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Sienna Finds High Silver and Gold Grades in Peru’s Andes

By Ted Niles

A year ago, Sienna Gold TSXV:SGP was focused on the Domo and Tesoros areas of its Igor project in Peru. Its objective was to turn them into a small but economic near-term mine. But an eight-hole drill campaign on the nearby Callanquitas structure, completed May 2011, led to a 15,000-metre campaign, which might very well transform the company’s prospects. “I’m very excited, and I think the future’s very bright for Sienna,” says President John Rucci.

“We had started a prefeasibility-type study for the small mine at Domo and Tesoros,” President John Rucci explains, “and part of the drilling there was to close in the ounces that we have in the resource. That’s moving forward, but now in light of what’s coming out of Callanquitas, the design would have to be much different than what we’d planned. If in fact it provides what we need, we’ll start investigating opportunities to put the whole thing in production—Callanquitas, Domo and Tesoros.”

Sienna Finds High Silver and Gold Grades in Peru's Andes

Sienna acquired the Igor project in 2005 along with 11 other projects since abandoned. Located in the Western Cordillera of the Andes in northern Peru’s Department of La Libertad, Igor comprises roughly 1,300 hectares and counts numerous producing mines among its neighbours, including Newmont’s TSX:NMC Minera Yanacocha—the world’s second largest gold producer, located 77 kilometres north of Igor—Barrick’s TSX:ABX Lagunas Norte mine and Rio Alto’s TSX:RIO La Arena mine, both to the southeast. In the months preceding the 2008 market crash, Sienna released an NI 43-101 mineral resource estimate for Igor’s Domo and Tesoros areas of 97,000 ounces gold and 2.98 million ounces silver in the indicated category, 49,100 ounces gold and 2.27 million ounces silver inferred.

Exploratory drilling that was done at Callanquitas was followed up only in 2010, but the structure now has the company’s full attention. “Callanquitas is to the northwest [of Domo and Tesoros] and looks very rich,” Rucci relates. “It extends probably over a one-kilometre length, is open at depth and at strike and is open to the north and south. We feel we have a major discovery here, with bonanza-type grades of silver, and even the gold values are very high as well.”

March 22 Callanquitas assays include

  • 1.32 grams per tonne gold and 141.2 g/t silver over 48.7 metres
  • 1.35 g/t gold and 3.1 g/t silver over 18.3 metres
  • 0.9 g/t gold and 19.4 g/t silver over 25.5 metres
    (including 4.48 g/t gold and 48.6 g/t silver over 2.8 metres)
  • 0.79 g/t gold and 24 g/t silver over 27.9 metres
    (including 2.33 g/t gold and 37.5 g/t silver over 4.2 metres)

February 28 results include

  • 2.16 g/t gold and 122.9 g/t silver over 7.3 metres
  • 2.28 g/t gold and 1,024.6 g/t silver over 55.5 metres
    (including 5.58 g/t gold and 5,465 g/t silver over 1.2 metres)
  • 50.7 g/t silver over 15.2 metres
  • 56.2 g/t silver over 15.7 metres
  • 1.7 g/t gold and 110.1 g/t silver over 74.5 metres
    (including 4.67 g/t gold and 403 g/t silver over 17.6 metres)

“These are huge grades,” Rucci declares. “These are phenomenal values. The company is targeting a million ounces of resource after this drilling program, and I think we’re going to achieve it.” The drill campaign is ongoing with two rigs turning. “We’re drilling infill holes and some step-out holes. So we’re going to close it in, get it down to a 50-metre grid if we can, for better resource definition. We’ve got another 5,000 metres to drill on Callanquitas, and we’ve got another 3,000 metres to drill up in the Domo and Tesoros areas.”

These are phenomenal values. The company is targeting a million ounces of resource after this drilling program, and I think we’re going to achieve it —John Rucci

The company expects to have a new resource estimate for the Igor project—”albeit in the inferred category”—by 3Q 2012. Sienna had targeted the Domo and Tesoros areas for production by late 2013, early 2014. However, should Callanquitas’ contribution to the resource prove as positive as hoped, Rucci says, “You’re talking a much bigger development.”

Infrastructure continues to improve in spite of challenging terrain, with access to water and power, as well as the construction of 13 kilometres of new roads since 2010. The company is sufficiently funded to see it through the current drill program, with approximately $3 million in the treasury. “We are looking at raising funds possibly in September,” Rucci adds. “However, if this news continues, and the stock rises to about $0.60, we do have warrants that will bring in about $11 million.”

He concludes, “I’m very happy with the project. We’ve had about five different drill programs on it. We have a resource on the property, and if we found nothing else, we’d still generate about $1 million net a month for the company with these prices. Now we have this huge find, and the question is, how big is it? I think it could be very large.”

At press time, Sienna had 100.4 million shares trading at $0.385 for a market cap of $38.6 million.

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