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silver100   Thursday, 11/06/08 12:37:20 PM
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Making a silver Impact in Mexico
A look at Impact Silver Corporation which controls a huge mineral concession area in Central Mexico, has small-scale profitable mining operations and a major ongoing exploration programme in one of Mexico’s most beautiful historic mining districts.

Author: Lawrence Williams
Posted: Thursday , 06 Nov 2008


With a refreshing approach to its operations at Zacualpan, 3 hours drive southwest of Mexico City, TSX-V quoted Impact Silver (ticker IPT) is running a profitable silver mining operation with enormous exploration potential in the 272 square kilometres of concessions in this historic mining area.

Currently mining operations are based on four small old mines relatively close to the company's concentrator, built by Penoles as a former operator. The main property, the Guadalupe mine, is located adjacent to the concentrator while Gallega is a few hundred metres away. The other operations currently are at El Chivo and San Ramon, a few kilometres away, but probably half an hour's trucking time via some windy roads through the hilly and very attractive countryside.

The huge area controlled by Impact takes in the old Royal Mines of Zacualpan - an area which has been mined since the days of the Conquistadores in the 16th Century. The concession areas are dotted with old mines - Impact reckons to have found over 1,000 of these and is still discovering more in a continuing observational soil sampling programme followed up by extensive diamond drilling. Drilling is helped by Impact's biggest shareholder being Energold Drilling which specialises in portable thinwall diamond drill rigs capable of drilling down to 1,000 metres - the portability being essential in this beautiful area of extremely hilly terrain.

Mineweb recently visited Impact's operations viewing two of its underground mining operations - Guadalupe and El Chivo - the concentrator and exploration drilling operations and with access to corporate management and the geologists conducting the exploration activities.

CEO Fred Davidson runs the business to make money - he won't authorise mining anything that is not immediately profitable - and the vein system and multiple mine operations enables the company to control and blend its output to ensure this actually happens. Mine development and processing has been implemented at low cost by using pre-owned equipment for the most part. The 500 tonne/day mill was built by Penoles in 1986 and updated regularly since then. The sight of brand new equipment is a rarity!

The metal deposits are vein type structures, of which there are many systems. In general the old miners only worked high grade material (20 ounces per ton or more of silver) down to the water table, which is at a relatively shallow 200m, so modern mining and processing techniques mean there's plenty of potential in relation to the material left behind, not to mention new veins that the old miners did not find.

While the ore being mined at present is for silver, lead and zinc, as is typical of these Mexican epithermal deposits the silver/lead/zinc sections tend to be underlain by more copper and gold rich bodies and the area - particularly Mamatla to the south of the old Zacualpan workings, has great potential in this respect too.

While mining is at a relatively small scale, it is gradually being built up to run 400 tonnes a day through the plant, with the full plant capacity of 500 tonnes a day in prospect by April next year according to Darrell Rader, the company's head of Corporate Development presenting at yesterday's Silver Summit in London.

The company has also just issued a news release announcing the commencement of a 5,000 m first phase drill programme for the Noche Buena-Carlos Pacheco Mining Camp, located within the company's concession areas. A variety of both silver and gold-copper targets consisting of old mine workings, past drill intersections and outcropping veins are being tested in order to determine which targets warrant further drilling for mine planning purposes. Currently thirty to fifty holes are planned, which will take the remainder of 2008 to complete. Over one hundred different vein intersections have been targeted as multiple vein intersections are anticipated in most of the drill holes.

The Noche Buena-Carlos Pacheco Mining Camp is one of several dozen ancient mining centres located within the company's extensive claim holdings and approximately four kilometres southwest of Impact's Guadalupe processing plant. Old records suggest mining efforts in the camp began during the time of the Spanish in 1746. Larger scale mining commenced around 1900 only to be largely shut down by the Mexican revolution of 1910, with sporadic efforts thereafter.

Over the past year the company's field crews have systematically located, documented and sampled 114 old mine and exploration workings in the camp consisting of prospect pits, mine shafts and tunnels. Included in this program was detailed geological mapping of the veins and the collection of 563 rock samples for assay and analyses. Numerous rock samples contained values greater than 100 g/t silver, attaining a high of 775 g/t in the San Jose 3 Tunnel, and 47 other samples contained greater than 1.0 g/t gold, attaining a high of 39.9 g/t (1.16 opt) in the Carlos Pacheco Main Tunnel. Base metals can also contain significant values as individual samples attained the following assays 8.39% copper, 11.95% lead and 14.80% zinc.

In the first six months of the year, Impact produced 252,000 ounces of silver, 647,000 lbs of lead and 974,000 lbs of zinc generating revenues of $91.91 per tonne mined as against direct costs of $47.24 a tonne. Six-month operating profit was $1.7 million.

Admittedly the company is a small one, but its ground holdings have huge potential which is only just being looked at. It has only been operating a few years in the Zacualpan area and has tied up its huge land positions and implemented profitable mining operations in a very short space of time. With profitable output and cash reserves of some $8 million it is in a great position to continue its exploration programme and if it keeps to its small scale principles can continue to grow without seriously depleting its cash. To develop a large scale mining operation, for which the area has huge potential, would require a rethink of company structure - or require a partner, or partners, to be brought in, but in the meantime it can continue operating as a profitable miner, while building up its overall knowledge of the areas it controls.

Impact also operates, and has options to buy, a 200 tonne/day mill, in the Zacatecas area, which custom processes ore, and has land holdings there too in the heart of one of Mexico's biggest mining districts. But the potential in its flagship Zacualpan area means it is concentrating its exploration activities there.

As long as the company remains true to its principles, and there isn't a further collapse in the value of its products, it has the financial strength to come through the current devastating downturn in the junior sector profitably, while building its inventory of knowledge on a fascinating, and highly prospective, mining region.

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