Calingasta, Argentina — The acquisition of the Casposo gold-silver project in the province of San Juan provides
The Toronto-based junior has been exploring Central America since Laurence Curtis formed the company in 1996. Curtis, a geologist, is the company’s president and CEO.
Intrepid has exposure in El Salvador through two key projects: Aldea Zapote, a joint venture with
Curtis had started looking seriously at Argentina in late 2001.
“We needed to expand out from El Salvador — it’s a great country, but we were getting a bit stale,” he told The Northern Miner during a recent site visit. “Argentina was getting beaten up so much with the peso that I felt there was good opportunity. I have always liked the geological potential of Argentina. The first time I was here was in 1971.”
In May 2002, Intrepid struck a deal with three arm’s-length vendors to purchase a 100% interest in a 35-sq.-km mining lease known as Casposo by making certain option and property payments. The property is in the Andean Cordillera Frontal mountain range of western Argentina, along the southern projection of the El Indio gold belt. Formed along a convergent plate, the Cordillera Frontal chain of mountains was created by the subduction of the Nazca plate beneath the South American continent.
The project centres on a 12-sq.-km package of hydrothermal alteration and veining, including a 3-km-long corridor of mineralized quartz veining that is classified as an intermediate low-sulphidation, epithermal precious metal-enriched system.
Casposo was previously held by Battle Mountain Gold Mining and subsequently Newmont Mining before being transferred to Eduardo Machuca, a former employee and one of the property’s vendors, who now serves as Intrepid’s Argentina manager. Battle Mountain tested only about 750 metres of the corridor to a depth of 100-250 metres, with 8,600 metres of drilling in 46 holes.
In the second quarter of 2000, on the eve of the Newmont merger, Battle Mountain unveiled the results of a preliminary scoping study that identified a resource of 1.7 million tonnes grading 6.38 grams gold and 115 grams silver, equivalent to 350,000 oz. gold and 6.4 million oz. silver. The 2000 study used a gold price of US$300 per oz. and gravity concentrate recoveries of 98.5% for gold and 96.7% for silver. Battle Mountain felt there was “excellent potential” to expand this resource with additional drilling.
The partially defined resource is confined to three main veins, Aztec, B and Inca, all of which are in the Kamila zone, which extends some 400 metres along strike. High-grade gold and silver mineralization is exposed at surface along a topographic high and known to extend to a depth of at least 200 metres. Intrepid believes the project is amenable to open-pit and shallow underground mining. The Kamila deposit remains open at depth, with increasing silver grades.
Other surface expressions of vein structures have yet to be adequately drill-tested. In particular, the Mercado zone, a robust quartz vein system with a strike length exceeding 500 metres some several hundred metres northwest of Kamila, has only been tested by 10 widely spaced drill holes. Drilling of this zone proved problematic. Many of the holes deviated and appear not to have intersected the vein structure. Better results included 7 metres grading 9.5 grams gold and 405 grams silver at 35 metres below surface. Historic trenching on the Mercado structure had returned 15 metres averaging 3.38 grams gold and 46 grams silver.
The Casposo project lies at an average elevation of 2,500 metres in rugged, rocky terrane, 150 km northwest of the city of San Juan. The nearest town is Calingasta, a small village of about 1,500 people, 30 km to the southeast. The property is road-accessible, with a paved road within 5 km of the property boundary. A hydro-generated power line passes within 10 km of the site.
Curtis believes Casposo was a political casualty of the Newmont takeover: “I am hoping we can find a million ounces here, but if we can substantiate half a million ounces, I think we’re in good shape.”
Royalties
Intrepid can acquire all of the mining lease by spending US$600,000 on exploration and paying US$300,000 over two years. It must present the vendors with a completed scoping study by July 1, 2004. The project is subject to advance royalty payments of US$1 per oz. gold-equivalent up to a maximum of US$450,000 due July 1, 2005, in addition to advance royalties of US$150,000 paid annually for three years or until the property reaches commercial production. The vendors retain a net production royalty of US$6 per oz. gold-equivalent.
Battle Mountain discovered Casposo in 1998 while following up on selected targets derived from satellite data and favourable geology. Anomalous stream-sediment samples and mineralized float were quickly followed by the discovery of a showing containing several outcropping veins at Kamila that yielded 5.65 grams gold and 59 grams silver across 63 metres. Battle Mountain had been exploring in the province of San Juan since 1993, and at its peak controlled more than 2,700 sq. km of exploration licenses. Andrew Hodgkin, a geological consultant to Intrepid, said Casposo was a low-ranked, strong colour anomaly set amongst many others. “We don’t expect to have a very strong colour anomaly with these low-sulphidation systems,” he said. “It’s most unusual. Exploration is more boot leather than high-tech.”
The discovery was made about 1 km away from where Puma Minerals, a partially owned subsidiary of Bema Gold, had drilled a copper-gold porphyry target in a joint venture with Argentina Mineral Development.
Volcanic tectonic basin
In San Juan province, the Cordillera Frontal is underlain by marine sediments (shales, sandstones and conglomerates) of the Carboniferous Cerro Agua Negra Formation. These sedimentary sequences are overlain by a thick intrusive and volcanic sequence assigned to the Permian-Triassic Choiyoi group.
