Placer Dome advances Cerro Casale gold-copper project

Since entering into a joint-venture agreement last October, Placer Dome (PGD-T) has completed US$10.5 million worth of feasibility work on the Cerro Casale gold-copper porphyry deposit and spent a further US$4 million exploring other parts of the Aldebaran property.

Placer acquired the right to earn a 51% interest in the Chilean property from owners Arizona Star Resource (AZS-T) (51%) and Bema Gold (BGO-T) (49%) for US$20 million in cash and private placements.

Placer must also complete a final feasibility study on the Cerro Casale deposit by February 2000, at an estimated cost of US$25 million, and spend a minimum of US$15 million over two years on exploration of targets outside of Cerro Casale. If a positive production decision is made, Placer would have the right to earn a 51% interest in the project by arranging and guaranteeing up to US$1.3 billion in mine financing.

The Aldebaran property covers 450 sq. km of ground in the Maricunga region of the Andes Mountains, 150 km inland from the Pacific coast. Besides the large, low-grade Cerro Casale gold-copper porphyry deposit, Aldebaran hosts several other near-surface gold-bearing zones.

A prefeasibility study completed by California-based Mineral Resource Development (MRDI) in late 1997 suggests Cerro Casale could be developed as a 150,000-tonne-per-day open-pit and milling operation capable of producing 916,000 oz. gold and 282 million lbs. copper per year over a mine life of 16 years.

Assuming a copper credit of US$1 per lb., cash operating costs are projected at US$79 per oz. gold, whereas total costs (including life-of-mine capital) would be US$182 per oz. Capital costs are pegged at a lofty US$1.3 billion, with a payback of 6.5 years.

MRDI estimates Cerro Casale contains a minable resource of 19.5 million oz.

gold and 5 billion lbs. copper. The sulphide portion of the body is estimated to contain 791 million tonnes grading 0.71 gram gold per tonne and 0.29% copper, while an outcropping oxide portion is calculated at 56 million tonnes grading 0.84 gram gold. Approximately 85% of the reserve is categorized as proven and probable.

The stripping ratio is projected to average 2.6 to 1 over the life of the mine, with approximately 50 million tonnes of pre-stripping.

As part of its feasibility work, Placer has put down 15 deep diamond drill holes and two geotechnical holes into Cerro Casale. Bema President Clive Johnson told shareholders at the company’s recent annual meeting that these holes have not only confirmed the grade of the deposit, but have enhanced some parts of the body.

Drilling has continued to expand Cerro Casale to the southwest: hole DD-91 intersected 342.1 metres grading 0.96 gram gold and 0.25% copper, starting at a downhole depth of 428 metres; and hole DD-101 encountered 411.7 metres grading 0.97 gram gold and 0.2% copper, beginning at 446 metres. The deposit remains open in this direction and to depth.

In addition, a new zone of mineralization was discovered 200 metres north of Cerro Casale. Hole DD-96 encountered a 72-metre interval grading 0.73 gram gold and 0.23% copper, starting at a downhole depth of 698 metres, as well as an 82-metre interval grading 0.59 gram gold and 0.34% copper, starting at 780 metres.

Although it is only one hole, Johnson is quite excited about its potential.

“It has the potential to assist the economics of Cerro Casale . . . or be another discovery in its own right.”

Placer has collected 60 tonnes of material from Cerro Casale for metallurgical testwork, including 24 composite samples selected for “metallurgical mapping”. Flotation and work indices testing are in progress.

Bema’s testwork involved standard copper flotation to produce a gold-rich copper concentrate; recoveries were roughly 74% for gold and 89% for copper.

Placer is investigating other approaches, including an on-site autoclave. A series of hydrometallurgical processing tests are in progress.

Placer is conducting engineering scoping studies designed to optimize mine project economics. Various ore and waste transportation options, crushing options and tailings pond locations are being examined. Johnson said Placer has also been evaluating the economics of a larger-scale mine/mill complex.

“It’s too early to say where they will end up, but I know they are playing with 180,000 tonnes per day, which would yield over 1 million oz. gold per year.”

A potential new water source was found 40 km closer to the mine and at a higher elevation than the one used in the prefeasibility study (which would have required construction of a 180-km pipeline). The new site at Piedra Pomez is expected to result in lower capital and operating costs.

In terms of exploration, Placer has completed a total of 9,600 metres of drilling on targets outside of Cerro Casale. Eighteen holes totalling 7,200 metres were completed on the Cerro Roman zone, 7 km northeast of Cerro Casale. The work confirmed earlier results indicating a mineralized zone measuring 500 metres by 400 metres and having a minimum depth of 300 metres.

Some typical assay results include:

* 47 metres grading 0.63 gram gold and 0.12% copper, starting at a downhole depth of 4 metres; 112 metres of 0.57 gram gold and 0.13% copper, starting at 80 metres; 64 metres of 0.97 gram gold and 0.17% copper, starting at 192 metres; and 30 metres of 0.65 gram gold and 0.17% copper, starting at 256 metres in hole RD-2;

* 94.9 metres of 0.63 gram gold and 0.1% copper, starting at 3.1 metres; and 22 metres of 1.02 grams gold and 0.17% copper, starting at 124 metres in hole RD-13; and

* 88 metres grading 1.01 grams gold and 0.16% copper, starting from a downhole depth of 52 metres in hole RD-16.

A potential new zone was encountered at the north end of Cerro Roman. Hole RD-10 intersected 52 metres grading 0.65 gram gold and 0.42% copper, starting at a downhole depth of 118 metres.

Placer completed a further 2,400 metres in seven holes on the Eva zone, 5 km northwest of Cerro Casale. Drilling confirmed and extended the zone to at least 500 metres in length, 150 metres in width and 300 metres to depth.

Results include 18 metres grading 1.14 grams gold and 0.07% copper, starting at 44 metres, and 16 metres of 1.13 grams gold and 0.1% copper, starting at 182 metres, in hole EVD-2.

A resource study on both Cerro Roman and Eva is expected to be completed in the latter part of 1998, and Placer is expected to resume exploration drilling on the Estrella, Anfiteatro and Vetas zones at about the same time.