Santiago, Chile — Having recently ramped up to production, the Pimenton gold and copper mine in the High Andes of central Chile is bringing
The company is selectively mining narrow veins from underground stopes at Pimenton where operations are almost in full swing. Six stopes have been prepared for production, and the first load of concentrate has been trucked to the state-owned Enami smelter.
The company hopes that with the revenues generated by the small-scale operation, it will be able to explore the surrounding ground and thereby test its theory that underneath Pimenton lies a large-scale porphyry system not unlike numerous others in the Central Porphyry Copper Belt.
The company’s goal is to become a medium-sized exploration and development company with a focus on gold and associated copper.
“With the new results of exploration, our focus at Pimenton has also turned to copper” says Stephen Houghton, SAG&C’s founder and president. The company is also keen to develop its lime properties in Chile.
The Pimenton mine site comprises 57.6 sq. km and is situated 175 km northeast of Santiago. The bright red oxidation on the surrounding hillsides explains how the mine got its name.
The Central Porphyry belt hosts numerous major copper producers including the Andina and El Teniente mines of
Though tiny by comparison, Pimenton, at 200 tonnes per day, is expected to incur low cash costs. Confirmation of its economic viability by Pincock, Allen and Holt (PAH) last fall caused an acceleration in development of the US$4-million project. The study estimated that in the first year the mine would produce the equivalent of 22,200 oz. gold, which would progressively increase to 46,500 oz. per year or an average of 41,200 oz. gold over the mine’s projected life span of seven years at a cash cost of US$166 per oz. The project’s internal rate of return is estimated at 117% based on a gold price of US$320 per oz.
Proven and probable mineral resources, at a cutoff grade of 12.85 grams gold-equivalent per tonne, total 67,800 tonnes averaging 18.7 grams gold and 1.57% copper, or 40,760 oz. gold and 1,060 tonnes copper. The inferred mineral resource is 37,000 tonnes averaging 18.4 grams gold and 1.45% copper in category A and 171,000 tonnes of 19.4 grams gold and 1.6% copper in category B.
The project was helped along by a US$2.8-million loan from Washington, D.C.-based Overseas Private Investment Corp. (OPIC) for a portion of the US$4 million required to restart the mine. OPIC was initially contacted by the company’s management to assist in financing the advancement of its lime projects and then became interested in the gold project. Knowing little about gold mining, OPIC commissioned PAH to conduct a due diligence review of the project last summer. The remainder of the project was funded by private placements raised in the latter part of 2003.
Although the path to production was fraught with snags, the company has overcome all obstacles. The mine, which had seen minor development and production, has been sitting idle since 1997 and needed almost a complete rebuild and refurbishment, owing to a heavy snowstorm during a time of El Nino conditions.
As a result of being funded by OPIC, the mine must comply with World Bank environmental and safety standards.
Santiago-based SAG&C was founded in 1991 by Houghton, whose previous experience was in the U.S. oil patch. He moved to Chile 15 years ago and has been working there ever since.
Houghton saw potential for economic growth in South America following the fall of the Berlin Wall in 1990. He looked for opportunities in countries with favourable geology, satisfactory mining laws, and economic potential, hoping to get a head-start on the majors. Through his work in the oil patch, he had noticed that majors tend to wait for situations to become stabilized before moving in.
His flexibility and clear focus allowed him to move quickly into Chile after assembling his “dream team” of David Thomson and Mario Hernandez. Thomson, now the company’s vice-president and director of exploration, had worked for several majors in Peru and Chile since 1955. He was a consultant when a Canadian company sent him to El Indio in Chile for St. Joe Minerals.
Striking out on his own and with a partner, Thomson explored the Andes Mountains from north to south on behalf of an exploration syndicate comprising Anglo American and Cominco. “Pimenton came on the threshold in 1985, when it was given back to us by the syndicate,” says Thomson. “They didn’t think anything was there, so the agreement stated it goes back to us.”
History
Then
Enter SAG&C, which, since the early 1990s, had been hoping to get a mining operation under way there. Its efforts were thwarted when a prearranged financing from Nesbitt Burns was pulled, owing to fall-out from the Bre-X scandal of 1997. That, combined with the heavy snowfall, left the project high and dry. And low gold prices over the next few years did not help matters.
States Thomson: “A lot of money was spent on mining and drifting, but as things started to turn around, the Bre-X scandal hit; then the price of gold dived and El Nino hit. Our buildings were not braced for a 10-metre snowfall, and the campsite and everything were almost crushed under the weight of the snow.”
Between 1997 and mid-2003, the mine was dormant.
Avalanche control will play an important part in SAG&C’s occupational health and safety plan, not unlike other mines in the area. Two specialists have been contracted from the nearby Portillo ski hill. As a further precaution, the company intends to build a base camp about half-way up the road from Los Andes to the mine.
