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Bear Creek identified and staked the Santa Ana Property in 2004, based on its potential to host a near-surface, bulk-tonnage silver deposit. The un-drilled prospect then covered extensive workings where colonial-era miners had exploited high-grade silver mineralization. Initial exploration by Bear Creek revealed a large silver anomaly that was subsequently determined to be at least 2.5 kilometers long by 600 meters wide. Santa Ana was the first grass-roots discovery made in the same epithermal belt now hosting the Company's advanced Corani Project. The first two phases of wide-spaced drilling completed by Bear Creek in 2006 confirmed the presence of a significant bulk-tonnage silver deposit with many favorable features, including silver mineralization amenable to low-cost heap-leaching and open-pit mining at a low stripping ratio. A third phase of drilling is expanding the footprint of the silver mineralization, defining high-grade zones that enhance the value of the property, and providing data that continue to support the positive results of preliminary metallurgical test-work. Santa Ana is a high-priority exploration project rapidly advancing to the development stage that still offers excellent potential for new discoveries. The project covers 1.4 square kilometers of favorable geology, of which about 50% has been tested by wide-spaced drilling. Location and Access The Santa Ana Property is situated in the Department of Puno near the border with Bolivia, about 200 kilometers south of the Corani Project. The project is a three-hour drive from the city of Puno, mostly by paved highway and a short distance on an upgraded dirt road. Bear Creek controls 100% of 6,300 hectares of mineral rights covering the mineralization defined to date and potential extensions. Because the project lies within the 50-kilometre Peruvian border zone, the Company has applied for a special decree that allows foreign company ownership within this zone and expects formal approval in due course. Geology and Mineralization
Bulk-tonnage silver deposits such as Santa Ana are not common, and until the discovery of San Cristobal in the 1990s, there were few geological models to guide exploration for such targets. Bear Creek's Corani Project is also hosted in a similar geological environment as Santa Ana. Shared exploration and drilling data benefit both projects. Exploration Programs Few early-stage exploration programs are as successful as the initial program at Santa Ana, which included geophysical and geochemical surveys, geological mapping and sampling focused on mineralized showings and shallow historic workings. This work identified coincident geophysical and geochemical anomalies where 446 rock-chip samples returned average grades of 80 g/t silver, 0.30% lead and 0.23% zinc. A Phase I drilling program of 11 widely spaced holes in early 2006 confirmed the bulk-tonnage potential of the property while also returning significant results, notably 12 meters of 189 g/t silver at surface. The Phase II drilling program continued to establish large volumes of near-surface silver mineralization. Within a one-square-kilometer area, all but four of 28 widely spaced holes (up to 500 meters apart) intersected silver mineralization. By year-end 2006, Santa Ana had been tested by 4,311 meters of drilling in 37 holes. The average of all reported intercepts in both drill phases is 53 meters averaging 43.9 g/t silver, with many higher-grade intervals. (See tables below for complete results of the 2006 drilling campaigns). A 2,500-metre, Phase III drilling program began in April of 2007. By mid-May, drilling at Santa Ana totaled 5,034 meters in 42 widely spaced holes, of which 39 holes intersected mineralization. Results from the first five holes exceeded expectations by returning several high-grade intersections, prompting Bear Creek to expand the 2007 drilling program in order to test extensions of known mineralization and explore new areas with significant surface values. Highlights from this phase of drilling include: 152 meters grading 96.3 g/t silver, including 52 meters at 240 g/t silver from Hole SA-2B; and 20 meters at 128 g/t silver, including 4 meters at 416 g/t silver from Hole SA-23. Drilling continues to expand the oxide-dominant silver mineralization and is starting to define high-grade feeder structures that represent potential underground mining targets. The 2007 work program also includes a soil-sampling program to test for blind mineralization in areas to the north, south and southwest of known mineralization. The Santa Ana Project is advancing to the stage where a preliminary economic assessment (or scoping study) will soon be initiated in order to provide the first indication of the project's potential. The study will be based on data from ongoing exploration and drilling programs, metallurgical test-work, and environmental and socio-economic studies. Resource Estimation The current resource estimates using a $12/ounce silver resource price are:
Bear Creek Mining, Santa Ana Deposit Mineral Resource Based on 20 g/t Cutoff
and Prudent Open Pit Constraints January 15, 2007
The stripping ratio is approximately 1.8:1; however, the block model considers blocks with no nearby drill holes as waste and additional drilling will convert many of these blocks to resource, reducing the stripping ratio. Lead and zinc are not recovered in a heap leach; however, flotation testing will examine this up-side as higher-grade base metals are seen in several drill holes. The resource estimate was prepared based on 17,991 meters of drilling in 104 diamond drill holes completed through November 2007 and was prepared by Independent Mining Consultants (IMC) of Tucson, Arizona, with John Marek, P.E. acting as the Independent Qualified Person under NI 43-101. The estimation utilized indicator kriging to establish the limits of mineralization and block grades were then calculated using a linear kriging method using 5-meter drill hole composites. The 20 g/t Ag cutoff was chosen based on operational assumptions substantiated by recent metallurgical test work completed at McClelland Labs and cost assumptions provided by both IMC and Resource Development Inc. (RDI) of Denver Colorado. Deepak Malhotra, PhD acted as Independent Qualified Person for process costs and recoveries. Metallurgy Preliminary metallurgical test-work has shown that heap-leaching processing methods will likely be the best option for lower grade portions of the Santa Ana deposit, whereas milling and vat-leaching may be used for the "high-grade" silver mineralization encountered in the Phase III drilling program. Both the mill products and crushed heap-leach material will ultimately be combined on the heap-leach pad in a processing method known as pulp agglomeration. The positive results of the first-phase metallurgical program were recently confirmed by two separate laboratories based on 10 representative samples from five drill holes spaced throughout the Santa Ana deposit. Bottle-roll tests from the two labs showed average silver recoveries of 71% and 85%, respectively. At this stage, Bear Creek anticipates that the potential combined leach recovery of both the mill products and crushed heap-leach material will be about 70%, with up to 85% recovery after grinding of the higher grade silver mineralization. Large-scale column-leach tests are under way in order to evaluate expected recoveries under actual heap-leach conditions and define optimal crush size, as well as cyanide and lime consumption. Maps & Sections
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