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However, if Christopher Ecclestone, principal and mining strategist at Hallgarten & Company, is to be believed, the zinc at the property may also be worth a look.
It’s been a sparse news year thus far for Vancouver-based Levon Resources (TSX:LVN), but the company made up for that today with the release of an updated resource estimate for its Mexico-based Cordero project.
The new report, which takes into account all Phase 4 core drill results to date, is an update of the company’s June 2012 resource estimate. It includes an indicated resource containing 488,494,796 ounces of silver, 1,366,129 ounces of gold, 9 billion pounds of zinc and 4.7 billion pounds of lead in 848.5 million tonnes of material grading 41.03 grams per tonne (g/t) silver equivalent; that includes 17.91 g/t silver, 0.05 g/t gold, 0.479-percent zinc and 0.254-percent lead at a cut-off grade of 15 g/t silver equivalent.
Silver equivalents are calculated at $20 per ounce silver, $1,250 per ounce gold, $0.94 per pound zinc and $0.95 per pound lead.
“The new resource estimate includes a 34% increase in the indicated silver resource over the Company’s June 2012 resource estimate,” said Ron Tremblay, president and CEO of Levon, adding, “[w]e are pleased with the Company’s progress at Cordero, which has advanced quickly from our original discovery in 2009 through four accelerated drill programs to reach the present resource estimate.”
Today’s press release also notes that the open-pit resource geometry contains an inferred resource of 44,448,039 ounces of silver, 84,746 ounces of gold, 663,311 million pounds of zinc and 396,532 million pounds of lead within 92,158 million tonnes of material. Grades for that material sit at 31.4 g/t silver equivalent, including 15 g/t silver, 0.029 g/t gold, 0.327-percent zinc and 0.195-percent lead at a cut-off grade of 15 g/t silver equivalent.
Also encouraging is the fact that, according to Vic Chevillon, Levon’s vice president and director, “[a]dditional upside potential exists proximal to the resource for contact replacement deposits, in areas yet to be delineated on the margins of the resource.” He also said, “[t]here is also a younger porphyry controlled zinc system in the southwest, and younger porphyry copper and molybdenite mineralization in the northeast part of the resource that has been intersected in deep holes … beneath the presently modeled open pit.”
Think zinc?
Even before the release of today’s updated resource estimate, Levon had touted Cordero as “one of the world’s largest silver resources.” However, if Christopher Ecclestone, principal and mining strategist at Hallgarten & Company, is to be believed, the zinc at the property may also be worth a look.
Writing yesterday for InvestorIntel, he points out that the company’s “main concern, after financing, is that its Cordero project is widely perceived as a low grade, bulk tonnage deposit, which will need favorable metal recoveries, metal prices and low operating costs to be developed.” However, if Levon can devise a “production plan that gets product out of the ground in very short order,” it may be able to offset those issues by taking advantage of zinc’s current good fortune.
Zinc, said Ecclestone, is doing well largely because large zinc mines are running dry — to the extent that some have closed or are set to close. Indeed, he states, “[i]n the space of a few months the metal that suffered from chronic narcolepsy has awoken from its slumbers and risen from the low 90cts range to over $1.06 per lb in recent trading.” That’s pretty impressive, and in his opinion, the base metal’s price is only set to improve — he expects to see zinc at $1.20 per pound by the end of the year “and would not be surprised to see it top $1.50 in 2015.”
Levon is of course focused on silver, so it might seem odd that Ecclestone is encouraged by its zinc prospects. However, he points out that many of the zinc projects in the works are “monster projects” that “will NOT be dusted off until zinc is a lot higher (north of $1.20) and for a sustained period of time (at least a year).” Meanwhile, “[t]he Canadian market, once a great happy-hunting ground for zinc plays, has been seriously denuded.” As a result, his “attention is on names like Levon and Canadian Zinc [(TSX:CZN)] in the up and comers.”
Levon closed today at $0.24 each, down slightly from yesterday’s end point of $0.255.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Levon Resources is a client of the Investing News Network. This article is not paid-for content.