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WestStar Resources Corp. has executed a Letter of Intent ("LOI") to acquire a historically relevant high-grade, past-producing gold and silver mine in Jalisco State, Mexico. The LOI with Lekona Minerals Incorporated ("Lekona") grants WestStar the option to acquire an 80% undivided interest in the La Paloma concessions (or the "Property"). The property comprises 160 hectares, that contains an extension of the same mineralized zone that hosted a mine that on record produced 41,090 tonnes at grades of 5.87 g/t gold and 507 g/t silver before labour issues ceased operations. A NI 43-101 report conducted by Snowden Industry Mining Consultants concluded that the project is a property of merit, with an achievable economic development plan. The Property lies at the very Southern end of the Sierra Madre Occidental physiographic province. Evidence of epithermal gold-silver mineralization has been demonstrated on the Property. The favourable Cretaceous-Tertiary andesite-rhyolite volcanic stratigraphy shown throughout the Property is known to host numerous small to large gold-silver deposits throughout the Sierra Madre Occidental physiographic province. La Paloma Property - Epithermal Gold and Silver Mineralization In compliance with the requirements of National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"), Snowden Industry Mining Consultants Ltd. ("Snowden") completed a report after a site visit and sample collection to support the opinion of mineral occurrence. During its site visit, Snowden collected samples from outcrops and structures found on the Property. Representing the area being evaluated, samples were taken across structures with a conscious effort made to include the full width of the structure of interest. Upon delivery of the results of the study, WestStar was optimistically pleased and further inclined to exercise its option upon receiving sample assays, which returned high-grade values of up to 49.20 grams per tonne ("g/t") gold and 385 g/t silver. ALS Chemex Laboratories located in North Vancouver, B.C. analyzed the samples collected by Snowden, and confirmed presence of gold and silver mineralization. This analysis was included in Snowden's report, which also concluded that the La Paloma concessions host epithermal style mineralization and importantly deemed the property as a "property of merit". At the time of the report, Snowden deemed the property under-explored, and recommends that should it exercise its option to acquire 80% of the La Paloma property, WestStar undertake a phased exploration program of mapping, geophysics and drilling. The estimated cost to be in the order of $1.367 million over two phases, with Phase 1 at $495,000 and Phase 2 at $872,000, which would include 10 drill holes. La Paloma Property- Previous Exploration The Property's historical significance can be attributed to exploration on the area and concession dating back over 400 years. Prior to the arrival of the Spanish, the Native cultures of the region mined and worked silver on the claims with archaic methods. Juan Fernandez de Hijar scribed the first physical records of mining in the area in 1543. He identified the mines in the Guachinango, Etzatlan and Guajacatlan districts (C. Rene de Leon Meza). By the 1900s a high-grade gold-silver mine was economically constructed in a zone adjacent to the La Paloma property and produced until 1928 when it was shut down over a labour strike. Over time, the Property changed hands several times. Before relinquishing it in 1980, the property was owned by Industrias Peñoles, S.A.B. de C.V. Due to no requirements for Mexican corporations to file reports on their activities, programs up to this date are unknown. In 1983 and 1984 the Consejo de Recursos Minerales (CRM), a government agency, drained and entered the northern end of the main tunnel of the Veta Ancha workings and sampled an exploration drift approximately 100 metres from the historic mine's 1928 planned mining to the northwest. Based on this work, CRM reported a "potential reserve" of 750,000 tonnes grading 4.19 g/t Au and 123 g/t Ag from the CRM. This estimate must be considered an historical resource as it does not meet the NI 43-101 definitions for a resource or reserve as stated in sections 1.2 and 1.3. In 2006, a small leach plant was constructed on the old foundations to process material and collect samples during the clean-up of tunnel #1. Further exploration carried out in 2008 outlined new targets of interest and additional tunnels, which were not identified in the 1928 reports. La Paloma Property - Production History On the La Paloma concessions a mineralized zone extends approximately 1,500m southeast to northwest. Mining operations at one time exploited this zone until a workers strike terminated operations 1928. Prior to the shutdown, the mine was deemed economic at the 1927 average gold price of $20.67 per ounce , which adjusted for inflation would only be approximately $252 per ounce today . Documentation from 1927 and 1928 offers detailed accounts of the mining operation. The 1927 Report of Production indicates that 41,090 tonnes were mined at an average grade of 5.87 g/t gold and 507 g/t silver. Plans for 1928 indicated that 44,300 tonnes were to be excavated at an estimated 6.64 g/t gold and 500 g/t silver. The main travel and communication tunnel at 1,563m elevation runs 1500 meters northwest to southeast with entrances to the northwest and a cross-cut tunnel 140 metres to the northeast. Previous exploitation occurred above the 1563-metre level in the mine to the northwest along 300m of strike length. Plans for 1928 were to develop below the 1563m level. WestStar Resources takes great interest in knowing that exploration shafts and tunnels were being developed as the mine shut down. ____________________________ 1 www.nma.org/pdf/gold/his_gold_prices.pdf 2 Calculation made for 2010 prices at www.dollartimes.com/calculators/inflation.htm |
