Ingenerio Jacobacci, Argentina — Results from ongoing infill drilling have convinced
The company’s optimism seems well-founded, as the latest batch of reverse-circulation holes returned the best-ever intersection from the property. Hole 136, collared on the little-tested northeastern portion of the Vein 49 system, returned 18 metres (beginning 5 metres below surface) grading 16.4 grams gold and 36.1 grams silver per tonne. No. 136 was among 13 angled holes (minus 55-68 sunk as part of the initial phase of a 4-phase, 12,000-metre drill program.
Other highlights from the recent drilling include hole 126, which returned 12 metres (from 22 metres) grading 7.7 grams gold and 19.8 grams silver, and hole 138, which included a 10-metre section of 10.6 grams gold and 200.1 grams silver beginning at a depth of 47 metres.
The remaining holes generally run 1-9 grams gold and 10-60 grams silver over widths of 1-60 metres. Aquiline says the results confirm the presence of a new, shallow, high-grade zone of mineralization in Vein 49. Assay results for samples from three other holes are pending.
Covering some 730 sq. km, Calcatreu is centred on a low-sulphidation, quartz adularia epithermal gold system. LaSource Dveloppement Argentine first discovered gold-bearing mineralization in the area in late 1997 in a quartz float along the side of a road. Normandy Mining of Australia inherited the project when it acquired LaSource from the French government in 1998. The property fell into
Aquiline acquired Calcatreu in July by agreeing to pay Newmont a little more than US$2 million in staged cash payments over 36 months. The major retains a 2.5% net smelter return royalty on gold and silver production and a 60% back-in right on certain mineral claims, excluding the Vein 49 deposit. The major can opt to back in, until the initiation of a feasibility study, by spending three times what Aquiline has spent on exploration.
“We set out to fill a niche as a mid-tier gold company,” Aquiline CEO Marc Henderson told The Northern Miner during a recent site visit. “We felt there were a number of major mining companies that owned projects that were probably too small for them. Our plan was to go after those projects, and we managed to acquire a good one from Newmont.”
In addition to the property, Aquiline also picked up Newmont’s Argentinean operating company Minera Normandy Argentina, including its database, office, staff and 7 million pesos worth of tax losses, thanks to the major’s decision to exit Argentina outright.
At the time of acquisition, Newmont’s in-house estimated mineral resource for Vein 49/Nelson area stood at 5.6 million tonnes grading 2.97 grams gold and 26 grams silver. The figure was not compliant with National Instrument 43-101.
Aquiline began infill drilling in June 2003 to confirm Newmont’s figure, and by October, Micon International calculated that the indicated resource was about 1.4 million tonnes grading 5 grams gold and 39 grams silver per tonne. An additional 4.5 million tonnes of inferred material grades 2.8 grams gold and 26.9 grams silver. The resource is contained in the Vein 49 and nearby Nelson low-sulphidation gold systems, with the bulk found in quartz veins in the oxidized portion of Vein 49.
“We basically have 700,000 oz. of gold-equivalent, and we’re aggressively trying to make that number bigger and take the inferred ounces into the indicated category,” said Henderson.
Oxidation at Calcatreu is deep, especially around Vein 49, so the drilling is easy and lends itself to the reverse-circulation method. The transition from oxide to primary mineralization occurs at a depth of around 120 metres. Aquiline’s vice-president of exploration, Martin Walter, said only about 1-2% of the rocks outcrop.
Henderson noted that outcropping is also not evident at some of the better parts of the systems at
Most of the existing resource is above 150 metres of depth, and Aquiline will drill to a depth of 300 metres to test for underground mining potential. The deeper drilling into the primary ore will also help determine the type of treatment plant required.
Aquiline’s approach at Calcatreu is two-pronged. So far, the focus has been on fast-tracking the 700,000 gold-equivalent ounces in Vein 49 toward a production decision. The second phase will entail testing the other 10 veins systems already outlined.
Reverse-circulation drilling continues to fill in Vein 49. Prior to the holiday break, some 105 holes had been sunk; plans call for about 250-270 holes in all to complete the infill program. A second drill will be added at the end of January, depending upon rig availability.
The company expects to sink 150 additional holes for 9,000-10,000 metres on Vein 49 by early March. The results will then be sent to Micon for an updated resource calculation.
Walter figures that the Vein49/Nelson deposit will easily break the million-oz. level in the next resource calculation: “I think this thing is heading to 2 million oz., to tell you the truth. Any sort of discovery between the existing resources and the Amistad target is going to make this project interesting. If we can get another Vein 49, that would be great, but we still have to go out and drill the other targets.”
Although the results from a first batch of metallurgical tests (on mostly oxide material plus at least one sample of primary ore) are not expected until late January, preliminary plans call for a 400-to-500-metre open-pit operation with onsite milling and heap leaching. The pit would be centred on the northeastern part of Vein 49.
“The best-case scenario would see us in production by the first quarter of next year,” said Walter. “As long as gold stays on side, we’ll be OK. We’ll make money on this at a gold price of US$315 per ounce, but we’d like US$350 an ounce.”
The second prong of Aquiline’s attack will see Quantec fly an induced-polarization (IP) and magnetic survey over a 3-by-4-km corridor between Vein 49 and Amistad early in the year. Once the infill program wraps up on Vein 49, the second rig will begin testing targets outlined by Quantec’s IP survey. Roughly 5,000 additional metres of drilling are planned for the Nelson vein in 2004.
