For almost 20 years, Keith Barron has been hunting for two famous gold-mining centres in Ecuador that historic Spanish manuscripts and maps from the 16th and 17th centuries refer to as Sevilla del Oro and Logrono de los Caballeros.
In late November, the chairman and CEO of Aurania Resources (TSXV: ARU) announced that field teams had found an old road in the central part of the company’s Lost Cities–Cutucu project that he believes linked the two mining centres from 1565 until 1606.
The remnants of the road, 60 km from where Aurania is drilling its Yawi target, were found in heavy vegetation over 2.5 km, and run north–south along Aurania’s concession block in the eastern foothills of the Andes mountain range of southeastern Ecuador.
“In the historical records they call them cities, but they were never cities, they were gold settlements of a maximum of probably 20 to 30 Spaniards and a number of Indigenous people made to work in the mines,” Barron says on a conference call.
At their peak around 2,000 people would have worked at these mines, he says, but the numbers dwindled to the hundreds, as the areas were depopulated by diseases like influenza and smallpox.
“We know from the archives that there were requests to the Spanish crown to purchase African slaves and send them from west Africa over to Ecuador and work in the mines, but by the time this happened, it was a bit too late because the Spanish crown was bankrupt — after the Spanish armada it lost everything — so these places were reclaimed by the jungle and lost.”
The next steps include a LIDAR survey over the area that may detect extensions of the road, which historic documents suggest joined Sevilla del Oro and Logrono de los Caballeros by a hard day’s march.
“I would like to see the LIDAR survey zero in on both ends of the road and try to pick up vestiges of the mining activity,” Barron told analysts and investors on the call. “We are not going to find any buildings, or anything of archaeological significance. What it will be is a trench, a pit, a rock dump, something like that, but we’re not going to be finding any heaps of gold or silver.”
Baron notes that the LIDAR survey can “really leapfrog things ahead” now that they have found the road, and says: “hopefully one end is going to terminate in the old mine workings.
“This is a very significant discovery,” he says. “We know from the documentation that we have — and we’re talking about hundreds and hundreds and hundreds of historic documents and maps — that this isn’t a tale out of Treasure Island, this is something very real. People lived and died here … and we are very much hot on the trail.”
Aurania describes the road in a press release as “engineered” and says it is “cut into embankments, and its downslope edges are lined with blocks of shale that have prevented erosion.”
Two rectangular blocks of dressed sandstone lie at a junction in the road and are estimated to weigh between 900 and 1,000 pounds.
Currently Aurania is drilling its Yawi gold target, where it just finished its second hole, and the drill is moving to a second target. It has found six so far.
“We’re dealing with an extensive mineralized system,” Aurania’s president, Richard Spencer, said on the call. “What we plan to do is drill one to two holes in each of the four target areas, and the fifth target is being defined. Once we’ve got a picture of the bigger part of the system, then we’ll decide where we’re going to start homing in.”
Aurania has also come across two types of copper at surface: porphyry-related copper and sedimentary copper, where the copper exists in specific sedimentary horizons. These findings are exciting, Barron and Spencer explain, because the copper would be cheaper and easier to extract.
“We stumbled over the copper and silver in sediments when we were looking for gold,” Barron says. “It’s like God kissed us on the forehead.
“This is really quite incredible. Remember it’s oxide copper, it’s not sulphide, so it doesn’t require a mill to grind it into a paste and then flotation cells to produce concentrate that needs to be shipped … this would be easy to crush and it could potentially be heap leached.”
Barron also notes that one of the most interesting things about the copper at the Lost Cities–Cutucu project is that both the porphyry copper and sedimentary copper is in the same place — something “not seen anywhere else in the world.”
Aurania has only explored 55–60% of its concessions so far and still has a “boatload of targets — well beyond what a typical junior mining company would have.”
This year, the company expects to spend US$10 million on exploration — at least 60% of that on gold targets and most of that on drilling.
But shareholders have to be patient, Barron says, pointing out that it took a long time for his team at Aurelian Resources to find the Fruta del Norte gold deposit in 2006 in the Cordillera del Condor — the adjacent and contiguous mineral belt to Aurania’s Lost Cities–Cutucu project. That project, now owned by Lundin Gold (TSX: LUG), poured its first gold on Nov. 18.
“Fruta del Norte was maybe the tenth or twelfth prospect we had drilled starting from 2001 right up until 2006 when the discovery was made,” he says. “We are better funded than that company was back then, but if it was easy to find gold it wouldn’t be precious.”
As for the copper, it opens up more funding and joint-venture opportunities with larger companies.
“The major copper companies that have signed joint ventures in Ecuador will typically sign for many tens of millions of dollars, in the range of US$50 million to US$60 million per target or per group of concessions,” Spencer says. “And then the original company, Aurania in our case, would get to keep a 30% free-carried interest right up to the definition of a feasibility study … these major companies know what they’re doing, they have experience, they have money, and can do things quicker than we can because they can afford helicopters and those things, so we look forward to advancing those copper targets to the point where the majors come in and put their horsepower behind them.”
But Barron notes that Aurania won’t repeat what happened with Fruta del Norte, which was only one of 34 gold occurrences they found and 12 porphyry targets, only two of which it drilled in a preliminary way.
“We were scooped up by Kinross and they got that whole package,” he says. “Everything else came for free. Now it’s in the hands of Lundin Gold and it has joint ventured with Newcrest on the peripheral concessions that contain some of the gold and copper targets … They’re close to drilling one of the copper porphyry targets we didn’t get a chance to explore. So it’s a disservice to our shareholders if we sit on our laurels and concentrate on only one commodity and give the rest for free … I’m not going to let that happen.”