Chacaconiza, Peru — There is no disputing the fact that
Corani has the potential to develop “large tonnages” of 2-3 ounces per ton silver and 1-2% lead, according to a recent independent technical report by SRK Consulting. Haywood Securities analyst Andrew Kaip is currently using a 250-million-oz. silver resource in his valuation model of Bear Creek, based on the results to date from drilling and surface sampling. And in a recent update, Graeme Currie of Canaccord Capital says that Corani has the potential for 250 to 300 million oz. silver, though he cautions that this is a preliminary estimate. He adds that lead and zinc mineralization will play an important economic role in the project.
So far, Bear Creek has released results for 59 core drill holes and 25 surface trenches across two separate zones of outcropping mineralization at Corani. Multi-ounce silver values have been encountered across continuous intervals of 30 to 229 metres (apparent true thickness) in drilling, starting at surface.
“The grades are holding up and the continuity is good,” notes Andrew Swarthout, president of Bear Creek. “I don’t have any question that there is an orebody here. Stripping rates look like they will be less than one-to-one.”
The two zones of silver-rich mineralization — Main Corani and Corani Este, are exposed along separate ridges, roughly 500 metres apart. There have been 45 holes drilled to date in the Main Corani zone; 34 of these show a weighted average of 89 grams (2.6 oz.) silver, 1.3% lead and 0.2% zinc across an average thickness of 77 metres. Many of the early holes bottomed in mineralization.
The Main Corani zone extends over a strike length of at least 1,500 metres. It remains open along strike, laterally and at depth. The mineralized zone widens as much as 425 metres at the north end, before disappearing under a younger post-mineral cover. Recent drilling at the north end returned the thickest intercept to date, cutting through 71 metres of post-mineral tuffs to intersect 229 metres averaging 62 grams (1.8 oz.) silver, 1.68% lead and 1.27% zinc, including a higher-grade section of 120 grams (3.5 oz.) silver, 2.47% lead and 0.85% zinc across the top 61 metres of the zone in hole 24.
“Hole 24 is a pretty important hole in that it’s the first one that has taken the largest bite across the true width,” Swarthout told The Northern Miner during a recent site visit. “The other holes on this section have kind of stabbed at it. We wanted to cut below the stopes, which are pretty shallow, and reach the underlying sediment contact.”
Angled at minus 40, hole 20A extended the zone another 100 metres north along strike to the edge of the post-mineral tuff by intercepting 127 metres averaging 69 grams (2 oz.) silver and 0.8% lead, starting 26 metres below the unmineralized cover. Hole 20B was steepened to minus 80 and cut 99 metres of 55 grams (1.6 oz.) silver, 1.4% lead and 0.5% zinc.
However, hole 20, which was drilled from the same site but aimed in the opposite direction, directly into the hillside, cut 30 metres of lower-grade mineralization carrying 10.3 grams (0.3 oz.) silver and 0.5% lead beneath 89 metres of post-mineral tuffs.
The hole overshot the mineralized structure, Swarthout believes: “We just missed it — we think we just drilled over it.”
Bear Creek stepped-out a further 100 metres on the north end with hole 32.
“We will continue to go from what we know to what we don’t know,” explains David Volkert, Bear Creek’s vice-president of exploration. “We’ll just follow the structures out.”
Hole 32 intersected 83 metres of lower-grade footwall mineralization averaging 48 grams (1.4 oz.) silver, 0.8% lead and 0.1% zinc, starting close to surface. Additional holes are planned to the west as Bear Creek chases the main structure under cover north of the old Corani mine workings. In the meantime, new mineralized showings are being discovered in windows through the post-mineral tuffs that could further widen the Main Corani zone out to the northwest.
Corani Este
The Corani Este zone lies directly across from the northern end of the Main Corani zone, separated by a small drainage valley. Prior to drilling, five trenches spaced across roughly 400 metres of strike length along the cliff side, delivered an average 226 grams (6.6 oz.) silver and 1.44% lead across 64 metres. The 13 holes completed to date have returned a weighted average of 104 metres grading 130 grams (3.8 oz.) silver, 1.1% lead and 0.6% zinc. The mineralization, which is traced for at least 450 metres along strike, remains open in all directions.
