Morelos and more.
Recent years have seen terrific interest in exploration in Mexico, stimulated by genuine improvement in its investment climate, abundant risk capital, difficulties with mine permitting in the rest of North America, proximity to the US and Canada, and a year-round exploration season.
It is Canadians that are heading the rush to Mexico. Since 1992-93, when Mexico's laws were changed to attract foreign investment, Canadians have taken an interest in 130 of 196 mining ventures established with foreign capital, according to the head of mining at the Canadian-Mexican Chamber of Commerce, Gunther Muller. He expects Canadians to invest $1,300 million in Mexican mining in the next two years, up from $900 million in the 1995-1997 period.
Just one of the rewards of recent activity is the emerging Morelos - Guerrero gold and base metal potential. Very interesting mineralisation has been identified over an area covering more than a quadrant from the west to the southeast of Iguala, all within fairly close proximity of the main Highway 95 between Mexico City and Acapulco. The area of interest from Iguala extends to some 70 km west, 120 km southwest and 135 km southeast. Teck describes Guerrero as a "relatively unexplored region for large bulk-mineable gold (plus copper) deposits. Geology is favourable for gold/skarn, gold/copper skarn and copper/gold porphyry systems." Important gold skarns include Nuteck's Los Filos and Penoles' Mezcala (Bermejal), there is the Las Truchas iron skarn deposit and polymetallic VMS deposits such as Farallon's Campo Morado, the Rey de Plata deposit held by the Penoles-Dowa-Sumitomo joint venture, and the Tizapa mine.
Miranda Mining Development Corp. (MMDC), which claims to hold, wholly or in joint venture, 51% of the massive sulphide belt and 75% of the gold belt, reported on the gold belt in May that its exploration results in the Vaticano areas - Norte, Poniente and Sur, enveloping the whole area of interest - and public announcements from other explorers working in the same area "corroborate the existence of a region marked by distinctive geological features linked with gold mineralisation. This trend has a known extension of 125 km long by 25-50 km wide and is characterised by the presence of Cretaceous sedimentary rocks intruded by Tertiary stocks with associated gold-silver-copper mineralisation. The belt hosts the Nukay (MMDC-Teck), Nuteck (Teck-MMDC) and Mezcala (Penoles-Newmont) deposits where, after eight years of exploration, some 8.3 Moz of gold reserves and resources have been identified, with geological potential still open. Also, inside the belt are located the Ana Paula (MMDC), Toronto (MMDC), Todos Santos (MNR), Xochipala (Britannia Gold) and Mochitlan (MMDC) gold prospects, among others."
MMDC, a company incorporated in British Columbia, Canada, developing gold projects in Mexico, has employed an aggressive strategy of land acquisition. The company has land positions in the states of Guanajuato, Durango and Michoacan, but it is in the state of Guerrero that it has built a position which may well become a key to the potential of the rich Morelos National Reserve (MNR). The auction of MNR, divided into north (MNRN) and south (MNRS) areas, was one of the most eagerly awaited of the disposals from Mexico's National Reserve system.
The Coordinacion General de Mineria (CGM) described a reserve of 50.6 Mt of mineral with values of 1.5 g/t Au with ample possibility of finding lead, zinc and silver for the 26,346 ha MNRN. MNRS, covering 16,688 ha, was similarly described, with the reserve figure quoted being 69.8 Mt. In July, Minera Media Luna (MML) - Teck 60% and MMDC 40% - won the bidding for MNRN. Industrial Minera Mexico (IMMSA) a 100% subsidiary of Grupo Mexico, the largest mining and railroad companies in the country won MNRS.
The MNRN mining concession covers a mineralised skarn and intrusive complex similar to, but larger than the skarn and intrusive complexes hosting the gold mineralisation in the Nukay, Nuteck and Mezcala areas. MML reports that it has confirmed geochemical surveys conducted by the Consejo de Recursos Minerales (CRM) showing widespread gold, gold-copper and silver-lead-zinc mineralisation on the concession. The CRM completed an airborne magnetic survey that shows numerous high-amplitude anomalies around the intrusive complex, similar to those associated with gold mineralisation at the Nukay, Nuteck and Mezcala properties. Following MML's winning bid for MNRN, a comprehensive exploration programme has been started under Teck's direction.
