(MENAFN - ProactiveInvestors - Australia) Black Mountain Resources (ASX: BMZ) is on track for first production from its New Departure Silver Project in Montana in the March quarter 2013 with the recommencement of development works.
Importantly, positive progress is also being made at the Conjecture Silver Project in Idaho, which is on track for initial production in the June quarter 2013.
The company has received federal health and safety regulatory approvals for development works at New Departure and equipment and personnel are currently being mobilised to site.
John Ryan, chief executive officer, said: "We are highly encouraged by the progress made at both our near term U.S. production assets, Conjecture and New Departure.
"Development at both projects is focused on achieving high grade silver production from historically worked areas over the next six months.
"At New Departure, having received sign off from the federal health and safety authorities, we will rapidly advance development work over the coming days with a view to commencing production early next year.
"As well as having near term production targets, both projects have demonstrated exciting exploration upside potential following recent drilling campaigns at each site."
New Departure development
At New Departure, the development work will initially complete the rehabilitation of the Laczay Adit and Tunnel.
A 335 metre decline will then be driven at a 15% decline to access historic workings below the historic blocks known as the Main Zone, additionally allowing access to the Quien Sabe Zones and the Bonanza Zones by way of secondary drifts off the main decline.
Black Mountain has now completed a 13-hole, 3,000 metre drill program targeting potential down-dip extensions of the historic workings and IP anomalies identified through geophysical work.
Assays will be released as soon as they are available.
Further geophysical and structural geological mapping was also undertaken on the project.
A number of further induced polarisation anomaly targets have been identified over the claims and an additional geophysical and geochemical program is planned prior to drilling prioritised targets in the June quarter 2013.
Conjecture progress
Meanwhile, over at Conjecture, the installation of culverts at the portal entry for the Graham Adit is almost complete.
Following this, Black Mountain will then begin work to construct a decline to cross cut and access historic working levels.
Cross cuts from the decline to the vein zones are proposed to be driven about every 200 feet (61.2 metres).
Additionally, planned i-drifting on the vein will enable bulk sample testing of the vein zone as well as delineation of additional potential resource blocks for eventual mining.
Ryan said driving the decline to cross cut the historical workings will enable Black Mountain to commence low cost high grade silver production.
Following completion of recent drilling, which intercepted several shallow high grade silver zones and identified new mineralisation zones, further desktop and geological work has been undertaken.
Black Mountain is currently developing an exploration program for March 2013 onwards.
This second phase is expected to include further geophysical work together with a drill program to test induced polarisation anomalies identified.
"Although some delays have been experienced at New Departure due to a backlog at the assay laboratory, we recently announced the significant intercepts of high grade silver up to 1,106 grams per tonne near to surface at Conjecture," Ryan said.
"With this in mind, we are now planning a second phase of drilling and geophysical work for March 2013 onwards which will strengthen our understanding and scope of the mineralisation at the projects."
Analysis
Proactive Investors believes the current share price of around 0.195 does not come anywhere near the intrinsic value inherent in the projects, the value of the resources nor the near term production assets.
We believe that a share price of closer to 0.30 is warranted.
