Gastre, Argentina —
Aquiline’s Argentine subsidiary filed a legal claim for Navidad in the Supreme Court of British Columbia in early March, asserting that IMA unlawfully used confidential regional exploration data to identify and acquire the Navidad project. Navidad is a promising grassroots silver-lead discovery that IMA’s geologists found in December 2002 while conducting preliminary “boot-and-hammer” field investigations in the north-central region of Chubut province.
The project was initially promoted based on a series of narrow metalliferous structures discovered along the crest of Navidad Hill, which yielded spectacular, bonanza-grade silver numbers (up to 50,520 grams per tonne, or 1,475 oz. per ton) in individual surface grab samples. Evidence now exists of a more extensive and widespread style of stratabound, replacement “galena matrix breccia” mineralization, exposed along trend to the southeast on Galena Hill and, to a lesser degree, on Barite Hill. This corridor of silver-lead mineralization runs at least 3 km long.
Aquiline owns the rights to the Calcatreu gold-silver project in the neighbouring Rio Negro province, 40 km northwest of the Navidad discovery. Aquiline acquired the project from
Calcatreu covers a large land package totalling 730 sq. km centred on a low-sulphidation, epithermal gold system. Gold-bearing mineralization was discovered in the Calcatreu area by LaSource Developpement Argentina in late 1997, when a geologist sampled quartz float along the roadside. The project passed to Normandy Mining of Australia when that company purchased LaSource from the French government in 1998.
Follow-up work from the float samples led to the discovery of mineralized vein systems at 11 different prospective areas of the project. With a strike length exceeding 2 km and widths of up to 20 metres, the near-surface Vein 49/Nelson prospect has been the most intensely explored. Past field work included ground geophysics, trenching, soil sampling, prospecting and chip sampling. Normandy completed 51 holes in four rounds of drilling between 1999 and 2001 to outline a resource, in the Vein 49/Nelson area, of 5.6 million tonnes grading 2.97 grams gold and 26 grams silver, equivalent to 531,000 oz. gold and 4.6 million oz. silver.
Aquiline has since updated those numbers with an independently prepared estimate containing an indicated 1.4 million tonnes of 4.99 grams gold and 39 grams silver, or 217,600 oz. gold and 1.7 million oz. silver, plus an inferred 4.5 million tonnes grading 2.83 grams gold and 26.9 grams silver, for an additional 411,400 oz. gold and 3.9 million oz. silver.
As part of a regional campaign, Normandy completed reconnaissance stream-sediment sampling consisting of 429 BLEG (bulk leach extractable gold) samples collected at an average spacing of 5 sq. km per sample across large parts of Rio Negro and northern Chubut.
Through its acquisition of Normandy in 2002, Newmont acquired the Calcatreu project, only to put it up for sale in September 2002. IMA was apparently one of at least 10 companies that reviewed the project and signed a confidentiality agreement. IMA, however, did not bid on the project. According to IMA President Joseph Grosso, the confidentiality agreement extends only for a 2-km buffer zone around the Calcatreu land package.
Aquiline signed a letter-of-intent with Newmont regarding Calcatreu in January 2003, and by July the deal was altered to include the assets of Newmont’s Argentine operating company Minera Normandy Argentina for an additional $85,000. These assets include an exploration database, office, staff and 7 million pesos’ worth of tax losses. The company was subsequently renamed Minera Aquiline Argentina.
Aquiline contends that the issue at hand relates to “confidential” regional geochemical BLEG sampling data acquired by IMA during the bidding process for Calcatreu. On a second visit to the Calcatreu project in late October 2003, Aquiline claims Paul Lhotka, an authorized IMA representative, and Keith Patterson, IMA’s exploration manager, were provided with Minera Normandy’s regional sampling data in an electronic format. IMA’s geologists left with the data, after downloading it into a personal laptop.
In a statement of claim, Aquiline says: “The regional exploration data was provided to IMA in confidence, to be used solely for the purpose of evaluating the Calcatreu project and, as a result, IMA owed Minera a duty to maintain the confidence of the regional exploration data and use [the data] for the sole purpose of evaluating its potential bid for the Calcatreu project.”
