South Atlantic eyes Swedish IOCG

A new copper-gold discovery has prompted South Atlantic Ventures (SAA-V) to increase the size of its exploration portfolio in Sweden’s Kiruna mining district.

The Kiruna region is famous for the huge and historic underground iron-ore mine after which it is named. Moreover, the deposit is now seen as conforming to the Olympic Dam model and, for this reason, has attracted the likes of Anglo American (AAUK-Q), Rio Tinto (RTP-N), BHP Billiton (BHP-N) and Phelps Dodge (PD-N) to the district.

South Atlantic, though smaller than those companies, is nevertheless the largest landlord in Kiruna, having laid claim to 950 sq. km. The latest acquisition adds 220 sq. km to its holdings and includes a mineralized breccia that yielded encouraging copper-gold grades in 12 holes drilled by Anglo and Rio.

Mineralized intersections varied from 0.85 to 33.65 metres in core-length and carried 0.26%-2.73% copper and trace-0.53 gold per tonne. Results include:

— hole RAK-1, which averaged 1.06% copper and 0.19 gram gold over 8.15 metres (starting at a down-hole depth of 14.85 metres), and 1.46% copper and 0.28 gram gold over 10.83 metres (from 42.7 metres);

— hole RKR-1, which averaged 0.4% copper and 0.08 gram gold over 29 metres (from 6 metres), and 1.12% copper and 0.3 gram gold over 2.15 metres (from 46 metres);

— hole RAK-4, which, before being abandoned because of poor recovery, averaged 2.73% copper and 0.83 gram gold over 1.9 metres (from 36.9 metres);

— hole RAK-19, which averaged 2.2% copper and 0.33 gram gold over 17.8 metres (from 66.15 metres); and

— hole RAK- 20, which averaged 1.6% copper and 0.46 gram gold over 33.65 metres (from 14.7 metres), 2% copper and 0.53 gram gold over 12 metres (from 119.1 metres), and 1.9% copper and 0.39 gram gold over 4.2 metres (from 151.8 metres).

Dubbed Discovery, the zone strikes northwards and dips subvertically. A coincident induced-polarization anomaly (magnetite in the matrix also gives off a strong magnetic response) suggests it may be 650 metres long and, on average, 50 metres wide.

Gold and copper are associated with magnetite, as in the case of the Ernest Henry iron-oxide copper-gold deposit in Australia. That deposit, held by Xstrata, also is hosted by a breccia system. The entire mineralized system at Ernest Henry is 250 metres thick and about 1 km deep, though the pit will bottom at 570 metres below surface. About half the preproduction resource of some 166 million tonnes grading 1.1% copper and 0.54 gram gold has been bumped up to reserve status.

Annual production averages 100,000 tonnes copper-in-concentrate and 125,000 oz. gold-in-concentrate.

South Atlantic notes that mineralization at Discovery remains open in all directions.

Also enclosed by the new property is the Conglomerate zone, about 600 metres northwest of Discovery, and the past-producing Pahtohavare mine, about 3 km to the northwest, where Finnish miner Outokumpu pulled 1.7 million tonnes of ore grading 1.9% copper and 0.9 gram gold between 1990 and 1997. Several copper oxide showings, as well as geophysical and geochemical anomalies, exist west and north of the minesite.

At the Conglomerate zone, nine holes drilled by the Swedish Geological Survey in the 1970s returned narrow intersections carrying up to 4.4% copper over 2 metres. More recently, Anglo cut 16.5 metres of 0.69% copper and 0.12 gram gold.

Mineralization is characterized by chalcopyrite in metamorphosed conglomerate.

South Atlantic has hired consultanting firm Watts Griffis & McOuat to help it with a due-diligence review. A definitive agreement must be inked by year-end.

To earn its stake, South Atlantic must issue US$500,000 worth of treasury shares to Anglo American and spend US$7 million on exploration over three years. The major, which also holds ground to the north, retains a back-in right for 60% in any discovery exceeding 300 million tonnes at 1% copper, subject to repaying the junior three times its expenditures.

South Atlantic continues to explore its other claims, collectively known as Norrbotten. Most adjoin the new property and are considered just as prospective.

Outside of Kiruna, South Atlantic’s biggest asset is a 38% indirect stake in the Storliden copper-zinc mine, several hundred kilometres to the south in the Skellefte district. Boliden (BLS-T) also holds a 38% indirect interest in the mine and operates it.

Earlier this year, reserves at Storliden were increased to 1.4 million tonnes grading 9.7% zinc and 3.6% copper, plus 30 grams silver and 0.3 gram gold. The estimate, calculated by Micon International, excludes an indicated resource of 234,000 tonnes grading 7.7% zinc, 3.5% copper, 35 grams silver and 0.4 gram gold.

In the first nine months, Storliden pumped out 9,568 tonnes copper-in-concentrate and 25,817 tonnes zinc-in-concentrate. The former were produced at a cost of US23 per lb., and the latter, at US17 per lb.