To jump-start development of a 39-million-oz. gold district in the high Andes along the border between northern Argentina and Chile,
Situated in the Argentine province of San Juan, 325 km northwest of the capital city of San Juan and 600 km north of Santiago, Chile, Veladero contains almost 9.4 million oz. gold in a proven and probable reserve base of 231 million tonnes grading 1.26 grams gold and 15.05 grams silver per tonne. Barrick is targeting an early 2006 startup for the mine, which is expected to average 530,000 oz. gold per year at a cash cost of US$155 per oz. over a life of 13 years. In addition, Veladero will produce about 1 oz. silver for every ounce of gold.
Once Veladero is up and running, Barrick intends to move the construction team to the nearby Pascua-Lama project, where mining is targeted to begin in 2008 at an annual rate of 800,000 oz. and an estimated cash cost of US$85 per oz. for the first 10 years. Pascua-Lama hosts proven and probable reserves containing 16.9 million oz. gold and 594 million oz. silver in 269 million tonnes grading 1.95 grams gold and 68.7 grams silver. A further 7.2 million oz. gold are tied up in mineral resources totalling 220 million tonnes grading 1.03 grams.
Barrick is convinced it can reduce the US$1.2-billion price tag for Pascua-Lama by taking advantage of synergies with Veladero.
“We want to start with the simpler and less expensive project, get established in the district, build a team and make sure that we know how to operate in an optimal manner,” says President Randall Oliphant.
The major had planned to begin developing Pascua-Lama a couple of years ago, but depressed gold prices caused it to shelve the project at the end of 2000.
“We couldn’t see any compelling reasons to bring a multi-decade project into production with gold prices at around US$270 an ounce,” says Oliphant. “Today, I think the situation is quite different. Over that time, we have further refined the whole operating parameters.
Alan Hill, executive vice-president of development, agrees: “Veladero is a great opener for Pascua. The synergies that Veladero brings to it are administration, a mine camp and access road.”
The capital cost estimate of $1.2 billion for Pascua-Lama was prepared in 2000 and does not take into account the impact of the devaluation of the Argentine peso, which, according Oliphant, has greatly reduced the capital cost of Veladero. The value of the peso has fallen to US28, from about parity in 2000. The devalued peso has a great deal of impact on engineering and construction labour costs.
Veladero was discovered by Lundin-led Argentina Gold, which first acquired the property in 1994. Lac Minerals immediately optioned a 40% interest in the Veladero holdings from the junior. Through its takeover of Lac in late 1994, Barrick acquired 100% of Pascua-Lama, which then contained a mere 2.3-million-oz. gold resource, plus the 40% option on Veladero.
It took several seasons of exploration work at Veladero before Argentina Gold discovered the Filo Federico deposit in 1996, followed by Amable in 1998. In response to Barrick’s unsuccessful takeover attempt in 1999, Argentina Gold was acquired by Homestake Mining through a negotiated US$190-million buy-out. Barrick’s merger with Homestake in December 2001, gave Barrick 100% control of Veladero.
Two stages of crushing
A feasibility study of Veladero was completed at the end of the third quarter of 2002. The study focused on an open-pit mining operation, with a two-stage, 36,000-tonne-per-day (or 12.6-million-tonne-per-year) crushing circuit and conventional valley-fill heap-leach, similar to Barrick’s Pierina mine in Peru.
“We are using SNC Lavalin [for the feasibility], which put together Pierina,” says Hill. “They have transferred the data, almost literally, down to Veladero for our plant and our site construction.”
The operating year is based on 350 days, with 15 days of scheduled downtime for snow and other climate changes.
The Veladero camp sits at an elevation of 3,800 metres, while the mineral resources lie in three general areas on the Cerro Pelado ridge, between 4,100 and 4,400 metres. Cerro Pelado hosts more than 10 sq. km of geochemical and geophysical anomalies covering a diatreme dome complex. Gold mineralization is associated with multi-phase, black silica-sulphide breccias that occur as crackle, fluidized, mosaic and rotational breccias. The main rock type of the diatreme breccias is tuffisitic breccia, which exhibits zoned alteration in the form of silica. The silicification is important in so far as it affects recoveries. Local bonanza gold grades occur in association with brown crystalline jarosite, which overprints the silicification. The mineralization is oxidized throughout.
The Veladero project will house two open pits — one centred on the Filo Federico zone on the north flank of Cerro Pelado, and the other, on the Amable zone on the southeast flank. The pits will have an overall stripping ratio of a little more than 3-to-1.
Filo Federico and Amable have been drilled to a density of 50-to-70-metre spacings. Filo Federico contains 188 million tonnes grading 1.1 grams gold, equivalent to 6.7 million oz. The higher-grade Amable hosts 38.7 million tonnes grading 2.05 grams, for more than 2.5 million oz.
