Silver Dragon Resources Inc. (OTCBB: SDRG) is a metals and mining company focused on the exploration and development in proven silver districts around the world, similar to companies like Minco Gold Corporation (AMEX: MGH) and Coeur d’Alene Mines Corporation (NYSE: CDE). Recently, the company reported significant progress at its Aobaotugounao property in Northern China, while its recently released NI 43-101 report suggests that it may be significantly undervalued.
Silver Dragon Resources Inc. (OTCBB: SDRG.OB) (the “Company”) is pleased to announce recent results from the ongoing 2011 drilling program at its Aobaotugounao Silver-Lead-Zinc polymetallic property in Inner Mongolia, Northern China. Aobaotugounao is a silver-lead-zinc polymetallic project owned by Sanhe Sino-Top Resources & Technologies, Ltd. (“Sino-Top), of which Silver Dragon Resources Inc. has a 40% equity interest.
Highlights of the latest discoveries at Aobaotugounao include the following:
- Aobaotugounao is the third property with industrial silver, lead and zinc mineralization findings after the Dadi and Laopandao properties of Silver Dragon.
- Soil geochemical survey has revealed at least two NW trending anomaly zones at the Aobaotugounao Property;
- Surface testing samples also indicate silver, lead, and zinc enrichments along alteration zones in the hosting Jurassic volcanic strata.
- Two drill holes reveal silver, lead, and zinc mineralization intervals at exploration lines 15 and 11, and the highest grades of silver, lead and zinc reach 48.5 g/t, 3.2% and 3.72% respectively;
- Further drilling is currently being conducted to identify more resource potential.
Aobaotugounao Property is one of six exploration properties of Silver Dragon in Inner Mongolia, China. This property is 21.07km3 and is located at 117*34″00″~117*37″30″N and 43*47″00″~43*50″00″E. It is approximately 9 kilometers to the Northwest of Tongxing Town of Keshiketeng County.
The main exposed rocks in the property are Upper Jurassic Manketouebo Formation (J3m) volcanic lava and pyroclastic rock series, and the typical rocks are rhyolitic crystal tuff, tuffaceous lava and rhyolite.
As of 2008, major exploration activities, including geological mapping, surface trenching and soil geochemical surveying were concentrated in the northeast part of the property. A total of 16 alteration zones with limonitization and silicification are found. Along the alteration zones, assay results of the pickup sampling show no significant mineralization of silver, lead and zinc. However, part of assay results of the alteration zones shows near industrial cut-off grades of silver, lead, and zinc, which indicate a potential to find mineralized bodies with industrial value within the alteration zones. The soil geochemical survey results show that, in northeast and southwest parts of the working area, at least two NW trended anomaly zones can be identified. The geochemical anomalies consist of silver, lead, zinc, copper and tin associations; as well as other associations, indicating hydrothermal mineralization in the area. The occurrences of the geochemical anomaly zones coincide with those of the alteration zones.
In 2011, more surface samples along the alteration zones were collected and analyzed. The results show several samples contain near cut-off grades of silver, lead and zinc (Table 1). Sample AH017, collected within surface trench TC2, has silver content (Ag 89.4 g/t; Pb 0.078% and Zn 0.14%), which indicates the existence of silver mineralized bodies with economic values.
Two drill holes, at exploration lines 15 and 11, have been operated and completed to test NW trending alteration zone and geochemical anomalies (Fig. 1 and Table 2). The assay results of drill cores show that both drill holes hit industrial Ag-Pb-Zn mineralization intervals.
Drill hole ZK1501 hits three mineralization intervals (Table 3): (1) from 22.65m to 23.75m interval, the highest grades are Ag 7.0 g/t, Pb 1.2% and Zn 0.15%; (2) from 38.9m to 41.4m interval, the highest grades are Ag 48.5 g/t, Pb 3.20% and Zn 2.49% (0.8m wide interval); (3) from 60.00m to 61.90m interval, the highest grades are Ag 8.8 g/t , Pb 0.58% and Zn 0.76%.
Drill hole ZK1101 reveals three Pb-Zn mineralization intervals (Table 4): (1) from 167.10m to 169.10m interval, the highest grade are Ag 7.5 g/t, Pb 0.38% and Zn 0.53%; (2) from 178.80m to 179.80m interval, the highest grade areAg 14.9 g/t, Pb 0.38% and Zn 3.72%; (3) from 202.15m to 204.25m interval, the highest grades are Ag 3.8 g/t, Pb 0.57 %, and Zn 0.72%.
These results are very important achievements obtained at the Aobaotugounao property. Because the geological setting and mineralization pattern in the property are the same as Dadi Ag-Pb-Zn Property, which is located to the south, it can be predicted that resource potential may be found at the Aobaotugounao Property.
The ongoing drilling project continues to be implemented at Aobaotugounao and the new exploration results will be reported as the data becomes available.
Dr. Tiebing Liu, P. Geo., a “qualified person” within the meaning of NI 43-101, reviewed and participated in the preparation of the technical information disclosed in this news release.