Aquiline says the database covers a large area of northern Chubut province, including the Navidad discovery area, as well as all the other claims subsequently staked by IMA in early January 2003. Aquiline contends IMA used the regional BLEG database to zero-in on the Navidad area.
“The staking and registering by IMA of the Navidad claims constituted a breach of contract and a breach of the duty of confidentiality,” claims Aquiline.
In a statement of defence filed in early April, IMA countered that Newmont, not Aquiline, was the owner of the alleged regional exploration data and that therefore Minera Aquiline Argentina has no standing or right to commence or maintain this action against IMA.
“Newmont congratulated us in a memo for the discovery of Navidad,” says IMA President Joseph Grosso.
From the time Aquiline announced its intent to purchase Calcatreu, in late January 2003, to when the junior reported that it had executed a supplemental agreement to purchase all the assets of Minera Normandy Argentine, in early June of the same year, IMA had put out seven news releases pertaining to the Navidad discovery.
Furthermore, IMA says it was given the regional BLEG silver-lead data on a non-confidential, unrestrictive basis by Carlos Cuburu, Newmont’s senior geologist at Calcatreu. “At that time, Mr. Cuburu expressly acknowledged that the silver-lead BLEG data did not pertain to the Calcatreu project and was not covered by the confidentiality agreement.” IMA believes it was free to use the BLEG data as it saw fit.
Cuburu copied the BLEG data on to a blank computer disk and gave it to Lhotka and Patterson, near the conclusion of their visit. “The silver-lead BLEG data related to regions outside the Calcatreu project boundaries, which Normandy, Newmont and Minera had previously investigated and determined to be of no interest,” says IMA in its defence. “In or about January and February 2002, Normandy, Newmont and Minera expressly noted significant anomalies in the silver-lead BLEG data at, and in the immediate vicinity of, Navidad, conducted follow-up site investigations at the Navidad area, and concluded that it was a region not worth pursuing.”
IMA says Normandy, Newmont and Minera did not treat the BLEG data as confidential or expect others to treat the data as such. “Their respective employees, consultants and contractors disclosed and disseminated the silver-lead BLEG data to others without any restrictions as to use or notice of alleged confidentiality.”
IMA further states: “At all material times, Normandy, Newmont and Minera considered the silver-lead BLEG data to be of negligible value and that the region pertained to, including the Navidad property, was of no value or interest to them. . . . Mr. Cuburu knew or ought to have known that IMA was engaged in extensive mineral exploration in the region generally and that IMA’s interest in the region was not restricted to the Calcatreu project.”
Field work
IMA has been exploring for gold in Argentina and Peru for the past decade, under the guidance of Grosso, who founded the company in 1993. Grosso says the company first investigated the potential of the Patagonia region in 1995 and has been carrying out extensive field exploration in Chubut province since 2001. Some six months before signing the Calcatreu confidentiality agreement with Newmont, IMA’s geologists had identified prospective target areas in northern Chubut, based on regional samples anomalous in silver, lead and zinc, with some gold, Grosso tells The Northern Miner. The findings and recommendations are documented in an April 2002 company report.
In late 2002 and early 2003, IMA staked several properties covering some 1,760 sq. km of favourable geology over a 100-km distance in the central Chubut province. The company farmed out the 200-sq.-km Regalo gold property to Guilford Brett’s
In addition, IMA sold three mineral properties totalling 242 sq. km to
Navidad
The Navidad project is midway between the towns of Gastre, 40 km to the west, with a population of 500, and Gan Gan, about the same distance to the east. The administrative unit is the Department of Gastre, which is one of the largest and least-populated departments or counties in Chubut province. Locally, the only significant economic activity is government services and sheep farming.
The region does have a bit of mining history. The former-producing Mina Angela is 30 km northeast of Gastre. Mina Angela operated intermittently between 1920 and 1992, producing 1.2 million tonnes of ore from a series of polymetallic epithermal veins grading 4 grams gold and 48 grams silver per tonne, plus 2% lead, 0.4% copper and 4.6% zinc.
The nearest railhead is a 2-hour drive to the north at Ingenerio Jacobacci in the province of Rio Negro. Ingenerio Jacobacci is a much larger town than Gastre, with better services, including banking. From Ingenerio Jacobacci, it is another three and a half hours to Bariloche, a city with multiple daily flights and a centre for tourism year-round.
