Genco Resources Ltd.
TSX : GGC

Genco Resources Ltd.

January 29, 2010 20:15 ET

Genco Increases Mining Reserves 415% to 47 Million Silver Equivalent Ounces

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 29, 2010) - Genco Resources Ltd. (TSX:GGC) is pleased to announce the results of an updated Resource and Reserve audit for its La Guitarra silver/gold mine and Temascaltepec Mining District. Reserves and Resources are reported as of December 16, 2009 in accordance with the National Instrument 43-101 Standards of Disclosure for Mineral Projects.

The Qualified Persons under NI 43-101 for this Reserve and Resource estimate are Glenn R. Clark, P.Eng, of Glenn R. Clark and Associates Ltd., and John Thornton of Thor Resources LLC. They are both arms' length to Genco and have prepared, or supervised the preparation, of the information that forms the basis for this news release and verified the data disclosed.

The following tabulates the reserve and resources by area and category:

La Guitarra and Temascaltepec Silver-Gold Mining District Reserves & Resources
Category tonnes ('000) Ag g/t Au g/t eAg g/t Oz Ag Oz Au Oz eAg
Underground Reserves
Proven 577 208 1.50 292 3,858,000 27,800 5,417,000
Probable 1,608 209 1.45 290 10,804,000 74,900 14,992,000
Total Underground Reserves 2,185 209 1.46 291 14,662,000 102,700 20,409,000
La Guitarra Open Pit Reserves
Proven 2,615 87 0.80 132 7,314,000 67,200 11,097,000
Probable 4,209 77 0.72 117 10,419,000 97,300 15,833,000
Total Surface Reserves 6,824 81 0.75 123 17,733,000 164,500 26,930,000
Total Reserves 9,009 113 0.93 165 32,395,000 267,200 47,339,000
La Guitarra Open Pit Resources - 45 g/t eAg Cut-off
Measured 3,008 86 0.84 133 8,318,000 81,300 12,864,000
Indicated 5,972 76 0.77 119 14,594,000 147,800 22,851,000
Total M + I* 8,980 79 0.79 123 22,912,000 229,100 35,715,000
Inferred 2,683 75 1.00 130 6,408,000 86,600 11,257,000
Underground Inferred Resources
Total Underground Inferred 10,000 305 1.95 414 98,063,000 627,600 133,103,000
Total Inferred 12,683 256 1.75 354 104,471,000 714,200 144,360,000

*Open cut Measured & Indicated Resources include Proven & Probable Reserves

Underground Reserves were calculated using a 135 equivalent silver ("eAg") grams per tonne ("g/t") cut-off, a 20% dilution factor at zero grades. The methodology used for the Underground Reserves was standard polygonal projections on longitudinal sections. Proven was projected 0-15 metres from data points and Probable were projected 15-40 metres for all areas, except Santa Ana. Proven at Santa Ana were projected 0-15 metres and Probable 15–50 metres. Silver assays were cut to 1,500 g/t, and gold assays to 15 g/t.

The following tabulates the parameters used to create the Creston block model grade interpolations:

Parameter Value, Distance or Method
Grade Estimation Method IDP3
Block Size (length x width x bench Height) 10x3x3 metres
Composite Length 3 metres
Gold Outlier Cap 10 g/t
Gold Outlier Capping Distance 15 metres
Silver Outlier Cap 700 g/t
Silver Outlier Capping Distance 15 metres
Measured Distance 20 metres
Minimum Number of Composites for Measured 2
Indicated Projection Distance 20-50 metres
Minimum Number of Composites for Indicated 2
Inferred Projection Distance + 50 metres
Model Constraint 3D Solid/Wire Framing Model

Silver to gold ratio of approximately 56 to 1 representing a gold price of US$780/oz gold and a silver price of US$13.80/oz was used in the eAg calculation. As the recently released La Guitarra Feasibility Study neared completion, the average gold and silver prices used in the Feasibility Study and the NI 43-101 Compliant Technical Report were sufficiently close to US$800/oz gold and US$14/oz silver that these metal prices were adopted for the financial valuations presented in both documents. The silver to gold ratio was left at 56 to 1. Silver and gold recoveries are 82%-89% using the existing flotation circuit averages and estimated at 92% for silver and 90% for gold using a proposed new cyanide mill. The total estimated operating costs for mining, milling and general & administrative costs is US$38.40 per tonne of ore processed.