Fig. 1 This mapping area is located in the northeast part of the Aobaotugounao Property.
Note: The core sampling method is sawing the core in half for assaying, with the other half being put in a storage box with a red marker. The length of each sample varies from 0.5m to 1m depending on mineralization and petrology.
All assay data were made by ordinary chemical method in Yanjiao Central Laboratory of North China Nonferrous Geological Survey Bureau
The Aobaotugounao property covers a total of 21.07 km2. It is approximately 9km northwest of Tongxing Township, Keshiketeng County, Inner Mongolia. Geologically, it is characterized by a hydrothermal vein Ag-polymetallic deposit within Jurassic volcanic series. Recent geological work on the property has identified 16 alteration zones, three of which are Ag-Pb mineralization zones. Major alterations are limonitization, siliconization, chloritization and fluoritization. A geophysical survey has suggested the possible existence of silver, lead, zinc and copper mineralization zones below 150 meters from surface. The 1,000 meter drilling planned for Aobaotugounao will help further define the existing mineral zones as well as identify additional mineral zones within the exploration area. To date, about 916 meters of drilling (3 holes) have been completed, and two more drill holes are have been designed and will be operated later this year.
About Sino-Top — China Mining 2009 Award Winner
Sanhe Sino-Top Resources & Technologies, Ltd. (“Sino-Top”) was originally incorporated in 2003 as a Chinese company wholly-owned by Huaguan Industrial Corp. (“HIC”), a subsidiary of the state-owned North China Geological Exploration Bureau. Sino-Top became an American-Chinese joint venture in 2005. Silver Dragon Resources Inc. acquired Sino-Top in 2006, and currently owns 40% of Sino-Top after having sold 50% of its ownership interest to its Chinese partners. The Chinese side partners, led by Gansu Shengda Group Ltd. (“Shengda”), at 52%, and HIC, at 8%, collectively together own 60% of Sino-Top. Sino-Top holds exclusive exploration and development rights to six properties in northern China (Inner Mongolia), covering a total area of 139 km2. Sino-Top won the prestigious Prospector/Explorer of the Year Award for its Dadi Silver Polymetallic Project, at the China Mining Congress & Expo 2009 held in Tianjin, China, during October 20-22, 2009.
About Silver Dragon Resources Inc.
Silver Dragon Resources Inc. is a mining and metals company focused on the exploration, acquisition, development and operation of silver mines in proven silver districts globally. Silver Dragon’s objective is to acquire silver mining assets that contain promising exploration targets, have highly leveraged, out-of-the-money silver deposits, and/or are producing properties with significant untapped exploration potential. It is management’s objective to grow the Company into a significant silver producer by developing the six Sino-Top properties in China in which the Company has 40% interest (particularly the Dadi, Laopandao and Aobaotugounao properties), and the Company’s Erbahuo Silver mine (through the Company’s Chifeng Silver Dragon subsidiary), also located in China (see project location map at: http://silverdragonresources.com/_img/China_Project_Location_Map.jpg).
For more information, please visit the Company’s website at: www.silverdragonresources.com (now available in Chinese).
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Cautionary Note on Mineral Reserve and Resource Estimates:
Silver Dragon Resources Inc. is a U.S. company that files reports with the United States Securities and Exchange Commission (the “SEC”). Information regarding mineralization and reserves included in the Company’s reports with the SEC are generally required to comply with the SEC’s Industry Guide 7. This press release and the study do not comply with Guide 7, because they were prepared in accordance with Canadian Institute of Mining, Metallurgy and Petroleum Standards, which have been adopted by NI 43-101 or Chinese Non-ferrous Resource Estimation Standards –. Accordingly, we caution you that the information contained in this press release and may not be comparable to information included in the Company’s SEC reports, and similar information made public by other U.S. companies under the United States federal securities laws and the rules and regulations thereunder. In particular, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” as used in this press release and the study are defined in and required to be disclosed by NI 43-101; however, these terms are not defined in Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into mineral reserves with demonstrated economic viability. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC standards as in place tonnage and grade without reference to unit measures.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained herein which are not historical, such as statements regarding the exploration and development of the Aobaotugounao Project, estimates of project performance, costs and other future metrics, and the Company’s plans and intentions, are forward-looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects,” “plans,” “anticipates,” “believes,” “intends,” “estimates,” “projects,” “aims,” “potential,” “goal,” “objective,” “prospective,” and similar expressions, or that events or conditions “will,” “would,” “may,” “can,” “could” or “should” occur. Estimates of mineralization may also be deemed to be forward looking statements, as it constitutes a prediction of what might be found to be present when and if a project is actually developed. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, financing risks, volatility of metal and other prices and costs, uncertainty of mineralization estimates, lack of operational control of projects, political risks, regulatory risks, operational hazards, certain delays beyond the Company’s control with respect to future assay results, delays in testing and evaluation of assays, and other risks detailed from time to time in the Company’s filings with the SEC.
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