The city of Esquel is a 4-hour drive to the southwest by gravel road. (Esquel is where
A high-voltage power line passing 50 km south of the Navidad project connects a hydro dam at the Futaleufu site to an aluminum smelter at Puerto Madryn, an Atlantic deep sea port with shipping facilities, 335 km to the east. It is an approximate 7-hour drive, mostly on gravel roads, from Gastre to the Atlantic coast.
The Navidad discovery occurs less than 1 km off a main gravel road in a tree-less, semi-arid part of the Patagonia in a fairly gentle and rolling environment. Elevation on the property ranges from 1,060 to 1,460 metres. From the road, the discovery area is pretty nondescript. No gossan or alteration are visible.
“A prospecting discovery of this type seems unthinkable in the exploration industry in this day and age, especially within a few hundred metres of a provincial highway, until the lack of mining and prospecting tradition in Patagonia is accepted,” states Lhotka in a September 2003 technical report. What makes the find even more remarkable are the high-grade boulders of rock containing green copper staining, which were used to prop up fence posts on top of Navidad Hill. Argentine geologist Daniel Bussandri, who walked over Navidad Hill and took the original samples, is credited with the discovery.
The discovery area is described by Lhotka as having no known exploration history, with no indication that any of the showings were previously discovered or sampled. The only nearby sign of previous activity lies about 3 km northwest of Navidad Hill, where some barite veins had been exposed in trenching, done about 20 years ago.
Map-staked
IMA immediately map-staked a 10-by-10-sq.-km claim, or cateo, upon making the Navidad discovery in early December 2002. All staking in Argentina is done on paper. Title to the Navidad cateo is held through IMA’s Argentine subsidiary, Inversiones Mineras Argentinas. Surface rights, which are not included, are held by two separate landowners who use the area for sheep grazing. IMA has obtained written consent from the two surface owners to carry out all necessary field exploration, including trenching and drilling. The company is completing a definitive agreement with the landowners.
The provincial Chubut government retains an underlying royalty on all mineral properties, which ranges from 0% to 3% of the value of production less certain deductions. Mineral properties in Argentina are maintained by paying property taxes and incurring exploration and development expenses, and by “perfecting” the mining title to greater degrees of certainty. Grosso says government approval of a mining licence now hinges on local support for the project.
The Navidad project centres on a 6-km-long northwest-southeast- oriented string of hills individually referred to as Calcite, Navidad, Galena and Barite. Since drilling began at Navidad in early December 2003, IMA has completed 53 diamond drill holes of HQ-size (63.5-mm diameter) core for a total of 8,853 metres. Most of the drilling (37 holes) has targeted Galena Hill, where IMA partially drilled off a near-surface, flat-lying, tabular-like bulk-tonnage target with open-pit potential.
IMA drilled the first two holes on Navidad Hill before turning to Galena Hill with the next three. IMA’s geologists had originally identified two styles of breccia mineralization in showings along the sides of Galena Hill. Bonanza silver grades were found in the Papa Noel sub-area in a thin cover of malachite-bearing carapace breccia exposed on the northwestern side in a couple of areas measuring 118 by 46 metres and 55 by 16 metres. There, 95 selective chip samples averaged 958 grams silver per tonne (27.9 oz. per ton), 1.53% lead, 0.4% copper and 0.11% zinc.
T-shape
More extensive galena matrix breccia was uncovered in numerous small showings in a 475-by-90-metre area, known as the 2155 sub-area, on the southwestern flank of Galena Hill. In total, 146 chip samples collected from this area averaged 117 grams (3.4 oz.) silver, 6.32% lead, 0.11% zinc and trace copper. A small portion of the area was hand-stripped and sampled in detail. Chip and panel sampling along a “T-shaped” trench delivered length-weighted averages of 29.7 metres grading 131 grams (3.8 oz.) silver and 7.36% lead, plus 22.5 metres grading 141 grams (4.1 oz.) and 5.25% lead.
