Bema, Arizona Star release Cerro Casale estimate

With four drill rigs turning at the Cerro Casale gold-copper porphyry target in northern Chile, Arizona Star Resource (AZS.V) and partner Bema Gold (BSO-T) have released a resource estimate indicating the deposit could contain more than 24 million oz. gold and 6 billion lb. copper.

Situated on the Aldebaran property, the Cerro Casale porphyry outcrops at surface in the form of an oxide gold deposit on the side of a talus-covered hill at an elevation of about 4,460 metres. The oxide zone is the weathered portion of the porphyry and contains virtually no copper. The transition to sulphide mineralization occurs at a depth of about 300 metres.

The porphyry sulphide mineralization extends for a length of 850 metres and has been confirmed to a depth of 1,350 metres. The width of the zone in the southwest has been extended to 800 metres from a previously reported 300 metres. A higher-grade breccia zone exists in the porphyry, with overlying supergene-enriched mineralization.

Current drilling is focused on defining the boundaries of the main porphyry, which remains open to the south, west and at depth.

California-based Mineral Resources Development (MRDI) has presented the partners with three preliminary estimates for the in situ resource at Cerro Casale, based on different gold cutoff grades:

* The first estimate, based on a cutoff of 0.4 gram gold, is of an oxide resource of 111 million tonnes grading 0.65 gram gold per tonne and a sulphide resource of 1 billion tonnes grading 0.7 gram gold and 0.28% copper.

* The second estimate, based on a cutoff of 0.5 gram, is of an oxide resource of 76 million tonnes grading 0.75 gram gold and a sulphide resource of 734 million tonnes grading 0.79 gram gold and 0.3% copper.

* The third estimate, based on a cutoff of 0.55 gram, is of an oxide resource of 64 million tonnes grading 0.79 gram gold and a sulphide resource of 645 million tonnes grading 0.83 gram gold and 0.31% copper.

MRDI based its resource estimates on 214 reverse-circulation holes over 40,895 metres and 47 diamond drill holes over 34,152 metres. Another 21 diamond drill holes have since been completed at Cerro Casale.

Gold and copper grades were calculated by a kriging method that employed a search ellipsoid measuring 175 metres by 175 metres by 250 metres.

Approximately 55% of the resource above the 0.5-gram cutoff is reported to be within a 70-metre radius of the drill holes.

During a conference call to analysts, Bema President Clive Johnson stressed that MRDI has been involved, independently, at Cerro Casale for six years and was on-site during feasibility work on the oxide deposit, supervising drilling and sample preparation.

Commenting on the different estimates, Johnson said, “No one in our organization believes we will be mining a 0.55-gram cutoff. Everything we know to date suggests that we will be mining something in the 0.4-gram cutoff, or possibly even less.”

Bema and Arizona Star are still far from defining minable reserves or, for that matter, proven and probable reserves. MRDI is conducting a preliminary scoping study, to be completed in May, which will address the economics of the project.

The geometry of Cerro Casale, whose shape has been likened to an upside-down pyramid, as well as the topography in which it lies, will contribute to a low stripping ratio. The ratio is estimated to be between 1.5-to-1 and 2-to-1.

The partners envisage open-pit production of 120,000 to 135,000 tonnes per day, with sulphides subjected to standard flotation milling techniques.

Preliminary metallurgical tests indicated recoveries of 75% for gold and 90% for copper. Extensive testwork is ongoing.

Initial plans called for the oxide material to be mined and processed in a large run-of-mine, heap-leach operation, though the possibility of mill treatment is also being considered.

Early estimates have priced the project at $800 million.

Arizona Star owns 51% of the Aldebaran property, whereas Bema owns the remaining 49%. Bema is also the major shareholder of Arizona Star, with a 33% share.

The partners also report that they have signed confidentiality agreements with 15 majors regarding Cerro Casale and that representatives of nine of the companies have been on-site.

“We are going to do a deal with somebody,” Johnson said. “I would be quite surprised if we haven’t entered into an agreement with someone in the next three months.”