A new emphasis on grassroots exploration paid off for
Barrick jump-started its grassroots efforts a few years ago when the bottom dropped out of the junior exploration sector and the stock feed of new discoveries slowed down. A prolonged period of sub-US$300-per-oz. gold pushed many of the hitherto-active juniors to the sidelines as exploration funding dried up.
“Historically for Barrick, exploration hasn’t been the place we made our name,” concedes Alex Davidson, Barrick’s senior vice-president of exploration. “But that’s changing now.”
As the juniors stepped back, Barrick stepped in. Last year, the major spent US$104 million on exploration and business development, which included US$15 million in mine exploration and about US$35 million in infill drilling, prefeasibility work, engineering and metallurgical studies at Alto Chicama, and at Veladero in Argentina. Barrick has budgeted another US$100 million for exploration in 2003.
Barrick wants to generate gold targets with the potential to deliver at least 2 million oz. and provide double-digit returns at US$300 per oz. The company tries to maintain a geographical mix of projects at various stages of exploration. “This allows us to maximize our chances for near-term discovery,” says Davidson. “It also allows us to advance our best projects through the pipeline faster and more efficiently, and drop the poor ones early.”
The geology is what first draws Barrick to a particular country. “If it’s got the potential, then we’ll look at the politics and the mining laws,” says Davidson, who adds that by establishing and maintaining a presence in various regions, Barrick ensures it is ready for third-party discoveries.
“The grassroots is a really important part of our whole portfolio and philosophy,” says Davidson. The most tangible result since the beginning of grassroots exploration efforts in South America has been the discovery of Alto Chicama in La Libertad province, north-central Peru. Since the discovery of the 3.5-million-oz. Lagunas Norte resource in April 2002, the deposit has grown to 9.5 million oz., and drilling continues.
At year-end, infill drilling to 50-metre centres and completion of a prefeasibility study had outlined a proven and probable oxide reserve of 110 million tonnes grading 1.85 grams gold per tonne, equivalent to 6.5 million oz. gold. Additional indicated resources now stand at 2 million oz. in 51.1 million tonnes grading 1.2 grams gold, with total inferred resources of 22.5 million tonnes grading 1.44 grams, for an additional 1 million oz.
Lagunas Norte is a Pierina-like, high-sulphidation, disseminated, epithermal-type deposit hosted in volcanics, sedimentary breccias and tuffs in the southeastern area of the 185-sq.-km Alto Chicama property. The flat-lying mineralization outcrops and extends over an area of 1,600 by 750 metres and to depths of up to 300 metres.
The Alto Chicama property occurs on the western flank of the Peruvian Andes at an elevation of 4,000-4,260 metres, 140 km east of the coastal city of Trujillo and 42 km west of Huamachuco. It lies midway between Barrick’s existing Pierina mine, 175 km to the south, and
Barrick started grassroots exploration in La Libertad in 1998 and identified Alto Chicama as a target area based on the results of a regional BLEG geochemical sampling program, which was done in conjunction with stream-sediment sampling. Davidson says the BLEG sampling technique is effective in most terranes and covers large areas efficiently. BLEG samples are leached with cyanide to recover any gold.
In early 2001, Barrick won the rights to the Alto Chicama property in a privatization auction held by state-owned Centromin. This past December, Barrick exercised its option and acquired 100% of the mineral rights to the property. Centromin retains a 2.51% net smelter return royalty.
Barrick began field work at Alto Chicama in March 2001 and initially defined three drill targets during geological mapping, channel sampling and ground geophysics. Crews uncovered altered tuff and anomalous gold-bearing breccias containing quartzites and vuggy silica clasts. Drilling began in June 2001 and consisted of an initial 4,700 metres drilled in 27 holes. The first 15 holes tested an area 3.5 km south of Lagunas Norte, before drilling shifted to the discovery area.
Alto Chicama has shot through Barrick’s development pipeline and will be one of four new mines that will come into production between 2005 and 2008, adding 2 million oz. in annual production at an average cash cost of US$125 per oz. over their first decade of operation.
Based on Lagunas Norte’s similarities to the Pierina mine, Barrick envisions an open-pit, valley-filled heap-leach mine at Alto Chicama running 29,000 tonnes per day to produce 500,000 oz. per year at a cash cost over the first decade of US$130 per oz. Capital costs are projected at US$300-350 million.
Most of the Lagunas Norte deposit is contained in oxide breccias. Metallurgical tests continue to indicate that the oxide mineralization is amenable to heap leaching. Preliminary bottle-roll and column tests pointed to possible recoveries of 85-95%. Sulphide recoveries were not as promising, achieving less than 50%.
