Bilbao Project, Zacatecas, Mexico (100% owned by Xtierra)
Minco holds approximately 30 million shares in Xtierra Inc. (“Xtierra”), a company listed on the TSX Venture Exchange under the symbol “XAG”, representing an approximate 26% interest.
Xtierra holds mineral properties located in the in the State of Zacatecas in the Central Mineral Belt of Mexico. The Central Mexican Mineral Belt is a prolific mineralized belt that has historically generated the bulk of Mexico’s silver production from the early colonial period to the present day and hosts many world class precious and base metal deposits.
In April 2014, RungePincockMinarco (Canada) Limited delivered an updated NI 43?101 compliant resource estimate and a Preliminary Economic Assessment (PEA) on the Bilbao Project.
Economic results of the Project cash flow model indicate an Internal Rate of Return (IRR) of 13.2% and a pre?tax Net Present Value (NPV) of USD $11.0M at a 10% discount rate and a pre?tax NPV of $18.7 million at an 8% discount rate.
Project Capital Costs, as of April 2014, are estimated by RPM to be USD $99.5M including an allowance for contingencies of USD $8.7M, equivalent to 8.8% of total capital expenditure.
RPM have made numerous recommendations throughout the PEA identifying various opportunities to increase the mineable resource and reduce operating costs through additional exploration and engineering, improving the overall economics of the Bilbao project.
Having received the completed Preliminary Economic Assessment, Xtierra’s focus going forward is to maximize the value of Bilbao by seeking to develop Bilbao either alone or in joint venture with a partner. Xtierra has initiated a strategic review to consider alternatives and has retained Jennings Capital Inc. to assist in the strategic review process. Strategic alternatives include, but are not limited to, financing structures for the development of the Bilbao Project, the sale of all or a portion of the Company’s interest in the Bilbao Project or a corporate transaction. In the meantime, Xtierra has taken steps to reduce costs in all area of operations, has relinquished various exploration properties and intends to focus its efforts entirely on maximising the value of the Bilbao project.
Geology of Bilbao
The project lies in the Central Silver Belt of Mexico, one of the worlds most prolific sources of silver over hundreds of years, and Bilbao is in an old mining district. High-grade, silver-bearing ores were initially discovered and exploited in the 1600s.
A significant amount of mining was completed on the Bilbao Property between 1900 and 1927 by the International Mining Company (Consejo De Recursos Minerales, 1992). Additional work may have been done on the property from 1939 -1945. No significant mechanized work is known to have been completed after 1945. The Bilbao Property was controlled by Frisco from 1945-1967 and Penoles from 1967 to 1991 (Kilborn, 1995).
An estimated one million tons have been mined from underground workings and two glory holes (Kilborn, 1995). High grade mineralization was followed to exploit direct shipping ore. There is no evidence of drilling on the property. Documented mining has been conducted only to a depth of 76 meters (250 feet) where sulphide mineralization was encountered.
Two primary types of mineralization are found on the property: distal Copper- lead-zinc silver pyroxene skarn mineralization has been documented within altered Cretaceous Age carbonate sediments near the contact with a granitic intrusive. Hydrothermal veins, of secondary importance, are hosted by both the granite and the sedimentary rocks. The zinc-lead skarn deposits could grade laterally into both gold-bearing garnet skarn or massive zinc-lead manto and chimney replacement ores hosted within the carbonate rocks.
Oxidation has reached a depth of about 80 metres on the property, creating an upper oxide resource that may overlie a significant sulphide resource. Zinc, lead, and copper oxides/carbonates and silver chloride minerals are found in potentially economic quantities within the oxide zone.