Zamora, Ecuador —
The Toronto-based company has just completed a 14-hole program, which so far has focused on two targets, Aguas Mesas Norte and Aguas Mesas Sur, both of which were discovered by artisanal prospectors over the past two years.
Aurelian’s first hole was drilled underneath Pit 3 at the Aguas Mesas Sur prospect. The pit previously yielded chip-sample results of 2.9 metres averaging 92.03 grams gold per tonne, 2.8 metres of 63.5 grams gold, and 8 metres of 71.98 grams gold (which included a 1-metre interval grading 330 grams gold).
The top section of the first hole, CP-01, intersected quartz-vein and breccia material at a down-hole depth of 23.8 metres. This material averaged 51.06 grams gold per tonne (uncut) over 9.2 metres (1.49 oz. gold per ton over 30.18 ft.). The interval included a 0.75-metre section of 501 grams gold (14.61 oz. gold per ton over 2.46 ft.).
A 1.8-metre section of core, taken at a down-hole depth of 28.6 metres, exhibited abundant, fine-grained, visible gold. The host rock is pyritic, propylitically altered andesite. Assays are pending for a second, 3.4-metre interval of vein material that was cut farther down-hole at a depth of 38.8 metres. Assays for the remaining holes are expected in January.
“This confirms that we have the key third-dimension to mineralization at this prospect,” said Aurelian President Patrick Anderson. “We are pleased with these results and have great expectations for the overall outcome of the first phase of drilling.”
Half-cores were sent, under security escort, to ALS Chemex’s laboratory facility in Quito. The samples were then shipped to ALS Chemex in Vancouver. Each sample was submitted to 50-gram charge gold fire assay with gravimetric finish. Sample blanks and recognized standards were inserted into the sample stream at regular intervals.
Aurelian recently announced a financing valued at $12 million. The junior will issue 5.3 million units priced at $2.25 apiece. From these, 1.8 million units will be sold on a bought-deal basis, which will result in just over $4 million. A unit consists of one share and half a share purchase warrant. Each whole warrant entitles the owner to acquire one share at an exercise price of $2.75 for one year after the closing date. Proceeds will be used to explore in Ecuador.
Aurelian now has 14.1 million shares issued and outstanding; after the financing closes, it will have 19.5 million shares issued and outstanding, plus more than $12 million in the till.
The company has been adding to its land base since 2001. At present, it has almost 770 sq. km (30 concessions) in the Zamora Chinchipe province of southeastern Ecuador, in a region known as the Cordillera del Condor.
“We’ve got a huge land package that was assembled on a sound and scientific basis; we didn’t just collect real estate,” Keith Barron, vice-president of exploration, told The Northern Miner during a site visit. “We’re going to explore these areas systematically, and due to political reasons, it will be the first time this area has seen modern exploration. This is one of the last areas of western South America that is [relatively] untouched, yet it has a mining history that goes back to the Conquistadors.”
The Condor project, as it is known, is in the highlands, east of the main axis of the Andes Mountains. A 40-km stretch of Aurelian’s western boundary is contiguous with the international border with Peru. To the southwest, the Condor property is bounded by the Chinapintza epithermal mineral district, whereas to the north, it abuts the Corriente-Billiton concessions and nearly surrounds
Aurelian’s property is a 5.5-hour drive east of the city of Loja. Half the road network is paved; the remainder being government-maintained gravel roads. Loja, a city of 177,000 people, is serviced three times daily by jet from the national capital, Quito.
Aurelian has a local office in the provincial capital, Zamora, which is a 2-hour drive from the airport. The town of Yantzatza, which is 30 km from the current focus of activity and 7 km from the edge of the property represents the closest supply centre.
Most of Aurelian’s concessions are no more than 5 km from a road. Foot trails and rivers provide access to the centre of the property area. Elevation ranges from 800 metres to a maximum of 2,400 metres and typically averages 1,400 metres above sea level. Tropical rain forest covers most of the region, and average temperatures remain fairly constant between 21 and 24 Celsius. Lower average temperatures prevail at higher elevations.
