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43-101 Technical Reports
September 28, 2012
Orko continues to advance the La Preciosa project.
La Preciosa property is located in Durango State, 47 km northeast of the city of Durango. It consists of a block of mineral exploitation concessions covering 32,400 hectares (80,000 acres) located southeast of the village of Francisco Javier Mina, northwest of the village of Francisco I. Madero and east of the village of Ricardo Flores Magon.
La Preciosa property covers Tertiary aged gold and silver bearing epithermal quartz veins, with barite and lesser quantities of base metals, primarily zinc and lead. There are three major vein and vein-breccia systems exposed on a series of hills and ridges, separated by flat floored valleys roughly 800 m wide. The main vein system consists of northward striking and westward dipping veins, plus east striking south dipping cross-cutting veins. The eastern vein-breccia system (Zona Oriente) strikes northwest. It is interpreted to be a shallow level flair-out of the Martha structure, which underlies the main vein system. To the west of these is a third sub-parallel vein system, with north and northwest trending veins, dipping to the west.
La Preciosa veins are composed of poly-phase veins of quartz, often banded, smoky, chalcedonic and amathystine, with a substantial amount of barite laths. Sulphide mineralization is scarce on surface and in the shallow underground workings. Drill core contains disseminated sphalerite, galena, pyrite and acanthite, plus iron and manganese oxides. Wall rocks adjacent to the veins are silicified, particularly between the prominent veins La Gloria and Abundancia. Kaolinite and hematite alteration is common, as well as more distal propylitic chlorite, epidote and pyrite.
The oldest rocks, found only in deeper drill core, consist of Jurassic-Cretaceous graphitic schist, chlorite schist and layers of quartzite. Above the metamorphic units is a thick package of Cretaceous polymictic conglomerate, with lenses of arkosic sandstone. This sedimentary package is topped by Tertiary andesite tuff and andesite agglomerate of the regional Lower Volcanic Sequence. No rhyolites of the Upper Volcanic Sequence are found in the immediate study area, but can be seen on cliffs further to the west. The conglomerates and andesitic rocks are the main host rocks for the veins, but mineralization also extends into the metamorphic rocks. There are a few dioritic dykes in deeper core, but intrusive rocks are generally rare. The youngest unit comes from several Quaternary volcanic vents which erupted basalt flows, filling the lower valleys.
Multiple veins in the main structural zone of La Preciosa ridge have been traced on surface for over 5 kilometres and drilling has revealed that the veins continue to the north beneath the basaltic cover. The veins are also interpreted to extend further south of known exposures. Individual veins have been traced for up to 4 km. Of the entire structural zone, the Abundancia and La Gloria veins, plus the Martha vein, have been explored in the greatest detail. The Abundancia and La Gloria veins coalesce at depth, the merged vein is known as the Abundancia vein.
There are 2.5 km of underground drifts, following the Abundancia and La Gloria veins, as well as a small portion of the Transversal vein. The original workings are over 100 years old, however, about 60% of the drifts were enlarged and resampled 30 years ago by Luismin. There is a winze that leads down to workings 50 metres below the main 2065 metre level in Abundancia vein. There are also several raises and small stopes which break through to surface on the Abundancia and La Gloria veins above the 2065 level. Good rock conditions are demonstrated by the openness of the historic stopes. At the farthest south exposures, El Orito vein was drifted upon for several hundred metres over a century ago, the workings for which are inaccessible, but has had no modern exploration.
Orko Silver Corp. (under their previous name "Orko Gold Corporation") entered into an option agreement in late 2003 with two companies under the direction of Luismin S.A. de C.V., now a part of Goldcorp Inc., to acquire an interest in the La Preciosa silver-gold prospect. A news release, dated 3 March 2006, states that Orko has reached an earn-in position and by agreement has 100% of La Preciosa, with Goldcorp holding a 3% equity interest in Orko.
Seven diamond drill holes, totalling 1,319 metres, were drilled by Luismin in a 1981-1982 program. The group of holes were mainly collared west of the Abundancia and La Gloria veins to test a 400 metre strike length of the veins roughly 50 to 75 metres below the 2065 level. The best intercept was from BP-1, which hit a true width of 13.6 metres at 232.0 g/t Ag and 0.10 g/t Au. Hole BP-7 was a longer hole which tested Abundancia and La Gloria veins and also intercepted the sub-parallel Luz Elena vein at greater depth. The 1981-1982 drill program was terminated due to falling metal prices at that time. Core from Luismin's program was split and the remaining half is intact and stored on site.
In June of 2004, Orko commenced a geological mapping and sampling program on La Preciosa. This was followed by a 40 line-km geophysical survey of Induced Polarization in the northern part of the property in January 2005, performed by SJ Geophysics under Orko's guidance. Orko commenced diamond drilling in March 2005 by Major Drilling International on La Preciosa Ridge, targeting Abundancia and La Gloria, but also extending to Luz Elena vein. The first 24 drill holes were completed by late October 2005 totalling 10,259 metres of diamond drill core.
