Since beginning an aggressive drilling program just three months ago,
Manhattan has outlined a near-surface oxide gold resource of more than 1.2 million oz. overlying the TG-1 massive sulphide deposit, while confirming the TG-1 sulphide resource. At the same time, crews have discovered another, potentially large, but lower-grade sulphide resource at the TG-3 gravity anomaly, the first of seven anomalies to be drill-tested.
On a recent site visit, The Northern Miner learned that the oxide gold resource will play an important role in developing Tambo Grande. It averages a much-higher-than-expected 4.5 grams gold per tonne (plus significant silver) and represents a low stripping ratio target of 1-to-1, which could be mined for quick payback. In addition, the oxide cap represents a large portion of the pre-stripping required to begin mining the base metal sulphides at TG-1.
A polymetallic massive sulphide deposit, TG-1 was discovered in 1979 by Bureau de recherches geologiques et minieres (BRGM). Based on 23 holes, the French government agency estimated a resource of 42.3 million tonnes grading 2.04% copper, 1.47% zinc and 0.36% lead, plus 37.7 grams silver per tonne. The resource was deemed amenable to open-pit mining.
In late 1993, Manhattan signed a letter-of-intent with BRGM to acquire an interest in the Tambo Grande concessions, and in early 1997, Manhattan purchased the balance of BRGM’s rights to the concessions for $23 million.
It was a long time coming, but in May of this year, Manhattan finally received all necessary government approvals to begin exploration. The Peruvian government issued a decree approving Manhattan’s option to earn a 75% interest. The option agreement governs the ownership, exploration and development of Tambo Grande. The key business terms of that agreement include the following provisions:
- Manhattan is required to complete a feasibility study and financing plan within three years and elect to proceed with development of a mining project. The company will be required to meet two qualifying conditions prior to exercising the option: it must be the operator of a 10,000-tonne-per-day mining operation and have net assets valued in excess of US$100 million. These terms will be waived if another company that meets the conditions owns a minimum of 25% of Manhattan.
- Upon exercising the option, Empresa Minera Tambo Grande (EMTG) will be incorporated to develop and operate the project. Manhattan will own 75% of EMTG, with the remainder to be held by the Peruvian government through Minero Peru.
- EMTG will then have four years to develop Tambo Grande, with Manhattan responsible for arranging financing and contributing the equity portion held by the government. The Peruvian government will retain a sliding-scale net smelter return royalty ranging from nil at US60 cents per lb. copper to 5% at US$1.20 per lb.
- Manhattan will guarantee that the mining methods used will not physically affect the town of Tambo Grande (population 13,600), which partially overlies the TG-1 deposit, nor harm its citizens. (The remaining seven anomalies, including TG-3, lie in agricultural or undeveloped areas.) In addition, the tailings must not affect the agricultural areas surrounding the town.
The Tambo Grande project lies approximately 865 km north-northwest of Lima, 40 km northeast of the city of Piura and 50 km south of the Ecuadoran border. It is accessible by a paved highway that connects to the port of Paita, 107 km to the west. The project area is generally flat with low topographic relief (70 to 150 metres). The Piura River flows through the project area, cutting the southern boundary of the TG-1 deposit. A secondary tributary also flows over a portion of the deposit. The newly discovered TG-3 deposit, 500 metres south of TG-1, lies beneath a good portion of the Piura River and its flood plain.
Manhattan holds a total land package of 97 concessions covering 86,900 ha in the Tambo Grande area. This package includes: the Tambo Grande concessions, which consist of 10 concessions totalling 10,000 ha; the Lancones concessions, comprising 80 concessions for an aggregate of 73,700 ha; and the Papayo concessions, which represent seven concessions covering 3,200 ha.
Manhattan has a 100% interest in the Lancones concessions, which were acquired by staking in 1996. The concessions adjoin Tambo Grande mainly to the south and partially to the east and north.