Work in the past quarter focused on infill, stepout and condemnation drilling, along with mine planning, geotechnical and engineering studies. In 2003, Barrick intends to complete the environmental impact statement and a final feasibility study. The project is on-track to enter production in 2005.
Barrick has assembled a highly prospective land position exceeding 1,200 sq. km in the Alto Chicama region. The company’s geological team has identified at least eight specific drill targets with striking similarities to Lagunas Norte. Davidson says the prospects all have the “same geology, spectacular alteration and decent gold,” adding “I don’t think we’re just looking at a single deposit here.”
New prospects
A 12,000-metre program of drilling will soon begin testing these new prospects, which are all within 20 km of Lagunas Norte.
Having outlined reserves containing 26 million oz. gold, plus another 13 million oz. in resources, at Pascua-Lama-Veladero, along the border of northern Argentina and Chile, Barrick has shifted its grassroots efforts away from the project area looking for higher-yield, low-sulphidation deposits like
Barrick zeroed in on project plays in northern Chile, assisted by hyperspectral imaging, which can separately map out silica, alunite and kaolinite alteration. Silica and alunite are often associated with high-sulphidation gold deposits, though “unfortunately alunite is also found many times without high-sulphidation gold next to it,” says Davidson. “Hyperspectral imaging is a regional reconnaissance tool; it gets you into the ball park.”
Hyperspectral Imaging can be flown much like a regional airborne geophysical survey, or it can be taken from Advanced Spaceborne Thermal Emission and Reflection Radiometer in space and downloadable off the Internet. Aster is a high-resolution imaging instrument that is flying on Terra, a satellite launched in December 1999 as part of the earth observing system of the National Aeronautics and Space Administration.
Barrick is also scouring the Patagonia region of southern Argentina, which hosts Meridian’s Esquel project and
The Cerro Vanguardia mine is 150 km northwest of Puerto San Julian in the province of Santa Cruz. The 900,000-tonne-
per-year open-pit and carbon-in-pulp (CIP) plant were commissioned in August 1998, just over two years after completion of the feasibility study, at a capital cost of US$270 million.
Buy-out
Last year, AngloGold doubled its ownership in Vanguardia to 92.5% by buying out Perez Companc International’s holding of 46.25% for US$90 million. Provincially owned Formicruz holds the remaining 7.5%. The joint venture holds more than 514 sq. km of surrounding ground.
In 2002, Cerro Vanguardia produced 193,000 oz. at a cash cost of US$104 per oz. and a total production cost of US$203 per oz. At Dec. 31, 2002, Vanguardia had proven and probable reserves amounting to 9.5 million tonnes grading 7.68 grams gold, equivalent to more than 2.3 million oz, along with a significant silver component. Additional gold resources contain another 1.5 million oz.
Cerro Vanguardia is an epithermal quartz adularia vein system hosted in Jurassic rhyolite ignimbrites. Gold and silver mineralization occurs in a series of narrow-banded, steeply dipping, quartz-vein oreshoots that occupy structures within the Chon Aike ignimbrites.
There are 98 recorded outcropping veins at Vanguardia that extend 150 metres to 11 km along strike and range from 0.5 to 10 metres thick for an average of 3.5 metres. Individual ore shoots range from 150 to 2,200 metres on strike and 50-350 metres at depth. Exploration around Cerro Vanguardia is concentrating on identifying new open-pit and underground resources along strike, and on downdip extensions from known vein resources.
Exploration has focused on the Osvalda Diez-Luciano vein principally, and AngloGold says further success in this area may extend the mine life beyond 2012.
The South African major is also investigating the potential of a heap-leaching project to exploit the lower-grade resources, which occur either at the fringe of the high-grade veins being mined or as lower-grade veins that do not meet the economic cutoff for processing at the CIP plant. The US$13-million project is expected to yield 25,000 oz. annually over 10 years at a cash cost of US$230 per oz.
Elsewhere in South America, AngloGold has been carrying out regional grassroots exploration in Peru since 2000. The company’s geological team has discovered an extensive high-sulphidation oxide gold system at La Rescatada in the southern part of the country. This year, AngloGold has budgeted a US$1.3-million exploration program at La Rescatada, including a third phase of drilling of some 35 holes in 9,000 metres and the completion of a scoping study. AngloGold has uncovered supergene oxide mineralization to a 220-metre depth at grades of less than 2 grams gold, with good recoveries of 80-90%. The company holds a 100% interest in the 400-sq.-km concession and reports that several dozen geochemical and geophysical anomalies remain to be drill-tested.
