Silvermex Resources Ltd.
TSX VENTURE : SMR

Silvermex Resources Ltd.

June 21, 2010 10:38 ET

Silvermex Provides Update on Exploration and Project Developments at Rosario

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 21, 2010) - Silvermex Resources Ltd. (TSX VENTURE:SMR) is pleased to provide a corporate update and progress report on its 2010 project exploration and development programs. The company is currently focusing its efforts on the newly consolidated Rosario/San Marcial silver project in south eastern Sinaloa State, Mexico.

This 16,279 hectare land concession hosts 2 past producing silver/gold/lead/zinc mines. The recently acquired Rosario Project is located just 5 km's from the company's San Marcial Silver Project. The strategic acquisition of this project provides Silvermex with a significant land position, 2 past producing mines and extensive infrastructure, including; 330 hectares of land owned fee simple, a 20 year surface rights agreement in good standing, 30 year water use permit, underground workings, tailings dam, water, 60 km - 33 KV power line, offices, shops, 120 man camp and multiple buildings.

The previous owner of Rosario made significant investments in the property. Improvements include the upgrading of electrical substations, mine dewatering and rehabilitation, exploration, mapping, 3D modeling, camp and building renovations, and the detailed engineering of an 800 tonne per day mill designed to be installed on the existing foundations and structures. This existing infrastructure could significantly reduce the development time and capital to restore production.

Silvermex's Mexican and Canadian legal representatives and accountants have recently completed the necessary restructuring, auditing and documentation of the company's newly acquired Mexican subsidiaries. The company has also completed the examination, assessment and auditing of all of the company's real estate holdings and mining concessions and the preparation and submission of all requisite permits and documentation.

Silvermex's new geological team, headed by Robert Fraser, continues the examination and assessment of thousands of historical data points and reports from previous operators which has lead to a better understanding of the geological structures and deposits. The information available includes; geological reports and maps, satellite imagery, assays, past production records, drill logs and sample results, geophysical reports, resource estimates, resource block models and metallurgical tests. The compilation of all of this data will allow the Company to prepare more accurate and comprehensive resource block models.

Silvermex management has formulated an aggressive plan of action over next 2 quarters, which includes; drill programs, resource modeling, upgraded resource estimates, advanced metallurgical analysis, drifts and cross-cuts, bulk sampling, mine plans, engineering, infrastructure improvements, environmental permit applications and the preparation of a Preliminary Economic Assessment.

The company is well funded for the planned exploration and development programs with approximately $5 million in working capital.

San Marcial Silver Project

San Marcial currently has an NI 43-101 indicated mineral resource of 3,755,893 tonnes grading 149.20 g/t Ag, 0.36% Pb and 0.67% Zn. Indicated resource contains 18.0 million ozs silver, 55.3 million lbs of zinc (Zn) and 29.9 million lbs of lead (Pb) and an inferred mineral resource of 3,075,403 tonnes grading 44.21 g/t Ag, 0.29% Pb and 0.51% Zn. This inferred resource contains 4.4 million ozs silver, 34.7 million pounds of zinc (Zn) and 19.5 million lbs of lead (Pb).

The current mineral resource estimate is based on a total of 4,884 meters of core drilling in 27 holes and extensive surface trenching completed by both Silvermex and previous operators. The majority (80%) of the silver resource is in the measured and indicated category.

Past drilling programs have intersected high grade silver near surface and over large widths. Selected drill intersections include:

Hole From
(m)
To
(m)
Interval
(m)
Ag g/t Pb ppm Zn ppm
SM-2 0.39 12.00 11.61 350.20 2,055 5,010
SM-3 0.20 15.00 14.80 227.00 1,511 3,955
SM-4 6.00 63.00 57.00 235.00 3,095 4,715
SM-5 1.40 21.00 19.60 282.00 1,737 2,335
SM-5 33.00 36.00 3.00 490.00 242 1,530
SM-9 30.00 44.50 14.50 540.00 1,874 3,607
SM-11 114.00 132.00 18.00 419.00 3,722 6,889
SM-12 99.30 100.30 1.00 3,600.00 250 6,260
SM-13 50.00 73.20 23.20 621.00 4,911 8,493
SM-17 169.47 172.52 3.05 215.00 1,952 3,155
SM-18A 38.82 63.90 25.08 175.00 3,278 5,127
SM-20 102.47 104.47 2.00 366.50 4,421 5,600
SM0808 98.55 118.00 19.45 234.40 6,410 13,365
SM0812 21.95 26.75 4.80 346.00 5,258 9,319
SM0812 32.75 34.75 2.00 346.00 2,336 14,297
SM0812 36.83 43.80 6.97 365.50 1,864 2,542

Previous resource estimation by Silver Standard Resources Inc. outlined an Inferred Mineral Resource at San Marcial of 2.31 million tonnes at a grade of 191.79 g/t silver, 0.32% lead and 0.66% zinc, containing 14.26 million ounces of silver, 33 million lbs of zinc and 16 million lbs of lead.

