Roundup: We need more discoveries, part II (February 07, 2011)

Last week, we presented the Canadian exploration projects highlighted at the Mineral Exploration Roundup presented by the Association for Mineral Exploration British Columbia (AME BC). This week, we turn to the international scene.

VANCOUVER – Gordon Keep, vice-president of Fiore Financial, told delegates at Mineral Exploration Roundup – the annual conference hosted by the Association for Mineral Exploration British Columbia (AME BC) – that venture capital raised in Canada is increasingly flowing offshore.

As of mid-2010, 50% of the 9,100 mineral exploration projects held by companies listed on the TSX and TSX Venture Exchange were outside Canada. And of the 200 companies financed by Keep and long-time partner Frank Giustra in recent years, 175 were active outside Canada.

In order to attract financing, Keep said junior companies must have a clear focus and distinguish themselves from the competition. “The location of the project is important, as is the quality of management team, but number one, the asset has to have public market appeal. You have to have size. You have to have blue-sky.”

Many projects featured in the international session are in under-explored historic mining camps being revived by Canadian junior and mid-tier companies, including properties held by Ventana Gold (VEN-T) in Colombia’s California-Vetas district. This region was mined in pre-colonial and colonial times, but has seen little modern exploration. Ventana’s most advanced project, La Bodega, hosts an inferred mineral resource of 27 million tonnes grading 3.9 grams gold, 21.5 grams silver and 0.14% copper, with potential for expansion.

Discoveries such as these have made Colombia a ‘blue-sky’ exploration hot spot. Ventana’s success has caught the attention of Brazilian gold and oil baron Eike Batista, who recently made a bid to acquire the company.

In Guatemala, Tahoe Resources (THO-T) transformed a grassroots gold discovery made by Goldcorp (G-T, GG-N) in 2006, into one of the world’s largest high-grade silver deposits. Evolving geological models were instrumental in recognizing a deep silver-base metal zone below a remnant, near-surface gold cap and in understanding related structural controls. Tahoe’s wholly owned Escobal project also has potential to be one of the world’s lowest-cost silver mines, based on a scoping study for a proposed mine that would produce an average of 19 million oz. silver per year in its first five years at a total cash cost of less US$3.00 per oz. (net of by-product credits).

Several porphyry-style projects were featured in the international session, including El Creston, a molybdenum-copper project held by Creston Moly (CMS-V) in Mexico’s Sonora State. The project was taken to pre-feasibility in the 1980s by Amax and a Mexican partner. Creston Moly acquired El Creston in 2007, outlined an National Instrument 43-101 compliant open-pit resource (measured and indicated) totaling 215.4 million tonnes at 0.071% molybedenum and 0.059% copper in 2010, and continues to advance the project.

Size and blue sky always matter to Anglo American (AAUKY-Q, AAL-L), hence exploring for porphyry deposits in Chile is a no-brainer. But when the mega-miner acquired Los Bronces from a subsidiary of Exxon Mobil (XOM-N) in 2002, the challenges were daunting. The high-altitude project is in a remote historic camp known for high-grade, low-tonnage deposits. It took four years and three helicopter-supported drill programs for Anglo to discover large volumes of high-grade, hypogene porphyry and breccia-style mineralization with economic potential. The current inferred resource for Los Sulfatos (one of two such deposits in the district) is 1.2 billion tonnes averaging 1.46% copper and 0.02% moly, although the overall potential is believed to be much larger.

Intrepid Mines (IAU-T) applied its geological understanding of the Sunda-Banda magmatic arc to unlock the potential of the Tujuh Bukit project on Java’s southeastern coast. Initial work focused on shallow anomalies suggesting high-sulphidation epithermal style gold-silver mineralization (identified but never followed up by a previous operator).

Subsequent drilling confirmed an oxide gold-silver deposit, currently hosting 95.3 million tonnes at 0.66 gram gold and 25.9 grams silver. Intrepid also discovered a nearby outcropping porphyry copper-gold system, adding a new dimension to the project. Drilling is continuing to expand the porphyry system, which hosts an initial inferred resource of 500 million tonnes grading 0.4% copper and 0.5 gram gold. Updated resource estimates are expected by mid-2011.

