Little-known Oceanus makes its mark in Mexico

Oceanus Resources (TSXV: OCN) is finding high-grade gold-silver mineralization on its wholly owned La Lajita property in Mexico’s Sierra Madre Occidental region, and says the project has rocks and structures similar to Agnico Eagle Mines’ (TSX: AEM; NYSE: AEM) Pinos Altos gold deposit.  

Most mineralization at La Lajita property — 300 km south of Pinos Altos in the southwestern corner of the state of Durango, near its borders with Sinaloa and Nayarit states — has been found in seven zones: La Fortuna, Esperanza, Santo Nino, Dos Hermanos, Mina la Guadalupe, Las Ratones and Cerro del Sol. The zones are all 200 to 400 metres apart, and exploration suggests that they are connected.

The property was worked in 2003 and 2004 by International Northair Mines, which identified seven outcrops on the side of a hill. Reverse-circulation drilling returned good numbers, but the company dropped the project in early 2004 when gold traded at US$450 per oz., coming up to a large balloon payment on the ground.

Oceanus Resources picked it up in March 2013 from private Mexican company Luna Gold, and dispatched a mapping and sampling crew. “It soon became obvious that there were three fractures — or faults — that went across the face of the mountain, and that these faults were in the upper volcanic rock package, which is quite rare in Mexico,” says Richard Gordon, the company’s president. “Most of the major deposits in Mexico are found at the contact with the lower volcanics.”

The upper and lower volcanics are the two major rock packages in Mexico, Gordon explains, and the upper volcanics are rarely looked at. “The understanding of the general geology in Mexico is that gold comes from deep below, follows an intrusive of some sort, and because the upper volcanics are 1,000 metres thick when they were made, that the gold comes up and hits the upper volcanics and is capped off,” he continues. “So, most of the large deposits in the country are found at the contact between the lower and upper volcanics.”

Gordon says that in most places in Mexico the upper volcanics eroded away, but in La Lajita’s case, what happened was that during the mountain-making process, the upper volcanic rocks cracked and instead of capping the gold coming from below, large voids were created that filled with breccia and gold-enriched fluids.

“What we have are these large faults across the face of the mountain with widths of between 20 and 40 metres that are filled with this rich, gold-bearing breccia,” he explains. “The major faults run north to south, but where they are cross-cut by structures going east to west, they ballooned out and became larger.”

Gordon describes the mineralized faults at La Lajita as slabs of “ore” — tilted at 55 degrees — that trace along surface for more than 2 km. The company’s structural geologist estimates that mineralization could reach the lower volcanic rock package at 450 metres depth.

“What we’d like to do is follow one of these slabs of ore down to where it crosses into the lower volcanic-rock package,” Gordon continues. “The lower rock package tends to be more brittle, so if there was an intrusive that came up, it would have shattered, causing voids that would have filled up with fluids carrying gold.” 

Gordon says the project could have the same geology as Agnico’s Pinos Altos, an open-pit and underground mining operation with reserves of 2.7 million oz. gold and 74 million oz. silver. Pinos Altos poured its first gold in July 2009, followed by commercial production that November. Underground production started in December 2010.

“What happened there was that a Mexican company followed the structure for 12 km along surface and drilled a number of small pits containing 30,000 oz. or 40,000 oz. gold,” he says. “When Agnico Eagle purchased the property they realized that the past operators were using shallow drilling — they were drilling in the upper-volcanic rock package — and when Agnico drilled deeper holes into the lower volcanics they found an orebody of over 2 million oz.”

Instead of being 100 metres above the contact, as at Pinos Altos, Gordon says, La Lajita is estimated to sit 450 metres above the contact with the lower volcanics. And while he concedes that deposits like Pinos Altos are rare, he says that La Lajita — even at this early stage — appears to share some characteristics. “When we look at our rocks they are the same, and the structures are the same. Now we just have to do additional drilling to prove the geological model. But that’s why we’re so excited about La Lajita.”

Gordon and his team say the project was never mined by the Spanish, so it is virgin territory. The earliest small-scale mining by pick and shovel on the property dates back half a century, and most mining took place at La Guadalupe, where underground workings followed the mineralization along strike for 150 metres.

Next year Oceanus hopes to complete a $1.2-million drill program and follow the mineralization to depth at the Dos Hermanos and Santo Nino zones.   

In September Oceanus reported results from diamond drilling at the Santo Nino and Dos Hermanos prospects that included intersections of 7.1 grams gold per tonne and 48.8 grams silver per tonne over 20 metres, including 18.9 grams gold and 71.3 grams silver over 6.5 metres at Santo Nino, and 10.2 grams gold and 143 grams silver over 1.7 metres at Dos Hermanos.

The September results followed channel sampling and geological mapping at the La Fortuna and Cerro del Sol zones. Results included 8.53 grams gold and 31.7 grams silver over 12 metres from channel sampling at La Fortuna, and 2.03 grams gold and 11.3 grams silver over 16 metres — including 4 metres of 4.71 grams gold and 23.5 grams silver — in channel sampling at Cerro del Sol.

In June, initial results from underground and surface channel samples from the Santo Nino zone included 10.64 grams gold and 41 grams silver over 10 metres from underground sampling, and 3.46 grams gold and 42.3 grams silver over 16 metres from surface sampling.

The Santo Nino zone is 600 metres along strike north of the Dos Hermanos zone, and is located on the same fault system.

Underground and surface samples from the Mina la Guadalupe zone, meanwhile, which were reported in May, returned 13.7 grams gold and 71.5 grams silver over 8 metres from underground, and 11 grams gold and 65.1 grams silver over 13.5 metres from underground.

“There are not many opportunities to buy into an extremely attractive exploration play once the first round of excellent drill-core results have been announced,” Tony Hayes, an independent mining analyst and chartered financial analyst, wrote in a recent email to The Northern Miner. “It outcrops at surface as a brecciated fault zone that has been traced over 2 km.”

Hayes adds that “the market just seems to be totally unaware of this story. This is where money can be made — going from having nothing to having something — and the early indications are that Oceanus could have something big.”

The tightly held junior has a $9-million market capitalization, with 36 million shares outstanding that over the last year have traded in a range of 15¢ to 30¢. At press time Oceanus was trading at 24¢ per share.