Vancouver — Latin American massive sulphide deposits have emerged from the shadows over the past decade, and explorers, despite facing historically low base metal prices, continue to advance discoveries in the well-known lead-zinc-silver metallogenic belt of central Mexico.
Earlier this year,
“We are massive sulphide specialists,” Croesus President Brian Hall tells The Northern Miner. “Even though they may not be the most popular thing on the block right now, over time, base metals always resurge.”
Situated in Guanajuato and Jalisco states, the El Gordo project covers two massive sulphide targets that were partially tested by Noranda. The mineralization, described as “typically stratiform,” consists of massive pyrite with lesser chalcopyrite, galena and sphalerite, hosted by felsic volcaniclastic rocks of the Esperanza formation. The mineralization is associated with dominantly lapilli and crystal tuffs, which are underlain by sediments and andesitic flows. The favourable Esperanza formation is stratigraphically correlated to the Zacatecas formation to the north, which hosts the Francisco I Madero deposit (40 million tonnes grading 36 grams silver per tonne, plus 0.8% lead and 4.7% zinc).
Despite intersecting 4.3% copper over 9.3 metres and 2.3% copper over 12.9 metres in drill core, Noranda elected to drop its option, citing a lack of tonnage potential. However, Croesus sees the project in a different light, and intends to focus on an unexplained geophysical anomaly in the same area as known mineralized debris flows.
“There’s nothing small about the mineralization at El Gordo,” Hall states. “We have a big target with the EM [electromagnetic] geophysical anomaly, and all the geological evidence points to a massive sulphide source.”
Most recently, mineralized float grading 2.15% copper was discovered in a bulldozed access road on the property. This new showing consists of malachite and cuprite mineralization in the Esperanza formation and is situated down-slope from a strong, 1-km-long EM anomaly. Some 300 metres to the east lies a second anomaly, measuring 700 metres long.
In 1999, the geophysical anomalies were priority targets for Noranda. However, the major moved away from the area after hole 1 cut 150 metres of Quaternary debris flow material before bottoming in granite, which was believed to be the basement rock. Croesus believes the debris flow occurs in a paleo-valley and that the granite is just a thin dyke. The company will carry out trenching to determine the size of the new zone.
Mexican silver belt
Moving north into Zacatecas state, the Faja de Plata or Mexican silver belt has long been a prolific producer of epigenetic silver-gold-lead mineralization. The high plateau region lies on the southwestern flank of a string of carbonate-hosted base metal deposits, and north of the Trans Mexican volcanic axis. The region is known for its younger skarn deposits at San Martin; vein, chimney, and manto deposits at Fresnillo; and veins-stockworks mineralization at Real de Angeles, itself a modern discovery, having started production in 1982. Beneath the wide basins covered by Quaternary deposits are widespread Jurassic and Cretaceous sedimentary and volcanic rocks in a lobe of accreted Guerrero terrane, underlain locally by Triassic and possibly Paleozoic crust.
Despite the region’s long history of production, explorers never considered the area prospective for hosting syngenetic sulphide mineralization. That was until the 1974 discovery of the Francisco I. Madero deposit, just west of Zacatecas city. The importance of this find, which many considered a volcanogenic massive sulphide deposit, came to the forefront more than 10 years later when Teck (now
The partners’ initial target was copper oxide showings, particularly those exposed in a small pit at El Salvador. Early inspection of the pit suggested that mineralization might be stratiform and possibly of volcanogenic origin. This suggestion was confirmed when hole 5 intersected 2.1 metres of massive sulphides grading 2.07% copper, 1.53% lead, 16.57% zinc, 3.68 grams gold and 213 grams silver. Further drilling outlined a small zone of massive sulphide mineralization hosted by siliceous sedimentary rocks at the contact between underlying felsic tuffs and breccias and overlying porphyritic andesite.
This discovery led Teck to look for volcanogenic massive sulphide mineralization. A subsequent geophysical survey directed the major to an area 2 km west of El Salvador. Diamond drilling began in November 1997, and among the more encouraging results were 179.7 metres of massive sulphide below 170 metres of cover in hole 25.
San Nicolas
By mid-1998, the San Nicolas deposit had been delineated by 58 diamond drill holes, and today it ranks as the largest volcanogenic massive sulphide deposit in Mexico. In January, Teck Cominco tabled a long-awaited feasibility study, which calls for a conventional open-pit mine capable of processing 15,000 tonnes per day, from which would be produced 230,000 tonnes of copper concentrate with an average grade of 23.8% per year over 12 years, plus 190,000 tonnes of zinc concentrate averaging 50% zinc per year over a 10-year period. The mineral reserves in the plan stand at 65 million tonnes grading 1.32% copper, 2.04% zinc, 0.53 gram gold and 32.1 grams silver. Overall, recoveries are pegged at 76.3% for copper and 71% for zinc.
Facing historically low zinc prices and an estimated capital cost of US$245.6 million, Teck Cominco was forced to put the project on the shelf until metal prices improve. Western Copper currently has a 21% stake in the project, with Teck holding the remainder.
Penasquito
Undeterred by the delay at San Nicolas and confident in the region’s base metal potential, Western Copper shifted focus to its wholly owned Penasquito silver project.
