Atico Mining (ATY-V) has been gathering market momentum the good old-fashioned way: by releasing some stellar drill results.
The company announced that underground drilling at its El Roble mine in Colombia hit a new massive sulphide body at the north end of the known mineralized area.
The highlight hole returned 119 metres grading 6.9% copper and 6.3 grams gold per tonne.
Investors showed their enthusiasm for the discovery by sending the company’s shares up 48% since the news was released on Jan. 24. In Toronto on Jan. 25, Atico shares finished the day trading for 98¢ on 1.45 million shares traded.
The company says the recent intercept extends the mineralized zone 360 metres along strike and 250 metres below level 2000, which is the deepest level of production at what is currently a small scale operation.
Atico interprets the new area as a separate mineralized lense at the north end of the mine and says that the discovery not only adds to mineralization, but also increases the potential to discover more mineralization below and beyond the current mine limits.
The plan is to bring any new discoveries to production quickly using the existing mine and mill infrastructure at the site. That infrastructure includes a facility with milling capacity of 400 tonnes per day. Over the past 22 years the mine has processed 1.5 million tonnes of mineralized material with an average grade of 2.5% copper and 2.5 grams gold.
A historical estimate by Kennecott at the site outlined 1.2 million tonnes grading 4.8% copper and 3.2 grams gold. The current operation, however, has been milling at an average head grade of roughly half that.
“The fact that the average grade is lower than the historical resource is due to dilution,” Fernando Ganoza, Atico’s CEO says. “They are [currently] using very unsophisticated mining techniques.”
But while the mining may be lacking finesse at the moment, Ganoza says the mill is ready to go.
"The majority of capex will go into the mine to bring it up to standard,” he says.
Both copper and gold mineralization at the site occurs as volcanogenic massive sulfide (VMS) lenses and the company has been working under the hypothesis that the 2000 level is actually the half way point of a broader VMS zone.
Its latest drill results are proving the wisdom of that hypothesis.
Other key intercepts from the property came from what it calls the Aquiles Massive Sulphide lense, which is located in the hanging wall and 30 metres above another zone known as Zeus.
The highlight intercept from Aquiles came in at 27.3 metres grading 3.88 grams gold and 1.14% copper.
Beyond drilling the area round El Roble mine, Atico is also reaching farther afield with a regional drill program on other VMS targets within 10 sq. km of the El Roble property.
Atico has an option to acquire 90% of the project for US$14 million. The company recently paid US$1.2 million to have the option period extended by one year.
The company recently closed a private placement that raised $8 million by issuing 12.3 million units at for 65¢ per unit. Each unit is made up of a share and half of a warrant with a strike price of 90¢.
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