Indicated resource of 3.55 million oz. of silver contained within 1.15 million tonnes grading 95.8 g/t silver, Inferred resource of 12.45 million oz. of silver contained within 2.89 million tonnes grading 134.1 g/t silver.*
San Acacio has had only limited mining and exploration during modern times.
The San Acacio property acquisition is by means of an option agreement to acquire a 100% interest in the historic San Acacio Silver Mine located in the Zacatecas silver district. This past producing mine consists of 10 mineral concessions totaling 746 ha. The agreement includes an option to purchase approximately 24 Ha of surface rights that control adit access to the underground workings as well as tailings from the former processing plant.
The mine controls 65% of the entire Veta Grande vein system which has produced over 200 M oz of silver since its discovery in 1546. The Veta Grande vein system extends to a depth of at least 335 meters and extends approximately 5.5 km along the strike on the San Acacio property. While Spanish colonials were able to mine the rich oxide portions of the vein, they lacked the technology to extract ore at depth.
The San Acacio mine is located within 2 km of the Santa Gabriela processing plant. Defiance has an option to acquire the processing plant from IMPACT Silver Corp.
Plant and Mineral Properties With Nearby Properties
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On signing the option agreement, the Defiance paid US$25,000 for an initial 90 day period for evaluation and due diligence. This period was extended for a further 90 days on payment of US$50,000. On or before the end of the initial or extended periods, the Company can execute a purchase agreement for US$200,000 with a deferred purchase payment of US$5.5 million for a period of 9 months. The purchase agreement also provides for a 2.5% net smelter return royalty payable to the vendor on production from the property. The Company will have the right to purchase the royalty at any time for the price of US$2.5 million which after five years will escalate with the official Mexican Inflation Index. Following the first anniversary of the purchase of the assets, the Company must make minimum annual royalty payments of US$125,000. The minimum royalty commitment terminates in the event that the minimum royalty paid is equal to or higher than the equivalent to US$125,000 during 6 consecutive months.
Under terms of the purchase agreement, the Company can also purchase: surface rights covering 12 ha controlling the adit access to the underground workings for US$5,000; and surface rights covering 12.0246 ha on which are located approximately 300,000 tonnes of tailings from the former San Acacio mine which can be purchased for a price of US$1.50 per tonne of tailings as defined by future work programs.
The acquisition terms were modified by allowing for the extension of the final payment for US$5.5 million until September 27th 2014, or September 27th 2015 by making payments of US$150,000 and US$225,000 on September 27th 2013 and 2014 respectively. The purchase in trust agreement under the modified terms was executed on September 27th, 2012.
History of the San Acacio Mine
The history of the San Acacio mine prior to 1992 is not known in detail. Martin Suttie (as revealed in personal communication) has collected a number of past reports in Spanish and English, which allow for the piecing together of the local history of the silver camp.
In the colonial period, the Spaniards mined only oxide ores from the high grade shoots, leaving behind most of the sulphide mineralization, partly as backfill. An estimate of past production was made by Minera Teck of 750,000 to 1 Mt mined grading of 1 kg/t Ag or better, based on vein widths and stopes.
The Esperanza area was worked by the Frenchman Jose de la Borda, who reported to have taken out four million pesos' worth of ore each year.
An English company held the property and drove the 1.5km long Purísima tunnel for access and drainage. A small amount of material was mined.
Various rich bonanza shoots were mined intermittently.
Intermittent production took place. The Mexican revolution (1910) put a stop to most mining in Zacatecas, as heavy fighting occurred in the area.
Compañia Dos Estrellas based in Mexico City (Tomas Skewes Saunders, Consultant Engineer) inspected the property. Mr. Skewes Saunders examined the accessible parts of the property in 1920 to 1922, although the lower workings were below water level.
The western part of the Veta Grande vein system (on ground to the west of San Acacio and now owned by others) was mined by Pittsburgh Vetagrande Company, who erected a 750 st/d cyanide plant for silica-rich ores, and American Metals Co., who later built a 150 st/d plant for floatation of complex lead-zinc ores. Both plants were successful until the tenor or the mineralization dropped at depth (oxides to sulphide transition).
A fairly complete report was written by T. Skewes Saunders for his client Dr. Roy B. Dean. At that time, the property was owned by the Mesta family of Zacatecas, and was operated under the supervision of James Berry, an English engineer for Compañia Minera San Bartolo, SA. Berry concentrated on opening the El Refugio adit and the Purísima tunnel (1,880 m). Geologist Sr. Ezequiel Ordonez, a respected and experienced individual who had been in charge of the Geological Institute, provided much of the geological information.
