Mar 5 2011
U.S. Silver Corporation (TSXV: USA, US OTCQX: USSIF, Frankfurt: QE2) has announced the successful results of its 2010 exploration program and provide updates and clarifications to some key matters of interest to investors.
Exploration Summary
The Company previously announced positive diamond drilling results from the 4000 and 5200 levels at the Galena mine (press release dated October 19, 2010). Drilling continues on both levels with 13,904 feet (4,238 meters) of drilling completed during the fourth quarter of 2010, and 7,031 feet (2,143 meters) completed during the first two months of 2011. Total exploration drilling footage for 2010 was 49,374 feet (15,048 meters).
Recent drilling continues U.S. Silver's 2010 trend of identifying new silver veins as well as extensions of existing silver veins at the Galena mine. The drilling results reported here identified both new silver-copper and new silver-lead mineralization. The best intersection on the 4000 level was 3.9 feet of true thickness grading 91.4 opt Ag and 2.5% Cu. The best intersection on the 5200 level was 1.5 feet grading 139 opt Ag and 4.8% Cu. In total, there were 34 intercepts detailed below, with 15 grading higher than 20 opt Ag. The exploration program in 2010 once again provided reserve additions in excess of that produced during the year.
Hedge Position
As announced on November 10th, 2010, US Silver entered into a hedge transaction for 20% of its expected 2011 production. The Company has fixed a price of $27.50 for roughly 41,000 ounces per month and has completed the sales for January and February leaving approximately 420,000 ounces to be sold under the contract in 2011.
US Silver receives the market price at the time of sale on the 80% of production not hedged in 2011. The Company has not hedged any production in 2012 or thereafter.
MSHA Fatality Investigation Update
Earlier this year, U.S. Silver received a single citation directly related to the contractor employee fatality that took place in June 2010 following the completion of the investigation. The Mine Safety and Health Administration ("MSHA") issued a proposed assessment of $70,000 in connection with that citation. That amount represents the maximum amount that can be assessed as a regular assessment on a citation such as the one at issue. U.S. Silver has taken the necessary steps to preserve its rights of appeal of the citation and vigorously disputes the allegations contained in it.
Environmental Obligations
Historical environmental reclamation obligations for the U.S. Silver operations in the Silver Valley, such as those currently being negotiated in the region, were settled in 2001 through a Consent Decree prior to the acquisition of the assets by US Silver.
US Silver has fully provided for all site reclamation obligations for all of its operations in the Silver Valley in its previously released financial results. As at September 30, 2010 the Company has accrued a total $1.5 million covering the expected reclamation costs for the existing operations at the end of the mine life.
Exploration Detail
Galena Mine, 4000 Level
A new drilling program was initiated in the central area of the 4000 Level to test for eastern extensions of the 127, 132, and 133 silver-copper veins. The drilling has returned multiple results on these veins with ore grades over mineable thickness. The drilling has also identified at least one additional high-grade silver-copper vein (133 FW) and two silver-lead veins. The 4000 Level central area drilling program is still in progress. Results received to-date from the first eleven drill holes are as follows (vein widths are corrected for true thickness):
Upon completion of the 4000 Level central zone drilling in early March, final interpretation of the veins will be made. Track drifting to cross-cut this multi-vein zone will begin by the end of March. An additional drilling station will also be established to facilitate diamond drilling to better define these veins.
Galena Mine, 5200 Level
A drilling program was conducted on the 5200 Level to locate the downward extension of the high-grade silver-copper 220 Vein which has been developed on the 4600 and 4900 Levels. The 220 Vein has now been identified in four new holes above the 5200 Level and five holes below the 5200 Level. The vein has been closed off to the north but it is still open to the south. Additional exploration drilling is planned to close the southern extent of the vein in the near future.
In addition, a new silver-copper vein has been discovered about 200 feet east of the 220 Vein in one of the drill holes. This new vein was seen in hole 52-281 with a true thickness of 4.8 feet (1.46 meters) at a grade of 133.04 opt Ag (4,561 gpt), and 3.79% Cu. This intercept appears to be on the same structure as an intercept from an old hole (52-170) which contained 2.2 feet (0.67 meters) true thickness at a grade of 132.07 opt Ag (4,528 gpt) and 3.19% Cu. Additional drilling is planned in conjunction with the 220 Vein follow-up drilling.
Results on the 220 Vein from the four holes are as follows (vein widths are corrected for true thickness):
In addition, the drilling picked up an extension of the 196 Vein, which may be a faulted offset of the Silver Vein. Approximately 100 feet of strike length at ore grade and thickness has been drilled. The drilling results are listed as follows:
Qualified Person
Information of a technical nature in this press release respecting the properties has been prepared and reviewed by Mr. Daniel H. Hussey, Manager of Exploration for U. S. Silver, who supervised the drilling and sampling programs. Mr. Hussey is a "Qualified Person" within the meaning of National Instrument 43-101 of the Canadian Securities Administrators.
All silver assay results reported in this new release were analyzed using standard fire assay techniques by American Analytical Services located in Osburn, Idaho. Check assays are conducted by ACT Labs, located in Ontario, Canada. All samples are obtained and assays are reported under a formal quality assurance program. Underground diamond drill core holes are drilled with BQ size tools.