The geological database consists of 747 reverse-circulation (RC) holes, 110 diamond drill holes, 509 metres of underground drifting on Amable, and 638 metres of tunneling on Filo Federico, for a total of 227,664 samples.
“We have taken a tremendous amount of sampling at this property and it all ties together with the block model,” says Hill.
Drifting
The drifting was designed to provide access to higher-grade portions. The Filo Federico drift ran 4.4 grams across 48 metres, 5.91 grams over 187 metres and 2.75 grams across 55 metres. The drifting also allowed for on-site testing of 90-tonne bulk samples to verify and optimize column-leach-test recoveries.
A third area of mineralization, Cuatro Esquinas, occurs at depth between Filo Federico and Amable. Cuatro Esquinas accounts for most of the 5.7-million-oz. resource that lies outside the mine plan.
“Cuatro Esquinas is pretty deep — about 400 metres in total,” explains Hill. “It has been drilled on 120-to-150-metre spacings, and we have not bothered to pursue it. We want to get on with the deposits that are near surface. It is something we’ll be looking at as mining ensues.”
The process flow sheet is a “Pierina look-alike,” says Hill. The ore, grading 0.9 gram or better per tonne, will be fed through a two-stage crushing circuit and reduced to minus 32 mm before being placed on the leach pad. A minor component of the reserves consists of lower-grade “sub-ore” totalling 43.6 million tonnes averaging 0.42 gram gold, equivalent to 584,000 oz. The sub-ore material will be run-of-mine, going directly to the pad at the rate of 3.5 million tonnes per year.
The reservoir pregnant solution will be contained behind a dam constructed downslope at the forefront of valley-fill heap-leach site. The liquid will be pumped out through a pregnant solution clarification system into a Merrill-Crowe refining circuit, with the solution being re-circulated back into the leach pile.
Two ore types
Metallurgically, the ore in both deposits is classified as two types. Type 1 is more easily leachable, with predicted recoveries of 75% for Amable and 80% for Filo Federico. Type 2 is more silicified. Gold is encapsulated, and recoveries are only 49% in both deposits. Almost 7.9 million oz. are categorized as type 1 ore, with Filo Federico hosting 6.2 million oz. and Amable containing 1.7 million oz. The remaining 1.5 million oz. of the reserves fall into the type 2 lower recovery. Filo Federico contains 660,000 of these ounces, and Amable has 860,000 oz. of type 2 ore.
“To bring [type 2 recoveries] up to 75% or 80%, we would have to put it in a mill and grind the hell out of it,” says Hill. “It just isn’t worth putting in a milling complex for those few ounces. We’ll take our lumps at 49% recovery.”
The Veladero project offers a rate of return of 14% based on a gold price of US$325 per oz. gold, and 12% at US$300 per oz.
Barrick expects to receive environmental approval and permits in the second quarter of 2003, followed by formal approval (to proceed with construction) by its board of directors in July 2003. The company is committed to spending US$23 million this winter on upgrading the existing 120-km access road from the community of Tudcum. Barrick has been negotiating with a large engineering firm out of Buenos Aires. Construction of the road is to be completed by June 2003.
With respect to the political and economic risk in Argentina, Barrick is in discussions with both the federal and provincial levels of government on an agreement providing for legal and fiscal stability.
“We are having discussions with not only the government but with international agencies because, everybody wants to see more investment there,” says Oliphant. “The World Bank, through the International Monetary Fund, would love to see a project of this magnitude go ahead, not only for the economic development but as a vote of confidence in Argentina.
“The big money will have to be committed starting the fall of 2003 and the fall of 2004. I think, by that time, there will be clear direction in terms of where Argentina is going.”
The Pascua-Lama project is 6 km northwest of Veladero. It sits a little higher in altitude at 4,500-4,800 metres. Barrick is investigating ways of improving the operation, especially on the metallurgical side.
Says Hill: “We’re now looking at a wet-grind scenario. Recoveries don’t suffer and they might be marginally better. There is a lot of work to be done on optimizing Pascua now. Veladero has opened the door for us.”
An updated feasibility study is due in the first half of 2004.
Development of Pascua-Lama as an open-pit operation will occur in stages. The first phase will consist of a 33,000-tonne-per-day plant, capable of producing 800,000 oz. gold and 35 million oz. silver annually. An expansion three or four years down the road would increase milling capacity to 44,000 tonnes per day, boosting production to 1 million oz. gold annually.
The deposits that comprise the Pascua-Lama project lie along the western margin of an oval-shaped alteration system measuring 10 km in its longest dimension. Gold, silver and copper mineralization occurs in a core zone of pervasive quartz-alunite alteration. Ore-grade values occur in strongly silicified and quartz-alunite altered zones along north-south- and northwest-southeast-trending faults.
“We think that if we orchestrate this properly that we can come up with a much more economic project than we would have been looking at a year or two ago,” says Oliphant.
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