TORONTO, ONTARIO -- (Marketwired) -- 07/10/13 -- Apogee Silver Ltd. ("Apogee" or the "Company") (TSX VENTURE: APE) reports that it has opened underground access to a number of mineralized vein systems in pre-production development at its Pulacayo project in south western Bolivia (See Figure 1 - http://media3.marketwire.com/docs/ape710-F1.pdf). A development and sampling program in the OB6 drift exposed a vein with average grades of 868g/t silver, 11.95% lead, and 5.05% zinc over a 97m strike length and average width of 0.61m (Figure 2 - http://media3.marketwire.com/docs/ape710-F2.pdf).
Grades as high as 3,130 g/t silver, 38.69% lead and 22.47% zinc have been observed elsewhere within this vein over corresponding widths of 0.33m for the silver & lead, and 0.37m in respect of the zinc. These results correlate well with those of historical sampling and underground exploration drillhole PUD 083 (not included in the average grade calculations above), which intersected the vein approximately 6m below the development, and are also above the stated NI 43-101 mineral Resource and Reserve grades (see press release dated January 17th, 2013). Stoping operations continue in the original trial mining OB6 stope and average diluted grades are shown for ore extracted from each stope panel in Figure 3 (http://media3.marketwire.com/docs/ape710-F3.pdf).
The ore mined was stockpiled at Pulacayo and then transported and toll milled at Potosi, 200km from the mine. Since trial milling began in 2012, over 11,000 tons has been treated to date to recover more than 92,000 silver equivalent ounces(1) in lead and zinc concentrates for an average overall silver recovery of 82.71%, using third party toll processing facilities. The average mill head grades over this period were 249g/t silver, 2.31% lead and 2.49% zinc, higher than the stated NI 43-101 mineral Resource and Reserve grades (See Press release dated 17th January 2013), despite dilutive development ore being the predominant source of material for milling to date. Proceeds from the sale of concentrates have been used to fund pre-production activities and continue with training of the local work force.
The Company has initiated the process of seeking potential financial partners to assist in the construction of its Phase I mine & mill complex, which is designed to produce 2.5 million silver equivalent ounces per year (see press release dated January 17th, 2013). This production level is supported by the NI 43-101 technical report entitled Pulacayo Project Feasibility Study (filed on www.sedar.ca on Mar 1, 2013), and showed a positive pre-tax Internal Rate of Return of (IRR) of 47.1% and after-tax IRR of 32% at silver price of US$28.00/oz. Sensitivity analysis to metal price in the study using a lower silver price of US$19.00/oz returned a positive pre-tax Internal Rate of Return (IRR) of 22.3% and an after-tax IRR of 14.1%. In the light of the reduction in metal prices, the Company has been continuously reviewing its operational performance and is curtailing discretionary spending. Given the limited pre-production volumes, this includes the temporary halting of toll milling operations.
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