The North Central Mineral Belt of Peru is well-known for the gold mines that dot its landscape, from South America’s largest gold mine, Yanacocha, owned by Newmont Mining (NYSE: NEM) and Buenaventura (NYSE: BVN), to Barrick Gold’s (TSX: ABX; NYSE: ABX) Lagunas Norte and Pierina mines, and the La Arena and Shahuindo mines owned by Tahoe Resources (TSX: THO; NYSE: TAHO).
“These are the elephants, and we’re looking to join the herd,” says senior vice-president of mining Jim Steel of Eloro Resources (TSXV: ELO), a junior explorer that recently added to its land position in the belt at its La Victoria project.
From La Victoria’s San Markito target, Steel says, he can see three producing gold and copper mines in the same geology to the north to northwest: Rosario de Belen’s Patibal open-pit gold mine, 11 km away; Comarsa’s Santa Rosa gold and copper mine, 22 km away; and Barrick’s Lagunas Norte, 47 km away.
Eloro Resources muscled its way into the belt in February 2014 in an option deal to earn 50% of the project from Tartisan Resources (CSE: TTC), a company that had bought the land in 2010 from a Peruvian family of artisanal miners for US$202,000.
The family had owned the ground for 30 years but was tiring of the hard work it entailed and the US$50,000 it had to pay the government annually in fees.
“It was such a coup for Tartisan to pick up the property at such a good price,” Eloro’s chairman and CEO Thomas Larsen says. “The patriarch’s sons didn’t want to continue working. He was getting old, and they just got to the point where they didn’t feel that they could keep carrying the fees, and if they didn’t pay them they’d lose the property.”
After Tartisan bought the property, the company staked more ground around La Victoria, bringing its total land package from 16 to 44 square kilometres.
Five months after signing its first option agreement with Tartisan to earn 50% of the project, the two companies amended the deal to increase Eloro’s earn-in to 60%. But it wasn’t long before Eloro decided to acquire all 100%.
Under a deal struck in October 2016, Eloro issued Tartisan 6 million shares and 3 million warrants, plus $250,000 in cash. Eloro owes another $100,000, and has granted Tartisan a 2% royalty interest, half of which it can repurchase for $3 million.
Larsen says a staking rush in the district by several major corporations since the start of 2017 underscores the area’s allure, with the La Victoria project now bordered in the north by Fresnillo (LON: FRES), south by Newmont, southeast by First Quantum Minerals (TSX: FM; LON: FQM) and east by Barrick.
According to Eloro’s general manager in Peru, Luc Pigeon, a Newmont subsidiary registered 88 sq. km in 13 mining claims contiguous with La Victoria’s southern boundary, while a Peruvian subsidiary of Mexican miner Fresnillo registered a 4 sq. km claim on the project’s northern boundary, and a Barrick subsidiary registered 6 sq. km on Victoria’s eastern boundary. Meanwhile, Anglo American (NASDAQ: AAUK; LON: AAL) staked 27 sq. km of claims along the eastern edge of Barrick’s new ground. The recent staking activity follows First Quantum’s registering 141 sq. km of claims that adjoin La Victoria’s larger land package southeast.
Since Eloro became involved with the project two years ago, it has completed geophysical and geological mapping and sampling programs that, combined with historical work on the property, have pointed to a number of prospective targets within its four principal mineralized zones: San Markito, Rufina, Victoria and Victoria South.
Rufina and San Markito are the most advanced targets and the company expects to start a 3,000-metre drill program in March, as soon as it receives its final permits.
The Ruffina showings — where there are a lot of artisanal workings — sit at a 3,100-metre elevation, while San Markito, a higher-level silver and gold in classic epithermal breccia, sits at 4,100 metres. It was that 1 km of extent that piqued the interest of William Pearson, who has signed on as Eloro’s chief technical advisor.
“Epithermal systems typically extend 1 km in vertical extent, and we have identified mineralization on the property over a vertical extent of 1 km from San Markito to Rufina,” Pearson says. “This tells me that we likely have more than one epithermal system present, and have an extensive vertical target zone to explore.”
Pearson, who has over 40 years of experience in global mineral exploration and production, and was set to retire in June at the age of 65, says he stayed in the game because of the potential he sees at La Victoria.
“I’m in it because it’s a terrific opportunity,” he says. “I like the project. I like the belt, it’s tremendous, and La Victoria hasn’t been drilled, which is quite remarkable. Normally a project like this in a major belt would have been drilled years ago.
“We’ve doubled the land package and you can see how aggressive the big guys are being in that area … we’re going to see an awful lot more activity in this region, and I expect this whole belt will get pushed further south because the potential is certainly there.”
Pearson concedes it’s still early days, but says from what he has seen so far, he is encouraged.
“We’ve completed a couple of mapping and sampling programs that continue to expand the mineralization,” he notes. “We’ve done good geological work and geophysical surveys [magnetic and induced polarization (IP)], and we have a number of good drill targets now with only a relatively limited amount of work completed. I’m quite confident as we continue to work on the property that we’re going to continue to expand these zones and find more targets.”
Mineralization occurs within breccias and veins that contain gold and silver concentrations, and trace element characteristics that are compatible with epithermal deposits, especially the low-sulphidation type.
The mineralization occurs along structures within intrusive diorite, as well as sedimentary rocks of the Chicama formation.
“We can map these rocks as well as outline mineralized target zones quite effectively using both magnetic and IP, in addition to the geological mapping and sampling,” Pearson adds.
“The thing that intrigued me when Tom first approached me about helping him out was that you have a property with a number of good showings, artisanal workings and so forth,” he continues. “It’s favourable geology in one of the world’s great gold belts, and it’s never been drilled. So that piqued my interest.”
At press time Eloro shares traded at 52¢ within a 52-week range of 12.5¢ to 58¢. The firm’s market capitalization is $15.5 million.
Eloro has $500,000 in cash and no debt.