Sulliden kicks Shahuindo’s tires

With $150,000 in hand from a recent private placement and looking for some cash flow, Montreal-based Sulliden Exploration (SUE-T) has inked a letter of intent paving the way for it to acquire the advanced Shahuindo gold property in the department of Cajamarca in Northern Peru, from Compania Minera Algamarca.

The letter gives Sulliden a 90-day due diligence period, after which it must pony up the first US$320,000 instalment to formalize the deal. The company paid US$10,000 on signing the letter of intent.

To acquire the property, Sulliden is responsible for escalating, semi-annual payments totalling US$3.8 million. The outstanding payments accrue interest at the rate of 5%, which can be avoided if Sulliden elects to accelerate payment.

If at any time, Sulliden fails to meet its acquisition commitments, the property will revert back to Algamarca, with Sulliden retaining a 0.5% net smelter royalty for each US$1 million spent.

The Shahuindo property covers a total of about 80 sq. km some 80 km south of the city of Cajamarca, and about 25 km north of Barrick Gold‘s (ABX-T) Alto Chicama discovery.

Between 1993 and 1998 Asarco discovered several epithermal gold occurrences on the property, including the oxidized, high-sulphidation San Jose deposit, reported to contain more than 800,000 oz. of gold. Asarco spent about US$4 million at San Jose, including more than 150 drill holes, a detailed reserve calculation, composite metallurgical tests and a pre-feasibility study.

Asarco pegged the economic reserve of San Jose’s oxidized portion at about 18 million tonnes running 1.04 grams gold and 17.5 grams silver per tonne.

Previous metallurgical tests on composite drill samples suggest that gold extraction from the oxidized samples is efficient and rapid (less than 48 hours) with a recovery rate of 80% with relatively low cyanide consumption.

According to a 1998 project evaluation, the San Jose deposit’s oxide ore is capable of supporting an open-pit, heap-leach operation for nine years, based on a gold price of US$300 per oz. Annual gold production would ring in around 50,000-80,000 oz. at an operating cash cost of US$128 apiece.

Sulliden intends to launch an evaluation and development program once it wraps up its due diligence study.

Late last year, Sulliden, nearly out of cash, suspended a 3,500-metre drilling campaign on the Mario base metal property, 50 km southwest of Huancayo, Peru.

Sullivan had drilled about 1,553 metres to test the Punapuna high-grade zinc-lead-silver massive sulphide zone and its untested northerly and southerly extensions. The zone is part of a large electromagnetic anomaly discovered during a geophysical survey in August 2001.

The first hole cut a zone of well-mineralized skarn at the dacite-marble contact, with disseminated-to-semi-massive sphalerite and pyrite, associated with a typical skarn-type assemblage of epidote, rhodochrosite and calc-silicate minerals. A 2.6-metre mineralized interval ran 4.5% zinc.

The second hole encountered mainly pyrrhotite, pyrite and magnetite, with minor sphalerite and chalcopyrite. Again, the mineralization lies at the contact between the limestone unit and the dacite/diorite intrusive body.

Sulliden also opted out of its agreement to earn 60% of the Rolling Pond and 50% of the Mustang gold properties in central Newfoundland. Both projects reverted back to Altius Minerals (ALS-V) .