The Vancouver-based company holds 86,900 ha of ground covering 10 concessions, subdivided into three projects: the 10,000-ha Tambo Grande, the 73,700-ha Lancones and the 3,200-ha Papayo.
Situated in the department of Piura, the Tambo Grande concessions lie within 50 km of the Peruvian-Ecuadorian border. Working in this politically sensitive frontier zone requires a supreme decree from Peruvian President Alberto Fujimori. Yet another decree is required to give formal assent to property agreements negotiated by Manhattan and a state-owned company.
Manhattan President Graham Clow says it has taken almost three years of “tough negotiations” to advance the approval process. “It took a long time to clear the title and ownership away from BRGM [French government-owned Bureau de recherches gologiques et minires], and the next process, which also took a long time, was the negotiation of agreements.”
However, Clow is confident a US$10-million drill program will get under way by May 1.
Manhattan is required to carry out an exploration program and feasibility study over a 3-year period and, in return, will earn a 75% interest in the Tambo Grande concessions. The remainder will be held by the Peruvian government.
Manhattan holds a 100% interest in the Lancones concessions and 51% of the Papayo property. A state-owned company holds the remaining 49% of Papayo, where Manhattan is required to spend $5 million on exploration over five years and pay a $250,000 option fee.
The company’s flagship property, Tambo Grande, is in the Sechura sedimentary basin, about 100 metres above sea level. Piura, the nearest major town, has a population of about 250,000. The Pan-American Highway crosses a portion of the property, and there is paved access to a deep-water port facility in the town of Paita, 110 km to the west. Paita is a fully operational bulk and container port capable of handling ships with capacities up to 30,000 tonnes.
The town of Tambo Grande (population 10,000) lies on top of about half of the deposit, and Manhattan has spent the past two years working closely with the community, signing impact and benefits agreements. The remaining seven anomalies at Tambo Grande, as well as the Lancones and Papayo anomalies, are all in agricultural or undeveloped areas.
Tambo Grande was discovered jointly in 1979 by the Peruvian government and BRGM.
Seven geophysical gravity anomalies were outlined within a 5-km radius, though only one was drill-tested. This was primarily due to the presence of gossan outcrop. Twenty-one drill holes, or 3,246 metres, defined an inferred resource of 42.3 million tonnes averaging 2.04% copper, 1.47% zinc and 0.36% lead, as well as 37.7 grams silver per tonne. This translates into about 2 billion lbs. copper, 1.5 billion oz. zinc and 42 million oz. silver. The resource was defined within a 700-by-300-metre area and to a depth of 250 metres. Preliminary calculations indicated a stripping ratio of about 2-to-1. The deposit remains open to the southwest, where the centre of the Tambo Grande gravity anomaly is situated.
To date, neither the sulphide body nor the overlying leached iron cap (depleted in base metals) have been comprehensively sampled for gold. Previously, however, BGRM analyzed 49 random samples from mineralized intervals, and the best assays returned up to 4.5 grams gold per tonne.
Mineralization is zoned into three metallic types:
- Type-1 mineralization is found at an average depth of 30 metres and lies beneath a 20-metre-thick, oxidized leach cap and a 10-metre thick layer of gravel. The mineralized layer is tabular and 50 metres thick. The resource in this zone has been pegged at 14.7 million tonnes grading 2.49% copper, 0.5% zinc, 0.33% lead and 40.8 grams silver. Grades of up to 10% copper have been documented.
- Type-2 mineralization exists below the Type-1 body and is poorly defined within a larger, dominantly pyritic body. The resource in this section weighs in at 20.8 million tonnes averaging 1.43% copper, 0.5% lead, 2.59% zinc and 43.2 grams silver.
- Type-3 mineralization lies at the base of the pyritic body and is host to a resource of 6.8 million tonnes grading 2.91% copper, 0.01% lead, 0.11% zinc and 13.7 grams silver.
Preliminary metallurgical tests on Tambo Grande indicate that copper recoveries average about 70% and yield a concentrate grading 28% copper. Manhattan believes the recovery of payable metals can be enhanced by grinding the ore to 25-30 microns.
Once final approvals are received, the company will launch a 50,000-metre program of diamond drilling, combined with further geophysical surveys and feasibility and environmental studies.
The drilling will have three objectives: to upgrade the geological resource at the Tambo Grande deposit to a mineable reserve; to extend the resource to the south; and to test geophysical anomalies on surrounding concessions. A core-logging and sample preparation facility has been set up 60 km from the site. ITS-Bondar Clegg will operate the preparation facility, with H.A Simons providing independent monitoring.
Two diamond drill rigs are in place, and another three can be made available if required.
Manhattan conducted some follow-up geophysics on the property in 1997; other than that, no exploration has been performed since 1981.
Recent geophysical work on the Lancones and Papayo concessions, which are contiguous to the southern boundary of Tambo Grande, has identified more than 10 other anomalies that warrant investigation.
Manhattan recorded an overall loss for 1998 of US$700,000 (or 3 cents per share) on revenue of US$8.4 million, compared with US$2 million (9 cents per share) on revenue of US$5.2 million in the previous year. Operating cash flow between the two periods rose to US$1 million from US$994,000
The 1998 loss is attributable to higher cash costs at the Morris mine, in Mexico, where proven and probable reserves stand at 3.4 million tonnes averaging 1.73 grams gold. The calculation is based on a gold price of US$300 per oz., a silver price of US$5 per oz., a recovery rate of 65%, and a cutoff grade of 0.74 gram gold per tonne.
The heap-leach operation produced 21,100 oz gold and 78,000 oz. silver in 1998 at a cash operating cost of US$252 per oz., compared with 17,000 oz. at US$290 per oz. in the previous year. The higher cash costs at Morris are due to heavy rainfall, poor grade control and unreliable assay procedures in the mine laboratory. However, corrective measures have been put into place and Manhattan expects to produce 29,000 oz. gold and 116,000 oz. silver in 1999 at a cash operating cost of US$210 per oz.
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