The world's top three largest gold producers, Newmont Gold Corp. (NYSE: NEM), Barrick Gold Corp. (NYSE:GOLD), and AngloGold Ashanti Limited (JSE:ANG | ASX:AGG | NYSE:AU) have each poured funds into developing the region, and along with the likes of IAMGOLD (TSE:IMG), Continental Gold Inc. (TSX:CNL), and legendary mining investor Eric Sprott, some seriously significant gold discoveries have been made along the way.
These include multi-million ounce gold discoveries, including the 25 Moz La Colosa, the 30 Moz Nuevo Chaquiro, the 12.2 Moz Titiribi, and the 12.4 Moz Marmato deposits.
The region, being as prospective as it is, has seen these majors swoop in and pick up smaller operators, transforming it into a premier gold region on the global stage, and it continues to attract attention.
That company is the revitalised Metminco (ASX:MNC), whose acquisition of unlisted company Andes Resources this past August greatly expanded the company’s package of highly prospective early stage Colombian gold projects.
Metminco now has a significant position in the Quinchia and Andes gold districts of Colombia’s Mid-Cauca gold and copper-gold belt, and it expects to finalise the sale of its legacy and non-core Mollacas asset in Chile for A$1.5 million in early December.
A maiden drilling program is currently underway at Quinchia. The first drillhole has been completed at the project’s Chuscal gold target with samples dispatched to the lab and the second hole is about to begin with the drill rig moved to the location.
The first hole passed through 274 metres of hydrothermal alteration and breccias, a positive early sign that bodes well for the presence of gold mineralisation, while the second hole is designed to intercept a gold bearing veins structure within a mineralised diorite porphyry.
With assay results due between late-November and early-February, it’s not long to go until we find out what Metminco has on its hands.
With this potential major catalyst due as soon as this month, it may be a wise time for investors to take a closer look at this sub-$15 million capped junior.
Certainly, Sandfire Resources (ASX:SFR), which hold a 15% interest in the company, is confident of the prospectivity of these projects and in the abilities of Metminco’s highly experienced management team.
As explained by Metminco’s newly appointed managing director, Jason Stirbinskis, “We are off to a strong start at Chuscal, with visual observations demonstrating better than expected geology, and we eagerly await the first batch of assay results within the next few weeks, whilst we press-on with drilling at the 2nd drill location.”
Metminco’s now expanded portfolio is concentrated in the premier Quinchia and Andes Gold districts of the richly endowed Middle Cauca and Choco copper-gold belts.
The acquisition of Andes Resources brought together Metminco’s existing Quinchia Gold Project, including its advanced Miraflores gold project, its Chuscal joint venture (JV) with AngloGold Ashanti and other surrounding prospects, with Andes’ extensive gold-silver-copper tenement holding — the Andes Project.
The deal created one of the largest portfolios of gold-copper exploration assets in the Cauca Valley with significantly reduced debt, while establishing such a dominant position in this richly gold-copper endowed region delivers compelling exploration upside.
Colombia is a geologically unique country, having a triple-plate junction where three tectonic plates coalesce under the country, making it one of the most diverse and prospective countries in Latin America and possibly the world.
Within the last seven years alone, more than 100 Moz of gold resource have been defined from its porphyry-style deposits, including several recent discoveries of greater than 10 Moz in size.
These giant ore bodies include:
- La Colosa: (25.4 Moz Au) – AngloGold Ashanti.
- Nuevo Chaquiro /Quebradona – (PP: 2.2Moz Au + 2.8Mlb Cu) (30 Moz Au eq) – AngloGold Ashanti.
- Titiribi (12.2 Moz Au) – Brazil Resources, Goldmining Inc. copper-gold porphyry cluster.
- Marmato (12.4 Moz Au) – Gran Colombia. Gold-silver epithermal.
MNC’s Andes and Quincha Projects sit amongst major discoveries
So it’s no surprise then that Colombia is attracting some major investment flowing in to fund exploration and development in the country’s gold industry.
Over the period May 2017 to July 2019, Newmont GoldCorp invested US$166M into Continental Gold, while in January 2017, RK Mine Finance provided US$275M in debt finance to Continental and Eric Sprott invested US$25M in the company in June 2019.
Additionally, IAMGOLD spent US$10M to earn a 65% interest in Gran Colombia Gold’s Zancudo Project in 2017, while Agnico Eagle invested US$5M in Royal Road Minerals ealier this year. In September, B2Gold lifted its investment in the Gramalote Gold JV with AngloGold to 50%.
Northern Colombia: Mineral Endowment & MNC’s Andes and Quinchia Projects
Yet compared to elsewhere in South America, Colombia has seen only limited exploration. In particular, Colombia remains significantly under-explored by modern techniques, providing strong opportunities for exploration companies such as Metminco.
Gap in exploration in Colombia
Metminco acquires Andes Resources
Metminco’s acquisition of the unlisted Andes Resources Limited has created a leading Colombian gold explorer with dominant positions in two gold districts of the richly endowed Mid-Cauca Gold Belt.