Penasquito is in the northeastern part of Zacatecas state, along the axis of an east-west-trending syncline in a sequence of sub-horizontal marine sandstones and shales of the Cretaceous Caracol formation. Covering 32.5 sq. km of the historical Concepcin del Oro district, Penasquito hosts a 9-sq.-km system of mineralization 30 metres below alluvial cover.
Modern-day exploration over the prospective ground began in 1994 with Kennecott, a unit of
Western Copper entered the picture in 1998 by acquiring the property as part of a deal that included eight projects scattered throughout Zacatecas, San Luis Potosi and Guanajuato states. The Dale Corman-led junior subsequently drilled nine holes on the property before dealing it to Lima, Peru-based Mauricio Hochschild & Cia in August 2000.
Last year, Western Copper reacquired its 100% stake in the project after Hochschild dropped its option to earn a 68% interest. Hochschild spent more than US$1 million on exploration, mostly at the Chile Colorado prospect, where 11 core holes were drilled. As a result, silver-lead-zinc mineralization was delineated over an area of about 500 by 350 metres and to a depth of 300 metres. The weighted average of the mineralized intervals from 19 holes drilled at Chile Colorado by Kennecott, Western Copper and Hochschild is 0.54 gram gold and 100 grams silver per tonne, plus 0.8% lead and 1.8% zinc.
In April, the junior launched a 6,900-metre drill program aimed at outlining the mineralization at 100-metre spacings. The 15-hole program confirmed the continuity of mineralization over the 500-by-350 metre zone. Highlights from the last eight holes include hole 23, which was collared 50 metres east and 100 metres south of hole 22 (332 metres grading 0.39 gram gold and 1,089 grams silver per tonne, plus 15% lead, 0.1% zinc and 0.41% copper) and hit 282 metres averaging 0.54 gram gold, 38 grams silver, 0.2% lead and 0.87% zinc.
Based on the promising results, the company is carrying out another 7,000-metre program in an attempt to establish proven and probable resources.
San Jeronimo
Moving 20 km south of Zacatecas city, Western Copper dealt
Mapping, sampling and limited drilling by Western Copper along the 2.5-km-long Loreto vein indicates potential for both high-grade and bulk-mineable vein-stockwork silver mineralization. Highlights from the previous drilling includes hole 2, which returned 3.1 metres grading 541 grams silver, 0.7% lead and 1.55% zinc from 168.3 metres down-hole.
Another company that has made headway in the Silver belt over the past few years is
The property was home to a 200-tonne-per-day silver operation from 1995 until September 1997, when Pan American optioned the property. In March 1998, Pan American exercised its purchase option for US$2.1 million and 304,000 shares.
The oldest rocks in the district are a thick package of Cretaceous marine sediments of the Cuesta del Cura and Indidura formations. Laramide compression resulted in a series of north-trending anticlines, and high-angle reverse faulting. Erosion of the Mesozoic sequence produced an unconformity, regionally overlain by late-Cretaceous to Tertiary andesite, trachyte flows and pyroclastics known as the Lower Volcanic Unit, which hosts many of Mexico’s epithermal silver deposits.
The La Colorada project hosts mineralization styles similar to both the Fresnillo and San Martin mines. Overall, four different styles of mineralization have been recognized; vein, transitional, replacement, and breccia types. More than 30 veins have been discovered on the property, with most of the historical production focusing on sulphide material in quartz veins. The veins generally strike east-northeast and dip moderately to steeply to the south across bedding and contacts in both the limestones and trachytes.
Mantos
Transitional ore at La Colorada occurs as mantos and chimneys, which are usually developed in limestone adjacent to veins, and shows characteristics of both vein and replacement mineralization. Replacement (or skarn) mineralization similar to that mined at San Martin occurs beneath the veins, and is characterized by disseminated sulphides in calc-silicate-altered limestone. Oxidation occurs in all ore types, extending to depths of 300 metres below surface.
A bankable feasibility study in 2000 pegged the total proven and probable reserves at 2.7 million tonnes grading 458 grams silver and 0.53 gram gold. Last year, the company resumed mining the property, gradually ramping production back up to 200 tonnes per day. In 2001, the operation produced 782,853 oz. silver at a total cash cost of US$4.14 per oz. For 2002, production is expected to reach 1.2 million oz. at a total cash cost of US$3.51 per oz.
Early this year, Pan American studied the prospects of augmenting the existing small-scale production by introducing a 600-tonne-per-day cyanide leach circuit to process the oxide ore. The 800-tonne-per-day operation would produce 3.2 million oz. silver per year at a total cash cost of less than US$2.70 per oz. for a 13-year mine life. The capital cost of expanding the operation is estimated at US$19.1 million.
In March, the company raised US$15.6 million in an equity financing. Following the inking of a US$10-million project debt facility with International Finance Corp. in June, it started full-scale construction at the site. Pan American agreed to repay the loan in semi-annual US$1-million instalments, starting in November 2004. The loan agreement does not require Pan American to hedge any silver production, and the company expects to feel the boost in production by the third quarter of 2003.
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