Great Panther Silver (TSE:GPR)(NYSE MKT:GPL)(AMEX:GPL) today said it has bought a 100 per cent stake in the El Horcon silver-gold project in Jalisco State, Mexico for US$1.6 million in cash.
The property, previously owned by private Mexican company Compania Minera El Dore, covers 7,908 hectares in 17 contiguous mining concessions and is located 60 kilometres northwest of Great Panther's Guanajuato Mine Complex.
The company noted it is within trucking distance to its Cata processing plant at the complex.
"The El Horcon Project has excellent potential to be a satellite mine for our Guanajuato Operations," said Great Panther CEO, Robert Archer.
"We are very pleased with this acquisition as it is consistent with our strategy to acquire assets with near-term production potential in the districts where we already operate, while looking for a larger scale, stand-alone acquisition elsewhere in Latin America."
El Horcon is a historic mining operation but the extent of past production is unknown.
The property is located on the northwest trend of the prolific Guanajuato mining camp and hosts similar silver-gold mineralized epithermal veins to those seen at the company's existing operations, it said.
El Horcon hosts nine known veins, with the Diamantillo vein traceable on surface for more than four kilometres. Several underground workings exist, the most extensive of which is the Diamantillo Tunnel, Great Panther noted.
Chip channel sampling by a previous operator, Exmin Resources Inc, returned average grades for the Diamantillo Tunnel of 1.97 grams per tonne (g/t) gold and 99 g/t silver, over a strike length of 80 metres.
Meanwhile, the Diamantillo vein at the El Horcon workings, 45 metres to the northwest of the Tunnel, returned average grades of 1.50 g/t gold and 20 g/t silver.
Exmin and then-partner Hochschild Mining plc completed around 6,500 metres of diamond drilling.
The company said the "most representative diamond drill hole to the Diamantillo Tunnel", HOR-07-01, intercepted 3.60 metres at 2.88 g/t gold and 61g/t silver - 45 metres directly below the tunnel.
Great Panther added that its sampling at the property so far is consistent with these historic results.
Preliminary metallurgical testing at the company's facilities in Guanajuato also shows the El Horcon mineralization to be compatible with the existing mill feed, the miner said.
While further testing is still necessary, it is expected that recoveries from El Horcon should be roughly 92 per cent for gold and 80 per cent for silver.
Great Panther said that for its initial geological program, it will focus on a shallow zone of silver-gold mineralization on the Diamantillo vein for a six month phase one exploration program.
Mapping and sampling of the property will start immediately, to be followed by diamond drilling as soon as permits are acquired, with the aim of outlining a new mineral resource for the project.
Great Panther Silver is a primary silver mining and exploration company focused on its two operating mines in Mexico, Guanajuato and Topia.
Aside from the development stage San Ignacio, the company also holds the exploration stage property, Santa Rosa, which is located 15 kilometres northeast of Guanajuato.
Last month, Mexico-focused Great Panther posted a 69 per cent increase in second-quarter revenues as processed ore increased by 3 per cent sequentially.
Overall, the company said that gold production increased 22 per cent to 2,354 ounces from the second quarter of 2011 and Topia silver production reached a record 148,439 ounces, despite lower throughput.
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