With a US$20-million surface exploration program in full swing,
Pascua is part of a 1,300-sq.-km land package Barrick acquired when it took over Lac Minerals in 1994. The property occupies a part of the El Indio gold belt in the central Chilean Andes that included the El Indio and Tambo gold mines. In total, the land package hosts reserves of about 8.8 million oz., including 2.3 million oz. in the Pascua project.
Barrick viewed the El Indio acquisition as an “asset of extraordinary strength” and, in 1995, convinced that Lac had only begun to scratch the region’s surface, began a comprehensive, long-term program of exploration and development.
At the end of 1998, the work had expanded the reserves and resources at Pascua to 20 million oz. gold and 525 million oz. silver. Proven and probable reserves were estimated at 220 million tonnes grading 1.99 grams gold and 75.4 grams silver per ton, equivalent to 14 million contained ounces. Exploration had also outlined an additional gold resource of 181.6 million tonnes averaging 1.13 grams gold, equivalent to 6 million contained ounces.
Most of Pascua’s reserves are in the main deposit in Chile, and, according to Alexander Davidson, senior vice-president of exploration, these “do not even begin to reflect the potential that is unfolding on the Argentinean side of the border.”
The Pascua project straddles the Chilean-Argentine border at the northern end of the El Indio belt in Chile’s Region III and Argentina’s San Juan province. It lies 48 km north of Barrick’s El Indio mining complex and 530 km north of Santiago.
Barrick continued to build on the reserves at Pascua in 1999 with a US$100 million exploration and development program. Over the first nine months of 1999, surface and underground work showed that ore-grade mineralization extends for at least 1,200 metres into Argentina. In the second quarter, Barrick pulled the best hole ever drilled on the property: 280 metres averaging 4.86 grams gold and 25 grams silver, plus 1% copper, starting from surface. The hole was drilled along the Pascua Extension in Argentina, 1 km away from known reserves.
An exploration tunnel, 953 metres long, was driven from Chile to just 25 metres from the hole. Barrick says the proposed Pascua pit will likely expand by at least 1 km into Argentina to include the El Morro Oeste, Frontera and Pascua Extension zones. Most of this mineralization was not included in the 1998 reserves and resources. In addition, drilling on the Penelope and Filo Federico Norte targets is reported to have returned encouraging results.
“The full potential of this property has yet to be realized, and it could very well become our next Goldstrike,” said Davidson, speaking at a recent Merrill Lynch conference in Toronto. “The more work we do on the property, the more attractive it becomes.”
Pascua is an acid-sulphate system. Mineralization is associated with silicification and quartz-alunite alteration. Both pyrite and enargite are present.
Based on the 1998 reserve estimate, Pascua is expected to produce 675,000 oz. gold and 20 million oz. silver annually at an initial cash cost of US$125 per oz. and a life-of-mine cash cost averaging US$150 per oz.
“The picture just keeps getting better, both in terms of production and costs,” said President Randall Oliphant at the recent Denver gold show. “The work we are doing today prepares us for the speedy development of the mine. We expect Pascua will become the largest gold mine in South America. You will understand our excitement when you see the increase to reserves at year-end.”
Based on last year’s work, Barrick has proposed a conventional 290,000-tonne-per-day open-pit mine centred at an elevation of 4,600 metres. The overall stripping ratio is estimated at 6.1-to-1. The mine plan calls for bench heights of 16 metres in waste and 8 metres in ore. The mining fleet will consist of twenty-seven 240-tonne high-altitude haulage trucks, five large hydraulic shovels and two front-end loaders, plus drills and other ancillary equipment. Unit mining costs are pegged at US70 cents per tonne.
The ore will be hauled to a nearby mill. Initially, oxide material will be processed exclusively, but, within three years, a flotation plant will be constructed to process the sulphide ore. Approximately 72% of the current reserves are oxide. The milling circuit is being designed at a throughput rate of 33,000 tonnes per day.
