Introduction
Since our previous coverage of the company, the share price of Minaurum Gold Inc. (MGG:TSX.V) has more than tripled. We were particularly impressed with the Alamos project (the new name of what we previously called 'La Quintera'), and at the most recent PDAC conference in Toronto, we met up with Dr. Peter Megaw to discuss the merits of the project.
A brief recap of the Alamos property
The Alamos property remained virtually untouched in the past century or so, with the exception of a small dump-processing operation right after the Second World War. This really excited Minaurum's geologists, who are gearing up to have a 'field day' in this silver district.
The available data from this period reveals impressive results: the average grade of these waste dumps was approximately 10 silver-equivalent ounces per tonne of rock (of which approximately 50% was pure silver). Encountering waste dumps with a sky-high average grade is definitely exciting and it confirms the potential of the Alamos project.
But, of course, Alamos is so much more than just re-sampling and processing high-grade dumps, and what Minaurum really is after is finding more high-grade silver veins on the property. Indeed, the average grade of the ore that was mined at Quintera and Promontorio is mind-boggling. Records indicate the rock contained an average grade of 40 ounces of silver and approximately 8% copper at a depth of 250-500 meters.
Minaurum's geos have now been able to trace the entire vein system over a length of 7 kilometers (in excess of 4 miles). With an average vein width of 4 meters (which isn't overly optimistic as vein widths up to 20 meters have been detected) this system is much wider than the typical Mexican high-grade silver mines such as the ones Great Panther Silver and Endeavour Mining are mining. It's really surprising to see how this property remained under the radar for almost a century, mainly due to the fragmented ownership of the Alamos property.
But keep in mind, Minaurum Gold is so much more than just the Alamos silver project.
At the Santa Marta VMS project, which is the property David Lowell was extremely interested in, the company is still advancing the permitting process to secure the drill permits that will allow Minaurum Gold to step up its exploration efforts.
And of course, after seeing Leagold Mining Corp.'s (LMC:TSX.V) drill results from the underground Bermejal deposit (with almost 30 meters at 18.5 g/t gold and almost 22 meters containing 12.4 g/t gold), the Guerrero Gold Belt continues to prove it's one of the most prolific gold districts in Mexico. Sure, Minaurum's first holes at Biricu revealed long intervals of anomalous gold, but it's still very early days there.
A chat with Peter Megaw
At PDAC, we had a chance to meet with Dr. Peter Megaw, director of Minaurum Gold and chief exploration officer of MAG Silver Corp. (MAG:TSX; MAG:NYSE.MKT), who was awarded the Thayer Lindsley award for the discovery of MAG Silver's Juanicipio silver project in Mexico. If someone knows how to deal with Minaurum's Alamos project and to develop a theoretical model, it's him. We asked him three questions about Alamos and the La Quintera zone, and its potential:
· The Alamos property looks very intriguing and based on the past few press releases it does look like you're finding veins and high-grade dumps all over the place. The main vein has been traced over a length of 800 meters, but you also talked about parallel veins. Could you elaborate a bit more about your technical and theoretical model for Quintera and the system of parallel veins? Do you expect to discover more veins at surface?
I like what the Quintera Vein/Block tells us about the potential to find entirely virgin and previously unsuspected blind high-grade veins throughout the Alamos District as a whole.
Several major recent discoveries have been made in other historic camps by applying modern vein concepts to areas outside where historic mining was focused and Alamos looks like a great place to try this again.
The Alamos District, which Minaurum controls most of, appears to be characterized by "piano-key" faulting that generated a series of parallel elongate fault blocks many kilometers long that alternate as up and down thrown blocks. Think of what happens when you press down every other key on a piano, the white ivory surface that starts at the same level is alternately up or down. If we think of the ivory as the surface at the time of mineralization, veins in the high-standing blocks (keys) will have been eroded to a deep level. . .what we see in the historically mined parts of the district. In contrast, veins in the down-dropped blocks (keys) were protected from erosion. . .we think enough so that erosion never worked deep enough to expose the mineralized part of the vein at all.
