UPDATE:Atacama Pacific grows Cerro Maricunga

Atacama Pacific Gold (ATM-V) is looking to expand its position in the dry highlands of Chile.

The company’s flagship property, the Cerro Maricunga Gold Project, sits in the Maricunga mineral belt which hosts roughly 100 million ounces of gold resources.

Some of the projects close to Cerro Maricunga include Kinross Gold’s (K-T, KGC-N) La Copia silver-gold mine, which is 20-km north, and its Lobo Marte project, which sits 30-km to the southeast.

Such neighbors, combined with solid results from Cerro Maricunga itself, has Atacama liking the area enough to extend its reach with an agreement to acquire the Santa Teresa gold property which lies within the boundaries of Cerro Maricunga.

To get the ground Atacama is paying $3 million over three years with a net smelter royalty of 1.5%. Atacama can buy back 50% of the royalty for $1 million.

And while it is closing that deal it is also looking to gain additional concessions to the northwest of Cerro Maricunga through an application process.

Cerro Maricunga, which sits 140-km by road east of the city of Copiapo, currently stretches out over 158.4 sq km.

Part of the reason for Atacama’s optimism can be found in the maiden resource estimate at the project, which was released in August of this year.

That estimate outlined indicated resources of 93 million tonnes grading 0.54 grams gold for 1.6 million oz. In the inferred category the company has another 117 million tonne grading 0.52 grams gold for 1.95 million oz.

That tonnage comes from three main zones, Lynx, Phoenix and Crux, and all mineralization is oxide-associated and breccia-hosted, which should make for easier and cheaper processing should the project become a mine.

Each of those three zones is defined by a mountain, with outcrop at the top and mineralization running between them. The zones have a 2.5 km strike length, a width of 400 metres and a depth of roughly 500 metres.

Atacama’s president and chief executive, Carl Hansen, says the deposit wasn’t discovered in the past because due to their not being porphyry related. With much of the gold mineralization in the region being in porphyries, prior exploration companies failed to notice what was on hand.

Gold mineralization at the project is associated with black banded silica veinlets and chlorite-magnetite-quartz veinlets. Both are primarily hosted in a central breccia complex.

Atacama was able to find the gold back in 2007 with the discovery of the Crux zone. It spent the next two years trying to de-risk the project as much as possible to get it ready for a public listing.

That came roughly a year ago, when the management team, which is largely made up of former Andina Minerals (ADM-V) executives, watched the stock go to the secondary market in the $2.90 range.

The tight capital structure – Atacama has only 47 million shares outstanding – the solid management team and the prospectiveness of the ground helped fuel a strong run with the share price reaching as high as $5.75 in August of this year. Its shares are currently trading for $4.08.

Atacama is both tightly held – 41% of its shares are held by either insiders, Gold Fields (GFI-N, GFI-J) or Kinross (K-T, KGC-N)- and well financed with $48 million in the bank.

As for Crux, while it has less tonnage than the other two zones, it has a higher grade at surface, which is generally in the 1 gram per tonne neighborhood.

The key to Cerro Maricunga’s future success, however, will not be grade but metallurgy.

Even at this relatively early stage, the company has been getting 89% recoveries from column tests.

Such excellent recoveries have to do with the oxide nature of the deposits and the gold being of very fine grain 98% pure gold.

That means that heap leaching the ores should be relatively smooth as when cyanide hits the ore the gold dissolves right away.

As for the latest Santa Teresa acquisition, the company says the property covers a series of dacitic and andesitic stocks intruding volcanic and sedimentary rocks similar to those formations and lithologies at La Copia mine.

A preliminary look at the ground by Atacama showed areas of black banded quartz veining which returned assays from trace to 0.49 grams per tonne gold over 2 metres.
It was also allowed to do a channel sample which cut across a 0.30 metre iron carbonate quartz vein and returned 4.20 grams gold per tonne.

The company says the iron carbonate quartz vein is associated with a major fault cutting a thin veneer of limestone overlying volcanic and sedimentary rocks.

While Cominco did some preliminary exploration at Santa Teresa in the late 1990s, the work was limited to a geophysical study and no drilling was done.

As part of its $24 million budget for the third phase of exploration, Atacama says mapping, trenching and sampling at Santa Teresa will get done with the goal of defining targets for drilling during the second quarter of 2012.