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Source’s Las Minas: Shallow Gold, Silver and Copper …and that New Director

In November the company appointed a new Chairman, David Baker and the stock almost instantly shot up from $0.02 to the $0.10 range where it has stayed. So perhaps their recent performance has less to do with results than with confidence in their new Director.

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THUNDER BAY, ONTARIO–(Marketwired – May 26, 2014) – SOURCE EXPLORATION CORP. (the “Company” or “Source”) (TSX VENTURE:SOP) is pleased to report step-out drilling at the Santa Cruz target of its Las Minas project continues to intersect wide zones of gold-silver and copper skarn mineralization including 1.44 g/t Gold Equivalent (Au Eq) over 45.0 metres in hole LM-14-SC-04. A high-grade interval grading 11.96 g/t over 2.0 metres was intersected in the upper portion of the drill hole. Drilling at Las Minas is scheduled to resume in the first week of JuneCurrent activities at the site include construction of drill roads and pads, with planned detailed surface mapping and sampling for target generation.

Source Exploration started out in this world solely focused on the San Acacio silver project in Mexico. In 2010, after three years of working on the property they dropped their option on the project and acquired Las Minas. At the same time they announced several private placements which filled the company coffers and their stock price doubled from around $0.30 to $0.60. The San Acacia project was quickly re-optioned by it’s Mexican owners (the real winners in this deal) to Defiance Silver Corp. (TSX-V: DEF ) who is still working the project.

Option Agreements between exploration companies and mineral rights holders generally involve a combination of annual payments and commitments to perform a certain amount of work on the property in exchange for the opportunity to earn 50-100% of the property mineral rights. If the optioning company fails to make their payments or decides to stop working the property, the option agreement is terminated. The details of these agreements can vary, but in general the exploration firm walks away with nothing, while the mineral rights holder retains the property. Holders of prime property can earn a healthy income from the optioning and re-optioning of their mineral rights.

Source’s Las Minas project is known as a “Skarn” deposit and is also know to host some gold-silver epithermal veins. Both of these deposit types occur along past (and present) continental convergent margins known as subduction zones and can occur together. These types of deposits may also occur in association with porphyry copper which form in the same tectonic setting.

This press release deals with drill results from the El Dorado and Santa Cruz zones within the Las Minas project. 

Highlights from the remaining 3 holes from the 17-hole diamond drilling program at the El Dorado and Santa Cruz targets (see press release dated April 7, 2014) include:

Table 1 Selected Las Minas Drill Results

Hole No. From
(M)
To
(M)
Interval
(M)
Gold
g/t
Silver
g/t
Copper
%
Au Eq(1)
g/t
Comments
LM-14-SC-04 0.0 13.7 13.7 0.39 4.30 0.96 2.10 From Surface
Including 7.7 9.7 2.0 1.00 22.50 6.05 11.69
Within 0.0 82.0 82.0 0.23 2.40 0.31 0.80
And within 0.0 51.6 51.6 0.24 3.00 0.39 0.95
And 159.0 186.5 27.5 1.49 1.77 0.25 1.94
Within 159.0 204.0 45.0 1.03 1.52 0.22 1.44
LM-14-SC-05 13.0 19.0 6.0 1.90 5.20 0.42 2.70
LM-14-SC-06 51.0 59.0 8.0 0.47 4.20 0.25 0.96

“The Santa Cruz mineralized zone remains open in all directions and continues to deliver high-grade intercepts contained within wider zones of mineralized skarn,” stated Brian Robertson, President and CEO. “We are excited about the recent drill results at Santa Cruz and Eldorado. As a result, we are preparing for Phase 2 of a multi-phase drilling program at Las Minas. The Phase 2 drilling program will consist of 2,000 metres and further the development of an initial mineral resource estimate for the Santa Cruz and Eldorado zones as well as test additional high priority drill targets at Las Minas.”

If you find the nesting of the drill results from hole number LM-14-SC-04 a little confusing, you’re not alone. Let’s try to break it down a little:

  • 0-13.7 Meters 2.10 g/t AuEq Average
  • 0-51.6 Meters 0.95 g/t AuEq Average
  • 0-82.0 Meters 0.80 g/t AuEq Average
  • 159-204 Meters 1.44 g/t AuEq Average

Within those results we have a few higher grade intervals:

  • 2 meters grading at 11.69 AuEq
  • 27.5 Meters grading at 1.94 AuEq

As we’ve discussed before, high grade drill highlights can be confusing and sometimes even misleading since the highlight can raise the overall average grade of the surrounding rock. In this case, when we separate out the high grade interval we get the following:

  • 0 – 7.7 m  grading at 0.46 g/t AuEq
  • 7.7 m – 9.7 m grading at 11.69 g/t AuEq
  • 9.7-13.7 m  grading at 0.46 g/t AuEq
  • 13.7 to 51.6 m grading at 0.53 g/t AuEq
  • 51.6 to 82 m grading at 0.55 g/t AuEq

As you can see, the narrow higher grade zone skews the average for the entire 82 meter interval. In the end, we have an 80 meter interval of grading at around 0.5 g/t AuEq and a 2 meter higher grade interval. The better result is actually the deeper interval which grades at 1.94 g/t AuEq for 27.5 meters and about 0.65 g/t for the rest.

