Deseado Massif reveals more high grade discoveries (May 26, 2011)

Vancouver – Argentina’s Deseado Massif has seen concentrated precious metals exploration for close to twenty years, but junior explorers continue to demonstrate the area’s significant hidden potential.

The geological structure, in the southerly Santa Cruz province, is estimated to span anywhere from 60,000 to 100,000 sq. km and is dominated by felsic volcanic and volcaniclastic rocks with a number of low-sulphidation epithermal gold-silver deposits. The area remained largely unexplored until twenty years ago thanks in part to the younger basalts that mask the underlying geology and the large swaths of land covered by marine sediments and gravels.  

The area first caught the mining world’s attention when exploration began in earnest in the early 1990s at what turned into the Cerro Vanguardia gold-silver mine. Operational since 1998, the mine is now 92.5% owned by AngloGold Ashanti (AU-N) and produced 45,000 oz. gold in the last quarter.

Since then numerous other majors have also developed mines in the area, with Coeur D’Alene Mines (CDM-T, CDE-N) opening its Martha silver mine in 2005, Pan American Silver (PAA-T) opening its Manantial Espejo gold-silver mine in 2008, Hochschild Mining (HOC-L) and Minera Andes (MAI-T) jointly opened the San Jose gold-silver mine the same year, and Goldcorp (G-T, GG-N) spending $3.6 billion last year to acquire Andean Resources and its advanced Cerro Negro gold project.

And while the big mining companies have come in to swoop up advanced projects, a number of juniors are quickly advancing their own projects in the region with promising news out in recent weeks.

Extorre Gold Mines (XG-T, XG-X) is currently the market darling with its high-grade Cerro Moro project. Already showing clear progress since being spun out of Exeter Resource (XRC-T, XRA-X) in early 2010, the company has taken off since discovering a new high-grade target in April that it called Zoe.

The Zoe discovery was a near-blind discovery with the outcrop assaying only 0.34 gram gold and 115 grams silver, yet results so far have included 4.8 metres grading 64.6 grams gold per tonne and 7,530 grams silver per tonne from 89 metres depth, 8.6 metres carrying 39.9 grams gold and 4,056 grams silver from 136 metres downhole, and 3.5 metres averaging 60.7 grams gold and 1,875 grams silver from 236 metres depth.

Extorre’s share price has gone from around $5.50 at the beginning of April to a trading high of $10.89 on May 24 since releasing the results and getting approval for its environmental impact assessment on the project. The company has 88 million shares out.

Mirasol Resources (MRZ-T) is also making steady progress in the area. Coeur d’Alene recently announced it would move ahead to the feasibility stage to earn 61% in Mirasol’s Joaquin project, Pan American Silver recently signed a letter of intent to earn into its Espej project, and it continues to advance its wholly-owned Santa Rita project.

In 2009 the company discovered a cluster of high grade silver veins at Santa Rita that it named the Virginia Vein zone. Mid-May drill results from the Julia Central and Naty veins at Virginia returned true widths of 29.1 metres grading 251 grams silver from 33.6 metres depth, 26.6 metres averaging 230 grams silver from 47 metres depth and 2.3 metres grading 1,309 grams silver from 36 metres downhole.

Mid-April results, from the same two veins plus Julia North, returned true widths including 36.5 metres grading 312 grams silver, 2.7 metres grading 1,649 grams silver, 40.8 metres averaging 172 grams silver and 44.6 metres averaging 142 grams silver.

At Joaquin, Coeur d’Alene recently announced it would take the project through the feasibility stage to increase its ownership to 61%. Mirasol recently released an initial resource estimate for Joaquin that, combining sulphides and oxides, established 7.2 million indicated tonnes grading 85 grams silver for 19.7 million contained oz. silver. A combined sulphide-oxide inferred resource adds 13.8 million tonnes grading 108.1 grams silver for a further 48 million contained oz. silver.

Mirasol’s share price recently closed at $6.05 with 38.3 million shares out, while it has a 52-week share price range between $1.51 and $7.94.

Argentex Mining (ATX-V) has been busy at its Pinguino project, releasing a number of high-grade silver hits from the Marta Este, Marta Sur and Marta Centro veins.

Results released in May include hole 369-11 that hit 5.8 metres grading 675.7 grams silver and 5.99 grams gold from 83 metres depth, hole 90-11 that cut 8 metres grading 470 grams silver and 1.64 grams gold from 8 metres downhole, and hole 96-11 that returned 7 metres averaging 121.9 grams silver and 2.77 grams gold from 17 metres depth.

To further advance Pinguino and its other properties, the company recently announced it was raising up to $20 million through a brokered private placement. Argentex is planning to sell up to 17.4 million units at $1.15 that contain a share and a half-warrant, with full warrants exercisable at $1.70 for 24 months.

The company hit a 52-week high of $1.69 in early May after climbing from a 52-week low of 45¢ last August and recently closed at $1.19.

Hunt Mining (HMX-V) also recently topped up its coffers with a $10 million bought deal financing. The company is to issue 22.3 million units at 45¢ each, which will include a share and a half-warrant with full warrants exercisable at 65¢ for 24 months. The raise also includes a $1.5 million underwriter option. The company will be putting the money towards its Deseado Massif properties, with its La Josefina the most advanced.

Recent drilling on the Sinter area of La Josefina returned two wide intervals of gold mineralization. The first interval hit a true width of 19.5 metres grading 18.83 grams gold and included 3 metres averaging 62.87 grams gold. The second interval, drilled 300 metres north, returned a true width of 34 metres grading 2.82 grams gold including 6.25 metres averaging 7.29 grams gold.

At the Amanda-Cecilia vein structure in the Veta Norte zone, recent results include 1.2 metres carrying 38.31 grams gold, 150.92 grams silver per tonne and 12.66% lead and 2.4 metres grading 3.56 grams gold and 63.94 grams silver from roughly 35 metres depth, both true width. Finally, at the Veta Ailin structure in the Central zone of the La Josefina project, Hunt hit a true width of 2.4 metres carrying 188.52 grams gold, 171.88 and 14.84% lead from 12 metres downhole.

The company recently amended its earn in schedule for the La Josefina project and should now earn its 91% ownership in 2012-2013 after completing a feasibility study.

London AIM-listed Mariana Resources (MARL) and Patagonia Gold (PGD) are also active in the region.


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