Orvana aims to double Pederson resource — Potentially large target attracts attention of BHP

After a hiatus of more than a year, Orvana Minerals (ORV-T) is preparing to resume drilling at the Pederson project in the central Altiplano region of western Bolivia.

Reflecting a renewed interest in sediment-hosted gold deposits, the Denver-based company believes it stands a chance of doubling the size of the known mineral resource.

Orvana and its Bolivian partner, Empresa Minera Unificada S.A. (EMUSA), have worked on Pederson since they acquired the property in 1992. However, Orvana scaled back exploration at Pederson in 1997 in favor of its Don Mario gold-silver project in the eastern part of the country.

The work at Pederson is part of a larger exploration program to test the mineral potential of a string of properties stretching south from the Kori Kollo gold mine, 88%-owned by Battle Mountain Gold (BMG-N) and situated north of Oruro (T.N.M., Oct. 5-11/98). This string of properties is in a corridor of similar rock lithologies that runs southeast for 240 km, with the Pederson property at the southern end.

The 2,936-ha project was formerly called San Bernardino; it was named to honor Robert Pederson, the Orvana geologist who is credited with finding the deposit. He died in late 1993. The total land package, including nine additional targets, cover 20,450 ha.

Mineralization at the Kori Kollo mine, the nation’s largest gold producer, is hosted in Tertiary-aged dacitic intrusive rocks that have metamorphosed the surrounding Silurian sandstones and shales to phyllites and slates. The Silurian siliciclastic rocks occur in a belt running southeast from the mine.

Using Kori Kollo as its model, Orvana and EMUSA have delineated a resource, within these same Silurian rocks, of 2.3 million oz. gold contained in 51.6 million tonnes grading 1.4 grams per tonne. The mineralization at Pederson is hosted in the centre of an anticline of siliciclastics and is thought to be related to nearby igneous activity. Within the stratigraphy at Pederson, upper siltstones and greywacke form better hosts than the lower conglomerate. So far, Orvana and EMUSA have completed 19,000 metres of reverse-circulation drilling at Pederson and plan to drill 10,000 metres more in this next round.

EMUSA geologist Osvaldo Arce cites eight areas around the project where drilling has potential for expanding the deposit’s size. Priority will be given to 14 holes.

As the Pampa Ridge-Main zone hosts most of the known deposit at Pederson, drilling will concentrate on each flank of the anticline. Much of the drilling will also centre on the North Pampa zone, which remains open to the north. The drilling will test induced-polarization anomalies heading off northward into the pediment. Arce says these areas offer the best potential for doubling the resource.

While drilling will also test the Toroca zone, situated uphill and west of the Main zone, Orvana also plans to drill several of the additional properties in the exploration corridor. The first priorities will be the Vinto property, which was last drilled in 1996, as well as the Isvaya and Golden Snake properties.

Recognizing the potential for sediment-hosted gold mineralization at Pederson, Australia’s Broken Hill Proprietary (BHP-N) recently completed an option agreement to explore the property plus nine other prospects across the central Altiplano region.

The central Altiplano resembles the deserts of the Great Basin in Nevada and Utah. The hills at Pederson, covered with grasses and the occasional cactus, overlook a vast expanse of bright white salt flats of Lake Poopo.

BHP became interested in the region in May, when it signed a letter-of-understanding with Orvana and EMUSA. The Australian major saw characteristics at Pederson similar to those at the Muruntau and Kumtor gold deposits in Central Asia. Unlike the deposits at Carlin in Nevada, which are predominantly hosted in limestones and impure limestones, Pederson is hosted in sandy siltstones and sandstones with little carbonate. The Muruntau deposit, in Uzbekistan, occurs in quartz stockworks along a major shear zone, in late Paleozoic phyllites derived from a turbidite sequence. Kumtor, 66%-owned by Cameco (CCO-T) and situated in Kyrgyzstan, is hosted by Proteorzoic and late Paleozoic sediments.

Gold mineralization at Pederson is associated with faults and fracture zones where the rock is strongly bleached. Despite much of the lithologic and mineralogic similarities, Pederson has a long way to go before it ever can be considered in the same size category as Muruntau and Kumtor.

BHP can earn a 60% interest in the exploration project and a 70% stake in the other properties, including Vinto, Isvaya, Golden Snake, Candelaria, Nobel and four others. In return, the major is required to spend a minimum of US$800,000 in the first year and no less than US$1.5 million in subsequent years. Orvana and EMUSA will each retain a 20% interest in Pederson.

BHP will make yearly option payments of US$200,000, though Orvana can require that BHP make a US$1-million private placement in its company on the second and third anniversaries of the agreement in place of the option payment. BHP, in turn, can opt to make the US$1 million payment in cash.

Orvana’s chairman, Neil Hillhouse, says BHP is the right company for the project because “they have the vision for this possible mineral belt, and the money and resources to do something with it.”

This renewed activity in Pederson comes at a time when Orvana and EMUSA are developing their Don Mario copper-gold property in eastern Bolivia (T.N.M., Sept. 28-Oct. 4/98). Construction of a decline into the lower mineralized zone began in mid-September as part of the final feasibility study.