Teck accelerates exploration in northeastern Mexico

Here in the southeastern state of Oaxaca, Teck (TEK-T) is carrying out early-stage exploration on the Lachatao gold property, with trenching and drilling endeavoring to outline what the company hopes to be a bulk-Tonnage, low-grade epithermal gold deposit.

Teck’s Mexican subsidiary can initially earn a 51% interest in the 8-by-8-km concession from Grupo Northair de Mexico, a wholly owned subsidiary of International Northair Mines (INM-V), by paying US$275,000 and spending US$750,000 on exploration.

The major can increase its interest to 60% by paying another US$100,000 and spending an additional US$1 million on exploration. If Teck elects to fund the project through to the feasibility study stage and arrange all production financing, it can boost its interest to 70%.

(Separate of the joint venture, Teck holds a 100% interest in an additional 16,879 ha of ground in the immediate area.)

International Northair is managed by the Northair Group, which was formed in 1966 by mining veteran Donald McLeod. Based in Vancouver, Northair Group is active throughout North and South America, and, more recently, in Indonesia.

The Group consists of six companies: Camnor Resources (CMB-V), Condor International Resources (COD-V), NDT Ventures (NDE-V), Newhawk Gold Mines (NHG-T), Norcal Resources (NLR-V) and Tenajon Resources (TJS-V).

International Northair currently holds two property positions in Mexico, both of which have been joint-Ventured with majors. One is Lachatao; the other is Las Minas, a gold-Copper skarn project in the eastern state of Veracruz. In the latter, a Mexican subsidiary of Battle Mountain Gold (BMG-N) has the right to acquire up to a 70% interest by spending US$950,000 on exploration, paying US$125,000, and funding the joint venture through to the feasibility study stage.

During a recent property tour of Lachatao by mining analysts and The Northern Miner, Bruce McLeod, vice-president of International Northair, justified the terms of the joint ventures.

“Our philosophy was to try to minimize our downside risk with deals where our capital risk was almost nil,” he said. “This will change in our next ventures.”

He added that the Group is currently negotiating to acquire three other properties.

James Robinson, Northair’s vice-president of exploration for Latin America, acknowledged the potential of the northern Sierra Madre, specifically the area near Francisco Gold’s (FGX-V) Sauzal gold discovery. “That belt is as hot as anything on the planet,” he said. “There will be monsters coming out of there.” Nonetheless, the topographical relief and lack of infrastructure render the area difficult to explore.

International Northair has 5.1 million shares outstanding, or 6.3 million fully diluted, with $1.4 million in its treasury.

Lachatao, 40 km northeast of Oaxaca city, is accessible by a 1.5-hour drive along 55 km of paved highway followed by 15 km of dirt road to the village of Santa Catarina Lachatao.

The terrain is mountainous, with elevations ranging from 1,600 to 2,600 metres. Vegetation consists predominantly of pine and oak trees.

The property lies within a volcanic district that has been mined for gold since the Spanish colonial era. The district centres on a large Tertiary-Age andesite porphyry complex that has intruded into a series of Paleozoic-Cretaceous metamorphic and sedimentary rocks. Surrounding the intrusive centre are coeval andesitic tuffs. Abundant younger hypabyssal porphyries occur near the contact of the andesite.

There are two obvious structural patterns, trending north-Northeast and west-Northwest; both act as controls for hosting epithermal gold-silver mineralization, which occurs near contacts with the andesite porphyry.

Mineralization has been observed in all the rock units.

To the northeast, immediately outside of the concession boundary, lies the still-Active Natividad gold mine, which is reported to have produced more than 1 million oz. in the past 20 years from narrow high-grade veins.

Within the concession, but excluded from Northair’s option, is the Escopeta mine, a small, privately owned underground operation. A series of stacked quartz veins running parallel to the hillside are being mined. Ore grades, which were once in the order of 7 to 8 grams gold, are believed now to average 4 to 5 grams.

The oxidized ore is processed at a nearby 80-Tonne-per-day flotation mill, which is said to suffer from recovery problems.

Discussions are being held with the owners to negotiate a separate option agreement on this area.

Northair acquired the Lachatao project in October 1995 and, during the first four months of ownership, carried out a reconnaissance mapping and sampling program in the northern half of the property, identifying several prospective bulk-Tonnage gold targets. Many of the targets are in areas marked by underground workings.