Preliminary high-grade resource modeling using a 180 g/t Ag cut off, estimates that the San Marcial project currently hosts a near-surface, high-grade Indicated resource of approximately 1.13 million tonnes grading 310.20 g/t silver, 0.36% lead and 0.67% zinc. This estimated high-grade resource is the primary focus of the current Preliminary Economic Assessment.

The Company has recently completed an extensive trenching and sampling program at San Marcial which has confirmed the continuity of the high-grade vein structures at surface and has been instrumental in filling in gaps in historic data. The results of the recent work have given management an increased understanding of the geologic controls and have assisted in development of the current drill plan. This successful trenching program provided numerous high grade results, 18 samples assayed over 300 g/t silver. Highlights include; 520.9 g/t silver across 9.70 meters and 1,770 g/t silver over 1.75 meters.

Selected channel sample results include:

Width (M) Ag g/t (Avg) Pb % Zn %
11.95 150.8 0.13 0.44
6.65 673.7 0.18 0.33
9.7 520.9 0.29 0.46
8.35 496.5 0.49 0.37
10.8 258.9 0.17 0.46
2.0 961.00 0.18 0.08
2.0 1,248.00 3.27 4.18
1.8 930.00 2.54 0.91
1.2 779.00 2.82 1.04

The company has initiated a 3,000 meter HQ core drilling program at San Marcial to expand and upgrade the classification of the existing resources and to test for continuity along strike and down dip. The company will also collect material for advanced metallurgical testing and formulate geotechnical data on the immediate hanging wall, the mineralized zone and the adjacent footwall to determine an appropriate mine plan for the economic extraction of the silver bearing resource.

This new information will be combined with the rework of the existing data to develop a new block model and prepare an updated NI 43-101 resource estimate. This new model, along with a comprehensive mine plan and the results of the metallurgical test work will be incorporated into a Preliminary Economic Assessment which is scheduled for completion in Q4 of this year.

Preliminary metallurgical testing on the San Marcial project returned encouraging results. Five oxide and sulphide samples from holes SM-2, SM-4 and SM-5 were sent to ALS Chemex in Reno NV for column leach tests. Recoveries from all columns exceeded 80% over a 72 hour leach period. Additional metallurgical test work were completed on four samples composed of drill core rejects submitted to Process Research Associates Ltd. in Richmond, B.C. Recoveries from flotation and cyanidation ranged from 83 to 93 percent.

The company has recently negotiated and signed a 20 yr surface rights agreement for the exploration and potential future production at the Company's San Marcial land concession on similar terms to that of the Rosario surface rights agreement.

Plomosas Mine

Historic production on the Rosario property by Grupo Mexico, the prior operator, averaged 600 t/d from 1986 to 2000, during which a total of 2.5 million tonnes of ore were produced which averaged 190.5 grams per tonne (g/t) silver, 0.92 g/t gold, 2.02% zinc and 2.38% lead.

In 2001, Grupo Mexico reported the Plomosas Mine has existing historic reserves and resources of 638,756 tonnes grading 136 g/t silver, 3.21% zinc, 2.23% lead, and 1.05 g/t gold. The Mine has extensive development and has been partially refurbished by the previous operator in preparation for an 800 tpd operation. The mine has been dewatered and has undergone partial rehabilitation.

The reader should be cautioned that the historic reserves and resources at Plomosas do not conform to National Instrument 43-101 for reporting purposes; as such the Company is not treating these historic estimates as current reserves or resources. These estimates should not be relied upon until they have been verified by further due diligence and by the Company's "Qualified Person".

Extensive data collection, underground mapping, control surveys, resource modeling and preliminary exploration programs have been completed by the prior operator. An extensive underground channel sampling program has been completed at Plomosas which yielded positive results with numerous high grade intersections of gold, silver, lead and zinc.