AngloGold recently paid
Meridian Gold
Meridian Gold acquired 100% of the Esquel project in the Patagonia region of southern Argentina through last summer’s takeover of London-based Brancote Holdings and the buyout of the project’s minority owners. The project comprises 433 sq. km in Chubut province, 10 km northeast of the provincial town of Esquel in the foothills of Sierra de Esquel. It centres on a near-surface, high-grade, low-sulphidation, epithermal gold-silver vein system that extends over 2.4 km. The project sits at an elevation of 1,200-1,400 metres.
The core area is at the southern end of Cordon Esquel and measures 3.5 km north-south by 1.5 km east-west. The western boundary is marked by the north-south-striking Antonia vein system, whereas the Pinnacles-Ungoliat veins define the eastern boundary. The massive vein system containing Galadriel, Galadriel Sur, Football Field and Julia cuts diagonally across the core area in a northeasterly direction.
In addition to these major veins, there are numerous others, both singular and in swarms, throughout the core area. Hired by Brancote, engineering consultant Pincock, Allen & Holt completed a prefeasibility study in November 2001 that outlined potential minable reserves of 2.8 million oz. gold and 4.8 million oz. silver in 10.4 million tonnes grading 8.46 grams gold and 14.57 grams silver.
The Esquel project is underlain by Jurassic age, sub-horizontal, andesitic volcanics and minor carbonaceous sediments. The rocks are cut by steeply dipping quartz and chalcedony veins, which have strike lengths greater than 2,000 metres and widths ranging from less than 1 metre to 12 metres. The veins are cut by steeply dipping faults and offset by generally less than 100 metres.
Aggressive approach
Since acquiring the project in July 2002, Meridian has been driving the project through feasibility. Meridian says Esquel exceeds more than 3 million oz. gold in a resource averaging 8.5 grams gold per tonne, based on a higher cutoff of 1.5 grams.
Meridian foresees Esquel producing 300,000 oz. gold annually at a throughput rate of 3,000 tonnes per day over a mine life of 10 years. Cash costs are estimated at less than US$100 per oz.; total costs, at less than US$185 per oz. The capital cost is pegged at US$100 million spread over a 12-month construction schedule with startup aimed for 2004. Meridian believes it can achieve gold recoveries of 80-83% using carbon-in-leach processing.
Meridian submitted an environmental impact study (EIS) to provincial authorities in the fourth quarter of 2002. Engineering and mine planning are continuing, with the final feasibility expected by the end of March. A new reserve and resource statement will be tabled with the study.
The Esquel project has become a lightning-rod issue for Meridian, drawing the ire of what the company describes as a “vocal minority” opposing the development of the mine.
In late March, a mandatory but non-binding vote on the project will occur in the city of Esquel. An earlier city council ordinance proposal to ban cyanide was vetoed by the mayor.
Federal authorities recently invited representatives of the United Nations Educational, Scientific and Cultural Organization (UNESCO) and the Office of the Bishop of Comodoro Rivadavia to participate in the dialogue between Meridian and opponents of the project. In the meantime, Meridian and the provincial agencies are moving forward with the technical reviews on the EIS.
Meridian is used to operating in environmentally sensitive areas, having built, and ultimately depleted, the Bear Track mine in Idaho. The company says it has designed the Esquel project so that it will be as environmentally safe as possible. The waste rock depository and plant infrastructure will be constructed to have low visual impact, and an Inco cyanide destruction circuit will be used. In addition, there will be no tailings pond.
Barrick is currently conducting an aggressive regional grassroots exploration program in the Patagonia. Davidson says the company starts out by selecting large areas on the basis of favourable geology and known showings. Using a technique called “weights of evidence,” Barrick’s geologic team assembles all the known data (LANDSAT, government maps, and so on) and assigns favourable criteria a “score.” High-score areas are followed-up on the ground, and if initial results show promise, the area is staked.
In the Patagonia, Barrick outlined five major regional plays: Los Menucos, Angela (Esquel), Costa, Cordillera and Deseado (Vanguardia).
At Deseado, crews visited 67 high-scoring areas. Fifty of these showed positive signs that the ground was indeed anomalous, and 20 were staked. For the sake of comparison, of the 51 high-scoring areas in the Costa region, 18 had positive indications and only one was good enough to stake. At Menucos, all 15 high-scoring areas were positively confirmed, but only six were staked.
“From this one grassroots program, well over 27 properties have been staked,” says Davidson. “That’s how we buil
d our pipeline, from the bottom.”
Juniors that have assembled prospective land packages in southern Argentina include
Yamana is involved in a 3-way partnership with two of Peru’s largest gold mining companies —
Minera Andes
Spokane, Wash.-based Minera Andes holds 10 properties covering 1,630 sq. km in the Andes and is pursuing underground development of its San Jose gold-silver property in Santa Cruz province, held in partnership with Mauricio Hochschild.
Pan American Silver and
Be the first to comment on "Barrick shows grassroots prowess with Peruvian find"