The circuit will consist of crushing, grinding, counter-current-decantation (CCD) washing to remove soluble salts, cyanide leaching, CCD Merrill-Crowe, retorting, electrowinning, and fire-refining to produce gold dor. The copper sulphide minerals will be floated and tails sent to the cyanide leach circuit. Most of the gold will be recovered by the company, but some will float with the copper for treatment in a smelter. The concentrate will be piped in the form of a slurry 140 km to the coast. Unit processing costs are expected to average US$9 per tonne of combined oxide and sulphide ore. The oxide unit cost is forecast to be about US$2 per tonne lower than the average.
The recovery rate for gold will likely average 85%, with an oxide recovery rate of 90% and a sulphide recovery of about 75%. The recovery rate for silver is estimated at 75%.
The possibility of heap-leaching lower-grade ore is to be investigated.
Capital costs are estimated at US$950 million, including US$250 million for infrastructure and indirect costs. Mining costs include US$90 million for prestripping and US$155 million for mine equipment. The processing costs include US$150 million for a pipeline, US$225 million for grinding and milling and US$50 million for flotation. Infrastructure and indirect costs cover power, roads, camps, related facilities and contingency.
As part of the current exploration program, which began in September, upwards of 18 drill rigs will be operating, mostly on the Argentine side of the property, following up on the Pascua Extension, El Morro Oeste, Penelope and Filo Federico Norte zones at Pascua. Drilling has also resumed at Barrick’s 40%-owned Veladero joint-venture project, 6 km to the southeast, under the operatorship of
In late 1997, Barrick embarked on a plan to phase out its higher-cost mines, which were not contributing significantly to earnings and cash flow. These mines included El Indio and Tambo. Last year, El Indio produced 99,102 oz. at a cash operating cost of US$274 per oz. from 541,000 tonnes of milled ore averaging a grade of 6.4 grams. Tambo produced 167,357 oz. in 1998 at US$267 per oz. from a milled 2.3 million tonnes grading 2.64 grams.
While Tambo is scheduled to close at the end of the first quarter of 2000, El Indio has been given a reprieve. Exploration success and lower operating costs have extended the mine life through 2000 at least. El Indio contributed 106,006 oz. during the first nine months of 1999 at a cash operating cost of US$172 per oz. Vice-Chairman John Carrington was quoted as saying: “El Indio is actually making a very nice, positive contribution for us, and we have at least a 2-year mine plan in front of us based on spot prices below US$300 per oz.”
Veladero
Meanwhile, San Francisco-based Homestake has resumed exploration at the Veladero gold project in northwestern Argentina after waiting out some late-winter snowstorms. Homestake gained a 60% ownership of Veladero in April of this year through a negotiated US$190-million takeover of Lundin-led Argentina Gold. In addition, Homestake acquired a 100% interest in a large, prospective 5,600-sq.-km land package encompassing a good portion of the Argentine side of the El Indio gold belt.
Veladero is host to a resource of 5.8 million oz. gold and 72.2 million oz. silver contained in the Amable and Filo Federico targets. The two targets are host to an indicated and inferred resource totalling 73.2 million tonnes averaging 2.47 grams gold and 30.7 gr
ams silver per tonne, based on a cutoff grade of 0.75 gram gold. About half the gold is found in higher-grade core zones averaging about 5 grams. Both deposits remain open.
Earlier this year, Argentina Gold intercepted an east-westerly trending corridor of higher-grade gold in Filo Federico. Highlights of this drilling included: 131 metres averaging 6.93 grams gold (including 68 metres of 12.95 grams gold), beginning at a depth of 19 metres in hole 121; and 197 metres averaging 4.95 grams gold (including 41 metres of 13.72 grams), starting at 122 metres in hole 135.
“We believe Veladero has the potential to be a low-cost producer,” Homestake President Jack Thompson said. “Veladero [represents] probably the largest potential increase to our reserves, assuming it is as good as we think it is, and we have seen nothing to change our minds.”
