Metallica makes headway at projects in Mexico and Chile

Reserves have increased substantially at the Cerro San Pedro gold project near San Luis Potosi, Mexico.

Metallica Resources (MR-T) reports that oxide reserves now stand at 77.3 million tonnes grading 0.6 gram gold and 24.8 grams silver per tonne, which converts into 2.3 million ounces gold-equivalent.

The figure is based on results from 215 drill holes, comprising 49,000 metres, and represents a 35% increase from a preliminary study which pegged reserves at 54.9 million tonnes of 1.1 million oz. gold and 43.4 million oz.

silver, or 1.67 million oz. gold-equivalent.

The estimates are based on gold and silver prices of US$400 and US$5 per oz., respectively, and are part of an ongoing feasibility study.

The study calls for open-pit mining of 10 million tonnes per year at a stripping ratio of 1.47-to-1. Annual gold production is projected at 150,000 oz.; silver production at 4 million oz.

Meanwhile, farther south, in Chile, Metallica has signed a joint-venture deal with BHP Minerals to explore the 1,849-ha gold-copper project known as La Fortuna. To earn a half interest, Metallica must spend US$1.3 million on exploration over the next three years.

Initial work will entail drill-testing the Cantarito gold prospect and the Fortuna and El Negro porphyry copper-gold prospects. Previous work by BHP, between 1992 and 1994, identified these prospects through surface work and drilling of 29 holes, comprising 5,000 metres.

At Cantarito, surface samples returned 0.4-238 grams gold, whereas subsequent drilling of 14 shallow holes yielded results ranging from 4 metres grading 20.3 grams gold to about 100 metres of 0.3-0.6 gram. At El Negro, one hole intersected 100 metres grading 0.25% copper and 0.3 gram gold.

Geology in the area is characterized by a Cenozoic volcanic-sedimentary sequence that overlies a Triassic volcanic-plutonic complex. Mineralization is believed to be related to Lower Tertiary rhyolitic to dioritic stocks and dykes, with gold and copper mineralization occurring at the intersection of north-south-trending reverse faults and west-northwest-trending structures.

According to Metallica, the property has potential for hosting disseminated, stratabound or structurally controlled gold mineralization.