MINERAL EXPLORATION — CASE STUDIES — Black Hawk develops local talent

The string of exploration successes at the Limon project in northwestern Nicaragua is more a function of personnel than of exploration techniques, according to mine owner Black Hawk Mining (BHK-T).

“There is nothing unique about our exploration approach,” says Michael Gareau, Black Hawk’s exploration manager for North and Central America. “But what is interesting is the amount of effort and time that goes into training the local talent. We are now benefiting considerably from that effort.” The education process got into full swing shortly after Vancouver-based Triton Mining and Internacional de Comercio, S.A., a privately owned Nicaraguan company, purchased the Limon mine and the surrounding exploration concession in 1994 for US$3.85 million.

The transaction represented the first privatization of a mining operation in Nicaragua since democratic elections were held in 1989.

Black Hawk acquired Triton at the end of May 1998 and inherited many of its predecessor’s staff, including Gareau and Vice-President of Exploration David Jenkins.

The training program included field trips to typical epithermal gold systems in Nevada and Argentina, computer courses on geological application packages, and instruction on the logistics of running a multi-drill exploration program.

As a result, the Nicaraguan geologists acquired the skills to develop a model that would guide further exploration on the 12,000-ha Limon property.

Subsequent drilling in 1997 boosted the inventory of reserves and resources by 23%, to 856,000 oz. gold, in spite of a coincident slide in the gold price. El Limon produced 48,600 oz. gold in 1997 at a cash cost of US$280 per oz., compared with less than 37,000 oz. in 1996.

To search for other gold-bearing vein systems on the mine property, on-site geoscientists use very-low-frequency electromagnetics to outline fault structures, and magnetics to help define the alteration halos that typically surround the veins.

Once drilling intercepts a vein system, Black Hawk employs its geological model to predict the location and depth of the gold-bearing section of the vein. The latest discovery to stem from this model is Talavera Sur, a gold-bearing vein in the footwall of El Limon’s Talavera underground operation.

“We bought a new underground drill that could drill down to 300 metres,” says Gareau. “We poked some long, flat holes to the south of the existing workings and found the vein system (at Talavera Sur).”

Based on recently published results, Talavera Sur appears to have a strike length of about 1 km, including a 100-metre-long, high-grade zone that is interpreted to connect to known reserves 200 metres to the east. This zone carries a weighted average grade of 16.9 grams gold and 17.3 grams silver per tonne, has a true width of 3.9 metres, and is open at depth and along strike to the east.

The footwall drilling also intersected the FWII vein, another gold-bearing structure parallel to Talavera Sur. The best results from limited drilling on FW11 include 5.5 grams gold over a true width of 2.9 metres.

The hope is that mineralization in the two new veins will significantly enhance reserves currently outlined in El Limon’s 5-year mine plan. Both are sub-parallel to, and within 150 metres of, the mine workings, so development would be relatively inexpensive using existing infrastructure.

The new discoveries are representative of the most common deposits in Nicaragua: gold-bearing epithermal quartz veins hosted by a band of Tertiary volcanic rocks that extends from Guatemala in the north to Costa Rica in the south.

While this deposit type remains a prime exploration target for Black Hawk, the company also plans to explore for bulk-minable gold systems such as Placer Dome’s (PDG-T) Cerro Crucitas deposit in Costa Rica, which lies along the same trend as El Limon. Placer outlined almost 60 million tonnes grading 1.2 grams gold per tonne at Cerro Crucitas before determining that the project was too small to meet its corporate objectives.

Black Hawk does not suffer from a shortage of hunting ground. As part of the Triton takeover, the company acquired a 323,300-ha exploration concession next to the Limon mine. Black Hawk plans to spend US$470,000 on this concession in 1998, in addition to the US$970,000 to be spent on mine site exploration.

The regional work is based on a compilation of available geological and topographic maps, reports and historical data, including a map of all known showings in the area. Regional trends were outlined on side-scan radar images that reveal structures hidden by the vegetation cover.

The most important structure controlling gold mineralization is the Nicaraguan depression that runs from Costa Rica to El Salvador and hosts Cerro Crucitas. El Limon, in company with several other showings, straddles the boundary between this structure and the adjacent highlands. Black Hawk narrowed down its exploration target area somewhat by completing prospecting, mapping and soil and stream-sediment sampling. The junior also brought in a joint-venture partner, TVX Gold (TVX-T), to explore and develop the India property, about 45 km east of the mine. TVX spent $1.5 million on the area and identified three distinct styles of gold mineralization before pulling out of the joint venture in early 1998.

Most of the exploration work in this part of Nicaragua takes place outside the rain-intensive periods in May and September-October. The relief is moderate, roads are abundant and a large lake borders the concession; as a result, the exploration area is easily accessible.