Hole 3, which was the first drilled at Galena Hill, clipped the zone’s southern margin, returning 175 metres of mineralized volcanic breccia averaging 26.2 grams (0.76 oz.) silver and 1.35% lead, starting from surface, including a 35-metre section of 49.9 grams (1.4 oz.) silver and 3.47% lead at down-hole depths of 72-107 metres. The rig was then swung around and aimed in the opposite direction, toward the northeast, at minus 45. Hole 4 cut 264 metres of volcanic breccia (to a vertical depth of 180 metres) averaging 74.1 grams (2.2 oz.) silver and 2.04% lead, including 81.6 metres of 141 grams (4.1 oz.) silver and 3.15% lead at 39.6-121.1 metres down-hole.
Angled at minus 65, hole 5 was drilled on the same section, 132 metres to the northeast, and returned 83 metres grading 229 grams (6.7 oz.) silver and 4.24% lead starting at 43 metres down-hole. This hole is highlighted by an 18.3-metre section averaging 503 grams (14.7 oz.) silver, 11.2% lead and 0.36% zinc.
IMA has since drilled off a core area of the deposit measuring 400 metres long by 300 metres wide, with a thickness ranging from 30 to 120 metres. The holes have been drilled on roughly 80-to-100-metre centres. The silver-lead mineralization extends well beyond these boundaries but thins to less than 10 metres, with weakening silver grades.
The best results from Galena Hill so far include the following:
— Hole 14 delivered 115 metres averaging 454 grams (13.2 oz.) silver, 5.26% lead and 0.5% zinc starting at 28 metres down-hole, including an 18-metre section averaging 1,421 grams (41.4 oz.) silver, 5.24% lead, 1.69% zinc and 0.42% copper at 33-51 metres down-hole. The higher-grade copper-bearing section spans the contact between pyritic mudstones and underlying mineralized volcanic breccia, and may represent the subsurface equivalent of copper-bearing carapace breccia.
— Hole 22 intersected 63 metres of 418 grams (12.2 oz.) silver, 1.82% lead, 0.32% zinc and 0.15% copper starting at 39 metres down-hole.
— Hole 44 cut 90.5 metres grading 178 grams (5.2 oz.) silver, 5.33% lead and 0.22% zinc at 13 metres from surface.
— Hole 50 hit 80.2 metres of 255 grams silver (7.4 oz.) silver, 0.93% lead, 0.19% zinc and 0.14% copper starting at 21 metres down-hole.
— Hole 13 pulled a 44.7-metre interval averaging 223 grams (6.5 oz.) silver, 0.56% lead, 0.09% zinc and 0.16% copper starting at a down-hole depth of 20 metres.
A complete summary of the 37 holes sunk at Galena Hill is provided in the accompanying table. The results are presented section-by-section in a west-to-east direction across the deposit.
30 million tonnes plus
Using a specific gravity of 2.9, a quick, back-of-the-envelope calculation indicates Galena Hill has the potential to contain a resource of at least 23 million tonnes of mineralization, based on core dimensions of 400 by 300 metres and an average thickness of 65 metres. Graeme Currie, an analyst with Canaccord Capital, suggests Galena Hill could exceed 30 million tonnes and hold more than 140 million oz. of in situ silver, assuming an average grade of about 150 grams.
IMA has engaged Snowden Mining Industry Consultants to help prepare a preliminary resource estimate, which is expected to be completed sometime this month. “We have a pretty significant resource in terms of grade and ounces,” Lhotka says confidently. IMA has also initiated preliminary metallurgical flotation tests on composite drill core samples. Lhotka is optimistic a bulk concentrate with a high silver content is feasible.
Preliminary petrographic studies were done on 11 hand specimens collected from surface, but this work was hampered by the oxidized nature of the surface samples. Samples of the galena matrix breccia were found to contain fragments of volcanic rock in matrices containing quartz, barite and galena. Traces of pyrite and pyrrhotite were found in one sample. No discrete silver-bearing minerals could be identified.
Two strongly oxidized samples from the bonanza-grade, copper-bearing breccia veins contained discrete silver-bearing phases and various supergene copper-bearing phases, including sulphate, arsenate, oxide, carbonate and silicate, as well as chalcocite, rare covellite and possible trace bornite. Argentite-acanthite is common and locally abundant.
Arsenic, antimony and mercury are present in anomalous amounts in the high-grade metalliferous structures.