Prospects
“Our top prospects are Aguas Mesas Sur and Aguas Mesas Norte, followed by Bonza,” said Barron. “The remaining prospects are at the same level of development.”
The strike extensions of these prospects remain unexplored; indeed, most of Aurelian’s land position is unexplored, owing to historical access restrictions related to a (now resolved) border dispute with Peru.
Aurelian’s Condor project was affected by earlier border issues: exploration companies found it almost impossible to explore in the region. The latest geological map of the region, released by the Ecuadorian government in June 2000, shows a quarter of Aurelian’s land package as blank.
In 2001, when the bullion price was US$255 per oz. and gold was off the radar screen of most investors, Keith Barron and Patrick Anderson, geologists and founders of Aurelian, seized the opportunity to acquire a large land package in Ecuador. They chose Ecuador because the country had just emerged from the shadow of an economic crisis and favourable new mining laws were in the works.
In April 2001, Ecuador’s mining law was revised. As a result, individuals and corporations were given one month to convert their outstanding concession applications into titles and begin paying patents. In the following month, about 80% of the country’s concessions were declared void. Barron and Anderson subsequently assembled a large and contiguous land package.
Despite limited modern exploration in the region, Aurelian has identified 13 gold prospects that define a northerly trend which extends for 16 km along the eastern margin of its property. These prospects are clustered along north-trending structures in the Cordillera del Condor and represent 10% of the total property area.
From north to south, the main prospects are Bonza, Las Peas, Tranca Loma, Ubewdy, Aguas Mesas Norte, Aguas Mesas Sur, Rio Negra, Puente, Princesa, Emperador, Emperador Sur and Alto Miasi. The first six lie within the previously explored La Zarza concession.
The Aguas Mesas Norte and Sur prospects are near the southern end of the La Zarza concession and represent two newly discovered zones of mineralization. Las Peas is also newly discovered, and is near the Bonza site.
“We plan to perform extensive trenching and pitting to identify the strike extensions of the Aguas Mesas prospects,” said Barron. “We’ll also perform geological, geochemical and geophysical work and continue to prospect the region for new discoveries.”
Australian-based Climax Mining explored the La Zarza concession in 1997 and 1998. During that time, crews drilled 22 shallow diamond drill holes, made 1,320 soil auger holes, took 208 stream sediments, 480 chip samples and 65 pit samples, and performed 518 metres of trenching and 116.95 line km of geophysics.
Climax abandoned the property in 1999, when it could no longer raise money for exploration and failed to complete the terms of its purchase agreement.
In July 2002, Aurelian purchased the La Zarza concession from private interests, and today it holds a 100% interest in the concession free of any underlying agreements. Aurelian also inherited 17 volumes of geological information compiled by Climax Mining.
Climax focused its exploration efforts on the Bonza, Ubewdy and Rio Negra prospects. Artisanal prospectors discovered the Aguas Mesas Sur and Norte prospects, as well as Las Peas, after Climax withdrew.
The Bonza, Las Peas, Ubewdy and Aguas Mesas Norte and Sur prospects lie along a 4-km stretch of the north-trending Las Peas fault zone.
At Bonza, the most northerly known gold occurrence on the concession, Climax targeted strongly brecciated and silica-clay-pyrite altered intermediate volcanic rocks. The best drill intercept returned 115 metres grading 1.6 grams gold, including 42 metres of 2.6 grams gold. Drilling indicates that gold and base metal mineralization continue south across the Machinaza River, where, at the Las Peas site, artisanal miners are exploiting near-surface mineralization.
Gold mineralization at Bonza appears to be controlled by the Las Peas fault zone, which is coincident with the contact between the volcanic rocks and a conglomerate to the west. The Bonza target remains open to the northwest, as well as at depth. Aurelian believes higher-grade mineralization may be present in en echelon tensional structures associated with this fault system.
