Nevada deposit given second look — Lac strikes more gold in

A reinterpretation of geology has led to the discovery of a potentially large-tonnage, heap-leachable gold deposit at the Nevada property high in the Chilean Andes.

Although operator Lac Minerals (TSE) is reluctant to release reserve estimates so early in the exploration program, analysts who visited the property in March say about two million ounces have been outlined to date. Some believe the deposit, perched at an elevation of more than 15,000 ft. (4,500 metres), could host as much as 75 million tons grading 0.08 oz. per ton.

“I was very impressed,” said Michael Jalonen of Midland Walwyn. “There are some technical problems, but the Nevada project will be a mine some day.” Lac holds an 80% interest in Compania Minera Nevada, owner of the gold-silver property, through its Chilean subsidiary.

The Nevada camp now accommodates 100 people including Chilean road-building crews, drillers, samplers, geologists and geophysicists. A telephone, fax machine and modem link the remote base to offices in Santiago and Toronto. The 45,000-acre property was staked more than 20 years ago, but early exploration concentrated on the type of vein-hosted mineralization common to many of Chile’s gold deposits, including Lac’s El Indio mine 30 miles to the south. Several adits were driven into the side of the mountain to investigate high-grade zones.

It wasn’t until the late 1980s that a new geological model began to take shape. Noting the disseminated mineralization and the characteristics of the surrounding alteration, project geologist Miguel Gallardo determined the Nevada deposit represents the crest of a large epithermal system. Subsequent road-building in early 1992 confirmed his theory. Road cuts exposed a stratabound, subhorizontal zone of disseminated gold and silver. Mineralization occurs at the base of a porous tuff lying unconformably on Paleozoic basement. Alteration includes quartz-alunite in the footwall grading to silicification and steam-heated (acid leach) alteration in the hangingwall.

Below the 15,000-ft. level, low-grade mineralization is associated with quartz veinlets and stockworks.

According to Craig Nelsen, vice-president of exploration, the deposit shares geological similarities with the Round Mountain orebody in Nevada, where reserves stand at about 200 million tons grading 0.03 oz. per ton. “This looks as if it could be a very significant deposit and very unusual for Chile,” said Nelsen in a recent interview. “We were looking for an El Indio — a continuous vein system — but this new model appears to be working.” An understatement, to be sure. Results from recent step-outs on the main Esperanza zone include a 492-ft. intersection grading 0.29 oz. gold and 0.2 oz. silver from Hole RDH-43. Hole RDH-44 returned 502 ft. grading 0.09 oz. gold.

Just as encouraging is the potential for reserve extensions along the southwest-northeast-trending structure that appears to control mineralization in the area.

About one mile to the south, surface work has uncovered gold values in a similar rock type. Channel sample results include 0.12 oz. gold and two ounces silver over 13 ft. and 0.05 oz. gold and 1.14 oz. silver over 59 ft. To the north, Lac is investigating a widespread soil geochemical anomaly. As the $1.5-million 1992-93 program draws to a close, Lac is gearing up for a much larger exploration effort in September. Although budgets have yet to be determined, Nelsen says two or three reverse circulation rigs will be infill-drilling at 150-ft. spacings on Esperanza while two will be assigned to reconnaissance work.

Developing a gold deposit at such high altitude will be difficult. The lack of oxygen at 15,000 ft. (4,500 metres) limits efficiency of both equipment and personnel, and ore must be transported from the top of the mountain to the nearest valley, at 13,000 ft. (3,900 metres), for processing. But Lac has gained experience in high-elevation mining at its nearby El Indio complex.

“There will be challenges, but they are not insurmountable,” says Nelsen. “We hope it will be a bulk-tonnage operation, so there won’t be as much physical work as with an underground mine.”

As the minerlaization generally occurs as free gold within fractures, preliminary metallurgical work has produced encouraging results. Lac is looking at building a heap-leach facility as well as a conventional mill for high-grade ore.

Meanwhile, the company will accelerate grassroots exploration along the El Indio belt, a narrow but almost continuous line of large hydrothermal alteration zones that extends 125 miles along the Chile-Argentina border. Lac controls about 55 miles of the belt, where gold deposits occur within a north-south-trending graben (depression) bounded by high-angle reverse faults El Indio produced 223,688 oz. gold at a cash production cost of US$183 last year, up from 191,342 oz. in 1991.