Virgin Metals Inc.
TSX VENTURE : VGM

Virgin Metals Inc.

October 27, 2011 08:00 ET

Virgin Metals Releases the Historic Resource Estimates for its Recently Acquired Potreritos Project

TORONTO, ONTARIO--(Marketwire - Oct. 27, 2011) - Virgin Metals Inc. (TSX VENTURE:VGM) today released their outline of the historic resources estimate at their 100% owned Potreritos project concessions in Sonora Mexico (see press release September 28, 2011). The Potreritos project neighbors the company's Los Verdes copper/molybdenum reserves and has the potential to increase the economic returns of that project.

"We hope to demonstrate the sizable impact this investment may have on the Los Verdes project" said Darren Koningen, Vice President Technical Services. "The mineralogy of the Potreritos deposits is similar to that found at Los Verdes and historically the two areas were mined and processed simultaneously at a common facility. We anticipate that this should allow for its incorporation into to the current development plans for the Los Verdes operation with limited impact on our ongoing engineering efforts."

Potreritos Highlights

  • Historical indicated mineral resources of 1,384,000 tonnes at a copper grade of 0.47% and a molybdenum grade of 0.12%.

  • The historical indicated resource grades compare favourably to those of the company's existing reserves (proven and probable) at the Los Verdes project (7,050,000 tonnes containing 0.66% copper and 0.14% molybdenum) and represent an incremental mineral potential of at least 20%;

  • Historical inferred mineral resources of 822,000 tonnes at a grade of 0.22% copper and 0.033% molybdenum.

  • Additional potential for growth as historic deposits appear to remain open in horizontal extents and at depth.

  • Other largely unexplored prospects on the Potreritos project site that were identified by Servicio Geologico Mexicano (SGM) with significant geophysical and geochemical anomalies characteristic of local copper/molybdenum deposits;

  • Maps of the project as well as the SGM report [Preliminary Evaluation of Potreritos Project] can be found on the company's web site.

Note: Historical estimates were prepared in 2008 by the SGM. A qualified person has not done sufficient work to classify them as current mineral resources or mineral reserves and they should not be relied upon.

Potreritos Project

The Potreritos project area ("Potreritos") is located in the southern limits of Sonora State (Mexico) approximately 200 km southeast of Hermosillo. The property is readily accessed from a paved federal highway via a 10 km maintained road. Potreritos consists of two concessions (Potreritos and Potreritos II) that cover a total of 1,070 hectares. Potreritos II is surrounded by the other concession and contains the workings of two historic mining operations (Buenavista and La Providencia).

The Potreritos project area is in close proximity to Virgin Metals Los Verdes project approximately 2 km to the south. During the 1960's and 1970's the Buenavista and Tres Piedras (now La Providencia) deposits were operated by Minera Galaviz, SA de CV which constructed a flotation plant in the area to recover copper, molybdenum and tungsten. The two deposits are located in close proximity to each other (approx. 200 m) and may be part of the same geological system. Although historical records for mineral production during this period are not available, SGM has estimated that approximately 10,000 tonnes of flotation tailings are still present at the site as are the foundations of the historic processing facility.

During 2007 and 2008 a preliminary exploration program was completed over the Potreritos concession area by means of an agreement between the Korea Resources Corporation (KORES) and the SGM. The exploration work completed in the area included geological mapping, geophysics, geochemical sampling (surface and old mine adits) and diamond drilling. The program concluded with the issuance of a report titled "Preliminary Evaluation of Potreritos Project – Yecora, Sonora, Mexico" which included historical resource estimate for the Buenavista-La Providencia deposit area (see Table 1). The report was prepared by Ruben Arellano Morales an employee of SGM who is not a Qualified Person (QP) under the requirements of National Instrument NI 43-101.

Resource Category Area Tonnes Copper (%) Molybdenum (%)
Indicated Buenavista 1,103,000 0.52 0.12
La Providencia 282,000 0.26 0.12
Total 1,385,000 0.47 0.12
Inferred Buenavista 822,000 0.22 0.033
Table 1. Historical resource estimates for Potreritos project (numbers are rounded)

Details as to how the historical mineral resources in Table 1 were estimated are summarized later in the news release. A review of the original sampling and drill data as well as the procedures which were followed verifies that the historical estimates appear to be reliable based on current estimating criteria. However, it should be noted that a qualified person has not done sufficient work to classify the historical estimate as current mineral resources. Virgin Metals has not completed sufficient work to confirm that the historical resource categories are NI 43-101 compliant and is not treating the estimates as a current resource. In order to upgrade the estimates to be compliant with current NI 43-101 a program of check sampling should be initiated within the historic mine workings as well as a drill program aimed at defining the extents of the geological structures that control the continuity of mineralization at the deposits. Virgin Metals considers that this historical mineral resource is relevant because of its potential to enhance the existing current mineral resources outlined on Los Verdes property. SGM did not specify metal prices used in the preparation of its estimate.

In addition to the Buenavista – La Providencia area, two other prospective areas were also identified in the KORES/SGM report -- El Moro-Los Tajos and Algarrobos. These are shown in the geology map available at www.virginmetals.com/properties/xxxx with brief highlights summarized below:

  • A significant IP anomaly in the El Moro – Los Tajos area that may correspond to a zone of intense pyritization such as that which accompanies the Cu/Mo mineralization at the Buenavista - La Providencia deposits. The area of IP anomalies also corresponds to surface geochemical samples that are anomalous in copper and molybdenum.

