Canadian explorer New Pacific Metals will acquire an 80% interest in Silvercorp Metals’ subsidiary Fortress Mining for a payment of US$3.5 million. The sale agreement also gives New Pacific the option of acquiring the remaining 20% of the company within two years for US$5 million, after capital expenditure of US$15.9 million at its RZY silver-lead-zinc project in Qinghai province.
The project is 67%-owned by Qinghai Found Mining (QFM), a Sino-Foreign Co-Operative company established by Fortress and the Qinghai Geological Survey Institute (QGSI) in 2007.
In 2011 QFM and QGSI agreed to jointly explore the RZY project which is on a high plateau about 240km from the capital city of Yushu Tibetan Autonomous Prefecture.
The project hosts known mineralization in silver-lead-zinc veins with a strike extent of 6.5km and width of 25 to 100 metres identified by historical surface work. The soil geochemical anomaly also indicated there could be another mineralized zone to the north.
To date Fortress has invested US$3.5 million in QFM and QFM has spent US$1.5 million on exploration and development expenditures in the RZY Project.
Historic assay results commissioned by Silvercorp in 2006 from trenches and shallow pits indicate that silver-lead-zinc mineralization exists at the RZY project. Highlights of these results include 327 grams/tonne silver, 5.28% lead and 1.33% zinc and 836 grams/tonne silver, 17.18% lead and 15.33% zinc.
Trenching of the site in 2012 confirmed the presence of high-grade lead-zinc-silver mineralization, with an intersection of 19.2 metres hosting 72.25 grams/tonne silver, 1.93% lead and 0.33% zinc. Another 9 metre intersection hosted 201.27 grams/tonne silver, 3.69% lead and 0.66% zinc.
Five drill holes over 890 metres were drilled in 2012 to test the depth potential of the mineralization exposed by surface workings. Unlike the surface trenches, no massive or blocky lead-zinc sulphide quartz veins were intercepted.
Assay results of drill core have indicated the mineralization occurs in the major east-west structural zones and is continuing at depth, however the width and grades of drill intersections are inferior to the results of the surface trenches and pits. Results include 1.5 metres @ 116 grams/tonne silver, 2.02% lead and 0.81% zinc from 67.2 metres and 4.5 metres @ 94 grams/tonne silver, 0.89% lead and 1.64% zinc from 79.9 metres.
Despite this, New Pacific believes there is enough evidence to support the transaction and justify continued drilling at the project in 2013.