Cardero buoyed by Argentine silver

Vancouver — Last year was a banner one for Cardero Resource (CDU-V), and with a $2.9-million financing in hand, the junior aims to step up exploration in 2003.

Over the past year, the junior saw its share price surge to a recent high of $2.69 from 27, though a rising stock price is nothing new to Cardero President Hendrick Van Alphen, a Dutch prospector who formerly presided over Pacific Rim Mining (PMU-T).

In the 1990s, Van Alphen and David Shaw, now Cardero’s exploration manager, closed a deal that formed Corriente Resources (CTQ-T). Van Alphen held several South America exploration projects through a private company, and Shaw had control of a publicly listed vehicle. After completing a reverse-takeover, Van Alphen stayed with Corriente, while Shaw became the senior mining analyst for Yorkton Securities. One of Shaw’s first assignments was to raise $4.5 million for Corriente, and shares in the junior subsequently rocketed to more than $19 from 30 in the heady days of the mid-1990s. Since then, a lot of water has passed under the bridge, and in early 2002 the pair once again joined forces.

Cardero’s emergence over the past year as a favourite among investors is a reflection of its promising land holdings in northwestern Argentina.

“The focus of the market is on our silver projects,” says Van Alphen. “Even though it’s early-days, it looks as if we could have a high-grade, open-pittable deposit at the La Providencia silver deposit.”

Cardero picked up the target in September 2002 by inking four deals that cover 330 sq. km in the Salar Olaroz region of Jujuy province. Shaw recognized the area’s potential during a property evaluation of La Providencia, where, from 1986 to 1996, some 200,000 tonnes of material grading 350-600 grams silver per tonne were processed from surface pits.

“I saw these multicoloured Tertiary sedimentary rocks, which are fairly common in South America, and was totally unimpressed,” Shaw tells The Northern Miner. “There were three pits. I found an area, in one of them, that had a green colour and structural fractures, took a 4-kg sample, and basically forgot about it.”

A few weeks later, Shaw got a call from Cardero’s head office in Vancouver informing him that the sample ran 3.3 kg silver and 2.5% copper. “With that type of number, we had to go back in and do more sampling,” he says.

The results continued to indicate potential for a large silver discovery.

“What we have is Tertiary clastic sediments, which are derived from Ordovician sedimentary rocks to the east and west,” Shaw explains. “The Tertiary sediments have remnant porosity and permeability so that mineralized fluids have come into the rock through closely spaced vertical fractures.”

Studies by the United Nations in 1982 defined a large structure of silver and copper mineralization some 750 metres long, 150-250 metres wide, and at least 75 metres deep. The UN identified native copper and silver, chalcocite and enargite. Initially the mineralization was thought to mark an extensive, flat-lying red-bed or roll-front copper-silver deposit within a gently east-dipping conglomerate horizon. An alternative theory is that the mineralization is epithermal, as suggested by the clay-carbonate alteration, low sulphur content, abundant lead-zinc mineralization, and presence of arsenic, antimony and mercury trace elements.

“It is somewhat unusual that the silver and copper mineralization come together,” adds Shaw, “and given that the bulk of the mineralization is contained in sulphosalts, the deposit may be epithermal in origin.”

In the surface pits, Cardero carried out chip sampling program over a 350-by-750-metre area to vertical depths of 75 metres.

“We sampled in a multitude of orientations with no bias at all and ended up with 118 metres averaging 495 grams silver and just under 0.5% copper,” the exploration manager states.

The mineralizing system is not just confined to this one area. Exploration 5 km north has identified an anomalous zone of copper-silver mineralization at the Romona prospect.

The potential for mineralization lies in a basin filled with Tertiary rock over some 10 by 3 km. The basin is fault-bounded on both sides.

La Providencia

The La Providencia target was drilled with BQ-size (36.5-mm) core in the 1980s, but results proved unreliable. In February, Cardero intends to test the target by carrying out 5,000 metres of HQ-size (63.5-mm) core drilling.

Cardero can acquire the 80-sq.-km La Providencia property by paying US$375,000 over four years.

Moving 15 km to the northwest, the junior can acquire the Chingolo property by paying US$10,000 and issuing 250,000 shares over four years. The prospect area consists of kaolinite and silica-alterated fanglomerates partially exposed over an area measuring 650 by 500 metres. Epithermal-style jasperoid (barite-chalcedony) rocks outcrop at the top of a hill at the northern end of the property. Five samples of altered conglomerate collected in 1996 returned an average of 747 grams silver per tonne. The Cardero team collected nine chip samples of weathered conglomerate and jasperoid rocks with values yielding 20-391 grams silver. The samples also returned up to 112 parts per million copper, 1.03% lead, and 159 parts per million zinc.

Both La Providencia and Chingolo occupy a regional, crosscutting, northwest-oriented fracture system that appears to have controlled the emplacement of a Miocene dacite volcanic event, as seen in several calderas with associated dacite extrusive domes, and ring-fracture structures.