The all scrip takeover in August 2019 delivered exposure to Andes’ substantial tenement position in Colombia, diversifying Metminco’s asset base and securing dominant control in these two gold districts.
In the Andes District it has a 90% interest in ~90,000Ha of tenement applications, including three granted titles. While in the Quinchia District, MNC has 2,846Ha of granted titles, plus ~ 6,000Ha applications, plus 497Ha in the Chuscal JV.
The merger had the support of Andes’ largest shareholder Sandfire Resources and saw the introduction of Sandfire as a cornerstone Metminco shareholder with 15% interest, as well as bringing valuable input from Sandfire’s technical team.
The deal also provided an opportunity to recapitalise, refresh, and re-launch the company as well as leveraging Andes’ experienced team, including the appointment of Jason Stirbinskis as managing director. The deal also gives the company increased market relevance and improved access to investors and funding going forward.
Alongside the merger, funds were raised and repayments to RMB were restructured — converting $2.0 million of debt into equity, and realigning future payments to project milestones — opening the door to accelerated exploration activities on the merged projects. Metminco had purchased Miraflores Compania Minera SAS, which includes the Mirafores gold project, from RMB Resources Australia in 2016.
Along with Andes projects, Metminco gained a new managing director in the deal, appointing Andes’ former MD, Jason Stirbinskis to the role at MNC.
Originally a geologist, Jason is a corporate executive with over 12 years’ experience leading both private and public companies in the mining and mining services space. He is experienced across a number of commodities including gold, zinc, lead, copper, and nickel and has managed projects ranging from greenfield to DFS/Development across the globe. Just last week he won the Pitch Battle at IMARC “best investment pitch - gold explorers and producers”.
Ross Ashton, the former chairman of Andes, also joined MNC as non-executive director. Ashton has over 45 years’ experience as a geologist specialising in mineral exploration and development internationally. He was founding managing director of Red Back Mining Limited, which was acquired by Kinross Gold Corporation for US$7.2 billion in 2010. He was also a director of PMI Gold Ltd and Brockman Resources Ltd (ASX:BCK).
MNC’s Kevin Wilson stepped down as executive chairman, taking the role of non-executive chairman.
Andes Gold Project
Located on the eastern flank of the Western Cordillera of the Andes Mountains, the Andes Gold Portfolio consists of a 90% interest in ~90,000Ha of tenements within the Mid-Cauca belt, and includes three granted titles.
The project is considered to be in a low security risk area and has excellent power, water and communications infrastructure and access with ~1,000 km of roads.
While the company has only explored approximately 10% of its land holding in the Andes Portfolio, it has already delivered 12 vein type gold/silver targets and multiple gold/copper porphyry targets, while Metminco has identified numerous priority targets based on surface work and artisanal mining activity in the western portion of the portfolio at Quinchia.
Here’s now managing director of Metminco, Jason Stirbinskis discussing the now acquired projects of Andes Resources at IMARC 2018 when he was Andes’ MD.
Quinchia Gold Project
Located approximately 70km from the Andes Projects in Colombia’s Mid-Cauca copper/gold porphyry belt is Metminco’s existing Quinchia portfolio.
The Quinchia Portfolio is located in central west Colombia, 100km south of Medellin, in the department of Risaralda — a district known for its high grade epithermal and breccia hosted gold/silver, and porphyry hosted gold/silver/copper systems.
This is a Mineral District with a cluster of porphyry stocks, breccias and epithermal vein occurrences.
The Quinchia Portfolio sits within the same structural trend (Mid-Cauca porphyry gold belt) as the Marmato Gold Mine and the La Colosa gold project which host gold resources of 14 million and 29 million ounces, respectively.
The 7,500Ha Quinchia Portfolio contains a number of gold deposits and significant exploration and development targets including Miraflores, Tesorito, Chuscal and Dosquebradas.
Quinchia Gold Project targets (in various shades of blue)
To date, approximately 40,000m of drilling has occurred at Quinchia and the project has an established 877koz Resource and 457koz Reserve at Miraflores.
Chuscal drilling program
The immediate focus for Metminco is drilling the Chuscal Gold Target, a JV with AngloGold Ashanti Colombia SA., where Metminco can earn 51% through US$2.5M of exploration expenditure. Metminco is the manager of the JV.
The company last week announced that the first hole of the maiden drilling program to test the Chuscal Gold Target has been completed after passing through significant hydrothermal alteration and breccia system.
The first hole of the maiden drilling program was completed at a depth of 452.5m, after being extended by approximately 100m based on the favourable observations from the drill core by the team on-site.
The drill hole passed through a very encouraging sequence of ~274m of hydrothermal alteration and breccias. This started from 212m extended down to 410m before eventually transitioning to weakly altered monzonite.
The company re-iterates that the extent of hydrothermal alteration, particularly in the breccias containing sulphides and overprinted by Intermediate Sulphidation (ISS) veinlets bodes well for the presence of gold mineralisation. However, it is difficult to anticipate the likely grades of gold by visual inspection.
The first hole intersected a zone of strongly altered monzonite and diorite from 136m before passing into an extensive zone of hydrothermal breccias and magmatic breccias with overprinting by epithermal veinlets from 212m down to 410m.
