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Black Mountain Resources Hits High Grade Silver In Maiden Drilling At Conjecture

Black Mountain Resources (ASX: BMZ) has confirmed high grade silver zones as well as uncovered a new mineralisation structure at its Conjecture Silver Project in Idaho, with grades of up to 715 grams per tonne (g/t) silver and silver equivalent from maiden drilling.

The company has received positive assays from a further six holes and initial results from geophysical work at its maiden drill program at the project.

Highlight intercepts include:

- 1.38 metres at 715g/t silver and silver equivalent from 101 metres;
- 3.91 metres at 363g/t silver and silver equivalent from 38 metres;
- 0.73 metres at 340g/t silver and silver equivalent from 17 metres; and
- 3.04 metres at 157g/t silver and silver equivalent from 40 metres.

The drilling program is the first exploration drilling undertaken at the Conjecture Project since the 1980s and, importantly, has successfully confirmed the grades and the presence of historic mining blocks identified by previous sampling, exploration and mining undertaken at the property.

The results also highlight the high gold, lead and zinc content of the structures. The credit for these minerals further improves the economics and enhances the potential of the project.

John Ryan, chief executive officer, commented: "The exciting results from drilling and geophysical work at Conjecture continue to demonstrate the exceptional prospectivity and the potential scale of Conjecture.

"Not only have we confirmed the presence of previously known areas of high grade silver mineralisation, thereby strengthening our confidence in the accuracy of previous work but we have also identified very promising new targets within our patented claims.

"With this in mind, we look forward to receiving the results from the remaining five holes over the coming weeks, which we already know have encountered mineralisation, in tandem with advancing development as we move towards initial production in H1 2013."

The company recently completed a 16-hole, 1,800 metre diamond core drill program at the previously producing mine.

The drilling was undertaken from three drill pad locations, with each location drilled into the hanging wall through the vein structure into the footwall material.

The vein structures encountered showed mineralisation and the assays returned have confirmed high concentrations of silver with gold that correspond with historical values of mineralisation and correlate to mapping and underground structures seen in the historical Conjecture workings.

The decision was made to extend the program from 10 holes to 16 due to positive results from drilling undertaken at the Rainbow Pad, where shallow mineralisation was intercepted in an area previously untested.

Seven of the holes targeted the historic "31" mining block, where high grade silver mineralisation was delineated in the early 1980s.

The results are consistent with the historic data for mining block 31 identified in the 1981 Reserve Report on the Conjecture Silver Project which estimated the block to contain 50,000 to 60,000 tons of silver at an estimated grade of 350 to 375g/t silver.

Black Mountain drilled a further eight holes from the Rainbow Pad targeting the Conjecture Shear Zone, an area which has not previously been explored or tested to the east of the historic ore shoot.

The mineralised structure identified by results from holes 8 and 14 is much closer to the surface than anticipated, with results of almost 320g/t silver at only 17.6 metres from the surface.

The results from drill holes 7, 11-13, 15 and 16 are anticipated to be available in the next fortnight.

Target anomalies

Black Mountain recently completed an initial induced polarity (NYSE:IP) survey strike line along the Conjecture Shear Zone of about 6 kilometres.

The strike identified a number of target anomalies along the zone which will require further test work.

Further desktop modelling and mapping is being undertaken on these results and a program involving cross lines across prospective areas is being developed.

The IP work continues to develop new potential drilling targets and will require geochemical and structural geology work to be done on the new targets for further development.

Historical U.S. silver province

The Conjecture and New Departure projects are located in two of the world's most developed silver mining districts.

North western U.S. is known to host extremely high grade silver with grades often averaging 400-plus grams per tonne.

Black Mountain has a 70% interest in both the Conjecture and New Departure projects.

Conjecture hosts a non JORC-compliant Resource of 8.5 million ounces at 14.8 ounces per tonne, while New Departure contains a non JORC-compliant Resource of 2.5 million ounces at over 15 ounces per tonne.

Director appointment

Shannon Robinson has been appointed as an executive director.

Robinson is a former corporate lawyer and corporate advisor with significant experience in providing corporate, capital raising, transaction and strategic advice to numerous public companies.

She has been involved with Black Mountain since its incorporation and is also currently a director of Kaboko Mining(ASX: KAB).

Analysis

These maiden drilling results successfully confirm the high grades and the presence of historic mining blocks identified by previous sampling, exploration and mining undertaken at the property.

Assays also highlight potential gold, lead and zinc credits, as well as new, near-surface silver mineralisation, all of which improve the economics of the project.

Black Mountain offers compelling value for investors given its near-term production profile as well as exploration upside.

Today's strong silver prices and the simple mining and processing method results in a very low operating cost environment for Black Mountain's projects.

We expect that Black Mountain's profile will lift as it approaches first production and transitions to miner.

We would expect significant upside in the current valuation of $14 million given the company's EV/Resource ounce ratio is significantly below that of silver peers such as Cobar Consolidated (ASX:CCU) and Alcyone Resources (ASX: AYN).

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