The Strait goods on Peruvian grassroots copper exploration

Peru’s Apurimac Belt already boasts eight significant mines and advanced-development projects, but Strait Gold (SRD-V) is offering investors a chance to get in on a grassroots project in the area.

In late 2009 Strait completed negotiating for an option on the Alicia property, which sits 40 km west of Xstrata’s (XSRAF-N, XTA-L) Las Bambas project in the north-central part of the belt.

Despite the great address, and a porphyry zone having been identified on government maps at the site, Alicia hasn’t seen any exploration work in eight years.

“An even then it was a just a cursory glance,” Strait’s president Jim Borland explains.

Part of that cursory glance was three drill holes drilled by a private company that was a joint venture between Antofagasta (ANTO-L) and Vale (VALE-N).

Of the three holes, one was of particular interest to Strait, as it cut 100 metres of 0.1% copper.

While the low grade wouldn’t make for an economic deposit on its own, Borland thinks it was just a “sniff” of what could lie underfoot.

“Porphyries are not homogeneous,” he explains. “They’re not the same grade throughout, so it’s about finding the sweet spots. It’s an expensive process with lots of drilling needed to be done, but we’re trying to do it in 2011.”

Strait’s ability to land Alicia had to with depressed copper prices and the amount of land that the joint venture accumulated. In all, the private company put together a portfolio of 13 properties which was then sold to Panoro Minerals (PML-V).

“Panoro had a full plate so they never really looked at it,” Borland explains. “Then, during downturn in 2008 they were looking to get work done on other properties.”

Panoro has pushed two other properties from the original package into the development stage, thus presenting an opportunity for Strait.

“We looked at a lot of projects and we decided this one was perfect for our stage of development,” Borland says. “It’s an early stage project with some indication of mineralization and some good potential.”

The most obvious indicator of the potential is the surfacing of the porphyry at the site.

The Antofagasta and Vale JV did some trenching to go along with their drililng, and trenching yield impressive assays with highlights of 56 metres at 1.9% copper, 0.18 grams gold and 12.7 grams silver and 32 metres grading 2% copper, 0.1 gram gold and 7.2 grams silver.

“What really jumped out at us was consistency of the grades, so we’re now trying to verify that with our own sample program,” he says.

That program has included over 200 channel and rock samples, and drilling to test the skarn zones which are so typical of the area.

In contradistinction to the giant porphyries to the south in Chile, the porphyries of southern Peru are associated with skarns that are generally closer to surface and contain higher-grade mineralization.

The skarns formed when intrusives shot acidic fluids into the host limestone sparking an interaction which created mineralized skarns on the perimeter of the porphyries.

“We’re not trying to step out. We just want to demonstrate that the skarns have depth potential and then on the basis of that, it would justify a more extensive drill program,” he says.

Strait will put one hole down 350 metres to test whether a geophysical anomaly is indeed a sulphide zone. The other holes in the 1,200-metre program are going down to depths of between 100 to 150 metres.

The company is currently halfway through its program with initial results due out by the end of November.

Strait has $400,000 in the kitty, enough to finish its initial drill program, but Borland is optimistic that results from the program will warrant a more extensive program.

Borland envisions a 10,000-metre program, which would allow the company to properly test the key areas of interest in a methodical manner.

As for its longer term plans for the project, Borland is refreshingly candid.

“Our strategy is to take these exploration projects, add value to them and move them on to larger companies,” he says. “We don’t see ourselves as miners.”

And while Strait may not be at Alicia down the road, that doesn’t mean it doesn’t put a high priority on gaining the social licence to operate in the region.

The department of Cusco, where Alicia sits, is one of Peru’s poorest areas, making mine development a key economic driver in the area.

“We took a fair amount of time to ensure a good community agreement was in place,” Borland says. “We have established a good basis for future development.”

The nearest community to the project is 12 km away. Strait has a 3-year agreement with the community and the company has already helped establish a local fish farm which adds needed protein to the local diet and revenue from the sale of the fish to other communities.