Initial resource out for Atacama Pacific’s Cerro Maricunga

Vancouver – Thanks to several years of work as a private entity, Atacama Pacific Gold (ATM-V) came out of the gates running last fall with a $33-million IPO and an advanced gold project in Chile.

Listing in November at $2.75, the company has since managed to complete a 30,000-metre drill program, metallurgical testing, and raise a further $30.5-million, though the second time around the company financed at $5.25 per share.

Most recently Atacama released an initial resource estimate on its flagship Cerro Maricunga project that outlined 1.62 million indicated oz. gold plus 1.95 million inferred oz. gold at a 0.3-gram-gold-per-tonne cutoff.

The resource is concentrated in the Lynx and Phoenix zones that span what the company states is essentially a single 1.4-km mineralized zone across two peaks, cut by a north-westerly trending regional structure. Together the zones host 92.8 million indicated tonnes grading 0.54 gram gold, plus 116.7 million inferred tonnes grading 0.52 gram gold.

A few hundred metres southeast sits the Cruz zone that hosts 33.1 million inferred tonnes grading 0.54 grams gold. The zone is cut off to the southeast along the margins of the volcanic centre, but is open to the northwest towards the Phoenix zone. The company also notes that the Phoenix zone is open along strike to the east-southeast where trenching has outlined 600 metres of untested mineralization. All deposits remain open to depth.

Atacama president and CEO Carl Hansen said in a phone interview that the numbers were “better than we were hoping for,” adding that analysts had been looking for roughly 2.5 million total oz. gold.

Hansen said that thanks to some very good drillers and drilling conditions the company was able to add about 10,000 metres to the original target, with the resource based on an eventual tally of 33,400 metres of reverse circulation and diamond drilling over 90 holes.

“We drilled a lot more,” said Hansen, “and that additional drilling…combined with positive results, led to a better than anticipated resource estimate.”

Hardly slowing down, the company is planning to launch a 42,000-metre, $24-million drill program in October with six rigs on site, to be paid for with its $48-million in cash. With the infill and exploration drilling on-going, the company also plans to dive into engineering and an economic study in early 2012 and continue with metallurgical testing.

So far metallurgical work has indicated the oxide-associated deposit is amenable to heap leaching, with early testing showing that gold at Cerro Maricunga is principally in fine-grained native form at a roughly 97% purity. The company attributes those characteristics to the 79% to 89% recovery rates at a 19 mm crush size.

Along with in native form, gold is associated with magnetite and hematite. The mineralization is associated with both black banded silica veinlets and chlorite-magnetite-quartz veinlets, hosted primarily in a central breccia complex.  

The fairly rapid progress at Atacama can both be attributed to the years of early work as a private company, and also to the experience of senior staff. Albrecht Schneider, who co-founded Andina Minerals (ADM-V) with Hansen, started Atacama in 2007 and is currently chairman. Hansen, a self-professed exploration geo, came on board in 2009 after Andina started moving into development of the 6.5-million-reserve-oz. Volcan deposit. The two have been working together for some 15 years.

“Management has done this before, this is nothing new for us,” said Hansen. “We were the exploration geos at TVX Gold which had the Coipa mine in Chile, we were the founders of Andina Minerals and the Volcan discovery, so this is just us moving ahead in Chile. We don’t really have to reinvent anything, we just have to get up and go.”

Schneider’s experience in the area paid off in the initial securing of the Cerro Maricunga property, which he had kept an eye on for some time and noticed when the claims, apparently previously held by Falconbridge, lapsed.

“Albrecht had been watching it for some time,” said Hansen, “so when it came open he was just fortunate enough that he happened to see it and stake it.”

The company now wholly owns the property in the prolific area with no royalties. Neighbours include Kinross Gold‘s (K-T, KGC-N) La Copia mine 20 km to the south and its Lobo Marte project 30 km to the north. Incidentally, Kinross owns about 6% of Atacama, while Gold Fields (GFI-N) owns 11%, and insiders own about 41% of the 47 million shares out.

For 2012 the company will continue to focus on Cerro Maricunga, but plans to also start looking at its earlier-stage greenfield projects in the region.

The project presents a challenge of being at almost 5,000 metres in elevation, though the camp is at a more reasonable 3,800 metres. And, like almost everywhere in Chile, water will be a problem for development. Hansen said the company is looking to resolve the water issue, but with the business so competitive he said the company was keeping fairly quiet about it.

On the day the resource estimate came out Atacama’s share price climbed 5¢ to $5.30 on very thin volume.