Virgin Wants to Start Small at Los Verdes

With a resource calculation in hand and plans for a feasibility study, Virgin Metals (VGM-T, VGMTF-O) is looking to move along its Los Verdes copper-molybdenum project on the eastern boundary of Sonora state, near Federal Highway 16, the main road between Hermosillo and Chihuahua.

Los Verdes has a measured and indicated resource of 10.5 million tonnes at grades of 0.46% copper, 0.124% molybdenum and 0.085% tungsten (translating into grades of 0.19% MoO3 and 0.11% WO3), plus an inferred resource of 1.1 million tonnes at 0.16% copper, 0.12% molybdenum and 0.024% tungsten. That resource has come out of a 50-year history of small-scale mining and exploration, and at least one nationalization, plus 11,000 metres of drilling, about three-quarters of it reverse-circulation, in 2006 and 2007.

Virgin is looking at Los Verdes as a primer for a much larger pump, the Cuatro Hermanos copper-molybdenum project in south-central Sonora, on the Rio Yaqui, about 70 km north of Ciudad Obregon (see separate story, Page B18). Cuatro Hermanos is much less advanced, but appears to host a much larger system than Los Verdes; what Los Verdes has that Cuatro Hermanos does not is a clear way forward now that a resource has been drilled off.

Los Verdes, neatly, is the top of a hill, with discrete zones of copper-rich, molybdenum-rich, and tungsten-rich mineralization in a quartz-tourmaline hydrothermal breccia atop an otherwise barren granodiorite. The granodiorite cuts off any depth potential for the mineralization, but makes mine planning relatively easy. On the east, the mineralization is cut off by a low-angle fault.

The planned feasibility study is for an open pit producing 1 million tonnes annually. Work to date has not put a pit limit around the mineralization, but the topography probably means there would be very little waste to remove, except for an oxide cap on top of the mineralized zone.

Drilling through the summer season concentrated on the tungsten zone and on the Bacanora property, an enclave in the Los Verdes property that Virgin acquired from Teck Cominco (TCK-T, TCK-N) in February for US$25,000 cash, 1.5 million shares and a 2% net smelter return. Chris Davie, Virgin’s president, said he expected recent drilling to increase the resource by about 3 million to 4 million tonnes.

Once a pit is put around the new resource, he said the minable reserve would probably be about 10 million tonnes.

Metallurgical tests have shown about 89% of the molybdenum and 86% of the copper can be recovered in a bulk concentrate. The proposed flow sheet for processing would put that bulk concentrate through a regrind circuit, then selectively float molybdenum and depress copper. “The biggest problem is rejecting pyrite,” says Davie, but the molybdenum concentrate can be cleaned at a high pH to remove the pyrite.

There is no feasibility study yet, but ballpark figures put the capital cost at US$50 million and operating costs at around US$30 per tonne.

Hence, Virgin’s push to bring Los Verdes into production quickly.

“We think the schedule is the most important thing about this,” says Davie, who also believes he can count on a molybdenum oxide price around US$20 for the next decade.