The mine had seen a bit of production before shutting down in 1997, with US$1.1 million in copper-gold-silver concentrate sold to Enami, and US$125,000 worth of gold dore sold to Johnson Matthey.
After financing was secured in mid-January 2004, construction and mine development lasted only five months — impressive, considering the mine’s remote location. The construction materials had to be transported over 80 km of unpaved road winding its way from the town of Los Andes up to the mine at 3,580 metres elevation within 4 km of the Argentine border.
New electric wiring and ventilation systems have been installed in the mine, as well as piping for compressed air and water-handling systems. The plant structure at Pimenton was totally rebuilt and enlarged, and all milling equipment in the plant is new or has been completely refurbished. In addition, an entirely new electical system has been installed. The mill has the capacity to handle 300 tonnes per day.
The Pimenton plant is powered by three Caterpillar 3406-350 KVA 60-cycle generators. The crushing circuit includes a primary jaw crusher, a secondary cone crusher, and a Harding ball mill and cyclones. Testing of the flotation cells and related circuits, and subsequently the thickener and filters, is under way, and milling began in May. The existing tailings pond was expanded to increase capacity, and a new one was added.
The main camp consists of housing and dining facilities for 125 people. The reconstruction entailed the installation of a roofing system over four primary building structures, floors and ceilings, a new electric system, heating installation, plumbing and a new potable water system, complete with a septic system.
Altogether, there are some 4 km of underground workings at Pimenton, most of which are accessible. The veins are only 20-30 cm wide and reserves are diluted u
p to 45 cm. Several stopes have been driven on the veins. There are two main vein/structural systems — one trending northeasterly and another, which crosscuts it northwesterly. At the 3,430-metre level, the Lucho Vein can be followed northwesterly.
Summing things up, Thomson says: “What we have is about a four-by-two-and-a half-kilometre area in which we have gold veins. In that area we have static gold veins oriented along the same strike. And of the ones in the main section, the best ones are northeast.”
The grades in both sets of veins are comparable, however. High grades are sometimes found in the walls. Raises have been driven to confirm the drilling below. There are workings on the 3,180-metre level, where there are good grades and workings around the 3,540-metre level as well. A few drill holes at the 3,600-metre level show mineralization and point toward inferred resources.
As the Pimenton mine is a narrow-vein, high-grade gold and copper deposit, it does not lend itself well to the 43-101 regulation, which, says Thomson, was largely intended for disseminated deposits. “We have good grade continuity,” he adds. “The bad side is narrow veins.”
SAG&C’s geologists think drilling should be directed toward finding new structures, as only 1.2 sq. km of the large property has been explored so far. They believe the copper mineralization and the gold veins are a late-stage expression of a porphyry copper system at depth.
“Last year we were happy to find some tourmaline float,” says Thomson. “That led to the discovery of a zone high up at 4,600 metres.”
Of particular interest is the breccia pipe, which is thought to be sourced underneath the Pimenton mine. Drilling at the breccia pipe began in February and has largely been completed for the season. The area of the first drill hole targeted the northern extensions to the breccia pipe complex. However, this hole had to be collared at the base of a steep cliff, owing to the steep terrain, and the target was not reached. The fourth hole hit good alteration and was stopped at a depth of 420 metres. The tourmaline breccia is confined to tuff beds and, in drill core, reached a thickness exceeding 80 metres.
“We drilled below that area but missed the target because it was difficult terrain, so we drilled down too far,” recalls Thomson. “Good alteration typical of a porphyry copper was found but nothing definite. A big chunk of it is owned by Codelco.”
Surveys
A magnetometer survey run over the same area as an induced-polarization survey appears to be pointing to anomalies at depth, as do the chargeability and resistivity lines. There are five such anomalies with lengths of 600-1,200 metres requiring follow-up geophysics.
Surface exploration this year also uncovered 11 leached gold-vein outcrops in the Hondo Valley, 2-3 km north of the Pimenton mine. Follow up exploration will endeavour to determine the extent of the mineralized veins, as well as the Pimenton mine area and the Hondo Valley area.
The recent breccia pipe discovery has generated more interest in the area. Open ground around Pimenton has recently been staked, and sampling has been carried out. Companies interested in the valley include Anglo American, Codelco,
Meanwhile, the company is developing its Catedral and Cal Norte projects now that it has the cash flow from Pimenton. “During the very lean years of 1997-2002, we recognized that Chile is the largest producer of copper from mostly sulphides ores,” says Houghton.
Lime is an important component of the processing of copper, and there was a shortage of high-grade limestones the country. Cal Norte has completed its environmental study done, permitting has been approved, and OPIC has expressed interest in financing its development.
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