This means the narrow stringer veins that we see on the surface throughout the down-thrown blocks may just be the wispy upper tendrils of intact veins lying at some depth. The old timers dug a lot of holes on these stringers, so we're pretty comfortable they were on to something, but they had no idea what. We think we do and if we're right, the entire zonation from upper Bonanza Zones (eroded off the top of the historically mined veins) through to the deep "root" zones (comparable to what was mined) should be present and intact.
Given that the root zones of the known veins were very silver-rich, it is possible that the Bonanza zones could really live up to their name.
· We believe a 5,000 meter drill program to allow you to provide a "proof of concept" of the geological structures at Alamos/La Quintera is being planned. What would you need to see/find in order to consider the theoretical model to be proven?
We have to have an advantage over the old-timers who just dug on rich veins that stuck out of the ground and followed them to depth, because they didn't leave much that was visible untested. Fortunately, we have a pretty good idea how these veins formed, how they are zoned from silver up high to increasing base metals at depth and what things look like in the 100-300 meters of altered rocks that overlay the mineralized zones.
Think of a slice through one of these veins as looking like a slice through a mushroom. The vein is like the stem. . .a few meters wide beneath a cap which extends for hundreds of meters on both sides of it. Finding the narrow vein is one thing, but the next trick is that mineralization only gets part way up the vein (stem)…it stops 100-350m below the bottom of the cap. Now remove (erode) the cap so all you can see is stem with a weak metals signature and you understand where we think we are with the veinlets in the downthrown blocks. . .the old timers had no idea that they were "only" 100-200 meters above a potential Bonanza.
We can't really tell how deep to drill to get into mineralized vein but in simplest terms all we need to prove our concept is to cut a vein a few tens of centimeters wide with relatively high silver and low base metals values anywhere beneath the surface in one of the virgin downthrown blocks. Wide and well mineralized would be great, but if we can target smarter and shallower we can get more holes out of those 5000 meters and increase our chances of proving our concept. We gain some comfort in knowing that Alamos District veins run deep (>500m) so we probably can't drill too deep.
· Based on your extensive experience with this type of epithermal system, what kind of exploration potential do you see at Quintera (and the larger Alamos District)—assuming your proof-of-concept drilling will provide the results you are hoping for? What would be the ounce-potential based on your experience and the available data from historical mining activities in Quintera?
We start knowing that the Quintera Block alone produced over 250 million ounces of silver at high grade, so Alamos has already demonstrated geologically that it is a Premier League district. . .the question is whether it can repeat its long-ago championship?
Given the new recognition of favorable geologic features throughout the essentially unexplored downdropped blocks flanking the narrow productive block I am very optimistic about the potential to the Alamos District dramatically. It's hard to talk sensibly about numbers at this point, but the ounce potential is only limited by the grade of what we find and the number of blind veins lurking out there.
Conclusion
Minaurum's recent announcement focusing on the discovery of two new high-grade silver vein systems wasn't a coincidence. Peter Megaw sounded quite upbeat about the exploration potential at La Quintera and Alamos, but the proof will be in the pudding.
We do expect Minaurum Gold to start a more extensive exploration program in the next few months, which will include a drill campaign. This will allow us to get a better understanding of the project, and whether or not Megaw's theoretical model could be confirmed. We are convinced several senior precious metals producers will keep a very close eye on the developments at Minaurum's projects.
Even though we predominantly focused on the Alamos Silver Project in this article, Minaurum's project portfolio contains more quality assets and we're looking forward to see the company advance them on all fronts.
Thibaut Lepouttre is the editor of the Caesars Report, a newsletter and mining portal based in Belgium that covers several junior mining companies with a special focus on precious metals and base metals. Lepouttre has a Bachelor of Law degree and two economics masters degrees that have forged his analytical approach to the mining sector. Considered a number cruncher, Lepouttre focuses on the valuations of companies and is consistently on the lookout for the next undervalued mining company.
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