Salazar Resources Limited

TSX VENTURE : SRL
FRANKFURT : CCG


Salazar Resources Limited

February 05, 2014 08:00 ET

Salazar Increases Indicated and Inferred Resources at El Domo Deposit

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb. 5, 2014) - Salazar Resources Ltd. (the "Company") (TSX VENTURE:SRL)(FRANKFURT:CCG) is pleased to report an updated National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") compliant mineral resource estimate for the volcanogenic massive sulphide ("VMS") El Domo deposit on its 100% owned (30,327 ha) Curipamba project in Ecuador. Buenaventura Ingenieros S.A. ("BISA") of Lima, Peru, an independent consultant, has prepared and authorized the release of the mineral resource estimate.

Highlights of the updated mineral resource estimate include:

  • Indicated mineral resource of 6.080 million tonnes at an average grade of 2.33% Cu, 3.06% Zn, 0.28% Pb, 2.99 g/t Au, and 55.81 g/t Ag, containing 312.95 million pounds Cu, 409.56 million pounds Zn, 37.76 million pounds Pb, 584,457 ounces Au, and 10.91 million ounces Ag.
  • The current indicated mineral resource estimate shows the following increases relative to the 2012 indicated mineral resource estimate: 7% increase in contained copper, 34.4% increase in contained zinc, 17.4% increase in contained gold, and 26.8% increase in contained silver.
  • The inferred mineral resource is 3.882 million tonnes at an average grade of 1.56 % Cu, 2.19% Zn, 0.16 % Pb, 2.03 g/t Au, and 42.92 g/t Ag, containing 133.46 million pounds Cu, 187.39 million pounds Zn, 13.96 million pounds Pb, 253,607 ounces Au and 5.36 million ounces Ag.
  • The current inferred mineral resource estimate shows the following increases relative to the 2012 indicated mineral resource estimate: 118.1% increase in contained copper, 108.0% increase in contained zinc, 125.2% increase in contained gold and a 118.7% increase in contained silver.

Mr. Fredy Salazar, President and CEO, stated "We are very pleased with this significant increase to both resource categories. The updated mineral resource estimate will form the basis of a Preliminary Economic Assessment (PEA) scheduled to be released in the first quarter of this year."

Table 1. El Domo Project - Mineral Resource Estimate at an NSR cut-off of US$30 per tonne (December 2013), by Buenaventura Ingenieros-BISA

Lithology Unit Category Tonnes Copper Zinc Lead Gold Silver Copper Zinc Lead Gold Silver
(Mt) (%) (%) (%) (g/t) (g/t) (Mlbs) (Mlbs) (Mlbs) (oz) (oz)
VMS Indicated 5.468 2.52 3.27 0.30 3.23 59.19 303.78 394.2 36.16 567,898 10,406,782
Grainstone Indicated 0.216 0.92 1.01 0.12 1.09 27.91 4.38 4.81 0.57 7,570 193,844
Breccia Indicated 0.345 0.49 1.33 0.13 0.76 26.91 3.73 10.12 0.99 8,431 298,519
Gypsum Indicated 0.051 0.94 0.39 0.03 0.34 7.40 1.06 0.44 0.03 558 12,135
Total Indicated 6.080 2.33 3.06 0.28 2.99 55.81 312.95 409.56 37.76 584,457 10,911,281
VMS Inferred 3.093 1.75 2.59 0.19 2.38 49.45 119.33 176.61 12.96 236,699 4,917,969
Grainstone Inferred 0.170 0.96 0.69 0.10 1.00 19.24 3.60 2.59 0.37 5,466 105,170
Breccia Inferred 0.370 0.53 0.83 0.07 0.78 24.89 4.32 6.77 0.57 9,280 296,119
Gypsum Inferred 0.249 1.13 0.26 0.01 0.27 4.80 6.20 1.43 0.05 2,162 38,431
Total Inferred 3.882 1.56 2.19 0.16 2.03 42.92 133.46 187.39 13.96 253,607 5,357,690

Notes:

  • CIM definitions were followed for mineral resources.
  • The mineral resource estimate is based on a 3D geological modeling of the volcanogenic massive sulphide deposit (VMS). Four lithology units with a NSR cutoff of US$30 per tonne were considered as mineral resource.
  • Metal prices used are US$2.95/lb Cu, US$0.91/lb Zn, US$0.91/lbPb, US$1,200/oz Au, and US$20.00/oz Ag
  • Metallurgical recovery factors assumed were based on three domains defined by the metal ratio Cu/(Zn+Pb):
    Zinc Domain Cu/(Pb+Zn)<0.3: 15% Cu, 90% Zn, 40% Pb, 50% Au and 65% Ag
    Mixed Domain 0.3≤Cu/(Pb+Zn)≤3: 75% Cu, 50% Zn, 0% Pb, 55% Au and 65% Ag
    Copper Domain Cu/(Pb+Zn)>3.0: 90% Cu, 0% Zn, 0% Pb, 30% Au and 40% Ag
  • Common industry smelter terms were assumed
  • Bulk density was estimated based on specific gravity determinations for each lithology unit

The Government of Ecuador, in recent months, presented changes to the Mining Law and has introduced a new medium-sized mining category. The government approval process for production capacity up to 1,000 tonnes of ore per day for underground operations, and up to 2,000 tonnes per day for open pit operations, has been significantly simplified and will be governed by the Mining Law versus having to negotiate taxation and royalty terms with the Government as is the case for larger scale projects. This is of significant importance as these medium sized mining companies will no longer be required to sign a Production Contract with the State and, therefore, will not be subject to windfall taxes but rather have a fixed 4 percent royalty rate. The scale of operations being considered in the PEA for El Domo fall within this range and will be classified as a medium sized mining operation. This will significantly benefit the Company in the form of reduced tax rates. At the present time, the Ministry of Non Renewable Natural Resources is drafting the regulations allowing for an immediate application of these reforms. We are confident the regulations will confirm the rules and provide encouragement for mining development in Ecuador.

