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Situated 400 km north of Santiago, the Pascu-Lama district straddles the Chilean-Argentine border at the northern end of the El Indio belt. It is expected to provide significant production, earnings and cash flow for the next two decades. As Alex Davidson, vice-president of exploration, often says; “It’s not just a mine, it’s a district.”
Pascua, which Barrick plans to develop in phases, is a cornerstone of a development program aimed at boosting production to 5 million oz. from 3.7 million oz. by 2003. Two other mines — Rodeo in Nevada and Bulyanhulu in Tanzania — will contribute to the growth plan.
First-phase construction should begin by year-end. Because of the size of the project, a modular concept divided into six units was viewed as being the most efficient to design and engineer. Project management teams are in place, with engineering work and pit development continuing apace.
The first phase will consist of a 33,000-tonne-per-day plant, which is expected to produce 800,000 oz. gold and 35 million oz. silver annually, beginning in 2003. Capital costs, including the mining fleet and infrastructure, are estimated at US$950 million.
Mine infrastructure will be built in both countries, thanks to a 1998 protocol agreement between Barrick and the governments of Chile and Argentina. The processing plant and tailings impoundment will be built on the Argentine side, whereas the crusher and maintenance facilities will be in Chile, close to the mine.
The second phase — including a flotation circuit to treat sulphide ores — will increase total capacity to 44,000 tonnes per day by 2005. Production would then rise to 1 million oz. gold annually. A third-phase, 6,000-tonne-per-day expansion is still under review but could begin as early as 2003. It involves the relocation of the Tambo mill to the property, which would be used to process oxide ore from satellite deposits. This would add a further 180,000 oz. of gold production annually. Tambo is slated to close shortly.
The second- and third-phase expansions will cost an additional US$300 million.
“We see a mine life of at least 18 years,” says Alan Hill, vice-president of development.
The larger mine is expected to produce an average of 900,000 oz. gold and 37 million oz. silver for the first 10 years, or 840,000 oz. gold and 28 million oz. silver for the life-of-mine. Barrick is confident Pascua will eventually become the world’s lowest-cost major gold producer. Cash costs for the first five years have been reduced to a mere US$60 per oz. (including silver credits and royalties), down from last year’s estimate of US$125 per oz., while life-of-mine cash costs are expected to average US$100 per oz., compared with a previous estimate of US$150 per oz. The lower cost estimates are attributed to higher gold and silver grades, as well as lower mining costs.
Proven and probable reserves are estimated at 263 million tonnes grading 2.02 grams gold per tonne and 66 grams silver, based on a gold price of US$325 per tonne. An additional 6.6 million oz. are contained in a resource of 177 million tonnes grading 1.17 grams.
The mine will be a conventional open pit at an elevation of 4,600 metres. The initial mining rate will be 329,000 tonnes per day at an projected life-of-mine stripping ratio of 6.4-to-1.
The mining fleet will consist of twenty-seven 240-tonne, high-altitude haulage trucks, five large-hydraulic shovels and two front-end loaders, plus drills and other ancillary equipment. Ore will be hauled a short distance to the crushing facilities and transported by conveyor to the processing plant.
Unit mining costs are now expected to be US58 per tonne, compared with a previous estimate of US70. The lower unit costs reflect short ore and waste hauls: half of all ore and waste hauls are downhill, allowing greater speeds and fewer trucks to move the same amount of material.
The milling circuit will consist of crushing, grinding, counter-current decantation (CCD) washing to remove soluble salts, cyanide leaching, CCD Merrill-Crowe, retorting, electrowinning and fire-refining to produce gold dore. The circuit would be capable of treating oxide and sulphide ore. The copper sulphide minerals will be floated and tails sent to the cyanide leach circuit. Most of the gold from sulphide ore will be recovered by the company, but some will float with the copper for treatment in a smelter.
Gold recoveries are expected to average 85% (90% for oxides and 75% for sulphides), with a 78% recovery rate for silver.
The Pascua mine is expected to provide a 14% rate of return and a payback of six years, based on a gold price of US$300 per oz. and a silver price of US$5.25 per oz. Though gold is currently US$25 shy of that target, Vice-Chairman John Carrington says project economics are “still robust at US$275 gold and $5 silver.”
At the end of 1999, Barrick had increased gold reserves at Pascua by 22%, whereas silver reserves had rose by 27%. Much of the increase came from the Penelope and Morro Oeste mineralized zones in Argentina.
More than 94,000 metres of diamond and reverse-circulation (RC) drilling were completed in 1999, of which 72,000 metres were drilled in Argentina. Approximately 24,000 metres of diamond drilling were completed from an underground exploration tunnel.
Last year’s program identified new gold zones at Central and North Frontera, and Breccia Central in Chile, while extending mineralization at Southeastern Frontera. In Argentina, new mineralization was discovered at Penelope, El Morro Oeste, Lower Frontera and Pascua Extension.
