Metalline acquired concessions and started work at Sierra Mojada in 1997. Early work consisted of collecting and compiling all available historic data on the district from Penoles and other previous operators in the district, surveying the locations of the mines and geologic mapping and sampling of the surface and some of the underground mines. Based on information gained from this work two areas were selected for evaluation by drilling and channel sampling, the La Nortena area of the Encantada mine, a north side silver, copper, zinc, lead target, and the oxide zinc mantos in the San Salvador and Encantada mines.
A 1999 drill program was completed which consisted of 24 holes and 6,630 meters of reverse circulation drilling. Fifteen holes were drilled in the La Nortena area of the Encantada mine and 9 holes were drilled in the oxide zinc mantos of the San Salvador and Encantada mines. The drill program was a success with intersections of ore grade mineralization over thick intervals and with some intersects of exceptional grade and thickness. The results were released in public news releases and are posted in the News Release section of Metalline's web site.
Reunion Mining plc of London announced in November 1998 that it had completed a positive feasibility study and pilot plant study on the Skorpion project in southwest Namibia, Africa. These studies demonstrated the viability of sulfuric acid leaching and Solvent Extraction Electrowinning of oxide zinc ore, using solvent extraction technology developed by Tecnicas Reunidas of Spain and electrolytic reduction technology supplied by Union Miniere of Belgium. The success of this work shifted attention to oxide zinc projects of sufficient size to justify the acid leach of oxide zinc ore and the solvent extraction and electrolytic reduction of zinc metal.
Metalline received inquiries for joint venture from major mining companies and decided to seek a joint venture partner to pursue the evaluation and development of Sierra Mojada. In October of 1999 an agreement was signed with North Limited of Australia that allowed North Ltd. to earn a 60% interest in Sierra Mojada by completing a bankable feasibility study.
North Ltd remapped the surface and underground geology and continued channel sampling of the mine workings and a reverse circulation drill program consisting of 26 holes and 6,753 meters was completed. Metalline and North collected and analyzed 8,339 drill hole and channel samples from the underground workings throughout the district, from the San Jose, Once and Veta Rica mines in the west to the San Salvador, Encantada and Fronteriza mines in the east, 5,363 from the oxide zinc mantos, 2,976 from the north side polymetallic mineral system.
Rio Tinto Ltd. purchased North Ltd. for their iron ore holdings in October of 2000. Rio Tinto reviewed the Sierra Mojada project, decided that it was not a project that matched their corporate priorities and terminated the joint venture agreement with no retained interest
Metalline continued channel sampling of the mine workings and initiated a percussion drill program. The holes are drilled laterally and vertically from the existing workings to evaluate the oxide zinc mineralization beyond the existing workings in the San Salvador Encantada and Fronteriza mines.
On November 15, 2001 Metalline Mining Company signed an Earn In Joint Venture Agreement with Minas Peñoles S.A. de C.V. on the Sierra Mojada Project. Details of the agreement were announced in a news release dated December 10, 2001 and the release is posted in the web site News Release section.
Peñoles is Mexico’s second largest mining company and the world’s largest silver refiner. They operate Fresnillo, the world’s largest silver mine, with proven and probable reserves over 400 million ounces silver. For the year 2000 Peñoles produced 298,300 ounces gold, 44.7 million ounces silver, 74,400 metric tons lead and 173,200 metric tons zinc. The Metals Division (Met-Mex) refined record amounts of gold and silver, 645,700 ounces gold and 74 million ounces silver. For the year 2000 Peñoles reported sales of 9,373,583,000 Pesos and assets of 17,113,584,000 Pesos, the US dollar equivalent is $1.02 billion in sales and assets of $1.86 billion. Peñoles trades under the symbol IPOAF and their web site is www.penoles.com.
Peñoles, as operator of the Joint Venture, continued to explore the oxide zinc mineral system. The work consisted of surface and underground drilling, driving raises vertically through the mineral horizon to bulk sample the mineralization, mapping and channel sampling the mine workings in the San Salvador, Encantada and Fronteriza mines. Results of this work were updated periodically in public news releases which are posted in the web site News Release section. Peñoles expended in excess of US$ 3 million exploring the oxide zinc mineral system. The results of this work continued the definition and evaluation of the oxide zinc mineralization. Peñoles and Metalline terminated the Joint Venture agreement, by mutual consent, in December 2003.
In January 2004 Metalline initiated an underground diamond drill program and continued percussion drilling and channel sampling. During 2004 in excess of 30,000 meters of diamond drilling was completed in the San Salvador, Encantada and Fronteriza mines. Results of this work were also updated by news releases and the news releases are posted in the web site News Release section.
Reserva International, an independent contractor, specializing in resource evaluation was retained to complete a block model evaluation of the oxide zinc data. The results, using a 5% cut off grade (using grades greater than 5%) and with blocks of 5 meter dimensions, estimate 17,926,988 metric tons with a grade of 8.78% zinc for the Iron Oxide Manto and 5,431,050 metric tons with a grade of 12.08% zinc for the Smithsonite Manto.
Based upon results of the block model evaluation of the work completed by Metalline, North Ltd. and Peñoles, Metalline is of the opinion that mineralization sufficient to justify a mine and solvent extraction electrowinning plant has been defined and has therefore commissioned a feasibility study on that mineralization.
Green Team International ("GTI"), Johannesburg, S. Africa has been retained to complete a feasibility study on the oxide zinc mineralization. The feasibility study will address metallurgy, mine plan, extraction method and economic evaluation studies. If the results of the feasibility study are positive, Metalline would then seek additional financing for the required capital to implement the project.
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