Aura Gold starts drilling in former gold rush area

Few garimpeiros are seen near Aura Gold’s new Cumaru project in north-central Brazil, unlike the scene from the Para State gold rush in the 1980s when they came in droves to find gold.

Until now the land has been largely untouched by any modern exploration companies, allowing Aura Gold to make authentic ore body discoveries.

“It’s very exciting,” says Bradley. “It gives you the spirit of the pioneers and it means doing genuinely creative work.”

But Bradley admits that the real prospectors were the garimpeiros; small-scale independent miners, viewed by some as illegal, who hauled sacks of gravel from man-dug pits in hopes of finding gold. It is estimated that garimpeiros have produced up to 60 million oz .of gold, or about 60% of Brazil’s total gold production, half of which has come from Para State over the last 30 years.

“We find it romantic, though some Brazilians don’t,” says Bradley.The company has recently begun a 3,000-metre drill program at the Cumaru and Graduas properties, which make up the 36,000-hectare Cumaru project in southern Carajas province.

Drill holes at Cumaru will be no deeper than 200 metres. Garimpeiros have dug holes up to about 20 metres deep, but they were unable to go deeper because of the water table.

Aura Gold, listed on the TSX in July, began as a concept in October 2005 when Bradley learned of some properties through the connections he’d made at Yamana Gold (YRI-T, AUY-X), for which he is currently chair. Yamana produced more than 400,000 oz. during 2006 and has a target of reaching 1 million oz. per year by 2008.

Located along a southern Archean-age greenstone belt, Cumaru is the second largest garimpeiro gold district in Carajas. Discovered in 1980, the Cumaru area has officially produced 1.5 million oz. of gold, but the actual figure is thought to be twice that. Limited drilling has been done at the small Graduas open-pit mine.

Aura Gold also has two other properties in Para State: the 125,000-hectare Inaja greenstone belt and the 433,000-hectare North Carajas claims.

Inaja, 90 km south of Cumaru, is also known for garimpeiro gold production in the 1980s. It’s located on the southern-most Archean-age greenstone belt in the region and forms a 100-km-long arc.

“Most Brazilians haven’t focused on greenstone belts, whereas North Americans see them as being relevant targets,” says Steve Dawson, a geologist and vice-president corporate development at Aura Gold.

North Carajas has been explored for nickel, copper and diamonds but without drill testing. Gold occurrences are known throughout the Archean and Early Proterozoic rock sequences of the region. Some of the Aura Gold’s claims are near the world-class Salabo copper-gold deposit, owned by Companhia Vale do Rio Doce (CVRD) (RIO-N), and Serra Pelada, where 1.3 million oz. of gold was mined up to 1994.

Aura Gold acquired Cumaru from Yamana Gold and Carajas from Santa Elina Mining, which is a 10% shareholder of Yamana.

Inaja was acquired through nine separate arm’s-length agreements with various landowners.

Dawson says that heavy labour done by the garimpeiros to mine surface gold isn’t a guarantee of gold below, but it’s a good sign.

“Garimpeiros don’t just do it for the sake of it, that’s how they make their living,” says Dawson.

So far, grab samples from the Graduas mine have been as high as 65.3 grams gold per tonne while the grab samples from Cumaru’s Divino target had values of 102.5 and 27.2 grams gold per tonne. As well, grab and chip samples taken from Axixa target, OP-2 and OP-3, assayed 1.2 grams gold per tonne over 2 metres and 2.3 grams over 3 metres.

Dawson says the company will not be putting out results on a hole-by-hole basis because so far only 500 of 36,000 hectares have been examined.

“We’re not interested in hyping the market,” says Dawson.

Yet to come is regional reconnaissance sampling and a detailed evaluation of the project through geographic information system (GIS) mapping.

Because of its history, Cumaru looks like the “crown jewel,” says Bradley, but he thinks Inaja is going to take first place because of its potential for copper, nickel and iron, as well as gold.

While drilling and exploration continues, Bradley says Aura Gold will keep an eye for other properties. The focus is Brazil, but the company is open to properties elsewhere in South America.

“Anything I come across (in South America)would go to Aura Gold,” says Bradley. “I’m not interested in starting another company.”

Aura Gold raised $10 million during the first half of 2006 before it’s IPO, and currently has about $7.5 million in the treasury.

Bradley has hopes of keeping Aura gold through the prefeasibility stage by getting equity financing in stages, though he noted that it’s currently an era of consolidation. If the price is right and it’s fair to shareholders, then a partnership proposal couldn’t be rejected, he says.

For geologists like Dawson, it’s the “thrill of the hunt,” and for Bradley it’s about creation.

“I like putting stuff together that’s the fascinating part,” Bradley says.