“There’s a lot of smoke in the other veins,” said Walter. “They certainly have reasonable widths of twenty to thirty metres at one to three grams.”
Exploration potential
In all, Normandy turned up 11 mineralized vein systems at Calcatreu in the late 1990s. Striking more than 2 km and running up to 20 metres wide, the near-surface Vein 49/Nelson prospect has seen the most exploration.
Grab sampling at the as-yet-undrilled Amistad target, to the northeast, yielded up to 38 grams gold per tonne, with trenching returning up to 6 grams across 11 metres.
At Viuda de Castro, 12 km north of Vein 49, previous trenching returned up to 9 metres grading 2.3 grams gold per tonne. Another trench in the area ran about 6 grams over 6 metres. The target remains undrilled.
At Nabel, 77 of 226 scattered samples returned more than 1 gram gold. Trenching yielded up to 15 metres of 4 grams gold.
Highlights from trenching at the Trinidad prospect include 13 metres of 3 grams gold in trench 4, 16 metres of 1.8 grams in trench 5, and 3 metres of 5 grams in trench 7.
Aside from Vein 49, the prospects have mostly been tested by just a single drill hole.
Also awaiting exploration are several anomalies and alteration zones outlined by regional stream-sediment sampling by Normandy. The program comprised 429 samples from the Calcatreu area plus more than 1,100 regional samples collected on an average spacing of 5 sq. km per sample. The survey covers both Calcatreu and the nearby Navidad project.
Community relations
Aware of the region’s growing popularity among “eco-tourists” and non-governmental organizations, Aquiline is taking a rigorous approach to addressing environmental concerns and improving community relations. The company wishes to avoid the problems encountered by Meridian Gold at its stalled Esquel gold project, elsewhere in Chubut province.
“The problems Meridian is facing have forced us to realize we have to be on top of this aspect from day one,” stressed Henderson. “At the end of the day, I believe the town will be very supportive of the project, but we do need to temper people’s expectations.”
Calcatreu’s location in a remote, sparsely populated region may also help save it from some of the problems encountered at Esquel, which, by comparison, is 170 km to the southwest in a more picturesque mountain terrain, about 6.3 km from the city of Esquel (pop. 35,000). The closest town to Calcatreu is Ingenerio Jacobacci, about 50 km to the south, with around 6,000 inhabitants.
To help with community relations and permitting, Aquiline has retained Buenos Aires-based Ambiental to provide environmental consultation. Ambiental expects to wrap up an environmental impact assessment (EIA) by June 2004 and has already had discussions with members of the local community, including the mayor of Jacobacci, local businessmen, school principals and landowners. Aquiline’s manager in Argentina, Vernon Arseneau, said the meetings were successful at acquiring information on which to build the company’s strategy. He added: “You can’t ignore them [members of the local community], since they face the direct impact of the project.”
The next step will be to present the EIA to the provincial government, followed by consultation with officials in Buenos Aires.
With virtually no other industrial projects in the area, the Calcatreu project is conspicuous, and so, Arseneau said, the company needs to be sensitive. “It’s a poor town and the needs are extreme. We can help, but we can’t do everything, and that’s one of the other management issues we’ll need Ambiental to help with.”
Aquiline intends to hire locally as much as possible. However, with the metallurgical results still outstanding, the company does not yet know what kind of construction will be required, and therefore it cannot predict how many workers will be required.
Looking forward, Ambiental expects approval for the EIA by October 2004, whereupon the company will begin work on an environmental management plan. To lend Ambiental a hand, Aquiline has lined up Golder Associates, which will ensure that the environmental practices are up to Canadian standards. Golder will also work with Micon on the pit design.
“Permitting will be the key issue; the technical side of the project is robust,” said Walter. “It’s the permits that are going to be the big hurdle. The hardest permit to obtain will be for the tailings dams. That’s always the biggest liability. It’s not so much the plant as the potential for tailings leaks people are worried about.”
To help fund the next phase of work, Aquiline plans to raise $6 million via a best-efforts private placement of 5 million units priced at $1.20 apiece. Each unit consists of one share and half a non-transferable warrant, with a whole warrant good for one share at $1.65 for 18 months after closing.
The agents for the financing, co-led by Pacific International Securities and Dundee Securities, have the option of increasing the offering by 15% at any time before closing.
Meanwhile in Santa Cruz province, Aquiline says privately owned, Australian-based Oroplata has notified Xstrata of its intention to match Aquiline’s offer for the Cerro Negro gold project. Aquiline has offered US$1.5 million over 15 months, with US$500,000 due on closing. It plans use a portion of the proceeds from the private placement to cover the acquisition. Oroplata has until late January to come up with guaranteed money to match the offer otherwise Aquiline will take the property.
The more advanced Cerro Negro project is reportedly home to a preliminary in-house resource estimate of 620,000 oz. gold grading 3.2 grams gold per tonne. The project comprises 11 contiguous mining tenements covering 250 sq. km in the northwestern corner of the province. The main target is low-sulphidation quartz vein systems similar to those at the nearby Cerro Vanguardia mine. The property also includes at least 10 other targets identified by trenching alone.
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