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Arqueros Gold Project

The Arqueros gold-silver deposit is located in the La Coipa sector of the northern part of the Maricunga district of the Atacama Region of Chile. The Maricunga Gold Belt hosts in excess of 70 million ounces of gold in resources and is considered to be highly prospective for large scale gold deposits. In 2009, it produced 465,000 ounces gold equivalent from two mines, Maricunga (formerly Refugio) and La Coipa, both operated by Kinross Gold Corporation. Several large scale feasibility level projects are in progress, including Cerro Casale (23 Moz gold, Barrick/Kinross), Marte-Lobo (6 Moz gold, Kinross) and Volcan (7 Moz gold, Andina Minerals).

The project at 7,052,500mN 482,500mE, 4,100 metres above sealevel, is linked by an all-weather road to Copiapo, a regional mining service 800 km north of Santiago.

Regional infrastructure is reasonable, with good road access and grid power already supplied to nearby large scale mining complexes such as La Coipa which is 20 km to the south. The deposit is hosted within a zone of multiple alteration zones and geochemical anomalies known as the Esperanza project, discovered in the 1981 as part of a regional exploration programme conducted under the auspices of Minera Anglo American Chile Ltda (now Anglo American Norte S.A.).

The Chimberos silver deposit which is part of Esperanza and only 1 km from Arqueros was mined by Compañia Mantos de Oro (Kinross) from 1998 to 1999, producing 34 Moz silver over 13 months. Subsequently, the high grade zones within Arqueros mineralisation were mined underground from 2000 to 2004 by a local Chilean company who over the five years extracted 270,000 ounces gold equivalent from 1.2 million tonnes of ore, which it processed at an average grade of 1.34 g/t gold and 364 g/t silver (~7 g/t gold equivalent), using a 4.5 g/t gold equivalent cut-off.

Laguna Resources commenced field activities in November 2009, with the objective of ascertaining the size and quality of the mineralisation at Arqueros, and to expand and upgrade that resource, and scope out the development for feasibility study commencing in the second half of 2010.

Laguna Resources is targeting mineralisation of the order of 1 to 2 million ounces of gold equivalent, that is, 20 to 40 Mt at 1.5 to 2 g/t Au equivalent (>1 g/t gold and >60 g/t silver), which could be mined by open-cut methods and processed using traditional agitation leaching with cyanide.

 

 

Panorama of Arqueros looking east from the haul-road to La Coipa plant.

 

 

Arqueros Sur showing portals, silicified structures and drill roads.

 

Geology

Arqueros is characterised by a high sulphidation epithermal system, associated with regional N60W and N10-20E structures hosted in Tertiary acid volcanics, tuffs and breccias, overlying folded Paleozoic marine sediments, and intruded by dacite stocks. It is part of the Cerro Bravos – Esperanza volcanic complex (25-22 Ma). It has a similar style of mineralisation to La Coipa, and shares the structural relationships of the Maricunga Gold Belt.

The principal controls for alteration and mineralisation are the presence of dacite and rhyolite porphyry stocks, and zones of structural weakness, associated with north-east trending regional structures.

 

 

Geology with reverse circulation drill hole collars (25 January 2010)

 

Hydrothermal alteration is strongly silicified and argillic, with kaolinite clays, cryptocrystalline quartz, and in places barite, alunite and abundant jarosite. Textural destruction is partially complete.

Mineralisation occurs in silicified structures as two distinct domains, a sub-horizontal silicified silver layer and a series of sub-vertical gold-rich silicified vein sets:

• Stratabound silver mineralisation dips 5-10°N, and is associated with zones of high primary porosity in breccia and tuff horizons, forming a blanket, or “mantos”, ten to over twenty metres thick. High-grade zones occur within the mantos, related to subvertical silica-pyrite veins.
• Gold mineralisation is associated with sub-vertical (80°W) silicified structures trending N10-20°E, and a silicified vuggy breccia composed of leached and argillised fragments of fine tuff, stained with jarosite. Vein thicknesses are 3 to 10 metres.