Geology
The 6-km-long series of hills that make up the mineralized trend are mapped as a gently dipping sequence of mixed calcareous sedimentary rocks and volcanic domes, flows and breccias of the Upper Jurassic Canadon Asfalto Formation. Much of the remainder of the Navidad project is underlain by the Lonco Trapial formation of Lower Jurassic age and by a poorly defined basement of Paleozoic granitic rocks. There are signs that a major, long-lived, northwest-striking structure, known as the Gastre fault, cut through the project area.
There is a strong stratigraphic control to the mineralization, with a definite base to the bottom. At Galena Hill, replacement-style galena matrix mineralization is confined to a volcanic-flow breccia unit capped by calcareous, pyritic black shales and limestones. Often, a thin massive-sulphide lens of about 1 metre is found at the contact between the volcanic breccia and the black shales, indicating a syn-sedimentary deposition of sulphides. Says Lhotka: “The system was coming up through these things and developed as the volcanic pile was growing, then continued as the volcanism ceased and actually vented.” The volcanic breccia host overlies an unmineralized volcaniclastic package that is marked by a discontinuity boundary of lateritic weathering along the contact.
Lhotka believes IMA is dealing with some type of sub-aqueous, high-level epithermal volcanogenic massive-sulphide hybrid, marked by the absence of gold despite the high silver values. It is of a type not previously recognized anywhere in the Patagonia, with few good analogs worldwide, says Keith Patterson.
There is a strong zoning pattern evident toward the northeastern side of Galena Hill. The pattern is associated with an interpreted growth fault structure, which may run parallel to the trend of the four hills. “It’s a healed structure, with veining and alteration,” explained Lhotka. It may have acted as a fluid deposition conduit. There is a strong increase in silver and copper grades, as is evident in holes 13, 21 and 22. The silver-to-lead ratio drops off, moving away from the structure out to the southwest.
Across the valley on the southwestern side, IMA sunk one wildcat hole into a parallel linear structure called the Esperanza trend. Angled at minus 45, hole 25 intersected a narrow zone of calcite-barite veining and stringers grading 303 grams (8.8 oz.) silver and 0.31% lead across 8 metres at a depth of 163 metres down-hole. “We don’t really understand the context, either structurally or stratigraphically, but it’s a major break that shows up in the mag data, the resisitivity, chargeability and gravity for a strike length of 5-6 km,” says Lhotka.
An induced-polarization survey of the project area shows a 1.6-by-1.3-km area of anomalous chargeability extending from Navidad to Galena Hill and out to the southeast under the valley cover. IMA drilled two holes, 18 and 35, out into the valley cover between Galena Hill and the Esperanza trend. Hole 35 was dead, whereas hole 18 intersected 12 metres of 70 grams (2 oz.) silver and 0.4% lead at a depth of 232 metres down-hole.
Zoning pattern
More precise pole-dipole IP over Galena Hill shows good correlation between elevated chargeabilities and drilled mineralization. IMA has completed pole-dipole IP on more than 40% of the grid to date. “Although the geophysics are great, and they really define Galena Hill well, just because you don’t have chargeability doesn’t mean you don’t have silver potential,” notes Lhotka. IMA has found that the zoning pattern of increasing silver grades accompanied by declining pyrite and galena content along the northwestern edge make for a poor geophysical target.
The 800-metre-long corridor between Galena and Navidad was tested with five widely spaced holes. Three of the holes intercepted what IMA calls the Connector zone. Hole 32 intercepted 49.5 metres grading 77.9 grams (2.3 oz.) silver and 0.14% lead starting at 46.5 metres down-hole. Hole 40 stepped out 200 metres away and hit 48 metres of 108 grams (3.2 oz.) silver and 0.22% lead starting at 43.2 metres depth, while hole 34, another 200 metres to the west, hit 18.7 metres of 75.1 grams (2.2 oz.) silver and 0.14% lead, at 10.5 metres from surface.
IMA has taken the recent break from drilling to carry out detailed geology work on targeted areas at Navidad, including an expanded soil grid on the northern side of the Esperanza trend and additional pole-dipole IP work over areas to be drilled in an upcoming 8,000-to-10,000-metre program. The focus of the next phase will be on the Navidad and Barite Hills, as well as Calcite Hill.