The CRM has documented 169 gold, silver, copper, lead and zinc mineralised occurrences, including old mining works and prospects, scattered throughout the MNR.
Through 70% subsidiary Minera Nukay, MMDC already produces over 15,000 oz/y of gold and 8,000 oz/y silver from its Nukay and La Aguita open pits and La Subida underground mine in MNRS. Largely as a result of plant modernisations and expansion, with throughput now at 450 t/d, Minera Nukay slashed its cash production cost from US$257/oz in 1994 to just US$151 in 1996. Gold production was just over 17,400 oz in 1997, plus 14,800 oz silver, at a cash cost of almost $175/oz, and the plan for 1998 is 19,000 oz. It has some very active exploration projects on which some 24,000 m of drilling has been completed around those operations. Nukay and Minera Nuteck (30% MMDC and 70% Teck) have invested US$15.8 million in exploration in the Nukay-Nuteck area since 1993.
MMDC has continued to develop reserves at Nukay and looked at the feasibility of the construction of a new operation there to produce in excess of 40,000 oz/y. However, no decision was made on this because of MMDC's various other projects both within and outside the MNR. MMDC was not to be rushed into an expanded Nukay operation that might not be compatible with other options. A Penoles-Newmont/Teck-MMDC joint operation is under discussion.
Nukay and Nuteck reserves and resources at December 1997 Area Mt g/t Au Moz m drilled Nukay Reserves and resources 5.6 4.57 0.823 25,323 Los Filos 28.99 2.20 2.045 80,405 Others 23.89 2.54 1.948 30,617 Nuteck (resources) 52.87 2.35 3.993 111,022 Total Nukay-Nuteck Reserves and resources 58.47 2.56 4.817 136,345
Adjacent to its Nukay reserves, to the west, are the exploration activities of Minera Nuteck - Los Filos and other prospects - where well over 90,000 m of drilling has been completed. MMDC estimates that the combined gold content of the ground held by Nukay and Nuteck is approaching 5 Moz, of which 1.9 Moz has been confirmed as a mineable reserve.
Teck's preliminary engineering assessment of Los Filos is a geological resource of over 2 Moz based on a 0.55 g/t cutoff with grades in excess of 1.25 g/t Au. About 75% of the resource can be extracted by an open pit and the metallurgy is favourable for a CIP mill (recovery greater than 90%) and heap leaching (recovery greater than 70%).
The Morelos Reserve (north and south) covers an area of some 40,000 ha, but MMDC's holdings (wholly-owned or with partners), before MML won MNRN, within and around the reserve, amounted to some 700,000 ha. MMDC has all the ground immediately surrounding the reserve to the north, west, east and south. MMDC's four strategic holdings within the reserve amount to 82 ha.
North of the Morelos reserve MMDC reports 19 intrusives have been identified in the Vaticano Norte area. To date, Ana Paula is the most attractive. Nine old mining operations were sampled, returning an average gold grade of 2.4 g/t. Various intrusives in the south of Vaticano Norte extend into MNRN, the most attractive, MMDC reports, "being the Toronto (formally San Luis) intrusive." MMDC also notes that Vaticano Norte "has excellent infrastructure, paved roads, water nearby, electricity and labour."
As of December 1997, with a total of 727,400 ha, MMDC controlled almost 71% of the Morelos - Guerrero Gold Belt with a cluster of properties in Vaticano Norte, Poniente and Sur, as well as Jaleaca. Many of these have shown exciting potential.
A sampling programme initiated by MMDC in Vaticano Sur reported gold contents up to 4.8 g/t. MMDC notes that in Vaticano Poniente, "The remarkable coincidence of the presence of iron concentration, conductive minerals at depth and a broad alteration zone at surface, localised in the Morelos formation (hosting the mineralisation in the Nukay district) in a mountain called Cerro Colorado (red stained mountain), make these anomalies a worldclass target for exploration." To the extreme south of the area under consideration, MMDC's Agau claim includes the old Poder de Dios mine of narrow epithermal bonanza type veins with argentite and gold. In 1996, Romero Luna, a member of the MMDC board of directors, took 135 samples from three of the old mine levels, returning average values of 3.9 g/t Au and 1,269 g/t Ag.