The Reserve and Resource calculations are based on assay data obtained from diamond drilling and sampling on surface, and ore body modelling. A total of 85,645 metres of drilling in 452 drill holes consisting of 289 core drill holes, and 163 reverse circulation drill holes completed since August 2006, was the primary source of drill data.

The substantial increase in mining reserves and corresponding recoverable ounces are the result of very successful surface drill programs that nearly doubled the projects Underground Reserves from 11,516,000 eAg ounces to 20,411,704 eAg ounces. In addition, the mining reserves now include La Guitarra Open Pit Reserve of 26,933,051 ounces that were carried as Resources in the June 2008 Technical Report. This upgrade of the Open Pit deposit to Reserves is based on Kappes, Cassiday & Associates' ("KCA") projected processing costs of US$20.00 per tonne of ore to a proposed agitated leach, Merrill Crowe gold recovery plant at 3,000 TPD and Genco's mining costs for the open pit, developed in conjunction with a mining contractor with current operations ongoing in Mexico, and the metal recoveries summarized in the KCA Feasibility Study.

The Feasibility Study has dramatically increased the projects expected equivalent silver ounces to be produced from the proposed expanded operations. The results of the drilling programs have not only increased the Proven and Probable Reserves for all operations, but the expected grades have increased from the most recent drilling assay results.

The following table shows the growth of Resources and Reserves by area and category:

Resource and Reserve Growth from 2008
Category tonnes
('000)
oz Ag oz Au oz eAg
Reserves 639% 361% 548% 415%
Measured and Indicated -17% 65% 34% 60%
Project Inferred 26% 6% 13% 11%

La Guitarra Mine including the San Rafael zone account for a large portion of the Underground Reserves and Resources. Included in the summary are Underground Reserves and Resources from other zones known as Nazareno, Coloso and Mina de Agua (Santa Ana veins).

The following tabulates the Underground Reserve by area:

La Guitarra and Temascaltepec Silver Gold Mining District Underground Reserves by Area
Area tonnes
('000)
Ag
g/t
Au
g/t
eAg
g/t
Oz Ag Oz Au Oz eAg
Guitarra 1,063 188 1.80 289 6,415,000 61,300 9,855,000
Nazareno 240 146 0.79 190 1,122,000 6,100 1,462,000
Coloso 373 335 2.65 483 4,010,000 31,700 5,780,000
Mina de Agua 509 191 0.22 203 3,115,000 3,600 3,312,000
Total Reserves Underground 2,185 209 1.46 291 14,662,000 102,700 20,409,000

All surface Reserves and Resources are contained within La Guitarra open pit, which is situated above the existing La Guitarra Mine. A mine design has been developed for the surface deposit which would exploit the deposit through development of three separate open pits: La Cruz, Los Angeles and Creston.

The following tabulates the Open Pit Reserves by mining area:

La Guitarra and Temascaltepec Silver Gold Mining District Surface Reserves by Area
Area tonnes
('000)
Ag g/t Au
g/t
eAg
g/t
Oz Ag Oz Au Oz eAg
La Cruz 1,585 83 0.76 125 4,741,000 42,200 7,099,000
Los Angeles 3,073 72 0.64 108 8,087,000 70,300 12,019,000
Creston 2,166 61 0.67 99 4,905,000 52,000 7,812,000
Total Reserves Open Pit Cut 6,824 81 0.75 123 17,733,000 164,500 26,930,000

It is estimated that at the conclusion of mining the identified Reserve contained in the three open pits there will be 2,156,000 tonnes of Measured & Indicated Resources remaining above the 45 g/t operating cut-off, containing 8,656,000 eAg ounces. Depending on the silver and gold prices prevailing at the end of the current proposed mine plan, and the prevailing operating costs at the time, it would have to be determined if further open pit mining would be justified beyond what has been determined in the current mine plan and Feasibility Study.

