Belo Horizonte, Brazil — Rarely does a newly listed junior gold company come with 2.5 million oz. already in the ground and an operating team experienced enough to advance them to production.
Yet that about sums up
“We believe we can achieve that objective based solely on the measured and indicated resources we have in hand today.” President Daniel Titcomb told The Northern Miner on a tour of the company’s properties.
Jaguar, which obtained its listing in October 2003 via a reverse-takeover of Rainbow Gold, had spent two years privately amassing 190 sq. km in the Quadrilatero Ferrifero to become the second-largest landholder there, next to AngloGold. The 60-by-40-km region is one of South America’s largest gold camps, having yielded some 16 million oz. since the 17th century, mostly from the deepest mines on the continent.
Said Titcomb: “As we developed our strategy, we saw a significant opportunity to walk in with a first-class development team and put together a plan not to develop a mine or promote a company, but rather to develop a region and become its consolidator.”
Keeping with the consolidation theme, Jaguar acquired the centrally located Caete oxide plant from
There is no doubt that Jaguar has its work cut out for it, but perhaps its biggest challenge will be logistics. Along with the tolling agreements, the company plans to build three plants — one for oxides and two for sulphides, employing them as central or stand-alone operations.
Fortunately, Jaguar’s projects are well-served by their proximity to this metropolis and by a 15-man operating crew with more than 100 years of combined exploration and mining experience in Brazil. The local relations that team brought to Jaguar also played a key role in pushing its plan ahead.
At the helm is Juvenil Felix, whose background includes 18 years as chief executive officer of AngloGold’s Brazilian gold division. During his tenure, he transformed US$350 million into several mines that produced a combined 440,000 oz. annually.
Also noteworthy is Lucio Cardoso, who served under Felix as superintendent and is now Jaguar’s vice-president of operations. Cardoso is credited with having developed and operated AngloGold’s 115,000-oz.-per-year Crixas underground mine.
The team has already begun mining one deposit and kick-started the permitting process for the rest. Before its goal is reached, Jaguar will have spent US$52 million on capital development projects, though it currently has US$10 million in the till, enough to support the first leg of its journey. The remainder is to be funded by internal cash flow.
The Quadrilatero Ferrifero derives its name from the Proterozoic-aged quartzite and itabirite ridges that enclose it loosely in the shape of a quadrangle. The itabirites are rich in iron and, in part, account for CVRD’s rise to top spot in terms of world iron-ore production.
As for gold, it occurs in the central part of the quadrangle, in an Archean greenstone belt known as the Rio das Velhas Supergroup. The largest deposits are hosted by banded iron formations and chert units of the Nova Lima group.
Most of the deposits are intensely folded and deformed, similar to their host rocks. This structural complexity also gave rise to gold-bearing quartz lodes adjacent to, or in, iron formation units and to shear-related deposits.
Regional foliation planes mainly trend to the northeast and plunge moderately to steeply to the east. And it is the down-plunge continuity of mineralization that makes the Quadrilatero Ferrifero truly remarkable.
Consider Morro Velho, which yielded 10.6 million oz. to a depth of 3 km below surface, averaging 200 metres long and 10 metres wide. Similarly, the producing Sao Bento deposit of Eldorado now extends to a depth of 1.8 km below surface yet is only 300 metres long by 6 metres wide.
Also in Jaguar’s favour is the fact that most deposits were found by tracing garimpeiro dumps and workings. Even the exception, Cuiaba of AngloGold, which was discovered by geochemical methods, was later discovered to overlie old workings.
“In my opinion, modern exploration techniques will bear new deposits, particularly blind ones,” said Prof. E.A. Ladeira, a noted geological expert of the region and consultant to Jaguar.
Excluding inferred material, Jaguar’s properties host 7.8 million tonnes of sulphides grading 5.6 grams gold per tonne and 4.75 million tonnes of oxides grading 2.9 grams, equivalent to 1.84 million contained ounces. Inferred resources account for the remainder of the company’s 2.5 million contained ounces.
The estimates are based on 51,627 metres of historic drilling results and a gold price of US$300 per oz. All are being updated to reflect recent gold prices, and Jaguar plans to spend about US$9 million over the next two years to prove up the revisions.
Based on experience elsewhere in the camp, metallurgy is expected to be straightforward, exceeding 90% for sulphides and 80% for oxides. Some of the gold is refractory, the main culprits being pyrite and arsenopyrite, but the AngloGold agreement assures a place for such material to be processed.
Surface mining is now under way at the B oxide zone, which lies on the Sabara property. A feasibility puts the zone’s reserve at 595,630 tonnes grading 3.22 grams, enough to support two years of production, though this is expected to rise to 3.5 years as a result of higher gold prices.
“The [extra] ounces, and this example of how an orebody can be evolved and developed by this team, provide gas for the engine,” said Titcomb. “It also provides a way for this company to expand without having to dilute its shareholders.”
60% BIF
About 60% of the orebody is held in banded iron formation, and the remainder is in quartz lodes. For the most part, both ore types are free-digging, being surrounded by friable phyllite.
Life-of-mine stripping ratios average a high 5.48-to-1, though this includes 270,000 tonnes of overburden that were stripped in advance of the upcoming rainy season. Since the cost is being capitalized, the actual mine strip should come in at a more respectable 2.2-to-1.
