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The Pitarrilla Project is a grass roots discovery made by Silver Standard in 2002. Since then, close to 200,000 meters of diamond drilling plus over 20,000 meters of reverse circulation drilling have steadily increased silver resources in a small area of the largely unexplored property. Today, Pitarrilla ranks among the largest silver discoveries made in the past decade.
The Pitarrilla Project is located on the eastern flank of the Sierra Madre mountain range in the central part of Durango State, Mexico. The major city of Torreon lies approximately 150 kilometers east of the project. Road access is good, with paved highways extending to within 20 kilometers of the center of the property. We hold a 100% interest in the mineral rights to the approximately 136,192-hectare Pitarrilla claim block. We also hold significant surface rights in the area.
Five zones of mineralization have been identified to date on the Pitarrilla property. Recent project activities have focused on the Breccia Ridge Zone, which hosts 63% of Pitarrilla's total silver resource of 643.6 million ounces of measured and indicated silver resources and 82.3 million ounces of inferred silver resources.
In June 2009, we announced the results of a pre-feasibility study for the underground component of Breccia Ridge, which now contains probable silver reserves of 91.7 million ounces using a silver price of US$11.00/oz, zinc price of US$0.70/lb, lead price of US$0.50/lb and a US$50.00/tonne net smelter returns cut-off. As presented in the pre-feasibility study (see news release dated June 24, 2009), the underground project has a 12-year mine life, mining 4,000 tonnes per day and producing approximately seven million ounces of silver per year. Capital costs are projected at US$277 million with average operating costs of US$33.81/tonne. Recoveries vary by rock type with expected weighted average recoveries of 88.4% for silver, 93.2% for zinc and 89.6% for lead.
A feasibility study for the underground component of the Breccia Ridge Zone was completed in the second quarter of 2011. Silver Standard is currently examining the opportunity to stage construction of the project by mining the near surface Peña Dike, Cordon Colorado, and South Ridge oxidized silver deposits ahead of the underground development.
