Echo Bay exploring Mexican gold project

Exploration results from the Paredones Amarillos gold property in northwestern Mexico are providing encouragement for Echo Bay Mines (TSE) and Baja Gold (TSE).

“Echo Bay has indicated to us that this is their highest-priority project and the one with the closest potential for production aside from an acquisition,” said Paul Saxton, president of Baja.

Echo Bay would neither confirm nor deny this statement and is, in general, being somewhat secretive about its activities on the property, situated 34 miles south of the town of La Paz in Baja California Sur territory. Indeed, it was with some reluctance that the company allowed The Northern Miner and a group of analysts to tour the property. The visit provided participants with an opportunity to examine a few boxes of unsplit core, although full assay results from drilling to date have yet to be released.

Echo Bay completed its joint-venture agreement with Baja early this year after a 5-month due diligence review. One indication of the former’s level of interest in the property is the fact that it has spent more than US$2 million on the current program. Saxton said Echo Bay originally set a budget of only US$600,000 for this phase of work, and he expects total expenditures to reach almost US$3 million by year-end.

Echo Bay can earn a 51% interest in the property by spending US$4.5 million and paying US$700,000 (US$200,000 of which has been paid). This can be increased to 60% by spending another US$2 million over a 1-year period and paying Baja an additional US$1 million.

Much of this year’s work has concentrated on confirming and expanding the resource around a previously drilled area, dubbed the Paredones Amarillos deposit.

In late 1991, Consultants Derry, Michener, Booth & Wahl estimated the resource at 8.9 million tons grading 0.051 oz. gold per ton. Mineralization occurs as a series of bifurcating-to-subparallel lenses within a cataclasite — a highly brecciated unit occurring on a granodiorite-diorite fault contact. The unit is about 330 ft. thick, with the contained mineralized lenses averaging 65-200 ft. in thickness and dipping at 30-45 degrees.

Gold mineralization occurs with pyrite and arsenopyrite in silicified zones. Sulphides are present as fine specks disseminated throughout the siliceous matrix, and their content can range up to 5%.

“It’s pretty simple geology,” summarized Ronald Netolitzky, chairman of Baja. “There are basically two types of rocks and a structure. Where you’ve got pyrite, you’ve got gold.” He added that since the surrounding rock is basically unmineralized and non-conductive, induced-polarization (IP) work can be a valuable tool in identifying targets.

By the end of September, Echo Bay had drilled 51 reverse-circulation holes and one deep core hole (1,135 ft.), with most of the drilling targeted on-strike to the southwest and northeast of the main resource area. That resource area (8.9 million tons grading 0.051 oz.) covers a strike extent of about 1,700 ft. and a dip extent of up to about 660 ft. Echo Bay’s drilling extends for a strike length of more than 4,000 ft. and a dip extent of up to 1,300 ft., significantly expanding the potential size of the resource.

Selected drill results from outside the defined resource include: 101.7 ft. grading 0.085 oz. in hole 23; 118.1 ft. grading 0.05 oz. in 37; 123 ft. grading 0.054 oz. in 50; and 147.6 ft. grading 0.053 oz. in 54. Echo Bay, which has not released a new resource estimate, is permitting an additional 170 holes.

The planned drilling will include holes on a number of IP targets, including one to the southwest of the main resource area where a trench returned 0.036 oz. over 165 ft.

While the gold is related to sulphides, metallurgical tests indicate the mineralization is in no way refractory. Material ground to 100 mesh returned flotation recoveries of more than 96% and cyanide recoveries of 89-98%. Additional metallurgical testing will be required to test the mineralization’s response to heap leaching, although Echo Bay has not ruled out the possibility of constructing a mill. The mineralized zone contains little or no clay and has no carbon to speak of.

Infrastructure is not expected to be a problem, should the property prove to host an economic deposit. Power is nearby, and no water-related problems are reported.

Although the property is situated in a buffer zone of a newly formed biosphere reserve, it is not illegal for mining to be carried out in such an area, and the joint venture is confident that all necessary permits can be arranged.

Permits are handled by Secretaria de Desarrollo Social (SEDESOL), to which Echo Bay has been quick to point out that it is exploring the property according to North American standards.

One environmental requirement for mining in the buffer zone is that any species affected by operations be transplanted. SEDESOL has tagged eight such species for transplant. Echo Bay has been successful in its transplanting operations and is in compliance with all its permits.