One of the most northerly holes on Corani Este intercepted 131 metres of 69 grams (2 oz.) silver and 0.5% lead, starting close to surface in hole 29B. The northern and eastern portions of Corani Este are covered by a thickening wedge of younger post-mineral tuffs. Hole 29A was drilled out under the eastern cover at the north end from the same site as hole 29B at an angle of minus 50, hitting an impressive 162 metres averaging 178 grams (5.2 oz.) silver, 0.8% lead and 0.7% zinc. High-grade feeder structures containing 3,874 grams (113 oz.) silver, 8.4% lead and 10.5% zinc across 3 metres of drill core were intersected in this hole, some 100 metres laterally beneath the post-mineral cover. “The discovery of very high-grade feeder structures bodes well for future exploration as we explore the source of the silver mineralization in the Corani district,” Swarthout says.
Steepened to minus 70, hole 29 intersected 103 grams (3 oz.) silver, 1.1% lead and 0.9% zinc across 104 metres, including 52 metres of 158 grams (4.6 oz.) silver, 1.8% lead and 1.5% zinc in the bottom half of the zone. The mineralization in holes 29, 29A and 29B represent an open-ended width of 180 metres.
“Corani Este is increasing in size and grade, and we expect it will be the economic driver of the project,” Swarthout remarks.
Trenching continues to expand the Corani footprint. A new prospect, called La Curva, lies 1.2 km south of Corani Este and 600 metres east of the southern end of the Main Corani zone. La Curva overlies an untested geophysical induced-polarization (IP) anomaly. New trenching has averaged 38 grams (1.1 oz.) silver across 84 metres on this showing, including 12 metres of 79 grams (2.3 oz.).
With three rigs turning, Bear Creek is working at expanding the boundaries of both Corani and Corani Este, while completing the necessary infill drilling for a resource calculation due in early 2006.
Rio Tinto
The Corani project, 160 km directly southeast of the city of Cusco, covers 36 sq. km of high, steeped terrain and U-shaped valleys at elevations of 4,600-5,100 metres. It’s about a 6-hour drive along paved and unimproved roads from Cusco, the archaeological gateway of Peru.
Bear Creek optioned the Corani project in January of this year from
In addition, Bear Creek will pay Rio Tinto “success payments” of US$1.10 per oz. gold and US1.5 per oz. silver based on its share of recoverable ounces as defined by a bankable feasibility study. This is on top of payments of US$5 million for every recoverable 1 million oz. gold or 100 million oz. silver defined, subject to no more than US$10 million.
There is also a claw-back provision: should economic resources exceed 10 million oz. gold-equivalent
, Rio Tinto could reacquire a 60% stake by reimbursing Bear Creek 300% of its exploration expenses and carrying the junior through to production. This threshold is the equivalent of roughly 600 million oz. silver.
Surface access and land-use permits are held by the local indigenous population. The villages of Quelccaya and Chacaconiza have legal title to the surface area covering the Corani project. The two villages, of about 80 families each, are 5 km northwest and northeast, respectively, of the property. Bear Creek has a surface use permit signed by a majority of the villagers at Chacaconiza, which owns most of the surface rights at Corani. The land-use permit covers all of Bear Creek’s exploration activities. A permit of equal standing is being obtained from the village of Quelccaya.
The ridge tops are generally rocky and devoid of vegetation. Moss mounds and limited low-growing grasses are found in the flat glacial valleys, and are used for grazing domesticated animals such as sheep, llamas and horses. Very little agriculture is practised in the immediate area, except for the occasional potato field, generally at lower elevations than the project area.
Rio Tinto acquired the Corani property as a porphyry copper prospect in 2003. Historical work on the property consisted of small-scale underground mining of sulphide-bearing silver-lead veins on the northeast end of the Main Corani zone during the 1950s and 1960s. Production from Minas Corani was fairly small, totalling roughly 100,000 tonnes grading in the order of 274-377 grams (8-11 oz.) silver and 9-11% combined lead-zinc. Historical maps of the underground workings show development on four levels that extend over an area of 500 metres in a north-south direction and by about 150 metres east-west.