Recent work has focused on expanding reserves within the current pit limits and increasing reserves at key satellite deposits. Seven RC rigs concentrated on the Nevada Norte and Morro Oeste areas, as well as Esperanza Sur. From underground, three core rigs continued drilling on deep targets in Chile and on the Pascua Extension in Argentina. Additional exploration drilling targeted Federico Norte. About 45% of the planned 17,400-metre drilling program for 2000 has been completed.
At a mining convention in March, David Heberlein, Barrick’s exploration manager for Chile and Argentina, said mineralization at Pascua can be classified as a high sulphidation system on the basis of quartz-alunite alteration and enargite-pyrite ore mineralogy.
The Pascua deposit lies at the western margin of an oval-shaped alteration system measuring 10 km in its longest dimension. Heberlein said gold, silver and copper mineralization occurs within a core zone of pervasive quartz-alunite alteration. Ore-grade values occur in strongly silicified and quartz-alunite altered zones along north-south and northwest-southeast trending faults. A vertical control to the mineralization is evident. Economic grades sit in a 100-to 200-metre thick, blanket-like zone at between 4,600 and 4,800 metres of elevation.
Alteration and mineralization affect basement rocks of granites and rhyolitic volcanic rocks of the Permo-Triassic Choiyo Formation. Tertiary igneous rocks, although spatially related to mineralization, are said to be relatively scarce.
Veladero
At the neighbouring Veladero project, a 60-40 joint venture between
“We’re really just starting to learn about the geological controls on the orebody and believe that there is a lot more gold to be found on this highly prospective property,” says Homestake Chairman Jack Thompson. Accordingly, the joint venture increased the current budget by US$5 million to US$18 million.
Homestake gained a 60% interest in Veladero last spring through a US$190-million takeover of Argentina Gold. In addition, Homestake acquired a 100% interest in a prospective 5,600-sq.-km land package along the Argentine side of the El Indio gold belt.
The 115-sq.-km Veladero project is accessible from the town of Pismanta via 160 km of single-track dirt and gravel roads, including a series of switchbacks over the Concocata pass at an elevation of 5,000 metres. The Veladero camp sits at 3,800 metres, while the primary target areas lie between 4,100 and 4,400 metres.
The two main targets, Amable and Filo Federico, host proven and probable reserves of 83.9 million tonnes grading 1.78 grams gold and 24.3 grams silver, equivalent to 4.8 million contained ounces gold and 65.7 million contained ounces silver. The reserve is part of a much larger resource totalling 200.1 million tonnes grading 1.2 grams gold and 22.9 grams silver, equivalent to 7.8 million oz. gold and 147.4 million oz. silver.
Gold mineralization at Veladero is hosted in a suite of Tertiary-age volcanic and volcaniclastic rocks. Drilling to date suggests the presence of a series of gold zones stretching in a northwesterly-southeasterly direction over the 3.2-km-long eastern flank of the Cerro Pelado ridge at the northern end of the property. Cerro Pelado hosts a complex variety of diatreme breccias. A 10-sq.-km series of geochemical and geophysical anomalies centre on Cerro Pelado.
The main rock type of tuffisite breccia is characterized by a finely milled rock flour matrix supporting generally well-milled polymictic fragments. The breccias have been pervasively silicified. Several episodes of re-brecciation and silicification are evident, frequently at the confluence of northwesterly and northeasterly striking structures.
Gold mineralization is associated with black silica-sulphide breccias that occur as crackle, fluidized, mosaic and rotational breccias. The high gold grades at Amable occur in association with brown crystalline jarosite that overprints the silica.
There are higher-grade structures in all the zones, including Amable and Filo Federico. These tend to run northeasterly.
The gold and silver occur as two different species and do not overlap. Native gold particles are liberated and range in particle size from 1 to 370 microns. The gold grains are often irregular and characterized by large surface areas that tend to leach quickly. The silver mineralogy is more complex. Silver occurs as ceragyrite, native silver, manganese wad and argento-jarosite. The latter two are refractory to direct-cyanidation in nature.
Early metallurgical work showed that gold recoveries in the high-60s to low-70s could be achieved by heap leaching after crushing to minus 25 mm. Conventional milling process yielded higher gold recoveries of 90%. Initial tests showed low silver recoveries in the region of 20%.
Homestake has completed an additional 50 holes since mid-February to the end of April. This drilling encountered new zones of mineralization that are expected to have a positive impact on pit design. Homestake currently envisions an operation where ore will be mined from two open pits, with the lower-grade material being heap-leached and the higher-grade material being processed by conventional milling.
At present, 67.1 million tonnes grading 0.99 gram gold and 18.5 grams silver are categorized as heap-leachable, whereas 16.8 million tonnes grading 4.97 grams gold and 48 grams silver are millable. Preliminary capital costs are estimated at US$370 million. Once in operation, the mine is expected to produce between 450,000 and 500,000 oz. per year, with cash costs averaging US$150 per oz. Production could begin in 2003.