 

Geological model showing the silver and gold domains.

 

The ore mineralogy for gold and silver may be considered oxidised, comprising cerargyrite (AgCl), argentojarosite (AgFe₃(SO₄)₂(OH)₆), native silver, argentite (Ag₂S), electrum and native gold in the size range of 0.5 to 50 micrometres. Other ore minerals include pyrite (relatively abundant) with traces of chalcopyrite, sphalerite, galena, enargite and marcasite. There is considerable potential for resource expansion at depth and in satellite deposits.

Maiden JORC Resource

The processing of assay data retrieved from historical exploration and production datasets resulted in the estimation and release of a maiden JORC Inferred Resource in November 2009. This will be updated once the information from the current Laguna drilling campaign (December 2009 to April 2010) is compiled.

The maiden resource estimate, 1.1 million oz gold equivalent (pre-mining), or current remnant of 783,000 oz gold equivalent (16 Mt @ 0.5 g/t Au & 64 g/t Ag, or 1.5 g/t gold equivalent) was a significant result, confirming the potential for the resource to achieve a minimum of one million ounces.

It was also recognised that the very large, historical data base used in the estimate required verification and quality control before the resource could be upgraded or expanded. This was the first objective of the subsequent drilling campaign. The second objective was to obtain reliable assay data on the high-grade gold domains, where lies the greatest potential to add ounces and grade.

 

JORC Inferred Resource (current estimate)

Cut-off grade, g/t Gold EQ60	Tonnes ‘000	Resource Grade, g/t			Ounces Gold EQ60
		Gold	Silver	Gold EQ60
0.5	16,012	0.45	64	1.52	782,700
1.0	9,711	0.60	85	2.02	629,520
1.5	5,791	0.77	107	2.55	474,770

Note: Gold equivalence (AuEQ) is estimated as AuEQ = Au + (Ag*EQ), where

Au = gold content, Ag = silver content and EQ = equivalence factor, which is calculated as the ratio of gold price to silver price * ratio of gold metallurgical recovery to silver metallurgical recovery. EQ60 = PAu/PAg * RAu/RAg = 60, based on long-range prices of gold at US$800/oz & silver US$15/oz, and recoveries of gold at 90% and silver at 80% respectively

 

Exploration Drilling

The first phase of drilling comprised 10,000 metres of reverse circulation and diamond drilling, undertaken from surface platforms between the end of November 2009 and mid February 2010. This provided valuable information on the extent of mineralisation in the silver rich mantos zone, and the high grade gold bearing structures. The latter are the principal host of the gold where drilling has demonstrated grades in the range of 3g/t to 10g/t gold over five to ten metres width.

The second phase of drilling comprises 2,000 metres of diamond drilling from underground platforms on the main development drive in the Arqueros Sur deposit. This drilling is designed to provide additional critical information on the gold bearing structures, which lie below the silver mantos but could not be adequately tested by surface drilling. The information provided will assist the estimation of a new JORC compliant resource, with a greater exposure to gold than has been previously possible.

 

Mine cross-section from original plans showing silver mantos with underlying
gold structures as interpreted from historical production drilling (2000-2004)

 

Surface Drilling

The completed surface programme comprised 8398 metres of reverse circulation holes drilled, logged and sampled in 43 holes, and assayed for gold, silver and in some cases, copper. In addition, 840 metres of diamond drilling was completed in 8 holes for geotechnical purposes.

The drilling results of the first 6500 metres in 30 holes were released on 25 January 2010. Drilling demonstrated the continuity of grade and extent of the silver domain, and reconciliation with the historical data base has now commenced. It was also showed that gold targets would be better tested by underground drilling. As a result, underground drilling was initiated.