As part of the PEA, additional studies are also being conducted to define and refine metal recovery factors and metallurgical processes. The updated resource estimate supports a mining-engineering study that includes both open-pit and underground mining scenarios, as well as design alternatives for infrastructure and support facilities. The Company anticipates having the PEA completed shortly, and looks forward to announcing the results.

Mineral Resource Modeling and Estimation

The December 2013 mineral resource estimate for El Domo was completed by BISA on behalf of Salazar. The mineral resources are classified as indicated and inferred resources in accordance with the CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on reserve definitions and adopted by CIM Council.

The mineral resource estimate in El Domo is derived from a total of 168 diamond drill holes (31,770 metres). This updated mineral resource adds 51 new drill holes (10,248 metres) to the 117 drill holes (21,522 metres) used in the January 2012 mineral resources estimate. The average drill hole spacing is approximately 50 meters within the El Domo area. A total of 7736 samples were assayed. A 3D geological interpretation was performed with Leapfrog Mining and the block modelling for the mineral resource estimation was carried out with Vulcan software. The general methodology and parameters used are the following:

  • Four mineralized units have been considered for reporting purpose: VMS, Grainstone, Breccia and Gypsum (see Figure 1 below).
  • Two structural domains have been defined at El Domo deposit: The Eastern Domain and Western Domain.
  • Metal envelopes were built using grades ≥ 0.3% Cu, ≥0.2g/t Au, ≥0.3% Zn, and ≥0.05% Pb.
  • Estimation domains ("ED") were defined considering geological and statistical criteria.
  • Composites of 1.25 meters length were completed for each estimation domain.
  • Prior to estimation of the block grades, copper, gold, zinc, silver, and lead grades have been capped. This capping, generally at 98% of the distribution, was applied on each ED.
  • Trend Analysis and variography by ED was computed by SAGE2001 software.
  • The Grade interpolation process was performed by ED. This process was developed into a sub-cell type block model; then the blocks were regularized into a 5mx5mx2.5 m standard block model.
  • Interpolation consists in three-pass search strategy of ordinary kriging or inverse distance weighting methods as appropriate.
  • Tonnage factors applied were based on a total of 1140 specific gravity measurements.
  • All blocks within the four mineralized units were classified as resources. The criteria to assign the category of resources is defined by a matrix that uses three copper domains and three zinc domains. These domains were established by the following interpolation parameters: the interpolation pass where the block was estimated, the average distance from the block to available composites, and the number of composites per drill hole used for the block. (see Figure 2 below).

The resource estimate and other technical information contained in this release were prepared by or under the supervision of Mr. Gustavo Calvo, P. Geo. of BISA., an independent "qualified person" for the purposes of NI 43-101.

The NI 43-101 technical report in respect of the resource estimate disclosed herein will be filed on SEDAR within 45 days of the date of this news release.

On behalf of the Board of Salazar Resources Limited,

Fredy Salazar, President & CEO

About Salazar Resources Limited:

Salazar Resources Ltd. is a publicly-listed (TSX VENTURE:SRL)(FRANKFURT:CCG) mineral resource company engaged in the exploration and development of new highly prospective areas in Ecuador. Led by a senior Ecuadorian management team and most notably by its namesake, Fredy Salazar, this team has been instrumental in other major discoveries throughout Ecuador. Being based in Ecuador, thus have thorough knowledge of local human and environmental issues, gives the company a strategic advantage, enabling it to complete exploration at a rapid pace. With an excellent property portfolio (3 projects- 42,900 hectares), good geopolitical positioning and a number of strategic corporate and financial partnerships, Salazar has positioned itself to be a strategic player in Ecuador and throughout South America.

Neither the 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 news release.

Forward-Looking Statement

This press release contains "forward-looking information" within the meaning of applicable Canadian securities laws. All statements included herein, other than statements of historical fact, are forward-looking information and such information involves various risks and uncertainties. Forward-looking information herein includes, but is not limited to, statements that address activities, events or developments that the Company expects or anticipates will or may occur in the future, including such things as the successful completion of the PEA and the timing of completion of the PEA. Such forward-looking information is based on a number of material factors and assumptions, including that contracted parties provide services on the agreed timeframes and that laboratory and other related services are available and perform as contracted. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. A description of assumptions used to develop such forward-looking information and a description of risk factors that may cause actual results to differ materially from forward-looking information can be found in the Company's disclosure documents on the SEDAR website at www.sedar.com. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information except in accordance with applicable securities laws.

Figure 1 - 3D View of the Lithology Model & Figure 2 - Plan View of Resource Estimate are aavailable at the following address: http://media3.marketwire.com/docs/140205_SRL_Fig1-Fig2.pdf

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