The following is a breakdown of the Open Cut Measured and Indicated Resources at 10 g/t eAg intervals:

Creston Resource by Class and Cut-off
Cut-off
eAg g/t
Class tonnes
('000)
Ag
g/t
Au
g/t
eAg
g/t
Oz Ag Oz Au Oz eAg
1 Measured  4,608,923 62 0.60 95 9,188,821 66,918  14,078,704
Indicated  8,609,933 58 0.58 90 16,067,110 160,571  24,916,205
M + I  13,218,856 59 0.59 92 25,255,931 249,489  38,994,909
Inferred  4,001,103 54 0.73 95 6,947,252 93,917  12,222,019
 
10 Measured  4,328,709 65 0.63 101 9,047,141 97,688  14,057,865
Indicated  8,238,985 60 0.60 94 15,981,965 159,820  25,038,411
M + I  12,612,694 62 0.61 96 25,029,106 257,508  39,096,276
Inferred  3,810,374 56 0.73 99 6,861,113 93,115  12,129,486
 
20 Measured 3,966,982 70 0.68 108 8,928,898 86,738  13,776,015
Indicated 7,725,407 64 0.64 99 15,895,886 158,979  24,592,132
M + I 11,692,389 66 0.66 103 24,813,343 245,717  38,368,147
Inferred 3,474,568 61 0.83 108 6,815,069 92,729  12,066,124
 
30 Measured  3,590,744 76 0.74 117 8,774,808 85,439  13,508,587
Indicated  7,125,531 68 0.68 106 15,579,939 155,799  24,286,376
M + I  10,719,275 70 0.70 110 24,354,747 241,238  37,794,963
Inferred  3,187,303 66 0.89 115 6,764,051 91,212  11,785,847
 
40 Measured  3,194,151 82 0.80 127 8,421,877 82,165  13,043,639
Indicated  6,381,900 73 0.74 114 14,980,023 151,852  23,393,460
M + I  9,371,302 76 0.76 119 23,401,900 234,017  36,437,099
Inferred  2,859,991 71 0.96 125 6,529,240 88,283  11,495,141
 
50 Measured  2,800,997 90 0.88 138 8,105,578 79,257  12,428,861
Indicated  5,550,536 79 0.81 124 14,099,432 144,564  22,130,754
M + I  8,351,534 83 0.83 129 22,205,101 223,821  34,559,615
Inferred  2,493,972 77 1.06 136 6,174,786 85,004  10,906,115
 
60 Measured  2,431,322 98 0.96 152 7,661,401 75,050  11,882,988
Indicated  4,784,115 86 0.89 135 13,229,586 136,909  20,767,059
M + I  7,215,437 90 0.91 141 20,890,987 211,959  32,650,047
Inferred  2,167,428 83 1.16 148 5,784,454 80,843  10,314,448

Genco's Acting CEO, Robert Gardner, stated, "We are extremely pleased with the growth in Reserves and Resources at La Guitarra. Genco will continue to work towards its goal of growing La Guitarra into one of the premier silver mines in the Americas."

For more information on Genco's Mineral Reserves and Resources, please refer to the full La Guitarra Mine Technical Report dated January 29, 2010, which can be found on SEDAR at www.sedar.com or on Genco's website at www.gencoresources.com.

At this time, Genco reports that Dr. Chris Wilson has informed the Company he will be resigning from Genco's Board of Directors, effective immediately. Genco wishes Dr. Wilson success in his future endeavours.

About Genco Resources Ltd.

Genco Resources Ltd. is a publicly traded mining company focused on developing its core asset, the producing La Guitarra silver-gold property located in the Temascaltepec Mining District of Mexico. La Guitarra Mine presently consists of two underground operation centres and a flotation mill with a proven capacity of 320 tonnes per day. Genco aims to create solid shareholder value through increased silver production and reserve & resource growth.

This news release may contain certain forward-looking statements that involve risks and uncertainties such as statements of the Company's plans, objectives, strategies, expectations, and intentions. The words "may", "would", "could", "will", "intend", "plan", "believe", "estimate", "expect" and similar expressions, as they relate to the Company, or its management, are intended to identify such forward-looking statements. Many factors could cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including those factors discussed below and in filings made with the Canadian securities regulatory authorities. Should one or more of these risk factors or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. The Company does not intend, and does not assume any obligation to update these forward-looking statements.

The Toronto Stock Exchange has not reviewed the contents of this release and does not accept responsibility for the accuracy of the contents of this release.

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