Atacama adds heft to Cerro Maricunga

Atacama Pacific Gold (ATM-V) is looking to expand its position in the dry highlands of Chile.

The company’s flagship Cerro Maricunga gold project sits in the larger Maricunga mineral belt, which hosts a 100-million-oz. gold resource.

Some of the projects close to Cerro Maricunga include Kinross Gold‘s (K-T, KGC-N) La Copia silver-gold mine 20 km north, and its Lobo Marte project, which is located 30 km southeast.

Such neighbours, combined with solid results from Cerro Maricunga, has Atacama liking the area enough to extend its reach with an agreement to acquire the Santa Teresa gold property, which lies within the boundaries of Cerro Maricunga.

To get the ground, Atacama is paying $3 million over three years with a net smelter return royalty of 1.5%. Atacama can buy back 50% of the royalty for $1 million. 

While it closes that deal, it also looks to gain concessions northwest of Cerro Maricunga through an application process.

Cerro Maricunga, which is located 140 km east of Copiapo city, stretches out over 158.4 sq. km.

Part of the reason for Atacama’s optimism can be found in the maiden resource estimate at the project, which was released in August. 

The estimate outlined indicated resources of 93 million tonnes grading 0.54 gram gold for 1.6 million oz. In the inferred category, the company has another 117 million tonnes grading 0.52 gram gold for 1.95 million oz.

The tonnage comes from three main zones: Lynx, Phoenix and Crux, and all mineralization is oxide-associated and breccia-hosted, which should make for easier and cheaper processing if the project becomes a mine.

Each of those three zones is defined by a mountain, with outcrop at the top and mineralization running in-between. The zones have a 2.5-km strike length, a 400-metre width and a 500-metre depth. 

Carl Hansen, Atacama’s president and chief executive, says the deposit wasn’t discovered earlier because it’s porphyry-related, which wasn’t a favourite exploration target in past years. With much of the gold mineralization in the region now seen to occur in porphyries, prior explorers failed to appreciate what was on hand. 

Gold mineralization at the project is associated with black-banded silica veinlets and chlorite-magnetite-quartz veinlets. Both are primarily hosted in a central breccia complex. 

Atacama found gold in 2007 with its Crux zone discovery. It spent the next two years de-risking the project in preparation for a public listing.

That came roughly a year ago, when the management team, which is largely made up of former Andina Minerals (ADM-V) executives, watched the stock go to the secondary market in the $2.90 range.

Atacama has only 47 million shares outstanding. The tight capital structure, solid management team and prospectiveness of the ground helped fuel a strong run, with the share price reaching as high as $5.75 in August. Shares now trade for $4.08. 

Atacama is tightly held – 41% of its shares are held by either insiders, Gold Fields (GFI-N) or Kinross – and well-financed, with $48 million in the bank. 

And Crux, while having less tonnage than the other two zones, has a higher grade at surface, which is generally in the 1-gram-per-tonne neighbourhood. 

But the key to Cerro Maricunga’s success is metallurgy, not grade.

Even at this relatively early stage, the company has been getting 89% recoveries from column tests. 

Such excellent recoveries have to do with the oxide nature of the deposits and the 98%-pure gold. 

That means that heap leaching the ores should be relatively smooth. When cyanide hits the ore, the gold dissolves right away. 

As for the latest Santa Teresa acquisition, the company says the property covers a series of dacitic and andesitic stocks intruding volcanic and sedimentary rocks similar to the formations and lithologies at La Copia mine.

A preliminary look at the ground by Atacama shows areas of black-banded quartz veining, which returned assays from trace to 0.49 gram per tonne gold over 2 metres.

It was also allowed to do a channel sample, which cut across a 0.30-metre iron carbonate quartz vein and returned 4.20 grams gold per tonne.

The company says the iron carbonate quartz vein is associated with a major fault cutting a thin veneer of limestone overlying volcanic and sedimentary rocks.

While Cominco did preliminary exploration at Santa Teresa in the late 1990s, the work was limited to a geophysical study, and no drilling was completed.

As part of its $24-million budget for the third phase of exploration, Atacama says mapping, trenching and sampling at Santa Teresa will define targets for drilling during the second quarter of 2012.