Plata Mining seeks Argentine gold and zinc

Junior Plata Mining (PMT-A) is setting its sights on developing its Argentine gold and zinc properties while it tries to overcome financing problems.

The Buenos Aires-based company is headed by President Ricardo Auriemma, who is perhaps better known for his post as vice-president of Northern Orion (nno-t), a Vancouver-based junior which holds a 30% interest in BHP Copper’s Agua Rica project in Catamarca province.

Plata’s primary asset, and the one most likely to reach production, is its Hualilan gold and silver prospect, situated in the Hualilan gold district of San Juan province, near Argentina’s western border.

The property lies in a semi-arid basin-and-range setting at a comfortable elevation of 1,750 metres above sea level. It is easily accessible by road from the provincial capital, San Juan, which lies 120 km to the southeast.

The property’s dominant features are two north-south-trending hills, Cerro Norte and Cerro Sur, which are each about 1 km long and separated by a 500-metre gap. These hills form part of a 5-km-long, discontinuous chain of hills named the Sierra de las Minas.

The Sierra de las Minas is occupied by a thick sequence of grey Ordovician limestone known as the San Juan formation, which strikes north-south and dips west between 25 and 70. The San Juan is overlain to the west by the Silurian Tucunuco formation, which consists of a basal sandstone-pebble conglomerate about 10 metres thick and overlain by brown, finely bedded shales. The entire sequence has been intruded by mid-Tertiary pale grey-green dacitic stocks, dykes and sills. In the mine area, these are steeply dipping and are either parallel to strike or occupy previously emplaced transverse faults.

On a regional scale, the dominant structure is the north-south-trending Hualilan thrust fault, which has carried the San Juan formation over younger Tertiary sediments to the east.

A tectonic event following the thrusting event created a series of roughly east-west-trending, high-angle transverse faults which transect the ridge.

These transverse faults appear to have channeled gold-bearing hydrothermal fluids and allowed their entrance into permeable horizons. The faults have also been the site of vein deposition and extensive hydrothermal brecciation.

Gold mineralization in the region is mostly restricted to the San Juan limestones, and has been observed to occur as: calcic skarn masses at contacts of the dacitic bodies; veins and manto beds of replacement origin; replacements and fillings in fissures and fractures; breccia fillings in hydrothermal breccias developed especially at fault intersections; and fine disseminations in dacites and shales.

At the Hualilan property, two styles of gold mineralization have been identified: a distal, low-temperature hydrothermal regime controlled by faulting and fracture patterns (at Cerro Norte); and a high-temperature skarn regime (at Cerro Sur, where gold values are lower).

Gold and silver mineralization at Hualilan has been oxidized to a depth of 50 metres, below which the primary mineralization consists of pyrite, silver-bearing galena, sphalerite and chalcopyrite.

Updated proven and probable reserves at Hualilan stand at 289,350 tonnes grading 12.71 grams gold and 47.54 grams silver per tonne, plus 2.25% zinc, 0.72% lead and 0.2% copper. Prospective resources now stand at 663,950 tonnes grading 14.1 grams gold, 49.07 grams silver, 2.04% zinc, 0.5% lead and 0.21% copper. Potential resources are pegged at 9.4 million tonnes grading 2.74 grams gold, 15.54 grams silver, 0.55% zinc, 0.31% lead and 0.038% copper.

In 1995, Plata hired Toronto-based Watts, Griffis & McOuat to conduct a US$250,000 exploration program, which included a 16-hole, 1,432-metre reverse-circulation drill campaign on Cerro Norte.

In the following year, Plata hired the Santiago-based consulting firm EPROM to undertake underground mapping, sampling, resource estimation and a preliminary economic assessment of Hualilan.

That economic assessment indicated a total, all-inclusive operating cost of US$65 per tonne generating a net profit of US$49.13 per tonne, excluding working capital and capital cost allowances. The operating costs are based on underground production of 75,000 tonnes per year over an initial mine life of 3.2 years.

In its report, EPROM recommended that a US$2.1-million exploration program of geophysical surveying, diamond drilling, underground development and metallurgical testing be conducted at Hualilan.

On a visit to the site, The Northern Miner learned that small-scale production along the western flanks of Cerro Norte and Cerro Sur dates back to the 16th century. Work continued sporadically up to the 1880s, when up to 160 men worked the site. Mining focused on the manto deposits at Cerro Norte and the skarn deposits at Cerro Sur.

Since that time, a couple of small operators came to Hualilan during the 1940s and 1950s, and later in the 1980s, to process the tailings.

The site now includes remnants of at least seven past-producing mines, with the deepest workings extending some 90 metres from surface.

Based on the extent of the underground workings and the grade of the remaining stockpiles, Plata estimates that between 250,000 and 500,000 oz.

gold were extracted from Hualilan.

Plata is in the midst of acquiring, for US$2.4 million, a 100% interest in the core Hualilan mining property, which comprises 90 ha. In addition, the company has staked new areas to the west, bringing its holdings in the area to almost 7,000 ha.

