Following in the footsteps of its earlier successes in Argentina, the Lundin group, through
Situated in San Juan province, along the Chilean border, the project consists of three gold exploration concessions: Vicuna, Lirio and Yamiri.
In September 1999, Tenke entered into an option agreement with three companies —
One month later, the company acquired the Lirio gold exploration project, adjacent to Vicuna, in return for exploration expenditures of US$1.5 million over 5.5 years.
In addition, Tenke has a right of first refusal on several gold properties north of Vicuna, know collectively as Yamiri, with a commitment to perform a geologic reconnaissance program prior to year-end.
Combined, these projects comprise 10,000 ha, roughly 75 km north of the Veladero and Pascua gold deposits, owned by
The land package occupies an unexplored region between the prolific Maricunga gold belt to the north and the El Indio gold belt to the south. Much of the area has been mapped by government geologists as basement Permian granite, though substantial portions of the region are now known to be solfataric silica (derived from strongly acidic hydrothermal fluids).
Tenke is focusing chiefly on the Vicuna prospect. Late last year, regional mapping and soil sampling outlined targets for follow-up work.
Felsic volcanics are overlain by a series of dacitic tuffs. Some of these tuffs grade into coarser-grained lithic-lapilli tuffs, which appear to be associated with breccia pipes, mapped elsewhere on the project. Intruded into these volcanics is a complex system of monzodiorite, diorite, microdiorite and quartz-porphyry dacite. Most of the porphyry is said to be strongly altered and stockwork veined.
The Vicuna prospect is cut by two major northwesterly striking faults. Alteration and mineralization in the area are aligned along a north-northeasterly striking structural zone that links the two northwest fault zones. The property is part of a strong hydrothermal system that is characterized by high-sulphidation epithermal alteration and mineralization, as well as by porphyry copper-gold mineralization.
Extensive hydrothermal alteration has been traced over an 18-km strike length and a width of 1-to-2 km. Epithermal-style alteration and silicification occur extensively over a 13-km strike length of this alteration system.
The epithermal zones on the property display a complex assemblage of alteration and mineralization types. These include: steam-leached silica; solfataras; vuggy silica; secondary silicified vuggy silica; silicified tuffs; silicified diatreme and phreatic/hydrothermal breccias; silica caps; and porphyry-style alteration and mineralization. The epithermal alteration zones are high-sulphidation systems with common alunite and rare pyrophyllite.
To date, Tenke has identified four drill targets on the Vicuna concession: Filo del Sol; Co. Vicuna; North Anomaly; and the Marancelas breccia.
Filo del Sol
The Filo del Sol target, situated in the west-central portion of the Vicuna concession, represents a phreato-magmatic breccia system that was developed within Tertiary-aged volcanics. Tenke has mapped a series of multi-stage breccias within the target. These breccias contain clasts of hypabyssal Vicuna porphyry, as well as clasts of vuggy silica and silicified breccia. Tenke reports that alteration and breccia textures are reminiscent of Filo Federico outcrop at the Veladero prospect and that the target may represent a nested system of breccia pipes or diatremes.
The breccias at Filo del Sol are bounded on their eastern side by a fault structure that is believed to have a vertical displacement in the order of 300-400 metres. Just east of the fault is a series of silicified and partially pyritized tuffs and incipient breccias with anomalous gold. A total of 39 soil samples have delineated a geochemical anomaly that measures 500 metres in diameter and averages 0.16 gram gold per tonne. Chip samples returned values of up to 0.14 gram gold per tonne.
The Co. Vicuna target, about 1 km south of the Filo del Sol breccia, represents a silicified porphyry covering 1.6 sq. km. A significant portion of the target consists of multi-stage vuggy silica and silicified porphyry. A silicified magmatic breccia has also been discovered, on the southeastern side of the target. Tenke’s initial work has confirmed the soil anomaly discovered by the previous operator, Cyprus-Amax, and extended it to the southeast by 0.75 km. Tenke collected 96 soil samples, which averaged 0.6 gram gold, with one sample assaying as high as 7.1 grams.
Cyprus-Amax had set its sights on a copper-gold porphyry target and, toward this end, collected soil samples over the porphyry and on to the adjoining Co. Vicuna silica cap. The results pointed to a strong geochemical anomaly over the eastern edge of the porphyry and into the silica cap. The core of the anomaly measured 300 by 350 metres and returned an average grade of 0.69 gram gold.
Cyprus drilled 16 reverse-circulation holes, or 2,519 metres, into the porphyry and intersected sub-economic, discontinuous copper mineralization. One hole, drilled near the edge of the Co. Vicuna soil anomaly, cut 20 metres averaging 1.18 grams gold starting at a depth of 4 metres. Tenke points out that Cyprus-Amax’s exploration tested less than 20% of the exposed hydrothermal system.
The North anomaly, about 5 km northeast of Co. Vicuna, features an alteration zone measuring 4 by 1.5-2 km. The alteration is dominantly steam-leached silica with anomalous mercury and sulphur. Here, Tenke has discovered locally anomalous zones of gold, silver, lead and molybdenum mineralization. Rock samples have returned up to 0.22 gram gold and up to 93 grams silver. Two small breccia pipes have also been discovered. The target is believed to represent the top of a large epithermal system. An induced-polarization survey is planned.
Marancelas breccia
The Marancelas breccia is situated 2 km southwest of the North anomaly. The 2-sq.-km target hosts strong quartz-alunite alteration and silicification associated with a complex mixture of phreatic and hydrothermal breccias. Soil and chip sampling has revealed anomalous gold on the eastern side of the target in an area of quartz-enargite veining. Sampling by Cyprus-Amax returned gold values of up to 3.7 grams gold, hosted in vein structures.
Force majeure
Meanwhile, owing to political instability in the Deomocratic Republic of Congo, Tenke has been forced to declare a force majeure at its Fungurume copper-cobalt project. The force majeure affects the company’s schedule for completing a feasibility study and paying transfer bonuses.
The 1,437-sq.-km project, which comprises two concessions, is in Katanga province, about 175 km northwest of Lubumbashi.
Measured and indicated resources are pegged at 233 million tonnes grading 2.9% copper and 0.3% cobalt. An additional 314 million tonnes of material averaging 4% copper and 0.25% cobalt are classified as an inferred resource. According to the draft feasibility study, initial production is projected at 100,000 tonnes of copper per year, though expansion plans could more than double this level.
Cobalt production is expected to be 6,000 tonnes per year over the first four years, ramping up to 13,000 tonnes in future expansions.
Predominantly open-pit and drill-and-blast methods will be used to mine the deposit, and stripping ratios are pegged at 3-to-1. These will increase gradually as the open pits beco
me deeper. Underground mining methods will be used for the deeper sulphide ores. The ore will be processed using conventional grinding and leaching technology, with low acid consumption. Copper cathode will be produced though solvent extraction-electrowinning.
Total capital costs are estimated at US$475 million for the initial phase and an additional US$368 million for expansion. The initial average cash costs over the first 15 years of mine life are estimated at minus-US6 per lb. of copper (after cobalt credits). This figure is based on a cobalt price of US$10 per lb.
Tenke holds a 55% interest in the property, Gecamines, the state-owned mining company, holds the remainder. In December 1998, Tenke concluded an option agreement with BHP Copper, whereby BHP can acquire a 45% ownership interest in the Fungurume concession in return for funding the next US$600 million in exploration expenditures. After BHP’s earn-in, Tenke would contribute its pro-rated (10%) portion. BHP Copper is a division of Australian-based
Tenke has 24.7 million shares fully diluted.
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