Narrow zones
Las Peas was discovered by artisanal miners just south of the Bonza prospect. Recent work has resulted in a long trench and two short adits plus a series of small pits, which were dug into the side of a ridge next to the flood plain of the Machinaza River. These workings have exposed narrow zones of west- and northwest-striking quartz veinlets hosted in weakly-to-strongly-silicified and fractured andesite volcanics. The andesite and quartz veins show multiple generations of fracturing and brecciation, as well as hydrothermal brecciation. Andesitic fragments in the muck pile contain 1-10% pyrite with and without quartz veinlets. Rhodochrosite can be seen in larger veins as laminated veins and bands. A new pit exposes a 4-metre wide rhodochrosite and chalcedonic quartz vein. Grab samples from the ore pile at the Las Peas artisanal workings yielded assays of 11.4 grams and 16.58 grams gold. The best continuous chip sample averaged 3.15 grams gold and 11 grams silver over 3 metres. A non-continuous chip sample returned 3.98 grams gold and 51 grams silver across 2.5 metres.
Also, Climax drilled three holes to test a geophysical anomaly at the Ubewdy prospect, 500 metres south of Las Peas. Initial drill results were disappointing, though one hole, drilled between Ubewdy and the current Las Peas artisanal workings, returned 84 metres of 1.03 grams gold, including a 2-metre section of 18.91 grams gold.
The Tranco Loma prospect is 1 km east of Las Peas and represents a 1.25-by-1.5 km gold, copper and molybdenum soil anomaly with a coincident chargeability anomaly that was never drilled or trenched.
The Aguas Mesas Norte and Sur prospects are 1.2 and 2 km south of the Ubewdy prospect, respectively.
At the Aguas Mesas Norte artisanal operation, trenching has exposed a north-striking white quartz vein that measures up to 9 metres wide and dips steeply to the east. This vein zone is exposed continuously for 95 metres and has been traced laterally through new trenching for an aggregate length of 450 metres. The company previously released trench-sampling results of 9.4 metres averaging 6.15 grams gold per tonne. This sample was taken at the northernmost end of the Aguas Mesas Norte trench. During the first phase of drilling, Aurelian tested the vertical extent of this quartz vein system, as well as its southern strike extension. Assays are pending.
The Aguas Mesa Sur prospect currently represents three pits that were excavated by artisanal miners. The southernmost pit exposed white quartz veins that strike to the northwest and dip steeply towards the west, as well as smaller vertical quartz veinlets that strike to east. The veins are hosted in a fine-grained andesite with 1-3% disseminated pyrite. The host rock shows some signs of fracturing and silica flooding but is not strongly silicified.
White quartz
The northernmost pit hosts block-like pieces of white quartz up to 1 metre long and 30 cm thick in a clay-hematite-limonite matrix. These quartz veins appear to strike to the north and are broken by east-trending faults.
Artisanal miners are working the third and largest pit. They have exposed a milky-white-to-light-grey, fractured and partly brecciated quartz vein that strikes to the northwest.
This pit has previously yielded chip sample results of 2.9 metres averaging 92.03 grams gold, 2.8 metres grading 63.5 grams gold, and 8 metres averaging 71.98 grams gold (which included a 1-metre interval averaging 330 grams gold). Aurelian drilled its first two holes underneath this pit and intersected high grades in the first hole. Assays are pending for the remaining section of the hole.
Aurelian has worked closely with the nearby communities and feels that the local attitude is extremely positive. Said Barron: “We have more than 100 local people working for us right now and are involved with the government in setting up a day-care program in a nearby village.”
The company has performed various community works, such as restoring streetlights, providing textbooks to a school, and building an extension to the local church.
“These are not big-dollar cost items and we are happy to do them,” said Barron. “The community realizes that the illegal miners don’t give anything back to the community, but we have the potential to improve the area through training, education, roads, clean water and all the benefits that come with improved infrastructure.”
Farther south are Aurelian’s Puente, Princesa, Rio Negra and the Emperador prospects. Puente is situated 7.5 km southwest of Bonza consists of a zone of repeated and crosscutting massive gray and white quartz veins that were injected into a sericite-pyrite mylonite schist. The quartz veins are brecciated tectonically. Continous chip sampling has yielded up to 6.14 grams gold over 1.32 metres. The zone is 35 metres wide and remains open in all directions.
