Anaconda drills high-grade iron ore at San Gabriel (November 05, 2007)

When Rio Tinto (RTP-N, RIO-L) found iron oxide copper-gold deposits 1,000 km north of Santiago, Chile, 10 years ago, it completed 11 reverse-circulation (RC) drill holes targeting magnetic anomalies. But the base metals giant decided that the iron ore mineralization it saw on the San Gabriel property didn’t meet its threshold of interest and returned it to the vendors.

Today, drilling by the property’s new owners, Canadian junior Anaconda Mining (ANX-T, ANXGF-O), has achieved some significant results. Since Anaconda acquired the right to earn a 100% interest in the property for US$2.4 million in September, two of the five holes it has drilled on a magnetic anomaly intersected high-grade iron ore.

Hole RSGA-05 intersected 62 metres grading 42% iron, including a 22-metre section that averaged 62.17% iron.

A second hole, RSGA-04, returned 84 metres grading 35.3% iron, including a 24-metre interval assaying 52.4% iron.

The San Gabriel prospect consists of 17 sq. km of exploration concessions and includes four magnetic anomalies. Rio drilled two of the four in 1997.

The prospect is an iron-magnetite skarn associated with dioritic intrusives of Jurassic to lower-Cretaceous age and which intruded andesitic volcanic sequences.

This type of skarn-related deposit is common along the coastal region stretching from Chile and Peru; Anaconda says the deposits can range from a few million tonnes to billion-tonne orebodies, such as Marcona in Peru.

The main zone of the magnetic anomaly on the deposit is known to have a strike length of 1,000 metres and remains open at depth below 300 metres.

Given its proximity to the coastal city of Chanaral, an iron ore mine at San Gabriel would be in a good position to export its concentrate to Asian markets.