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The gold-silver project, in Sonora state, is a past-producing asset. Previous mining operations ended in the 1930s.
Canada-based Oceanus completed a 12,000m drill program at El Tigre in May, which supported the announcement of a 1.0Moz gold equivalent maiden resource in September.
While the company plans to begin work for a PEA based on the maiden resource, the main focus is on further drilling to the north of the old mine area with the aim of developing a district-style play at El Tigre, according to CEO Glenn Jessome.
BNamericas: How did you get involved at El Tigre?
Jessome: We formed this company in a terrible downturn and around the start of 2015 things were beginning to turn.
We decided to see if we could find another large, district-style play in Sonora, and that's when we came across El Tigre, then owned by El Tigre Silver.
El Tigre Silver did some great work, drilling 10,000m, but they were completely focused on looking for that next silver vein.
We had the hypothesis that if we got right over the old mine we would be able to quickly delineate a 1Moz gold resource, but that was just going to be a starting point.
Our hope was to be looking at a district-style play here, with 1-3 more of these old El Tigre-type mines along the trend.
What opened our eyes was the grade. Previous mining operations were over by 1930, but had taken out 70Moz silver and 350,000oz gold out of 1.87Mt of ore, with silver equivalent grades of over 1.5kg/t.
A simple NAV calculation on our current resource would be maybe Cdn$100mn (US$78mn). That old El Tigre mine would have a NAV of probably over Cdn$1bn today.
BNamericas: How big are the concessions you acquired?
Jessome: What was really exciting for us was the size, at 22,000ha, and the north-south trending fault going right through the center. That's what we couldn't wait to get our teeth into.
The project was 100% owned, with no royalties. The good thing is there is no ejido [or landowners cooperative]. The closest town is 40km away. The land is dry, so is not growing land for the drugs trade.
Road access is fairly good, and there is a lake about 30km away, so lots of water for the future, and we have power lines nearby.
BNamericas: Tell us about your drilling.
Jessome: We drilled 12,000m in the nine months to May 2017. At the end of the program our team had 4-5 holes left. We drilled hole 133, which was just outside the area that had been mined, and we had a nice intercept there, about 70m of 1.5g/t gold.
We knew once we got to the south end of the mine it would be continuous.
We stepped out about 500m beyond the end of the old mine and at hole 139 we hit 5m of 1g/t gold and 9m of a couple of grams at hole 140.
So we know it's there. At some point we will designate that as a new discovery and go back and fill that in. None of that went into resource estimate.
The Sooy vein was not mined very much, we only put a couple of drill holes in there. We know there are some underground workings and the grade is good. We will go back and put a few more holes in probably in the New Year.
So with Sooy vein and mineralization to the south, that main deposit is going to get a little better. We like how it looks now, the first 500-600,000oz look really good for a heap leach starter pit.
We had a couple of holes left and wanted to test the northern vein. We really stepped out, 2-3km to the north. The vein system is the same vein system. It was never mined up there. The old timers didn't get that far north.
We put in a hole 800m north of the northern end of old mine, looking for the Protectora vein. We had a nice intercept, of 1.5m of 14g/t gold. We had no idea the Caleigh vein was there, so that was a really exciting intercept for us. We had 3m of 36g/t but almost 1m of that at 7.3kg/t silver 36-7g/t gold.
That opened our eyes to the idea we should start paying a lot more attention to what was going on to the north.
We raised Cdn$3mn very quickly and that allowed us to continue exploring from July-September in the northern area.
BNamericas: What are you next steps?
Jessome: The first thing is to go south of the Caleigh vein and see where it's heading. We are hoping it is going to plow right into the Fundadora vein.
We are planning 15 holes of 50-75mn, to come along in both directions to see what kind of length these veins have.
BNamericas: What are your plans for getting El Tigre into development?
Jessome: We are getting to the point where we have proven enough to gain the interest of a corporate partner.
The second option would be to find a strategic partner, run by mining engineers or geologists, that can bring money and technical expertise to the table.
It is our focus to figure out what's going on to the north, but we will do some metallurgical work and pit design as the starting points for a PEA, which will be more of a priority for next year.
About Glenn Jessome
Glenn Jessome is a founding shareholder of Oceanus Resources. He is a securities lawyer based in Halifax, Canada, mainly focused on the resource sector.
Jessome is also a member of the national advisory committee for the TSX-V exchange.
About the company
Oceanus Resources' main asset is the El Tigre project in Mexico's Sonora state.