Infill drilling by
The resource now stands at 122 million tonnes grading 1.85 grams gold per tonne, equivalent to 7.3 million contained ounces of gold.
In April, Barrick announced what it called “a significant gold discovery” at Alto Chicama, and reported an in-house estimate of 55 million tonnes of inferred material running 1.95 grams gold per tonne, equivalent to 3.5 million contained ounces. The estimate was based on 45 holes spaced an average of 200 metres apart and a cutoff grade of 0.35 gram per tonne.
The new resource is based on 172 diamond drill holes spaced an average of 100 metres apart. To ensure a conservative estimate, the cutoff grade was raised to 0.5 gram gold for the oxide material and to 0.75 gram for sulphides. Gold values were capped at 20 grams.
The 7.3-million-oz. resource was calculated so as to be consistent with the initial resource estimate, including only material within a 50-metre radius of each hole. Barrick’s head of exploration, Alex Davidson, is confident further infill drilling will add to the already identified ounces.
The resource comprises 97 million tonnes of oxide material running 1.8 grams gold per tonne plus 15 million tonnes of sulphides averaging 2 grams gold. The newfound gold is predominantly in the form of oxide mineralization. There does not appear to be any transitional material.
The oxide mineralization hosted by volcanics overlies oxides in sediments and is controlled largely by lithology. The volcanics form a skin over the sediments, and also occurs as breccia pipes. Some of the sulphide mineralization is higher-grade, with intersections running as high as 9 grams gold over 45 metres.
Mineralization begins at surface and extends as deep as 300 metres in some areas. The zone measures about 1,600 by 750 metres and remains open to the south and southeast.
The high-sulphidation epithermal deposit exhibits grades and gold-rich surface outcroppings similar to those at the major’s Pierina property, 175 km to the south.
Bottle-roll and limited column tests on the oxide ore have returned recoveries of 85-95%. More work is required on the sulphides, which have so far returned recoveries of less than 50% from bottle-roll tests.
“Based on expansion of the resource and positive metallurgical testing, we appear to have another Pierina on our hands,” says Barrick CEO Randall Oliphant.
So far, the company has spent about US$10 million at Alto Chicama. By the end of the year, it plans to have spent US$35 million.
Infill drilling will close the effective drillhole spacing to 70 metres, good enough to bring the resource to indicated status. Barrick plans to sink another 200 holes by year-end. Additional rigs will be mobilized for extension, condemnation and exploration drilling.
Exploration targets
Exploration drilling will target areas south and southeast of Lagunas Norte. Previously, 15 holes 3-3.5 km south of the deposit returned up to 1.6 grams gold over 54 metres and 1.7 grams over 18 metres. The rigs will also test un-drilled areas with surface gold showings and alteration similar to Lagunas, to the east and west.
Plans also call for more environmental, metallurgical and engineering work.
The company will begin the permitting process this year and expects to complete a feasibility study on Lagunas Norte in 2003.
Barrick, which turned out to be the only bidder to a tender by Peruvian state-owned Centromin in early 2001, can acquire Alto Chicama by completing a feasibility study. The company has easily eclipsed the deal’s US$6-million spending requirement.
Also, under the deal, Barrick must pay Centromin a $2-million royalty advance credited against Centromin’s 2.51% net smelter return royalty once a positive production decision is made.
Alto Chicama is 140 km east of Trujillo on the Peruvian coast and is accessible by road. The property lies midway between Pierina and
Benchmark
In other news, credit rating agency Standard & Poor’s has announced that under a decade-old policy it will replace all foreign-based entities on its S&P 500 Index with U.S.-based companies in a bid to make the index, “a more useful benchmark for tracking large-cap U.S. equity market performance.”
The change affects five Canadian companies, including Barrick and fellow gold miner
“We acknowledge that this may have some short-term impact on our share price,” says Oliphant, “but we believe that, over the long term, it will have no impact on the overall evaluation of our company. The fundamentals of the company are stronger than ever.”
Oliphant regards the deletions from the index as a buying opportunity for the companies that have been affected.
In early trading on July 10, Barrick’s pending removal from the S&P 500 had outweighed the good news from Alto Chicama: the stock was off $1.40, or 4.75%, at $28.10. By mid-afternoon, the stock had regained some ground and was trading at $28.90, off 60 from its previous close.
Barrick’s financial results for the second quarter will be released in late July.
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