Nukay gold project holds promise for Teck and Miranda

Although Canadian companies have been aggressively acquiring projects around the globe, it is rare for a foreign private syndicate to approach a Canadian senior in the hope of striking a joint-venture deal.

Yet this is precisely what occurred when, in 1993, privately owned Miranda Mining struck a deal with Vancouver-based Teck (TSE) to increase reserves and production levels at the former’s Nukay gold project in the south.

On a recent visit to the property, The Northern Miner witnessed, first-hand, the mining operations at the Nukay and Aguita pits, as well as some more promising prospects being explored by Miranda’s partner, Teck.

Situated in Guerrero state, between the tourist resort of Acapulco and Mexico City, is a chain of hills that has yielded gold since prehistoric times. The region was first worked by the Incas and, according to Miranda’s president, Enrique Miranda, the name “Nukay” was derived from an old native dialect; it translates as “place of gold.”

More recently, in the late 1930s, the property was acquired by a Mexican company that completed more than 1,000 metres of development work on four underground levels. Mapping and sampling in the early 1940s outlined an east-west-trending zone 150 metres long, 30 metres wide and extending to a depth of 60 metres below the surface. Average grades in the zone ran 1 gram gold per tonne, with higher-grade pockets topping 10 grams.

Production at Nukay started in 1946 and, during the proceeding 15 years, almost 500,000 tonnes of ore averaging 18 grams gold per tonne were mined, with cutoff grades averaging 10 to 12 grams per tonne.

In the late 1970s, the property was acquired by a private group of investors led by the Miranda family. The group was interested in mining the more than 100,000 tonnes of high-grade ore left in the underground pillars.

A Miranda-owned subsidiary began development of the Nukay in 1983. At this time, a new road was commissioned, construction of which resulted in the discovery of a wide zone of medium-grade mineralization running about 0.5 gram per tonne on surface. As a result, the group shelved plans for a selective, high-grade, underground mine and, instead, set about developing a larger-tonnage, open-pit operation.

Since production resumed in 1988, the subsidiary has produced more than 48,000 oz. gold in dore bars. It is currently producing more than 1,000 oz. per month from the original Nukay deposit and the newly developed Aguita prospect. Monthly gold production has risen to 1,030 oz. in July, 1995, from 331 oz. in September, 1993.

This rise is the result of an increase in milling capacity and throughput. Between 1988 and 1994, daily milling capacity jumped to 350 from 150 tonnes, while yearly throughput rose to 8,800 from 3,200 tonnes.

The 1,052-hectare Nukay property lies on the northern flank of the Sierra Madre del Sur Mountains within the Morelos mineral reserve. The property is underlain by the Morelos-Guerrero sedimentary basin, which is dominated by Cretaceous-aged fossiliferous limestones of the Morelos formation. These limestones were later intruded by the Tertiary-aged Don Enrique and Don Terry granodiorite intrusives.

At least two types of gold deposits have been identified. The first and better-understood type is associated with metasomatic iron replacement skarn deposits on the contacts between recrystallized limestones and the intrusives. To date, more than 10 skarn deposits have been defined along the rims of the intrusives by means of geological mapping, geochemical sampling, ground magnetic surveys and drilling. All past production has come from skarn deposits.

In total, 14,176 metres, comprising 94 holes, have been drilled on the Nukay, Aguita and Subida skarn deposits. Independent consultants have determined the deposits host proven and probable reserves exceeding 4.4 million tonnes averaging 4.47 grams gold per tonne, equivalent to more than 656,000 oz. of contained gold. As well, the remaining skarn deposits are said to have a geological potential of 1 million oz.

In addition to the skarn deposits, another type of gold mineralization was encountered in a drill program carried out between the two intrusive bodies. Although not fully understood, it appears that the area known as the Don Marta hosts gold-bearing stockwork veins within intrusive rocks masked by a few hundred metres of limestone. The intrusive that hosts the veins is described as argillically altered and highly silicified. What has yet to be determined is whether the mineralization is related to the buried intrusive, or to a later, crosscutting structure.

It was the potential of finding a large prospect like the Dona Marta that enticed Teck to sign the joint-venture agreement with Miranda. The senior can earn a half interest in the property by completing a 3-phase program of exploration and development. The work is to culminate in a positive feasibility study (by June, 1997), leading to production of 52,000 oz. gold annually.

Teck is completing a third phase of exploration, and, so far, has carried out district-wide geological mapping and sampling, lithogeochemical and magnetometer surveys, and more than 14,500 metres of drilling. The second phase of exploration was completed last December at a cost of US$1.47 million.

Drilling by Teck at the Dona Marta has resulted in an inferred resource of 800,000 oz. and indicated a geological potential of 1.5 to 2 million oz. Some of the better intersections within the Dona Marta zone have averaged 3.37 grams over 51.7 metres, 2.6 grams over 25.9 metres and 1.9 grams over 30.5 metres.

According to geologists on site, Teck will continue to drill the Dona Marta and other skarn deposits with three drill rigs. In addition, metallurgical testing and base-line studies will be completed over the coming months.

For its part, Miranda is considering listing its shares on a Canadian exchange. Proceeds would be invested in the Nukay project and in the acquisition of other Mexican gold and silver properties.