Intrepid hits hot hole at Casposo (December 06, 2004)

Shares in Intrepid Minerals (IAU-T) shot up as much as 11, or nearly 19%, higher to 70 in afternoon trading in Toronto on Dec. 6, after the company announced some impressive drill results from the proposed Kamila pit at its Casposo project in Argentina’s San Juan province.

Highlighting the latest batch of five holes is hole no. 104, which cut 12 metres (beginning 49 metres below surface) grading 18.6 grams gold and 266 grams silver per tonne from the Aztec vein. Excluding a 3.5-metre section of barren dyke, the interval grades 26.3 grams gold and 376 grams silver over 8.5 metres.

Other results include:

• hole 100 6.7 metres (from 6 m) running 18.1 grams gold and 589 grams silver, including 9 metres of 26.8 grams gold and 944 grams silver;
• hole 101 5 metres (from 23 m) averaging 3.1 grams gold and 216 grams silver;
• hole 102 4 metres (from 13 m) of 39 grams gold and 224 grams silver; and
• hole 103 3.5 metres (from 13 m) of 26 grams gold and 543 grams silver.

Intrepid says all the intervals are close to true thickness, and that three of the holes have doubled the grade-thickness of a 75-metre-by-50-metre resource block to 120 g/t-m.

Open-pit indicated resources at Kamila currently stand at 774,000 tonnes grading 5.6 grams gold and 87.5 grams silver, with another 1.6 million tonnes of inferred material running 4 grams gold and 118.6 grams silver. Previous drilling at Casposo has confirmed bonanza gold and silver grades at depths of up to 150 metres below the pit model. The adjacent Mercado zone is home to 370,000 tonnes of inferred material running 1.6 grams gold and 76.6 grams silver. The estimates employ a gold equivalent cutoff grade of 1.4 grams.

“Resource drilling of the Kamila zones continues to demonstrate that grades of both gold and silver are conservative in our current block model," says Intrepid CEO Laurence Curtis in a prepared statement. "Once this program is completed we will be in a better position to define high-grade zones in the Kamila system and better quantify grade capping and the resource estimates.”

So far, grade capping assigned to Kamila’s principal veins range from 35-60 grams gold and 350-800 grams silver.

In June, an independent preliminary assessment of Kamila envisaged the production of between 47,500-76,650 oz. of gold and 474,000 to 1.2 million oz. of silver per year over 5 years, based on preliminary bottle-roll tests that showed recoveries in the range of 89-93% for gold and anywhere from 75% to 83% for silver on minus 80 mesh. Initial gravity tests have recovered up to 25% of the gold alone. The plan calls for a 1,200-tonne-per-day mill.

In all, the scheme would see some 294,300 oz. of gold and more than 4.7 million ounces of silver recovered at a total cash cost of US$127 per oz. (net of silver credits and government royalty).

Intrepid says such an operation would generate a base case internal rate of return (IRR) of 18%, based on a gold price of US$375 per oz. and US$5 per oz. of silver. Capital cost are pegged at US$40.6 million, including US$6.2 million in contingencies and US$4.8 million in recoverable value-added taxes; corporate taxes run 35%, and the property is subject to a 3% net smelter return royalty payable to the government.

The IRR for a heap-leach scenario ranges between 17% at a gold price of US$350 per oz. and 26% at US$400 per oz.; capital costs would be nearly halved to around US$21.5 million, but gold and silver recoveries would be lower.

Meanwhile, drilling in and around Kamila continues, and intrepid plans to drill test the newly discovered Kamila East zone next year.

Earlier this month, reverse circulation drilling east and southeast of Kamila cut volcanic rocks hosting quartz stockworks and veins with anomalous gold and silver at Kamila East. Hole no. 9 returned a 56-metre interval grading 0.8 gram gold, including two 4-metre sections running 4.8 and 3.4 grams gold. The zone’s surface expression measures 200 metres by 300 metres.

Induced polarization and resistivity surveying has indicated several chargeability and coincident resistivity highs along the Rociio de Oro corridor. The data also suggests that the Kamila zone appears to be part of a 1-km-long tensile feature.

Future drilling will aim to test the Rociio de Oro corridor at greater depths, and target mineralized gold-bearing structures north of Kamila where grab sampling of surface veins about 1 km north has returned up to 13 grams gold.