EXPLORATIONS
Generative explorations' most significant achievements in Peru in 2012 took place in Surichata in Puno, Hualgayoc in Cajamarca, Tambomayo in Arequipa, Colquemayo in Moquegua and Trapiche in Apurimac (Figure 1). It has been a year of interesting results and increased resources in both Hualgayoc and Trapiche. We drilled a total of 54,455 meters in these five places, exploring for gold, silver and copper ore deposits.
At our Surichata prospect located in Puno, the first six drill holes showed polymetallic mineralization in wide veins with sectors of copper and gold content adjacent to other areas hosting lead, zinc and silver. These veins and their ore shoots are hosted in volcanic rocks. Selective flotation metallurgical testing has shown favorable results. We are going to continue drilling these and other mineralized structures in these properties located in Puno's high plateau area during the 2013 campaign.
The fourth drilling campaign programed for the Colquemayo project located in Moquegua was performed in the Yanarico prospect. Results here were sterile. We are going to resume exploration work on the breccia ore bodies that have sections of high-grade silver associated to arsenical copper at depth, detected two years ago in the Amata prospect. We will also review the latter prospect one more time in order to design a drilling program that may optimize the metallurgical processing and to try to increase ore resources here.
Regarding our underground exploration efforts to find high grade silver resources associated to copper or zinc in the ore bodies and veins of the Hualgayoc Mining District in Cajamarca, we have discovered, after two years of work and 16,428 meters of diamond drilling, that the veins in the Mesa de Plata sector go deeper down than 3.500 m.a.s.l. toward ore bodies with average widths of three meters. At depth, silver grades remain high - ranging between 10 and 15 oz/t of silver- and are associated to copper with trace amounts of gold, leaving the zinc and lead content at the edges and closer to the surface. Factoring in the new drill results, Indicated resources have risen by 60% in relation to the last measurement, giving us 1.7 million tons with 12.3 oz/t of silver, 0.7 g/t of gold, 0.6% of copper, 4.8 % of zinc and 2.2 % of lead in six structures with an average width of 5.2 meters.
We recommend that Consolidada de Hualgayoc S.A., (50% Buenaventura and 50% Gold Fields Peru), continues with the metallurgical research and begins to develop these ore bodies, in particular the main ore shoot of the Ulrica vein detected by drill hole PR-15-11 at level 3.300 m.a.s.l. , by means of a 2,000 meter long ramp from the El Tingo level. We also plan to continue drilling from this ramp, to double the resources in these and other silver veins and mantles in the area. This proposal will have to be discussed and approved by the Board of Consolidada de Hualgayoc S.A. before it can be implemented. That said, we shall continue to explore in the search for potential copper porphyries with gold and/or molybdenum in other localities within the property. Cía. Minera Colquirrumi S.A., in its capacity as operator of this partnership, is going to persevere with the generation of new objectives and environmental permits for drilling potential porphyries in the future.
Diamond drilling was resumed in Trapiche, our copper- molybdenum porphyry located in the province of Antabamba, in the region of Apurimac. Secondary and primary sulfides were assessed and for the first time ever, we also evaluated copper oxides. Simultaneously, we are conducting metallurgical tests and preparing scoping studies to have an initial technical and financial diagnose for this project currently operated by our subsidiary El Molle Verde S.A.C., (100% Buenaventura). The most important drilling results in 2012 were those that discovered the existence of a superficial area with leachable copper oxides, towards the west of the porphyry zone. Column leaching tests are underway and we hope to be able to confirm these encouraging initial results. Copper Resource inventories have grown by 22% and the exploration/development campaign will be continued intensively over the next two to three years. Our mission is to launch a first profitable open pit mining operation with heap leaching, solvent extraction and electrolytic copper precipitation treatment processes.
We also collaborated with the Tambomayo project located in the provinces of Tapay and Caylloma, and operated by Cedimin S.A.C. (100% Buenaventura). In 2012 we mapped the 30,000 hectare claim at a scale of 1/10,000. For the first time, we defined the stratigraphy and volcanic structure in this vast and remote high mountain area of Cordillera Shila, in the region of Arequipa. To end the campaign we identified two areas of interest with significant mineralized structures: Sahualque 2 km to the east and Blanquita 8 km to the northwest of the operations, for now focused on the development of four levels over the gold-silver Mirtha vein (see the inventory of resources in the corresponding Annex). We recommend drilling 5,000 meters in each of the two areas of interest documented in the district-scale mapping.
Similarly, we provided our support to Minera La Zanja's brownfield explorations division (53.7% Buenaventura and 46.3 %, Newmont, in Cajamarca. There we carried out detailed mapping, (1/1000 scale) of the sectors of San Pedro Norte, Cerro Cocan and Alcaparrosa, where the drill holes are proving the existence of veins and high grade gold ore bodies underlying a covering of barren opaline silica. In addition, we are drilling at the Las Lomas and Las Huangas prospects in the valley of the river Pisit in search for silver and gold-bearing veins. In 2013 we will continue drilling these veins and in addition, we plan to evaluate other prospects such as Totora, granted in concession to Minera Yanacocha S. R. L., for disseminated gold and silver and also Veta Corrales for wide structures with potential for high grade precious metals. Veta Corrales is located entirely within the property of Minera La Zanja.
Canteras del Hallazgo S.A., is a joint-venture company co-held by Gold Fields (51%) and Buenaventura (49%) that operates the Chucapaca project. This project is currently having its engineering designs re-evaluated in order to improve the economic model obtained from the last Feasibility Study. Additional studies will focus on evaluating alternative design options such as underground or mixed mining methods. Capital costs will also be reviewed to improve the economics of the project. The exploration campaign will be resumed in the area of interest of Chucapaca where a number of exploration targets have been identified. The paperwork to obtain the permits from the authorities is underway. Drilling of these objectives will begin as soon as the permits are obtained.
Mapping and sampling was completed to generate drilling targets in the Ccaccapaqui prospect - optioned out to Alturas Minerals - and Brecha Andrea to the northwest and north of our Breapampa operation in Ayacucho. To this end, we have begun the environmental studies for processing the Environmental Impact Statements (EIS) with the relevant authorities so as to start drilling these targets as well as three new prospects: Nazca in Ica, Paco Paco in Arequipa and Minas Ragra in Cerro de Pasco.
We are going to continue exploring as part of the 2013 campaign in five areas of interest and shall start up activities in at least five other new areas in 2014 (Figure 2). Tentatively, the annual 2013 budget for explorations has been estimated at US$20.2 million. In addition, Business Development management has planned and is carrying out advanced exploration and conceptual mine development activities in the Trapiche porphyry. An investment amount of approximately US$35 million will be required to bring this project to pre-feasibility stage.
This next campaign will be decisive and successful, if we work as an enthusiastic, professional team, displaying geologic intelligence and zealous technical and administrative supervision over the 500,000 hectares that the company currently holds and explores in Peru.