American Bonanza cuts high-grade at Copperstone

Vancouver The initial results from an ongoing 9,000 ft underground drilling program has confirmed the high-grade nature of the D zone on the Copperstone gold project in Arizona.

Owner American Bonanza Gold Mining (BZA-V) punched the first two holes of the latest program into the western margin of the D zone, with hole 1 failing to cut any significant values and hole 2 yielding a high value of 0.31 oz gold per ton over 4.5 ft.

The third hole returned 40 ft grading 1.2 oz gold. Included in this interval was a higher-grade section running 2.3 oz gold over 18 ft.

“These bonanza grades are a very encouraging indication of the potential of Copperstone to ultimately support a significant, extremely low cost gold mine," says company President, Brian Kirwin.

Assay results for the fourth hole are still pending, while the rig currently drilling hole 5.

The latest bout of drilling is designed to convert resources into reserves at the D-Zone. The company has extended an existing decline some 500 ft. to the southern end of the targeted zone, which is 600-650 ft. beneath the surface.

The decline was designed to intercept drill hole C96-19, which returned 5.3 oz. gold per ton over 10 ft. That hole, completed in 1996, was drilled from surface and is about 80 ft. north of the southern margin of the D zone. Channel sampling from the same mining round that exposes hole C96-19 in the back of the underground workings returned 9.5 ft. grading 4.1 oz. gold, 4.5 ft. grading 9.1 oz., and 4 ft. grading 1.9 oz., confirming the bonanza values of the hole.

A 1999 scoping level study by MRDI Canada estimated the total geological resource for the C and D zones at 2.1 million tons grading 0.34 oz., equivalent to 709,000 oz. gold, using cut grades. The D zone alone contains 391,500 oz. in an indicated and inferred resource totalling 910,800 tons averaging 0.43 oz. Gold grades were capped at 4.7 oz. in the D zone and 2.5 oz. in the C zone.

Uncut, the C and D resource averages 0.58 oz. gold, giving an estimated 1.2 million oz. MRDI used a database containing 71 drill holes, with 253 associated assays, to develop the resource model.

The Copperstone project is a former-producing open-pit mine 80 miles west of Phoenix in La Paz Cty. The closest communities are Quartzite, 10 miles to the south, and Parker, 25 miles to the north. A 3-mile-long gravel road connects the property to a paved road. The project is in an area of arid sandy desert terrain, with surface elevations ranging from 720 to 900 feet.

American Bonanza owns a 100% leasehold interest in 284 contiguous mineral claims comprising 5,680 acres. Under a 1995 lease agreement with the Patch Living Trust, annual advance royalty payments of US$30,000 are payable over a renewable term of 10 years. The junior is obligated to pay for all permitting and state lease bonding, as well as insurance taxes, amounting to a further US$30,000 a year. A sliding-scale production royalty ranging from 1% to 6% is tied to the price of gold.

From 1987 to 1993, Cyprus Minerals operated a 2,500-ton-per-day open-pit mine and carbon-in-pulp (CIP) milling complex. During its life, the Copperstone mine produced 514,000 oz. gold from 5.6 million tons of CIP mill ore grading 0.089 oz. gold per tonne and 1.2 million tons of heap-leach ore grading 0.03 oz. Gold recoveries averaged 89% in the CIP mill. Following the mine closure, Cyprus reclaimed the tailings pond and removed the CIP mill. Certain on-site buildings, roadways, a water system, power lines and a sub-station remain in service.

Santa Fe Pacific leased the Copperstone property in 1993 and drilled 12,500 ft. in 17 widely spaced reverse-circulation holes. A deep, 1,000-ft. vertical hole drilled from the pit encountered 15 ft. grading 0.65 oz. gold per tonne in the footwall of the Copperstone fault at 479 ft. from surface. This hole was never followed up, and the lease was terminated in 1994.

The Copperstone property occurs in the “basin and range” province of the southwestern U.S. The regional geology is strongly influenced by Tertiary-age detachment faults and younger high-angle normal faults. The Copperstone gold mineralization occurs in northwest-striking, moderate-to-shallow-dipping fault zones related to the Copperstone structural horizon within a package of Triassic sediments and Jurassic quartz latite volcanics. Most gold mineralization occurs in a breccia zone related to the fault.

Gold mineralization is restricted to the fault zones, with little or no gold present in the wallrocks. The Copperstone fault dips 25 to the east in the D zone area. A sequence of quartzite, chlorite schist (siltstone) and marble (limestone) is the predominant host in the high-grade portion of the D zone.

Royal Oak Mines leased the property in 1995 and proceeded to test for deeper extensions of mineralization in the Copperstone fault below the open-pit and along strike. Some 35 surface holes totalling 28,330 ft. were completed between 1995 and 1997, resulting in the discovery of several bonanza-grade intercepts on strike to the north (the “D zone”) and down-dip to the northeast (the “C zone”). Highlights included 20 ft. averaging 1.98 oz. (including 5 ft. of 6.27 oz.) from the D zone and 10 ft. grading an impressive 21 oz. from the C zone. In addition, Royal Oak outlined two smaller zones of lower-grade mineralization beneath the pit area.

In 1998, American Bonanza’s predecessor, Asia Minerals, acquired a 25% interest in the project from Royal Oak, along with an option to earn up to 80% by incurring certain exploration costs and cash payments totalling US$4 million. At the time, Royal Oak was a controlling shareholder of Asia Minerals, with a 44% stake. The relationship between the companies dated back to 1993, when Royal Oak bought a 40% interest in Asia Minerals, which was then exploring for gold in China.

After spending US$560,000 exploring the property and completing a positive preliminary scoping study of a proposed small high-grade underground operation, Asia Minerals was forced to resolve the problems associated with the 1999 bankruptcy of Royal Oak. The junior lined up a group of private investors to purchase Royal Oak’s position in Asia Minerals and arranged a credit facility to buy out the remaining 75% interest in the Copperstone project not already held.

In September 2000, Asia Minerals began driving an underground exploration decline north into the D zone area from a portal near the north floor of the Copperstone pit. The decline was advanced 1,350 ft. before lack of funding forced the company to stop exploration in early 2001. The decline failed to reach the targeted D zone, falling some 500 ft. short.

In late 2000, Asia Minerals changed its name to American Bonanza Gold Mining after acquiring all the shares of Bonanza Gold, a private company exploring in Nevada. The acquisition resulted in a change of management, with Brian Kirwin appointed president and CEO. Kirwin was vice-president exploration for Vengold from 1996 to 2000 and prior to that, from 1989 to 1996, was employed by Placer Dome in various capacities, including senior evaluations geologist in the corporate development group.