Atacama drills deep into Chile

Carl Hansen is a big fan of the Maricunga mineral belt in Chile’s Atacama region, high in the Andes.

The president and CEO of Atacama Pacific (ATM-V) is advancing the company’s wholly owned Cerro Maricunga gold project, which is just 40 km north of the Volcan deposit being developed by Andina Minerals (ADM-V), a company Hansen co-founded in 2004 and where he served as CEO until January 2009.  

Atacama’s flagship Cerro Maricunga property is situated in a pretty exclusive neighbourhood within the Maricunga gold belt. The oxide gold project is 20 km south of Kinross Gold’s (K-T, KGC-N) La Coipa mine, 60 km north of its Maricunga mine and 30 km northwest of its Lobo-Marte deposit. The prolific belt is also home to Cerro Casale, a project jointly owned by Kinross and Barrick Gold (ABX-T, ABX-N).

 “We’ve been working on and off in the Maricunga belt for our entire careers,” Hansen told The Northern Miner. “No one knows this area like our guys.”  

Cerro Maricunga has characteristics similar to other deposits in the belt, but it’s also unique, he says. “There are no other deeply weathered deposits like Cerro Maricunga in the belt. And typically mineralization in the area is porphyry related, whereas this deposit doesn’t have an obvious porphyry relationship.” That partially explains why there is no copper or molybdenum in the deposit. “It’s more a brecciated-hosted than porphyry-related deposit, which may explain why it is so deeply oxidized,” he adds.  “It is one of a kind for South America.”

The 25-year veteran geologist should know. Prior to co-founding Andina Minerals in 2004, Hansen held senior positions with TVX Gold, an Eike Batista-controlled company that had projects around the world including Chile, Czech Republic, Mexico, Greece and Nicaragua. After Kinross bought TVX in 2003, Hansen and several colleagues asked themselves where they would be prepared to invest and drew up a short list. Chile topped the list with its vast mineral potential and political stability.

“Chile was a place where we were comfortable working over the years,” he says. “Considering the things we had to deal with internationally [at TVX], we were more comfortable spending our own money in Chile. It is a stable place to explore, permit and develop.” Indeed Atacama management drilled eight holes on their own dime while it was still a private company. It didn’t go public until November 2010.

The key to Cerro Maricunga, Hansen explains, is that it is deeply oxidized.  “We have not found the base of oxidization yet and our deepest hole is 500 metres below surface, which makes it an unusual deposit,” he says. “The depth of oxidization is almost unheard of — especially in these areas. Nevada has deep oxidized deposits, but Cerro Maricunga is unusual for this part of the world.”

Hansen also notes that the project demonstrates fairly good metallurgy. The company is achieving 80% recoveries on a course crush of 19 millimetres. And it’s fast. “Within twenty days we recover 85% of the gold we’re going to recover,” he elaborates. “There are guys out there running leach pads for a year or more. Cerro Maricunga metallurgy is good mainly because it is oxidized and is a fairly clean deposit.”

Hansen says it’s reasonable to believe that Cerro Maricunga—which will likely be a heap-leach project — is the largest undeveloped oxide deposit in the world. According to a maiden resource estimate completed in August 2011, indicated resources at a cut-off grade of 0.3 gram gold per tonne stand at 92.8 million tonnes grading 0.54 gram gold per tonne for 1.62 million contained oz. gold. Inferred resources add 116.7 million tonnes grading 0.52 gram gold per tonne for 1.95 million contained oz. gold in inferred.

Atacama plans to release an updated resource estimate in August based on 129 drill holes — the first resource was based on 90 holes — and earlier this month management announced that it would postpone releasing a preliminary economic assessment (PEA) until the fourth quarter so that it can fold the updated resource figures into the PEA. The delay will also allow more metallurgical testing at crush sizes reaching 15 centimetres, as well as assess the potential of using one of the large valleys adjacent to the deposit for a valley fill, heap-leach processing area.

The Toronto-based company completed 46,000 metres during the third phase of its drill program, which is 4,000 metres more than it had planned owing to good weather conditions and better-than-projected, reverse-circulation drill rates. In total it drilled 38 diamond drill holes (14,400 metres) and 91 reverse-circulation holes (31,600 metres). Since drilling began in 2010, Atacama has completed 79,600 metres.

On June 7 the company released more drill results with highlights including 124 metres grading 1.10 gram gold per tonne in the Cruz zone, 230 metres of 0.55 gram gold in the Phoenix zone, 50 metres grading 1.04 grams gold in the Lower East zone and 90 metres of 0.49 gram gold, including 18 metres of 1 gram gold in a new zone. All remaining assay results should be available prior to the end of June.

The company also noted that it has discovered new areas of oxide gold mineralization off the main Cerro Maricunga trend, which it claims opens the potential of the 2.5-by-2-km Cerro Maricunga volcanic complex.

According to its October 2011 technical report, gold mineralization at Cerro Maricunga is largely associated within zones of black-banded (grey) quartz veinlets, which are developed within or flanking phreatic, phreatomagmatic, volcanic or hydrothermal breccias associated with domal porphyritic, Miocene dacitic-andesitic intrusives.

Atacama controls the surface rights at and around the project, and there is more-than-adequate operating room for a mining operation there.

It also notes that “apart from minor secondary roads, there are virtually no infrastructure nor inhabitants in close proximity to the Maricunga area.” Personnel will have to stay in camps and all food supplies transported 140 km to the nearest city, Copiapo, the capital of Copiapo province and the Atacama region.

Electric power is not available at site but grid power is available to the La Coipa and nearby Can-can mines. If power can’t be sourced from those locations, the company says, it will have to be brought in using high-tension power lines from outside Copiapo.

The company purchased and trucked water from Copiapo for its phase 1–111 drill programs. In March it announced that it had signed an option agreement with AMX de Chile S.A. to explore and acquire water-use rights on contiguous water-exploration concessions covering 2,670 sq. km. The concessions are 95 km north of the project.

In addition to Cerro Maricunga, Atacama Pacific owns five other properties in Chile, four of which are within close proximity Cerro Maricunga.   

Over the last year Atacama Pacific has traded within a range of $2.60–$6.14 per share. At presstime it traded at $3.03.

Insiders own 42% of the company, Kinross has a 6% stake, Gold Fields (GFI-N) has 11%, and the company has strong, institutional support.

“We’ve actually done very well,” Hansen says. “That’s largely a result of our track record — we’ve had a long history of success in this part of the world. But it’s also because Atacama spent three years de-risking this project before we went public.”