I am a long time fan of Quaterra Resources and the CEO Dr. Tom Patton. You may
remember that Western Silver drilled the PeÃ±asquito deposit in Mexico for several years.
All that anyone saw at PeÃ±asquito was a solitary outcrop in the high Mexican Desert. Well
the deposit is now owned by Goldcorp after two takeouts and there is now more than 20
million ounces of gold and over 1 billion ounces of silver there. With gold headed for the
millennium mark and silver headed for the $20 mark this year PeÃ±asquito (developed by
Patton and field boss Tom Turner) is a world class deposit and qualifies as a discovery
Quaterra has continued to acquire 100% positions in near term mineral plays. Most recently
it announced a NI 43-101 resource of oxide copper at Yerington Nevada (called the
MacArthur) of almost 800 million pounds. Yesterday the company announced its first
resource at Nieves â€“ a silver property in the western Zacatecas state, Mexico.
The results are impressive. Using a 30 gram cutoff the company reports 25.1 million ounces
of silver in both the indicated and inferred category. Using a 60 gram cutoff the resource is
17 million ounces. Quaterra owns half the resource and a private group owns the remaining
50%. I have visited the property three times in the past few years. Each time I saw more
progress. I counted up to 7 veins on the property with some very high grade silver mined
historically. There are several dumps and 24 shafts on the property to a maximum depth of
180 meters. The property was never mined below the water table. The Spanish first mined
the property in 1540 and, as we now know, the Spanish did not waste time or energy. There
are only 82 drill holes here (Kennecott, Western Silver and Quaterra) and in the most recent
drill program on the Concordia vein the spacing was 100 meters in some cases. That meant
that the observed grades were penalized (cut from much higher grade to 375 grams) by
Caracle Creek (the company doing the 43-101 analysis). More infill drilling should show
continuity and increase the resource to well over 31 million ounces.
Experts have told me that Nieves has a geochemical footprint very similar to Fresnillo 90
kilometers to the south. It is in the same mineral belt. Fresnillo is one of the largest silver
mines in the world.
The key fact is that Quaterra has drilled only 1/3 of the Concordia veinâ€™s 1,200 meters to
build their 25.1 million ounce resource. Average grades range up to 570 grams but the
promise is that the vein is open along strike and a depth. In other words there is likely to be
a lot more silver at Nieves â€“ at least in my opinion. There is also about 30,000 ounces of
gold in this resource. The independent analysis only allowed 350 grams per tonne based on
the wider drill spacing.
Estimated mineral resources(1)
Concordia vein system, Nieves Property
Ag range Ag Au Ag Au
(g/t) Classification Tonnes (g/t) (g/t) (oz)(2) (oz)(2)
0.0 – greater
than 15.0 Indicated 133,189 8.348 0.046 35,749 198
Inferred 1,477,235 8.074 0.050 383,484 2,365
15.0 – greater
than 30.0 Indicated 326,164 22.400 0.071 234,901 748
Inferred 2,988,093 22.790 0.049 2,189,450 4,714
30.0 – greater
than 60.0 Indicated 863,267 46.909 0.082 1,301,973 2,270
Inferred 4,587,616 44.857 0.063 6,616,366 9,240
60.0 – greater
than 90.0 Indicated 1,258,964 74.543 0.101 3,017,304 4,084
Inferred 1,275,489 72.304 0.100 2,965,086 4,102
90.0 – greater
than 120.0 Indicated 754,187 103.125 0.123 2,500,575 2,990
Inferred 507,865 103.329 0.122 1,687,208 1,998
120.0 – greater
than 150.0 Indicated 388,788 134.132 0.144 1,676,647 1,799
Inferred 250,484 134.991 0.136 1,087,134 1,092
150.0 – greater
than 300.0 Indicated 480,704 188.975 0.175 2,920,646 2,709-
Inferred 221,639 176.033 0.164 1,254,409 1,171
300.0 – greater
than 500.0 Indicated 14,927 320.946 0.258 154,029 124
Inferred 1,117 332.728 0.280 11,949 10
1) Prepared by Michelle Stone, P.Geo., Caracle Creek International
Consulting Inc., an independent Qualified Person within the meaning of
NI 43-101, showing tonnes in various Ag ranges.
2) 1 troy ounce equals 31.103 grams.
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prepared by management.
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Most of this resource is near the surface and more drilling is warranted. In my view the
Concordia vein which runs for 1,200 meters could yield significantly more silver resource
with more drilling. The current plan only drilled about 1/3 (400 meters) of that vein â€“
and there are additional veins and targets. Geophysicist Joe Inman will be recalibrating
his geophysical analysis based on these drill results.
There is an opportunity for an open pit and / or a high grade mining operation depending
upon economics. Most important there is the potential that this ore will leach or process
easily. I think the company should now perform a small scoping study to test the economics
of the project as it stands while recalibrating and planning the next drill program.
We think the wind is at the backs of investors in Quaterra as silver should be able to climb
to $18 to $20 per ounce later this year and as infill drilling and further exploration of the
Concordia proceeds to completion. One of the worldâ€™s best known mineral consultancies,
GFMS, thinks $18 per ounce is in the cards. Concordia and other veins will add to the size
of this resource.
This makes three for three for the Patton team. They discovered significant uranium pipes
on the Arizona strip, developed a low cost oxide copper resource at MacArthur (Nevada)
and now they have the beginnings of a much larger silver resource at Nieves.
This stock, like others has not been treated kindly in spite of the discovery successes of the
Quaterra team. I own shares in Quaterra Resources.
CLICK HERE and scroll down to view Dr. Michael Berry’s chart of Quaterra
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