Assay results are expected to be received in late November 2019 and will show which parts, or if all, of this 274m zone is related to the generation of the extensive surface gold anomaly.
The diamond drill rig relocated to the 2nd drill pad located 130m southeast of pad 1 on 26 October 2019. The second hole of the program, CHDDH002, will also test the eastern end of the large surface geochemical anomaly and pass underneath the historic workings to investigate the core of the diorite zone and its potential extension to the north-northwest.
The hole is designed to intercept the Guayacanes structure which consists of gold bearing veins within the mineralised diorite porphyry.
Located just two kilometres from Chuscal, the Miraflores Project at Quinchia is the most advanced project in Metminco’s portfolio. The project is in the advanced mining approvals stage and Metminco could start trial mining now.
Miraflores has an established mineral Reserve and feasibility study and there’s the potential for higher grade results at Chuscal just 2km away to improve the economic viability of Miraflores and tap into its established reserve (amplified positive effect of good drill results at Chuscal).
It has an existing Resource of 877,000 gold ounces at 2.80g/t gold and Reserve of 457,000 gold ounces at 3.29g/t gold.
The Miraflores Feasibility Study in 2017 considered an underground mining operation generating 4.3Mt of mineralised material at a head grade of 3.3g/t gold over 9.3 years to deliver 421,000oz recovered gold. Capital costs were estimated at US$72 million and operating costs were estimated at AISC of US$643/oz.
At a gold price estimate of US$1,300/oz. over the life of the operation, the study generated an NPV of US$72 million (at 8% discount rate) and payback of 3.6 years.
Miraflores Feasibility Study Economic Model Gold Price Sensitivity
Keep in mind that the gold price is now well above the upper limit of the modelled project gold price sensitivities in the 2017 fesibilty study...
With further exploration success elsewhere within the Quinchia project, leveraging existing mine planning, plant design and approval status of Miraflores to fast track production becomes a compelling opportunity.
Tesorito is a porphyry system, located only 500m away from the proposed plant site at Miraflores and approximately two kilometres from Chuscal.
Prior assay results point to Tesorito being a significant near surface porphyry gold target. Previous drilling intersected wide, shallow gold and copper at depth:
- 383m @ 1.01 g/t Au from surface to end of hole, including 32.5m @ 1.34g/t Au from 48.8m;
- 156.6m @ 1.28g/t Au from 88.3m; and
- 253m @ 1.01 g/t Au from 2.9m, including 64m @ 1.67 g/t Au from 144m.
The next steps at Tesorito are to design a drilling program to scope the known high grade mineralisation at surface and investigate potential repetitions of the high-grade zone within the intrusive porphyry.
Metminco will consider drilling a deep drill hole to test the depth extension of the high-grade gold zone into what is thought to be higher grade base metals at depth. And with Tesorito just 500m from Miraflores, there is possibility of a regional multi-mine district with a central processing facility.
Sale of Chilean assets: expected to yield A$1.5M in non dilutive funding
In October 2019 Metminco announced that it has negotiated key commercial terms, and executed a nonbinding term sheet for the sale of its legacy and non-core Mollacas asset in Chile to Chilean company, Agricola Bauza Limited.
The transaction comprises the sale of mineral title, surface title and water rights for US$1.0 million (A$1.5M), subject to satisfaction of due diligence by Agricola Bauza with a proposed settlement date of 1 December 2019.
Unanticipated costs of the merger and costly merger delays further compounded by an unfavourable AUD/USD exchange rate, has brought funding requirements forward and ahead of the highly anticipated Chuscal drill results.
Whilst Metminco expect the Mollacas transaction to be finalised in early December and provide a nondilutive capital injection, it does have alternative funding options prepared to facilitate ongoing exploration and to manage short term cash requirements.
Los Cerros – a new chapter for Metminco
Following the merger and to mark the start of a next exciting chapter, Metminco plan to re-brand itself as “Los Cerros Limited”.
Los Cerros is Spanish for “The Hills” and better reflects the company’s business focus in the Andes mountains. Villa De Los Cerros is also an accepted alternate name for the town of Quinchia in Colombia from which the company operates and therefore has local relevance.
The change of name will be voted on by shareholders at the 28 November 2019 General Meeting.
A strategic review of all previous exploration, known targets and existing resources on the company’s projects has been completed confirming significant potential for discoveries.
While the review confirmed Chuscal as the first drill target, it also identified significant upside in the remainder of the Quinchia Gold Project, requiring systematic integration of geological, geochemical and geophysical exploration results.
The Tesorito porphyry is of particular interest, with the review recommending further drilling in the medium term, especially testing the potential for near surface repetitions of higher-grade zones to the north of recent drilling at the target.
Further upside from the expanded portfolio comes from the Andes Project, with the San Pablo epithemal target (one of 12 vein targets at Andes) identified as an area for consideration in the 2020 exploration program.
In the meantime, the highly anticipated Chuscal drill results are due to begin arriving this month. This could prove to be the first major catalyst for the just $13.7 million capped explorer with its expanded portfolio in this highly prospective gold region of Colombia.