New York-based Santa Elina Gold (TSE) has entered into an agreement with a subsidiary of TVX Gold (TSE) to explore the Lavrinha gold property in Brazil’s Matto Grosso state.
Mineracao Santa Elina, a subsidiary, will acquire a half interest by carrying out exploration on the property, which is held by the TVX subsidiary.
The cost to Elina of acquiring and exploring the property is set at US$2 million.
TVX, long active in Brazil, recognized the property’s potential from historic production and, in 1994, signed an agreement with Consolidated Madison Holdings (VSE) giving it a 70% interest.
Under the recent agreement, Santa Elina will receive half of TVX’s interest, or 35%, with Madison retaining the remaining 30%.
TVX’s current goals involve working with advanced-stage projects. However, desiring to retain some interest in the property, it chose to bring in a partner to do the grassroots exploration.
It approached Santa Elina because it recognized the company’s experience in the gold belt of the same name. Santa Elina controls about 8 million hectares along the gold belt (or about 95%).
Moreover, Santa Elina controls the land immediately surrounding the Lavrinha property, and, according to company spokesman John Hammes, “it seemed natural to put the lands together.”
As part of the agreement, Santa Elina will contribute all land that falls within 1 km of the property line.
Nestled within northwest-trending hills rising above a flat, alluvial plain, the Lavrinha property comprises 2,000 hectares. The hills are characterized by Middle Proterozoic metasedimentary rocks of the Aquapei group, and these consist of metaconglomerates, quartzites, phyllites and schists.
Stratabound gold mineralization occurs along shear surfaces developed in zones between rocks of different competence. Gold is also concentrated in dilation zones. Near the surface, oxidation has freed the gold. In fresh rock, gold is expected to be associated with pyrite, with free gold restricted to quartz veins in dilation zones.
A 6,500-metre, 47-hole program of diamond drilling was carried out by TVX in 1994, with significant mineralization encountered in three horizons. Hole FE-40 hit 4.9 metres of 14.35 grams gold per tonne in the lower horizon, while hole FL-10 hit 12.6 metres grading 6.89 grams.
Santa Elina will bring in four core rigs for a second phase of drilling, aimed at delineating reserves in selected targets.
In the first quarter, Santa Elina suffered a loss of US$2.9 million (or 2 cents per share). There are no comparable data for 1994, owing to a reorganization of the company.
Revenue of US$789,000 was generated from limited gold production at the Sao Vicente mine, which operated for fewer than 30 days during the quarter. Second-quarter production is expected to be just less than 10,000 oz.
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