Amazon Mining explores Brazil for gold and diamonds

Amazon Mining (AMZ-V) has assembled a stable of five early-stage projects in Brazil, four of which are gold-focused, and the fifth is a diamond prospect.

Possibly the highest-profile one is the 860-hectare Lavras project in Minas Gerais state, located 10 km from the Kinross Gold (K-T) Paracatu mine. The Kinross-owned mine has a low-grade deposit with proven and probable reserves of 18 million oz. gold grading 0.39 gram per tonne. Amazon’s management hopes that the ore horizon from the Paracatu mine extends to Amazon’s Lavras property, and has completed an 8-hole diamond drilling program, for a total of 1,165 metres. Results are pending. Beside the site’s proximity to the Paracatu mine, management says that what makes the site prospective is the extensive surface gold production that took place on the property in the 18th century. Furthermore, mineralization occurs in boudins structures, similar to the mineralization at Paracatu mine.

Cristiano Veloso, Amazon’s president, says that the existing soft-ore mill at Paracatu mine has spare capacity, so if a discovery is made on the Lavras project, he believes that ore could be trucked 10 km to the mill for processing. The project is located 2 km from the town of Paracatu, and infrastructure in the area is good. The company has an acquisition agreement in place for 100% of the property.

The second property with an active exploration program is the 9100-hectare Tocantins gold project, in the state of Tocantins. It lies within an archean greenstone belt. Gold was first discovered on the property in the 18th century. In the 1980’s, garimpeiros (artisinal miners) mined gold from alluvial and saprolite deposits via shallow pits and shafts. In the 1990’s, Brazil’s CVRD explored the property, completing 9,000 metres of reverse-circulation drilling. Amazon reports good infrastructure and road access nearby.

The company has come up with a new geological model for the project, describing the property as hosting hinge zones of major folds. To test the new model, Amazon conducted an exploration program in 2006, including ground magnetic surveys and 82 rotary air blast drill holes totaling 1,221 metres. The program showed continuity of hinge zones of major folds beneath the laterite cover, which is present over two thirds of the property.

A drill program of 12 holes totaling 1,730 metres was completed this year. The company highlights hole 8, intersecting 2 metres of 19 grams gold per tonne at a depth of 107 metres, and hole 9, which cut 17 metres of 3.9 grams gold per tonne at a depth of 80 metres, including 4 metres of 9 grams gold per tonne and 2 metres of 11 grams gold per tonne. The same hole also intersected 5 metres of 2.6 grams gold per tonne at a depth of 66 metres.

The company says that the drilling shows continuity of mineralization, and the results correlate with the historic CVRD drill holes. Exploration continues along the same trend which has been drilled, and which is believed to be a limb of a major hinge structure. Exploration has also started within a target area of 4 km by 4 km covered by laterite, where previous exploration work indicated the presence of a major “nose fold” structure. An auger drilling campaign is underway in this target area.

Commenting on the results, Amazon’s vice-president of exploration, Oscar Yokoi, said: “The gold mineralization at Tocantins is associated with sulphide and sometimes magnetite-rich quartz-veined horizons hosted by deformed mafic and felsic volcanics predominantly covered by laterite.”

Amazon’s diamond prospect is the Terra Branca alluvial diamond project in the state of Minas Gerais, located 25 km downstream from the Duas Barras alluvial diamond mine of Vaaldiam Resources (VAA-T). The company has an exclusive option to acquire 100% in 1582 hectares lying along 90 km of the Jequitinhonha river. (The Vaaldiam-owned mine is projected to produce 61,000 carats in 2008, with an average value of $163 per carat.)

Amazon has two more gold projects in the pipeline. The Castello dos Sonhos gold project is in the state of Para, and is located in an area with a significant historic gold production. It covers 76,000 hectares, and Amazon signed a letter of intent with Osisko Exploration (OSK-T) to acquire the project in exchange for Amazon shares. The Madeira gold project is located in the states of Rondonia and Amazonas, in an area of significant gold production. Amazon has a new geological interpretation on the project, which covers 217,000 hectares.

The company reported a working capital position of about 6 million pounds sterling (equal to about $12 million) as of March 31.