Impressive intersections mark Mexican find by Teck, WCH

The discovery of the San Nicolas volcanogenic massive sulphide deposit in central Mexico is significant not only because of the magnitude of the drill intersections, but also because it indicates the region’s considerable exploration potential.

The project, part of the El Salvador joint venture in Zacatecas state, is held 55% by Teck (TEK-T) and 45% by Western Copper Holdings (WTC-T).

Luismin, a gold mining subsidiary of a publicly traded Mexican manufacturer of auto parts, holds a back-in right to a 25% participating interest in about three-quarters of the 360-sq.-km property package, including the San Nicolas find.

Last month, Teck and Western Copper Holdings (WCH) announced that they had intersected a 161.2-metre thick interval of massive sulphides at a depth of 207.1 to 368.3 metres in diamond drill hole SAL-25. The vertically drilled hole, which stopped in massive sulphide mineralization, was collared in the centre of an induced-polarization (IP) geophysical anomaly with an aerial extent of 500 by 500 metres at a 200-metre depth below surface.

The top 28.4 metres of the massive sulphide intersection averaged 5.53% zinc and 0.64% copper, plus 1.2 grams gold and 47.6 grams silver per tonne.

Douglas Leishman, a Vancouver-based mining analyst for Yorkton Securities, stated in an in-house newsletter that, at current metal prices, the 28.4-metre interval is “potentially economic,” with a “gross value of US$90 per tonne.”

Subsequent drilling of the discovery hole later extended the mineralization by 14.2 metres, returning a total massive sulphide length of 175.4 metres averaging 1.5% zinc and 0.52% copper, plus 0.61 gram gold and 19.41 grams silver. The hole was completed to a final depth of 517.2 metres.

The massive sulphide interval is predominantly pyrite, with lesser amounts of sphalerite and chalcopyrite.

The sulphide zone, which is believed to be flat-lying, is overlain by mafic volcanics consisting of tuffs and flows, with minor sedimentary units.

Tertiary volcanics cover the mafic unit. The underlying footwall is composed of interlayered sediments and felsic volcanics.

During a recent trip to the project, The Northern Miner was informed by WCH President Dale Corman that the discovery is returning some of the longest intersections of continuous sulphides ever drilled in North America.

“When we mine this thing, it’s going to throw off the Earth’s centre of gravity,” he joked.

At the time of our visit, Teck, the project’s operator, had completed two additional follow-up holes into the IP anomaly and was in the process of finishing two others.

Teck stepped out 200 metres south of the discovery hole with hole SAL-24 and intersected 54.8 metres of massive sulphides at a depth of 403.5-458.3 metres. The massive sulphide zone, however, was hit almost 200 metres below its projected depth, indicating the zone has been faulted downward and possibly laterally. The hole encountered a different hangingwall package of altered felsic tuffs and flows, overlying an altered mafic unit containing chalcopyrite stringer mineralization.

Chalcopyrite and sphalerite mineralization is also evident in the footwall at the base of the massive sulphide zone. The footwall consists of silicified and sericitized felsic volcanics.

Hole SAL-29 was collared 100 metres south of the discovery hole and intersected two massive sulphide zones: a 157.5-metre thick zone at a depth of 180.5-338 metres, and an 11-metre interval at a depth of 360-371 metres.

The 157.5-metre section of massive sulphides appears to show zoning, with stronger zinc mineralization at the top and stronger chalcopyrite mineralization at the bottom.

At the time of The Miner’s visit, hole SAL-29 was continuing to intersect sulphide stringer mineralization and had reached a depth of 408 metres.

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Stringer mineralization

Hole SAL-30, drilled 100 metres north of the discovery hole, intersected 62 metres of mostly semi-massive sulphides and pyrite-chalcopyrite stringer mineralization between a depth of 240.5 and 305.5 metres. The hole passed into a footwall of altered interlayered sediments and felsic volcanics.

Hole SAL-31 stepped out 100 metres west of the discovery hole and encountered the same package of overlying Tertiary volcanics and mafic volcanics before intersecting massive sulphides at a depth of 165.9 metres.

The hole was in progress during our visit, and, at last report, was still in massive sulphides at a depth of 273.4 metres.

A sixth hole, SAL-32, will be drilled prior to the Christmas holiday period.

The hole will be collared 100 metres east of the discovery hole. Assay results from these holes are not expected until early January.

Putting structural complications aside, Gillian Kearvell, project geologist for Teck’s Mexican subsidiary, Minera Teck, says the San Nicolas discovery seems to resemble a Kuroko-style volcanogenic massive sulphide (VMS) deposit.

The San Nicolas discovery comes about a year after the project known as El Salvador first showed promise. While drill-testing near-surface oxide copper mineralization in October last year, Teck intersected a 2.1-metre interval of massive sulphides grading 16.57% zinc, 1.53% lead and 2.07% copper, plus 3.68 grams gold and 213 grams silver at a depth of 96.9-99 metres in hole SAL-5.

