Corani silver resource gets even bigger

Continued drilling at Bear Creek Mining’s (BCM-V, BCEKF-O) Corani discovery in the high Andes of southern Peru has resulted in a 27% increase in the overall contained silver resource, highlighted by a dramatic upgrade in the measured and indicated category.

The Corani project is now estimated to hold 257 million oz. silver in 140 million tonnes grading 56.9 grams silver per tonne, 0.9% lead and 0.51% zinc in the measured and indicated category. Additional inferred resources total 60 million oz. silver in 37.9 million tonnes averaging 49.3 grams silver, 0.66% lead and 0.28% zinc.

“We are very pleased that in only a few months we have not only added significantly to the Corani silver resource but, as we have approached the drilling in a very deliberate manner, we have also converted large areas of inferred resources into measured and indicated resources,” said Andrew Swarthout, president of Bear Creek, in a statement. “We continue to focus on extending resources into the many areas where the deposits remain open and exploring new targets.”

The updated resource estimate, prepared by Independent Mining Consultants of Tucson, Ariz., is based on 236 diamond-drill holes and 25 surface trenches completed through mid-July. In contrast, SRK Consulting used the results from the surface trenching and the first 83 holes completed through to mid-February in the original resource estimate, which accounted for 44.5 million oz. silver in the measured and indicated category, plus 205 million inferred oz. silver.

The revised resource estimate features a lower cutoff of 16 grams silver, versus the 20-gram cutoff used in the first estimate. Bear Creek notes that the lower cutoff is offset by higher metal prices.

The Corani project represents an emerging discovery of potentially bulk-minable silver-lead-zinc mineralization. So far, drilling has outlined the Main Corani, Minas Corani and Corani Este silver-rich zones, as well as the Gold zone and several other targets.

There are more than 54 drill holes not included in the updated resource calculation, including 38 holes alone on the Gold zone, a 1-km-long, gold-enriched structure situated 2.5 km south of the silver-rich Corani target area. In May, Bear Creek temporarily moved the rig off of the Gold zone in order to increase resources in the silver-rich portions of the Corani project, which still remain open on several fronts.

Four drill rigs are being used at Corani to define the limits of Minas Corani and Corani Este, hidden under post-mineral cover, and to perform infill and exploration drilling. Roughly 10,000 metres of drilling is planned for the rest of the year.

The Corani project, 160 km directly southeast of the city of Cusco, covers 36 sq. km of glaciated terrain of steep ridges 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 villages of Quelccaya and Chacaconiza, 5 km northwest and northeast of the property, have legal title to the surface area covering the Corani project. The remote area is sparsely populated, with about 500 people living within 10 km of the discovery area.

Earn-in agreement

Bear Creek optioned the Corani property in January 2005 from Rio Tinto (RTP-N) by agreeing to make a series of escalating payments totalling US$5.4 million over three years in return for an initial 70% interest. Upon earn-in, Rio Tinto will have a one-time right to either maintain a 30% working interest or sell it outright to Bear Creek for US$5 million.

Bear Creek’s earn-in is subject to success payments, in addition to a claw-back provision. Should economic resources ultimately exceed 10 million oz. gold or gold-equivalent, as defined by a bankable feasibility study, Rio Tinto could reacquire a 60% stake by reimbursing Bear Creek 300% of its exploration spending and carrying the junior through to production. This threshold is the equivalent of roughly 600 to 700 million oz. silver.

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.

Rio Tinto’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 precious metal mineralization crops out. Rio did not conduct any drilling on the Corani project before farming it out.

Bear Creek began to systematically trench and sample across the exposed mineralization at the northern end of the property. Two trends of structurally controlled mineralization were defined along the cliff side, hosting silver, lead and zinc mineralization over a total strike length of 2.5 km and ranging from 50 to at least 425 metres wide. The trenches averaged about 106 grams (3.1 oz.) silver and 1.5% lead and, locally, up to several per cent zinc.

Drilling to date has intercepted multi-ounce silver values, along with associated lead and zinc, right from surface over intervals of 50 to 150 metres in length, and to drill depths of 100 to 200 metres in most holes. At Minas Corani, some mineralization extends to depths of 225 metres. Bonanza-grade feeder-type structures have been intersected in drilling at Corani Este.

The mineralization occurs along a series of north to northwest-trending, vertical to west-dipping structures in association with veins, breccias and stockworks. The host rocks are a Tertiary-age tuffaceous volcanic unit that overlies a Paleozoic sedimentary rock sequence. The mineralized volcanics are, in turn, overlain by post-mineral volcanic tuffs, which are generally flat-lying to gently dipping and cover most of the north end of the property.

Bear Creek describes the deposit as a low-sulphidation, carbonate-base metal-silver epithermal system.

As of mid-August, Bear Creek had completed 269 holes at Corani for a total of 45,159 metres of drilling.

With the updated resource estimate completed, the company considers the resources better defined and, as a result, engineering and metallurgical testing now become the “critical-path” issues for project development.

Within the overall resource, there are higher-grade cores in each of the three mineralized zones (Main Corani, Minas Corani and Corani Este) offering starter-pit potential at a modelled stripping ratio of 2:1 or less. This core employs a 45-gram silver cutoff, resulting in measured and indicated resources of 71.2 million tonnes averaging 82.2 grams silver, 1.17% lead and 0.62% zinc, or 188 million oz. silver in situ. There is an additional 23 million oz. of inferred silver in 10.2 million tonnes of 71 grams silver, 0.84% lead and 0.34% zinc.

As the Corani deposit grows, it’s become increasingly apparent that Bear Creek is dealing with predominantly sulphide-hosted mineralization and that cyanide leaching alone would not recover the significant lead and zinc components of the mineralization. Preliminary metallurgical test work is touching on flotation, selective flotation and flotation/leach combinations. Initial test results are expected in mid-September, followed by the release of a project scoping study early in the fourth quarter.

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