Veladero is 400 km northwest of the capital city of San Juan and is accessible from the town of Pismanta via 160 km of single-track dirt and gravel roads, including a series of switchbacks over the Concocta pass at an elevation of 5,000 metres. The Veladero camp sits at 3,800 metres in relatively subdued topography, while the target areas lie between 4,100 and 4,400 metres. The Veladero joint venture comprises 115 sq. km.
Gold mineralization at Veladero is hosted in a suite of Tertiary-age volcanic rocks — the same rocks that host Pascua, El Indio and Tambo. A prominent colour anomaly 3 km in diameter overlies the targeted Cerro Pelado ridge at the northern end of the property. Cerro Pelado is host to a nested series of diatremes covering more than 10 sq. km of geochemical and geophysical anomalies.
Gold mineralization is associated with multi-phase, black silica-sulphide breccias that occur as crackle, fluidized, mosaic and rotational breccias. The main rock type of the diatreme breccias is tuffisite breccia, which exhibits zoned alteration in the form of silica. Local bonanza gold grades occur in association with brown crystalline jarosite that overprints the silicification. The mineralization is oxidized throughout.
The gold and silver occur as two different species and do not overlap. Free gold has been found in all samples. The gold grains, which range from 1 to 370 microns, are characterized by large surface areas that tend to leach quickly. The silver mineralogy, however, is complex. Silver occurs as ceragyrite, native silver, manganese wad and argento-jarosite. The latter two are refractory to direct-cyanidation in nature.
Based on the limited testwork to date, Veladero will require crushing to minus-25 mm to achieve gold recoveries in the high 60s to low 70s by heap leaching. A conventional milling process could yield gold recoveries of 90%. Initial tests show silver recoveries in the region of 20%.
Homestake views Veladero as a 500,000-oz. open-pit gold producer utilizing heap-leach or pulp agglomeration leaching. Cash costs are predicted to be in the range of US$160 to US$180 per oz. A preliminary mine design indicates a stripping ratio of about 4-to-1. Early projections of capital costs are in the range of US$300-400 million.
Homestake and Barrick have budgeted a US$13-million exploration and development program at Veladero for 1999/2000. Drilling will continue to step out on the known mineralization. Metallurgical tests are ongoing, and environmental base-line studies are in progress.
Homestake is also planning to spend between US$2 million and US$3 million tp evaluate its neighbouring, wholly owned Rio Frio property, which covers more than 650 sq. km. Previous exploration outlined seven main alteration targets coinciding with geochemical gold anomalies. During 1997-1998, Australian-based WMC drilled 14 reverse-circulation holes into the Chezanco prospect before walking away from the project.
IMA Exploration
Junior Vancouver-based
Under a financing-option agreement executed in August 1999, Barrick subscribed to 1.5 million units of IMA at price of $1 each. A unit consists of one share and one warrant entitling the owner to buy an additional share at $1.50 for one year.
Barrick can choose to option a half-interest in either the Rio de las Taguas or Potrerillos property by paying IMA US$250,000 and spending US$3 million on exploration over five years. Barrick can boost its interest to 75% by providing IMA’s share of production financing.
Rio de las Taguas borders Barrick’s Pascua property to the west and Homestake to the south. Potrerillos is bordered by Barrick ground to the southeast and the Veladero project to the southwest. A first-pass reconnaissance program on the Potrerillos property yielded values of up to 0.23 gram gold and 117 grams silver from grab sampling of talus boulders.
IMA recently closed the first tranche of a non-brokered private placement of just under 1.7 million units at 60 cents each, raising gross proceeds of $1 million. Each unit consists of one share and one warrant; the warrant entitles the holder to an additional share at 75 cents for one year.
IMA’s technical team includes two notable geologists: Gerald Carlson as chairman and Lindsay Bottomer as vice-president of exploration. The company has 10 million shares outstanding, or 12.8 million fully diluted.
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