LATIN AMERICA — Sulliden steps up drilling at Peru’s Las Huaquillas

At its Las Huaquillas polymetallic property in northern Peru, Sulliden Exploration (SUE-M) has launched a third phase of drilling aimed at outlining an epithermal gold-silver zone and two copper-gold porphyry systems.

The project comprises 8,800 ha and lies within 15 km of the Ecuadorian border. It is accessible by road from the nearby town of San Ignacio, which, in turn, is a 400-km drive from the coastal city of Chiclayo.

Geologically, Las Huaquillas is in the Miocene Metallogenic belt of central and northern Peru. The belt stretches for several hundred kilometres along the Western Cordillera and is divided into two sub-belts known as Quiruvilca-Pierina and the Michiquillay-El Toro, to the west and east respectively. Las Huaquillas is in the northern extension of the latter sub-belt.

Locally, the property is underlain by intermediate volcanics of the Jurassic Oyotun Formation, which were intruded by Jurassic- and Cretaceous-age diorites and granodiorites. Satellite imagery indicates that a large caldera, characterized by concentric and radial fracture patterns sits at the northern limit of the property.

Sulliden optioned the property from two local firms in 1996 and has since earned a 100% interest by spending more than US$505,000 on exploration, paying US$1.28 million in cash and issuing 400,000 shares. (An additional 75,000 shares must be issued if commercial production is reached.)

Previous exploration revealed low-grade disseminated and high-grade vein and stockwork gold mineralization in several areas on the property. One of these, Los Socavones, was outlined with a resource of 2.6 million tonnes averaging 2.69 grams gold and 27 grams silver per tonne, plus 1.09% zinc, 0.18% copper and 0.34% lead. Sulliden has since estimated that the resource contains 6.6 million tonnes grading 2.09 grams gold and 25.2 grams silver.

Most of the work completed by Sulliden to date has focused on Los Socavones, which occurs at the northeastern end of a generally northeasterly trending, southeasterly dipping fault. There, mineralization is found in a series of polymetallic sulphide veins and veinlets that form a high-grade stockwork surrounded by a low-grade halo of disseminated pyrite. Tertiary-age, sub-volcanic porphyritic andesites intruded by quartz diorites host the mineralization.

In early 1997, four shallow holes were drilled to confirm results obtained by previous operators, which drilled seven drill holes along 400 metres of the zone’s strike length and developed 1,200 metres of underground workings to a depth of 200 metres. As well, core from the original holes was resampled and a stepout hole was drilled west of the deposit, where mineralization was previously considered closed, to test a geophysical anomaly.

Hole 97-3, drilled at the zone’s northeastern end, intersected 25.5 metres (from 30 to 55.5 metres) averaging 1.03 grams gold and 10.4 grams silver. Hole 5, collared 30 metres northeast of hole 3, returned 1.5 metres (29.5 to 31 metres) grading 1.27 grams gold and 6.7 grams silver.

Hole 97-7, drilled a further 60 metres southwest of hole 3, returned 42 metres (28.5-70.5 metres) of 2.05 grams gold and 24.6 grams silver, including 13.5 metres averaging 4.3 grams gold and 70.4 grams silver. Stepping out another 60 metres to the southwest, hole 97-8 intersected 70.5 metres (7.5-78 metres) averaging 2.59 grams gold and 18.2 grams silver, including two higher-grade zones. Both holes were drilled to test the width of the zone in its middle and crossed the same stratigraphic section as two of the previously drilled holes.

Starting at surface, stepout hole 97-6 averaged 1.09 grams gold and 25.8 grams silver over 28.5 metres, the first 6 metres of which graded 3.17 grams gold and 64.6 grams silver. Sulliden notes that this intersection represents a minimum width and grade as it was collared directly in mineralization.

Encouraged by the initial results, Sulliden drilled six more holes to test for strike and depth extensions to mineralization. Three holes, 97-9 to -11, were spaced 300, 500 and 100 metres, respectively, southwest of the known limit of the deposit; the remainder were collared near existing holes but drilled 100 metres deeper into the system.

Hole 97-9 returned 14 metres grading 2 grams gold and 45 grams silver, starting at a downhole depth of 97.5 metres; a zone of equivalent width (221-235 metres) averaging 2.45 grams gold and 13.6 grams silver was intersected in hole 10. Hole 11 returned 3.7 metres of 1.09 grams gold and 10.1 grams silver.

Each of holes 12, 13 and 14 were successful in extending the zone down-plunge. Results included: a 23.4-metre interval of less than a gram gold, including 2.1 metres (252.5-254.6 metres) averaging 9.27 grams gold and 106.1 grams in hole 12; 13.5 metres (181.7-195.2 metres) of 2.86 grams gold and 57 grams silver, and 28.5 metres of 1.67 grams gold and 15.2 grams silver, in hole 13; and 2.3 metres of 0.83 gram gold and 17.5 grams silver in hole 14. Hole 14 intersected three other gold-bearing zones, though all are considered separate from the Los Socavones zone.

