EXPLORATION ’95 — Chile’s gold potential a buried treasure

Chile is best known for its front-ranking copper deposits, but a major exploration initiative by Barrick Gold (TSE) is aimed at placing the South American country on the map as a leading gold producer.

This development will be no small feat, considering that primary gold mining got off to a rocky start and is still relatively new to the country. During the 1980s, several companies explored and developed gold mines in the Maricunga district. For the most part, however, these failed to live up to expectations, putting a damper on the efforts of others active in that region. Today, the search for major gold deposits is focused on the belt known as El Indio, near the border with Argentina. This prolific, gold-silver-copper district is situated in the Andes Mountains, 300 miles north of Santiago and 100 miles east of the town of La Serena.

Local miners were the first to work deposits in the region, starting in the mid-1960s. A predecessor company to Lac Minerals developed the first primary gold mine in Chile, El Indio, and began production in 1979, roughly four years after the deposit was discovered.

Heap-leaching processing was used in the early years, and in 1989, a flotation approach was developed for treatment of direct smelting ore grading 1.6-1.8 oz. gold per ton (boosting recoveries to 97% or better). Research into three high-intensity smelting processes was also carried out, with the goal of removing arsenic and antimony from the concentrate so as to lower treatment costs at international smelters. A second roaster was commissioned in the fall of 1989, followed by a third in 1991.

Now owned and operated by Barrick, which acquired Lac last year, El Indio is the jewel of the company’s Chilean holdings. Total processing capacity is 3,300 tons per day, which results in 180,000 tons of calcine concentrate containing more than 200,000 oz. gold and 33,000 tons copper. Ore is from three sources: El Indio itself, the adjacent Viento system and the Rio del Medio deposit, 5 miles north of El Indio. In March of this year, ore from a fourth source, the Tambo mine, will be processed at its own new, on-site, 6,600-ton-per-day mill.

A variety of mining techniques are used, including open-pit (primarily at Rio del Medio) and underground methods such as longhole stoping, mechanized cut-and-fill, and ramp-in-vein.

Barrick already has reserves of 8.6 million oz. within the Indio belt, and believes more discoveries will come to light. “In terms of structure, alteration and size, we’ve never seen a better area to explore than El Indio,” says Barrick President Robert Smith.

As proof, Smith points to the recent discovery of the Jalene vein system, an andesite-capped target found by surface drilling at the Indio minesite. It is already viewed as having the potential for at least 1 million oz. gold. “I believe Jalene will be its own mine, justifying its own shaft,” he says. In 1995, Barrick intends to spend $30 million to explore its 500-sq.-mile land package. The work will entail close to 400,000 ft. of drilling, of which 100,000 ft. will consist of underground work at the Indio mine. Work will also be carried out on the Rio del Medio deposit (which remains open to depth), as well as at the Tambo mine, the objective being to convert resources of six satellite deposits into reserves.

To aid in the exploration at depth of the Indio vein systems, Barrick is sinking a 2,000-ft. internal shaft which will also be used for existing operations.

Barrick’s known deposits are in a north-south-trending tertiary volcanic belt, with more than 30 extensive zones of hydrothermal alteration. The area is dominated by major north-south-trending faults, with subsidiary north-east and north-west fracture systems.

Three distinct mineralogical ore types are found: silver and minor gold in quartz veins at the North zone (around Rio del Medio); copper, gold and silver in quartz, as well as massive sulphide veins, at the Central zone (El Indio); and gold in silica-barite veins and breccia bodies in the South (Tambo) zone.

Tambo, unlike the Indio mine, contains gold mineralization only, rather than a gold-copper mix. Its mill circuit has been designed as a typical, free-milling, North American-type process, and gold recovery will be enhanced once the ore is being processed in its own dedicated facility. Ore will be from two pits, Wendy and Kimberly.

Smith estimates that Barrick’s costs of production at El Indio will average US$77 per oz. this year, after taking into account copper credits (about 40% of costs).

Barrick is also planning more drilling this year for the Nevada gold project, about 30 miles north of the Indio complex. Discovered in 1987, this project has current minable reserves of 32 million tons grading 0.071 oz. (or 2.3 million oz. contained). A recent hole hit 417 ft. of 1.34 oz. This year’s drilling, part of a final feasibility study, will test additional targets.