Dear friends and shareholders,
Southern Silver Exploration is pleased to forward exciting news from our partner Desert Star Resources which announces the start of exploration at the past-producing Oro copper gold project in New Mexico. The 2013 exploration program includes geophysical and geological components as well as diamond drilling to test both the porphyry and gold potential of the property which lies within the prolific Laramide Porphyry Copper Belt, renowned for the world class Tyrone (Freeport-McMoRan; 1,050 Mt @ 0.49% Copper, 0.013% Molybdenum) and Resolution (Resolution Copper Mining; 1,624 Mt @ 1.47% Copper, 0.037% Molybdenum) porphyry deposits. The Oro Project is a compelling property that hosts a new bulk tonnage deposit, near surface gold target, and copper porphyry/skarn potential at depth. We look forward to announcing results as they become available from work on the project. Please read on for the full release.
Oro Project Update
Desert Star Resources Ltd. has entered into an option agreement dated Jan. 14, 2013, with Southern Silver Exploration Corp. to earn up to a 70-per-cent interest in Southern Silver's copper and gold project (Oro project), located in southwestern New Mexico, United States. For additional information please see the company's press release dated Jan. 28, 2013.
The Oro project is located approximately 80 kilometres southwest of the Silver City porphyry copper district and lies within the prolific Laramide porphyry copper belt, which hosts the world-class Tyrone (Freeport-McMoRan; 1.05 billion tonnes at 0.49 per cent copper, 0.013 per cent molybdenum) and Resolution (Resolution Copper Mining; 1,624 million tonnes at 1.47 per cent copper, 0.037 per cent molybdenum) porphyry deposits.
The Oro claims surround a highly prospective three-kilometre-by-two-kilometre quartz-sericite-pyrite alteration footprint, interpreted to overlie an unexposed porphyry centre. Classic porphyry system zonation is indicated by surface gold and copper mineralization associated with Laramide-age intrusions in this core area, flanked by lead-zinc skarn mineralization and distal sediment-hosted gold occurrences.
In addition to bulk-tonnage porphyry copper-molybdenum-gold potential, the Oro project claims also include the high-grade sediment-hosted Stock Pond gold target. Reconnaissance rock sampling has been completed over a strike length of 140 metres at Stock Pond, yielding values up to 4.8 grams per tonne gold. Gold mineralization at Stock Pond is interpreted to be related to the main porphyry centre, located four kilometres to the southwest.
"We are very excited to begin exploring the porphyry copper and sediment-hosted gold targets on the Oro project," stated Desert Star Resources' president and chief executive officer, Vince Sorace. "The alteration footprint as well as the distribution of gold and copper mineralization at surface suggests that the Oro property contains promising potential."
Exploration history
The Oro claim block includes a number of mine shafts from past-producing lead, zinc, silver and copper operations that started production shortly after these metals were discovered in 1877, and continued sporadically through the early 1960s. The New Mexico Bureau of Mines estimates production from the Eureka district between 1880 and 1961 at 2.9 million pounds of lead, 1.7 million pounds of zinc, 500,000 pounds of copper, 450,000 ounces of silver and 5,000 ounces of gold.
The Oro claims have undergone limited modern exploration since the 1960s. Kennecott drilled 600 metres (two reverse circulation drill holes) in 2003. It is unclear whether the target was porphyry or skarn mineralization. In 2009 to 2011 Southern Silver completed 3,201 metres of diamond drilling designed to test the depth potential of past-producing carbonate replacement and skarn zones along the periphery of the porphyry target area. Southern Silver also conducted an airborne magnetic survey in 2010 consisting of 455 line kilometres at 75-metre line spacing.
Deal terms
In accordance with the terms of the option agreement, the company paid to Southern Silver $75,000 upon execution. The option agreement provides that the company can earn an initial undivided 51-per-cent interest in the Oro project by making an additional cash payment of $150,000 by Aug. 1, 2013, and, over a period of 42 months after approval of the option agreement by the TSX Venture Exchange, incurring exploration expenditures totalling $3-million and issuing one million common shares of the company to Southern Silver. The company also has the option to earn an additional 19-per-cent undivided interest in the Oro project by incurring a further $3-million in exploration expenditures and completing a preliminary economic assessment, on or before the date that is 66 months after exchange approval.
Portions of the properties included in the Oro project are subject to royalties of either 1 per cent or 2 per cent of net smelter returns. In addition, the state leases included in the Oro project provide for royalties of 5 per cent on specified special minerals (such as uranium, thorium, precious and semi-precious stones, rare earth minerals, or minerals determined to be essential to the production of fissionable materials) and 2 per cent on other minerals (including gold and silver) mined from the property subject to such state leases.
Expected 2013 exploration program
Desert Star Resources intends to conduct a systematic exploration program on the Oro project in 2013. The 2013 exploration program includes a detailed deep-penetrating geophysical program, surface mapping, sampling, trenching and diamond drilling to test both the porphyry potential on the property as well as the gold potential at Stock Pond.
Qualified person
Technical aspects of this news release have been reviewed and approved by Dr. Alan J. Wainwright, PhD, PGeo, a consultant to the company, designated as a qualified person under National Instrument 43-101.
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