Anaconda proves up iron resource in Chilean desert

Vancouver – Less than a year after its first drill hole into the San Gabriel iron ore property Anaconda Mining (ANX-T) has proved up an initial resource for the site that is already sizeable and still has much room to grow.

San Gabriel, in northern Chile near the deepwater port of Chanaral, hosts 57.9 million tonnes grading 32% iron in the indicated category, plus 2.6 million inferred tonnes grading 29% iron. The estimate was calculated using a 20% iron cut-off grade.

The resource is contained in three zones. The San Gabriel Main zone contributes the large majority of the indicated tonnage; the Esperanza zone, a smaller target to the southeast with a near-surface deposit, tops off the indicated count. All of the estimate’s inferred resources sit in the Antonia zone.

Mineralization at San Gabriel consists of magnetite magmatic intrusive and magnetite-bearing metasomatized volcaniclastic andesitic host rocks occurring as a roof pendant in dioritic intrusives. Such skarn-related iron mineralization is characteristic of the Chile-Peru coastal region.

Anaconda completed 71 reverse-circulation drill holes totalling 17,570 metres and five diamond drill hole totalling 2,190 metres between fall 2007 and spring 2008.

Preliminary metallurgical testwork has shown that San Gabriel is home to high-quality magnetite-bearing material, which can likely be recovered by magnetic separation. Analyses returned very low levels of impurities, specifically silica, phosphorus, sulphur, and copper in magnetic concentrates.

Further north, Anaconda is also watching closely as Minera Penoles de Chile advances a drill program at Inca de Oro Sur. Penoles is operating the exploration program to earn in majority ownership on the copper-gold project.

The current exploration program is focused on three targets Carmen, Juana, and Lautaro though the majority of the drilling to date has tested Carmen, a porphyry copper-gold target. Results from the first 18 holes include some lengthy intercepts.

Hole 1 cored 257 metres of sulphide mineralization grading 1.1 grams gold per tonne and 0.45% copper from 95 metres downhole, including 66 metres of 1.87 grams gold and 0.54% copper. Hole 2, collared 250 northeast, returned 0.67 gram gold and 0.37% copper over 290 metres, starting 84 metres downhole.

The project is located in the historic Inca de Oro mining district in northern Chile, some 100 km north of Copiapo.

Penoles is earning in a 65% interest in the project from Anaconda and Inversiones EM-DOS by spending US$10 million on exploration and making cash payments of US$12 million to Anaconda and EM-DOS over four years.

And in late July Anaconda poured the first gold dore bar at its new Pine Cove gold mine in Baie Verte, Newfoundland. The pour yielded three gold dore bars with a combined weight of 140 oz.

Mine and mill commissioning and optimization continue at the site, where construction began in June 2007 and was completed on time and within capital budgets allocations. The small operation, designed to produce 500 tonnes of ore daily and 16,000 oz. gold annually from probable reserves of 2.3 million tonnes grading 2.8 grams gold, should give Anaconda a small but steady influx of capital to continue exploring and developing other ventures.

Anaconda, after financing the project to production, hold a 60% interest in Pine Cove; the other 40% is held by New Island Resources (NIS-V). The joint venture agreement, however, stipulates that Anaconda receives 100% of the project’s cash flow until capital payback is achieved.