Drilling to date has outlined the Los Socavones zone over a strike length of 1 km and down to a depth of 200 metres, where mineralization remains open. The zone averages 20 metres in true thickness but varies from 1.3 to 48.5 metres.

Thin sections show that the gold occurs in free form, electrum, tellurides and as inclusions in pyrite and sphalerite. Also, a positive correlation between high gold values and base metals, especially sphalerite, is suggested by visual inspections of drill core.

Concurrent with drilling, an induced-polarization (IP) survey indicates that the zone may continue an additional 1 km to the southwest. Soil sampling taken along the anomaly has returned up to 1.46 grams gold, and two samples of stream sediments ran 10.6 and 15.4 grams gold.

As well, previous operators uncovered two showings of narrow, gold-bearing quartz veins in the middle and southwestern limit of the anomaly. Sulliden drilled one hole between those showings but has not reported any results; the company plans to drill another near the showing at the anomaly’s southwestern limit.

Porphyry mineralization

While results from Los Socavones are encouraging, Sulliden is turning more of its attention to the property’s potential for hosting porphyry-style copper-gold mineralization. Two such systems, dubbed Cementerio and San Antonio, were discovered in the 1997 exploration program.

The Cementerio area lies 1 km due south of Los Socavones and measures 1.5 km in diameter. It is characterized by a donut-shaped IP anomaly and coincident low magnetic anomaly.

Soil sampling in the area has returned values of up to 1.8 grams gold, 0.22% copper and 104 grams molybdenum. Anomalous values of those metals were also detected in grab samples from outcrops.

Three reconnaissance holes were drilled in the northern portion of the system in early 1997 and followed up by a fourth hole later that year. The best results came from hole 97-4, which intersected 155 metres (0-155 metres) averaging 0.35% copper, 0.8 gram gold and 3.9 grams silver. That interval included 99.5 metres (55.5-155 metres) averaging 0.47% copper, 0.11 gram gold and 4.5 grams silver, within which 13.5 metres graded 0.61% copper, 0.14 gram gold, 4.4 grams silver and 0.02% moly.

The host material consists of sub-volcanic porphyritic andesites and volcaniclastic rocks. A vertical profile of the system from core logging is described as a thin layer of oxidation that extends from 1 to 15 metres in depth and is underlain by 70 metres of advanced argillic alteration containing disseminated pyrite, chalcopyrite and molybdenite. This is followed by 50-90 metres of leached and silicified hornfels with hydrothermally deposited magnetite, as well as up to 10% pyrite, 2% chalcopyrite and trace amounts of molybdenite; finally, propylitic alteration, which decreases in intensity at depth, continues to the bottom of each hole and is characterized by patches of epidote and veinlets of calcite.

Situated 1 km northwest of Los Socavones, San Antonio
is distinguished by a 1.6-km-long-by-1.4-km-wide area with soils containing between 200 and 2,589 parts per million copper (or 0.26% at the higher end). A crescent-shaped IP and high magnetic anomaly coincides with the soil anomaly.

One deep hole drilled at the southern end of the soil anomaly returned 100.7 metres of massive diorite containing 5-10% quartz-sulphide-sericite-chlorite veinlets and locally disseminated chalcopyrite. The interval averaged 0.28% copper, 0.38 gram gold and 2.6 gram silver, starting at a hole depth of 295.8 metres. Within that interval, 69 metres averaged 0.32% copper, 0.45 gram gold and 3 grams silver, including 21 metres grading 0.46% copper, 0.74 gram gold and 4.9 grams silver.

About 500 metres to the northwest, a 350-metre-long trench was dug in the heart of the system. Channel samples yielded an average of 0.13% copper over the entire length of the trench, with 28.6 metres averaging 0.24% copper, plus 0.15 gram gold and 2 grams silver.

The trench uncovered highly leached, argillic, sericitic and silicified diorite containing 5-15% veinlets of limonite and sporadic malachite. It measures 1 metre in width and extends to between 1.5 and 3 metres below surface.

In the coming weeks, six holes are to be drilled in the San Antonio system and one in the Cementerio. At the former, Sulliden plans to collar four holes in the vicinity of the trench, and the remainder near the discovery hole. A strong gold-in-soil anomaly will be tested in the Cementerio area.

In all, 2,000 metres are budgeted for the current phase of drilling. Once completed, more than 6,000 metres will have been drilled on the property.

Independent engineering firm Kilborn Engineering Pacific is managing the exploration program. The company also assisted Sulliden with its initial due-diligence review.

Sulliden has 12.5 million shares outstanding, or 14.4 million fully diluted. During fiscal 1997, the company raised $4.4 million. It currently has $2.1 million in working capital.

In addition to Las Huaquillas, the company is exploring for gold on two properties in the Baie Verte region of western Newfoundland.