The Papayo concessions to the south of Tambo Grande are a joint venture in which Manhattan can acquire up to a 100% interest from Cedimin. Manhattan can earn an initial 51% by spending $5 million on exploration over five years and paying $250,000.
Exploration to date
The Tambo Grande area was first known for its iron occurrences, and it was not until 1977 that BRGM, with the co-operation of the Instituto Geologico Minero y Metalurgico, identified a weak base metal and silver geochemical anomaly. BRGM was targeting old iron occurrences in a search for massive sulphides.
BRGM followed up with a self-potential geophysical survey that indicated the presence of conductive anomalies. However, because the overburden was found to be conductive, the self-potential and induced-polarization surveys first utilized on the project proved to be unsatisfactory. Gravity surveys became the tool of choice, and seven gravity anomalies were originally identified by BRGM on the Tambo Grande concessions. The TG-1 anomaly measured 700 by 350 metres in size and was the highest-amplitude anomaly mapped.
The first hole drilled at TG-1, the discovery hole, intersected 100 metres of massive sulphides grading 1.5% copper, 1.5% zinc and 25 grams silver. BRGM completed 23 holes and partially defined a resource of 42.3 million tonnes grading 2.04% copper, 1.47% zinc, 0.36% lead and 37.7 grams silver. The resource estimate was verified in 1997 by Derry, Michener, Booth & Wahl (DMBW).
After the TG-1 discovery, BRGM followed up with reconnaissance 500-metre grid gravity surveys and identified 55 anomalies in the Tambo Grande area.
In 1997, Manhattan flew aeromagnetic surveys. “We got some understanding of the magnetic signature of the district,” explained Peter Tegart, managing director. “But it didn’t really accomplish much [as] we didn’t understand the rocks we were dealing with.” He added, however, that magnetic data are now becoming quite useful as Manhattan’s understanding of the geology grows.
Manhattan followed with a systematic ground gravity survey program over the 55 anomalies in 1997-1998 and determined that 20 of the anomalies warranted drilling, while several more required further analysis.
To date, no gravity work has been done on ground north of Tambo Grande. Tegart said the northern area, held under the Lancones concessions, covers favourable geology and has yielded some magnetic response. “That’s an area on which we’re going to have to do some reconnaissance gravity surveys,” he explained.
Manhattan is investigating other geophysical methods, such as electromagnetics, that could help refine the search for massive sulphides. The company is undertaking conductivity tests on the core.
When BRGM first drilled TG-1, no systematic sampling for gold had been carried out on either the main sulphide body or the overlying oxide cap. Manhattan and DMBW had done some early limited test-sampling of the previous drilling and believed a gold content of about 1 gram for the oxide cap and a portion of the sulphides was likely.
In February 1999, Manhattan began a comprehensive program of re-logging and re-sampling the old core. A previously unassayed oxide section of BRGM’s discovery hole was found to run 5.06 grams gold and 48.1 grams silver over 18 metres.
By the end of May, Manhattan had begun an aggressive drilling program at Tambo Grande as part of an $11-million program recommended by DMBW to bring the project through the prefeasibility stage. The first phase of drilling
was designed to confirm the geological model, investigate the oxide gold potential and, if possible, expand the TG-1 sulphide deposit.
Within a month, the company had completed 41 holes in TG-1 and discovered a major gold resource in the oxide cap, while expanding the sulphide margins 50 metres to the east and west and 175 metres to the south. The sulphide resource remains open to the south and southwest, though it’s “a little bit lensey on the southern margins,” according to Exploration Manager Andrew Carstenson.
On the southwestern margin, hole 37, which was drilled from the edge of Piura River, intercepted a 54.3-metre section grading 0.7% copper, 2.3% zinc, 0.2% lead, 0.85 gram gold and 40.9 grams silver.
Richard Allan, vice-president of engineering, said the drilling has expanded the TG-1 sulphide resource to about 50 million tonnes. The gold content for the sulphides is estimated to average about 0.7 gram.