 

 

Intersections >0.5 g/t gold equivalent (AuEQ60) from surface drilling

	Intersection, metres			Grade, g/t
Drillhole	From	To	Length	Gold	Silver	Gold EQ60
AR09-03 .. includes	248 262	285 274	37 12	0.13 0.20	71 151	1.31 2.71
AR09-05 .. includes	248 257	261 261	13 4	0.02 0.03	206 422	3.45 7.07
AR09-06   includes	159 178	185 181	26 3	0.01 0.01	68 232	1.14 3.88
AR09-07 .. includes	103 103	118 109	15 6	0 0	106 184	1.78 3.09
AR09-08	130	139	9	0.05	37	0.68
AR09-09 ...includes ...includes	67 96 175	178 107 177	111 12 2	0.51 2.44 5.59	43 127 41	1.23 4.56 6.27
AR09-10 ...includes	54 62	80 68	26 6	0.20 0.80	89 220	1.67 3.84
AR09-11	16 28	20 59	4 31	0.60 0.03	1 52	0.63 0.91
AR09-12 ...includes	73 95	97 97	24 2	1.28 6.34	22 14	1.64 6.56
AR09-16 ...includes	40 45	58 49	18 3	2.76 7.12	4 8	2.83 7.26
AR09-20 ...includes	38 44	55 49	17 5	0.25 0.76	42 44	0.96 1.50
AR09-21	36	72	36	0.27	55	1.18
AR09-22	34	62	28	0.02	70	1.19
AR09-24 ...includes	316 339	347 344	34 5	0.15 0.10	77 286	1.43 4.86

 

 

Underground Drilling

Underground diamond drilling (2000 metres, NQ core) is in progress from five locations on the main drive along the axis of Arqueros Sur, targeting gold-bearing structures.

 

Section N1600 showing surface drilling and proposed underground holes extending
from the centre of the section to intersect gold-bearing structures.

 

Technical Studies

Exploration work is being complimented by supporting technical studies in metallurgy, process design, geotechnical assessment of rock properties and conceptual mine planning. In addition, fundamental issues such as mine site infrastructure, environmental impact assessment, water, power and licensing are being reviewed.

 

COMPETENT PERSONS STATEMENT

Dr Nicholas Lindsay is a Member of the Australian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Dr Lindsay is the Managing Director of Laguna Resources NL and consents to the inclusion in this release of the matters based on his information and information presented to him in the form and context in which it appears

CONSENT

The Mineral Resource has been estimated by Mr P Ball (Director of DataGeo Geological Consultants) from information provided by Laguna Resources NL and its agents. Mr Ball is a member of the Australian Institute of Mining and Metallurgy and has sufficient experience relevant to the style of mineralisation under consideration to qualify as a competent person as defined in the 2004 edition of the “Australian Code of Reporting of exploration results, mineral resources and ore reserves”. Mr Ball consents to the inclusion of the mineral resource estimate in the form and context in which it appears based on the information presented to him.

DISCLAIMER

This document contains certain forward-looking statements. These forward-looking statements are based on management’s expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, some of which are outside the control of Laguna Resources NL, which could cause actual results to differ materially from such statements.

The Exploration Target presented is 1 to 2 million gold equivalent ounces of potential gold-silver mineralisation grading between 1.5 and 2.0 g/t gold equivalents. The potential quantity and grade is conceptual in nature. There has been insufficient exploration to define a Mineral Resource under the JORC Code and it is uncertain if further exploration will result in the determination of a Mineral Resource.

Gold equivalence (AuEQ60) is estimated as AuEQ60 = Au + (Ag*EQ60), where Au = gold content, Ag = silver content and EQ = equivalence factor, which is calculated as the ratio of gold price to silver price * ratio of gold metallurgical recovery to silver metallurgical recovery. EQ60 = PAu/PAg * RAu/RAg = 60, based on long-range prices of gold at US$800/oz & silver US$15/oz, and recoveries of gold at 90% and silver at 80% respective