Source chases district-scale skarn at Las Minas

VANCOUVER — Roughly 270 km east of Mexico City in the state of Veracruz, junior Source Exploration (TSXV: SOP) is thinking big. Earlier this year the company expanded a discovery at its property package in the historic Las Minas mining district. And according to Source’s senior geologist Matt Liard, exploration efforts have barely scratched the surface of the project’s potential.

North-central Veracruz is thought to host one of the largest under-explored gold-copper skarn systems in Mexico. Copper-gold mineralization is typically found in zones along the contact between an overlying limestone and intrusive rocks. Source’s Las Minas project hosts a granitic intrusive that runs over 7 sq. km and a number of known mineralized skarns zones, as well as multiple epithermal polymetallic zones. The project consists of three separate blocks totalling 16 sq. km.

Thirty small-scale, high-grade mines operated in the district between 1870 and 1910. High-grade ore shipped from Las Minas to smelters graded from 15% to 30% copper and 20 grams to 40 grams gold per tonne, according to historic estimates.

In 2011 and 2012, Source carried out a geological mapping and sampling program over several of the concessions, including: Pepe, Pepe Tres and La Miqueta. Subsequent drill programs have outlined two promising mineralization zones — Santa Cruz and Juan Bran-El Dorado — where Source hopes to fast-track maiden resource estimates.

“It’s all been strategic from the start, and that plays directly into why we chose Las Minas,” Liard notes during an interview. “We wanted to differentiate ourselves from exploration projects that were drilling some fairly good holes, but not getting much reaction. We realized a lot of companies were holding value because they had resources, so we really wanted something where we could move into delineation drilling right away. When you walk into some of these old adits you can go for hundreds of metres in mineralized material.”

Santa Cruz is one of six top drill targets at Las Minas, and forms part of the El Dorado corridor skarn zone that has been intersected by diamond drilling for 840 metres along strike and 400 metres downdip, with mineralized drill intercepts varying from 20 metres to 245 metres long. Source began a follow-up 2,000-metre drill program in June that has yielded promising results.

Santa Cruz is the higher-grade of the two targets, though more geologically complex. Gold, silver and copper mineralization at the zone is hosted in retrograde altered endoskarn and exoskarn developed at the contact between the granodiorite and marble.

In August Source reported drill results from Santa Cruz that boast the best assays found at the project to date. Hole 14-SC-8 cut 99 metres grading 1.64 grams gold, 7.63 grams silver and 1.1% copper from surface, including a 10-metre interval at 10.6 grams gold, 48.5 grams silver and 7.4% copper. Additional highlights include hole 14-SC-7, which intersected 87 metres of 1.17 grams gold, 4.7 grams silver and 0.6% copper from 10 metres.

Meanwhile, drilling at the Juan Bran target 300 metres north of Santa Cruz resulted in another discovery. Stepout holes north of Juan Bran intersected skarn mineralization over a 350-by-250 metre area, with the system open for expansion. The results link Juan Bran and El Dorado into a single zone and extend the flat-lying mineralized zone from 170 metres to 420 metres wide.

Highlights from the Juan Bran drill program include: 42.5 metres of 0.77 gram gold, 2.35 grams silver and 0.48% copper from 132 metres deep in hole 14-JB-1; 20.1 metres at 0.87 gram gold, 3.76 grams silver and 0.83% copper from 98 metres deep in hole 14-JB-2; and 13 metres of 0.32 gram gold, 1.17 grams silver and 0.46% copper from 78 metres deep in hole 14-JB-7.

“It’s actually a new area in between two drill holes completed in 2011 that hit some interesting high-grade material,” Liard says about the El Dorado-Juan Bran drilling, noting that the underlying geology and mineralization are “identical.”

“We feel the recent program has really put it together. It’s a single-contact skarn that’s basically a flat-dipping, highly consistent zone. After doing work at El Dorado we think there could be pretty sizable resource potential there,” he adds.

Source hopes to delineate 1 million equivalent oz. gold at Las Minas for a maiden resource estimate. Liard figures the company has invested $750,000 in drilling so far, and that another $1 million could make a maiden resource realistic.

“We need to come in and outline a resource to underpin the share price. But we haven’t even touched the greater project potential,” Liard says. “When I did my first site visit I thought: ‘A minimum quarter of a million ounces, with 4,500 metres of drilling.’ I think we’re looking at something big, based on our activities to date.”

Source has restricted its activities to the skarn-type mineralization exposed within the historic workings and through erosion on the Las Minas valley floor.

At higher elevations the project has potential for higher-grade epithermal vein deposits. The company hopes it is comparable to Torex Gold Resources’ (TSX: TXG; US-OTC: TORXF) Media Luna discovery.

Source notes that in both cases the mineralized skarn units are situated between structurally competent marble and granodiorite rock units, with strong magnetic footprints correlating with mineralization. Liard also sees similarities between Media Luna core and Las Minas core.

“When I look at Torex I see that on the same intrusion they have late, retrograde, classic Guerreo gold belt oxide skarn, and on the other side they have Media Luna, which is a copper-gold magnetite skarn that’s a totally different animal,” Liard says. “I think our deposit is really close in terms of mineralogy and distribution, so I have to keep my eye out for oxide-type skarn mineralization too.”

Source shares have traded within a 52-week window of 1¢ to 16¢, and closed at 8.5¢ per share at press time.

The company closed a $1.2 million non-brokered private placement in May wherein it issued 10.3 million units at 12¢ per unit. Each unit comprises a share and a warrant to buy a share for 20¢ through May 2019. Source has 74 million shares outstanding for a $6.3-million market capitalization.