  • Diamond drill hold MO-11A intercepted a 3 cm long molybdenite crystal at a depth of 126 m which would seem to confirm the potential for copper/molybdenum mineralization at depth below the surface in the El Moro – Los Tajos area.

  • An IP anomaly in the Algarrobos area that coincides with the presence of quartz-tourmaline breccias such as those located at the Los Verdes deposit which are related to copper and molybdenum mineralization.

  • Tungsten anomalies in the geochemical samples from the NW part of the Algarrabos area drawing further parallels with the Los Verdes deposit where there is a distinct zone of tungsten mineralization that partially overprints the copper/molybdenum mineralization.

Buenavista Resource Estimation

The historic mine workings at the Buenavista-La Providencia area correspond to a significant IP anomaly identified as part of the SGM's study work which is approximately 350 m in diameter as well as an area of significant geochemical anomalies for copper and molybdenum. At Buenavista approximately 750 m of underground adits were available for sampling (main drift and four crosscuts). Above the main level is a mining zone that extends about 30 vertically and contains approximately 90 ore chutes. The ore chutes were inaccessible for sampling due to safety concerns.

In total 106 chip samples were taken from the open workings on the main access level at the Buenavista mine. Each sample was approximately 2 m in length. The weighted average grade of all of the samples was 0.52% copper and 0.12% molybdenum. Sample grades ranged up to a maximum of 4.3% copper and 1.7% molybdenum.

In addition to sampling of the old mine workings, 9 diamond drill holes (NQ diameter) were completed in the Buenavista-La Providencia area. The holes were directed so as to assess the potential for mineralization at depths up to 100 m below the previous mine workings level. According to the drill logs, evidence of copper and molybdenum was present in all of the drill holes. All holes were logged for lithology, mineralization, type and level of alteration.

The historical indicated resource for the Buenavista deposit was estimated to the following assumptions:

  • The area of the mineral resource was determined from the overall mineralized extents of the accessible drift and crosscuts;

  • A deduction was made for the area which was previously mined;

  • It was assumed that the average grade of the mineral resource was equivalent to the average grade estimated from the extensive chip sampling program in the historic mine workings (0.52% copper and 0.12% molybdenum);

  • The indicated mineral resource area was extended 30 m vertically up from the main access level to correspond with the upper limits of the historic mining zone and 15 m down which corresponded to the maximum depth of a historic vertical shaft which followed the mineralized zone.

  • The overall quantity of mineral resource material was estimated at 1,103,000 tonnes based on a determination of the total volume of material contained within the resource area and applying an overall in-situ specific gravity of 2.7 t/m3 for the deposit.

An estimation for inferred resources at Buenavista was also made based on the following assumptions:

  • Data from four diamond drill holes (BV-02/04/09/12) which all indicated the continuity of mineralisation to a depth of at least 30 m below the Buenavista historic mine access level.

  • The estimated mineralized area includes the area used in the indicated resource estimation as well as the area of mineralized outcrops mapped just south of the Buenavista mine.

  • The vertical extents of the inferred mineralization was assumed to be 15 m which is the distance from the base of the indicated resource to the level of the mineralization outlined by the diamond drill holes.

  • The tonnage of inferred mineral resources was estimated at 822,000 tonnes based on the total volume of the resource zone and an in-situ specific gravity for the rock of 2.7 t/m3.

  • The grade of the inferred mineral resource block was estimated based on the average weighted grade of the mineralized intersections from the four diamond drill holes (BV-02/04/09/12) – 0.22% copper, 0.033% molybdenum

La Providencia Mineral Resource Estimation

At La Providencia a drift approximately 78 m was available for sampling. A total of 29 chip samples were taken from inside the workings area. The weighted average grade of all of the samples was 0.26% copper and 0.14% molybdenum. Sample grades ranged up to a maximum of 3.4% copper and 0.76% molybdenum.

An indicated mineral resource for the La Providencia deposit was estimated according to the following assumptions:

  • The area of the mineral resource was determined from the overall mineralized extents of the accessible workings area

  • The vertical extents of the mineral resource were estimated at 80 m based on the limits of the mineralized continuity established based on two diamond drill holes (PRO 3/5) and the fact that the mineralization can be seen to outcrop at surface.

  • The tonnage of indicated mineral resources was estimated at 282,000 tonnes based on the total volume of mineralized rock and assuming an in-situ specific gravity of 2.7 t/m3.

  • It was assumed that the average grade of the mineral resource was equivalent to the weighted average grade of the chip sampling program in the historic mine workings (0.26% copper, 0.14% molybdenum)

QA/QC Procedures

All samples obtained from the mine workings and diamond drill holes were analyzed in Mexico at the Centro Experimental (SGM) laboratories using partial acid digestion and ICP techniques. For quality control purposes two prepared standards were utilized along with intermittent check samples that were analyzed by the same procedure at two additional laboratories including ALS-Chemex (Vancouver, Canada). In general the QC sample results were in reasonable agreement with the original assay results.

Some potential issues were reported with respect to assay results for molybdenum. In some samples it appeared that the assayed molybdenum content was lower than what would have been expected based on visual observations of the core samples. A recommendation was made for future analyses to utilize a complete acid digestion versus the partial digestion used for the current report.

About Virgin Metals

Virgin Metals is a junior exploration and development company; its projects include two copper-molybdenum porphyry properties in Sonora, northern Mexico. One of these, Los Verdes, is currently the subject of a pre-feasibility study while the other, Cuatro Hermanos, is the focus of ongoing exploration efforts.

Darren Koningen, P. Eng., is the Qualified Person responsible for technical content of this release.

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 RELEASE.

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