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The 100% owned El Tranquilo block, comprising 27 contiguous tenements for a total area of 81,000 hectares, is located on the western margin of the Deseado Massif, Santa Cruz Province, Argentina and includes the Cap-Oeste and COSE deposits. The topography is subdued featuring arid, poorly vegetated plains with sporadic elevated basalt plateaux. The project is located approximately 50 kilometres by gravel road east of the National Highway 40 and is largely located on land owned by the company.

Highlights

  • 81,000 ha property hosts the Cap-Oeste and COSE gold-silver deposits
  • Surface rights for much of the area owned by Patagonia Gold S.A.
  • Hosts numerous exploration prospects where significant ore grade intersections have been reported from exploration drilling
  • Bonanza grade gold-silver mineralisation reported, up to 0.2% gold and 10.6% silver

Geology and Mineralisation

The stratigraphy of El Tranquilo project area comprises Triassic schist basement overlain by sporadic andesitic volcanics of the Bajo Pobre Formation followed by a thick, shallow SW dipping sequence of dacitic to rhyolitic pyroclastic deposits and flow-domes of the Chon Aike Formation. Persistent, thin, organic material rich sedimentary horizons define temporal breaks between eruptive pyroclastic events. A NE-SW oriented, graben style caldera is interpreted to truncate the project area. Hydrothermal sinters and eruption breccias have been documented. There are significant areas masked by Tertiary marine deposits and Quaternary glacial outwash deposits and basalt flows.

NE-SW extensional tectonics during the Jurassic Period resulted in the development of a series of NW-SE striking normal faults with vertical movement exceeding 300m in places.

Cap-Oeste Deposit: The Cap-Oeste deposit is situated within a half-graben controlled by the NW-SE striking Bonanza Fault. Gold-silver mineralisation occurs within breccia zones where Bonanza Fault intersects a thick, rheologically competent rhyodacitic crystal rich ignimbrite. The highest grade mineralisation is located above a subvolcanic trachyte dome, which is interpreted as a source of precious metal bearing magmatic fluid.

Gold and silver mineralisation occurs as iron, arsenic and precious metal sulphides within illite-sericite +/- kaolin matrix to clasts of brecciated crystal rich ignimbrite. There is very little free silica.

COSE Deposit: The COSE deposit is located approximately 1.4 kilometres SE of Cap-Oeste and is located on an insignificant steeply dipping, brittle fault that truncates the same stratigraphy as is seen at Cap-Oeste. The COSE mineralisation is not detectable at surface.

Two distinct phases of mineralisation have been identified at Cap-Oeste and COSE:

  • Phase 1 is an early and extensive phase of illite rich breccia matrix, with gold and silver associated with abundant iron and arsenic sulphides. Gold and silver concentrations are typically less than 30 ppm and 200 ppm respectively.
  • Phase 2 is a later, less extensive phase of mineralisation characterised by rare iron and arsenic sulphides, with free gold and electrum, and silver occurring in pyrargyrite, proustite and freibergte. Gold and silver concentrations frequently exceed 100 ppm and 1000 ppm respectively.

Work to Date

El Tranquilo project area was first targeted in the mid-1990’s by Western Mining Corporation and Homestake Mining on the basis of clay alteration associated with NW-SE oriented lineaments. By 2002, Barrick Gold Corporation had taken control of the project. Barrick conducted widely spaced geochemical surveys and some Dipole-Dipole IP surveys and conducted a small drilling programme at the Brecha Valentina prospect. Three trenches were excavated at Cap-Oeste, two of which intersected significant mineralisation coincident with an IP Chargeability anomaly.

