AngloGold to buy 19% of Mariana

AngloGold Ashanti (AU-N) is all set to acquire a 19.9% interest in fellow Deseado Massif landholder Mariana Resources (MRY-T, MARL-L).

The major gold miner is buying 45 million shares of gold junior Mariana at 12 pence apiece for a total of £5.4 million, or roughly US$8.5 million, representing a 41% premium to Mariana’s last closing price before the original private placement announcement on Nov. 17. The financing will bring the company’s issued and outstanding shares to 226 million shares. 

Mariana has made two grassroots gold-silver discoveries over the past few years in southern Argentina’s Deseado Massif, a highly prospective volcanic complex stretching across 77,000 sq. km of the northern third of Santa Cruz province. The area was largely unexplored 20 years ago because of the younger basalts and gravels that mask the underlying geology. It became an emerging gold-silver province after several companies made major low-sulphidation, epithermal gold-silver discoveries there.

The first such deposit to catch the mining world’s attention was the Cerro Vanguardia gold-silver mine now 92.5% owned by AngloGold. Operational since 1998, the mine produced 209,000 oz. gold and 2.8 million oz. silver in 2010 and was the company’s lowest-cost producer for the year at US$366 per oz.

More recently, Goldcorp (G-T, GG-N) spent $3.6 billion acquiring Andean Resources in late 2010 for its advanced Cerro Negro gold project in the far northwest corner of the Massif. 

Mariana’s flagship project, Las Calandrias, is located 100 km northwest of Cerro Vanguardia in the Deseado Massif’s northeast. Mariana’s neighbours on site comprise some of the most-advanced juniors exploring in the complex, such as Minera IRL (IRL-T, MIRL-L) and Extorre Gold Mines (XG-T, XG-V, XG-X), as well as a small set of joint-venture claims held by Iamgold (IMG-T, IAG-N) and Hochschild Mining (HOC-L). 

Four phases of drilling by Mariana in 2009 have led to multiple zone discoveries of gold-silver epithermal mineralization at Las Calandrias. The mineralization is generally hosted in rhyolite domes and volcaniclastics over a 12-sq.-km area. An initial National Instrument 43-101-compliant resource comprising the bulk-tonnage Calandria Sur and the higher-grade La Calandria target areas pegged the deposit at 519,000 equivalent oz. gold in July, contained in 11.8 million indicated tonnes grading 1 gram gold per tonne and 17.4 grams silver per tonne, as well as 870,000 inferred tonnes grading 0.93 gram gold and 5.17 gram silver. 

The most recent drill program, completed between August and September, tested 10 new targets outside of the maiden resource area in 47 holes over 6,181 metres. Results from the first 28 holes released in early November showed that the mineralized footprint of the bulk-tonnage Calandria Sur zone extends 800 by 350 by 500 metres, with new intersections located up to 300 metres east and 120 metres north of the initial resource area. The best intersection from the program assayed 1 gram gold over 40 metres starting from eight metres below surface at Calandria Sur.

Mariana’s Australian chairman, John Horsburgh, said in a prepared statement that “these encouraging results demonstrate the potential of the Calandrias Sur mineral system to be expanded substantially in several directions outside the core area. Results further indicate scope for breccia-hosted gold at the new El Clavo target northwest of Calandria Sur.”

The company anticipates follow-up drilling in the next few months once all results are in, with detailed mapping and geophysics to further outline the targets.

Although it seemed that limited high-grade veins were found in the first set of drill holes, the holes must have shown mineralization that was continuous enough to interest AngloGold. The South African miner announced its proposed private placement with Mariana just two weeks later.

Mariana’s second project is Sierra Blanca, located in the centre of the Massif 140 km southwest of Las Calandrias, 70 km northwest of AngloGold’s Vanguardia mine and right beside Argentex Mining‘s (ATX-V) Pinguino discovery. The Sierra Blanca project is under option from Iamgold, which completed first-pass sampling there before Mariana drilled it for the first time in early 2007. Mariana owns a 70% interest but can earn the rest by paying US$1 million in cash and shares.

Follow-up drill programs have shown Sierra Blanca to be a relatively small, intermediate-sulphidation epithermal gold-silver deposit, where the best drill results to date include 29 metres averaging 1.4 grams gold and 11.5 grams silver from a depth of 85 metres, and 30 metres grading 2.2 grams gold and 101 grams silver from 23 metres.

The company began its fourth drill program at the property in October, comprising 5,000 metres targeting gold-rich veins and vein breccias. 

At presstime on Nov. 29, Mariana traded for 15.5¢ a share with a 52-week share price range of 5.5¢-48¢.