Before starting an aggressive program of exploration drilling on the promising El Tambor gold project in central Guatemala,
Murray John and Joseph Hamilton at Dundee Securities are the latest to join the fray, with a short-term (6-month) target of $1.50. Radius is currently bouncing off the upper end of a 52-week trading range of $1.30-48.
Based in Vancouver, the company was formed by the same team that managed Mar-West Resources when it discovered the San Martin gold deposit in Honduras. Simon Ridgway, president of Radius, and Robert Wasylyshyn, vice-president, lead this team. (In the fall of 1998, subsequent to the San Martin discovery, Mar-West was taken over by
Radius bought the right to a 100% interest in the El Tambor property in late 1999 from
The Tambor property is 50 km northeast of Guatemala City and accessible by paved roads. It sits 5 km south of the Motagua fault, a major crustal shear zone that forms the plate boundary between the Caribbean and North American continental blocks.
The company believes this area, which has seen intense structural deformation, has potential for hosting gold deposits of significant size. The area has seen little historical gold exploration and production. Radius has since applied for concessions covering more than 200 km of strike length adjacent to the Motagua fault, comprising an intrafault wedge of deformed Paleozoic-aged, metasediments and amphibolites. This package has been intruded by Cretaceous-aged plutons, and subsequently covered in places by younger volcanic ash.
To date, Radius has spent $1.5 million exploring the 66-sq.-km Tambor property. Most of the work has focused on a 6-by-2.5-km area, where five significant gold zones — Sastre, Bridge, Lupita, Valery and TBS — have been outlined by geochemical sampling and follow-up trenching. The zones of mineralization appear to be related to a low-angle fault, called the Tambor Shear, which trends east-west and dips gently to the north at 8. Mineralization is hosted in strongly deformed and brecciated, oxidized schistose rocks.
The first trench results, reported in late January 2001, are summarized in the accompanying table. The Sastre zone has returned the highest grades from the property so far, including 29.4 metres (estimated true width) averaging 10.6 grams gold per tonne in SN-1 and 20 metres averaging 10.52 grams in SN-5. Sastre has been traced for some 500 metres along strike.
Haywood Securities analyst Glenn Brown, who visited the property in February, believes El Tambor and the Motagua fault area constitute a superior grassroots exploration project.
“In an era of low gold prices, we recommend that investors focus on projects that can deliver superior grade,” states Brown. “El Tambor could do so, and we recommend Radius Explorations as a speculative buy for accounts tolerant to risk.
“The occurrences found to date are hosted in breccias exposed within a possible thrust-fault complex that was subsequently broken by normal faults. The mineralization is associated with silicification (more prevalent at brecciated metasediments, such as at the Lupita zone) and carbonates (for example, siderite, common in the brecciated amphibolites at Sastre).”
Sastre zone
Brown says the exposed mineralization in the Sastre zone appears to be about 10-20 metres wide and bounded by conformable, low-angle faults. The zone seems to be tilted into the slope of the ridge at about 30. Based on the soil geochemistry and trenching results, Radius believes there is potential for multiple stacked breccia zones.
Grade is associated with iron oxides in pyrite and possibly arsenopyrite pseudomorphs, and the arsenic content in the mineralized zones is in the order of 1%. Although surface enrichment is a possibility, Radius has exposed and sampled bedrock in all the trenches reviewed by Brown.
At the western end of the mineralized trend, initial chip sampling along the banks of a small river yielded 3.59 grams across 85 metres in what is known as the Bridge zone. Across the river, an old railway cut, some 10-15 metres above the riverbank exposure, returned 2.58 grams over 65 metres. A layer of unconsolidated volcanic ash masks the mineralization above the river valley, though several pits and two hand-trenches confirm that the mineralization extends over a minimum strike length of 400 metres.
A nearby hot spring lends credence to the theory that the zones in the east are related to past epithermal systems generated by a regionally high geothermal gradient.
