Silver Bull Resources (TSE:SVB) is not only on the verge of defining a high grade silver zone at its Sierra Mojada property in Mexico - on top of the already defined low grade silver resource - but it is also on the cusp of bringing a high grade zinc resource into its story.
At the moment, the company is working on an underground drilling campaign designed to expand its silver resource, by twinning a series of so called "long holes" in a high grade silver zone found at the eastern end of the Shallow Silver Zone at the property.
"There are 2,700 historical long holes, or very short drill holes, ranging from 10 to 50 metres long. We started twinning a small number of these to confirm the grades, and increase confidence in about 38,000 metres of drilling that was either severely restricted or discarded from our latest resource update," says president and CEO Tim Barry.
Reported intercepts so far from the program include 309 grams per tonne (g/t) silver over 23 metres, 912 g/t silver over 17.6 metres and 2,250 g/t silver over 1 metre.
"These drill holes still end in mineralization, which suggests there is still significant width to grow," says Barry. "This could be a potential game changer for the company."
The company has already defined a "big, low-grade silver resource in the 50-70 g/t range, and now we are developing a high grade zone within this low grade resource."
"It is an ideal mining scenario, as we can pay off our capex costs very quickly by targeting high grade, all the while running low grade through the mill as well."
A new resource estimate is anticipated in the first quarter of next year, when Barry says he expects to see more than 100 million ounces of in-pit silver and several billion pounds of zinc in the resource, as well as a potential re-rating of Silver Bull's stock.
The zinc zone is found slightly adjacent and just below the silver mineralization. "When you mine out the silver, you expose billions of pounds worth of zinc."
Last month, the miner expanded the underground drill program with an additional 2,000 metres to twin a series of long holes in the high grade zinc zone.
Generally, Barry explains there are reclamation and cleanup costs after a mining operation - but not in this case, as the "company will go from a silver mine to running a zinc mine."
There is also immediate infrastructure in place to use to move the zinc. "It won't be converted into zinc metal - it will be a zinc concentrate - very cheap - which can then be shipped to any zinc processing plant around the globe."
Zinc on its own is quite hot right now, with supply concerns becoming a reality starting in 2014, when many large zinc mines are due to shut down in an already small market. This will mean big price increases for the metal. "The scramble to replace that lost production only bodes well for the outlook on zinc."
The company will look at ways to monetize its zinc asset - including potential off-take agreements, and having a third party "outright buy the zinc" - which will only make the capital costs cheaper for its silver operations.
The Shallow Silver Zone at the Sierra Mojada project is now estimated to have a measured resource of 6.343 million contained troy ounces of silver, an indicated resource of 61.694 million contained troy ounces of silver, and an inferred resource of 9.478 million contained troy ounces of silver, at a 20 g/t cut-off grade.
Barry says the company is focused on finishing off the historical twinning program by the end of the year, so far seeing "very good correlation with historical data". Silver Bull has drilled 120 holes thus far.
After this campaign is wrapped up and its new resource is released, the Sierra Mojada project is set to go to the next stage - that of the preliminary economic assessment report - which Barry says will take the company from the end of the first quarter to the beginning of the third quarter in 2013.
"We are now in the process of refining the metallurgy of the project. We have a full program going on right now, and we're going to start to release results in the very near future," Barry confides.
The refining program will take place over the next five to seven months, focusing on geotechnical work and items such as rock stability, building toward the preliminary economic report stage.
Next up after the PEA is the feasibility study. "We feel the resource we will have is big enough to roll into a feasibility study on the future mining operation."
Despite mineralization still being open, particularly in the east and west direction, Barry feels that investors need to see economics being applied to the project, with a focus on development.
In terms of exploration, "there is no question that the resource is bigger than what it currently is." But Barry says that after the current drilling program, the focus will be only on targets that the company feels may add "very significant upside" to the project.
"There is real value in continuing to target the high grade silver zone. At the beginning of this year, we hit massive sulphide zones, and we still haven't found the feeder that brings this mineralization."
"This brings exciting upside."
The Sierra Mojada project is located 150 kilometres north of the city of Torreon in Coahuila, Mexico, in an area that benefits from having three working mines within a 50 kilometre radius.
The property also boasts a paved road right to site, a working railway, and a grid tower, with the company also owning five water wells - of which only one is used to run its entire exploration camp.
More than 95 per cent of the workforce is drawn from two towns nearby, Barry says, where the locals are supportive of the project. The area is no stranger to mining, with work taking place over the past 100 years.
The junior miner has a regional play in Mexico, in what Barry calls a "seriously under-explored" part of the country, but with plenty of historical workings on it.
The company's chief explains that it is looking for buried ore bodies in the historical mining region that are not sitting at surface, and therefore are more challenging to locate.
"But there are three mines in the area that scream potential. Technology is at a point today where finding buried ore bodies is nowhere near as difficult a task as it used to be."
With some $5 million in the bank, and a land position that stretches for around 2,000 kilometres, Silver Bull is certainly geared up for the task. It is currently surveying strategic avenues to raise funds, from off-take deals, to public offerings.
In addition to Mexico, Silver Bull holds some iron ore and manganese projects in Gabon, Central Africa that it is now looking to joint venture out, and has received "a lot of interest so far".
"There is no question that central Africa is going to become a major iron ore producing area in the near future," predicts Barry. Gabon is already the second largest producer of manganese in the world.
"There is nothing included in our market cap for our Gabon properties - it's an interesting cherry on top," he concludes.
Silver Bull's stock has gone up more than 14 per cent in the last 3 months alone, with expected newsflow over the next year a potential boon to its share price.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.