Genco's La Guitarra estimate is 442 g/t Ag in 236,100 t
2006-10-27 11:48 ET - News Release
Mr. Gregory Liller reports
GENCO REPORTS 4,153,000 EQUIVALENT SILVER OUNCE RESERVE AND 51,108,000 EQUIVALENT SILVER OUNCE RESOURCE AT LA GUITARRA
Genco Resources Ltd. has provided the results of an audit of mineral reserves and resources at its La Guitarra mine. Reserves and resources are reported in compliance with National Instrument 43-101 Standards of Disclosure for Mineral Projects as of July 31, 2006, and were audited by Glenn Clark and Associates. The table below summarizes the results.
LA GUITARRA JULY 2006 RESERVES
Location Proven Probable
Tonnes Ag g/t Au g/t Tonnes Ag g/t Au g/t
La Guitarra mine
NW area 3,600 384 3.25 3,500 109 3.12
Central area 2,500 413 3.04 1,700 128 2.76
SE area 17,500 542 7.90 40,400 523 4.34
SE area HW 1,600 1,170 3.20 29,000 494 1.14
Subtotal underground 25,200 547 6.46 74,600 483 3.00
Creston open cut - - - 74,400 113 2.20
Total La Guitarra mine 99,600 223 3.28 74,600 483 3.00
Nazareno - - - 61,900 667 0.62
------ ----- ---- ------- --- ----
Grand total 99,600 223 3.28 136,500 567 1.92
Total proven and probable reserves: 236,100 tonnes grading 442 g/t Ag and 2.49 g/t Au
The next table summarizes contained silver, gold and equivalent silver ounces.
CONTAINED OUNCES
Class of reserve Silver Gold eAg ounces
Proven 714,000 11,000 1,264,000
Probable 2,489,000 8,000 2,889,000
Total 3,203,000 19,000 4,153,000
The next table summarizes the project resources. Resources are in addition to the prior reserves.
TEMASCALTEPEC DISTRICT JULY, 2006, RESOURCE BASE
Silver Gold eAg
Class Tonnes Ag g/t Au g/t ounces ounces ounces
Inferred 3,000,000 450 1.6 43,403,000 154,000 51,103,000
Cut-off grades for the underground resources and reserves were based on a silver equivalent (eAg) of 320 grams per tonne (g/t) using $5.50/ounce silver (Ag) and gold (Au) at $500/ounce. Reserves and resources were calculated using information obtained from channel sampling and diamond drilling. For the Creston open cut, where ore will be mined from surface, no cut-off was applied and all channel sampling was included. Contained ounces were calculated using a 50:1 silver to gold ratio to reflect current prices and to avoid distortions. Forecast total cash operating cost for calendar 2006 is $54.61 per tonne. Metal recoveries at La Guitarra's mill during the first six months of 2006 were 90.4 per cent of contained silver and 89.2 per cent of contained gold.
To Genco's knowledge, the resources and reserves are not materially affected by any known environmental, permitting, legal, title, taxation, sociopolitical, marketing or other known issues.
The Clark report states: "The resources and reserves estimates truly reflect the mineralization that is currently known. The estimates conform to the requirements of National Instrument 43-101.
"At the current rate of production of approximately 50,000 tonnes per year, the proven and probable reserves are sufficient for approximately four one-half years. Increased production from the La Guitarra mine is planned and with a 50-per-cent production increase the proven and probable reserves are sufficient for more than three years."
No significant new capital investment will be required to facilitate a 50-per-cent production increase at La Guitarra.
Genco's president Gregory K. Liller stated: "I am pleased to have this report in hand. It will serve as a benchmark to measure the success of our 50,000-metre phase I drilling program.
"The inclusion of the Creston open cut reserves marks a milestone in Genco's development. The mining of surface ores will contribute to Genco's near-term objective of increasing production and utilizing the full capacity of the existing milling and processing facilities. The cost of mining surface ore is considerably less than mining underground thereby offsetting the more moderate grades and insuring profitability.
"Three additional areas, Los Angeles, La Cruz and San Francisco, have been identified which may be suitable for surface mining. Sampling results on these targets are pending."
The qualified person responsible for all technical data reported in this news release is Glenn R. Clark, PEng, of Glenn Clark and Associates. He is independent from Genco in accordance with NI 43-101 and has verified the data disclosed.
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