Highlights

• Mining concepts study completed following the excellent high-grade maiden resource estimate delivered in November 2021 and hte recently announced metallurgical test work
• The conceptual exploration access – mine design indicates El Refufgio-La Soledad has the potential as an underground project utilising common contemporary mechanised mining methods suited to narrow to moderate mining widths
• Early underground access initially for exploration drilling is considered as part of longer-term mining development
• Outcomes of the study will aid design of the future drilling at El Refugio to advance resource classification and resource expansion
• Drilling, mapping and geochemical sampling are progressing in the district, and we await laboratory assay results for this work

Mithril Resources Ltd (ASX: MTH) (Mithril or the Company) is pleased to release details on the recently completed mining concepts study from its Copalquin Gold Silver District, Mexico.

Mithril CEO and Managing Director, John Skeet, commented:

“The positive outcome of the conceptual mining study by AMC Consulting is an important step in the advancement of our work in the Copalquin district. The study and the recently reported high metallurgical recoveries are positive steps towards development in the district for production of gold and silver from high-grade resources. Exploration drilling, mapping and geochemical programs are in progress, and we look forward to reporting this work in the near future.”

CONCEPTUAL EXPLORATION ACCESS – MINING DESIGN

AMC Consultants has completed a mining concepts design study for the El Refugio-La Soledad maiden JORC mineral resource estimate. The high-grade maiden MRE released 17 November 2021 is given below.

• 2,416,000 tonnes @ 4.80 g/t gold, 141 g/t silver for 373,000 oz gold plus 10,953,000 oz silver (Total 529,000 oz AuEq*) using a cut-off grade of 2.0 g/t AuEq*
• 28.6% of the resource tonnage is classified as indicated

*AuEq. = gold equivalent calculated using and gold-silver price ratio of 70:1. That is, 70 g/t silver = 1 g/t gold. The metal prices used to determine the 70:1 ratio are the cumulative average prices for 2021: gold USD1,798.34 and silver: USD25.32 (actual is 71:1) from kitco.com

The study considered open pit potential and various underground mining techniques. The positioning of the underground mine development was also assessed.

The study work shows that there is some open pit potential requiring further drilling work to better define near surface high-grade material at El Cometa. The most likely scenario from the study indicates that the resource would be most effectively mined by underground methods.

For the underground mining, the preferred mining method recommended is mechanised Avoca bench (a variant of long hole open stope benching with rockfill) using a bottom-up extraction sequence as shown in the schematic below.

Geotechnical

Some geotechnical logging of exploration holes has been undertaken and historical workings are present. AMC notes that rock mass conditions indicate “good” to “very good” rock but can generally be categorised as “fair” until recommended geotechnical assessment work has been undertaken. AMC has recommended geotechnical work, which includes geotechnical logging of existing drill core on site, geotechnical diamond core drilling, structural modelling and structure confirmation drilling (to coincide with resource infill drilling) to be completed prior to further mining study work.

Preferred conceptual exploration access – mine design

The preferred conceptual exploration access – mine design was constructed, and sequence animated based on:

• Twin mine are accesses from twin southern adits connected to a valley-to-valley exploration access developed in the footwall of the El Refugio orebody. A separate eastern adit exploration access is developed in the footwall of the Soledad orebodies with maximum access gradient reduced to 1:8,
• Primary infrastructure developed off the exploration access, with primary infrastructure positioned within the footwall.
• Mine access layout based on Avoca benching with rockfill.
• Mine design to avoid ventilation raises to surface, provide a cost-efficient flow-through primary ventilation circuit as soon as possible and provide emergency secondary egress as soon as possible within the mine plan.

Maximum re-use of development for other activities is assumed when a level is depleted. For example, stockpiles are used for mobile sub-station or mobile skid-mounted pumps or magazine or materials storage. The design makes notional allowances for miscellaneous infrastructure such as pump station sumps at the end of each decline leg and stripping of the backs above the raise bore machine position. At this time there is no allowance for additional development for underground drilling sites located off primary infrastructure routes.

AMC Study Recommendations

If ongoing exploration drilling identifies significant additional near surface mineralisation adjacent to the current understanding of the El Refugio mineral resources, then Mithril should consider re-assessing the project for open pit mining potential.

The key recommendations for the next phase of data collection include:

• Assess where infill and extensional drilling is required to upgrade Inferred Mineral Resources and unclassified mineralisation.
• Once target areas are identified, assess what can be achieved more cost effectively from an underground drilling platform, taking into consideration ease of access, timing, drilling accuracy and usage of hole wedging methods.
• Undertake a geotechnical data collection programme which will be critical to better understand mine design parameters like potential stope and pillar sizes, development offsets to stoping voids, mine modifying factors (overbreak), open pit wall angles and the impact of these on the project economics.

AMC makes the following underground planning recommendations:

• Undertake next-study-level geotechnical assessments to understand the geotechnical constraints to establish the largest practical unsupported spans to maximise extraction (less rib and sill pillars) and/or to improve development efficiency via taller level intervals. This requires careful balancing of the development efficiency against the plan dilution.
• Critically assess inclusion of incremental stoping resources.
• Obtain indicative contractor rates to conduct the conceptualised project works, confirm the processing cost and assumed site administration costs, to then confirm project viability accounting forcapital estimates. There may be opportunities to rent the infrastructure, with the contractor to take on these items as part of their rates or to enter into other contracting agreements.
• Identify local contractors with small profile equipment to ascertain the smallest on-lode sill development profile possible with trackless equipment, and based on this, re-assess the impact of on-lode sill development dilution on the inventory head grade.
• Enquire about acquiring specialist narrow vein equipment
• If a suitable narrow vein development jumbo cannot be sourced, investigate the option to use traditional handheld airleg miners for the on-lode sill drive development and then use mechanised production drilling for the stope production.
• Conduct next stage mine plan optimisation potentially using a combination of mining methods to address narrow versus wider lode areas, wast rock availability, delaying of capital development using a top-down extraction sequence in selected areas, etc.
• Conduct ventilation simulation analysis to e diesel dilution volumes and fan pressure requirements and required airway sizes to practically balance operating costs against capital costs.

ABOUT THE COPALQUIN GOLD SILVER PROJECT

The Copalquin mining district is located in Durango State, Mexico and covers an entire mining district of 70km² containing several dozen historic gold and silver mines and workings, ten of which had notable production. The district is within the Sierra Madre Gold Silver Trend which extends north-south along the western side of Mexico and hosts many world-class gold and silver deposits.

Multiple mineralisation events, young intrusives thought to be system-driving heat sources, widespread alteration together with extensive surface vein exposures and dozens of historic mine workings, identify the Copalquin mining district as a major epithermal centre for Gold and Silver.

within 15 months of drilling in the Copalquin District, Mithril delivered a maiden JORC mineral resource estimate demonstrating the high-grade gold and silver resource potential for the district. This maiden resource is detailed below.

• 2,416,000 tonnes @ 4.8 g/t gold, 141 g/t silver for 373,000 oz gold plus 10,953,000 oz silver (Total 529,000 oz AuEq*) using a cut-off grade of 2.0 g/t AuEq*.
• 28.6% of the resource tonnage is classified as indicated

Mithril Resources is earning 100% interest in the Copalquin District mining concessions via a purchase option agreement detailed in ASX announcement dated 25 November 2019.

-ENDS-

Released with the authority of the Board.

For further information contact:

John Skeet
Managing Director and CEO
[email protected]
+61 435 766 809

Mark Flynn
Investor Relations
[email protected]
+61 416 068 733

Original Article: https://investi.com.au/api/announcements/mth/81f11745-62e.pdf