Taylor Deposit

Resources

Taylor Deposit Resources

The following table lists the Indicated and Inferred Mineral Resources for the Taylor Deposit. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

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Indicated Mineral Resource

Cutoff
ZnEq %

Short Tons

ZnEq %

Zn %

Pb %

Cu %

Ag opt

25

1,775,000

32.8

13.4

12.8

0.4

6.6

20

3,640,000

27.2

11.4

10.8

0.3

5.0

15

6,499,000

22.7

9.8

9.0

0.3

4.0

10

12,303,000

17.8

7.7

7.1

0.2

3.0

6

22,280,000

13.3

5.8

5.3

0.2

2.2

5

26,265,000

12.1

5.2

4.8

0.1

2.0

4

31,143,000

10.9

4.7

4.4

0.1

1.8

3

38,571,000

9.5

4.1

3.8

0.1

1.6

Inferred Mineral Resource

Cutoff
ZnEq %

Short Tons

ZnEq %

Zn %

Pb %

Cu %

Ag opt

25

5,231,000

36.1

16.4

13.7

0.4

6.1

20

8,399,000

30.9

13.4

12.1

0.4

5.4

15

15,713,000

24.4

9.9

10.0

0.3

4.5

10

32,203,000

18.2

7.1

7.6

0.2

3.6

6

61,112,000

13.3

5.1

5.6

0.2

2.6

5

71,222,000

12.2

4.6

5.1

0.2

2.4

4

82,748,000

11.1

4.2

4.7

0.2

2.2

3

98,671,000

9.9

3.7

4.1

0.1

2.0

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Results are based on a ZnEq grade calculated with the following metal prices: $0.90/lb for zinc; $0.95 for lead; and $20/oz for silver. It is recognized for the Taylor Deposit that while Zn and Pb contribute approximately equally to the resource calculations, we have chosen to report Zn equivalents for calculation of the cut-off grade and the equivalents grade for the resource. Base Case highlighted.

The resource is based on assay results from 59 surface diamond drill holes, totaling 62,863 meters (206,192 feet) of drilling, which have all intersected stratabound carbonate replacement sulfide mineralization within the Taylor Deposit. The updated Mineral Resource Estimate was prepared by AMC of Tucson, Arizona.

Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that all or any part of mineral resources will be converted to mineral reserves. Inferred Mineral Resources are based on limited drilling which suggests the greatest uncertainty for a resource estimate and that geological continuity is only implied. Additional drilling will be required to verify geological and mineralization continuity and there is no certainty that all of the inferred resources will be converted to measured and indicated resources. Quantity and grades are estimates and are rounded to reflect the fact that the resource estimate is an approximation. A 4% ZnEq grade was selected as the Base Case cut-off grade for this updated resource estimate.

Estimation Parameters

The Taylor Deposit Mineral Resource update was carried out using Ordinary Kriging of drill core sample data that was composited to 10 feet in length. The compositing process honored lithological domain boundaries. Tonnages and grades of lead, zinc and silver were estimated for seven separate lithological domains. In all cases boundaries between domains were treated as “hard”, meaning that grades from adjacent domains were not used to influence the estimation of grades within a given domain.

Because of the sparsity of bulk density data, a formula using the analyzed abundances of zinc, lead and copper was used. This formula produces bulk density values within approximately 10% of a set of 30 samples of various grades of mineralization for which bulk density measurements were made.

Top cut analysis was carried out using log cumulative probability plots for all metals. Only silver was determined to require capping and was capped at 42 ounces per short ton.

Variographic analysis was carried out for lead, zinc, silver and copper assay grades and the variograms were employed in the kriging estimation. Search ellipses were constructed for each domain and honoured the attitude of mineralization within each domain. Most search ellipses were 600 feet long in the strike direction, 300 feet wide in the cross-strike direction and 100 feet high (vertical direction). Several domains were estimated using ellipses with a vertical height of 50 feet because of the restricted nature of the mineralization in those domains.

Grades were estimated in a single pass. For a grade to be interpolated into a block it was necessary that a minimum of four composites were located within the search ellipse. A maximum of two composites per hole was allowed to ensure that at a minimum, each block was informed by composites from at least two drill holes. A maximum of 10 composites, representing five drill holes, was allowed.

Blocks were classified as an Indicated or Inferred Mineral Resource. For a block to be classified as Indicated it was necessary that a minimum of eight and a maximum of 10 composites were located within 300 feet of the block centroid; for a block to be classified as Inferred, it was necessary that a minimum of four and a maximum of 10 composites were located within 600 feet of a block centroid. No blocks were classified as Measured Resources as at present, mineralization has not been exposed by underground openings, a circumstance that would be necessary to provide sufficient evidence of continuity to warrant that classification.

Mineral Resource Model

A total of three geologic domains were modeled for the Taylor Deposit (Manto, Top and Bottom), which consists of stratabound skarn and massive sulfide carbonate (limestone) replacement mineralization. The Top and Bottom domains were created to define the upper and lower limits of sulfide mineralization which typically is the boundary between the overlying Cretaceous volcanic units and lower Concha, Scherrer, Epitaph carbonate units, as well as two oxidized ore types. Within the Top and Bottom domains are horizons of sulfide and oxide mineralization. Sulfide mineralization is hosted in intervals marked as containing no iron oxide minerals but containing sulfide minerals of lead, zinc, copper and iron. Oxide mineralization, those zones in the core containing predominantly iron oxide, is mineralogically different from the sulfide mineralization and is excluded from this mineral estimate.

The mineral resource was estimated using 62,863 meters (206,192 feet) of drilling from 59 drill holes that intercepted sulfide mineralization associated with the Taylor Deposit.

Qualified Person

The QP for the Mineral Resource estimate is G. Z. Mosher, P.Geo, an associate of AMC. The Mineral Resource estimate has been prepared under the guidelines of National Instrument 43-101 (“NI 43-101”) for reporting of Mineral Resources.

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