Princesa, which lies 8 km southwest of Bonza, hosts gold-bearing quartz veins with pyrite and local silicification and brecciation. The veins are exposed in shallow artisanal workings in an area of abundant quartz-vein litter. Initial surface samples from the prospect returned up to 1.23 grams gold and 0.6 gram silver.
The Rio Negra prospect, 7.2 km south of Bonza, was found by stream-sediment sampling in the Negra River. Climax performed an auger soil survey and, in the process, identified nine samples that returned in excess of 100 parts per billion gold but did not define a coherent gold anomaly. However, a copper-molybdenum anomaly was identified, and 11 samples returned more than 500 parts per million copper.
About 8 km south of the Rio Negra prospect, Aurelian investigated another artisanal mining site: mechanical excavations at the Emperador prospect exposed what is believed to be andesitic breccia and/or diatreme. Laminated and brecciated epithermal-style quartz and pyrite can be seen in nearby andesite volcanics.
Chip sampling along the breccia zone returned 23 metres of 0.25 gram gold and 2,600 ppb mercury. The best precious metal assay in this interval was 0.8 gram gold and 8 grams silver per tonne. The entire breccia is anomalous in silver, arsenic, antimony, copper, lead and zinc (relative to the adjacent saprolite). Some boulders on the prospect are strongly leached and silica-rich and resemble products of vuggy silica alteration, commonly associated with high-sulphidation epithermal gold-silver deposits.
The Emperador Sur prospect represents a small artisanal operation 500 metres east of the Emperador site. Non-silicified andesite with minor disseminated pyrite is exposed in two small adits. The best channel samples from these adits returned 8.92 grams gold over 2 metres.
Regional geology
The Cordillera del Condor is part of the foreland basin between the Amazon Craton and the Andean Cordillera, and comprises both the upper reaches of the Amazon sedimentary basin and the Sub Andean zone. The Sub Andean zone in Ecuador represents a back-arc fold-thrust belt that encompasses the Cordillera del Condor frontal uplift.
Dominant normal fault structures in the Cordillera del Condor trend toward the northwest and are down-thrown toward the west. These structures typically terminate against, or merge with, northeast-striking anastomosing or en echelon fault sets.
The Zamora batholith and intermediate volcanic rocks of the Chapiza formation underlie the property. These represent intrusive and extrusive components of the Jurassic-aged arc that developed along the northwestern edge of the Amazonian Craton. The Pangui porphyry copper belt is associated with late intrusive phases of this batholith.
The highlands and ridges of the property are unconformably overlain by flat-lying, Cretaceous-aged sandstone and minor conglomerate. Quartz porphyritic intrusions of unknown age occur locally on the property. Similar mid-Cretaceous-aged felsic-to-intermediate intrusions are spatially and genetically associated with epithermal-style mineralization in the Cinapintza district, as well as skarn-hosted gold deposits in the Nambija district, 25 km west of Chinapintza.
Gold mineralization discovered in the project area consists of quartz veins and veinlets, stockworks, quartz-cemented breccias, and zones of silicification. The host rocks are moderately-to-strongly-fractured andesite, feldspar porphyry and intermediate-to-felsic intrusions. Evidence of repeated fluid and tectonic events can be seen by fractured and brecciated quartz injections. Pyrite is ubiquitous at all of the prospects and can be seen in both of the host rocks, mainly in disseminated form. Other associated minerals include rhodochrosite, galena, sphalerite, barite and chalcopyrite. Alteration in the host is generally secondary quartz, white mica (with or without clay), calcite, chlorite and epidote.
Local mines
Adjoining Aurelian’s land package to the south is the Chinapintza silver-gold deposit. The deposit has produced 385,000 oz. gold and 5.8 million oz. silver through a co-operative of informal miners. A further reserve of 1.1 million oz. gold and 5.5 million oz. silver was defined by TVX Gold, which merged with
The El Tambo gold camp, directly across the border from Chinapintza in Peru is the subject of a joint venture agreement between
Several companies have examined the Chinapintza area, including
South of Chinapintza, copper and gold-bearing skarn mineralization has been found at Santa Barbara.