Plata has to make two payments totalling US$466,666 to the Argentine company El Colorado before April 1, 1998, as well as two payments totalling US$840,005 to the Argentine firm Alulix before Feb. 17, 1999.

One goal of any future study at Hualilan will be to determine whether it is feasible to bulk-mine Cerro Norte’s Dona Justa pit, where a hydrothermal breccia pipe has been discovered at the junction of the Sanchez and Rockslide faults. A ballpark figure for setting up a mine and mill at Hualilan is $4-5 million.

Another goal would be to explore the existence of the dacitic porphyry at depth to the west of the hills, and to determine its role as a potential feeder to the near-surface gold deposits.

With mineralization tending to be focused along faults, the unexplored zone between Cerro Norte and Cerro Sur is an obvious future drill target and could prove to be a strongly faulted zone.

Plata’s other major asset is its Helvecia zinc-lead-silver prospect, situated along the western flank of Urcuschum Mountain in Argentina’s western province of La Rioja.

The 2,000-ha property, now wholly owned by Plata, is 270 km northeast of San Juan at an elevation of 2,700 metres. This mountainous site is accessible by 4-wheel drive truck via a 42-km-long, under-maintained gravel road that connects the site to the nearest settlement, Guandacol.

Plata has also entered into an option agreement for adjacent concessions, which cover 14,000 ha on the northern and southern extensions of the Helvecia unconformity.

At Helvecia, one finds the oldest formation in the area, the San Juan limestones, unconformably overlain by the Carboniferous Volcan sedimentary sequence, which consists of conglomerates, continental red beds and bleached sandstones. In turn, this Carboniferous sequence is overlain by the continental sediments of the Panacan formation, which is commonly cut by andesitic dykes and overlain by sills which are possibly of Triassic age.

The structure of the property is that of a homocline with a westerly dip of 25 to 30 produced by reverse faulting.

Helvecia’s zinc mineralization occurs at the thrust-faulted unconformity between the Ordovician limestone and the Carboniferous sandstone, and is considered by Plata to be a Mississippi Valley type deposit. Primary minerals are sphalerite, galena and barite, as well as pyrite, chalcopyrite, tetrahedrite and pitchblende, all of which are associated with calcite and quartz. The secondary oxides smithsonite and hemimorphite have been the most common zinc minerals mined to date.

These zinc oxides occur in
the unconformity as high-grade pods 2 to 5 metres in length and 0.5 to 1.2 metres in thickness, with typical grades of 40% to 49% zinc, 0.2% to 0.4% lead and 40 to 70 grams silver per tonne.

The Helvecia zinc mine was brought into production around the turn of the century by a French company before operations were suspended in 1910. From then until 1983 (the last year of production), the mines in the area were operated intermittently by various parties interested in exploiting the zones where the oxidized and enriched former sulphide minerals were exposed near surface.

Underground development in the area includes the workings of La Solitaria-Las Aranas, including a 365-metre-long adit, a raise and some crosscuts.

In 1995, Watts, Griffis & McOuat consulted on a US$400,000 exploration program, which included geophysical surveying, surface geological mapping and sampling, and an 11-hole, 1,537-metre reverse-circulation drill campaign.

Any future exploration program would, in part, be directed toward identifying extensions to the known zone of mineralization, which appears to be open in all directions, continuing over a strike length of 5 km and a downdip distance of 800 metres.

About 1 km south of the Helvecia mine is the Urcal mine, where there are the now-inaccessible underground workings of Argentina’s National Atomic Energy Commission, which explored for uranium in the region. The government agency also found significant lead and zinc mineralization at the site, though official records are sketchy.

Plata was born in late 1993 with seed capital of $435,000. By late 1994, the company had completed its initial public offering, raising $1.3 million in the process. In the autumn of 1996, Plata raised an additional $1.4 million by way of private placement.

It was about that time that Plata began experiencing difficulties closing its financing deals: Last autumn’s proposed $10 million financing through Canaccord Capital, a sum that had shrunk to $6.6 million by the spring of 1997, collapsed earlier this year.

By July, Plata regained some ground, raising $1.4 million through C.M. Oliver & Co. The initial closing was for 2.8 million units at 50 cents per unit, with each unit comprising one share plus a warrant to purchase one share at $1 before July 24, 1998, or at $1.25 per share for one year after that date.

Plata is now left with a cash position of roughly $1.5 million, a situation that will allow it to fulfil its option payments at Hualilan but leave it short on cash for exploration.

Thus Plata is now being pressed into seeking out joint-venture partners so as to secure financial assistance for exploration work. Other possibilities include renegotiating the terms of its option agreements (terms that were agreed on before this year’s fall in gold prices) and seeking out additional private or public placements in North America.

Plata’s other assets are in Paraguay, though work there is at its earliest stages. Through the entire acquisition of the mining company Grupo Minero Guarani (which was partly owned by Auriemma), Plata has acquired a gold mining concession which consists of three cateos (licence areas) in eastern Paraguay: the 27,390-ha North Precambrian gold cateo and the 104,649-ha South Precambrian gold cateo, both of which are situated some 150 km south of Asuncion; and the 17,928-ha Amambay carbonatite cateo, 400 km northeast of Asuncion.