States Brown: “We believe that Radius could very rapidly build a resource, should it be able to demonstrate, through drilling, that the high-grade material sampled at surface leads to a deposit at depth and that there is continuity between the zones.
On a cautionary note, the analyst notes that El Tambor has yet to be drilled and that all the results reported to date are based on near-surface sampling of oxidized material.
Open-pit potential
Dundee’s Murray John concurs: “Exploration at Radius’s Tambor project is at a very early stage. There are many risks associated with interpreting early-stage trenching; however, initial results seem to indicate that Tambor could develop into a high-grade orebody amenable to open-pit mining.
“If drilling is successful in confirming Tambor’s early promise, then we can see a situation developing where reserves are added very quickly in the second half of 2001. High-grades, potentially low open-pit mining costs and low infrastructure costs mean that these would be very valuable ounces that could reasonably be expected to net back US$25-50 per oz. to Radius.”
Radius is continuing with trenching on the Sastre, Bridge and TBS zones at Tambor. The TBS zone is 1 km south of Sastre and lies on-strike with the projection of the Tambor shear. An anomalous area measuring 1,500 by 400 metres has been identified by soil and rock geochemistry. A total of 150 chip and grab samples taken from outcrop in this area averaged 1.75 grams.
In regional work, rock and stream-sediment sampling have outlined an anomalous 3-by-2.5-km area at the San Pedro prospect, 10 km west of Tambor. The geologic setting is similar to that at Tambor. The strongest zone has been intermittently traced for 700 metres. Limited outcrop has yielded values of up to 7.5 grams across 12 metres and 8 grams over 10 metres. Field crews have identified similar mineralized areas 1.2 km to the southwest and 1.5 km to the east-northeast.
Streams draining a broad, north-striking ridge of argillic and carbonate altered phyllites returned strongly anomalous gold values in the Cerro Apazote area, 16 km west of Tambor. Follow-up work is in progress.
Radius recently obtained the rights to the Tierra Blanca property, north of Cerro Apazote. The agreement calls for payments of US$1 million over four years, with a 2.5% NSR. The property covers an east-west-trending ridge that follows the trace of the Motagua fault system. Rock-sampling by previous owners returned multi-gram gold values over an area measuring 1.5 by 1 km. Mineralization is hosted in ridge-top tectonic and karst breccias in strongly silicified limestone and phyllite. Mechanized trenching and geologic mapping programs are planned.
Radius has managed to raise $4.4 million during the past two years through share and special warrant unit offerings at 25, 35, 80 and, most recently, 60. The company has $700,000 in cash and 11.8 million shares outstanding, or 17.1 million fully diluted. In-the-money warrants that expire on June 6, 2001, are expected to bring in $1.3 million.
The analysts at Dundee expect Radius will try to raise $3 million to $4 million either from an industry partner or through the capital markets. The funds would enable it to launch a first phase of drilling at Tambor in the second quarter of 2001.
Speculative leverage
Canaccord Capital’s Graeme Currie, who also recommends Radius as a speculative buy, says that despite a poor gold price environment, Radius is one of the few juniors that provides good speculative leverage. “El Tambor, as a grassroots discovery target, exhibits numerous positives that [suggest it has] the potential to host a multi-million-ounce resource,” says Currie.
Summaries of trench results reported to date are outlined in the accompanying table.
SastreS-114.2 open5.54
S-211.2 open4.09
SN-129.410.6
SN-424.02.09
SN-520.010.52
BridgeEast85.03.59
West65.02.58
B-130.0 open0.91
B-231.5 open1.71
LupitaLW-118.2 open1.57
LW-223.62.41
LW-319.2 open1.80
LW-421.5 open1.31
LW-55.51.87
CH-145.9 open0.90
CH-221.01.45
CH-328.00.60
CH-418.00.67
ValeryVA-165.01.47
VA-225.0 open2.48
VA-321.0 open0.85
VA-418.5 open1.46
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