4.0 OTHER AREAS 4.1 Geological Potential In Section 2.1-1 it was pointed out that the properties that constitute the privatization package are located within a 50-kilometer wide polymetallic metallogenetic belt that extends of 500 kilometres from the vicinity of the city of Puno to the border between the departments of Apurimac and Ayacucho (Figure 2.1.1-1). According to the metallogenic map prepared by F. de las Casas and E. Ponzoni in 1969, there is an assortment of about 143 ore deposits in this belt. Of these, 61 are copper deposits, 18 are iron deposits, 49 are lead-zinc-silver deposits, and 15 are silver-gold deposits. At least 21 of 61 copper deposits are skarn deposits with variable amounts of gold and iron (mostly as magnetite). The expansion of communications, housing, energy, and possibly metallurgical infrastructure in this region as a result of the operation of the mines subject of the privatisation package may well stimulate considerable development of this region, one of the poorest in Peru. Some of these mines could well supply additional ore to whatever concentrators or metallurgical plants are built and operated for the mines under consideration in this report. The iron deposits are located mainly in the northern end of the aforementioned metallogenic belt, primarily in the department of Apurimac (but extend also into the departments of Cuzco and Ayacucho. They are mainly massive magnetite (with minor hematite) skarn deposits at the contacts of diorite intrusions with the Ferrobamba limestone. Minor gold placer deposits occur in their vicinity. Resource estimates made by Cerro de Pasco Corporation, Takajashi, Nittetsu M., ITOH and the Peruvian Ministry of Mines suggest in the order of 2 billion tons of 57 to 65 percent Fe or (0.08% P, 0.020.26% S and 0.05-0.10% Cu). A prefeasibility study was made by Wright Engineers through Geo-X Surveys Ltd. and Brynelson Resources Ltd. These deposits could become attractive as the region develops. Most likely, the iron ore (or pig iron) would be transported to the port of San Juan/Marcona along the Abancay-ChalhuancaPuquio-Nasca-Marcona road. Magnetite concentrates recovered from the tailings of the copper-gold-iron skarn deposits could contribute to these operations. Of more immediate interest for the privatization package is the possibility that some of the skarn deposits may be associated with considerable porphyry coppermolybdenum type mineralization. There are at least some evidences of such disseminated mineralization in some of the copper-gold skarns described in this report. However, the following discussion will be restricted to a few ore deposits that are either part of this privatization package (i.e., Winicocha and Coporaque) or third party properties that may logically be expected to become tributary to its main mines. 4.1.1 Tintaya Properties Winicocha The Winicocha disseminated prospect is located about halfway between the Tintaya and Bambas areas (68 kilometers NW of Tintaya, 80 kilometers ESE of the Bambas, and 20 kilometers ENE of the Katanga district described below). The geology is illustrated in Figures 4.1.1-1 and 4.1.1-2. The prospect was mapped geologically and sampled (227 samples), revealing stockwork type mineralization in an intrusive within a 3.8-kilometer long and 750-meter wide area. This mineralization consists mainly of quartz and gold-bearing pyrite, with subordinate amounts of galena and chalcopyrite. Figure 4.1.1-1 Figure 4.1.1-2 In addition, within this stockwork there are some veins up to 250 meters long and widths between 0.2 and 4 meters, estimated to contain about 4.7 million tons of 0.24 grams Au per ton. Outside of the stockwork there are up to nine veins with lengths between 200 and 1,100 meters and widths between 1 and 20 meters, adding up to about 4.9 million tons with grades between 0.21 and 0.84 grams Au per ton. Within this total the bulk consists of 3.0 million tons with 0.23 grams Au per ton and 1.3 million tons of 0.56 grams Au per ton. Coporaque The Coporaque prospect is located about 15 kilometers due west of Tintaya. Its geology is shown in Figure 4.1.1-3 and 4.1.1-4. It consists of a number of veins in diorite and quartz-monzonite intrusives. The mineralization consists of quartz, pyrite, gold, galena, chalcopyrite, boulangerite, luzonite, tetrahedrite and galenobimutite. The main structure is the Tambonate vein, which crops out over a distance of 450 meters and has an average width of 1.6 meters (although underground it appears to be 1.8 to 2.3 meters wide). Its northern ore shoot is estimated to contain 25,000 tons with an average grade of 10.8 grams Au per ton, 2.7 ounces Ag per ton, 0.9 %Cu and 1 percent Pb. 4.1.2 Third Party Properties Atalaya The Atalaya property is located 10 kilometers southwest of the Tintaya concentrator. In this area the Ferrobamba limestone has been intruded by a monzonite porphyry stock, producing mineralized skarns and breccias. The limestone is covered unconformably by Tacaza volcanics. Figure 4.1.1-3 Figure 4.1.1-4 The ore minerals are mostly chalcocite, chalcopyrite, bornite and native copper, and contain subordinate amounts of silver and gold. Gangue minerals are calcite and quartz. In an area of about 2,000 by 1,500 meters there are about 25 mineralized skarn outcrops. These outcrops are quite irregular, with widths between 1 and 50 meters and with variable lengths. This mine operated 14 years (from 1971 to 1984), producing 1.3 million tons of 2.4 %Cu ore from three levels (levels 35, 70 and 105). The initial grades of 2.9 %Cu declined progressively to 2.1 %Cu. The concentrator capacity prior to shut-down was 700 tons per day; it is now treating 200 tons per day. Proven plus probable reserves are about 2 million tons of 2.23 %Cu, of which just about all is above the 140 level. About 36 percent of these reserves are between the levels 105 and 140. Averaging grades by levels gives: % Cu Level 35 2.70 Level 70 2.83 Level 105 2.45 Level 140 2.40 (only two samples) This