The Pangui cluster of porphyry deposits ties on to the northern boundary of the Aurelian land position is held by Corriente Resources. The best target to date is Mirador, which is now surrounded by Aurelian concessions. Mirador hosts an inferred resource of 218 million tonnes averaging 0.73% copper and 0.24 gram gold. Another Corriente porphyry deposit is the Panantza, which has a resource of 148 million tonnes averaging 0.82% copper and 0.1 gram gold. A ne Corriente discovery, Mirador North, is adjacent to Aurelian’s Victoriana concession.
Investing in Ecuador
Ecuador is a fairly small country that straddles the Andean mountain chain with a population of 13.5 million people. Its major export is oil, followed by bananas, shrimp, and cut flowers.
In 1998 and 1999, the El Nio weather phenomenon struck Ecuador hard, devastating its agriculture-based industries. As a result, an Argentine-type banking crisis ensued, during which seven banks closed down. After defaulting on loans and borrowing heavily from the World Bank and the International Monetary Fund, Ecuador scrapped its own currency and adopted the U.S. dollar. All business in Ecuador is now transacted in U.S. currency. This step has restored stability to the economy, allowing foreign investment to once again take place.
Foreign oil companies have recently made major investments. The US$1.2-billion, 500-km-long Trans-Andean oil pipeline project is now finished, and slightly more than 30% of it was funded by Canadian interests.
As part of the restructuring of the Ecuadoran economy, the World Bank recommended that Ecuador foster investment and development of the mining sector in order to insulate it better from future El Nio weather cycles.
Subsequently, the Ecuadoran government introduced sweeping changes to the mining law. Some of these changes include: increasing the term of concessions to 30 years (renewable); streamlining the granting of title transfer from exploration to exploitation; abolishing the 3% mineral royalty payable to the government; allowing foreigners to hold concessions without Ecuadoran partners; introducing guarantees into law which secure the right to mine once a positive feasibility study has been carried out.
When the Spanish New World Empire was dismantled in the early 19th century, the new countries of Ecuador and Peru hastily cobbled together a border agreement using both the old Incan boundaries and the last judicial boundaries between the Viceroyalty of Nueva Granada and the Viceroyalty of Peru.
Since little was known about the geography of the Amazon basin, the border was rather arbitrarily drawn. At that time, the region was of little importance and indeed was deemed worthless.
In the 1920s, American oil companies began exploring the Amazon basin, and in 1940, Royal Dutch Shell spudded the first well. The following year, Peru invaded Ecuador and claimed the entire Amazon basin.
The U.S. intervened and in 1942 the Protocol of Rio de Janeiro was signed. The treaty defined the border in the Cordillera del Condor area as the division of two river watersheds, based on high-altitude air photographs. Since the area is prone to cloud cover, when survey crews went in four years later, they found that two “rivers” specifically mentioned in the wording of the treaty did not exist. As a result, a 78-km section of the border remained undefined and became, in effect, a no man’s land.
After 1960, it became illegal in Ecuador to print a map showing the boundary through the disputed zone, which was labeled zona en la que el Protocolo de Rio de Janeiro es inejecutable (zone in which the Protocol of Rio de Janeiro is not in effect).
Until 1998, the border issue was a point of contention between Peru and Ecuador, and several military skirmishes ignited in the area, the most notable of which was the Paquisha Incident in 1981 and a 34-day undeclared border war in 1995.
During this period, it became illegal for foreigners to own property along the real or perceived border in Ecuador.
On Oct. 28, 1998, the presidents of Ecuador and Peru signed the Acta de Brasilia, bringing the conflict to a close. A joint Ecuador-Peru commission erected border monuments in the formerly contentious 78-km no man’s land in 1999, and most of the Ecuadoran military posts are now dismantled or abandoned.
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