core and reverse circulation drill holes and undertook a scoping-level study, a
pre-feasibility
study, and a feasibility study in 2003, 2004, and 2005
respectively. The feasibility study was updated in 2006. Under the assumptions in the studies, the Peñasquito Mine returned positive economics. In 2003, Western Copper underwent a name change to Western Silver Corporation (
Western
Silver
). Glamis acquired Western Silver in May 2006, and we subsequently acquired the combined company in November 2006.
During
2005, a drill rig was used to perform geotechnical field investigations to support the design of the heap leach facility, waste rock piles, tailings impoundment and process plant. Standard penetration tests were performed. Construction in the
Peñasquito Mine commenced in 2007. In October 2009, the first lead and zinc concentrates were produced and concentrate shipment to smelters commenced with first sales recorded in November 2009.
Geological Setting, Mineralization and Deposit Types
Deposits currently mined within the Peñasquito Mine operations are considered to be examples of breccia pipe deposits developed as a
result of intrusion-related hydrothermal activity.
The regional geology of the operations area is dominated by Mesozoic sedimentary
rocks, which are intruded by Tertiary stocks of intermediate composition (granodiorite and quartz monzonite) and overlain by Tertiary terrestrial sediments and Quaternary alluvium. The Mesozoic sedimentary rocks comprise a >2.5 kilometres thick
series of marine sediments deposited during the Jurassic and Cretaceous Periods with a 2,000 metre thick sequence of carbonaceous and calcareous turbiditic siltstones and interbedded sandstones underlain by a 1,500 metre to 2,000 metre thick
limestone sequence.
Large granodiorite stocks are interpreted to underlie large portions of the mineralized areas within the
Concepción Del Oro District, including the Peñasquito Mine. Slightly younger quartzfeldspar porphyries, quartz monzonite porphyries, and other feldspar-phyric intrusions occurring as dikes, sills, and stocks cut the sedimentary
units. The intrusions are interpreted to have been emplaced from the late Eocene to
mid-Oligocene.
The two diatreme pipes, Peñasco and Brecha Azul, are the principal hosts for goldsilverzinclead mineralization at the
Peñasquito Mine. The pipes flare upward, and are filled with breccia clasts in a milled matrix of similar lithological composition. The larger diatreme, Peñasco, has a diameter of 900 metres by 800 metres immediately beneath surface
alluvial cover. The second, and smaller, diatreme, Brecha Azul, is about 500 metres in diameter immediately below alluvium. The diatremes are surrounded by coalesced halos of lower grade, disseminated sphalerite, galena, and sulphosalts containing
silver and gold.
Chile Colorado is a mineralized stock work located southwest of Brecha Azul, in sediments of the Caracol Formation. It
has a geometry of approximately 600 metres by 400 metres immediately beneath the surface alluvial cover, and it extends to at least 500 metres below surface.
Both of the breccia pipes lie within a hydrothermal alteration shell consisting of a central sericitepyritequartz (phyllic)
alteration assemblage, surrounding sericitepyritequartzcalcite assemblage, and peripheral calcitepyrite alteration halo.
Manto-style sulphide replacements of carbonate strata have been discovered beneath the clastic-hosted disseminated sulphide zones, and
adjacent to the diatreme pipes. The mantos consist of semi-massive to massive sulphide replacements of sub-horizontal limestone beds, as well as cross-cutting chimney-style, steeply dipping, fracture and breccias zones filled with high
concentrations of sulphides.
Garnet skarn-hosted polymetallic mineralization has been identified at depth between the Peñasco and
Brecha Azul diatremes. The skarn has horizontal dimensions of approximately 1,000 metres by 1,200 metres and is open at depth.
Exploration
Work undertaken included reconnaissance geological inspections, regional-scale geochemical and geophysical surveys (including gravity,
controlled source audio frequency magnetollurics, reconnaissance induced polarization, scaler induced polarization, airborne radiometrics, magnetics and ground magnetics), rotary air blast, reverse circulation and core drilling.
The exploration programs completed to date are appropriate to the style of the deposits and prospects within the Peñasquito Mine and
support the genetic and geological interpretations.
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