Capital costs, most of which have been spent, ring in at US$1.5 million.
Run-of-mine ore is trucked 36 km to Caete in four 25-tonne haul trucks at the rate of 1,000 tonnes per day. The trucks are fed by backhoes, which enable contract miners to keep dilution to a minimum.
The Caete plant, which was refurbished in 2003, employs conventional heap leaching and carbon-in-column technology. Although it has a design rate of 300,000 tonnes per year, Jaguar believes it can push 360,000 tonnes through the circuit, which should come in handy if other oxide deposits in the vicinity pan out.
Annual production is expected to top 25,000 oz., and cash costs, US$158 per oz.
By the time of the Miner’s visit, 1.7 kg of dor had been poured and 17,000 tonnes of oxide ore stockpiled. All dor will be shipped to Queiroz for refinement.
Sabara also hosts the A zone, 3 km southwest of zone B in the same rock units. The two differ in that the units are folded at zone A and more of the gold is held in banded iron formation there. The same lithologic units continue at depth, but underneath an adjacent property owned by AngloGold.
Infill drilling is under way in order to tighten historic drill spacings to 25 metres. About 2,000 metres are planned, and results for the first few holes are pending.
Assuming all goes well, starting in 2005, Jaguar will begin mining zone A and processing the material in a heap-leach facility to be built on site. The company envisages a daily mining rate of 1,500 tonnes, with feed augmented by other nearby oxide deposits, similar to Caete.
The remainder of Jaguar’s ground was largely acquired from AngloGold, CVRD and
The Paciencia property, which had been explored by the South African major in the early 1990s, accounts for about half of Jaguar’s sulphide resources, making it suitable as a stand-alone operation. As envisaged, the flotation plant will have the capacity to treat 1,500 tonnes per day and be operational in 2008.
As is the case elsewhere in the quadrangle, the sulphides were capped by oxides, though today this is only evident in the V-shaped gap left behind by garimpeiros.
Jaguar intends to pump out AngloGold’s old workings and follow up with a 10,900-metre program of underground infill drilling. A concurrent but smaller surface drill program will be undertaken as well, and all three programs are scheduled for completion by year-end.
As part of their deal, AngloGold retains a sliding-scale net smelter return royalty (NSR) on the optioned properties and a back-in right for 70% on some portions of Paciencia. The back-in right kicks in only if Jaguar discovers 750,000 oz. itself, and its triggering would reverse the NSR and require the major to pay US$10 per discovered ounce.
About 12 km of prospective strike remain unexplored at Paciencia, and mineralization remains open at depth. About half the strike length is excluded from the AngloGold deal.
The Santa Barbara property is where the second flotation plant will be. This one will be slightly smaller than Paciencia’s and have a rated capacity of 1,200 tonnes per day.
Between 1985 and 1994, CVRD sank 132 core and reverse-circulation (RC) holes at Santa Barbara to outline 2.01 million tonnes of measured and indicated sulphide resources grading 6.5 grams gold. The resource extends over a strike length of 750 metres and down-plunge for 500 metres, and remains open in all directions.
For instance, the deepest historic hole cut 5.51 metres grading 7.69 grams gold at a depth of about 130 metres below surface. Other highlights include:
— 8.62 grams over 9.21 metres (starting at 73.65 metres) in hole 1;
— 7.83 grams over 7.36 metres (at 72.78 metres) in hole 11;
— 11.2 grams over 15.14 metres (at 34.56 metres) in hole 37; and
— 16.98 grams over 4.57 metres (at 146.58 metres) in hole 44.
By year-end, Jaguar expects to be well-advanced in a 7,100-metre surface drill program and to have begun driving a ramp to expose the sulphide zone at 120 metres below surface. The ramp will be 600 metres long and branch off into 700 metres of drifts, from which about 1,600 metres of underground drilling are planned for late 2005.
Oxide resources
Santa Barbara also hosts 426,680 tonnes of oxide resources grading 3.4 grams. A mining permit is expected in the latter half of the year, by which time Jaguar will have decided whether to truck the material to Sao Bento or treat it at Caete, 33 km to the west.
In return for its interest, Jaguar paid US$1.1 million to CVRD and must spend US$2.4 million on the property over the next two years. The major also is entitled to US$7.48 for each additional measured or indicated ounce outlined before November 2005.
Rounding off Jaguar’s regional consolidation is Rio de Peixe, which lies northwest of Paciencia and south of Queiroz. The company acquired the project from Rio Tinto for US$175,000 in cash and US$110,500 in committed expenditures.
Between 1987 and 1991, Rio sank 15 core and 14 RC drill holes to outline about 675,000 tonnes of sulphide resources averaging 5.1 grams and 1.5 million tonnes of oxide resources grading 2.2 grams. The sulphides will be trucked 35 km to Queiroz, whereas the oxides will be treated in the Caete plant, which will be relocated.
Drilling and metallurgical testing will begin once the necessary permits are in-hand. The program is expected to take two years to complete, putting the startup date at 2007.
Jaguar has 18.9 million shares outstanding, giving it a market capitalization of roughly $614 million at recent trading ranges. Nearly half the shares are held by
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