Results from the 41 new holes and the re-assaying of 21 previously drilled holes show the oxide barite cap to have an uncut, weighted average grade of 4.75 grams gold and 113.1 grams silver over a true thickness of 14 metres. This resource is overlain by 14.1 metres of sandy overburden.
The gold resource is especially well-developed along the fault margins at the sides of the sulphide deposit in two areas. “The gold resource remains open to the north and presents an exceptional opportunity to be expanded in that direction,” said Carstenson. A hole sunk by BRGM well outside the limits of the sulphides, about 100 metres to the north, intersected 4.54 grams gold and 54 grams silver over a thickness of 19 metres, starting at a depth of 20 metres.
According to Allan, the TG-1 oxide gold zone, as defined, is starting to look as if it contains 1.5 million oz. gold-equivalent. He believes the minable grade will come in somewhere between 4.5 and 5 grams gold, with a stripping ratio of about 1-to-1. This oxide cap represents a good portion of the pre-stripping required to mine the underlying sulphides and could serve to reduce the projected stripping ratio for the TG-1 sulphides to just over 1-to-1.
Manhattan has proposed a 35-hole program to chase the limits of the oxides to the north.
Metallurgy is preliminary to date. Under the guidance of AGRA-Simons, bottle-roll tests were conducted on three 10-kg composite oxide samples. Recoveries of 90% for gold and 75% for silver were achieved. Gravity separation tests revealed little coarse gold, with about a 2% recovery.
Allan said the oxide material is not likely heap-leachable and is probably better-suited to processing in a conventional cyanide-in-leach recovery plant. There is no evidence for refractory gold.
Kerry Smith, a mining analyst with First Marathon Securities, suggests a 5,000-tonne-per-day gold circuit could be built for US$70-80 million, which would allow production of more than 200,000 oz. per year for at least five years at cash costs of less than US$75 per oz.
Manhattan is evaluating tests performed on the sulphide material, and Allan said initial results are favourable for the development of marketable concentrates of 25-30% copper and 50% zinc. (Previous work by BRGM achieved recoveries of 70% for copper.)
TG-3
The discovery hole, on the southern flank of the TG-3 gravity anomaly, 1.5 km south of TG-1, intersected 42.3 metres of massive sulphides grading 1% copper, 1% zinc, 1.11 grams gold and 29 grams silver. “As we now know, if we had taken that hole deeper, we would have hit more sulphides at depth,” explained Carstenson.
At presstime, 50 holes representing about 19,077 metres of drilling had been completed on TG-3. The anomaly is still at the exploration stage and remains open to the northwest and east. It is about 1 km long and 400 metres wide, with an average thickness of about 90 metres.
While stressing that exploration is still at the preliminary stage, Allan said: “If you use a specific gravity of 4.5, you are starting to look at about 150 million tonnes sitting in that footprint. The majority of this material could be mined at about a 3-to-1 strip ratio.”
TG-3 consists of a northern and a southern mound. The former is up to 150 metres thick and has been traced laterally over an area measuring 400 by 450 metres. It sits as shallow as 140-150 metres below surface. Zinc values are typically higher in the northern lobe. The southern mound is up to 300 metres thick and has been traced over a 400-by-550-metre area. It has been hit as shallow as 121 metres below surface. The pyritic core in the southern lobe averages 0.5% copper.
Geology
The TG-1 and TG-3 deposits are hosted in the lower- to mid-Cretaceous Ereos formation, composed of submarine volcanic flows, breccias and pillow lavas (consisting mainly of basalts and andesites). The host rock contains only a minor component of felsic volcanism.
The volcanic stratigraphy is contained in a northeasterly trending graben called the Lancones Basin. It is restricted on the northwestern and southeastern sides by faults and measures 120 km long by 40 km wide.
Tegart believes the setting for the host rocks and subsequent volcanogenic massive sulphide deposits is a continental margin rift. During Tertiary times and after the deposition of the sulphides, the setting was superimposed by a southwesterly directed structural extensional environment, resulting in a series of late-stage faults that likely brought the host volcanics closer to surface.
