TORONTO (miningweekly.com) – Canadian precious metals producer Primero Mining has acquired a 30 192 ha concession that covers a greenfield swathe of prospective land and 18 km between the San Dimas concession and the Ventanas exploration property, from private vendors.

The TSX- and NYSE-listed company on Tuesday stated that the mineral concession acquisition built on the about 10 000 ha added by the company in the second half of 2015, and reflected Primero's strategic goal of acquiring concessions outside of the original San Dimas mining area and the silver purchase agreement with metals streaming firm Silver Wheaton.

As a result of the Expanded Lechuguilla acquisition, Primero's total concession area in the San Dimas district had nearly doubled to 68 628 ha.

PRIME OBJECTIVE
Proving extensions to San Dimas' main mining blocks could have significant implications for Primero, and as a result had become one of its main exploration targets.

"The acquisition of this key mineral concession area further advances our strategic goal of mining outside of the original San Dimas mining concession from areas not covered by the silver purchase agreement with Silver Wheaton. This would provide significant benefit to the company as mining from this area would increase our revenues and therefore our taxable income,” president and CEO Ernest Mast stated.

From August 6, 2014, to the end of the mine life, the company’s San Dimas mine operated under the obligation to sell the first six-million ounces of payable silver produced a year, plus 50% of any excess, at $4.20/oz (plus 1% inflation) to metals streamer Silver Wheaton.

Primero advised that the property had not previously been explored by modern techniques and remained unexplored owing to its large size and the region's challenging topography.

GRASSROOTS EXPLORATION
Much of the newly acquired concession was significantly covered by the regional upper volcanic sequence, which prevented surface expressions of the mineralised vein systems hosted in the lower volcanic sequence, the company explained.

Initial reconnaissance by Primero's geologists and information provided by the property's previous owner, had provided the company with several key "geological windows" through the upper volcanic capping, some of which were not recorded in the regional geological maps.

Based on this initial work Primero had defined multiple distinct outcropping veins located in these windows, the company disclosed.

Primero believed that the Expanded Lechuguilla area could contain an extension of the San Dimas mine's prolific Central and Sinaloa-Graben mining blocks without major faulting to offset any discovered veins. One of the key indicators was that the El Cristo tunnel at the south end of the San Dimas concession and the ore-shoots of Mala Noche vein at Ventanas were at about the same elevation with similar mineral composition in the same host rock. This inferred potential continuity of the mineralised veins system over 18 km between both areas.

While a significant amount of future exploration would be required to confirm the continuous block hypothesis, Primero's 2016 exploration programme now included geological field work with the goal of identifying additional geological windows and surface outcroppings of new veins on the Expanded Lechuguilla concession.

The company advised that its 2016 plans included exploration diamond drilling on the Lechuguilla and Expanded Lechuguilla concessions, and extending exploration drifting from the El Cristo tunnel 3.1 km to the south towards the Lechuguilla concession. Primero expected to reach this concession boundary in 2017.

Meanwhile, Primero had earlier this month issued a notice of intent to submit a claim of international arbitration against the Mexican government under provisions of the North American Free Trade Agreement. The dispute was rooted in Mexican tax authorities in February seeking to nullify a 2012 advance pricing agreement, which confirmed the company's basis for paying taxes on realised silver prices for the years 2010 to 2014.