Cerro Negro Gold Project
Vein Zone
In 2007 Andean re-mapped the Vein Zone geology in detail, using all available natural outcrop and drill-pad exposure. As a result of this work, a new structural interpretation was developed. It showed the influence of the faulted contact between two volcanic units – a strongly welded ignimbrite and a less welded ignimbrite unit referred to as a lithic tuff – on the distribution of gold mineralization. On the basis of this mapping, the deposit was divided into three structural domains:
- A western domain, west of 8550E, in which most quartz veins strike EW and dip about 60 degrees north. In this domain, all veins are hosted at the surface by welded ignimbrite. The contact between welded ignimbrite and lithic tuff strikes NE and is almost certainly a fault which dips steeply NW.
- A central domain, 8550E to 8650E, in which there are few vein outcrops. All of them are hosted at the surface by lithic tuff and most of them strike NW. The domain boundaries are an inferred NW fault to the west, and contact with welded ignimbrite to the east. This contact strikes almost NS at the surface, and has a flat easterly dip. It is thought to be a low-angle fault, probably associated with a flat-dipping, arcuate quartz vein which crops out to the south of the deposit.
- An eastern domain, east of 8650E, in which outcropping veins are again hosted by welded ignimbrite. Veins strike NW to NS with steep to flat dips. The eastern boundary of the domain is an inferred NE-striking fault, which dips NW.
After completion of Phase 4 drilling, all subsurface and surface geological data at Vein Zone was re-evaluated. It is now considered that the three structural domains referred to above are segments of a continuous change in strike, and are part of dilational jog in a complex fault system. At least four individual veins are distinguished within the fault system. They are separated and flanked by zones of stockwork mineralization thought to have formed in tensional fractures related to the fault system. The radical change in the strike of the fault system, especially at the south eastern limit of exploration, opens up new possibilities for additions to the resource, and Phase 5 exploration will focus on these extensions.
Vein Zone Resource Estimate
The Vein Zone estimate is based on 100 holes which have intersected this zone to date. Assuming an open-pit scenario and using a cut-off grade of 1.0 g/t Au, Micon has estimated an indicated resource of 4.6 million tonnes with an average grade of 3.7 g/t gold, or 554,000 ounces of gold; in addition Micon has estimated an additional inferred Resource of 4.3 million tonnes with an average grade of 2.7 g/t gold for 367,000 ounces of gold. Silver grades at Vein Zone were not considered economically significant and consequently were not incorporated in the resource at this time.
The resource estimate was based on three major geologic domains: the Main quartz vein, the lower quartz vein and a broad envelope of quartz stockwork. Mineralization was restricted within these domains and statistics were developed for each of these zones separately. Individual one meter composites were capped at 35 g/t Au within the Quartz Vein domain, and the composites within the Stockwork domain were capped at 10g/t Au.
A specific gravity 2.4 tonnes/m3 was used for mineralization at Vein Zone. The grade of the resource estimate was determined using the inverse distance squared method. The sensitivity of the resource estimate to cut-off grades of 0.5, 1.0, and 2.0 g/t Au is shown in the table below, showing a robust core to the mineralization:
| Vein Zone Resource Estimate | ||||
|---|---|---|---|---|
| Classification | Cut-off | Tonnage | Au Grade | Product Au |
| (g/t) | (T x 106) | (g/t) | (ounces) | |
| Indicated | 0.50 | 5.56 | 3.23 | 576,172 |
| Inferred | 0.50 | 6.86 | 1.93 | 426,020 |
| Indicated | 1.00 | 4.61 | 3.73 | 553,736 |
| Inferred | 1.00 | 4.31 | 2.65 | 366,888 |
| Indicated | 2.00 | 3.17 | 4.77 | 486,034 |
| Inferred | 2.00 | 2.21 | 3.85 | 273,636 |
After completion of Phase 4 drilling at Vein Zone, a major re-evaluation of the geology of the deposit was carried out (see above). This changes some of the assumptions made in the previous resource, as greater geological continuity and control can now be demonstrated. Work is in progress to refine the geological and grade model and to determine what additional drilling is necessary to update the resource.