Acero-Martin’s Pinaya Project In Peru Will Be A Lot Bigger By Christmas
By Charles Wyatt
Stewart Jackson became president and chief executive of Canadian-listed Acero-Martin Exploration in April when the company was in a slight state of flux. Back then Don Currie was only acting as interim president, following the resignation of president Don Gee and chairman Len De Melt the previous October. However Dr. Jackson was known to the existing management and came to the company with a record of achievement as long as your arm, built up over 49 years. In his time he’s been responsible for the discovery and development of several major mineral discoveries, including the multi-billion dollar Red Dog zinc deposit in northwestern Alaska. Today Red Dog, operated by Teck Cominco, is the world’s largest producer of zinc and a significant source of lead. The mine accounts for over 10 per cent of the world’s zinc production.
After the discovery of Red Dog, Dr. Jackson was involved in the discovery and development of the Borealis, South McCoy, and Manhattan gold deposits, all in Nevada. That was while working for Houston Oil and Minerals. He then founded Crown Resources and helped lead a team that discovered more than 4.5 million ounces of gold in several deposits in Washington State, USA. In 2003, Crown was acquired by Kinross Gold Corporation, primarily for its Buckhorn Mountain gold deposit in north central Washington. So, as might be expected Dr. Jackson did plenty of homework on Acero Martin’s flagship Pinaya project before he joined the company. This included getting opinions on its potential from experts in this region of Peru, some 60 kilometres south of Xstrata’s Tintaya copper gold mine. He clearly liked what he heard and saw, or he would not have joined the company.
With six months under his belt he’s now prepared to give the opinion that the copper gold porphyry/skarn deposit at Pinaya could be a big one. Back in September 2006 an initial estimate that showed an indicated resource of 29.13 million tonnes grading 0.53 grammes per tonne gold and 0.42% copper, plus another 12.72 million tonnes in the inferred category grading 0.41 grammes per tonne gold and 0.41% copper. The total resource is therefore 41.85 million tonnes that’s reckoned to contain around 498,000 ounces of gold and 269 million pounds of copper indicated, and 168,000 ounces of gold and 1,115 million pounds inferred. It’s worth trotting out these figures as Dr. Stewart describes the exploration carried out to date as merely nibbling round the edge of the whole deposit, which covers some 114,000 hectares.
Even so he is now happy for Pinaya to be described as one of Peru’s premier gold and copper exploration prospects. Every hole drilled since the initial resource estimate has given him more confidence, and he’s now saying the resource could amount to more than a billion tonnes. Comparisons have been made with the Collahuasi copper mine in Chile, which also sits high in the system, and which currently has a resource of 5.19 billion tonnes at 0.83% copper. First, though, Dr. Stewart will be announcing an updated estimate before Christmas and he makes it pretty clear that he expects the resource to be close to 100 million tonnes. Deeper drilling is only just starting and this will give an even clearer idea of the potential. Also in Pinaya’s favour is its proximity to excellent mining infrastructure. As well as being south of Tintaya it is 100 kilometres northeast of Barrick’s Arequipa mine.
The company has continued to work on defining the deposit with the drilling an additional 90 holes since the 2006 estimate came in. That drilling brings the total drilling on Pinaya up to more than 45,000 metres from 160 holes. Drilling has continued to expand the deposit and test new zones of mineralization. To complement continued drilling, the company is currently completing a scoping study to determine the potential and the economic parameters for developing a starter open pit mining operation. The environment is not nearly as harsh and fragile as at Collahuasi, and the scoping study will have more to say about this.
Dr. Jackson has just raised the first C$1.6 million out of a total of C$2 million by a placement, but admits that it was tough going in current conditions. He does not want the exploration programme to be hampered by lack of money, as deep drilling is expensive. He is therefore contemplating a joint venture with a major partner in order to leverage the property. He’s been encouraged by the recent evidence of majors buying strategic shareholdings in juniors with potentially exciting projects at above the market price, as described this week by our Man in Oz. He is not a pushy promoter, but points out in his quiet way that some recent deals in North America have seen a price of US$29 per ounce put on gold in the ground, simply on the basis of a resource estimate and without the benefit of a feasibility study.
On this basis Dr. Jackson has calculated that the current resource is worth C20 cents per share, compared with the prevailing share price of C6 cents. It is clear that the upcoming estimate should at least double this resource and that there is still a long way to go. Not surprising, therefore, to learn that a number of big producers are taking a very close look at Pinaya. It’s unlikely that any price suggested will be at current levels, if they want to be taken seriously
