Cusco Iron Ore Project
Overview
The Cusco Project currently comprises approximately 22 concessions totalling approximately 18,000 hectares located 130 to 180 kilometres south-east of the Apurimac Project area and 80 kilometres south of the historical city of Cusco.
Like Opaban, the Cusco area contains coarse-grained, magnetite-dominated iron ore mineralisation. High grade (>60% Fe) iron ore deposits which contain some haematite occur at surface with lower grade (>30% Fe) magnetite ore at depth. Drilling to date has been concentrated within 30% of the large magnetic anomaly and outcropping ironstones which define a circular target area in the order of2km in diameter.
An initial resource estimate was completed in early 2011 based on the widely spaced 2008 drilling. Due to the broad nature of the drilling a reasonably conservative approach was taken to the estimate. Inferred Resources of 104.4Mt at 32.6%Fe with potential for a further 23 – 26Mt at 30 – 35%Fe identified from the current drilling. (The potential quantity of the target iron ore mineralisation is conceptual in nature. There has been insufficient exploration to define an additional Mineral Resource in relation to that target iron ore. It is uncertain whether further exploration will result in the determination of an additional Mineral Resource in relation to that target iron ore.)
The mineralisation remains open along strike and at depth. It is anticipated further drilling will be undertaken to test the remaining 70% of the target area which has not been drilled to date. In addition, metallurgical test work will be undertaken to determine the preferred processing options for the haematite and magnetite mineralisation.
The objective within the Cusco Project is to establish a stand-alone iron ore operation based on the Apurimac Ferrum and Cuervo Resources concessions covering approximately 28,000 hectares.
Exploration programs are focussed on outlining sufficient resources to support a 15 – 20 Mtpa operation or the alternative of long-term ore feed for the Apurimac project.
Exploration and Geology
The main Cusco project area of Santo Tomas is centred on a large 2 kilometre diameter circular magnetic anomaly with north and north-east trending magnetic highs extending both north and south of the circular feature. Extensive outcrops of high-grade iron ore coincide with the magnetic anomalies. Mapping and surface sampling indicates these outcropping zones commonly contain >60% Fe and contain a mixture of both haematite and magnetite.
Broadly-spaced drilling undertaken in 2007 and 2008 over approximately 40% of the target area identified iron-ore mineralisation over an area of approximately 2,500 metres long by 800 metres wide. The mineralisation is similar in style to that present at Opaban being generally coarse-grained and magnetite-dominated at depth with a mixture of haematite and magnetite near the surface. The near-surface haematite zones tend to be higher grade (>50% Fe) while the lower grade magnetite mineralisation (30 – 40% Fe) can be beneficiated using magnetic separation to produce concentrates containing >65% Fe.
A Concept-level study was completed in 2008 into a 1Mtpa operation producing a lump product trucked 275 kilometres to Imata then railed to the port of Matarani for storage and export. The study indicated a capital cost of approximately US$160 million and operating costs of US$75 per tonne which is not considered sufficiently attractive to pursue further.
Since that time exploration efforts have been focussed on outlining sufficient tonnage to support a stand-alone operation or to provide long term ore feed to an Apurimac iron-ore project.
A resource estimate completed in 2011 based on the 2008 drilling outlined an Inferred Resources of 104.4Mt at 32.6% Fe with potential for a further 23 – 26Mt at 30 – 35% Fe. The mineralisation remains open along strike and at depth. In addition, due to the broad nature of the drilling, a number of mineralised intercepts could not be included in the resource estimate.
Further exploration drilling is planned at Santo Tomas to close off the existing mineralisation and test the remaining 60 – 70% of the magnetic anomaly. This work is planned to commence in 2011.
Magnetic image of Santo Tomas concessions showing current resource and potential outlines and target areas (black circles).
In addition to exploring the AF concessions the Company has also pursued opportunities to secure additional iron ore resources within the Apurimac and Cusco regions to accelerate the delineation of sufficient mineralisation to support a 15 – 20 Mtpa operation.
JORC Code Competent Person Statement
The information in this website that relates to exploration results and mineral resources has been compiled by Mr Ken Hellsten, B.Sc. (Geology), who is a consultant to Strike Resources Ltd and is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Hellsten has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves” (the JORC Code). Mr Hellsten consents to the inclusion in this document of the matters based on this information in the form and context in which it appears.
