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Due to a combination of hyper-inflation and low metal prices, mining ceased in approximately 11% zinc mineralization at 480-500 metres below surface. Several deep exploration boreholes indicate that mineralization extends an additional 200 metres vertical depth. Initial exploration work by the Company has confirmed the presence of previously untested high-grade mineralization to the North of the former mine site -- highlighting the very significant exploration potential of the large property package. The project enjoys both an excellent location and quality infrastructure. In the short term, the Company plans to re-commence production and to create shareholder value via successful mine-site exploration. Medium- to long-term, the Company continues to monitor advanced projects in known productive belts where it can leverage its in-house operational expertise. LocationThe Property is located on the western edge of the Altiplano, which forms the Western Cordillera of the Andes, in the Central Peruvian Polymetallic Belt.It is accessible by road from Lima, either via the town of Huaral and continuing through the villages of Acos and Tingo to Santander (distance of 215 km) or via the town of Canta to Santander, a distance of 200 km (Fig. 1). OwnershipThe Company, through its Peruvian subsidiary, Trevali Peru S.A.C., has acquired from Compania Minerales Santander S.A. ("Santander") of Lima, Peru, owners of the Santander Property the exclusive right for a period of 50 years (with an automatic 50 year extension) to engage in exploration, development, exploitation, processing and commercialization activities at the Santander property as well as the exclusive use of the existing infrastructure including a 1,000 person camp, associated support facilities and an ore processing/concentrate plant as well as the lease of a hydroelectric plant.In addition the Company, through its Peruvian subsidiary, Trevali Peru S.A.C., has effectively acquired approximately 95% of the current outstanding qualified liabilities of Santander as of April 2010. (Note: remaining ownership held by combination of Peruvian tax authorities and minor creditors) InfrastructureIn detail, the infrastructure is comprised of an approximately 1,000-man camp (now fully refurbished to a modern 200-man camp) and associated support facilities; an ore-processing / concentrate plant (including various crushers, mills and cell houses) to produce zinc, lead-silver and copper concentrates. Additionally the Tingo hydroelectric power-station is located approximately 17 kilometres down-valley to the West and is connected to the mine site.Property BackgroundThe former Santander Mine is classified as a poly-metallic High Temperature Carbonate (HTC) or Carbonate Replacement Deposit (CRD). Modern mining activities commenced on the principal Santander Pipe from 1958 until 1991 to an approximate depth of 480 metres.Total production is estimated to be about 8 million tonnes averaging +7% Zinc, 1 to 4% Lead and 60 g/t Silver with additional Copper credits. Mineralization remains open at depth with reported zinc grades of 11% in multiple replacement or manto bodies. An initial due diligence study in late 2007 undertaken by the Company confirmed the high-grade nature of the former producer with values up to 39.8% Zinc, 8.98% Lead, 324 g/t Silver and 1.6% Copper (see NR-07-01 for details) determined through re-sampling of outcropping mineralization and historical drillholes (Table 1). Table 1: Summary geochemisty results - Santander due diligence study.
The 4,455-hectare (44km2) property contains numerous outcropping poly-metallic mineralized bodies (Magistral Norte, Central, Sur and Puajanca). Current WorkThe Company has completed resource definition drilling on the three Magistral ore bodies with almost all of the 104 drillholes (20,613 metres) completed in 2008 intersecting polymetallic mineralization over significant intervals from surface to approximately 350 metres vertical depth. Mineralization remains open to depth and to the East.Assay data and drill logs have been compiled by Golder Associates Engineering that has completed an independent NI43-101 resource estimate reviewing an indicated resource of 390 million contained lbs zinc, 149 million lbs lead and 6.5 million ozs silver in 5,298,000 tonnes at an average grade of 3.34% zinc, 1.27% lead and 38 g/t silver in the Magistral North, Central and South deposits using a 2% ZnEQ* cut-off grade. Additional inferred resource of 144 million contained lbs zinc, 25 million lbs lead and 1.3 million ozs silver in 2,244,000 tonnes at 2.92% zinc, 0.50% lead and 18 g/t silver also reviewed using same cut-off grade. The aim of the current round of drilling (2009-10) has been four-fold:
In this regard, the results to date have been extremely successful.
Future WorkIn addition to current resource expansion drilling, the Company in conjunction with partner Glencore International A.G. is continuing to work through the terms of a definitive development agreement for the Santander project that will, if concluded, see Glencore provide and operate a 2,000-tonne-per-day concentrate plant, undertake mining operations on a 'contractor/toll basis' and enter into a long-term concentrate offtake agreement for 100% of Santander project production at benchmark terms.
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