The major will spend US$5 million over six years to earn a 70% interest in the Paraguari project, 100 km southeast of the capital of Asuncion. Newmont can, in addition, spend another US$4 million, a portion of which would finance a feasibility study, to increase its stake to 75%.
When Newmont is fully vested and if production is approved, Yamana can elect to participate in the project or dilute to a carried interest. During Newmont’s capital payback period, Yamana’s interest would be 10%, rising to 15% thereafter.
Yamana has been active in the country for more than five years and is responsible for having found the first gold in bedrock in Paraguay’s history.
The Paraguari project is in a large alkalic province in the country’s southern region.
In early 1998, Yamana drilled a small alkalic intrusive breccia pipe at the Picua prospect, encountering 16 metres of gold mineralization grading 2.5 grams gold per tonne starting at a down-hole depth of 10 metres. Deeper in the hole, the drill cut another 4-metre interval grading 3.25 grams gold. In all, Yamana drilled 12 core holes, totalling 1,345 metres.
The company also conducted ground magnetics and collected stream-sediment and pan concentrate samples across the 35,000-sq.-km property. The work resulted in the discovery of the small breccia pipe, measuring just 50 metres in diameter, as well as other anomalies.
Alkalic intrusive breccias can be significant sources of gold mineralization. For example, the Cripple Creek district in Colorado produced more than 20 million oz. gold, and still contains significant resources.
Newmont plans to begin its exploration with broad geophysical and geochemical surveys.
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