“The project looks like a classic epithermal with silica breccias margined by an alteration zone,” says Shaw.

Chingolo is on a piedmont plain, which extends from the western flanks of the same mountain range to the Chilean border. It hosts Tertiary, poorly cemented sediments and talus conglomerates underlying the low-rolling terrain.

Condor Yacu

In 2002, the junior drill-tested its Condor Yacu property, in Catamarca province. The deposit is south of the Diablillos project of Silver Standard Resources (SSO-V), which has an inferred resource of 42 million tonnes grading 69.5 grams silver per tonne.

The main target at Condor Yacu is the Southern zone, a silicified granite 10-15 metres wide and 70 metres long. Seven samples collected from an open cut on the zone returned 5.96-48.5 grams gold.

About 350 to the northwest, crews collected 16 samples from the Northern zone, where gold values range from 0.28 to 2.10 grams per tonne. The highest value was 16.3 grams gold. Mineralization is hosted in intensely silicified and brecciated granite in association with sphalerite, galena, tetrahedrite, enargite and visible gold.

In July 2001, the company sunk five holes on the property. The 400-metre drill program tested the Southern zone to determine the vertical extent of the previously cut mineralization. Hole 1A was collared at the same site as hole 14 (57 metres grading 21.2 grams gold and 84.9 grams silver, plus 1.45% copper) and cut 76.4 metres grading 18 grams gold, 115.3 grams silver and 2.2% copper at a down-hole depth of 0.61 metre.

Moving 70 metres to the west, hole 2 cut 14.3 metres grading 14.85 grams gold, 146.6 grams silver and 1.75% copper at 80.5 metres down-hole.

Testing the downdip extension of this mineralization, hole 3 was drilled from the same pad and cut 7.6 metres grading 3.29 grams gold, 126.2 grams silver and 0.67% copper at 114.2 metres down-hole,

Hole 4 was collared 40 metres south of the first hole and cut 8 metres grading 4.6 grams gold, 38.8 grams silver and 1.84% copper at 35 metres down-hole.

In September 2001, a second round of drilling confirmed the results from the South zone but failed to yield any significant values from the North zone.

Holes 5 and 6 were collared from the same pad on the eastern side of the South zone and returned, respectively, 14.6 grams gold and 129.3 grams silver over 11.4 metres at 25 metres down-hole, and 18.74 grams gold and 129.7 grams silver over 1.9 metres at 130 metres down-hole.

Moving
80 metres south, hole 8 cut 8.6 grams gold over 3.9 metres at 32 metres down-hole, while holes 7 and 9 were abandoned owing to poor ground conditions.

At the North zone, holes 1 through 4 returned only weakly anomalous gold values.

Based on these results, Cardero is seeking a joint-venture partner to help it develop the property. Cardero can earn a 100% interest from property owner Ascot Resources (AOT-T) by making an initial cash payment of US$110,000 and paying US$875,000 over 22 months.

Mexico

Cardero will follow up results of surface exploration at its 35-sq.-km Ludavina epithermal gold project in Mexico’s Baja state. Mapping has defined a broad zone of alteration and veining along a northeast-striking zone measuring 7 by 2 km.

Crews have identified five gold-bearing targets hosted in Cretaceous mafic to intermediate volcanic rocks in the vicinity of a 12-km-wide inferred caldera structure. At the South zone, pervasive silica alteration has been outlined over an area measuring 700 by 100 metres. Chip samples returned up to 7.3 grams gold over 35 metres.

Some 1.5 km northwest of the South zone, the company collected 28 chip samples over a 1-sq.-km area dubbed the Discovery Ridge zone. Gold values range from 50 parts per billion to 31 grams per tonne.

The Basin zone is a 700-by-200-metre area with hot-spring and sinter deposits. It is immediately adjacent to the northwestern perimeter of the Discovery Ridge zone.

Trenching and drilling are planned.

Cardero picked up the project, along with two others earlier in 2002, by acquiring a private local company. The junior now holds more than 175 sq. km in northwestern Mexico, and most of this ground is considered promising for iron and copper mineralization. Cardero is in talks with major mining companies about possibly forming joint ventures.

“In my opinion, these types of targets are just too big and costly for a junior company,” states Van Alphen.

To finance exploration in 2003, Cardero has completed a non-brokered private placement of 2.2 million units priced at $1.30 each. A full unit holds one share and half a warrant, which is exercisable at $1.60 for one year. Proceeds are earmarked for the Providencia, Chingolo and Ludavina projects.

The company also struck a deal to convert $250,000 owed to Pacific International Securities into 247,524 non-transferable common share purchase warrants. Each warrant is exercisable for one share at $2.02 per share for one year. The securities have a hold period of four months.

Cardero has $4 million in cash and 20 million shares outstanding.