The ever-growing, 3.8-million-oz. Esquel gold project in southern Argentina has garnered little attention in North American markets, largely because its operator,
The project comprises four groups of exploration concessions covering 1,400 sq. km in Chubut province, close to the Chilean border in the foothills of Patagonia. Brancote holds a 60% interest in these concessions through its ownership in the Argentine company Minera El Desquite (MED); the remaining 40% of MED is held by a private group of investors consisting of the Miguens Bemberg family and Kerry Packer.
A February 2001 updated resource study, prepared by Denver, Colo.-based Pincock, Allen & Holt, incorporated results from 33,500 metres of drilling completed during three separate campaigns in 1999 and 2000. Six epithermal vein deposits in the core area — Galadriel, Galadriel Sur, Elena Norte, Elena Sur, Julia and Antonia — are estimated to contain a total near-surface resource of 14.7 million tonnes averaging 8 grams gold and 13 grams silver per tonne at a cutoff grade of 2 grams per tonne. This is equivalent to 3.8 million oz. gold and 6.1 million oz. silver. About 3.2 million oz. of the gold resource averages a grade of 10.5 grams.
Furthermore, 63% of the total resource, or 2.4 million oz., is categorized as measured and indicated, at 8.6 million tonnes grading 8.67 grams gold and 15.2 grams silver.
The third round of drilling, completed in late December 2000, expanded the established resource of Galadriel Sur downdip and along strike south toward the Julia vein. The program, which consisted of 11,650 metres of reverse-circulation (RC) and diamond drilling, confirmed expectations that the high-grade Galadriel Sur vein system continues southward through the intervening hill and connects with the Julia and Elena vein systems, a further 800 metres to the south.
Stepout drilling on Galadriel Sur extended the system a further 250 metres southward to Julia, reducing the undrilled gap between those veins to 550 metres. Brancote says a 3-to-5-metre-thick, high-grade core runs 20 grams or more in many of the intersections. The southern 300-metre strike of Galadriel Sur was extended a further 50 metres downdip, giving this section an overall downdip of at least 200 metres.
The resource at Galadriel Sur increased to 1.7 million ounces of contained gold, of which 1.4 million oz. averages 12.4 grams per tonne. The previous resource estimate had Galadriel Sur accounting for 1.3 million oz., of which 1.2 million oz. averaged 14 grams per tonne.
A fence of four holes, at 50-metre spacing, was drilled in the gap between the southern extension of Galadriel Sur and the northern end of Julia. This area has been dubbed the Football Field zone. Three of the holes intersected a wide, high-grade vein system similar in texture to Galadriel Sur. Results included: 11 metres of 7.7 grams gold, starting at a down-hole depth of 99 metres; 18 metres of 7.2 grams gold, starting at 132 metres down-hole; and 15.1 metres of 10 grams gold, starting at 123.5 metres down-hole.
The Football Field zone contains an inferred resource of about 4.2 million tonnes grading 7.69 grams gold and 10 grams silver, equal to 1 million oz. gold and 1.3 million oz. silver.
The drilling of just eight additional RC holes in the Julia vein system extended the mineralized zone downdip to at least 70 metres in the northern section and doubled the resource to 484,200 oz. gold at a grade of 7.5 grams.
Drilling to date suggests that the Galadriel, Galadriel Sur, Julia and Elena veins are part of one continuous epithermal system extending over 2.2 km of distance.
The core area of the project lies just 10 km north of the provincial town of Esquel. With a population of 30,000, the town offers national grid power and gas supply, abundant water and road access. The project area lies at elevations of between 1,200 and 1,800 metres.
MED began acquiring ground in the Cordon de Esquel range, just northeast of the townsite, shortly after it was formed, in 1997. Preliminary work had revealed the presence of high-grade, gold-and-silver-bearing, epithermal vein systems within a 600-to-1,000-metre-wide corridor that can be traced over a distance of 20 km. MED added to its position in 1998 by acquiring the neighbouring La Joya del Soya gold property from
The original discovery at La Joya del Soya is just 3 km north of the Galadriel and Elena veins.
MED also picked up a second block of concessions, containing the former Huemules gold mine in the Cordon de Rivadavia range, some 25 km northwest of Esquel.
Following a review of the Cordon de Esquel’s potential, Brancote and its joint-venture partner approved a US$2.5 million exploration and drilling program targeting the Galadriel and Elena vein systems. The program got under way in March of 1999.
Two distinct styles of mineralization have been recognized. The first is the prominent quartz, chalcedony vein, with high surface gold values. The second style, characterized by a poorly defined surface expression, is associated with silicified and stockwork andesites, generally wider and more pervasive than the first type.
By the end of 1999, exploration work had defined 15 vein systems (each with significant surface mineralization), compared with five at the beginning of the year. Pincock, Allen & Holt estimated a near-surface resource of 2.3 million tonnes averaging 10.32 grams gold, or 753,500 oz., based on the first pass of 9,000 metres of drilling.
MED continued drilling during 2000. Results from a 13,000-metre second round, carried out in the first half of last year, boosted resources to 2.1 million oz. gold and 3.8 million oz. silver contained in 6.5 million tonnes averaging 9.78 grams gold and 18.2 grams silver.
In November 2000, Brancote announced it was discussing a possible takeover offer with three major mining companies. By early February, however, the talks ended without an acceptable offer. The interested parties carried out extensive technical due diligence, including confirmation drilling.
Brancote and its joint-venture partners are continuing to go it alone at Esquel. They began a fourth phase of drilling in early 2001, with some 20,000 metres budgeted. The program is concentrating on upgrading, to measured and indicated status, the inferred resource of the Football Field zone. Infill drilling is being conducted on a 40-metre-strike-by-25-metre-downdip pattern. To date, the vein system has been drilled 280 metres along strike and an average of 75 metres downdip. Results indicate that the vein is becoming wider, with improving grade at depth.
Significant intercepts from the Football Field zone include 12 metres of 10.4 grams gold, 19 metres of 9.6 grams gold, 13.5 metres of 25.8 grams gold, 9.5 metres of 12.1 grams gold, 13.3 metres of 16 grams gold, and 23.1 metres of 9.1 grams gold.
Exploration drilling tested the northern exposure of Ungoliant system over a strike length of 250 metres. Ungoliant lies east of the Elena vein. RC results include: 6 metres of 4.1 grams starting at 6 metres downhole; 8 metres of 11.1 grams from 6 metres of surface; 19 metres of 4.1 grams from 31 metres downhole; and 11 metres of 4.5 grams at 44 metres from surface.
Prefeasibility studies are expected to get under way in May. Conceptual plans envision an open-pit operation utilizing conventional carbon-in-leach (CIL) processing. Metallurgical tests of vein material indicate that the mineralization is amenable to a standard whole-ore CIL process, with recoveries of 92-94% gold in 24 hours. Silver recoveries range from 68% to 78%. Recoveries from the mineralized wallrock were lower than those from the vein material, ranging from 60% to 67% for gold and 34% to 47% for silver. One metallurgical test, using a blend of 90% vein material and 10% wallrock, resulted in recoveries of 92% for gold and 70% for silver.
With 62.6 million shares outstanding, Brancote is trading at around 156p in a 52-week range of 235-88.5p.
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