Promotion is an undercurrent of the mining business, and companies often boast that their project has geological similarities to the world-class one down the road or over the hill. To some degree, this explains why
“Weak markets and lack of interest in resource stocks haven’t helped,” says John McCluskey, vice-president of the Vancouver-based junior. “It’s been a struggle, but hole 13 was lucky for us. While it didn’t get the kind of attention it might have enjoyed in better times, the doubts are melting away.”
Drilled this summer by partner Anaconda Copper, the hole returned an impressive 232 metres (starting at 12 metres) grading 1.19% copper and 0.08% molybdenum, for a copper-equivalent grade of 1.5%. It was designed to test the lateral extension of a skarn and adjacent intrusive mineralization where previous drilling returned 332 metres of 0.73% copper and 0.014% moly.
“What’s exciting,” McCluskey says, “is that we’re hitting good grades in both the skarn and the intrusive, unlike Antamina, where the intrusive is only weakly mineralized.”
Magistral is about 160 km northwest of the world-class Antamina deposit, which hosts 500 million tonnes averaging 1.2% copper, 1% zinc, 0.03% moly and 11 grams silver per tonne. The deposit is being developed by a consortium of three Canadian mining companies and a minority Japanese partner.
Magistral’s copper-moly skarn system is hosted by the Calendin Formation, the same limestone unit that hosts the skarn at Antamina. Inca Pacific believes it has potential to host a sizable deposit too, but the proof must come with the drilling, and these are still early days. Size matters in the big leagues, and Antamina still casts a mighty shadow.
Magistral is not a new discovery. Cerro de Pasco explored a limited portion of the skarn aureole in the early 1970s and calculated a resource of 1.8 million tonnes grading 2.04% copper and 0.03% moly. The project was then nationalized, only to sit dormant for almost three decades.
When Peru reopened its doors to foreign investment in the 1990s, Inca Pacific went to see what might be available. President Anthony Floyd was already active in Chile, so it was a matter of heading north and kicking similar rocks.
Inca Pacific staked the ground surrounding the area explored by Cerro de Pasco, which was still in state hands. “All that was left was a small hole in the middle of our doughnut, which the government agreed to put up for auction,” McCluskey says. “We did a geophysical program, saw a saddle-shaped anomaly and knew we had a strong [Antamina] print here.”
Inca Pacific won the bid by agreeing to spend US$2.1 million and paying US$750,000 by early 2002. Once vested, the company will have seven years to complete a feasibility study to bring the deposit on-stream. The government will retain a net profits royalty of between 0.5% and 3%, depending on metal prices.
An early sampling program showed mineralization within the limestone, through the skarn and into the quartz monzonite intrusive. Results from an old adit, including 90 metres of 1.29% copper, led to drilling.
In the fall of 1999, Anaconda Chile, a major copper producer wholly owned by Antofagasta Holdings, secured the right to earn a 51% joint-venture interest by spending US$5.75 million over three years. This can be increased to 65% by preparing a bankable feasibility study within two years.
As part of its earn-in, Anaconda completed an 8-hole program in late 1999. Four of the holes yielded impressive drill results from strongly mineralized skarn bodies hosted by the Celendin Formation, as well as in certain sections of the intrusive complex.
Hole 2 hit 332.4 metres (starting at 7.6 metres) of skarn intruded by mineralized dykes grading 0.73% copper, 0.014% moly and 3.23 grams silver, while hole 3, collared 200 metres to the southwest, returned 442.2 metres (starting at 108 metres) of 0.62% copper, 0.059% moly and 2.29 grams silver (which included 80 metres of 1.09% copper and another grading 1.04% copper). Both stopped in mineralized skarn.
The size potential of the project grew when a drill was moved southwest of hole 3 to test a strong geophysical anomaly. Hole 6 cut 208 metres (starting at 10 metres) of 0.87% copper, 0.125% moly and 2.79 grams silver, including 36 metres grading 1.69% copper.
By this point, geologists had enough information to note other similarities to Antamina, including structural setting, age and composition of host rocks and intrusives, mineralogy and mineral zonation, and the copper-moly association. Magistral was found to be much more deeply eroded than Antamina, though the westerly dip of the Celendin Formation is believed to have allowed the preservation of much of the original skarn under structurally emplaced thrust slices of Jumasha Formation (a key host for rich copper ore at Antamina) in the western and southern sections of the property.
Anaconda Chile returned in March of this year, only to receive mixed results from a 6,000-metre program. So far, the aforementioned hole 13 has been the luckiest.
Holes 9 and 11 were spotted to establish the thickness of the skarn and well-mineralized centre of the zone. Hole 9 intersected 180 metres of 0.77% copper and 0.07% moly, but hole 11 encountered only intermittent lenses (18 metres of 1.01% copper) of skarn in limestone. Hole 10 returned no significant results, while hole 12, drilled in the heart of the intrusive, hit 184 metres of 0.58% copper and 0.07% moly.
Ongoing work will determine the ultimate size potential of Magistral and whether or not it meets Anaconda Chile’s threshold for development. After Anaconda completes its earn-in and has notified Inca Pacific of its plans for development, the junior must decide whether to participate as a 35% partner or dilute to a 20% carried interest after payback.
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