Campo Morado is one of the most advanced projects in the massive sulphide belt. Lying some 65 km west-southwest of Iguala and less than 60 km southwest of Taxco, it was established in 1534 to extract rich silver veins, some of which are still in production today. It is a classic VMS-type deposit associated with felsic volcanics. Campo Morado's polymetallic deposits include past producers at La Reforma and La Suriana, and could be developed into a series of underground operations. Over 60,000 m of drilling has been completed and new targets continue to be identified.
The geological resource estimated by Farallon is 29.3 Mt grading 2% Zn, 0.6% Pb, 1.5 g/t Au, 86 g/t Ag and 0.8% Cu in the four deposits of Reforma, Naranjo, El Largo and El Rey. Furthermore, Farallon has calculated a mineable resource of 12.4 Mt at 3.7% Zn, 1.1% Pb, 2.8 g/t Au, 146 g/t Ag and 0.6% Cu. Farallon is aiming to double both resources through infill and expansion drilling. Drilling on G-9, Estrella de Oro, San Rafael and La Lucha, for example, has identified resources that remain open.
By late August, 56,164 m of core drilling in 293 holes had been completed. At Reforma, a large-scale massive sulphide deposit has been identified with a northwest strike length of 800 m and a down dip extension of 400 m. Drill holes have intersected two distinct precious metals-rich massive sulphide horizons. One, at the base of Reforma, averages 7.7 m thick, grading 4.7 g/t Au, 245 g/t Ag, 0.65% Cu and 6.2% combined zinc-lead. Drilling had also intersected an overlying horizon averaging 8.2 m thick, grading 2.1% Cu with significant silver values. Southwest of Reforma, 305 m, El Rey is currently estimated to be 305 m northsouth and 250 m east-west with an average intercept thickness of 5.7 m grading 3.6 g/t Au, 167 g/t Ag, 0.54% Cu and 6.2% combined zinc-lead.
Naranjo appears to have extensive, locally stacked massive sulphide horizons 900 m north-south, 250 m east-west with an average intercept thickness of 6.9 m assaying 3.22 g/t Au, 149 g/t Ag, 1.2% Cu and 4.4% combined zinc-lead. El Largo, 500 m west of Naranjo is up to 250 m north-south, 500 m east-west with an average intercept thickness of 10.3 m grading 1.3 g/t Au, 86 g/t Ag, 1.5% Cu and 3% combined zinc-lead.
Southwest of Naranjo, 7 km, La Suriana is a structurally complex, block faulted massive sulphide running 125 m north-south and 700 m east-west. The average intercept thickness of 4.2 m grades 2.05 g/t Au, 259 g/t Ag, 0.54% Cu and 3.9% combined zinclead.
Conventional milling and flotation testwork revealed poor recoveries, but subsequent work indicates that both bio-oxidation and pressure oxidation can significantly improve recoveries. Farallon estimates the capital cost of a 5,000 t/d mine and processing facility to be $285 million.
Pre-feasibility work has led Farallon to estimate total cash operating costs for a bulk underground mining operation to be in the $25.75/t milled range - mining $9.75/t, milling $7/t and administration $9/t. The company reports that: "Extensive tours of Mexico's operating mines by Farallon personnel have demonstrated that operating costs are considerably lower in Mexico than similar operations in Canada and the US due to low labour costs. In Mexico, labour makes up approximately 20% of total cash operating costs, while in Canada and the US labour costs are approximately 60% of total cash operating costs. Consumables such as tyres and drill steel have to be imported, making consumable costs moderately higher in Mexico. Overall, daily production and efficiencies are similar for mining operations located in Canada, Mexico and the US."
1. Flores, Victor and Archambault, Yannick, Mining in Mexico: Developing the Next Generation of Gold Mines, HSBC Securities company report, July 8, 1998.
2. Reduccion Morelos North & South Bids, MMDC press release 98-01.
3. Company material from Farallon, MMDC and Teck
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|Title Annotation:||Miranda Mining Development Corp.'s operations in the Morelos-Guerrero gold and sulphide belts in Mexico; Mining North America|
|Date:||Nov 1, 1998|
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