Basal andesite volcanic flows, tuffs and breccias underlie the Casposo property. These, in turn, are overlain by rhyolite, rhyolite-dacite breccias and ignimbrite flows. The volcanic units dip gently to the east at 10-30 and are crosscut by north-south-, east-west- and northwest-southeast-striking structures. “Basically, this is a volcanic tectonic basin filled with Permian-Triassic volcanics, and we’re kind of in the middle of that,” explained Hodgkin. “There is not a huge tectonic complication, but there is a lot of detailed tectonic complication.” A plethora of rhyolitic porphyry and andesitic dykes, mostly north-south but some east-west, transect the volcanic units.
The epithermal vein system is oriented along a northwest-southeast-trending corridor and dips 60-70 to the southwest. Some of the veins are in a north-south direction and dip to the west.
The epithermal system is considered high-level, with bonanza grades typical of boiling zone systems. The structurally controlled system has associated sinistral shearing and later low-angle block faulting. The system formed together with the volcanic development of the basin. “There is no question the mineralization is contemporary with the volcanics,” said Hodgkin. “It’s not a much later event.” The quartz vein and stockwork mineralization occurs in both the rhyolites and andesites.
Determined to advance the project to prefeasibility, Intrepid is trying to verify the resource estimate while carrying out metallurgical tests. Four areas on the K
amila vein system and one area centred on the Mercado vein were systematically sampled in a grid pattern. Representative surface samples of about 20 kg from each of the five zones were submitted for metallurgical tests. The average composite grade of three surface zones sampled from the Aztec and B veins (Kamila) was 6.8 grams gold and 121 grams silver. A composite sample from the Inca vein returned a much higher grade of 115 grams gold and 569 grams silver across a width of 10 metres. The Mercado sample ran 4.1 grams gold and 140 grams silver.
Bottle roll tests at the University of San Juan yielded recoveries of 85-94% for gold and 70-94% for silver on minus 80 mesh, as well as 91-96% for gold and 82-99% for silver on minus 150 mesh sub-samples. In addition, a gravity test on the high-grade Inca sample indicated a 25% recovery. Reno, Nev.-based Kappes, Cassiday & Associates replicated the results. Recoveries for 96-hour leach tests averaged 94% for gold and 81% for silver on minus 150 mesh samples.
“These are much better recoveries than I am used to, working with silver systems,” said Curtis.
First phase
Intrepid’s geologists re-mapped and sampled the Kamila area in detail prior to completing a first phase of drilling this spring that included three twin holes, 10 infill holes and three stepout holes to test the southern extension of the system. The re-mapping program distinguished five types of different veins and accurately defined their orientation. The higher-grade mineralization occurs in grey-greenish, colloform-banded, re-brecciated quartz veins, which are 3-10 metres wide and sometimes include 1-4 parallel sets.
“If you get a vein that looks gorgeous but is not greenish, it won’t run,” said Curtis. “Re-brecciation also seems to be key.”
A microprobe study by Ottawa-based Kishar Research on selected core sample taken 60-150 metres below surface shows precious metal mineralization occurs in the form of zoned electrum, native silver, acanthite and complex silver sulphosalts. Associated base metal sulphides include minor sphalerite, chalcopyrite, galena and lead selenide. Arsenopyrite and stibnite occur in the stockwork zones adjacent to the gold-bearing veins.
During the first round of drilling, Intrepid used HQ (63.5-mm core diameter) triple tube to improve on historic core recoveries of about 70%. In general, recoveries averaged 90%, which may account for improved grades in two of the three twin holes relative to Battle Mountain’s holes. Samples from some of the deeper material in the twin holes will be tested to see how it behaves.
The infill drilling targeted the Aztec, Inca and B veins over a total strike length of 600 metres and to a vertical depth of 175 metres. Notable intercepts included:
— 13.3 metres grading 45.4 grams gold and 302 grams silver on the Aztec vein in twin hole 47;
— 6.5 metres of 15.97 grams gold and 161 grams silver on the B vein in hole 57; and
— 5 metres of 17.17 grams gold and 331 grams silver on the Inca vein in hole 58.
“The drilling substantiates the often spectacular nature of the bonanza veins at Casposo,” said Curtis. “The statistics of this first phase were good, so the next phase is to move north on Mercado to see if this really has some legs.” Intrepid has begun to re-map and sample all of Mercado in detail.
“We’re going to get the block model resource and the metallurgy done, and by June we’ll be drilling phase-2 at Mercado, which should add to the resource,” said Curtis. In addition, Intrepid is planning a program of wildcat drilling to test some of the outlying targets. Regional mapping has outlined a number of silica and silica-carbonate veins that yielded a 13-gram grab sample, 2 km north of Kamila.
Farther to the north, a complex system of colloform-banded epithermal veins, up to 20 metres wide, contains anomalous silver and mercury. Intrepid has recognized a stratigraphic control to the mineralization that is basin-wide and believes some of the outlying targets may be higher in the system and in need of deeper drilling. Curtis said fluid inclusion work shows Casposo to be a polyphase or multi-brecciated sequence, which means the boiling zone is moving up and down.
“We have some satellites out there that could be stand-alone hydrothermal systems,” he added.
Intrepid has $750,000 in working capital and 25.5 million shares outstanding, or 34.7 million fully diluted. Major shareholders include
In early April, Intrepid announced plans to raise up to $4 million by way of a brokered private placement of 6.7 million units priced at 60 apiece. Each unit will consist of one share and a half-warrant. A whole warrant will entitle the holder to an additional share at 75 for 12 months.
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