LATIN AMERICA — Piedras Verdes gets confidence boost

Favorable results from exploration in 1996 have prompted partners Azco Mining (AZC-T) and Phelps Dodge (PD-N) to initiate a US$4.8-million program at the Piedras Verdes copper project in Sonora state, Mexico.

The project, owned 30% by Azco and 70% by Phelps Dodge, contains a resource of 140 million tonnes grading 0.41% copper hosted in an oxidized portion of a porphyry system.

The deposit is amenable to open-pit mining methods, heap leaching and recovery by solvent extraction-electrowinning techniques.

The new program will consist of additional core and reverse-circulation drilling to expand and upgrade that resource. The joint venture will also carry out geophysical surveys, metallurgical tests and preliminary project engineering.

In 1996, 58 core holes were drilled in a 16,685-metre program which succeeded in confirming previous drill results, on which the current resource is based.

The drilling also served to evaluate rock types, mineralization and structures at depth.

Ten of the previously drilled reverse-circulation holes were twinned with core holes, which showed the average grade and thickness of the mineralized intervals varied by less than 6%.

The program also included six column-leach tests. Recovery rates of about 80% were consistent with previous tests.

With an eye toward expanding their resource base, the partners recently acquired 1,351 ha of adjacent ground from Alamos Minerals (AAS-V).

The agreement calls for an up-front payment of US$300,000 and an additional US$700,000 on the first anniversary. Alamos will also receive a production royalty equivalent to a 2% net smelter return royalty (NSR).

Previous work in the area by Alamos outlined seven mineralized copper zones in a 8-km-long trend which varies in width from 1 to 2 km.

Last year, drilling of one of those zones, El Tabelo, yielded 33 metres of 6.5% copper, including 9 metres of 19.5% copper. Four other holes cut similar intersections, though copper values ranged from a low of 0.13% to a high of 0.68%. One hole yielded 21 metres of 0.85% copper. Each hole was drilled in an area measuring 50 by 60 metres as part of a 20-hole program drilled on 40-metre spacings to a depth of about 40 metres.

In other developments at the Piedras Verdes project, the partners signed a life-of-mine exploitation agreement with Minera Serrana, the owner of the main mineral concessions. The agreement is subject to advanced royalty payments recoupable from future production royalties equivalent to a 3% NSR.

The closure of that deal and the purchase of new concessions are expected to followed by a feasibility study. The new concessions will also provide a site for future production facilities.

Should the project proceed to the development stage, Phelps will arrange for debt financing of up to 60% of the project’s capital costs. Azco will be responsible for 30%. Up to the feasibility stage, Azco must spend US$3 million, of which US$1.8 million remains.