The Tambo Grande deposits are formed in what Tegart calls third-order basins within secondary grabens internal to the main regional graben. Along the Tambo Grande trend, these second-order grabens are about 2 km wide and 7 km long. The secondary grabens form linear trends that have a chevron-type appearance. The main Tambo Grande trend includes the TG-1, TG-3, TG-8, TG-7 and B-2 gravity anomalies.
Manhattan has tested the TG-8 anomaly with a single hole that was drilled to a depth of more than 500 metres but encountered no mineralization.
To the west of Tambo Grande is a trend that extends for about 5-6 km and contains the TG-4, TG-5 and TG-6 anomalies. These trends are interpreted to represent a clustering of massive sulphide deposits. At the time of our visit, Manhattan was moving a drill on to TG-6. No results have been announced to date.
TG-1 consists of a dominant pyrite core surrounded by zoned copper-zinc mineralization. It is associated with a 100-million-tonne pyrite body. The characteristic sulphide zoning that results in base and precious metal enrichment is attributed to four separate mechanisms that, in turn, are due to the interaction with sea water on the hydrothermal sulphide system.
The TG-1 deposit consists of:
- a basal copper-rich replacement zone containing mostly chalcopyrite;
- a peripheral copper-zinc-silver zone containing chalcopyrite and sphalerite; and
- an upper copper-enriched zone containing chalcocite, digenite, covellite and bornite.
The TG-1 sulphides are capped by a gold-rich barite unit that is interpreted to be late in the hydrothermal event as the system was changing from a reducing environment consisting of sulphides to a more oxidizing environment, where it actually starts to precipitate the sulphate-barite, along with a lot of gold. A silica-iron zone directly overlies the barite unit. The silica forms a major topographic high to the north of TG-1 in the direction that the oxide gold remains open.
“The silica is definitely telling us something,” said Carstenson.
The TG-3 deposit was formed a little differently than TG-1. It grew from two separate vents spaced about 600 metres apart on the sea floor. As the two mounds grew, they eventually merged along the distal phases to form one deposit as seen today. TG-3 is hosted in the same volcanic sequence as TG-1 and in the same north-southerly trending graben. Manhattan interprets TG-3 as being slightly older than TG-1, lying 70-100 metres stratigraphically deeper. Like TG-1, it is zoned with a basal copper enriched zone and a distal copper-zinc-silver-gold zone. However, TG-3 lacks an oxide gold event
and a copper-enrichment event.
“What we think happened at TG-1,” said Carstenson, “is that the hydrothermal system was able to live its whole life, whereas TG-3 was snuffed out at an earlier stage by a volcanic eruption, so it never had a chance to fully develop.”
TG-1 and TG-3 have undergone little metamorphic overprint, nor much structural deformation.
With four rigs continuing to turn at Tambo Grande, Manhattan is nearing the end of its 25,000-metre, first-phase drill program. Drills will continue to test TG-3 and other TG anomalies. “We’re just going to try to put a hole or two into each one of them and see what we see,” said Carstenson.
A second phase of drilling will be largely directed at upgrading the reserve status of TG-1. Further drilling will be directed at expanding TG-3, and exploration is also planned for the Papayo joint-venture lands, in particular drill-testing of gravity anomalies B-5, B-3 and B-7. Additional geophysical studies are planned.
Manhattan expects to have completed a prefeasibility study in June 2000, with a full feasibility due a year later. A strong project team has been assembled: MRDI Canada is looking after resource modeling; Klohn-Crippen (SVS) is in charge of environmental and geotechnical studies; Lorax Environment has been brought in to assess acid rock drainage; and AGRA-Simons is spearheading the prefeasibility.
With good infrastructure in place at Tambo Grande, the development of TG-1 and TG-3 will require the relocation of at least half of the town’s residents and the diversion of the Piura River.
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