Patagonia Gold S.A. acquired the project from Barrick during February 2007 and subsequently drilled 697 holes for 140,000 m in the Cap-Oeste – COSE structural corridor with 164 holes for 24,000 m drilled at other prospects in El Tranquilo block. Significant prospects of interest outside of the Cap-Oeste – COSE corridor include:

  • Don Pancho: Located 1.3 kilometres east of Cap-Oeste, on a similar NW-SE striking structure. Drilling at Don Pancho intersected gold-silver mineralisation associated with the emplacement of a subvolcanic trachyte dome of the same series as occurs beneath the Cap-Oeste deposit. The best intersection reported to date:
    • DPA-003-R, 5.0 m at 8.13 ppm Au and 250.3 ppm Ag from 23.0 m
  • Brecha Valentina: A rhyolite dome complex located 5 kilometres SE of Cap-Oeste, with abundant phreatomagmatic breccias. Barrick drilled 11 diamond holes during 2007, intersecting wide zones of low grade gold mineralisation, including:
    • BVA-002-D, 12.5 m at 2.38 ppm Au and 12.1 ppm Ag from 26.0 m
    • BVA-007-D, 26.0 m at 0.86 ppm Au and 7.1 ppm Ag from 54.0 m
  • El Valle: Located 3.3 kilometres east of Cap-Oeste, El Valle hosts an extensive hydrothermal eruption breccia system with pervasive gold-silver mineralisation and exceptionally high pathfinder elements such as As-Hg-Sb-Tl. Initial exploration at the prospect has not been able to locate the feeder to this hydrothermal vent, but has identified a subvolcanic trachyte dome of the same series as occurs at Cap-Oeste and Don Pancho. Best results include:
    • TR-035-VLE, 47.0 m at 0.64 ppm Au and 5.0 ppm Ag
    • VLE-003-D, 29.0 m at 0.32 ppm Au and 5.3 ppm Ag from 12.0 m
  • Monte Leon: Located 10 kilometres south of Cap-Oeste, the Monte Leon prospect shows widespread low grade gold-bearing black silica-sulphide mineralisation hosted in the margins of a dacitic -rhyodacitic dome complex with associated sinter and hot spring deposits. In addition, narrow very high grade chalcedonic silica veins occur. Significant intersections include:
    • MLN-003-D, 65.95 m at 1.16 ppm Au and 114.8 ppm Ag from 31.1 m
    • MLN-019-D, 3.0 m at 23.31 ppm Au and 53.2 ppm Ag, from 137.0 m
    • MLN-O27-R, 38.0 m at 1.68 ppm Au and 2.3 ppm Ag from 14.0 m

An extensive area surrounding Monte Leon is masked by Quaternary sediments and has yet to be explored.

  • La Marciana: An extensive and regionally significant preserved Jurassic sinter deposit with associated breccia facies, located 20 kilometres southeast of Cap-Oeste. Only 5 holes drilled in the district which intersected high concentrations of As-Sb-Tl, indicating shallow levels of the system. Best intersection includes:
    • 0.85 m at 1.68 ppm Au and 204 ppm Ag in a quartz-sulphide vein hosted by brecciated rhyodacitic crystal tuff

RESERVES AND RESOURCES

CAP OESTE
Category Grade (g/t) Metal (oz)
Tonnes Au Ag AuEq Au Ag AuEq
Indicated Resources 14,585,000 1.82 56.32 2.76 855,000 26,407,000 1,295,000
Inferred Resources 8,392,000 1.00 25.79 1.43 269,000 696,000 385,000
TOTAL Indicated 22,977,000 1.52 36.70 2.27 1,124,000 27,103,000 1,680,000
COSE
Area Grade (g/t) Metal (oz)
Tonnes Au Ag AuEq Au Ag AuEq
Indicated Resources 49,000 27.80 1,466.00 52.20 44,000 2,325,000 83,000
Inferred Resources 20,000 12.50 721.00 24.50 8,000 464,000 16,000
TOTAL Indicated 69,000 23.40 1,257.10 44.60 52,000 2,789,000 99,000

 

Exploration Potential

Numerous areas of the 81,000 hectare El Tranquilo block remain inadequately tested, especially the strike extensions of the Bonanza – Esperanza Fault system where there is high potential for repetitions of bonanza grade shoots such as COSE. Parallel structural corridors have been identified, and remain untested.

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