By Andrew K Burger

Just two years in the making, Impact Silver Corp. s [TSX.V:IPT] efforts to revive historic silver mines in Mexico is bearing more fruit. The company reported operating earnings of C$2.07 million for fiscal 2007, having ramped up silver, lead and zinc mining 47%, to 99,918 tonnes, at three producing mines in central Mexico s Zacualpan silver district, part of its Royal Mines of Zacualpan Project.

Management anticipates further gains in 2008, shooting for a goal of producing 1 million ounces silver equivalent. They aim to process 500 tonnes of ore per day within 12 months, proceeds from which will be used to purchase additional mining equipment and for expanding underground mining, Impact s Sunny Pannu told Resource Investor. A 200 tonne per day semi portable mill has been purchased at a cost of US$700,000 and is being dismantled and transported to the Zacualpan site. The semi portable mill will enable company engineers to more flexibly and efficiently follow up on drilling results as they come in, Pannu explained.

Impact also plans to step up exploration in 2008. Its exploration budget for this year has more than doubled and should come in between C$3 $4 million, as management looks to accelerate work to build inventories and move potential production to a faster track. There are plenty of targets. More than 700 known prospects have been identified on the Zacualpan and recently acquired Mamatla properties and more than 15,000 metres of surface and underground drilling is planned.

While the near term focus is to be in the vicinity of active mine workings at Zacualpan s Guadelupe, Gallega and Chivo Mines, the company is also hatching plans to explore prospects on the 200 square kilometre Mamatla prospect southwest of Zacualpan, as well continuing exploration work at Nueva Grande and Asturiana, two of its concessions in the Zacatecas silver district.

Zacualpan: Increasing Production Mill Throughput

With three mines producing more silver, lead and zinc ore at Zacualpan, throughput at Impact s on site mill rose to 274 tonnes per day in 2007 as compared to 196 tpd in 2006 and 145 tpd when Impact acquired the mine two years ago, a 189% increase.

Zinc and lead production increased while silver production fell year over year to 976 tonnes, 601 tonnes and 348,949 ounces, respectively as management decided to maximize zinc production in light of record high summer prices by extracting previously marginal ore while preparing higher grade silver mines for production, according to the company media release.

Having become the main source of high grade silver ore, Zacualpan s Chivo Mine looks like the focal point for engineering and production activity this year. An access adit was completed in Q4 and drifting began along the ore vein in December, resulting in 100 tpd of ore being processed at the company s 500 tpd mill. A second adit is being planned some 60 metres below the first.

Ore grades at the Zacualpan mines range from 200 to 450 g/t silver equivalent, Pannu elaborated. Production costs decreased to C$44.15 last year, or about C$5 per ounce silver equivalent, compared to C$59.55 in 2006. Management expects them to rise slightly this year due to continuing development of the Chivo Mine, but higher silver grades should more than offset them.

Impact is looking to reach its 500 tpd ore processing target by utilizing the extra capacity of its existing mill and bringing the 200 tpd semi portable mill into operation. Mining itself is conducted using a continuously operated underground drill with samples analyzed at the company s on site lab.

Management is bullish on commodity prices in the long term, feeling that metal demand will continue to be driven by huge infrastructure development in Asia, Pannu commented. The effects of the credit crunch and economic slowdown in the U.S. have not affected the company too much. The only effect is that of the U.S. dollar as our smelter contracts are in US dollars. However, the company has and is doing well despite the slowdown in the U.S., he added.

A Wealth of Exploration Opportunities

In addition to silver, lead and zinc, Impact has made new gold and copper discoveries at the Royal Mines of Zacualpan Project s Pacheco Prospect. Initial drilling results included 14.6 g/t gold and 0.46% copper across 2.7 metres true width and point to the potential for a copper gold district lying at depth below the silver district, according to management.

Impact also began drilling to explore an initial two targets on the Mamatla property late last year, a 200 sq. km. prospect that the company acquired in a government auction that took place last February. Historic exploration work was most advanced at Mamatla s Capire and Aurora 1 VMS deposits.

Best estimates thus far described in the Mexican government s public auction document by the Mexican Geological Survey are that the Capire deposit holds an indicated resource of 1,154,500 tonnes grading 0.22g/t gold, 73g/t silver, 0.45% lead and 1.13% zinc in a near surface zone with potential for open pit mining and open for expansion. The same document says that the Aurora 1 Deposit contains an indicated resource of 194,000 tonnes grading 1.28g/t gold, 180g/t silver, 2.13% lead and 4.45% zinc.

The recent acquisition of historical data is helping management further refine its exploration plans. On Feb. 14, the company announced that it would purchase a large amount of historic technical data including extensive geological, geochemical and geophysical information produced in the 1990s related to exploration of volcanogenic massive sulphide deposits in the area.

A total of 50,000 Impact shares will be paid out to Valgold Resources Ltd. [TSX.V:VA] in two equal installments within seven days of TSX Venture Exchange approval of the transaction and receipt of the data.

North in Zacatecas

With estimated past production of 1.2 billion ounces, central Mexico s Zacatecas Silver District is one of the world s most prolific historic silver districts. Yale Resources [TSX.V:YLL] is working to earn 80% interests in four of them.

Impact is pursuing aggressive expansion plans in Zacatecas, having to date acquired 100% interests in 17 mineral concessions and looking for additional acquisitions and joint ventures. Due diligence, exploration and engineering work to assess the production potential of its properties and the feasibility of a processing plant are under way.

In 2007, we focused on the Nueva Granada and Asturiana concessions, which cover veins branching off the Veta Grande Vein System, the major silver producer in the district, Pannu explained. Old plans indicated the veins were mined over a length of 700 metres and depth of about 150 200 metres so we plan to define that.

Field work has focused on the San Jose and Armado veins. The former crosses the concessions over a distance of 800 metres. Assay results of six channel samples averaged 239 g/t silver over 0.74 metres true width, with the highest coming in at 444 g/t silver over 1.10 metres true width. Trending west and running parallel the San Jose Vein has been traced over 500 metres. Assay results from channel samples reported 237 g/t silver over 1.92 metres and 1,320 g/t over 0.3 metres. Samples from surface dumps at the Cristian Mine returned 310 g/t silver, 24.2% lead and 8.0% zinc.

Impact management sees the ore that may eventually be mined at these concessions as sources of feedstock for a 200 tpd mill located in the Veta Grande area of Zacatecas. Impact holds a 25% Net Profit Interest in the mill, which is currently operating on a toll basis.

We still have the option on the 200 tpd processing plant which is operating intermittently custom milling for local miners, however, Impact engineers are assessing the plant for a final decision on the purchase. When we trigger the purchase of the mill that is when decisions will be made on where we go with Zacatecas. The option to purchase the mill extends another 2 years but we will likely do something sooner, Pannu commented.

By arrangement with: www.resourceinvestor.com

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