EXPLORATION 1998 — Mexico’s Zacatecas state teeming with Canadian juniors

With massive-sulphide intervals as thick as 263 metres, the San Nicolas polymetallic massive sulphide discovery in Mexico’s Zacatecas state is significant in its own right, but it is the likelihood of additional discoveries that now holds the market’s attention.

San Nicolas is part of the El Salvador joint-venture project, held 55% by Teck (TEK-T) and 45% by Western Copper Holdings (WTC. The project covers approximately 360 sq. km of ground, 65 km southeast of the city of Zacatecas.

The San Nicolas find was made in November of last year, when hole SAL-25 intersected a 175.2-metre interval of massive sulphides averaging 1.5% zinc and 0.52% copper, plus 0.61 gram gold and 19.41 grams silver per tonne, beginning at a depth of 207.1 metres. The upper 28.4 metres of the intersection averaged 5.53% zinc and 0.64% copper, plus 1.2 grams gold and 47.6 grams silver.

The vertically drilled hole was collared in the centre of an induced polarization (IP) geophysical anomaly measuring 500 metres by 500 metres.

Teck is currently drilling off the limits of the deposit on 100-metre centres. A total of 17 holes have been completed to date.

The El Salvador project first showed promise in October 1996, when drill testing of near-surface copper oxide mineralization intersected a 2.1-metre interval of massive sulphides grading 16.57% zinc, 1.53% lead and 2.07% copper, plus 3.68 grams gold and 213 grams silver at a depth of 96.9 metres.

That prospect, known as El Salvador, was subsequently tested with a total of 23 holes, which revealed a structurally complex zone showing evidence of multiple flat-lying horizons. Grades, on the whole, were lower than the discovery hole, and had an average thickness of about 2 metres.

The San Nicolas discovery lies about 1 to 1.5 km west of the El Salvador prospect. Both are “blind” deposits, in that neither is exposed at surface and both are covered by younger volcanics. Geophysics has been the primary tool for exploration; San Nicolas was found using ground real-section IP surveys. At the time of the discovery, only 2% of the project had been subjected to IP work. Teck is in the process of completing a wide-ranging IP survey, to be followed by a gravity survey.

Through a strategic alliance with Rio Tinto (RTP-N) subsidiary Minera Kennecott, Western Copper controls more than 3,000 sq. km of ground in Zacatecas and in neighboring San Luis Potosi state, including a 35-km-long belt extending northward from, and sharing the same geology as, the El Salvador project. Reconnaissance IP work on this trend has already identified drill targets.

Working on behalf of Western Copper, Kennecott was allowed to complete an orientation IP survey over part of the El Salvador project. That work successfully confirmed the San Nicolas deposit and defined several new geophysical anomalies — one north of San Nicolas (which coincides with a copper anomaly), and another trending along the Teck-Kennecott border.

The discovery of San Nicolas has spawned a growing regional area play. Among the juniors, Albert Applegath’s Kalahari Resources (KLA-V) has amassed the largest land position to date. Under the direction of Kevin McAndrews, who recently left Minera Kennecott to join the junior, Kalahari has staked 1.4 million ha in seven blocks; staking is continuing. The company has reported that it is interested in developing joint-venture partnerships and has begun negotiations with several major mining companies.

Kalahari also entered into a number of joint-venture agreements on ground in the Fain de Plata area, 50 km southeast of the El Salvador project and 35 km southeast of the Real de Angeles open-pit silver-lead-zinc mine. Kalahari can earn a 50% interest from Sunstate Resources (SUT-V) in its Caldera 1 and 2 claim blocks (8,000 ha combined) by spending $500,000 on exploration over a 2-year period.

Kalahari is also acquiring a 50% interest in the Caldera 3 and 4 blocks from a private owner. The other half-interest in the 1,792-ha Caldera 3 block is being acquired by Global Mineral & Chemical (GCO-A), while Thunderbird Projects (TBX-V) is acquiring the other half-interest in the 4,000-ha Caldera 4 property.

Arcturus Resources (ATQ-V) fully owns the Caldera 5 through 12 concessions, which cover approximately 55,000 ha. It has recently optioned a half-interest in Caldera 8 and 12 (23,331 ha combined) to Victory Ventures (VIP-V); the latter firm is required to spend $750,000 on each property.

President Mines (PDT-V) can also earn a half-interest from Arcturus in the Caldera 9 block for $60,000 cash and 200,000 shares; President must also spend $400,000 exploring Caldera 9.

Sister companies Teuton Resources (TUO-V) and Minvita Enterprises (MVE-V), led by Dino Cremonese, have jointly staked a total of 687,000 ha in 21 properties in the vicinity of the San Nicolas find. Five of the concessions are situated to the south and southeast of the El Salvador project, while a sixth, 80%-owned concession, lies west of the discovery area. Teuton and Minvita recently optioned three of the properties to Thunderbird Projects, Consolidated Sarabat Gold (CSB-V) and Augusta Gold (AG-V).

Thunderbird can earn a half-interest in the 9,720-ha Victoria concession by spending $1.5 million on exploration over an 18-month period. The property lies 22 km southeast of the San Nicolas discovery.

By spending $1.5 million in exploration over 18 months, Consolidated Sarabat can earn a 50% interest in the 9,200-ha Diana concession, 29 km southeast of San Nicolas. Sarabat must also pay $250,000 and issue 200,000 shares.

Augusta has optioned a half-interest in the 2,000-ha El Real concession, which lies southeast of, and adjacent to, the El Salvador project. The company is required to spend $1 million within 18 months and pay $175,000 cash and 200,000 shares.

Thunderbird and Sarabat have agreed to let each other earn half of their respective interests in the Victoria and Diana concessions. The companies have signed a contract with Quanteca Geophysica for 150 km of linecutting and IP surveys at a cost of US$120,000; the work is already underway.

Copperstone Resources (CPP-V) acquired an option to earn a 50% interest on the 50,000-ha (combined) Ruedas concessions, situated in the Faja de Plata mineral trend, 30 km northeast of Fresnillo. The two concessions are contiguous to ground being explored by Noranda (NOR-T).

Copperstone can initially earn a half-interest from Exploraciones Picacho by spending US$1.1 million on exploration and giving Picacho US$200,000 cash and 200,000 shares.

International CanAlaska Resources (ICA-V) has acquired a 50% interest in a 75,000-ha concession situated approximately 30 km southeast of the San Nicolas discovery, and an 80,000-ha concession situated 10 km southwest of the city of Fresnillo. CanAlaska can elect to acquire the other half-interests in the properties through the issuance of shares.