North Zone Grade Shell at depth 3D-IP analysis (part 3) The 2011 historical resource estimate for the North Zone placed it at 280.5 Mt of measured and indicated higher grade ore (> 0.35% Cut), equating to 2,725.7 million pounds Cu. The average grade was calculated to be 0.461% Cu measured and 0.429% Cu indicated. No resource credit was given for inferred resources.
As shown in Figure #33 from the Santo Tomas technical report (“ST report”), the majority of drill holes at the Santo Tomas concession were advanced in a narrow area between the Western Fault and the Foot Wall close to the Rio Fuerte river. The data generated from this drilling was used in modeling the “2009 Grade Shell”, and served as a spatial representation of the central part of the North Zone mineralization.
The 2011 historical resource estimate was based on an analysis on the drill hole and assay data by classifying the subsurface area into blocks. A “measured block” was interpolated with data where the closest sample composite was within 50 m away and with up to 12 composites. An “indicated block” was interpolated with data where samples distance ranged between 50 m to 130 m to the closest composite. All other blocks at distances of greater than 130 m away were considered “inferred.” (ST report page 5)
Many North Zone drill holes terminated in mineralization at ~ 0.50% Cu. The 2009 Grade Shell boundary / 2011 resource estimate includes areas at additional depth below these holes, but no more than 130 m according to the established resource classification criteria described above.
The 3D-IP data from Oroco’s January press release reveals that the highly-charged mineralization encompasses areas where drill holes terminated in ~ 0.50% Cu or greater and it extends to even greater depths below the base of the 2009 Grade Shell. This mineralization goes well beyond areas that were classified as measured and indicated resource.
The Figure 2 longitudinal cross section p20 from the press release shows the depth of measured IP data where some grades of 0.44% - 0.56% Cu were encountered through historical drilling. The data shows that measured chargeability of at least 25.1 mV/V was recorded at depths ranging of 70 m – 400 m below the 2009 Grade Shell boundary along this p20 section. For a measured chargeability of 20.0 mV/V, the depth increases to approximately 550 m at some locations, and for a chargeability of 15.8 mV/V, the depth extends to approximately 600 m at some locations below the 2009 Grade Shell.
Drill holes STD-44 and STD-47 are reported to have terminated in grades of 0.47% and 0.45% Cu respectively, at locations where the recent measured IP chargeability was at least 25.1 mV/V (dark orange color on Figure 2). Of particular note, these two holes encountered grades of 0.41% and 0.44% Cu closer to the surface where the measured IP chargeability was just 10 mV/V (bright yellow color on Figure 2). So from this information, we cannot discount areas where measured chargeability from the 3D-IP survey was as low as 10 mV/V. These areas too have shown economically viable resource above a grade of 0.40% Cu.
The 3D-IP data is not the only line of evidence demonstrating the depth of mineralization in the North Zone. Figure 28 on page 76 of the ST report includes a good cross section that represents just how deep the mineralization in some areas runs, and this data is based on historical drilling and assaying of ore samples. The orientation of this section runs roughly East to West along drill holes STD-16, STD-46, STD-45, STD-08, STD-22, and STD-07. The ST report tells us that, “The North Zone has a true thickness of 400 m on this section,” and “The 2009 Grade Shell Cu > 0.30% has a true thickness of 250 to 300 m on this section.” This analysis was prepared some time prior to embarking on the current 3D-IP geophysical survey.
The more recent 3D-IP data adds more information and helps to revise our understanding of the site characterization. The two independent avenues of data (drilling results and 3D-IP data), give us a greater level of confidence that the depth of mineralization is significant.
STD-44 terminated at an elevation of 90 m above sea level where measured chargeability was shown to be between 25.1 – 31.6 mV/V, according to Figure 2 from the press release. Section view p20 from the ST report (page 100) represents the 2009 Grade Shell depth to be approximately 50 m above sea level at this drill hole location. Measured chargeability of 25.1 mV/V extends to a depth more than 300 m beyond the bottom of the 2009 Grade Shell at this drill hole location. At a chargeability of 15.8 mV/V, this depth increases to about 500 m below the bottom of the Grade Shell. Keep in mind that grade of 0.41% Cu closer to the surface mentioned earlier where measured chargeability was a modest 10 mV/V. This has the potential to add substantial amounts of ore to the resource estimate.
Section view p21 (ST report page 101) includes drill hole STD-45, which terminated in a grade of 0.59% Cu at an elevation of 74 m above sea level. Figure 28 from the ST report represents the 2009 Grade Shell depth to be close to sea level at this drill hole location. Although we don’t have a revised section view showing the IP data along this cross section, we know that drill holes STD-44 and STD-45 are located just 82 m apart (see Table 7 ST report for location coordinates).
Moving further south on section view p20, but still within the 2009 Grade Shell, historical assay results from drill holes STD-23 and STE-29 tell us that the shallow portions of each hole encountered significant Cu composite intervals. STD-23 measured a 167.8 m composite of 0.56% Cu starting at an elevation of 448.9 m above sea level and STE-29 measured a 92 m composite of 0.47% Cu starting at an elevation of 397.3 m above sea level. Figure 2 from the January press release represents the IP data close to the surface area where each of these two Cu grade intercepts were obtained and the chargeability appears to be in the range of ~ 15.8 mV/V.
