Exploration and studies continue at Las Cristinas

Despite the recent disappointing results from Vengold’s (TSE) Oro Uno property in eastern Venezuela, Placer Dome (TSE) remains confident about the region and quietly continues work on its Las Cristinas property in the Kilometre 88 camp.

Las Cristinas, the cornerstone of the Kilometre 88 camp, comprises 6,000 hectares and is 70%-owned by Placer and 30%-owned by a state-run mining company, Corporacion Venezolana de Guayana (CVG).

After spending about US$10 million exploring Las Cristinas between mid-1991 and 1993, Placer indicated that it had uncovered a resource of 189.7 million tonnes averaging 1.26 grams gold per tonne. This equates to 7.7 million contained ounces of gold, of which Placer’s share would be 5.4 million oz. Most of this resource is contained within two zones known as Conductora and Cuatro Muertos, which, as of late 1993, had a known strike length of 2 km and had been drilled to a depth of 200 metres with 223 holes. Exploration drilling within these zones has been carried out on a 100-by-100-metre centre, with some areas being drilled off at 50-by-50 metre centres. Before exploration drilling had been completed, the area had undergone soil geochemical surveys, very-low-frequency and magnetic geophysical surveys, as well as auger drilling.

Exploration drilling resumed on the property this past August and, at presstime, three diamond drill rigs were working the Conductora zone. In addition to Las Cristinas, the company has entered three contracts with CVG to acquire three other concessions south of Las Cristinas. The concessions — Zuleima, Barbara and Lucia — cover an additional 8,300 acres. Earlier this year, when it announced the resource figures, Placer said it would proceed with a US$13-million feasibility study. Although the study was expected to be finished by the first quarter of 1995, it is now being slated for delivery by the second quarter, and a production decision is expected sometime in 1997.

No reason for the delay has been given, but it is believed the company may require the time to assess some difficulties associated with the project. According to Placer’s second-quarter report for 1994, “an extension of the feasibility period could be advantageous in order to more fully address all available options related to mining methods, process optimization and environmental safeguards.”

CVG has indicated its willingness to consider such an extension, and a decision on whether to extend the feasibility period could be made late in 1994.

In addition to the technical difficulties at Las Cristinas, obstacles of a political nature may exist.

The company has been in discussions with central banks and the Venezuelan government relating to such key issues as foreign exchange regulations, currency fluctuations, inflation and the expectation that gold will be sold to the central bank.

In addition, Venezuela’s antiquated mineral tenure system has proved perplexing to foreign companies operating there. Under the system, CVG may grant mining leases for gold and diamonds south of the Orinoco River while the Ministry of Energy and Mines may grant concessions for all minerals north of the Orinoco and for all minerals, except gold and diamonds, south of the Orinoco.

Despite these problems, Placer maintains that Venezuela is still a good place to do business and the country could well experience a mining boom similar to that which Chile experienced five years ago.

And so work on the project continues. In-fill drilling, in an attempt to define the first portion of the deposit to be developed, has been completed; a resource model is being prepared; and studies are under way as regards mining methods and metallurgy.

As well as hosting an improving business climate, Venezuela — and, in particular, the Kilometre 88 region — has an impressive geological potential. According to geological publications on the Guiana Shield, the Kilometre 88 region is typical of Archean terrains found in Canada but has undergone intense weathering because of the tropical climate. At Las Cristinas, the area is underlain by felsic to intermediate metavolcanics and metasedimentary rocks.

These units were subjected to regional deformation which has, in places, imprinted a north-to-northwest-trending shearing and foliation that dips steeply to the southwest.

This sequence was then intruded by younger granitic rocks. Margins of the stocks are commonly brecciated and exhibit sericite, argillite and tourmaline alteration. Locally, the margins may also exhibit veined stockwork mineralization.

These intrusive stocks occupy a north-northeast-trending zone about 850 metres wide. Gold mineralization is associated with quartz veins that host minor amounts of sulphides, typically pyrite or chalcopyrite. The area has long been a known source of gold. Historically, local miners recovered gold from the soft, highly weathered lateritic material, which is thought to have an average grade of 6-8 grams. Most of this material has been processed and little lateritic material remains.

Below the oxidized lateritic zone lies a clay-rich saprolitic layer that contains microscopic gold. The difficulty in processing saprolitic ores — in which recoveries can drop as low as 20-30% — forced many of the local miners to use more mercury to amalgamate and recover gold.

The increased use of mercury, coupled with high clay content in the runoff, caused an environmental hazard in the local river systems. As part of its ongoing work on the project, Placer is collecting water samples from rivers that flow in and around the deposit and is completing environmental baseline studies.

Placer now intends to acquire mid-stage exploration properties with potential for either gold or gold-copper mineralization. In recent years, the company has shifted its focus away from North America and towards the areas of Mexico and South and Central America. Reasons cited for the shift have been the mature state of the exploration cycle and the arguably adverse regulatory and political climate found in North America.

The company opened a management office in Caracas last spring and Las Cristinas is only one of five advanced projects it is developing.