Cia. Fresnillo, who operated the adjacent property, mined some dumps from San Acacio. Reportedly, about 100 t/d were treated.
Sr. Julio and Jose Romo offered the property to Asarco (American Smelting and Refining Co.).
The Amado Mesta family built a 100 t/d flotation plant to process dumps and some backfill material from San Acacio.
The Amado Mesta family incorporated Minera San Acacio and built a larger plant (250t/d), again to process dumps and surface material. No fresh vein material was mined or milled. Mr. Mesta made available production records from 1968-2009.
S. Pastor reviewed the property for Compañia Sedemex. Compañia de Minas San Acacio, under the supervision of Engineer Alfredo Sandoval owned it at that time. Levels 100, 160, and 250 were available for inspection. Compañia Fresnillo owned the adjacent Veta Grande property to the west. Inco (international Nickel) had expressed interest in the property; however, the two to three owners were not interested in consolidating ownership into one company. The underlying claims were held by the Mesta Howard family and associates, who had 50-60 people working at the mine and mill. The Guillermo winze was being dewatered, but apparently, this was not completely successful, although about 1,000 tonnes of silver ore were mined.
Minas de San Luis SA de CV evaluated the San Acacio mine, estimating that 1.6 Mt had been extracted, with an average grade of 205 g/t Ag and 0.28 g/t Au (6 oz/t Ag and 0.0082 oz/t Au). A detailed study, complete with good quality maps, was done by the company (Atlas Mining materials). Minor small-scale intermittent mining was continued up to the present (Konkin 1996).
Minera San Acacio, SA de Cv, processed backfill material from stopes at or near surface for silica flux. The company crushed the siliceous vein material to ¾ inch mesh, and shipped the ore directly to San Luis Potosi. At that time, the ore graded 180 g/t Ag and 1 g/t to 2 g/t Au. Approximately 80 tonnes of ore were shipped per week, or about 300 tonnes per month. Local illegal "high-graders" from the surrounding villages occasionally work in the various backfilled stopes along the surface, using explosives to break up vein material in order to hand-cob high-grade silver mineralization, and piles of high-grade material are sometimes seen at the surface, indication the grades at depth. PEG Mining consultants (the group that prepared the NI 43- 101 for San Acacio on May 21, 2010), observed these piles of high grade material during their site visit. The property was optioned to Silver Standard Resources Inc. in 1994, and was held and explored by them until 1997.
Late 1997 or Early 1998
Minera Argentum SA de CV, a subsidiary of Atlas Mining Inc. (a US SEC reporting issuer), signed a three-year option on the property. Minera Argentum worked in Mexico under the direction of Richard Tschauder (current Defiance VP of Exploration), and Gabriel Arredondo. Olympic Silver Resources, a Nevada company, option the San Acacio property. Minera Argentum, a subsidiary of Atlas Mining Inc., purchased the majority interest in Olympic Silver. Atlas planned to raise US$1 million to start production and expanded the mine in 1999, but the financing apparently failed, and the property was relinquished in 2001 (according to the SEC filings for Atlas).
Jim Williams, an independent consultant based in the UK for Orca Gold International Ltd. (not Minco plc), inspected the property. In 2004, Sterling negotiated an agreement for the property.
December 2008 to 2010
As listed in the Source Exploration Corp. press release dated December 3, 2008, Source, through its 100% owned subsidiary, has closed a transaction with Sterling and its Mexican subsidiary, Sterling Mining de Mexico SA de CV to purchase Sterling's remaining interest in the San Acacio silver property an earn-in agreement with Sterling to acquire the San Acacio deposit. In late 2010, Source Exploration did not fulfill their agreement and the property was once again relinquished.
Defiance Silver Corp. signed option agreement with Minera San Acacio SA de CV for a 100% interest in the San Acacio silver mine.
Defiance Silver Corp amended the option agreement with Minera San Acacio de CV for a 100% interest in the San Acacio silver mine.
* This 43-101compliant resource was calculated by APG Mining Consultants Inc. in "Technical Report, San Acacio Deposit, Zacatecas, Mexico dated April 16, 2012 " and announced by Defiance in a press release dated October 25, 2012.
**See press release(s) of same date(s).