Cuervo Resources
Strike Resources has loaned Canadian mineral explorer Cuervo Resources Inc. (“Cuervo”) CA$5.25 million and has been issued with warrants that can be converted into a 31.5% shareholding in Cuervo (undiluted). This transaction provides Strike with exposure to Cuervo’s Peruvian concession holdings which are complementary to Strike’s own projects in Peru.
This transaction was part of the Company’s strategic objective of consolidating its position as the major holder of high-quality iron ore concessions in the Apurimac and Cusco regions. The Cuervo resource, when combined with AF’s existing Apurimac and Cusco project resources, represents a substantial proportion of the resource necessary to support an iron-ore operation producing 15 – 20 Mtpa of product. In addition there is excellent exploration potential for iron ore within the more than 700 square kilometres held under concessions by AF and the 140 square kilometres held by Cuervo. Based on the current resources, the defined targets and exploration prospectively within these concessions Strike believes that, subject to reasonable exploration success, there is potential to establish an iron-ore operation within the Apurimac and Cusco regions. Strike Chairman, Professor Malcolm Richmond and former Managing Director, now consultant, Mr. Ken Hellsten, are Strike nominees on Cuervo’s Board.
About Cuervo Resources Inc.
Cuervo Resources Inc. (CNSX code: FE) is a Canadian mineral explorer listed on the Canadian National Stock Exchange (CNSX) and also trades on the Frankfurt Stock Exchange. Cuervo is active in exploration for iron ore in Perú, most particularly at its wholly-owned Cerro Ccopane project, 65 km south of Cusco in southern Perú (see Figure 1, below).
At Cerro Ccopane Cuervo has delineated four zones of magnetite mineralisation, hosting the prospects of Aurora, Orcopura, Huillque and Bob 1 (see Figure 2, below).
The Cerro Ccopane property covers 14,000 ha (140 square kilometres) of largely-contiguous mineral concessions. At Cerro Ccopane (Figure 2) drilling in 167 holes in four zones has identified high-grade magnetite mineralisation. The Orcopura Zone has a reported JORC-Code compliant mineral resource estimate of 106.4 million tonnes at 45.3%Fe which is detailed in Table 1 below.
Table 1 – Cerro Ccopane Iron-Ore Project – Resource Inventory as at April 2009
|
Prospect |
Classification |
Mt |
Fe% |
S% |
|
Orcopura |
Measured |
19.7 |
48.3 |
2.4 |
|
Orcopura |
Indicated |
35.9 |
45.9 |
2.6 |
|
Orcopura |
Sub-total (Measured + Indicated) |
55.6 |
46.8 |
2.5 |
|
Orcopura |
Inferred |
50.8 |
43.7 |
3.1 |
|
Orcopura |
Total |
106.4 |
45.3 |
2.8 |
The mineral resource estimate has used a database consisting of the assay results of sampled intervals from 121 diamond-drill holes totalling 15,725 metres.
The Orcopura mineralisation has been tested over a strike length of approximately 800 metres and remains open along strike and down dip in several areas.
These resources exhibit a strong geophysical expression with strong magnetic and gravity anomalies coincident with the iron-ore mineralisation.
