The purchase of a Mexican company provides Metallica Resources (CDN) with exposure to the famous Cerro San Pedro mining district.
The Toronto-based junior now holds options to buy 25 concessions, totalling 673.5 acres and covering most of the mining district.
Situated 12.5 miles east of San Luis Potsoi, the district was discovered in 1575. Since then, it has produced more than 2 million oz. gold and 25 million oz. silver.
Mineralization exploited in the past consisted of oxidized, massive sulphide mantos, breccia pipes and chimneys hosted in a sequence of Mezozoic carbonates which has been intruded by a gently dipping, porphyry dyke-like body.
A previous operator, Compania Fresnillo, attempted to develop a bulk-minable resource in the porphyry body, which contains disseminated mineralization. Metallica says Fresnillo’s work “documents the validity of this target,” but adds that it was not generally aimed at developing the halo mineralization surrounding the old, high-grade bodies exploited during the early stages of mining.
Fresnillo spent US$2.25 million on a program which included 35 reverse-circulation (RC) drill holes and sampling of underground workings. Based on this work, a geologic resource of 700,000 oz. gold and 20 million oz. silver was identified.
To test the potential of the land package, a $1.7-million program has been proposed. Metallica’s initial drill program will attempt to define mineralization overlying the porphyry along a northeast-trending, structural corridor which appears to control the localization of all past production in the district. A 10,000-metre RC drilling contract has been awarded, and work is expected to begin shortly.
Metallica acquired the Mexican company by paying US$200,000 and issuing 300,000 shares. The underlying purchase options call for periodic payments over three years towards a complete purchase price of almost US$4 million.
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