That discovery has since been tested with a total of 23 holes. Grades, on the whole, have been lower than those of the discovery hole, with the intersections averaging a thickness of 2 metres.

The prospect is structurally complex, with evidence of multiple flat-lying horizons. Roger Scammell, regional director of exploration for Minera Teck, says that, alone, the El Salvador VMS prospect is uneconomic. The San Nicolas discovery is about 1 to 1.5 km west of the El Salvador prospect.

The El Salvador project is 65 km southeast of the city of Zacatecas in an area of low relief. The property is accessible by paved highways and about 3 km of dirt roads.

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Copper oxides

Scammell told The Northern Miner that a grub staker/prospector originally shopped the property to Teck on the basis of its copper oxide potential.

Copper mineralization consisting of tenorite, azurite, malachite and chrysocolla was exposed on a low hill. The mineralization occurred along the flow fabric in Cretaceous-age andesitic volcanic rocks. Old underground workings extended as deep as 40 ft.

Teck felt the oxide potential was not big enough for them and passed the property on to WCH, which acquired an option on it in October 1994. Teck, which owned 35.9% of WCH, sold its position in the junior to Prime Equities International (PGE-V) in the fall of 1995.

In the spring of 1996, while WCH was proceeding to merge with Thermal Exploration, Prime Equities (its partner in the Carmacks copper project in the Yukon) sold its holding in WCH to a group of sophisticated investors.

In the meantime, Teck picked up a package of ground surrounding the El Salvador property from Luismin after another U.S.-based major dropped the option. “Lucky for us, they had been concentrating on gold and were not looking for copper,” Scammell said.

In August 1996, Teck and WCH agreed to combine their holdings and participate in the exploration and development of the entire package on a respective 55-45 joint-venture basis. Teck can acquire a further 10% interest in the project by arranging production financing and can buy an additional 5% from WCH based on the net present value of the project upon completion of a feasibility study. If Luismin and Teck complete all their obligations, WCH’s interest could be reduced to 22.5%.

The San Nicolas discovery and the El Salvador prospect are both “blind” deposits in that neither is exposed at surface; both are covered by younger volcanics.

After the discovery of the El Salvador deposit, Teck flew airborne geophysical surveys but met with little success. They were useful only in determining where the cover of the younger volcanics thinned, explained Scammell.

He added that one of the problems Teck faced was that most geophysical programs are designed to look for inclined, or verti
cal, bodies. Flat-lying, or horizontal bodies, do not show up.

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Time domain

Teck investigated several geophysical survey techniques before finding success using ground time domain IP gradient array surveys. Scammell says

the IP surveys are fast and dirty, and, as a regional tool, can be done cheaply.

To date, only 2% of the 360-sq.-km project has been subjected to IP work.

Scammell believes there is enormous potential for the discovery of other VMS discoveries.

“We have only seen the first five minutes of a three-hour movie,” added Corman, alluding to the area’s exploration prospects.

Teck plans to complete IP surveys over an additional 30 sq. km of ground in the coming months. Gravity surveys will also be conducted. Exploration expenditures on the El Salvador project total about US$2 million to date. An exploration budget is being drawn up for 1998 and is expected to be in the US$3-million range.

Drilling will likely resume in or after mid-January. Teck plans to drill off the San Nicolas deposit on 100-metre centres, a process that could take six months to complete. Plans are also in the works to deepen one of the holes in the El Salvador prospect to test a coinciding IP and gravity anomaly that occurs at a depth of about 400 metres.

WCH, through an option with Minera Kennecott, controls a 35-km-long prospective greenstone belt extending northward from the northern boundary of the El Salvador project. This belt of rocks consists of andesite flows and interbedded sediments and pyroclastic units.

Kennecott was allowed to complete an orientation IP survey over the El Salvador project. That work successfully confirmed the San Nicolas anomaly and defined several new geophysical anomalies — one north of San Nicolas (which coincides with a copper geochem anomaly), and another trending along Teck and Kennecott’s border.

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Back-in right

WCH’s option with Kennecott covers about 3,000 sq. km of ground in Zacatecas state. The junior is required to spend US$3 million on exploration over the next three years. Kennecott retains a back-in right to a 51% interest on any project.

To date, Kennecott, working on behalf of WCH, has completed reconnaissance IP surveys over the southern half of the 35-km-long trend. The northern half should be completed by the end of January. By February, reconnaissance IP work should also be completed on other properties held in the Faja de Plata silver belt. The joint venture expects to have identified drill targets by the end of the first quarter.

WCH has 10.7 million shares outstanding, or 13.5 million fully diluted, with current working capital of $750,000. The company expects to carry out a financing in the early part of the new year.