Four African projects were featured in the session, led by the Ghanzi copper-silver deposit, which lies within the Botswana portion of the Kalahari Copperbelt. Operator Hana Mining (HMG-V) has focused most of its recent work on the Banana zone, resulting in an indicated resource of 37.4 million tonnes at 0.93% copper and 13.4 grams silver. This zone has additional inferred resources (225.4 million tonnes at 0.64% copper and 8.1 grams silver), as do three other zones: Zone 5 (20.7 million tonnes at 1.23% copper and 8.7 grams silver); Zone 6 (16.7 million tonnes at 0.86% copper and 4.0 grams silver); and the Chalcocite zone (161.1 million tonnes at 0.45% copper and 3.6 grams silver), all at a cut-off grade of 0.3% copper. The Ghanzi project is believed to have similarities to Europe’s Kupferschiefer, but also shares similarities with large-scale hydrothermal copper systems.

Rockgate Capital (RGT-T) has another exploration success story at its wholly owned Falea uranium-silver-copper project in Mali, situated within a sedimentary basin similar in age to Saskatchewan’s Athabasca basin. Interest in the area was triggered by a uranium discovery in nearby Senegal in the 1960s, but only limited exploration took place (mid-1970s to 1981 by Cogema) on the Central zone before Rockgate revived the project in March, 2007. Later that year, Rockgate discovered the North zone by drilling an area of Cogema down-hole radiometric anomalies, which returned bonanza silver and higher grade uranium mineralization than the Central zone. The company’s latest resource estimate (early 2011) shows a 37% overall increase in pounds of U308 over a 2009 estimate, mainly within the North zone, as well as a 29.5% increase in the U308 grade. Indicated resources now stand at 1.96 million tonnes at 0.14% U308, 196 grams silver and 0.18% copper, plus 9.44 million tonnes at 0.104% U308, 93 grams silver and 0.23% copper in the inferred category.

Gryphon Minerals (GRY-A) was attracted to Burkina Faso’s untapped gold potential and quickly encountered success at its Banfora project at the northeastern end of the Loumana greenstone belt. Geologist Greg Cameron said the company plans to spend US$40 million on further exploration to expand current resources and test a series of satellite targets identified across 120 km of highly prospective shear zones at Banfora. Gryphon recently reported that drilling at the Samavogo satellite target had intersected further significant mineralization, including 6 metres grading 9.89 grams gold, 10 metres at 5.14 grams gold and 7 metres at 4.8 gram, all near surface. This new discovery is outside of the current resource, which stands at 24 million tonnes grading 2.2 grams gold, of which 80% is above a 100-metre depth.

Graeme Davis delivered a history of the Tasiast gold deposit situated in a remote and sparsely populated desert in Mauritania, which Kinross Gold (K-T, KGC-N) acquired through its late 2010 takeover of Red Back Mining. The project changed hands many times since its discovery by the nation’s geological survey, starting with exploration by Normandy Mining in the mid-1990s. The attraction was the potential for multiple gold deposits within the largely unexplored, Archean-a
ged Aoueouat greenstone belt, which shares many similarities with the Timmins camp in Canada and Laverton belt in Australia.

The first deposits found and mined in the 70-km long, 15-km wide belt were hosted in banded iron formation, primarily within the Piment and West Branch zones. But under Red Back’s tenure, step-out drilling at West Branch discovered significant blind mineralization in mafic rocks, known as the Greenschist zone. Subsequent drilling revealed higher grade zones within the Greenschist mineralized envelope, greatly enhancing the project’s potential. In less than a year, Red Back expanded Tasiast’s measured and indicated resources by 42% to 9.25 million oz. (195.25 million tonnes at 1.47 grams gold). Inferred resources increased by 48% to 1.93 million oz. (41.2 million tonnes at 1.5 grams gold), reported just before the Kinross takeover.

Davis credits the Red Back team for their past exploration success, but noted that Kinross has 26 drill rigs turning to expand resources and further define pit reserves. This work is expected to boost resources from Red Back’s August 2010 numbers.

“Kinross views Tasiast as a cornerstone asset. And this story is just beginning,” Davis said.

– Based in Vancouver, the author is a freelance journalist specializing in mining, and is a former editor of The Northern Miner.