That mining activity has resulted in mill tailings, sulphide-bearing mine dumps and mine water effluent, which drains into the flat valley adjacent to the historic workings. Klohn-Crippon was hired to investigate the quality of water downstream from the former operation and to identify potentially affected areas.
A private Peruvian company, Minsur, carried out limited exploration on the property in the mid-1990s, including the drilling of some 40 shallow holes in various targets. Swarthout believes they were tinkering around with the gold. The only data available from that drilling are references to intercepts of variable lengths containing up to 0.24% copper, 3 grams gold and 438 grams (12.8 oz.) silver. Rio’s field work in late 2003 and early 2004 identified a large area of intense alteration measuring 5 by 2 km, within which structurally controlled gold and silver mineralization crops out.
Soil geochemical sampling outlined three main anomalous areas including the following:
– a 1.1-km silver soil anomaly averaging 49 grams (1.4 oz.), disappearing to the north under post-mineral volcanic cover;
– a gold-enriched anomaly averaging 0.49 gram gold (with a high of 9.56 grams) and 11 grams silver in soils over an area of 0.6 sq. km; and
– a copper-gold anomaly averaging 707 parts per million (ppm) copper and 0.36 gram gold across 0.5 sq. km.
Preliminary rock-chip sampling by Rio Tinto returned assays as high as 2.3% copper, 2.94 grams gold and 2,350 grams (68.5 oz.) silver in the confines of the soil anomalies. Rio did not conduct any drilling on the Corani project before farming it out.
While carrying out due diligence on Corani in late 2004, Bear Creek collected six grab samples from the northern silver anomaly. These samples, which exhibited strong barite and silica mineralization, ran 25 to 451 grams silver for an average of 158 grams (5.1 oz.) silver and 0.06 gram gold. In addition, a grab sample taken from within the confines of the central gold anomaly returned 13 grams gold. Volkert was suitably impressed by the amount of precious metal present in the system.
Turning its attention to the bulk-tonnage potential of the structurally controlled silver-gold mineralization, Bear Creek began to systematically trench and channel sample the anomaly. To date, 19 trenches on the Corani Main zone have exposed an oxidized, silver-rich, base metal mineralized system that ranges from 50 to 425 metres wide along the cliff side. The trenches average a grade of 106 grams (3.1 oz.) silver, with many of them ending short in multi-ounce silver mineralization.
“What’s continually amazing about Peru is the good outcrop, good exposure — and you can still walk up to something like this that has never been drilled,” Volkert says. “It’s wild; I have been here 10 years and it amazes me that it still can be done.”
Swarthout agrees: “I’ve worked in the southwest U.S. and Mexico for 15 years; I can’t think of anything that would look like this that wouldn’t be full of drill holes. And to come here and find out that Rio Tinto did all this district work, identified a silver anomaly and then walked.”
The mineralization occurs along a series of north- to northwest-trending, vertical to west-dipping structures in association with veins, breccias and stockwork. The host rocks are a Tertiary-age tuffaceous volcanic unit that overlies a Paleozoic (age uncertain) sedimentary rock sequence. The mineralized volcanics are, in turn, overlain by post-mineral volcanic tuffs, which are generally flat lying to gently dipping and occupy much of the volcanic section at the north end of the property. Geological mapping by Rio Tinto identified a felsic dome in the southeast part of the property.
The pre-mineral volcanic sequence is hydrothermally altered and structurally faulted, fractured and brecciated, to the extent that stratigraphy and structural orientations are not well defined.
“We are dealing with a large pile of quartz-eye, biotite crystal tuff, plus or minus lithic fragments,” explains Volkert. “If there are variations in that host rock, it’s going to be on a hand-specimen scale. It’s real simple geology; the complications come in the structure.”
A May 2005 internal geological report by Michael McClave describes the north end of the silver zone as: “an area where the narrow zone of veins and mineralized breccias along the north-trending fault blossoms into a broad zone of veins, stockworks and breccias as it intersects a system of northwest-trending veins and faults. Typical mineralization here includes laminated and banded chalcedonic quartz veins with strong manganese oxide, lesser iron oxide and barite plus variable amounts of pyrite, galena, sphalerite and probably small amounts of unidentified polymetallic sulfosalts.”
