Bilbao Project, Zacatecas, Mexico (75% owned)
All of Minco's Mexican interests are held indirectly through its investment (60%) in Orca Minerals Limited which has recently applied for listing on the TSX Venture Exchange in Toronto under the new name of XTIERRA Resources Ltd.
Since acquiring its interest in the Bilbao project, located approximately
50 kilometres east of the city of Zacatecas, in March 2006, Bilbao Mining, S.A. de C.V., Orca Mineral's Mexican operating company, has discovered a previously unknown polymetallic zinc/silver sulphide deposit beneath an oxide orebody which was mined during the 1940s. Bilbao Mining now completed some 11,000 metres of diamond drilling and developed an initial, non-JORC compliant estimate for these sulphide resources. The deposit remains open to the south and to the northwest. Bilbao Mining is optimistic that step-out drilling has the potential to further expand the resource base at Bilbao.
In March 2007, a pre-feasibility study on the Bilbao project was published (by Minco) which demonstrates that underground mining of the zinc/lead/silver sulphide mineralisation is both technically feasible and economically viable at metal prices significantly lower than the levels seen during the first quarter of 2007. The sulphide mineralisation remains open towards the south and the west offering potential for sulphide resource increases as follow up drilling proceeds.
The study envisaged a 1,000 tonnes per day underground mine accessed by a 1.5 kilometre long ramp. The mine is expected to produce two products, a zinc concentrate and a silver bearing lead concentrate for sale to local smelters within Mexico or internationally.
Initial estimates suggest an underground mine of this scale using sulphide
flotation to recover the concentrates will cost approximately US$43 million
and operate at a cash cost of 
around
$35 per tonne of ore. Approximately 65% of the projected revenue is derived
from the zinc concentrate and the value of the lead concentrate effectively
covers the cost of production, which, subject to financing, will be subject to a feasibility study, to include development of both sulphide and oxide ores, by the first quarter of 2009.
The state of Zacatecas is “mining friendly” with a long mining history, established fiscal, legal and permitting regime and a skilled mining labour force. The project area is well served by infrastructure.
Bilbao lies approximately 4 kilometres south of the main four-lane highway
between Zacatecas and San Luis Potosi and within 5 kilometres of the small
town of Panfilo Natera where electrical grid power is available.
As well as the sulphides, overlying oxide mineralisation represents additional
resource potential at Bilbao. Work undertaken by a previous owner of the
property during the 1990s by Kilborn Engineering in Toronto and Lakefield
Research established the viability of extracting zinc from these oxide resources,
however, Bilbao Mining is now working to identify a metallurgical process route which
would also allow the recovery of the silver and lead within the oxide zone.
With this in mind Bilbao Mining appointed Behre Dolbear, based in Denver, to review
the oxide open pit potential in late 2006.They recommended 4 metallurgical
leaching test work programmes for the recovery of the lead and silver, as
well as the zinc.
If this is successful the project could commence with an oxide open pit followed by the underground sulphide mining and processing.