“It’s an exciting project, with low operating costs and significant production down the road for Homestake,” says Thompson.
Recent drilling outside Amable’s proposed southeastern pit boundary encountered significant mineralization towards the newly established Breccia Agostina zone. Hole 203 hit 145 metres averaging 2.95 grams gold and 39.8 grams silver (including 71.1 metres of 4.77 grams gold and 64.1 grams silver), starting at a down-hole depth of 81.1 metres. Hole 258 was drilled 76 metres away to the northeast and hit 82 metres averaging 5.52 grams gold and 31.9 grams silver (including 34.2 metres of 10.6 grams gold and 32.2 grams silver), beginning at 112 metres down-hole.
Homestake believes these holes reveal a relatively high-grade structure of some importance, in terms both of resource growth and reserve development. “It will almost certainly influence pit design,” says Donald Lewis, vice-president of valuations and development.
Just northeast of Amable, holes 216 and 217 showed potential for expanding the deposit. Hole 216 encountered 146.1 metres averaging 1.3 grams gold and 32.2 grams silver (including 24.1 metres of 3.84 grams gold and 51.8 grams silver) at a down-hole depth of 68.9 metres, whereas hole 217 pulled 22.9 metres averaging 2.19 grams gold and 122.4 grams silver, starting at 103.1 metres.
Stepout drilling at Filo Federico continues to grow the deposit to the southeast and northeast. One of three holes on the southeastern end intersected 151 metres averaging 1.41 grams gold starting at a depth of 244 metres in hole 260. On the northeastern side, core hole A-16 hit 89.1 metres averaging 2.37 grams gold (including 34.2 metres of 4.7 grams) at a down-hole depth of 93 metres.
Homestake says a new zone called Cuatro Esquinas, which sits halfway between Filo Federico and Amable, has the potential to be an important new deposit. Results from three drill holes include:
142.1 metres averaging 2.64 grams gold and 26.1 grams silver (including 47.9 metres of 4.05 grams gold and 16.5 grams silver), starting at a down-hole depth of 261.1 metres in hole 197;
150.1 metres averaging 1.54 grams (including 59.2 metres of 2.43 grams), beginning at a down-hole depth of 268.1 metres in hole 231; and
159.2 metres averaging 3.29 grams gold and 15.8 grams silver (including 88.1 metres of 4.66 grams gold and 17.8 grams silver), at a depth of 228.1 metres in hole 252.
“The zone that is developing here is similar in nature to other zones, the most obvious being Amable,” Lewis says. “With the nature of the fairly widely spaced drilling, we’re encouraged by the repetition of mineralized zones that we’re intersecting and by the grades we’re seeing. It’s a little deeper, but everything is driven by grade, and the grades are super. The depth will be overcome once we start to determine the size and girth of this deposit, as well as understand the metallurgical characteristics.”
Results from 15 holes on the Nicholas target, east of Filo Federico, have been disappointing. Drilling yielded sub-ore grades from the highly silicified and strong geochemical anomaly.
Homestake is continuing to drill through May with nine RC rigs, in addition to two core rigs drilling metallurgical holes on Amable. A short underground decline will be driven into Filo Federico to collect a metallurgical bulk sample and establish geological ore controls. An updated reserve and resource estimate is expected to be completed by June or July in advance of preparing the 2000-2001 program.
The deposits at Pascua and Veladero contain a total resource of 30 million oz. gold, all of which occurs in a 20-km northwest-southeast-striking structural corridor known as the Pascua trend. Heberlein says numerous other unexplored targets along the trend suggest that the district has the potential to become one of the premier gold mining districts in the world.
Juniors active
Farther along the trend in the Valle del Cura region of Argentina, junior
Fabiana sits 5.5 km east of the Veladero project at an elevation of 4,400 metres. Outcropping felsic volcanic breccia at Fabiana shows strong silicification, alunite alteration and anomalous arsenic geochemistry. Drill results are expected sometime in June.
Under a 1999 financing-option agreement, Barrick subscribed to 1.5 million units of IMA at $1 each.
Barrick can choose to option a half-interest in either the Potrerillos or Rio de las Taguas property by paying IMA US$250,000 and spending US$3 million on exploration over five years. The major can boost its interest to 75% by providing IMA’s share of production financing.
In November, IMA began early-stage exploration on the two properties, focusing on alteration zones associated with southeasterly trending structures. The targets were identified through the interpretation of satellite imagery and the extrapolation of linear structural elements. The initial work identified six prospects (three on each property), which were followed up with geophysics, mapping and geochemical sampling. Exploration should resume this fall, when several targets will be drilled.
Ima currently holds a land position of 10 properties covering 430 sq. km in the Valle del Cura area.
Barrick can also earn a 60% interest in the Evelina property from
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