Continuing to where STD-23 terminates at 178.2 m above sea level in a grade of 0.42% Cu, the measured chargeability increases to 25.1 – 31.6 mV/V. Figure 2 shows us that as one continues to even greater depths at STD-23, a measured chargeability of at least 15.8 mV/V extends more than 400 m below the 2009 Grade Shell.
These are several examples where known grades of Cu resource were measured and the IP data indicates that highly-charged mineralization extends to significantly greater depths below the bottom of the 2009 Grade Shell.
Figure 1 from the press release includes a plan view of the 2009 Grade Shell at an elevation of 100 m above sea level. This covers an area of approximately 250,000 square meters. The Figure 2 section view runs along the East side of the Grade Shell. The base of the Grade Shell varies and is not a flat planar surface, as you can see from the different section views on pages 97-103 in the ST report. Section views p17 through p19 represent the base of the Grade Shell to be generally higher in elevation than in view p20, while views p21 through p23 show the base of the Grade Shell to be lower in elevation. For purposes of the estimates below, I will approximate an average Grade Shell depth as represented in section view p20.
In plan view at an elevation of 100 m, about one-third of the Grade Shell area is located North of reference line 2977000 N. I estimate that it covers an area of approximately 90,000 square meters. Figure 2 shows that North of reference line 2977000 N, a measured chargeability of at least 15.8 mV/V extends to a depth 400 m below the Grade Shell. So the estimated volume between the Grade Shell and the 15.8 mV/V line would be 36,000,000 cubic meters here. Closer to STE-01, the 15.8 mV/V chargeability actually extends 500 m below the Grade Shell for a short distance. But to be conservative, let’s assume a 400 m depth interval here.
The remaining portion of the Grade Shell area in plan view at an elevation of 100 m, South of reference line 2977000 N, represents approximately 160,000 square meters. Without additional IP cross sections further to the West, we can’t be certain that the depth of measured chargeability runs as deep as that shown North of reference line 2977000 N. However, Figure 2 shows that a chargeability of 15.8 mV/V runs at least 200 m below the Grade Shell South of STD-21. If we assume conservatively that this depth range of chargeability remains at 200 m below the remaining two-thirds of the Grade Shell, rather than the more profound depth interval of 400 m elsewhere, then the volume between the Grade Shell and the 15.8 mV/V line would be 32,000,000 cubic meters South of reference line 2977000 N.
The combined two estimated volumes yields a total of 68,000,000 cubic meters. An average bulk ore density conversion rate of 2.7 tonnes / cubic meter yields 183,600,000 tonnes ore.
We don’t know how much of this ore volume will ultimately be converted into economically viable Cu resource. We know that many historical drill holes terminated in grades of ~ 0.50% or greater and did not test the full depth of mineralization. This alone tells us that the resource estimate will increase from portions below the 2009 Grade Shell.
We also know that some drill holes delivered samples that assayed with greater than 0.40% Cu and that these locations measured IP chargeability in the range of 10 – 15.8 mV/V. Seeing significant areas at depth where measured IP chargeability was much greater looks very promising.
Some percentage of the potential 183,600,000 tonnes ore volume may not prove economically viable. Presented below is a range of average grades, % ore volume economically viable, and the corresponding Cu resource representing the potential additional North Zone resource from below the 2009 Grade Shell where measured IP chargeability was 15.8 mV/V or greater. Keep in mind that the 2011 historical resource estimate calculated average North Zone grades of 0.461% Cu measured and 0.429% Cu indicated.
North Zone – Below 2009 Historical Grade Shell only
Cu resource estimate in millions of pounds
% Cu 20% ore viable 40% ore viable 60% ore viable 80% ore viable
0.55 445.2 890.5 1,336 1,781
0.50 404.7 809.5 1,214 1,619
0.45 364.3 728.6 1,093 1,457
This range of resource estimates is only for the portion below the 2009 Grade Shell. It does not include areas to the West or East of the Grade Shell and does not take into account credit for Au, Ag, or Mo.
The January 2020 RFC Ambrian report provides an analysis of historic prices paid for underlying assets at stages of, “...feasibility US$193/t (US¢9/lb) and exploration US$74/t (US¢3 /lb).” While $0.03 / lb. is the average for exploration stage projects, attractive projects might be higher - especially in a higher copper price environment.
The additional resource estimated above (assuming an additional 1.2 billion pounds Cu) would add $36 M at the exploration stage and $108 M at a feasibility stage to this project.
Oroco’s January press release also tells us that, “Responses extend to the 600 m depth-limit of the 3D IP survey.” So from this statement, the survey data reached the depth limits of the IP technology. There could be additional economically viable resource that the 3D-IP was simply not able to detect beyond 600 m below surface grade. In other words, the 15.8 mV/V chargeability limit shown at the bottom of Figure 2 from the press release may be in some locations an artifact of the technology’s limits rather than an actual limit on subsurface mineralization. This is another wildcard.
My next post will analyze the IP data for the area to the east of the 2009 Grade Shell.