Honduran gold-copper play draws Kennecott’s interest

A gold-copper prospect in Honduras has caught the eye of Kennecott, which plans to carry out a due diligence review before committing to an earn-in agreement with property owner Milagro Minerals (VSE).

Like several other countries in Central America, Honduras has recently taken steps to encourage natural resource development and attract foreign investment. This improved business climate is resulting in an increase in exploration.

To date, Milagro has spent $3.7 million exploring the land package, with work having focused on several extensive gold-copper mineralized systems. The two contiguous concessions — Zapotal and Macuelizo — are held by the junior’s wholly owned Honduran subsidiary.

Work during the past three years was concentrated on the Macuelizo concession, specifically on the shallow oxide-gold zones. A deeper, secondary, copper-gold zone has been discovered, although its potential is still unknown.

Milagro’s objective has been to develop the open-pit oxide gold zone, where drill-indicated reserves are in the order of 4-7 million tonnes at 1.5-2.5 grams of easily minable saprolite-laterite oxide-gold material. Limited metallurgical work is reported to have indicated a high and fast recovery rate of gold in the oxides (about 90%-plus in 10 days) in agglomerated column bench tests, with cyanide consumption of 1.2 kilos per tonne.

The land package covers a number of known, but as yet untested, mineralized areas which could add to existing reserves with drilling. The concessions are accessible and within an hour’s drive of San Pedro Sula, the largest city in Honduras.

Kennecott will have 90 days to complete a review of field data and carry out mapping and sampling. If satisfied with the exploration potential, the major will conduct a staged exploration program and make scheduled payments to Milagro for two years. If results warrant, Kennecott will be able to earn a majority interest by producing a feasibility study and bringing the project to production.