During the first pass of drilling, IMA completed eight holes at Navidad, and these tested 80 metres of the 475-metre mineralized strike length. The holes were designed to undercut a series of exposed, bonanza-grade structures that averaged 5,546 grams (162 oz.) silver, 9.8% lead and 3.8% copper in 119 selected surface chip samples. At least 18 separate structures, ranging in thickness from 0.2 to 3.3 metres, were mapped by IMA’s geologists in a northwest-trending corridor measuring 475 metres long by 60-140 metres wide.
The first hole, drilled on the southeastern flank of Navidad at minus 45, intersected 58.4 metres averaging 111 grams (3.2 oz.) silver, 0.22% copper, 0.06% lead and 0.07% zinc from surface. The hole intersected a narrow, discrete bonanza-grade section grading 2,677 grams (78 oz.) silver, 3.07% copper, 0.3% lead and 0.24% zinc across 0.8 metre at 15.7 metres down-hole.
From the results, it was apparent that mineralization on Navidad Hill occurs predominantly as broad areas of stockwork and breccia, rather as narrow structures, as originally thought. The results, none the less, were impressive. Highlights included:
q 48 metres of 97.8 grams (2.8 oz.) silver, including 1.05 metres of 1,320 grams (39 oz.) in hole 2, 60 metres of 162 grams (4.7 oz.) silver in hole 6, 84 metres of 247 grams (7.2 oz.) silver, including 2.4 metres of 2129 grams (62 oz.) in hole 7; 143 metres of 146 grams (4.2 oz.) silver [including 1.7 metres of 3,042 grams (89 oz.) in hole 8; 82 metres of 125 grams (3.7 oz.) silver including 0.7 metre of 5,067 grams (148 oz.) in hole 9; and 75 metres of 111 grams (3.2 oz.) silver in hole 10.
Soil sampling was previously done over a gridded area about 6 km long by 1 km wide, from which 959 samples were collected. The average of 649 samples, which yielded silver values at or greater than the detection limit, is 6.2 grams. The silver-in-soils run as high as 531 grams. A large intense silver anomaly overlies Navidad Hill and joins with a somewhat smaller, weakening silver anomaly on the Papa Noel sub-area of Galena Hill. Farther to the south, a smaller, weaker silver anomaly exists in the 2155 sub-area of Galena Hill, followed by another large anomaly of moderate intensity coinciding with Barite Hill. Additional silver-in-soil anomalies are defined at Calcite Hill, 1 km or more northwest of Navidad Hill, in an area that has seen limited prospecting. These anomalies are comparable in size and intensity to those at Navidad and Galena Hills, and are open to the north.
“We have found a bit of mineralization at Calcite Hill but not enough to explain the soil values,” says Patterson. “There is a good silver anomaly and a big booming lead anomaly there. It’s completely untested.”Lead is highly anomalous over the entire grid area, ranging from a low of 10 to 23,900 parts per million (2.39%), with an average of 692 ppm. A definite anomaly is present along the southwestern margin of the Papa Noel sub-area of Galena Hill. A large anomaly is centred over Barite Hill, whereas strong, open-ended lead-in-soil anomalies occur at Calcite Hill. The response at Navidad Hill is not particularly strong, notes Lhotka, when compared with the 2155 sub-area.Copper-in-soils range from a low of 3 to 2,360 ppm, for an average of 55 ppm. Copper values are strongest over Navidad Hill and the Papa Noel part of Galena Hill. Smaller and weaker copper anomalies occur at Barite Hill and also at Calcite Hill.At Barite Hill, IMA’s geologists have mapped galena matrix breccia exposed over an area of 700 by 300 metres. Selective surface sampling averaged 95 grams silver and 3.84% lead for 74 samples collected from a 200-by-100-metre oval-shaped sub-area of Barite Hill. “We could have the same scenario of Galena Hill repeated at Barite Hill, but we don’t have a single hole in this yet,” explains Patterson.Preparations are under way to begin the next round of drilling on Navidad, and IMA has proposed spinning out the rest of its exploration property portfolio into a newly created company called Newco. IMA is concerned Navidad is overshadowing its portfolio and that it is receiving little or no market value for its other projects. Shareholders would receive one share of Newco for every 10 shares of IMA held. This reorganization plan will be presented to shareholders at the annual meeting in June.
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