Chutine, Barrick drill Mexico bet

Partners Chutine Resources (TSE) and American Barrick Resources (TSE) have begun drilling on a Mexican gold property that adjoins a heap leach gold producer operated by Phelps Dodge (NYSE) and affiliate Santa Gertrudis.

Chutine and Barrick have teamed to look for Nevada-style large-tonnage, low-grade disseminated gold deposits on a 16,000-acre property near Magdalena in the state of Sonora. Known as the Amelia claims, the joint venture ground is known to contain 695,000 tons of proven ore reserves grading 0.15 oz. gold per ton in the vicinity of a former 500-ton-per-day mine. An additional 720,000 tons of probable and possible reserves (of similar grade) also exist on the Amelia claims which are held by Chutine’s 49% owned Mexican affiliate Minera Sanex.

Equipped with an option to purchase the remaining 51% stake in Sanex, Chutine recently granted Barrick the right to earn a 75% project interest. To exercise the option, Barrick must spend a minimum of US$3.5 million on exploration and bring the project to production. The deal also requires Barrick to finance 33,000 ft. of reverse circulation drilling this year.

Having concluded preliminary exploration work, including mapping, geological surveys and trenching, the joint venture is planning 6,500 ft. of reverse circulation drilling in this exploration phase.

Operator Chutine has outlined 10 areas of intense oxidation, some of which are on strike with the adjoining Phelps Dodge development. According to Chutine Chairman Peter Holmes, the Amelias are geologically similar to American Barrick’s Goldstrike mine near Carlin, Nev., where disseminated gold mineralization contained within sedimentary rock sequences is common.

At Barrick’s recent annual meeting in Toronto, President Robert Smith said his company had agreed to the joint venture in the hope that enough reserves could be proven up to support a 100,000-oz.-per-year mine.