Excellon Resources Inc. (TSX:EXN) reports that production at the Resources Platosa mine continues at a reduced rate, however, has increased in the last month.
On August 18, 2010, the mine suffered a sudden water inflow and fourteen days of production were lost (see press releases dated August 23, August 26 and September 1, 2010). Following reestablishment of the stockpile at Miguel Auza milling recommenced on September 11th.
The Company's objective is to return to previous production levels and grades as early as possible in 2011. Planning for 2011 continues and the Company will provide an additional update as this work is completed.
The water inflows occur when mining encounters water-filled faults and the Company has recently begun a more intensive grouting program. An underground diamond drill is now dedicated to drilling and grouting 25 to 50 m long sub-horizontal holes in advance of certain production and development headings to seal off these faults. The Company is acquiring additional new pumps and upgrading electrical infrastructure as it continues to enhance the Platosa water management program.
Excellon also reports that it has entered into a binding Letter Agreement with Sundance Minerals Ltd., a private Canadian company, to acquire an interest in their 17,000 hectare Pluton Property located to the west of and contiguous with portions of the Platosa Property. Sundance, which has considerable expertise in CRD exploration, will be the initial project operator in cooperation with Excellon's exploration team. Excellon can earn a 60% interest in the property by making an upfront cash payment of $50,000 and incurring $1,500,000 in exploration expenditures over three years. At its option, Excellon may earn an additional 15% interest for a total of 75% by completing a pre-feasibility study within another three years. Following earn-in, a joint venture shall be formed and in the event either party dilutes to below a 15% interest it shall be entitled to a 2.5% Net Smelter Return royalty (NSR). If the royalty holder is Sundance, Excellon shall have the right to acquire 1.5% NSR for $5,000,000 payable through the issuance of 5 million common shares of Excellon with the balance, if any, in cash. If Excellon is the royalty holder, Sundance shall have the right to acquire 1.5% NSR for $5,000,000 payable through the issuance of 5 million Sundance common shares (if such shares are then listed in a recognized stock exchange) with the balance, if any, in cash.
The Pluton Property covers the western portion of a large regional magnetic feature that is believed to reflect underlying intrusives favourable to the development of CRD systems. The Platosa Mine is located on the eastern side of the same regional feature and the past producing Ojuela Mine (6 million tonnes of high-grade Ag, Au, Pb, Zn production from a series of CRD chimneys and mantos) sits on the south-central side. The Pluton Property covers favourable geology with sulphide showings and other signs of proximity to a mineralizing source. Sundance has carried out only limited work on the property but has developed soil geochemical anomalies of significant size.
The Company has reported that Geotech Ltd., a Canadian geophysical contracting company and world leader in airborne geophysical surveying techniques has completed a ZTEM survey at Platosa. The survey covered a large portion of the original Platosa block, almost all of the new concession acquired in April and a portion of the Pluton Property. The capabilities of this method are well suited to detecting anomalies, which might represent either skarn-type, intrusive-related sulphide bodies such as a large-tonnage proximal CRD deposit or high-grade manto deposits similar to those the Company is presently exploiting. Company geologists are optimistic that the results of this survey will help further focus the search for such deposits by outlining direct targets, which can be advanced quickly to the drilling stage. The Company expects to receive preliminary survey results before the end of November. The Company and its geophysical consultant continue to work with the data gathered during the pilot 3D induced polarization (3D IP) survey completed in June. The survey grid measures roughly five kilometres from NW-SE and one kilometre from SW-NE and is centred on the known mantos. Several untested areas underlain by chargeability anomalies similar in nature to those associated with portions of the known massive sulphide mantos have been identified and a series of drill holes is planned for these areas. The Company presently has one drill operating at Platosa.
"We are pleased with the completion of the ZTEM survey, which we hope will reveal new targets directly related to either a large-tonnage proximal CRD deposit we believe is hosted on the property or additional high-grade mantos. In addition we believe the option agreement recently signed with Sundance further increases the possibility of significant new discoveries by the Company on its land package, which now totals 59,000 ha (146,000 acres)," said John Sullivan, Excellon's Vice-President of Exploration.
Qualified Persons
The Company's exploration programs are supervised by John Sullivan, Excellon's Vice-President of exploration, in consultation with Dr. Peter Megaw of IMDEX Inc.
Dr. Peter Megaw, PhD, CPG, and Mr. John Sullivan, BSc., PGeo., have acted as the Qualified Persons, as defined in National Instrument 43-101, for the exploration portion of this disclosure.
Dr. Megaw has a PhD in geology and more than 30 years of relevant experience focused on exploring silver and gold systems in Mexico. He is a Certified Professional Geologist (CPG 10227) by the American Institute of Professional Geologists and an Arizona Registered Geologist (ARG 21613). Dr. Megaw is not independent of Excellon as he is a shareholder.
Mr. Sullivan is an economic geologist with over 35 years of experience in the mineral industry. Prior to joining Excellon in 2007 he was a senior geologist at a Toronto-based international geological and mining engineering consulting firm where he evaluated properties and prepared NI 43-101 reports on gold and base metal projects in Canada and internationally. In addition he has held senior positions with two large Canadian mining companies where he directed major exploration programs, managed field offices, and evaluated projects in Canada, Europe, Africa and Latin America. Mr. Sullivan is not independent of Excellon as he is an officer and holds common share purchase options.
Source: Excellon Resources Inc.