Coronado find extends First Majestic Silver’s San Dimas mine in Mexico

[Redator]

Drilling at First Majestic Silver’s (TSX, NYSE: AG) San Dimas mine in Mexico shows potential for extending high-grade veins and has cut a new structure called Coronado in the West Block, results released late Monday show.

The latest drilling returned two standout intercepts that could support near-mine growth. At the Elia vein, hole ELI25X-1 cut 3.57 metres grading 15.93 grams gold per tonne and 1,112 grams silver from 273.6 metres downhole. In the newly-discovered Coronado structure in the West Block, drilling intersected 2.12 metres grading 2.59 grams gold and 327 grams silver starting at 752.6 metres. The intercepts are characteristic of San Dimas’ low-sulphidation narrow-vein system of high-grade shoots in quartz veins.

“These new results confirm our view that San Dimas has significant growth opportunities and remains a cornerstone asset for our long-term growth strategy,” CEO Keith Neumeyer said in a release.

The 112,000-metre drill program at the mine, located 125 km northeast of Mazatlán, in Durango state, is targeting new veins. It’s also designed to expand resources and upgrade inferred material to indicated near current development headings. The focus is on targets that can move into short- and medium-term mine plans. At the same time, the company is exploring district-scale areas to test parallel structures like Coronado.

San Dimas is a critical asset for First Majestic and is important to precious metals streamers, such as  Wheaton Precious Metals (TSX, NYSE, LSE: WPM) , with whom it has a long-term agreement tied to its mine output. Discoveries and converting inferred resources to indicated at veins near active sites help maintain life-of-mine production profiles under those agreements.

First Majestic shares fell 2.7% or C33¢ by mid-Tuesday in Toronto to C$11.81 ($8.52), but shares are still up 50% over the past 12-months. It has a market capitalization of C$5.8 billion ($4.2bn).

Narrow-veined

San Dimas has been in continuous production for more than 100 years. Its relatively narrow veins can stretch laterally but are mined at metre-scale widths, according to company documents. It has used underground cut-and-fill and selective long-hole stoping. This is fed by closely spaced underground drilling from drifts. So, the short strike lengths in these reported assays are common and not a problem if continuity is proven.

Economics hinge on grade, vein predictability and strict dilution control – development metres per ounce matter as much as headline intercepts. The caveat is variability: veins pinch and swell, so step-outs must show consistent thickness and grade before tonnes make the plan. First Majestic is regarded as a specialist in this style, tailoring mining, backfill and sequencing to squeeze value from narrow, complex structures, according to industry insiders.

San Dimas is forecast to produce 9.9 – 10.5 million oz. silver-equivalent this year, comprising 4.9 – 5.2 million oz. silver and 53 – 57,000 oz. gold at cash cost of $14.11 – $14.56 per silver-equivalent oz. and all-in sustaining cost of $18.38 – $19.10 per ounce.

The project hosts proven and probable reserves of 3.2 million tonnes at 245 grams silver and 2.84 grams gold per tonne for 25.5 million oz. silver and 294,000 oz. gold, or 51.2 million oz. silver-equivalent metal.

More upside

First Majestic noted that, beyond Elia and Coronado, step-out and infill holes showed mineralization along the Sinaloa–Elia trend and at Roberta. Drilling up-dip of old stopes found narrow but high-grade intervals. This suggests more testing is needed, the company said.

Work at Santa Teresa indicates the vein system remains open along strike and at depth, leaving room for follow-up drilling in the current program.

What to watch next is whether follow-up step-outs along Coronado can show continuity and thickness over meaningful distances. Additional results from Roberta and Santa Teresa will indicate how quickly new ounces can be scheduled into the mine plan.