In May 1996, Northair optioned the property to Teck, which set about concentrating its efforts on the San Pedro-San Pablo vein-stockwork system, where the previous drilling of six diamond drill holes by the Cansejo de Recursos Minerales intersected strongly anomalous to potentially ore grade mineralization. A potential resource of 10 million tonnes averaging 1 gram gold was indicated in a general target area measuring 350 by 200 metres.

Teck’s 1996 program consisted of a series of hand-dug trenches and nine reverse-Circulation drill holes totalling 1,215.5 metres, at a cost of US$333,000. Some regional prospecting and sampling were also carried out.

A total of 14 trenches was completed in the San Pedro-San Pablo area, returning anomalous to potentially ore grade values. Highlights included: 44 metres averaging 1.18 grams gold and 9.33 grams silver in trench 2; 30 metres of 1.59 grams gold and 14 grams silver (including 14 metres of 2.4 grams and 18.3 grams silver) in trench 3; 22 metres of 2.2 grams gold and 11 grams silver in trench 6; 28 metres of 0.64 gram gold and 4.21 grams silver (including 6 metres of 1.01 grams gold and 9.13 grams silver) in trench 8; 35 metres of 0.63 gram gold and 3.47 grams silver in trench 9; 55 metres of 0.55 gram gold and 9.62 grams silver (including 10 metres of 1.56 grams gold and 32.92 grams silver) in trench 12; and 37 metres of 1.09 grams gold and 5.19 grams silver in trench 13.

Teck’s objective in the first phase of drilling was to confirm Cansejo’s previous drill results. The 1996 program tested more than 400 metres of strike length of the San Pedro-San Pablo system. Several of the holes intercepted wide intervals of low-grade gold mineralization, with six of the holes bottoming in mineralization.

Hole 96-2 returned 49.5 metres grading 0.51 gram gold and 6.69 grams silver from a depth of 17 to 66.5 metres, plus 3 metres grading 7.84 grams gold and 8.3 grams silver from 80 to 83 metres. Stepping out 100 metres to the southwest, hole 96-4 encountered 96 metres grading 0.62 gram gold and 3.4 grams silver at a depth of 65 to 161 metres.

Along strike, 100 metres to the northwest, hole 96-3 intersected 85.5 metres of 0.97 gram gold and 5.59 grams silver (including 15 metres of 2.14 grams gold and 12.1 grams silver) at a depth of 5 to 90.5 metres.

The most northwesterly drilled hole, 96-9, was collared a further 100 metres along strike and intersected 22.5 metres grading 0.4 gram gold and 4.64 grams silver at a depth of 34.5-57 metres, plus 33 metres grading 0.92 gram gold and 2.83 grams silver (including 1.5 metres grading 10 grams gold and 20 grams silver) from 78 to 111 metres.

The San Pedro-San Pablo system occurs along a west-To-Northwest-Trending fault zone. It is underlain by a series of shallow-dipping,

northwest-Trending volcanics and volcanoclastics. Gold mineralization is associated with epithermal quartz veins and stockworks hosted in an argillic and siliceous porphyritic dacite sequence.

Exploration work indicates the system continues to the northwest over a mineralized strike length of 800 metres. Follow-up trenching and prospecting are testing the extension. Teck’s senior project geologist, James Janzen, said the potential for a much larger system i
s indicated by the fact that many drill holes bottomed in mineralization.

In addition, trenching in the Veta Nueva area, about 250 metres north-Northeast of the San Pedro-San Pablo, returned 113 metres averaging 0.38 gram gold and 2.99 grams silver in trench 15, including 16 metres of 5.69 grams gold and 15.3 grams silver. Within the 16-Metre portion, a 2-Metre section graded 34.2 grams gold.

Janzen believes Veta Nueva and San Pedro-San Pablo may all be part of the same system. Teck envisages a potential resource of 100 million tonnes averaging a grade of 1 to 1.5 grams gold, amenable to heap leaching.

Working from a US$450,000 budgeted program for 1997, Teck continues to concentrate its efforts on the San Pedro-San Pablo area by carrying out mapping, trenching and prospecting. A limited regional program is being conducted on prospects within the project known as La Colorada, where chip sampling has returned values of 1.5 to 2 grams gold.

The next phase of drilling could begin as early as mid-June. Janzen plans to use a core rig to drill up to 10 holes on the San Pedro-San Pablo system, including stepouts on the Veta Nueva area.