Lumina Gold (TSXV: LUM) has carved out 4 million oz. gold at its Cangrejos project in the Andean foothills of southwestern Ecuador’s El Oro province, and mineralization remains open to the northwest, south and to depth.
The deposit contains inferred resources of 191.8 million tonnes grading 0.64 gram gold per tonne, 0.8 gram silver per tonne and 0.1% copper, for contained metal of 4 million oz. gold, 4.6 million oz. silver and 423 million lb. copper.
“We’re really excited by the resource number and there’s significant gold and copper there, and there’s upside exploration potential within our concessions around Cangrejos,” Marshall Koval, Lumina Gold’s president and CEO, says in an interview from Vancouver, adding that the company plans to infill drill later this year to move parts of the inferred resource into the indicated category.
The maiden estimate is based on 10,829 metres of diamond drilling in 35 holes, of which 3,190 metres in eight holes were drilled by Lumina and 7,639 metres in 27 holes were drilled by Newmont Mining (NYSE: NEM), the project’s previous operator, in a joint venture with Lumina’s predecessor company, Odin Mining and Exploration.
Odin Mining and Exploration identified the Cangrejos area in 1994 as the source of the Biron alluvial gold deposit, which yielded 69,000 oz. gold. Between 1994 and 2001, Odin and Newmont completed geophysical and geochemical surveys and tested anomalies with diamond drills. The discovery hole returned a 192-metre intercept grading 1.57 grams gold per tonne.
Diego Benalcazar, Lumina’s senior vice-president, says the gold-copper porphyry mineralization at Cangrejos is hosted in breccias and diorite porphyry associated with potassic alteration where high gold values usually correlate with finely disseminated chalcopyrite.
The project, 30 km southeast of the provincial capital of Machala and the Pan American Highway, is also 40 km from the deepwater commercial port of Puerto Bolivar. Ecuador’s national grid provides power to the camp. Lumina acquired the project in 2014.
In addition to completing the maiden resource, Lumina Gold has been acquiring more concessions in Ecuador. Just before Christmas, it was granted mining title for the Cangrejos 20 concession, which is surrounded by the larger project.
Lumina also gained three concessions through an auction conducted by the Ecuadorian government. These concessions — Tres Picachos (48 sq. km), La Canela (32 sq. km) and Las Orquideas (47 sq. km) are near Lumina’s Condor project in southeastern Ecuador’s Zamora province.
Previous work by the company at Tres Picachos and La Canela showed large, high-amplitude gold geochemical signatures based on stream sediments and soil samples, which the company says correlate with regional airborne magnetic surveys.
Las Orquideas has a 3 km long rock-and-soil copper-molybdenum anomaly that covers a ridge feature, the company says, and field observations suggest this could relate to a cluster of porphyry deposits similar to Lumina’s Santa Barbara deposit, which is in the same district.
The Condor concessions surround Dynasty Metals & Mining’s (TSX: DMM; US-OTC: DMMIF) Jerusalem project, 40 km east of the town of Zamora near the border of Peru, and 31 km south of Lundin Gold’s (TSX: LUG) 7.4 million oz. gold Fruta del Norte project.
Lumina acquired the Condor project late last year when it bought Ecuador Copper and Gold.
Condor has an indicated resource of 447.3 million tonnes grading 0.55 gram gold per tonne and 2 grams silver per tonne for contained metal of 8 million oz. gold and 28.5 million oz. silver. Inferred resources add 197.6 million tonnes averaging 0.40 gram gold and 1.40 grams silver, for 2.6 million contained oz. gold and 9.13 million contained oz. silver.
In addition to the Condor and Cangrejos projects, Benalcazar says, Lumina has eight new projects comprising 24 concessions, and the company already has two exclusively dedicated exploration teams in the field.
“Once the government of Ecuador drafted a new mining law in 2011 and regulatory code in 2013, with the aid of international consultants, Wood Mackenzie optimized the fiscal mining regime in 2015. The cadastral system was open for the tendership of new concessions in 2016,” Benalcazar says, adding that the public auction for concessions got underway in March 2016.
“Other mining companies such as SolGold, Cornerstone, INV Metals, Southern Copper, Fortitude, Codelco, Green Rock and others participated in the auction process,” he continues. “Lumina Gold was able to stake most of the proliferous land based on historical exploration data belonging to Odin Mining, now part of Lumina.”
The concession terms are four years, and companies are required to submit an investment plan outlining how much they intend to spend on exploration work during this time.
“We’re encouraged that the government of Ecuador has opened the cadastral system,” Lumina’s Koval says. “They are trying to foster exploration in the country and as we all know, Ecuador really hasn’t had much of an exploration business in the last 10 years since the mining moratorium was put in place in 2008. So that’s an important step.”
Benalcazar adds that major companies such as BHP Billiton (NYSE: BHP; LON: BLT) and Hankook “are looking for business opportunities, as well as Newcrest, which has invested in a project locally already.
“More or less 80% of the mineral belts of Ecuador have been claimed already and close to 90% of the claims have a registered mining title in hand,” he says. “Ecuador is back on track and open to foreign investment with better and clearer fiscal conditions.”
Lumina Gold recently closed at $1.20 per share, marking a 52-week high. (Its 52-week low is 33¢ per share.)
The company has 232 million shares, fully diluted.