tailings storage facility were also examined as a means of water recovery and conservation.

Meanwhile, the permit consultant has advised the company that the previous disturbance of the site by historic activity will significantly speed up and simplify the permitting process. Guidelines on the requirements for baseline studies, to include extensive photos, soil and water samples were discussed and a compilation of this material has already been initiated. A more formal proposal from the consultant will be submitted to the company within the next two weeks, and thereafter the permitting process can get underway.

At a higher level, meetings were also held with the company’s corporate and environmental lawyers to discuss the anticipated process of completing and filing permit applications with the authorities in such a way as to minimize any potential delays.

View from Vox

A substantial update from Pinnacle following the recent site visit, that shows the company making significant progress on several fronts. Two developments will be key in the near-term: drilling and permitting, and there seems to be serious momentum building to get both underway. Refurbishing the plant will be a fairly substantial undertaking, but at this stage it looks as though the actual procedures will be fairly straightforward. There is much to be encouraged by.