There is evidence of both classic epithermal textures and polymetallic metal associations more typical of deeper mesothermal-type mineralization. Typical epithermal textures include “classic” banded silica veining, chalcedonic silica veins, open-space fracture filling and comb quartz, casts of leached-out carbonate clasts, and barite gangue minerals.
The silver mineralization is associated with lead and zinc, with minor copper, and anomalous gold and bismuth. There is also an arsenic-antimony signature.
Recent petrographic work has identified fine-grained galena with tetrahedrite, minor sphalerite and chalcopyrite, miargyrite, as well as traces of arsenopyrite, pyrite and unidentified lead-silver sulfosalts. Sulphide minerals appear to be fine-grained and can occur as inclusions in hematite and quartz gangue.
The upper, near-surface part of the Corani zones is oxidized, with sulphide mineralization occurring at depth. The top part of the column is dominated by a limonite, iron oxide assemblage, followed by a transition stage between the oxide and sulphide mineralization.
“It’s never a sharp contact between the oxide and sulphide,” Volkert notes.
Early metallurgical leach test work shows silver recoveries of 95% for oxide and 76% for mixed oxide-sulphide mineralization in drill-core samples taken from the main Corani zone. The results are extremely favourable and much higher than expected. Cyanide bottle-roll leach tests were carried out under the supervision
of Dawson Metallurgical Laboratories at Plenge Laboratories in Lima, Peru, on an initial six composite samples of oxide, mixed oxide-sulphide material, and deeper sulphide mineralization.
Leach tests on two composite samples of oxide mineralization gathered from four drill holes returned 95.4% and 95.7% of the contained silver. Recoveries for the mixed oxide-sulphide transition stage in the same four holes were 75.5% and 75.9%. Leaching of two sulphide-sample composites from three drill holes yielded silver recoveries of 48.7% and 66.7%.
Bear Creek views the initial test work as very encouraging as the oxide and mixed material make up a significant proportion of the mineralization currently defined at Corani. Lower recoveries for the sulphide material are no surprise. It is anticipated that the best process treatment of the sulphides may be flotation, or a combination of leaching and flotation to produce silver-rich concentrates.
“Positive metallurgy has opened the door for alternative processing routes, including low-cost heap leaching that could lower cutoff grades and improve strip ratios,” notes Haywood’s Kaip. “Although positive, we also stress the preliminary nature of the test work that was directed towards establishing silver recoveries above other factors such as cyanide and lime consumption, and the effect of altitude on leach kinetics.”
Additional cyanide bottle-roll test work is continuing on samples from the Main Corani and Este zones, with future work to include flotation testing and more focused cyanide leaching for use in a scoping study due in the first quarter of the new year.
Bear Creek has now moved a rig onto a separate gold target, some 3 km along strike south of the silver zone. The first two trenches in this area returned 52 metres of 0.57 gram gold and 58 metres averaging 2.9 grams gold, each ending mineralization. The two trenches are about 200 metres apart on a north-south striking structure that is traced for about 1 km. The gold-silver mineralization is hosted by sheeted quartz veining in argillized volcanics. The average gold grade for 250 rock-chip and channel samples was 0.76 gram, whereas the silver averaged 16 grams, much lower than that of Corani or Corani Este.
The mineralization along the 4.5-km-long structural corridor appears to show a north-south lateral zoning, possibly related to some sort of low-grade porphyry copper system, with gold-to-silver ratios increasing to the south. Antimony veins with minor gold have been found on the south and southeast ends of the property. The Stibnite veins are generally located in structures and breccias that are a couple of metres wide. Volkert believes there could be potential for gold at depth below the stibnite mineralization.
Bear Creek sits with 37.5 million shares outstanding or 46.4 million fully diluted and working capital of $15.6 million. In August,
“We are viewing it as a long-term, speculative investment,” said Peter Barnes, chief financial officer of Silver Wheaton, during a recent conference call. “If it is as exciting as a lot of people seem to think it is, and we think it could be, then we’ll see what happens,” he replied when asked about the possibility of a creeping takeover.
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