Selected channel sample results include:

Width (m) Au g/t Ag g/t Pb % Zn %
2.00 25.40 611.00 2.60% 11.40%
2.00 18.00 379.00 0.80% 5.50%
2.00 41.00 123.00 3.10% 2.70%
0.75 36.40 1,536.00 17.90% 11.30%
2.00 2.90 44.00 37.70% 26.30%
0.35 2.50 52.00 35.60% 27.10%
1.85 1.70 43.00 7.80% 23.70%
1.70 1.30 36.00 10.90% 15.20%
0.50 4.10 85.00 28.60% 32.30%
1.50 2.90 54.00 14.90% 20.70%
2.00 2.60 63.00 25.50% 20.30%

Future plans at Plomosas include the preparation of an NI 43-101 resource estimate and the continued exploration at depth and along strike of the existing known structure. The company will also collect material for advanced metallurgical testing and develop a comprehensive mine plan for the potential extraction of the resource.

San Juan Mine

At the San Juan Mine, 3 kms west of the Rosario mine site, Grupo Mexico reported historic reserves and resources of 256,756 tonnes grading 329.3 g/t silver, 3.73% zinc, 1.69% lead, and 0.19 g/t gold.

The San Juan workings consist of a main adit approximately 5 meters in width, 5 meters in height and 250 meters long and a crosscut extending easterly for 150 meters, plus a partially flooded ramp with a further 150 meters development. The mineralized structure averages 3.0 m in width and has been traced down dip for approximately 150-200 meters. A decline has been driven into the San Juan zone and has been tested over a vertical distance of 40 meters with the zone still open to depth.

Extensive data collection, underground mapping, control surveys and exploration programs have been completed at San Juan by previous operators. A recent surface and underground channel sampling program has been completed which yielded very positive results.

Selected channel sample results include:

Width (M) Au g/t Ag g/t Pb % Zn %
1.5 - 994.00 0.18 0.18
2.0 0.17 982.00 0.02 0.18
1.3 0.13 714.00 0.05 1.40
2.0 0.43 988.00 0.01 0.70
1.6 0.37 1,735.00 1.12 2.00
2.0 0.10 961.00 0.18 0.08
2.0 0.36 1,248.00 3.27 4.18
1.8 0.08 930.00 2.54 0.91
1.2 0.96 779.00 2.82 1.04

The company will be initiating a 3,000 meter HQ core drill program at San Juan in July 2010 to expand, define and upgrade the current historic reserve and resource and prepare an updated NI 43-101 resource estimate. The company is currently collecting a representative sample of material for advanced metallurgical testing.

The reader should be cautioned that the historic reserves and resources at San Juan do not conform to National Instrument 43-101 for reporting purposes; as such the Company is not treating these historic estimates as current reserves or resources. These estimates should not be relied upon until they have been verified by further due diligence and by the Company's "Qualified Person".

The outlined programs are currently on schedule and on budget. The company expects to complete the preliminary economic assessment report by Q4 of this year. Management is confident that the Rosario project will continue to deliver positive results this year and ultimately provide shareholders with increased value and long term growth.

The Company also announces it has granted 1,500,000 incentive stock options at $0.32 per share with a five year term expiring on June 21, 2015. The foregoing options are subject to the terms of Silvermex's incentive stock option plan. The grant of the incentive stock options is subject to receipt of all required regulatory approvals including those of the TSX Venture Exchange.

About Silvermex

Silvermex Resources is a well funded exploration and development company focused on developing the recently consolidated Rosario Mining Camp in south eastern Sinaloa, Mexico. This mining concession consists of 2 past producing mines and numerous known deposits. The project has significant resources and historic reserves with extensive production related infrastructure. Silvermex is led by a highly experienced and successful team, comprised of top executives from leading corporations in the silver mining sector.

Qualified Person

Pursuant to National Instrument 43-101, Robert Fraser, M.Sc., P.Geo is the Qualified Person (QP) responsible for the disclosure in this news release.

On Behalf of the Board of Directors of Silvermex Resources Ltd.

Duane Nelson, CEO & Director

This News Release contains forward-looking statements. Forward looking statements are statements which relate to future events. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking-statements. Management has assumed that these will be our major projects going forward. Risks include that we are unable to satisfy environmental or other regulators, that we determine that our resources are not commercially viable, or that we have difficulties due to unavailability of labour or equipment.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggests herein. Except as required by applicable law the Company does not intend to update any forward-looking statements to conform these statements to actual results.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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