LATIN AMERICA — Patagonia projects come of age — Minera Andes, Yamana among juniors active in Argentine region

Encouraging results released during the South American winter are setting the stage for what could be a pivotal exploration season in the Patagonia Plateau of southern Argentina.

Junior companies active in the area are hoping to find deposits comparable to Minorco’s (MNRCY-Q) Cerro Vanguardia gold-silver mine in central-eastern Santa Cruz province.

“Cutting good drill holes is not going to do it anymore,” says Victor Flores, senior gold analyst for HSBC James Capel. “What the market needs is a discovery, a delineated orebody that’s going to be a mine.”

To date, results across the region have been encouraging, with several companies encountering high-grade intercepts of gold and silver.

The regional play has more than its share of participants, including: * Yamana Resources (YRI-T), which announced dual discoveries at its Lejano and Bacon prospects;

* Minera Andes (MAI-A), which did the same at its El Pluma/Cerro Saavedra property;

* Abacus Minerals (AMC-V), which reported a discovery at its Manchuria project, where the company is earning a 100% interest from Barrick Gold (abx-n);

* Black Hawk Mining (BHK-T) and Triton Mining, which, as a newly merged entity, have an interest in the Manantial Espejo joint venture with Barrick; and

* Orvana Minerals (ORV-T), which recently acquired a 9,200-ha cateo in Santa Cruz as well as a 1,200-ha cateo in Chubut province, to the north.

Among the more promising projects in the region is Cerro Negro, situated in the north, where Australian partners Newcrest Mining and MIM Holdings are encouraged by two holes drilled on a blind target.

MIM, as operator, stepped out over basalt cover and spudded a reverse-circulation (RC) hole that encountered 80 metres grading 3.9 grams gold per tonne starting at a depth of 56 metres. Included in the interval were 26 metres grading 9 grams gold.

Concerned that the hole had drilled into a vein structure, the company brought in a core rig to twin it. Collared 15 metres to the west, the core hole managed to cut 38 metres averaging 4.1 grams gold starting at a depth of 69 metres. While it did not test the full length of mineralization, the hole did enable the drill crew to rule out the notion that they had been following a vein.

Geologically, the Patagonia region is characterized by the Deseado Massif, a terrain of relatively undeformed Mesozoic volcanic rocks that remained unexplored for centuries.

Much of the area is covered by younger basalts that mask the underlying geology, and since few streams have cut through the basalts, stream sediment sampling is generally not carried out.

Interest in the region began heating up in 1991, when Mincorp, a 50-50 joint venture between Minorco and an Argentine partner, bought a controlling interest in the Cerro Vanguardia property. Five years later, a production decision was reached. The deposit contains 9 million tonnes of material, minable by open-pit methods, grading 9.7 grams gold and 113 grams silver per tonne. The resource is equivalent to 2.8 million oz. gold and 32 million oz. silver.

Newcrest was one of the first Western companies to pick up properties in Patagonia. Following close behind were Minera Andes, Yamana, Triton and Abacus, along with other multinational companies, such as Mexico’s Penoles and Australia’s Western Mining Corp. All are waiting for the Argentine winter to release its grip and allow geologists to return for another season.

Minera Andes

Minera Andes hopes to get a jump on the weather at its 80%-owned Arroyo Verde project in northern Chubut province. The remaining interest is held by Pegasus Gold (PGU-M).

Core drilling crews will begin work at Arroyo Verde before moving to the Cerro Saavedra property in northwestern Santa Cruz, where, during the winter, two drill holes encountered encouraging grades. Hole 20, drilled southwest of the original discovery hole, hit 15 metres of 8.2 grams gold and 741 grams silver, whereas hole 21, northeast of the discovery hole, cut 6 metres of 61.5 grams gold and 1,647 grams silver. The two holes, which were drilled within 20 metres of other high-grade intercepts, expanded the mineralization around the discovery hole.

Based on these results, Minera Andes intends to look for more permeable host rocks (porous volcaniclastic and epiclastic rocks) that carry wider zones of disseminated mineralization. Also, pervasive alteration in the Saavedra West target is said to indicate a high volume of hydrothermal fluid flow, which is deemed favorable to disseminated mineralization.

Arroyo Verde and Cerro Saavedra may not reach the resource stage with this year’s work, says Minera’s president, Allen Ambrose. “We have too many targets and keep finding more.”

The company controls 92,000 ha in the northern part of the Deseado Massif, and only about a fifth of that has been adequately explored.

Yamana

Core drilling is under way at Yamana Resources’ Santa Cruz project. The Bacon prospect is being worked first, as it is at a lower, more accessible elevation than a second prospect, known as Lejano. Drill crews are testing Bacon at greater depth and along strike, with a close pattern of holes, while, at Lejano, geologists have outlined a mineralized zone measuring 800 metres.

“The company’s primary target is disseminated mineralization, though a bulk-tonnage target is a better way to describe it,” says Project Manager Mel Klohn.

Adds company geologist Matthew Hughes, who has been exploring Patagonia with Yamana for more than four years: “This is the year we need to come up with a resource.”

Black Hawk/Triton

Meanwhile, Black Hawk/Triton is entering into a joint-venture agreement with another Canadian company for its Manantial Espejo property. The newly merged company earned an 80% interest in the project from Barrick Gold, which retains back-in rights for 20%. Black Hawk/Triton had optioned the asset to Global Explorations (GXC-V), which chose not to pursue the acquisition.

The property contains an open-pit resource of 3.9 million tonnes grading 3.1 grams gold and 132.7 grams silver, equivalent to 1.5 million oz. gold-equivalent. An independent feasibility study is due in October.

Abacus

Vancouver-based Abacus expects to drill 10-15 holes at its Manchuria property in the next few months. Drilling earlier in the year encountered 58 metres grading 6.5 grams gold and 22 grams silver from the second of 14 drill holes.

The company plans also to evaluate other early-stage prospects it acquired from Barrick, including La Sarita, Sarita Sur, Cerro Negro, Cerro Morro and Rio Oro.