In addition, limited initial drill testing of the magnetic anomalies at the Huillque and Aurora prospects has intersected broad zones of iron-ore mineralisation, however insufficient drilling has been undertaken to deliver a resource estimate at this time. Better results from drilling at these zones include:
Table 2 - Selected intercepts from Huillque and Aurora prospects
|
Hole ID |
Interval (m) |
Width (m) |
True Width |
Fe% |
S% |
P% |
Prospect |
|
HDH – 01 |
62.7 – 138.5 |
78.85 |
53 |
62.09 |
0.80 |
0.03 |
Huillque |
|
HDH – 03 |
129.80 – 228.50 |
98.70 |
69 |
54.55 |
4.14 |
0.04 |
Huillque |
|
HDH – 12 |
130.25 – 181.10 |
50.85 |
35 |
53.66 |
1.51 |
0.05 |
Huillque |
|
HDH – 17 |
21.20 – 132.30 |
110.60 |
|
49.92 |
2.27 |
0.05 |
Huillque |
|
ADH – 01 |
8.70 – 87.20 |
78.50 |
55 |
50.77 |
3.64 |
0.03 |
Aurora |
|
ADH – 01 |
17.70 – 59.70 |
42.00 |
29 |
58.73 |
3.71 |
0.02 |
Aurora |
|
ADH – 06 |
35.50 – 114.00 |
78.50 |
68 |
51.05 |
3.46 |
0.03 |
Aurora |
Ground geophysical surveys (magnetic and gravity) have also identified two additional target zones on the property. These are known as Bob 1 and Huillque Norte (see Figure 2) both of which are considered high-priority drilling targets, with the following significant features:
- At Bob 1 coincident magnetic and gravity anomalies have been identified over 6 kilometres (km) of strike with strong indications of at least 10 km of strike potential. This compares with the Orcopura magnetic anomaly (1.5km) and the approximately 600 metre strike length of the current resource. The strength and extent of the geophysical anomalies are very impressive and the presence of outcropping massive magnetite ironstones above the anomaly means this represents an exciting drilling target. Bob 1 will be the initial focus for the Stage 1 drilling program.
- Huillque Norte has a strong gravity anomaly with sporadic magnetic highs which lies immediately north of the Huillque mineralised zone. Further detailed surveying and mapping is required prior to drill testing. At this time Cuervo believes this area has potential for copper and gold mineralisation as well as iron ore but further work is required to define specific drilling targets.
Cuervo has also completed high-quality studies on the Cerro Ccopane project including metallurgical testwork, transport studies and concept-level project assessment. The results are consistent with the outcomes from similar work by AF on its Apurimac and Cusco concessions.
Mineral processing studies have shown that standard grinding and magnetic separation will produce a high-grade (i.e. 67% to 71% Fe) magnetite ore concentrate containing acceptable levels of impurities in the majority of samples. Iron recoveries to the concentrate are very high, with average mass recoveries of 75%, which is similar to that seen for AF’s high-quality Opaban deposit. Similarly to AF’s projects, there is evidence the coarse-grained nature of the mineralisation will enable good-quality concentrates to be delivered with grind sizes up to <1mm. Further work is planned to determine the best way to capitalise on this characteristic. Coarse grinding provides potential for significant operating and capital cost savings relative to iron-ore projects which require energy-intensive, fine grinding prior to beneficiation.
As the Orcopura iron ore contains sulphur and copper, typically present at concentrations of 2.5% S and 0.1% Cu, these must be removed to deliver an attractive product for the steel industry. In some concentrate samples the copper and sulphur levels were higher than the target range, therefore sighter tests were undertaken to determine the best way to reduce these elements to acceptable levels. Initial tests indicate this can be achieved by further grinding and either magnetic or floatation separation. Additional studies carried out by Cuervo have also shown the resulting concentrates are amenable to the production of commercial-grade pellets.
Two transportation studies to date have shown that there are no unique logistical challenges that would prevent the conceptual development of a mining project. The construction of a direct slurry pipeline to tidewater was identified as the most cost-effective alternative for bulk transport.
Preliminary concept-level studies for a 20Mtpa operation have produced capital and operating cost estimates similar to those from AF’s studies for Apurimac and indicate a robust business can be established based on 15 – 20 years’ operational life.
Resource Potential
Iron Ore
The Cerro Ccopane Iron-Ore Project overlies the contact zone between the Tertiary-age Apurimac Pluton and an older outlier of limestones belonging to the Arcurquina Formation of Cretaceous age. This geological setting is highly prospective for the discovery of additional iron skarn mineralisation along the geological contact as well as hydrothermal iron mineralisation within host intrusives.
Ground geophysical surveys (magnetic and gravity) have been successful in the targeting of the magnetite mineralisation. The three mineralised zones delineated by drilling to date at the Cerro Ccopane property all exhibit the same geophysical expression with strong magnetic and gravity highs. While caution must be used in interpreting gravity data in steep terrain such as seen in the Peruvian Andes, the mineralisation identified to date also has a strong magnetic signature (see Figure 2, below). Cuervo intends to continue to use both magnetic and gravity data to screen their concessions and identify drilling targets.
