Queenstake awaits results from Chupaca property

At the Chupaca project in the Ancash region of central Peru, Queenstake Resources (QTR-V) has completed the final three diamond drill holes of a 6-hole program.

The project is on a structural trend, 2.5 km to the northwest of the Pierina gold-silver deposit, which Barrick Gold (ABX-T) acquired through a takeover bid of Arequipa Resources valued at more than $1 billion.

A geochemical gold-plus-arsenic anomaly has been defined in a sheared and hydrothermally altered zone of volcanic rock. The zone is marked by clay, limonite, sericite and silica alteration, and is highly fractured and brecciated. A target more than 1 km long and 100-400 metres wide has been defined by mapping, trenching and rock-chip sampling.

The best gold values are believed to occur at a moderate depth near the interface between Mid-Tertiary volcanics and the underlying tightly folded Cretaceous sediments, where the contact is cut by shearing and brecciation.

Queenstake has overcome drilling problems encountered in the first three holes to achieve what it describes as excellent core recovery. Results are in hand for the first three holes, with results for the final holes expected shortly.

The first three holes, plus two additional twinned holes, drill-tested a 450-metre southern segment of the alteration-geochemical target, returning anomalous to low-grade gold values. The first hole was abandoned at a depth of 36 metres because of bad ground; it was redrilled as Hole 1A to a completed depth of 264 metres and returned 5.8 metres grading 0.27 gram gold per tonne, 24 metres of 0.44 gram, 3.7 metres of 0.48 gram, 5.9 metres of 0.63 gram, 4.5 metres of 0.19 gram and 9.4 metres of 0.63 gram.

Hole 2 was drilled to a 166-metre depth before it was lost, yielding 7.6 metres grading 0.35 gram, 1.3 metres of 0.51 gram and 4.7 metres of 0.42 gram. It was redrilled as hole 2A at a slightly different angle but was lost at a depth of 106 metres. Hole 2A reported 19.6 metres grading 0.42 gram, 7.5 metres of 0.12 gram and 2.2 metres of 0.14 gram.

The third hole was completed to a depth of 188 metres and encountered 23.3 metres grading 0.69 gram, 17.4 metres of 0.9 gram, 27.8 metres of 0.53 gram and 15.6 metres of 0.25 gram.

Plans are being made to incorporate reverse-circulation drilling during the next phase of drilling.

As part of an ongoing regional reconnaissance exploration program, Queenstake has identified a strong alteration zone on its Marcat prospect, 1.5 km southeast of, and on-trend with, the Pierina property. Systematic mapping and sampling are under way.

Elsewhere in the Ancash region, an initial diamond drilling program is set to begin on the Olleros property. Up to three holes are planned, to depths of 200 metres, the objective being to test an alteration area measuring 500 metres long and 200 metres wide.

Queenstake also expects to drill-test separate gold and copper targets at the Mata Mata property by the end of the year.

In all, the company holds a 100% interest in 70 different concessions covering 66,000 ha in the Ancash region.

Farther north, in the Mexican state of Sonora, a second phase of reverse-circulation drilling is under way on the Jabali gold prospect. The Jabali is one of 23 Mexican properties held in a 60-40 joint venture between Queenstake and Alamos Minerals (AAS-V).

In northern Chile, the company has an option to acquire the Rio Frio gold property, which is southeast of Antofagasta. Queenstake can acquire a 100% interest in Rio Frio from Battle Mountain Gold (BMG-N) by spending US$500,000 during the next three years.

Battle Mountain will retain a 2% net smelter return royalty on the property and hold the right to buy back a 50% interest in the project if a feasibility study determines more than 1 million recoverable ounces.

Queenstake has identified a target area measuring 1,000 by 400 metres and plans are under way to trench and sample the prospect.

The company is currently negotiating to joint-venture certain properties it holds in Peru, Mexico and Chile, and has reached a preliminary agreement on the Huancavelica properties in Peru. Details are pending.