information and the indication provided by the induced polarization anomalies for a -200 level suggest that it is reasonable to expect the mineralization to continue in depth to at least the -200 level. The extent of the mineralized outcrops, of the underground workings, and of the induced polarization anomalies indicate that the mineralization may extend horizontally, both to the east and to the west. If the ore extends in depth 50 percent more than the already developed 150 meters and laterally for about the same distance as the known ore (in accord with the corresponding geophysical anomaly), then there is a potential for a further 6.7 million tons of ore. In addition, in the Huarca area there are mineralized skarn outcrops and a geophysical anomaly, indicating a potential for another 2 million tons of ore. A crescent shaped geophysical anomaly north-northeast of the main mineralized area suggests an additional potential of 10 million tons or ore. Hence, the prospective potential is in the order of 19 million tons of ore. Actually, the geophysical anomalies suggest a ring pattern which may reflect a skarn surrounding an intrusive coupola, in which case the potential tonnage may be even larger. Katanga The Katanga properties are located 76 kilometers northwest of Tintaya. They comprise the Katanga mine and the prospects María Reyna, San José, Joselito, Korilazo and Leviatán. The copper mineralization is in magnetite bearing skarns within the Ferrobamba limestone adjoining monzonite porphyry intrusives. The ore is mostly oxidized and contains subordinate amounts of silver and gold that were also recovered economically. Gangue minerals are magnetite, hematite, specularite and pyrite. In the Katanga mine area there are nine orebodies with the following reserves: DMT % Cu Oz Oz Au Ag Ore Grade Proven + Probable 160,11 2.71 0.86 0.068 1.96 0.67 0.040 0 Marginal Proven + Probable 78,330 Total Proven + Probable 238,44 2.46 0 The Katanga mine had a 200-tons-per-day concentrator that operated until 1991. It treated bout 170 tons per day of ore and produced 350 tons per month of concentrates. The concentrate grade was 20 %Cu, 0.60 oz Au per ton and 4.95 oz Ag per ton; recoveries were about 70 percent. The María Reyna prospect is located 5 kilometers north of the Katanga mine and can be reached by an 8-kilometer long road. Detailed geological mapping and sampling indicate a potential tonnage of about 1.9 million tons of skarn mineralization containing 2.1 %Cu. Six diamond-drill holes totalling 1,500 meters were made to test for a possible porphyry copper type mineralization, but the results were discouraging. The San José prospect is 4 kilometers southeast of the Katanga mine. Diamond drilling indicated two skarn orebodies totalling 251,000 tons and containing 1.96 %Cu. The Joselito prospect is located 5 kilometers southeast of the Katanga mine and 3 meters northeast of the San José prospect. In this area stockwork and vein mineralization may total 45,600 tons containing 3.77 %Cu, 0.38 oz Ag per ton and 0.003 oz Au per ton. The Korilazo prospect is located 8 kilometers southeast of Katanga. It contains three magnetite bodies with about 46,000 tons of ore containing 2.35 %Cu, 0.91 oz Ag per ton and 1.41 grams Au per ton. In addition, there are six veins estimated to contain 38,000 tons of ore with 1.04 %Cu, 0.93 oz Ag per ton and 22.16 grams Au per ton. Finally, there is one vein for which the reserves are estimated at 60,000 tons containing 1.14 %Cu, 8.67 percent Pb, 1.22 percent Zn, 1.00 oz Ag per ton and 0.051 oz Au pr ton. The Leviatán prospect is 10 kilometers southwest of the Katanga mine. It is another skarn deposit formed at the contact between the Ferrobamba limestone and a porphyritic monzonite. The skarn forms a 10-meter thick tabular body. It was explored by 23 diamond drill holes totalling 2,189 meters. This showed that the oxide zone is 5 to 30 meters deep. The ore reserves are calculated to be 748,000 tons containing 2.61 %Cu, 0.62 oz Ag per ton and 0.014 oz Au per ton. Pirhua The Pirhua prospect is located 15 kilometers southwest of Tintaya and consists of epithermal mineralization in volcanic rocks. Silicification occurs over an area 3 kilometers by 2 kilometers along with disseminated pyrite and galena. Low grade gold values have also been detected. Putespunco The Putespunco prospect consists of epithermal mineralization in volcanic rocks and is located 18 kilometers south of tintaya. Exploration has found disseminated galena, chalcopyrite, bornite, sphalerite, and pyrite over a 750 meter by 250 meter area, with some gold and silver values. Quechuas The Quechuas property is located 8 kilometers south of the Tintaya concentrator In this area monzonite invades both the Ferrobamba limestone and the underlying Hualhuani (= Yura) quartzite. This has produced a limited amount of skarn and more extensive porphyry copper type mineralization. The orebodies were discovered as a result of systematic geological, geochemical and geophysical (induced polarization) prospecting followed up by diamond drilling (80 holes totalling 15.5 kilometers) and tunnelling 590 meters). The porphyry type mineralization consists of quartz, chalcopyrite, pyrite and minor molybdenite. It appears to be 1,000 meters long and 300 to 500 meters wide. The following ore reserves have been calculated: Cutoff grade 0.30 0.35 0.40 0.45 Tonnage mt 105,979,120 95,433,520 85,857,200 76,337,000 Grade %Cu 0.66 0.70 0.74 0.78 0.50 66,755,520 0.82 0.60 50,001,120 0.92 Grades obtained by tunneling averaged about 20 percent higher than the diamond drill hole grades, but this discrepancy may be due to the specific location of the tunnel relative to the drill holes. The skarn type mineralization is in small bodies which are 5 to 20 meters wide, 10 to 20 meters long and 10 to 20 meters deep, and is oxidized. The calculated reserves for this are only 14,000 tons of oxide ore containing 4.00 %Cu and 7,000 tons of sulphide ore containing 1.81 %Cu.