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The junior can earn up to a 70% interest in the 51-sq.-km Constancia property, 50 km northwest of Espinar and some 600 km southeast of Lima, in the Yauri-Andahuaylas metallogenic belt.
This belt is best known for hosting mega-sized copper-skarn deposits including Tintaya, Los Bambas, Corocohyayco and Atalaya, in addition to Katanga. However, the belt also contains several porphyry copper-molybdenum-gold prospects that have not been mined yet and are attracting several explorers to the region. The main porphyry deposits include Antapaccay with roughly 420 million tonnes grading 0.83% copper and 0.16 gram gold per tonne; Los Chancas with 200 million tonnes of 1% copper, 0.08% molybdenum and 0.12 gram gold; and Quechua with some 100 million tonnes of 0.98% copper.
The Constancia property is situated between 4,000 and 4,700 metres elevation. The property has little vegetation, is road-accessible for the most part, and can be explored year-round.
Just off the property, 3 km northwest of Constancia, lies the past-producing Katanga copper-gold mine. The mine was operated by Mitsui and Minera Katanga at different times. The Katanga deposit comprises several narrow hypogene zones in skarn at the contact between marbles and monzonite stocks.
The San Jose prospect, now part of the Constancia project, was explored by Mitsui in the 1980s in an effort to find more high-grade ore for the Katanga mill.
Mitsui and Minera Katanga drilled 5,430 metres in 48 holes on the property.
With an appetite for large-scale porphyries, Rio Tinto unsuccessfully tried to strike a deal with Mitsui back in 1995 after reconnaissance prospecting yielded indications of porphyry-style mineralization over a 1.4 by 0.7 km area. A zone of copper enrichment was found beneath a widespread leached cap in porphyry and skarn zones.
Rio Tinto finally struck a joint-venture deal with Mitsui in October 2003 after it revisited the property and confirmed its potential for a significant copper porphyry. The major drilled over 7,800 metres in 24 widely spaced diamond drill holes.
The drilling included one hole that averaged 1.14% copper, 0.11 gram gold, 8 grams silver, and 0.014% molybdenum over 168 metres, within a zone enriched in chalcocite.
Rio Tinto prepared a preliminary unclassified resource estimate based on the 72 holes drilled. That estimate pegs the Constancia deposit at 608 million tonnes averaging 0.48% copper, 3.4 grams silver, 0.05 gram gold and 0.015% molybdenum, at a 0.3% copper cut-off. Using a higher cutoff of 0.5% copper, Rio estimated 189 million tonnes that grade 0.68% copper, 3.4 grams silver, 0.05 gram gold and 0.019% molybdenum.
The Constancia project encompasses a large copper porphyry system with related copper skarn mineralization. It is underlain by two monzonitic porphyry intrusives about a kilometre apart that intrude older limestone and sandstone units and older dioritic intrusives.
Potassic alteration
The highest copper grades in the Constancia porphyry system are found in zones of supergene enrichment which comprise mainly chalcocite mineralization. The supergene enrichment extends 260 metres below surface in places. The copper-gold-molybdenum mineralization is strongest within the zones of potassic alteration, and is open to depth at 480 metres below surface. Widespread surface oxidation with a leached cap extends over 100 metres beneath the surface.
Magnetite skarns occur along the contacts between porphyry and sedimentary rock. Pyrite, sphalerite, galena, chalcopyrite and molybdenite mineralization, are found in these skarn zones along with garnet and breccias.
Norsemont plans to focus its exploration on the higher grade, leachable copper-oxide mineralization near the surface. The company is also interested in extending the high-grade skarn mineralized zones.
Mark Levy, president of Norsemont, says the company is working on an equity financing in an effort to meet the terms of the agreement with Rio Tinto and further explore the property. He was uncertain as to how much the company plans to spend this year but says that that work towards a NI 43-101 compliant report is scheduled to start this spring.
In light of its limited cash position ($500,000), Levy said that the company has had a good response from the brokerage community to handle the equity financing based on the merits of the Constancia project.
“We are planning to aggressively advance the project,” states Levy. “The game plan is to raise a few million through an equity financing.”
Norsemont can acquire an initial 51% interest in Constancia for US$5 million in payments, US$7.8 million in exploration work and by issuing 1.25 million of its shares to Rio Tinto over five years.
Following Norsemont’s initial vest-in, Rio Tinto can claw back 17%, if global reserves exceed 4 million tonnes copper, which would leave Norsemont with a 34% stake. If Rio Tinto doesn’t claw back, Norsemont can acquire another 9% for US$3.75 million or 19% for US$8 million.
Norsemont was originally founded by Egil Lorntzsen, who also founded Lornex Mining, which had been around since the mid-1960s. Lornex Mining is best known as the discoverer of the Lornex copper-molybdenum porphyry deposit at Logan Lake in south-central British Columbia, which it put into production. It has since been taken over by
A year ago, Norsemont’s shareholders revolted against existing management and brought in a new leader. The company, which was inactive until last October, is now headed by Levy, a business type from the high tech sector. In January, the company changed its name from Consolidated Norsemont Ventures to Norsemont Mining.
Norsemont’s current slate of directors include the recently appointed Art Freeze, who brings 35 years as an exploration and production geologist plus experience in Peru to the table. Gerald Carlson, a consulting geologist, has over 30 years experience in managing junior exploration companies and acts as an advisor.
The company’s share price has doubled on the news of the Constancia deal. Since November 2004, it has risen from the 25 range to a high of 90, though it has settled back to the 75 range at press time.
Norsemont has various interests in other base metals projects. The company’s Jossalun property is a volcanogenic massive sulphide deposit with similarities to the Windy Craggy deposit in northwestern British Columbia.
Results from a limited diamond drill program included 17.8 metres of 0.94% copper, and 6.9 metres of 1.15% copper; as well as 53.4 metres averaging 0.34% copper and 33.62 metres at 0.41% copper.
Norsemont can earn up to a 75% interest at Jossalun from
On the gold front, the company owns the Nome property in Cassiar, B.C. This property lies adjacent to
The company also has an interest in the Corcovado gold property in Argentina which reportedly lies along the same trend as
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