Step-out hole LM-14-SC-O4 is located approximately 125 metres along strike from the high-grade hole LM-11-SC-45 (10.33 g/t Au Eq over 20.0 metres) (see press release January 26, 2012). The hole delineated a high-grade interval in the upper portion of the hole as well as a 45.0 metre intersection from 159.0 metres to 204.0 metres grading 1.44 g/t Au Eq, including a 27.5 metre interval assaying 1.94 g/t Au Eq.

Equivalent calculations are often used to standardize assay information of multi-metallic deposits to help compare deposits of the same type (ie. Porphyry Copper). In this case, the company is using a gold equivalent since gold contributes the highest economic value to the over all assay, but the silver and copper values are significant. Note that these calculations require the conversion of grades using market prices for the commodities involved and often assume a 100% recovery of the metals. In this case, the company has posted the metals prices used for the calculation and are assuming 100% recovery.

You can try our metal equivalency calculator to compare different commodity equivalents based on grade, market value and commodity.

 

Holes LM-14-SC-05 & 06 were drilled as step-out holes to extend the mineralization intersected in hole LM-12-SC-54 (3.82 g/t Au Eq over 28.0 metres) (see press release October 8, 2012) further to the northeast. Both holes intersected wide zones of mineralization suggesting the continuation of the mineralized zone at depth to the northeast.

2014 Drill Plan Map of Las Minas Project in Veracruz, Mexico

2014 Drill Plan Map of Las Minas Project in Veracruz, Mexico

All intervals are reported as down-hole lengths and additional information is required to determine true widths for the Santa Cruz drilling. Assays are uncut, length weighted average values.

It’s also worth noting that the drill results are reported as apparent widths and not true widths. This is typical of early exploration projects where the geometry of the deposit is not fully understood.  

(1) Gold equivalent (Au Eq) calculations use metal prices of US $1200/oz. for gold, US $19.00/oz. for silver and US $3.00/lb. for copper. No adjustments have been made for potential relative differences in metal recoveries.

Au Eq g/t equals Au g/t + (Ag g/t x 0.016) + (Cu% x1.71)

About Las Minas

The Las Minas Project hosts near-surface gold-silver and copper skarn mineralization and high-grade gold-silver epithermal vein deposits. The project is comprised of six mineral concessions covering approximately 1,616 hectares (3,995 acres), with several small scale, past-producing mines and numerous untested targets.

The district is host to one of the largest under explored gold-silver copper skarn systems known in Mexico, and has a production history that extends back to the Aztec era. The Las Minas granodiorite intrusive measures approximately 10 kilometres in diameter and underlies the Las Minas concessions. The mineralization controls and association with magnetite appear to be similar to the Guerrero Gold belt, which is the site of the Los Filos and Morelos gold deposits.

They are comparing the mineralization style to that of the Guerrero Gold Belt in Mexico. If the magnetic mineral magnetite is associated with the mineralization, magnetic surveys may be useful in helping determine the size and extent of the ore body.  

Las Minas is an early-stage exploration project and does not contain any mineral resource estimates as defined by National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). The potential quantities and grades disclosed herein are conceptual in nature and there has been insufficient exploration to define a mineral resource for the targets discussed herein. It is uncertain if further exploration will result in these targets being delineated as a mineral resource.

Source’s stock is currently sitting at $0.125 slightly off it’s 52-week high of $0.15 and way up from it’s 52-week low of $0.01. In November the company appointed a new Chairman, David Baker and the stock almost instantly shot up from $0.02 to the $0.10 range where it has stayed. So perhaps their recent performance has less to do with results than with confidence in their new Director.

Speaking of results, the highlight-adjusted assays are not bad for such a shallow prospect and it would have been nice to see them presented more completely and directly.

Quality Assurance/Quality Control

The technical information in this news release has been reviewed and approved by Sonny Bernales, P. Geo, a registered Professional Geoscientist in the Province of British Columbia and a qualified person as defined by NI 43-101. Mr. Bernales is responsible for logistics and supervision of all exploration activity conducted by Source on the property.

The Company has implemented and adheres to a strict Quality Assurance/Quality Control program which includes inserting mineralized standards and blanks into the sample stream, about 1 for every 10 samples. The standards and blanks were obtained from CDN Resource Laboratories Ltd. of Langley, BC, Canada. Each sample bag is properly sealed and kept in a secured, restricted storage place prior to shipping to the lab. Samples are shipped directly by Source or picked-up by the lab vehicle with chain of custody/sample submittal signed and dated. The Company sends it samples to SGS Mineral Services (ISO/IEC 17025) at Durango, Mexico, an accredited and independent laboratory.

About Source Exploration

Source Exploration is a Canadian based mineral exploration company committed to building long-term value through ongoing discoveries and strategic acquisitions of prospective precious metals deposits in Mexico. Source is exploring the Las Minas Project, which is located in the core of the Las Minas district in the Veracruz State, Mexico. The district is host to one of the largest under explored skarn systems known in Mexico and has a strong production history that dates back to the Aztec era.

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