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Soho Advances Toward a Production Decision in Mexico

Soho Resources President, Ralph Shearing is venturing to estimate a production decision on the Tahuehueto Project in the Durango district of Mexico within the next two years. He tells ResourceINTELLIGENCE that a mine on the property could end up with a mine life of between eighteen and forty years with current resources…and all of that while making significant development contributions to the local Mexican people living in the area.
Resource Intelligence: The Tahuehueto Project currently has a resource of nearly 13 million tonnes. Any projections of when your current resource will be advancing to higher categories of indicated and measured, and what are your chances of increasing the overall resource?
Ralph Shearing: The Tahuehueto Project currently has a 12.3 million tonne resource outlined from our drilling program with about 40,000m drilled to date. Of that, 60% of the resource is in the measured and indicated categories with the remainder in the inferred category. The grades for the measured and indicated are higher than the grades for the inferred but we’re very confident that we’ll be able to move the inferred grades up with closer spaced drilling, moving the inferred into measured and indicated. We are also extremely confident that we will add more tonneage to the current resource as we continue to explore along strike and down dip on structures hosting the resource as well as stepping out to explore on other parts of the project where we know there are mineralized structures. Really, I don’t think we’ve touched more than 20% of the deposit. It’s a polymetallic project so we’re going to get excellent credits from the base metals. About 40% of the value of this project is in the gold and the rest is in the other metals.
RI: Are you expecting to release any new reports in the near future?
RS: We are conducting metallurgical testing right now. We expect to have news to the market on metallurgy within three weeks to a month. All the recoveries we are getting are quite good so we expect the report will support previous studies that were conducted by a Mexican government organization in the 1970’s where 90% plus recoveries were obtained for gold, silver, lead and zinc. We are also receiving proposals from engineering firms for a preliminary economic or scoping study style assessment of the project. We’re hoping to be able to deliver this economic study report to the market in the next three to five months and then we’ll have a preliminary economic assessment done.
RI: Any idea when investors might be able to expect production to take place?
RS: Well our best guess is a production decision within a couple of years, and it’s a year to two years to build so, probably three to four years.
RI: What about infrastructure at the Tahuehueto Project?
RS: We currently have access out of a town called Tepehuanes 185km away on reasonable logging-style gravel roads for the first 100km or so and then quite poor access from there on. However, the Mexican government is actually building a highway to the south of the Tahuehueto Project that will connect northwestern Durango through to Tamazula connecting through Culiacan and providing us with future access to the deep sea ports of either Mazatlan or Topolobampo. This new access route will allow us to sell future mineral concentrate at world market prices to any buyer in the world rather than having to sell to the Penoles smelter in Torreon. We will have about 18km of new road to build and about 25km of existing road to upgrade to connect through to the new highway. We also envision accessing electrical power along this route.
RI: How much property do you own in this area? And what is the ownership structure?
RS: Our total area is just over 9,000 hectares on Tahuehueto. We control 100% of the project through a 99.4% ownership in a Mexican subsidiary company.
RI: How is Soho Resources involved in promoting development for the Mexican people living in the area?
RS: Our project is near a little community of eight to ten families near the resource with other families spread out within the concessions. We employed all of the able workers in the area. We built a school for the children. We built a clinic and hired a doctor to be there on a full-time basis during our drilling program. We improved sanitation for most of the locals within the resource area by supplying running water, flush toilets and showers into their homes. We’re very conscious of the people’s well-being and recognize how important they are to us, not only as a human resource, but they’re absolutely necessary to make the project flow smoothly and go forward.
RI: A symbiotic relationship.
RS: Absolutely, yes.
RI: Soho acquired the Jocuixtita project in July of 2009. Could you tell us a little about what is exciting about that silver project?
RS: We think it has the potential to be a similar sized project to Tahuehueto considering the big long structures and the strength of mineralization seen at the Jocuixtita with the main difference being that Jocuixtita is predominantly a silver project with base metals while Tahuehueto is a gold project with base metals.
RI: Next steps?
RS: Once we’ve established access to the project site we will commence underground sampling in the existing exploration adits, surface sampling, surface geological mapping after which we intend to go very quickly into a preliminary drill program.
RI: How is the cash flow situation and how much cash does Soho Resources have in the bank?
RS: We’ve got about $350,000 in the bank. We’re intending to get back to the market in the next couple of months to raise additional operating capital.
RI: How should investors evaluate Soho Resources?
RS: Soho has to be considered an advanced-stage explorer with a premier project that is fairly close to a production decision. We’re highly undervalued. An evaluation by London Based Objective Capital clearly demonstrates this giving Soho Resources a valuation of about thirty-five cents per share in August 2009. Currently, we’re trading at around seven or eight cents due to the market conditions. So investors should view us as a huge opportunity to get involved with an advanced stage exploration project that I’m convinced will make a mine in the near future.

Disclosure: No Positions