Cerro Resources NL
ASX : CJO
TSX VENTURE : CJO

Cerro Resources NL

August 11, 2011 09:26 ET

Cerro Resources Initial Namiquipa Drill Results Confirm High Grade Silver/Lead/ Zinc Strike Potential

LONGUEUIL, QUEBEC--(Marketwire - Aug. 11, 2011) - Cerro Resources NL (ASX:CJO)(TSX VENTURE:CJO) is pleased to announce positive results from the first three drill holes of its initial scout drilling program at the Namiquipa silver-lead-zinc project in Chihuahua, Mexico. Further drilling will continue to test the down dip and strike extensions of the mineralisation. Geophysical and preliminary geological evaluations to date estimate the strike potential at 2.5 KM over multiple veins.

HIGHLIGHTS:

  • Broad intervals of significant grade mineralisation intersected, including:
    • 92.87 g/t AgEq over drilled length of 65.7m (NAM-003), and
    • 109.93 g/t AgEq over drilled length of 23m (NAM-002), and
    • 72.63 g/t AgEq over drilled length of 11.05m (NAM-001), and
    • 63.87 g/t AgEq over drilled length of 6.5m (NAM -001);
  • Excellent enriched grade zones encountered, including:
    • 1754.07 g/t AgEq over drilled length of 0.82m including 1730g/t Ag, from 166.18m to 167.0m (NAM-003);
    • 1388.9 g/t AgEq over drilled length of 0.47m including 1350g/t Ag, from 164.53m to 165.0m (NAM-003);
    • 356.96 g/t AgEq over drilled length of 1.24m, from 236.5m to 237.74m (NAM-002);
  • Progressive improvement in grade and potential widths of mineralisation shown in initial results;
  • Drilling has intersected vein systems not previously reported;
  • Initial system and grade indications highly encouraging;
  • Second rig commenced and targeting vein extensions with drilling to continue through September quarter;

Highlights of the first three drill holes (NAM-001, NAM-002 AND NAM-003):

NAM-001 intersected the Princesa vein at 158 to 165m with 63.87 g/t AgEq and includes 0.55m drilled length with 553g/t Ag and intersected a second vein system at 228 to 241m with 72.63 g/t AgEq.

NAM-002 was drilled 423m north of NAM-001 and approximately 160m north of the Princesa shaft. NAM-002 intersected the Princesa vein at approximately the projected drill depth of 194m with a drilled length of 23m containing 109.93g/t AgEq and sharp increases of both lead and zinc to highs of 8.61% Zn.

NAM-003 drilled 75m south of NAM-001 and intersected the Princesa vein and an additional two other veins containing both high zinc and lead values including a drilled length interval of 65.7m with 92.87g/t AgEq that includes 1.44m of 17.68% zinc and 929.13g/t AgEq. High silver grades include 1,730g/t Ag over a drilled length interval of 0.82m and 1,350g/t Ag over 0.47m.

Drill Hole Location Map: http://media3.marketwire.com/docs/Drill%20Hole%20Locations.JPG

Drill Hole From (m) To
(m)
Drilled Length(m) Ag
g/t
Pb
%
Zn % AgEq1
g/t
NAM-001 158.50 165.00 6.50 56.75 0.10 0.26 63.87
Including 163.45 164.00 0.55 553.0 0.14 0.15 558.64
228.76 241.00 11.05 49.18 0.88 0.29 72.63
NAM-002 194.00 217.00 23 36.23 1.13 3.13 109.93
Including 194.50 202.00 7.5 77.87 2.11 4.45 182.76
236.50 237.74 1.24 85.06 5.31 8.61 356.96
NAM-003 162.00 167.00 5.00 542.05 .047 0.39 559.06
Including 164.53 167.00 2.47 854.38 0.66 0.33 874.09
259.65 325.35 65.70 33.40 0.82 2.24 92.87
including 293.00 294.44 1.44 440.39 7.48 17.68 929.13
(1)The Silver equivalent grades ("AgEq") have been calculated using metal prices at 1 August 2011, being US$39.31/oz Silver; US$1.09/lb Zinc; and US$1.16/lb Lead. Metal recoveries are not considered in this calculation.

Further drilling is required to provide a more accurate assessment of vein thickness and true width may vary.

Core photo - NAM003: 1,730 g/t Ag over 0.82M*: http://media3.marketwire.com/docs/NAM3_Drill_Core.JPG

Discussion

Initial drill holes have been designed to test potential extensions of the vein mineralisation from the historic La Venturosa Mine – which produced an estimated 14.4 million ounces of silver, 32,550 tonnes of lead and 43,530 tonnes of zinc from two prominent quartz/breccias vein systems; the America and Princesa.

