Catherine McLeod-Seltzer, president of
Although the first reverse-circulation rig is now on-site, the start of the 20,000-metre program was delayed for several months owing to delays in constructing a 10-km access road to the site. It was a daunting task, says McLeod-Seltzer: within a section of several kilometres, 40 switchbacks had to be built to traverse a 1,000-metre drop in elevation.
The drilling was further delayed while the company waited for drill rods and a second rig to clear customs.
Luicho is a low-sulphidation, epithermal gold prospect perched atop steep and rugged terrain at an elevation of about 2,700 metres in a mountainous region of the Ayacucho department, near the town of Pomacocha. The main target area is related to a complex series of converging regional and subsidiary strike-slip faults that have created a broad zone of intense fracturing. This structural corridor extends 1,850 metres in length and averages a width of 250 metres.
Since acquiring an option to buy a 100% interest in the 10-sq.-km property in September 1999, Pacific Rim has sampled every accessible outcrop and cliff face, either by foot or rope. To date, 8,226 individual rock-chip channel samples have been collected from the property using hammer and chisel methods along 2-metre sections for an average a grade of 1.68 grams gold per tonne. Of these, 5,558 samples were taken in the structural corridor and averaged 2.31 grams. Almost two-thirds of the samples from the structural corridor exceeded a cutoff grade of 0.31 gram and averaged 3.5 grams. Only six of the total samples were found to contain no gold.
“It’s a really consistent, very large gold-bearing system,” McLeod-Seltzer tells The Northern Miner. “It’s almost porphyry copper dimensions.”
The structural corridor has been divided into three broad contiguous target zones — northeast, central and south — based on the structural intensity of the rock, or the degree of fracturing. In the northeast zone, 1,432 samples averaged 1.34 grams; in the central area, 3,329 samples averaged 3 grams; and in the south area, 795 samples averaged 1.14 grams.
The first fence of 5-6 drill holes will be drilled across the northern end of a high-grade section in the central zone. The high grade occurs in a wedge-shaped area measuring 430 metres along strike, with a width averaging 110 metres. The area averaged a grade of 6.69 grams based on 1,824 samples.
All drill holes will be angled 60 to the east in order to cut across all major fault trends to a maximum depth of 300 metres. The first hole is targeted to cross three of the major structures.
The drill fences will be spaced at 200 metres in the central zone and widened to 300 metres at each end. Within the fence, the holes will be spaced 100 metres apart. The drilling contractor is Colorado-based AK Drilling.
The gold mineralization is hosted in a stratigraphic sequence of sandstones and siltstones of the Cretaceous-aged Hualhuani formation. The stratigraphy in the main target area consists of local scabs of eroded, non-mineralized shale underlain by an upper 60-to-100-metre-thick quartz sandstone unit, which is exposed in the structural corridor. A lower, 3-metre-thick shale unit separates the upper sandstone from a 300-metre-thick middle sandstone unit consisting of alternating, thinly bedded shales and sandstones. The middle unit is exposed on the eastern side of the northeastern zone and at the northern end of the central zone. A lower sandstone unit is similar to the middle section but has a higher carbon content.
At the top of the upper sandstone unit, gold mineralization is enriched in a variable, 10-metre-thick sequence of black, carbonaceous sandstone. Most of the sampling has been restricted to the top 50 metres of the upper sandstone unit. Pacific Rim has been able to sample some 200 metres into the stratigraphy, north of the central zone and north of the bend in the structural corridor, where mineralization continues along the north-south Luicho fault. A 322-metre-long string of 235 samples averaged 1.1 grams across a 50-metre width.
Haywood Securities, which acted as the lead underwriter in a recent $7.3-million financing of Pacific Rim at $4.25 per share and half a warrant, regards Luicho as one of the better early-stage gold properties it has investigated. Given the average grades from surface sampling, analysts Edward Flood and James Mustard see the potential for a 3-million-oz. resource if the mineralized horizon in the structural corridor averaged only 50 metres in thickness. Twice the thickness could yield upwards of 7 million oz., state the analysts in a research report.
In a separate report from Canaccord Capital, Graeme Currie, who continues to rate Pacific Rim a speculative buy for high-risk accounts, states that the Luicho prospect “continues to demonstrate . . . some of the best exploration leverage for a gold project currently held by a junior.
“The upside leverage could be substantial as the Luicho’s target size (strike and width) imply that, if a depth dimension of over 150 metres is present, a multi-million-ounce deposit (assuming a grade in the 2 gram gold per tonne region) is probable.”
However, Currie cautions that failure to confirm grade and thickness through drilling could result in a rapid and substantial decline in the share price.
Pacific Rim can earn a 100% interest in Luicho by paying US$400,000 in the first year, US$1 million in the second and US$24.2 million in the third. The vendor retains a sliding-scale royalty of 2.5-3.5% on the first 1 million oz. produced and 3.5% on production thereafter.
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