Yamana sizes up Lejano, North Bacon

Spokane-based Yamana Resources (YRI-T) is eager to resume drilling at its Lejano prospect in southern Argentina, following the release of a preliminary resource estimate.

The company delineated 14.4 million oz. silver-equivalent based on drill results from the South Ridge zone of the property. The resource amounted to 1.15 million tonnes averaging 331 grams silver and 1 gram gold per tonne, 4.1% lead and 1.6% zinc, equivalent to 12.2 million oz. silver and 36,235 oz. gold. Silver-equivalent was calculated at the rate of 1 gram gold to 60 grams silver.

A higher-grade core of the vein contains 500,000 tonnes grading 659 grams silver, or 10.4 million oz. silver-equivalent.

The estimate is based on 23 holes drilled in a roughly tabular vein, which averages 6 metres in thickness. The holes were spaced over a strike length of 500 metres and penetrated to a depth of 140 metres. The results are subject to an independent audit.

Mineralization is associated with concentric ring fracture zones in a rhyolite dome. At the South Ridge zone, it consists of sulphide-cemented breccias, associated with the outer ring fracture, whereas, at North Ridge, Yamana encountered quartz stockwork with lower sulphides (primarily pyrite) on the inner ring fracture.

The company has drilled 114 reverse-circulation and core holes at Lejano, including 33 holes in the latest round.

Highlights include DDH-82, collared on the western sector of South Ridge. The hole cut 10 metres grading 277 grams silver and 2.6 grams gold per tonne, plus 7.5% lead and 0.14% zinc.

A nearby vertical hole, DDH-86, hit 10.3 metres of 253 grams silver, 1.2 grams gold and 1.3% lead. Using the same pad, DDH-93 was drilled at a 60 angle, hitting 7.1 metres of 179 grams silver, 2.2 grams gold and 3.4% lead.

One hundred metres to the west, DDH-83 hit 9.9 metres grading 277 grams silver, 0.29 gram gold and 3.5% lead from the surface.

At North Ridge, RC-108 hit 12 metres of 398 grams silver and 0.3 gram gold. This hole confirmed mineralization at a greater depth, intersecting a zone of quartz stockwork.

Three more targets at Lejano — East Ridge, Broken Saddle and Red Slope — warrant follow-up drilling, Yamana says.

Lejano is in the Patagonia region of northwestern Santa Cruz province, 150 km north of the North Bacon property, where Yamana recently announced a preliminary resource of 7.2 million oz. silver-equivalent, based on drill results from a portion of the Veta Martha silver shoot.

With the help of consulting firm Micon International, the company produced two estimates for North Bacon based on results from a 200-metre segment. The first estimate assumes an easterly plunging oreshoot; the second, which is based on the same data, envisions a westerly plunging oreshoot. More drilling is required to determine the true plunge.

The first estimate is 215,092 tonnes of material grading 1,050 grams silver per tonne, totalling 7.3 million oz. silver-equivalent. The second is 224,887 tonnes grading 986 grams silver, totalling 7.15 million oz. silver-equivalent.

In both estimates, Micon used uncut values to a depth of 75 metres on the vein dipping to the north, and in both, gold assays were converted to silver-equivalent at the rate of 1 gram gold per tonne representing 60 grams silver per tonne. Yamana and Micon also recalculated the mineralized widths over the entire vein thickness to represent a mining width.

The estimates were calculated using the guidelines set down by the June 1998 interim report of the Mining Standards Task Force.

Because of a strong nugget effect in the deposit, Yamana asked Micon to produce a third resource estimate, using cut assays. Cutting assays entails capping individual high-grade assay values at a statistically significant value to avoid skewing the ultimate grade of the deposit. In this case, Yamana encountered values as high as 12,000 grams silver over 1 metre.

Through two rounds of drilling, Yamana has completed 70 reverse-circulation and core holes at North Bacon. High-grade intercepts from the latest round include an 8.1-metre interval in hole 37 grading 2,989 grams silver and 4.4 grams gold within 10 metres of the surface on Veta Martha. Hole 39, at the western edge of Veta Martha, encountered 7.3 metres near the surface grading 1,591 grams silver and 1.8 grams gold. Also on Veta Martha, hole 48 hit 4.7 metres grading 2,267 grams silver and 3 grams gold.

By mid-February, Yamana plans to begin a third round of drilling at North Bacon. The 4,500-metre program will target all segments of the Veta Martha system, including Veta Martha Oeste, Veta Nordeste, Veta Medio, Sugar Hill and the R4 area, as well as the Far North Bacon prospect.

Says Yamana’s chief geologist, Mel Klohn: “I am optimistic that this new drilling could more than triple the inferred silver resource.”

Yamana’s management believes the North Bacon prospect could ultimately hold as much as 50 million oz. silver.

Along with the resource estimates, Yamana produced a cashflow analysis of a proposed 200-tonne-per-day underground operation at Veta Martha. With an investment of US$7.5 million, such a mine would be capable of producing 2 million oz. silver annually. With an internal rate of return of 53%, the capital could be recovered in 16 months.