Wednesday 7th December 2016

Resource Clips


High Grades, Smaller Envelopes

Argentex is Piling Up the Silver Ounces in Argentina

By Ted Niles

Peter Ball is very keen that you grasp the concept. For, impressive as Argentex Mining’s recently reported intercept of 88.8 grams per tonne silver over 61.8 metres may seem, its Executive VP of Corporate Development is more interested in what those numbers include. In this case, an interval of 675.7 g/t silver over 5.8 metres. “We’ve had areas of 277 grams over 24 metres—but our focus is defining mineralized widths of higher-grade material over concentrated or smaller widths. The concept in this area is open slot mining, near surface. Multiple pits. We’re not going to have a pit 300 feet wide!”

The area to which Ball refers is the Deseado Massif in the Patagonia region of Santa Cruz Province, Argentina. In addition to Argentex’s polymetallic Pinguino property, the area hosts Extorre Gold Mines’ Cerro Moro project, Pan American Silver’s Manantial Espejo mine, AngloGold Ashanti’s Cerro Vanguardia mine, Coeur d’Alene’s Mina Martha and Goldcorp’s Cerro Negro project. Ball explains, “They’re all mining these open slots, near surface. The first 50 to 100 metres everywhere on our project has been oxidised, where the gold and silver has been leached out, and it’s high grade. You’ve got this nice meat. That’s what’s going to be mined.”

Argentex is Piling Up the Silver Ounces in Argentina

Argentex has 100% control of over 124,000 hectares of property in the Santa Cruz and Rio Negro provinces, of which its Pinguino property is the most advanced. Pinguino comprises 10,000 hectares and has a 2009 indicated resource estimate (at a 50 g/t cut-off) of 7.32 million tonnes grading 169.64 g/t silver equivalent and inferred resources of 35.4 million tonnes grading 123.63 g/t silver equivalent (totalling approximately 180 million ounces silver equivalent).

Last year, a discovery hole at Pinguino graded 2,428 g/t silver and 0.22 g/t gold over 6 metres, bringing new attention to the near-surface vein systems.

Pinguino assays released May 26 include 88.8 g/t silver over 61.8 metres (including 675.7 g/t silver over 5.8 metres), 1.33 g/t gold and 92.9 g/t silver over 29 metres (including 3.83 g/t gold and 271.3 g/t silver over 9 metres), 1.14 g/t gold and 38.8 g/t silver over 17.8 metres and 1.03 g/t gold and 112.7 g/t silver over 11 metres.

May 5 assays revealed 118.1 g/t silver over 19 metres (including 3.21 g/t Au and 678 g/t silver over 3 metres), 205.5 g/t silver over 20 metres (including 1.64 g/t gold and 470 g/t silver over 8 metres) and 86.2 g/t silver over 21 metres (including 2.77 g/t gold and 121.9 g/t silver over 7 metres).

Ball reports, “We’re consistently seeing veins with widths in the range of four to 12 metres within the first 100 metres of surface, with the vein systems open at depth and open along strike. And some of these veins can range longer than a couple kilometres. Wherever we drill, we appear to consistently and continuously hit high-grade silver with positive associated gold grades. We currently have in excess of 50 veins measuring over 75 line-kilometres, and we keep finding more as we go along. All sitting very close to surface. So it is quite a large, very high-grade system. We believe it’s the second-largest mineralized vein swarm in Patagonia—second only to the Cerro Vanguardia mine, which is along strike to the southeast.”

Wherever we drill, we appear to consistently and continuously hit high-grade silver with positive associated gold grades – Peter Ball

Ball characterizes the Pinguino property as “advanced exploration or early development.” He notes that, to date, Argentex has drilled greater than 50,000 metres on the property and that a preliminary economic analysis has been completed. “At today’s prices, we could build a small mining operation for under $22 million. Internal rate of return would be just under 200%, a payback period of less than six months. That small mine would run over 650,000 ounces of silver for eight years and approximately 6,000 ounces gold.” And that’s based on the resource calculated two years ago.

But Ball does not see production in Pinguino’s future. He says, “This year and most of next we’re working on prefeasibility studies and more drilling and such. We’re looking to have two resource estimates completed by the fourth quarter of this year. One will be an update on the polymetallic; the second will be for the new near-surface stuff, which will probably be giving us a nice re-rate. We are looking to build a significant silver resource and build value through ounces in the ground first.” He adds, “We will worry about building a mine when we have done the due diligence.”

Argentex has not been wanting for interest. Its major shareholder is International Finance Corporation—a member of the World Bank Group—who holds 19.9% of the company. And, Ball adds that the company’s $20-million financing announced May 26 is being led by GMP Europe, “an excellent financial group to have representing us, supported by a solid syndicate including Byron, Northland Capital, LOM, Casimir and Haywood.”

Ball concludes, “Shortly after I joined Argentex, the phone was ringing. I was contacted by most of the investment houses and banking groups looking to be involved in the Argentex story. Within a month I had six analysts on site in Argentina. It’s one of the few stories I’ve had the pleasure of working for where the calls coming into the office outmatched the calls going out.”

Argentex currently has 59.8 million shares trading at $1.17 per share. The company has a market cap of $69.97 million.


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