The road to El Dorado - Argentinian gold fields
A closer look at the gold ﬁelds of Argentina is set to reap rewards for UK-based Samco Gold Ltd. Michael Forrest spoke to CEO Paul Richardson to ﬁnd out more.
The results of a 2012 survey show that gold accounts around 50% of non-ferrous expenditure and that Latin America attracts 25% of the global budget, estimated at US$18.2 billion. These figures have not escaped the attention of the directors of Samco Gold Ltd, a London-based, Toronto stock exchange-listed exploration company. Gold particularly is the target of junior companies, and the reasons are relatively simple. It is a high value, low bulk commodity that can be produced on site using relatively simple mining and processing technology and allowing sale from the mine site without establishing extensive transport infrastructure. It also has a published value within a global market, and provides a fiscal haven in the present economic turmoil.
Looking to Latin America
One country with rising gold production is Argentina, and of particular interest is the Deseado Massif in the southern Santa Cruz province. Topographically the massif is bounded to the north by the Deseado river, the Andean Cordillera to the west and the South Atlantic to the east, and covers approximately 60,000km2. The oldest rocks are late Pre-Cambrian and early Palaeozoic metamorphics of the La Modesta formation, which are intruded by granites, granodiorites and minor basaltic dykes and sills. These are unconformably overlain by continental sandstones of Permian-Triassic age. Structurally, the massif is characterised by block faulting and grabens that were re-activated in the Jurassic and Cretaceous Periods during a period of regional extension. Of particular note is the outpouring of rhyolitic ignimbrites and deposition of sediments that comprise the Bahia Laura group that extends more than 100,000km2. Part of this group is the Chon Aike formation that hosts the majority of known mineralisation in the Deseado Massif.
But the massif is more than a prospective location. It hosts the Cerro Vanguardia mine, operated by AngloGold Ashanti, Cerro Moro of ExTorre Gold and Cerro Negro of Goldcorp with a combined resource of more than 11 million ounces of gold. Samco Gold set out to acquire a portfolio of licence areas in 2006, focusing on areas that had been claimed early in the exploration cycle of the region by Argentinian geologists. This portfolio was supplemented by the acquisition of the flagship El Dorado-Monserat property (contiguous to Samco’s Judite property, itself adjacent to the area of Cerro Vanguardia where Anglogold Ashanti has been operating for around 12 years). The mineralisation at El Dorado-Monserat was identified in the early 1980s by Government geologists exploring for barytes. The area was claimed by Dr Ricardo Auriemma, a renowned geologist with a long track record of successful exploration in Argentina, including the discoveries of Manantial Espejo (Pan American Silver) and Agua Rica (Yamana). The area covers at least six high-quality target areas with more than 15 kilometres of outcropping lowsulphidation epithermal veins.
Over the next 25 years, a number of local and international companies worked on the property, with different philosophies and at different gold prices. The majority of the work focused on the Ashanti, which conducted geochemical sampling from its base at the nearby Cerro Vanguardia mine, and AUR Resources, which conducted a comprehensive trenching and sampling followed by drilling over the southern part of the Main Vein system. Values up to 240g/t Au were recorded over a short interval while in the central part AUR found gold values in excess of 0.5g/t over the upper 150 metres. Exploration drilling was carried out over large areas that now comprise Samco’s Monserat main zone, Monserat East and West, and the El Dorado licence areas of Beethoven and La Herradura. In 2007 AUR was acquired by Teck-Cominco, which led to the operation being closed.
Samco’s CEO, Paul Richardson, explains, ‘We recognised the potential of the Deseado Massif and sought to build a focused portfolio of claims that had originally been staked by reputable Argentine geologists – in some cases ahead of the development of what are now significantly more advanced projects or even mines’. By 2010, the company had acquired a portfolio of 10 exploration licences and had agreed to acquire the El Dorado Monserat project. In May the following year the initial public offering (IPO) of the company was oversubscribed with a target price to raise $C25 million. These funds are being used to prove the gold resources in the main zone and peripheral areas. The style of mineralisation is one of low sulphidation vein-type (characterised by reduced sulphur species and Au-Ag) that has the potential to host high-grade gold deposits. Vein widths within the licences vary from 0.5–10m, with the latter in the broader areas of dilation. The mineralisation occurs within normal fault and strike-slip zones with local wall rock lithologies controlling the direction. There is little alteration of the wall rock with silica (quartz and chalcedony) being the major vein minerals.
Samco’s core properties are those of El Dorado and Monserat. The outcropping veins on the latter comprise a series of en-echelon veins that extend over six kilometres and in the southern part swells to more than 1.5 kilometres in width. This year the company has recovered 10,640 metres of core from 64 drill holes in the Monserat sector (principally from the Main Veins target) and 6,571 metres in 27 holes at El Dorado. In the former the Inés veins are the main priority where values between 4g/t and 8.2g/t are recorded. Three mineralised shoots have been identified with a combined strike length of 530 metres. Additionally at Monserat West (around 1.5 kilometres from the Main Veins) values up to 5g/t have been identified in historical cores. To date the vast majority of the drilling on these targets has been to comparatively shallow depths of no more than 250 metres. This contrasts with the bonanza grades recorded elsewhere in the region at depths of more than 400 metres. The targets so far identified at El Dorado Monserrat are open at depth and encouragingly show increasing width and grade in the deeper intersections.
At the Herradura target on the El Dorado sector of the project, outcropping breccias display a high gold content in the vicinity of an eruptive centre with numerous gold-bearing veins. Previously regarded as two separate systems, it now appears that the La Herradura and Beethoven targets are a more or less continuous epithermal vein system extending over five kilometres. It occurs in a west-northwest corridor in a syn-volcanic graben and its association with a possible volcanic centre and domal complex adds to its economic potential. This continuous system and its lateral and vertical extent offers scope for large-scale open pit mining, as used in the Cerro Vanguardia mine to the east, which in 2011 was the lowest cost producer per ounce of the entire Anglogold Ashanti group.
Richardson explains, ‘This year we employed structural geologist, Dr David Coller, to review the exploration results from the Main Veins and the Herradura target’. Coller identified the Camila-Inés vein system as a north-northeast-trending sinistral fault in which mineralisation also occurs in northwest-trending extensional veins in the hanging wall. Ore shoots or wide zones of multiple veins develop at changes in dip and strike of the main structure and are consistent with steeply north-plunging ore shoots. Deeper exploration of these shoots and the wide, multi-vein structures will be exercised, including testing the hanging wall splays of the Inés vein in the wider zones of multiple veins identified in the Coller report. It is possible to calculate relatively wide zones of lower grade mineralisation with a weighted average of the intersections of 2.2g/t gold and 88g/t silver over 9.1 metres.
As of March this year, Samco Gold had more than US$17 million in cash and cash equivalents, which is scheduled for the continuation of drilling, and geochemical and geophysical exploration. Commenting on the recent results Paul Richardson, Chief Executive of Samco Gold said, ‘The results of our first stage programme on the Main Veins target are very encouraging and we have some exciting targets to follow up, particularly at Inés. We are also very enthusiastic about the initial drill results from Herradura that suggest great potential. Dr Coller’s work has been very helpful in identifying key structural themes which underlie our strategy for future phases of drilling on this important target.’