Gold

Newmont Mining (NEM-N) is following the trend of other major gold producer eager to discover multi-million-ounce deposits that have potential for turning a profit at currently low prices. The Denver, Colo.-based titan has its eye on the Los Cangrejos breccia complex in southwestern Ecuador.

Situated 30 km inland from the port city of Machala, the complex was first targeted by Odin Mining & Exploration (ODN-V) as an alluvial prospect. From the late 1980s to the early 1990s, Odin was the largest gold producer in Ecuador, cranking out more than 165,000 oz. of alluvial material from three deposits draining the Los Cangrejos area. With the collapse of the junior exploration market in 1996, Odin formed a joint venture with a subsidiary of Newmont to seek out the bedrock source for the placer gold. Having starting with a 275-sq. km area of interest, the joint venture now has mineral rights to 97.3 sq. km.

Encouraging results from stream-sediment samples previously collected by Odin prompted the joint venture to conduct a regional soil geochemical survey over the ridges draining the anomalies. This resulted in the delineation of a large 2.2-sq.-km coincidental anomaly marked by gold values greater than 100 parts per billion and copper values exceeding 250 parts per million. Despite the extensive saprolitic cover, follow-up mapping over the anomaly identified a large breccia complex at the junction of an east-westerly trending belt of Miocene diorites and north-northwesterly trending regional structures.

By late 1999, Newmont had tested the anomaly with 22 core holes. All the holes intersected intervals of gold-copper mineralization, returning greater than 1 gram gold per tonne. An impressive 42% of the 5,590 metres drilled on the prospect returned greater than 0.5 gram gold.

Targeting the southeastern portion of the anomaly, the partners drilled 19 of the holes over an area measuring 1 km by 600 metres. Highlights from this area included several intercepts greater than 100 metres in length returning more than 1 gram gold. Hole 14 cut 192 metres grading 1.57 grams gold, while hole 5 intercepted 200 metres grading 1.07 grams gold.

In the northeastern portion of the anomaly, three of the holes were collared over a 500-by-300-metre area. The most encouraging results came from hole 4, which cut 98 metres grading 1.07 grams gold.

Hosted in a multi-phase intrusive complex that comprises diorites and polymictic hydrothermal breccias, mineralization shows a strong affinity to a copper porphyry system. The complex is generally weak in sulphides with chalcopyrite and pyrite accompanied by localized bornite and molybdenum. Mineralization occurs as stockworks and disseminations both within breccia clasts and diorite bodies. The alteration halo appears limited and consists of chlorite, chlorite-biotite-tourmaline and chlorite-silica.

Despite surface trenches that seemed to confirm the continuity of gold values, several drill holes encountered late-stage barren dykes, most notably a quartz-eye porphyry unit that interrupted the continuity of mineralization. This is of particular concern because, faced with low-grade mineralization, the partners must be able to outline significant tonnage without diluting the gold grade.

To boost the economic potential of the complex, Newmont is having the mineralized interval assayed for copper. Initial results show low grades generally in the order of 0.1-0.2%.

According to Odin, the extent of mineralization over the breccia indicates potential for a bulk-tonnage, open-pit gold mine, though the junior is quick to add that a considerable amount of additional drilling is required to establish a resource.

Having spent US$3.3 million exploring Los Cangrejos to date, Newmont can earn a 60% interest in the property by producing a bankable feasibility study.