To date exploration and diamond drilling has been undertaken at the Aurora, Orcopura and Huillque prospects; however resource estimates have only been completed at the Orcopura Prospect. Successful drilling campaigns targeting the geophysical anomalies have been completed at the Aurora and Huillque prospects, where significant intervals of magnetite mineralisation have been intersected. The Aurora prospect is defined by a geophysical anomaly similar in size to the Orcopura Prospect. The magnetite mineralisation at Aurora and Huillque prospects remains open along strike and down dip. At both prospects there is good potential to extend the mineralisation targeting the untested portions of the geophysical anomalies. Further drilling is scheduled to improve the geological understanding of these prospects.
Of particular interest is the significant geophysical magnetic and gravity anomaly located in the northern portion of the property, which delineates the Bob 1 target zone. This geophysical anomaly is over 6 km long and remains open to the south (see Figure 2) with strong indications of at least 10 km of strike potential. Recent field work has mapped extensive magnetite outcrops at Bob 1 typical of the known zones of mineralisation at Orcopura, Huillque and Aurora.
In addition, regional appraisals based on satellite imagery and regional geology have highlighted several areas in the western half of the Cuervo concessions which warrant detailed exploration including geological mapping and ground geophysics.
Base Metals
The Cerro Ccopane property is situated within the tectonic Andahuaylas-Yauri belt and metallogenic province which hosts a number of world-class porphyry copper deposits (see Figure 1, below). This belt is the northern portion of the Andean copper belt which extends through Chile and is the world’s largest producer of copper.
Until the 1980’s the province was mainly known for its copper-bearing magnetite skarn deposits such as Tintaya, Atalaya and Las Bambas, however, during the 1990’s important discoveries of economic porphyry-style copper deposits such as Antapaccay, Los Chancas and Cotabambas were made.
Copper mineralisation has been observed during exploration at the Cerro Ccopane Iron-Ore Project. Copper sulphide minerals such as chalcopyrite and chalcocite have been observed in the diamond drill core and are present as replacement mineral and as veinlets crosscutting the magnetite mineralisation.
Exploration will remain focussed on growing the iron-ore resources within the Cerro Ccopane property, however, the potential of this geological setting to host porphyry style copper mineralisation will also be investigated. As an initial step it is planned to undertake base and precious (gold and silver) metal analyses of selected previous drilling to determine whether exploration targets can be generated in the short term.
Cuervo Board and Management
Cuervo has an impressive board and management team with extensive, relevant experience in both North American capital markets and in exploration in South America.
Cuervo’s CEO, Mr. Brian Berner, has over 12 years’ experience in the resources sector as a corporate advisor. Mr. Berner is the owner of Berner & Co. Inc., a corporate advisory firm in Canada which provides advice on financing and corporate strategy to junior resource companies.
Mr. John Siriunas, a director of Cuervo, holds degrees in engineering and geology. He has over 35 years’ experience in the resource sector and is responsible for the management of Cuervo’s exploration program in Peru. Mr. Siriunas is an experienced company director with over 13 years’ resource company board experience.
Mr. Velasquez Spring is a geologist with over 50 years’ experience in the resources industry, with extensive experience exploring for minerals in South America for both large and small resource companies. Mr. Spring has experience in planning and managing exploration programs through to feasibility stage and supervises Cuervo’s exploration programs in Peru.
Mr. Gordon Watts is a mining engineer with over 45 years’ experience in the resource industry. Mr. Watts has experience in exploration and mine design and specialises in economic modelling and analysis of resource projects. Mr. Watts previously served as a company director of Baffinland Iron Mines Corporation, a TSX-listed Canadian iron ore explorer prior to its takeover by a consortium led by Arcelor Mittal.
With its accumulated experience in the resources industry in both Canada and South America, Strike believes that Cuervo’s board provides Cuervo with a solid foundation for the future development of its Peruvian mineral concessions.
Further information on Cuervo can be found on its website at www.cuervoresources.com.
Figure 1 - Regional plan showing Cuervo (blue) and AF (red) concessions and major Cu/Au deposits.
Figure 2 - Magnetic image of Cerro Ccopane Project showing existing drilling, prospects and targets
