MINING IN CHILE — Project opportunities draw Canadian

The lure of large-tonnage, bulk-minable gold and porphyry copper deposits has a large number of Canadian juniors seeking opportunities in Chile.

Lacking the financial resources of their major-sized counterparts, these companies have generally set their sites on relatively small projects which do not require considerable infusions of capital.

In northern Chile, Northgate Exploration (TSE) has a 35% interest in the Choquelimpie gold mine, a former heap-leach operation. Last year, a US$3.6-million plant was constructed for the purpose of rewashing spent ore that had been stockpiled from past production.

Initial production from this operation began in October, with monthly recoveries averaging 62,200 grams (2,000 oz.) gold and 777,500 grams (25,000 oz.) silver. The original feasibility study projected the recovery of 1.09 million grams (35,000 oz.) gold over two years. Production in 1994 is estimated at 622,000 grams (20,000 oz.) gold and 7.8 million grams (250,000 oz.) silver at an operating cost of US$110 per oz. gold equivalent. In addition to producing gold and silver, the rewashing project has the added benefit of neutralizing the heaps to an environmentally acceptable level. The property also has exploration potential for underground sulphide reserves, and Northgate is seeking partners to pursue this venture. About 80 km north-northeast of Copiapo, Kaleeda Enterprises (ASE) and mining consultants R.F. Fry & Associates (Pacific) are jointly developing two copper-gold plays and a gold tailings operation.

Within the next few weeks, Kaleeda plans to drill the Main vein at the Centauro copper-gold project and start reprocessing tailings at the Planta Omega property.

The three projects are being leased to the joint venture, subject to a modest royalty.

In the Maricunga district, 160 km east of Copiapo, BDG Pacific Resources (VSE) holds a 7% royalty interest in the Pepa gold mine. Production began in March, 1990, but was suspended last year when capital dried up. Measured, indicated and inferred reserves amount to 330,000 tonnes averaging 9 grams gold per tonne.

Elsewhere in the Maricunga district, Arizona Star Resource (VSE) is continuing with exploration and prefeasibility work on its Aldebaran gold project. The company can earn a 51% interest by spending US$4 million on exploration and paying US$2 million by this September. One of the zones — Cerro Casale — contains an estimated geological resource of 90 million tonnes grading 0.72 grams based on a cutoff of 0.51 grams. The deposit is minable by open-pit methods, with a stripping ratio of about 1-to-1. Recently, Arizona Star signed a deal with a Chilean company to earn an interest in three other properties, adjacent to the Aldebaran, where previous work outlined four gold-mineralized stockwork zones.

Meanwhile, in the Cordillera de la Costa region of southern Chile, Vancouver-based Arauco Resources (VSE) has acquired 21 properties covering 420 sq. km. In 1990, the principals of the company recognized that, despite its favorable geology, southern Chile remained essentially unexplored. Subsequently, they began amassing land in the region.

Arauco’s most advanced projects are Barba Rubia and Joya, both of which are near Curico, 200 km southwest of Santiago.

The former consists of 10 concessions covering a large, hydrothermal alteration system which hosts several chalcedonic, silicified zones with anomalous gold values of up to 7.1 grams.

At the 2,400-hectare Joya property, gold mineralization is associated with a swarm of northwesterly-trending quartz veins. This zone, which can be traced for up to 9.5 km, has returned values of up to 15.3 grams.

Arauco plans to explore both projects in detail.

Precious metals are not the only target of Canadian juniors active in the country. Adex Mining (TSE) and Trans America Industries (VSE), for example, are focusing their efforts on industrial mineral projects.

In northern Chile, Adex has acquired a pair of rutile properties, Barranca Negra and La Rosada. At the former, preliminary surface work has indicated a significant reserve grading 1.02% TiO2, while at La Rosada, a larger reserve, averaging 2.5% rutile, has been outlined.

About 95 km southeast of Antofagasta, Trans America and its affiliate, Boron Chemicals International (VSE), have been developing the 19,600-hectare Aguas Blancas iodine property. Several years ago, a major U.S. company spent US$4.5 million on the concession, establishing reserves of 29.6 million tonnes grading 683 grams iodine per tonne, 33.1% sodium sulphate and 4.5% sodium nitrate. The mineralization exists in flat-lying caliche formations (surface deposits impregnated with crystalline salts).

However, low iodine prices have forced the partners to concentrate on developing a high-grade sodium sulphate reserve which overlies the caliche deposit. Proven reserves of 385,000 tonnes grading 83% sodium sulphate have been established for this zone.