Arequipa firms up Peruvian portfolio

A drill program under way at the Ventana property in Peru is attempting to outline a copper porphyry deposit for Arequipa Resources (VSE).

The work is being carried out under the direction of Southern Peru Copper, or SPC, which has acquired from Asarco (NYSE) the right to earn a 60% interest in the property. (Asarco, in turn, owns 63% of SPC.) By incurring exploration expenditures of US$10 million over the next four years and paying US$1.6 million cash, SPC can earn an initial 40% interest. It can increase this to 51% by delivering a bankable feasibility study, following which it can buy an additional 9% by paying US$5 million.

SPC operates two large, open-pit copper mines in southern Peru, along with a refinery and smelter.

The remaining interest in SPC is shared by Phelps Dodge (NYSE) and a subsidiary of the Marmon Group.

The drilling at Ventana will entail up to six widely spaced holes 250 metres deep. Several anomalous areas of leached outcrop suggest the possibility of a porphyry deposit buried at depth.

Meanwhile, Arequipa continues to evaluate its Paron gold property in northern Peru, where a near-surface resource stands at 2 million tonnes grading 3.11 grams gold per tonne. The resource is contained within a tabular, 250-by-300-metre body which is open to the north, south and west. Gold mineralization occurs with strong quartz sericite alteration in sheared zones.

A 45-hole program of delineation drilling is under way at Paron, with more than half the holes already completed. The work is aimed at upgrading reserves to the proven and probable category, as well as testing extensions of the deposit. The first hole succeeded in extending the zone 120 metres south of any previous work, returning 7.5 metres of 2.09 grams gold and 16.72 grams silver, plus 3 metres of 0.8 gram gold and 3.15 grams silver.

Select results from the first 10 holes drilled include: 4.5 metres of 3.59 grams gold and 16.97 grams silver, plus 4.5 metres of 1.03 grams gold and 11.37 grams silver for hole 95-2; 10.5 metres of 2.39 grams gold and 4.57 grams silver for hole 95-4; 21 metres of 1.71 grams gold and 8.6 grams silver for hole 95-6; and 24 metres of 2.1 grams gold and 1.63 grams silver for hole 95-8.

The Paron property lies within an 80-km-long, structurally controlled belt of rocks. A regional, north-south-trending fault zone along the western boundary of the Cordillera Blanca batholith brings Tertiary-age granular rocks into contact with Mesozoic sediments. A series of younger, intermediate, porphyry intrusions occurs at the intersections of major east-west faults.

Of the 50,000 hectares of concessions Arequipa holds within the belt, one of the most prospective is California IV, situated 13 km southeast of Paron. Drilling will be applied to an anomalous area measuring 1.6 km long by more than 400 metres wide. Geochemical sampling resulted in more than 182 rock chip samples, and these returned peak values of 4.18 grams gold and 61 grams silver.

Arequipa has 23.5 million shares outstanding.