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Thursday, 8 November 2012
Latin American Minerals: Writing the textbook on gold mining in Paraguay
As one of the first exploration companies to operate in Paraguay, Latin American Minerals (CVE:LAT) says it has had the “tremendous advantage” of being able to explore and secure some of the region’s most prospective projects.
The company’s flagship Paso Yobai gold project has recently become home to Paraguay’s first gold mine, and Latin American also has three other active projects in the region – one of which is led by a joint venture partner that provides specialized technical resources and financing.
President and CEO Miles Rideout says that exploration in Paraguay has been “pretty exciting”, with many instances where the company has gone into an area and found gold on surface that hadn’t been worked by other companies.
The phenomenon has been both a boon and a blessing, as Rideout explains that being the first in means untouched gold in many cases, but notes that the company can’t look to a neighbouring project to compare results.
“There is no public reference to determine the look, mineralogy, grades and depths [of these new properties],” he says.
“When there is a textbook written, we’ll be the ones writing it.”
The Toronto-based mineral explorer entered Paraguay in 2007, when the company’s management saw that the area held “great promise” for gold mining.
“Since 2008, we’ve been adding to the Paso Yobai package and we’ve been developing and exploring new Paraguayan prospects as well,” says Rideout.
Located in south-eastern Paraguay, roughly 160 kilometres east of the capital city of Asuncion, the Paso Yobai project comprises two main sectors; the Minera Guairá mining concession, and two Latin American Minerals Paraguay S.A. prospecting properties, which are owned by the company. The total project area covers 15,019 hectares.
Rideout says the project appears to be a very large epithermal gold deposit, delineated at surface on two parallel trends – the Discovery and the X-Mile Trends.
Latin American controls about three kilometres of the mineralized Discovery Trend.
Its sampling programs have delineated the 14.8-kilometre X-Mile Trend, which is 100-per-cent held by the company and also detected additional off-trend gold targets.
The company notes that a significant characteristic of the gold mineralization on the Discovery Trend is that it is largely coarse gold, which produces a prominent “nugget effect” particularly evident in gold assays using small sample volumes.
As a result, bulk-sampling produces a more reliable evaluation of gold grade.
In 2011, Latin American began a large scale bulk-sampling and development on the central 1,200-metre Discovery Zone, the core mineralized area of the Discovery Trend structure.
The development included the construction of a five-tonne-per-hour concentrator facility within the fully mine-permitted concession.
This plant was designed to allow the company to expose ore shoots to more than 15 metres depth for mapping and sampling, and to finance this exploration with the proceeds from the sale of the processed gold.
Operational trials and training began in January of this year, and the plant was inaugurated in February as the Independencia Mine.
The month of May saw the implementation of a second shift at the mine, and in late August, Latin American announced that it had delivered its first gold doré bar to the Johnson Matthey gold refinery in Brampton, Ontario.
Refinery assays indicated the bar contained 166 ounces gold and 47 ounces silver, giving it a rough value of $276,000 at then market prices.
With the strategy to develop the Discovery Trend with a bulk sampling operation, the company says it could then refocus its conventional exploration efforts on the much larger X-Mile Trend.
Drilling began on the X-Mile trend with 12 holes on the Tacuru target earlier this year. All of these intersected gold mineralization, with the best results in hole 8 - showing 22 metres grading 4.2 grams per tonne (g/t) gold near surface, and 2.7 metres grading 107 g/t gold near the bottom of the hole at 80 metres depth.
“We are still working out the mineralogical model,” Rideout says.
“Although these new results still show largely structural controls, the mineralization at Tacuru is substantially different than that of the Discovery Trend.”
The drill campaign detected a new gold mineralization style for the project, with fine gold disseminated in sandstone host units.
To more quickly advance the project exploration, and to test the potential for bulk-tonnage gold targets at depth, Latin American is now deploying advanced geophysical imaging techniques.
“We are applying a proven technology, permitting target imaging to about 400 metres depth,” says Rideout.
“It is relatively inexpensive, much faster than drilling and will allow us to prioritize our drill targets.
“Now instead of drilling surface targets or drilling blind, we will have a picture of the target, allowing our drill budget to go much further.”
Latin American believes that Paraguay’s mineral potential is virtually untapped. The country, which is roughly the size of California, has historically focused on agriculture, cattle production and industrial processing of food and timber.
Mineral showings in the country, however, include gold, diamonds, rare-earth oxides, uranium, niobium, titanium, iron and bauxite.
In a remarkable turn of events, Latin American’s initial local partners on a gold showing were also able to present the company with an impressive diamond discovery.
The Itapoty diamond property is located roughly 120 kilometres north of Paso Yobai. Geologically, this area is part of the diamond rich Alto Paranaiba Igneous province extending south from Brazil.
Exploration work at Itapoty has included soil and stream sediment sampling and ground magnetics, which Rideout says have been very useful, and have returned 80 “significant-sized” diamonds.
In fact, 11 per cent of all the sampling programs on the project have returned diamonds, and Rideout says that as many as five different prospective areas have been identified on the claimed Itapoty project area, which has grown to encompass 2,200 square kilometres.
“With a young diamond district like this, we [the management] believe that we’ll require significant technical and financial resources to advance to a mining stage project,” he explains.
“To that end, the company decided we’d be better off to partner with an able diamond exploration company.”
Thus began a 50-per-cent earn in option on the project with Olivut Resources Ltd. (CVE:OLV), signed in 2011.
Olivut is a Canadian diamond exploration company focused on projects in the Northwest Territories in Canada and in Uruguay, South America, and acts as the operator of the Itapoty project in Paraguay.
Latin American also has a rare earth element (REE) and niobium project named Chiriguelo.
Located near the Brazilian border in eastern Paraguay, the project has a large alkaline intrusive complex six kilometres diameter with mineralogy similar to the world’s three niobium mines and several important REE deposits.
Chiriguelo is the centrepiece of the company’s strategic portfolio of similar large intrusives in the area, Rideout indicates.
“We have cornered the market on carbonite intrusive in Paraguay.”
The company says it is actively seeking an able corporate partner to take the lead in exploring and developing these large, complex properties.
Looking ahead, Rideout says Latin American will continue to review new project opportunities in Paraguay, with a primary focus on gold.
“We are initiating a new gold project and hope to have it at a similar stage to Paso Yobai within two years.
“By moving Paso Yobai to more advanced development steps, we don’t expect this new project to dilute our development on our core gold project.”
The company expects that the first stage of advanced geophysical work at Paso Yobai will be completed by year end, with drilling ready to start early in 2013.
“Last month, we closed with $1.4 million in cash, so we are funded for the geophysical survey,” says Rideout.
“In order to do a significant amount of diamond drill follow-up, we will want to get more funding in place next year.”
As the "leading gold explorer" in Paraguay, Rideout says that the company has worked closely with the Paraguayan government to insure that both the country and the host communities benefit from its exploration and mining activities.
“The Paraguayan government has been very supportive of the company’s venture,” he says.
“The government is firmly behind foreign investment to further economic growth.”
When asked how Latin American Minerals differs from other junior exploration companies, Rideout says: “Unlike exploration projects in many other South American gold plays, we know we’ll be permitted to mine at Paso Yobai.
“The Independencia Mine is the pilot operation of a large new gold district and is fully licenced for gold production. And with our low market cap, currently at $13.26 million, we are probably significantly undervalued.”