New York-based South American Gold & Copper (SAG-T), or SAGC, has signed a letter-of-intent with Sociedad Contractual Minera Vilacollo (SCMV) to develop the Choquelimpie gold-silver-copper project in northern Chile.
To earn a 50% interest in the joint venture, SAGC must spend US$1 million in the first year, US$2 million in the second and US$3.5 million in each of the third and fourth.
On signing the final agreement, SCMV will be required to nominate two of its executives to serve on SAGC’s board and vest in a 5-year share purchase warrant exercisable into 7% of the then-outstanding primary shares of SAGC, at an exercise price of 6.5 cents per share. SCMV may vest in a further warrant upon the completion of a bankable feasibility study.
Choquelimpie’s gold, silver and copper mineralization occurs mainly in association with pyrite and enargite (a copper-arsenic sulphide), with lesser chalcopyrite. These occur as finely-to-coarsely disseminated sulphides, up to massive, between breccia fragments. Strong alteration has occurred over an area exceeding 5 sq. km, which lies within the 12-sq.-km of eroded remains of a late Miocene strato-volcano. A dacitic intrusion occupies the centre of the alteration zone, and a swarm of near-vertical structures provides the host rock for the bulk of the later mineralization.
Between 1987 and 1992, then-owner Shell carried out 100,000 metres of mostly reverse-circulation drilling in order to delineate low-grade oxide mineralization for an open-pit, heap-leach operation.
SCMV subsequently acquired control of the project, including 4,500 ha of mining claims covering the Choquelimpie alteration zone plus a further 22,700 ha of nearby exploration leases. More recently, SCMV has concentrated on exploring breccia structures, in particular within two pits named Choque and Vizcacha. SCMV sank a 12-metre shaft at the bottom of the Suri pit, where the highest-grade oxide mineralization was known to occur. This shaft encountered high-grade sulphide ore with little evidence of supergene enrichment. Almost 300 metres of drifting and crosscutting were run out from the shaft, giving an average of 13.92 grams gold and 72.1 grams silver per tonne, plus 2.04% copper, over widths of 6.4 metres and a length exceeding 70 metres.
Resource estimates are based on the known sulphide-bearing breccias that host the bulk of the mineralization at Choquelimpie; not included are low-grade envelopes around the breccias or possible structural extensions.
Within the Suri structure, measured and inferred resources are estimated at 165,000 tonnes grading 11.43 grams gold, 63 grams silver and 1.77% copper over a width of 7.8 metres, a length of 144 metres and an overall depth of 52 metres.
If sufficient reserves are developed, SAGC will consider constructing an underground 500-tonne-per-day operation producing up to 70,000 gold-equivalent oz. per year. The plant could be built and placed in production for about US$5 million.
SAGC intends to finance its first-year capital contribution through a private placement primarily with the company’s officers and directors.
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