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Andrew Todd
In the rarefied air of high-altitude mineral exploration, the old real estate mantra of “location, location, location” carries the weight of billion-dollar opportunities.
For junior explorer Flagship Minerals, its strategic lock-up in Chile’s celebrated Maricunga belt is shaping up as a monster district-scale opportunity, with new data revealing massive resource upside in an address that features some seriously big neighbours.
The company has pieced together a compelling narrative at its Pantanillo gold project by leveraging some dusty historical datasets and cutting-edge satellite technology. And it’s all happening in the shadow of some of the mining world’s heaviest hitters.
The immense geological endowment of the Andean border region is well and truly on global display thanks to mining titans BHP and Lundin Group committing to a colossal US$18 billion (A$27 billion) investment in their nearby Vicuña joint venture.
The gargantuan capital injection not only confirms the belt’s prospectivity but also signals a new wave of development and infrastructure that could provide a significant tailwind for astute, well-positioned players such as Flagship.
The scale of the Vicuña development is simply breathtaking. The JV vehicle, between BHP and the Lundin Group, will roll out the project in three stages, targeting the giant Filo Del Sol and Josemaria deposits.
Over its first decade, Vicuña is projected to produce a staggering 2.5 million tonnes of copper, 5.5 million ounces of gold and 214 million ounces of silver – all commodities currently flying near all-time historic highs.
Its long-term production over 25 years is forecast at 395,000 tonnes of copper, 711,000 ounces of gold and 22.2 million ounces of silver annually. These are numbers that define a new Tier-1 mining operation and put a global spotlight squarely on the region.
For market watchers, the spectacular re-ratings of nearby Lundin-backed explorers such as Filo Mining and NGEx Minerals – the latter rocketing almost 5000 per cent in just five years – offer a tantalising glimpse of the kind of value junior players can unlock in a richly endowed and proven mineral district.
Against this backdrop of massive regional investment, Flagship’s own journey at Pantanillo began with a shrewd, game-changing deal. The company secured a five-year option to acquire the project for a total of just US$12.6 million (A$21 million). Based on the project’s existing foreign resource estimate of 1.05 million ounces of gold, this works out to a remarkably low acquisition cost of around US$13 (A$21.50) per ounce.
That non-compliant estimate currently sits at some 47.4 million tonnes grading 0.69 grams per tonne (g/t) gold. Crucially, the deposit was identified as a large-scale oxide and mixed-ore body, making it well suited to a simple, low-cost open-pit heap-leach operation – a development model that has been proven highly profitable for similar deposits in the region.
However, Flagship wasn’t just buying a historical resource; it was buying an opportunity. The company quickly set about proving the 1.05-million-ounce figure was merely a launchpad.
Its first breakthrough came from a deep dive into the past. For just under A$3 million, Flagship acquired a massive 32GB of digital data from mining major Anglo American.
The company estimates it would have cost more than A$30 million to replicate the dataset, which includes 183 drill holes for over 30,000m of drilling and nearly 19,000 assays.
The treasure trove review immediately uncovered a string of historical hits, including one hole that returned a massive 142m intercept, running 0.74 grams per tonne (g/t) gold from just 58m, bottoming out gold mineralisation. That hole provided a clear indication that the orebody was significantly larger than previously thought and remained wide open at depth.
While the historical drill results gave the company a detailed look beneath the surface, Flagship took to the skies to understand the true scale of the mineralised system.
The company commissioned an ASTER remote-sensing study, using satellite imagery to map mineral alteration signatures across its 110-square-kilometre landholding.
The results were visually stunning, revealing seven distinct alteration zones that management says are consistent with the footprints of large-scale gold systems.
Two of the zones are simply massive, each exceeding 5km in length and 2km in width. In total, the alteration signatures cover more than 40 square kilometres of largely unexplored gold potential.
Critically, the halo patterns seen at Pantanillo are remarkably similar to those at some of the Maricunga belt’s most famous deposits, including Norte Abierto, Lobo-Marte and La Coipa, reinforcing the view that Flagship is sitting on a project with genuine, district-scale potential.
Pantanillo’s address in the heart of the Maricunga gold belt places it amongst a veritable herd of elephants. The belt hosts over 65 million ounces of gold, with Flagship’s neighbours including the Newmont-Barrick joint venture’s colossal 27-million-ounce Norte Abierto mine, Kinross’s 10.7-million-ounce Maricunga project and Hochschild’s 11-million-ounce Volcan deposit.
With a clear view of the prize, Flagship has a straightforward strategy: build enough ounces to support a large-scale, open-pit heap-leach operation capable of producing around 100,000 ounces of gold per year for at least a decade.
The company is now moving rapidly on all fronts. The next major catalyst will be the eagerly awaited release of its maiden JORC-compliant mineral resource estimate, slated for the end of the month. The update will incorporate a wealth of historical data and is expected to significantly upgrade the previous 1.05-million-ounce foreign estimate.
This will then set the stage for a follow-up drill program designed to test the down-dip extensions of high-grade zones and probe the heart of the massive alteration targets identified from space.
With gold prices remaining near all-time highs and its neighbourhood buzzing with multi-billion-dollar investments, the company appears to be on the cusp of turning a forgotten Chilean legacy asset into the next major gold Andean play.
Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au
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Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: www.smh.com.au
