10:48 AM EDT, 06/18/2020 (MT Newswires) -- Sierra Metals Inc. (SMT.TO) saw gains of 2.5% and edged up 0.04% on the NYSE American after saying on Thursday that it discovered a new high-grade silver zone with "significant' widths at its Cusi mine in Mexico.

The new high-grade silver vein system includes true widths of 17.45 meters of 428 g/t silver (464 g/t silver equivalent), 9.35 meters of 304 g/t silver (327 g/t silver equivalent), 8.75 meters of 303 g/t silver (322 g/t silver equivalent) and 4.90 meters of 1,140 g/t silver (1,163 g/t silver equivalent), the company said.

The discovery is located in an area called Northeast - Southwest System of Epithermal Veins and was the result of mine development work in the last few months, as well as confirmatory drilling.

The discovery also extends the Cusi vein systems in the northeast of the fault. The veins, previously considered to be barren, are reporting above-average silver grades and widths compared to structures previously known at the mine in the southwest of the Cusi fault, according to Sierra.

Sierra plans to drill another 1,000 meters to better understand the extension of the zone at depth and to the northeast. The mine area covers 11,657 hectares at an elevation range of 1,950 to 2,460 meters above sea level in the Sierra Madre Occidental Mountain Range.

Under care and maintenance during the government-imposed shutdowns, the management team completed an optimized view of the entire mine operation, changing the interpretation of the geological system based on updated information. This is expected to help better control and improve head grades and dilution, as well as make better use of Cusi's silver mineral resources.

The main access ramp has also been extended to an opening of four meters by four meters, allowing access to larger 30-ton capacity trucks and improving ore haulage efficiency. Sierra expects to recommence production at Cusi after mine development work has been completed.

Production will include ore from Santa Rosa de Lima zone, the Promontorio zone and from a series of east-west vein systems, including the new zone announced today. Sierra management aims to ramp up to 1,200 tonnes per day by the end of the year, when the Cusi mine is expected to be self-sustainable and cash flow positive.

In addition, studies are scheduled to begin on the potential expansion of the Cusi mine in the second half of the year. Work will include infill drilling at the Santa Rosa de Lima, Promontorio, and San Nicolas zones to improve and build on mineral resources. Management also sees further brownfield potential in unexplored areas close to the Santa Rosa de Lima zone.

Price: 1.04, Change: +0.03, Percent Change: +2.48