Major Drilling was selected as the drill contractor for the Phase 1 program. Drilling consists of angled HQ diameter core holes. Drill holes NAM-001 through NAM-003 were drilled to target potential down dip extensions of mineralisation along the Princesa vein where mining was reported to have stopped at the 100m level during the operation of the Venturosa Mine.
The drill results to date indicate the mineralised system continues at depth along the Princesa vein system with the geological setting suggesting significant potential for high grade material to be hosted in additional vein spurs/shoots.

Drilling is currently underway along the approximately 1.25 km known strike distance of the Princesa vein as well as targeting other veins in the area such as the Esmeralda, Mexico and America and north and south of the previously drilled areas where vein extensions have been identified.

In addition to testing extensions of the known vein systems, drilling is also progressing towards the evaluation of geophysical anomalies detected in recently completed IP and ground magnetic surveys. The geophysical and preliminary geological evaluations have defined some 2.5km of favourable targets.

Encouraged by the early progress and the number of high priority targets a second drill rig was added to the program and commenced drilling at the end of July. Core drilling rates are now significantly increasing.

Namiquipa Project Location and Geology

The Namiquipa Project is located in the Municipality of Namiquipa, Chihuahua State, Northern Mexico, approximately 145 kilometres west-north-west of the city of Chihuahua. The Project is within the Namiquipa Mining District adjacent to the village of El Terrero.

The Namiquipa Project area is hosted by Tertiary age volcanics deposited in the Early to Middle Miocene. Namiquipa is one of a series of deposits hosted in the rocks of Northern Mexico's Upper Volcanic Series and lies within the Ag-Pb-Zn epithermal belt. The mineral assemblages present and the associated hydrothermal alteration suggest that mineralisation is a low to intermediate sulfidation type. As such and considering the levels of silver at Namiquipa it is analogous to the Fresnillo-style of polymetallic vein systems which are silver rich and gold poor. Fresnillo in Zacatecas State in north central Mexico is the world's largest primary silver producer and Mexico's second largest gold producer, with substantial lead and zinc credits.

Under the general characteristics of epithermal deposits outlined by Simmons and others in 2005, the Namiquipa deposit falls under the mineralisation associated with quartz+/- calcite +/- adularia+/- iliite assemblages. Epithermal deposits exhibiting these general characteristics have ores that occur in veins and stockworks, making up sub vertical fractures, or more rarely in pore space of breccias and permeable rocks, forming disseminated mineralisation (Simmons et al, 2005).

Historic mining at Namiquipa consisted of underground mining along six main veins of quartz replacement breccias using at least seven shafts. Mining took place over a strike length of 1,250m to a depth of 250m. Principal vein constituents in the sulphide zone are quartz, sphalerite, galena, fluorite, chalcopyrite with silver minerals and minor gold.

Oxidation which extends to about 100m below the surface leached out the lead and zinc minerals and re-deposited them as cerussite, rarely anglesite and wulfenite. Vein mineralogy displays vertical zoning. Increased quantities of barite formed near the surface where silver occurred as native silver and cerargyrite. The veins show distinct zones of silver and lead enrichment at or near the base of oxidation (Fleming, 2010).

Additional information about the Namiquipa project is available in a Technical Report dated March 7, 2011 and filed on SEDAR on March 17, 2011.

Competent Person/Qualified Person

The technical information in this news release is based on information compiled Mr Bill Fleshman, who is a Chartered Professional and Fellow of the Australasian Institute of Mining and Metallurgy. Mr Fleshman is a consultant to Cerro Resources NL and has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the "Australasian Code for Reporting of Exploration Results and "qualified person" as this term is defined in Canadian National Instrument 43-101 ("NI 43-101"). Mr Fleshman consents to the inclusion in this news release of the information in the form and context in which it appears.

About Cerro Resources

Cerro Resources is a precious and base metals exploration and development company. The Company is currently focused on Mexico where it is developing the Cerro del Gallo gold/silver project in the central state of Guanajuato, Mexico and has commenced exploration on the Namiquipa silver project in northern Mexico. It also maintains an active working focus on the Mt Isa, Queensland, region where it is exploring the Mt Philp haematite project and it holds an interest in the Kalman molybdenum, rhenium, and copper project.

Additional information about the Company is available on the Company's website at www.cerroresources.com and on SEDAR.

Forward-Looking Information

This news release contains certain "forward-looking information" under Canadian securities laws. All statements that address future plans, activities, events or developments that the Company believes, expects or anticipates will or may occur are forward-looking information. Forward looking information in this news release includes statements regarding the structure of the mineralisation of the project, the results of the exploration program, the interpretation of such results, and the potential of the Namiquipa project. Forward looking information is based upon assumptions by management that are subject to known and unknown risks and uncertainties beyond the Company's control, including risks related to mining exploration and the availability of financing for companies such as the Company. There can be no assurance that outcomes anticipated in the forward looking information will occur, and actual results may differ materially for a variety of reasons. Accordingly, readers should not place undue reliance on forward-looking information. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking information, except as may be required by law.

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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