Nice blurb on GPG's QTAMORNING NOTES Tuesday April 20, 2010 Michael A. Berry, Ph.D.
Today’s Notes:
1. Quaterra’s Nieves
1. Quaterra’s Nieves
This AM Quaterra Resources made a significant announcement regarding its 50% owned Nieves property. CEO Tom Patton discussed the results of the final 16 holes of a 29 hole 6,118 meter drilling program. The purpose of these campaigns was to infill a small portion (200 meters) of the 1,000 meter hanging wall silver stockwork vein discovery on the Concordia / Gregorio vein system. This is one of Nieves’ three major veins comprising 7 minor vein systems.
Dr. Patton said,
“Every hole we have drilled in the La Quinta stockwork zone so far has been mineralized ...The extensive and consistent silver values have given us the confidence to expedite metallurgical testing and to explore the possibility of open pit mining.”
Perhaps most important is Dr. Patton’s plan of action. In this release he has laid out the progression of events to occur in the next 8 weeks that will occur to determine if the discovery is amenable to open pit mining. Clearly management thinks this is a real possibility.
During the next two months, the following activities will be completed:
1) InducedPolarization(IP)Survey.Workwillbeginwithintwoweekstodelineatethe extent of the stockwork zone to the east and west.
2) Preliminarymetallurgicaltests.Workwillincludeflotationtesting,orehardnessandbulk mineralogical analysis.
3) Resourceestimate.AnupdatedNI43-101reportincorporatingthenewdrillholedata will be completed by Caracle Creek International Consulting Inc.
Based on this release, it would seem that Quaterra / BlackBerry is on the way to a potential open pit mine at Nieves. There are at least four positive factors here. First, we think silver has significant price upside. Just yesterday Ted Butler suggested in his valuable commentary that the current withdrawals from the silver ETF may be incredibly bullish for silver. Second, we estimate that less that 10% to 20% of the Nieves property has been explored – for example only 1/5th of the Concordia’s known mineralization has been infill drilled. Third, there is significant high grade silver (and Nieves appears primarily a silver mine) in addition to this stockwork discovery that makes early cash flow from open pit potential possible. Finally the infrastructure is in place at Nieves, roads, smelter, power and water.
There are almost certainly many more silver discoveries just as there were at Penasquito. Having the chance to get into open pit production at Nieves would ensure that possibility. Of course we will not know grade and tonnage potential till Caracle Creek opines (a 43-101) and the results of the planned IP tests are known. It certainly would not be a surprise, given the recent history of Quaterra’s transactions with the major mining companies, that one or more silver mining companies could be interested in Nieves - particularly at this stage of development. It is gratifying to see Quaterra progressing so much closer toward production at Nieves.