Average drill hole spacing is approximately 100 metres for all the holes drilled from 2005-2008. For the 1981-82 program, analytical testing was performed in the Luismin Labs in Durango, Mexico. All 2005-2008 analytical testing has been done by SGS or Inspectorate laboratories, which are North American based labs both holding ISO certification. The QA/QC work demonstrates reliability of the analytical data and the auditing of the database has shown it is accurate.
The Martha vein, first identified in hole BP06-77, represents the most significant target. It is relatively flat lying, dipping an average of 20 degrees to the west. It has a known lateral extent of over four kilometres and varies in down-dip widths between 200 metres to 1.7 kilometres. The Martha vein varies in thickness from one meter to sixty meters and averages about 15 meters. Within the Martha vein are one or more veins or vein breccias which contain the resource grade material and which average about five meters.
On April 14th, 2009 Pan American Silver Corp. and Orko Silver announced that they have agreed to form a joint venture to develop the La Preciosa project. Pan American would contribute its demonstrated mine development expertise, as well as 100% of the funds necessary to develop and construct an operating mine, in consideration for a 55% interest in the joint venture. Orko Silver would retain a 45% interest fully carried to production.
During its time of operatorship of the project from April 2009 - 2012, Pan American drilled 340 holes, for a total of 88,658 metres. Delineation drilling is in the Central Area of the La Preciosa Resource.
Diamond drilling by Major Drilling International continued to the end of 2010. Combining Pan American's 2009-2010 drilling of over 88,000 metres, with Orko's 2005-2008 drilling of 154,000 metres, the project now has 713 holes and has passed the 242,000 metre mark.
A first phase detailed metallurgical program was completed, which included: work index tests, abrasion tests, mineralogical studies, gravity tests, floatation tests and cyanide leach tests. The program was a follow-up to the preliminary testing conducted in 2008 (April 17, 2008).
Simple cyanide leaching yielded average silver recoveries of 91%, although the use of selective oxidants could further enhance these results. In addition, we have been successful in reducing cyanide consumption to 1.6 kg/t, which is materially lower than the results from the metallurgical work previously completed. Lastly, the current test work has shown that with the use of oxidants, the leach cycle times can be reduced to 48 hours with minimal impact on ultimate silver recovery.
Orko has retained AMEC Americas Limited of Vancouver, Canada, a large international consulting firm, to assist the company by providing a new preliminary economic assessment in early 2013, along with recommendations on how to proceed to a feasibility stage.
Complete 43-101 compliant descriptions of each resource estimate can be found on our technical reports page here.
In the Resource area, more high-grade values have been intercepted, such as hole BP10-539, which yielded a true thickness of 7.71 metres in the Gloria vein grading Au 0.646 g/t and Ag 648.0 g/t for a silver-equivalent of 686.8 g/t. This included 3.59 metres grading Au 0.894 g/t and Ag 986.7 g/t for a silver-equivalent of 1,040.3 g/t.
In exploration diamond drilling beyond the main resource area, 11 holes have been completed in the El Orito Norte sector, 12 holes in the Nancy sector, 9 holes in the Baritina sector, 6 holes in the Baritina Norte (Zona Oriente Extension) sector, 8 holes in the Plomosa sector, 6 holes in the Orito Sur sector, 4 holes in the Vaquero sector, and 11 reconnaissance holes have been completed in the north-northwest trend.
In El Orito Norte, a mineralized dyke was intercepted in hole BP10-598, which yielded a true thickness of 2.49 metres grading Au 0.209 g/t and Ag 396.3 g/t for a silver-equivalent of 408.9 g/t. On the north margin of the Nancy drilling, hole BP10-595 yielded a true thickness of 2.41 metres grading Au 1.123 g/t and Ag 157.1 g/t for a silver-equivalent of 224.5 g/t.
On the south margin of the Orito Sur drilling, hole BO06-01 contained a gold intercept with high values in a hematite zone, which yielded a true thickness of 0.56 metres grading Au 67.400 g/t and Ag 42.7 g/t for a gold-equivalent of 68.112 g/t (silver-equivalent 4,086.7 g/t). More exploration testing is required in Orito Sur.
The delineation drilling results from the new holes are mainly located in the known Martha vein structure and were drilled at approximately 18 metre and 50 metre spacing in an area previously drilled by Orko at 100 metre spacing. This data confirms Orko's previously reported results, and forms the basis of a geostatistical study, toward ultimate reserve definition.
There are a number of positive exploration options to expand the resources at La Preciosa and further explore the 32,000 ha project area:
Whiting, B.H., 2008, Orko's La Preciosa: The discovery of a major epithermal silver-gold deposit in Durango, Mexico. in Technical Session Abstract Book, Mining for a Minerals Dependent World, Northwest Mining Association, Reno, Nevada, USA, 1-5 December 2008, p. 16-17.