2011 - SEG Newsletter Cerro Negro

Advancing Science and Discovery

SEG

NEWSLETTER

www.segweb.org

APRIL 2011

NUMBER 85

percent on the initial capital investment of $275 M. In this paper, we trace the exploration history of the district from early exploration by Andean’s predecessors in the 1990s, through Andean’s acquisition of the property in 2004, to Andean’s merger with Goldcorp in December 2010. Rather than providing a comprehensive geologic description of the deposits, we describe the history of their discovery and attempt to focus on our evolving geologic understanding of the district. ...

ABSTRACT

INTRODUCTION

Exploration by Andean Resources Ltd. in the Cerro Negro district of southern Argentina between March 2005 and July 2010 delineated resources of 2.54 Moz gold and 23.5 Moz silver in three low-sulfidation epithermal vein deposits. Two of these, Eureka West and Bajo Negro, are new discoveries; the third deposit, Vein Zone, had been explored previously. Additional measured and indicated resources of 2.7 Moz Au have been estimated by current owners Goldcorp Inc. for three other discoveries at Cerro Negro: San Marcos, Mariana Norte, and Mariana Central. The total gold resource for the project is 5.3 Moz Au measured and indicated, plus 1.24 Moz inferred. Andean completed a positive feasibility study into an underground and open pit mining operation in July 2010, based on reserves of 2.07 Moz Au and 20.6 Moz Ag at Eureka, Bajo Negro, and Vein Zone. The study concluded that these deposits can produce an average of 200,000 oz of gold and 1.8 Moz of silver per year for 10 years, which would make Cerro Negro the largest gold producer in the Deseado Massif without considering resources or production from the other three deposits. The deposits are hosted by Late Jurassic volcanic and probable intrusive rocks of the Deseado Massif in which Triassic-Cretaceous extension created the structures which control the precious metal vein deposits. Four of the five new discoveries were found through geologic mapping, but pioneering work by previous explorers also contributed; the two most recent discoveries do not crop out. Geophysical studies helped to define drill targets and are likely to be increasingly important in future exploration. A key ingredient in Andean’s success was a willingness to drill test targets identified by a skilled and dedicated, largely Argentine, exploration team, supported by Australian and North American-based management.

The Cerro Negro district, in the Deseado Massif of southern Argentina, contains six known epithermal goldsilver deposits. Four of these were discovered by Andean Resources Ltd. between March 2005 and June 2010, and a fifth was elevated from an untested vein outcrop to a significant resource. The mineral rights are held 100 percent by Goldcorp Inc., through its December 2010 merger with Andean Resources Ltd. to page 17 Andean released the results of a feasibility study on July 6, 2010 (Ausenco, 2010), which quoted probable reserves of 2.07 Moz Au and 20.6 Moz Ag in three deposits. The study predicted that these deposits can produce 1.96 Moz of gold and 17.7 Moz of silver over a 10year mine life, at an average cash cost of $168/oz Jurassic Au. It was estiVolcanics mated that this would provide an internal rate of return (on a 100% equity basis, $800 gold, $14 silver, and constant US FIGURE 1. Regional setting of the Cerro Negro district in the Deseado Massif, with producing or former mines shown. dollar costs) of 43

† Corresponding author: e-mail, shatwell.dave @gmail.com

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D. SHATWELL (SEG 2011),† Calle Monteflor 596, 33 Lima, Peru, J. A. CLIFFORD (SEG 1989 F), D. ECHAVARRÍA, G. IRUSTA, AND D. LOPEZ

k 1 2– oo 011 es, .1 .C 2 s (pg d B in elea n WS huk a tions s R VIEYakubc e addi s, Newnline O A. bsit ideo ws We y V Vie w tor d Ne l His an a Or

Discoveries of Low-Sulfidation Epithermal Au-Ag Veins at Cerro Negro, Deseado Massif, Argentina

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APRIL 2011 • No 85

SEG

NEWSLETTER

SEG NEWSLETTER

Contents FEATURE ARTICLE 1

Nº 85 — APRIL 2011 EXECUTIVE EDITOR

Brian G. Hoal NEWS EDITOR

Lori Robertson GRAPHIC DESIGN

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PRODUCTION MANAGER Society of Economic Geologists, Inc. 7811 Shaffer Parkway Littleton, CO 80127-3732 USA Tel. +1.720.981.7882 • Fax +1.720.981.7874 Email: [email protected]

WEBSITE http://www.segweb.org

From the Executive Director: Summary of Activities for the Year 2010 Presidential Perspective: SEG in the 21st Century SEGF Presidential Perspective: Sustaining and Expanding Global Student Support Programs From the Treasurer: 2010 Year-End Summary

VIEWS 12

Vivian Smallwood Christine Horrigan

Discoveries of Low-Sulfidation Epithermal Au-Ag Veins at Cerro Negro, Deseado Massif, Argentina

NEWSLETTER COLUMNS

Alice Bouley EDITORIAL ASSISTANT

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VIEWS I — Exploration Approaches: Comparison of the Former Soviet Union with the Rest of the World VIEWS II — Exploration—It’s All About Turning Rocks into Money

SEG NEWS 10-11 24 24 25 25 26

Contributions – SEG, SEG Foundation, and SEG Canada Foundation SEG Presence at MDSG Why Do Geometallurgical Studies? No Surprises! Geometallurgy Forum—About Geologic Models and Metallurgical Response Geometallurgy Workshop VII Congreso Internacional de Exploradores

SEG STUDENT NEWS Feature articles are peer reviewed before they are accepted for publication. Please submit material to the Executive Editor. Tel. +1.720.981.7882 Fax +1.720.981.7874 E-mail: [email protected] The SEG Newsletter is published quarterly in January, April, July and October by the Society of Economic Geologists, Littleton, Colorado, exclusively for members of the Society. Opinions expressed herein are those of the writers and do not necessarily represent official positions of the Society of Economic Geologists. When quoting material from the SEG Newsletter please credit both author and publication. © 2011 The Society of Economic Geologists, Inc. Printed by MODERN LITHO–PRINT CO. Jefferson City, Missouri SEG Newsletter non-receipt claims must be made within four (4) months [nine (9) months outside of the U.S.A.] of the date of publication in order to be filled without charge.

— FOR CONTRIBUTORS — The SEG Newsletter is published for the benefit of the worldwide membership of the Society of Economic Geologists. We invite news items and short articles on topics of potential interest to the membership. If you have questions on submittal of material, please call the SEG office at +1.720.981.7882 or send details by FAX to +1.720.981.7874; by email to Format: E-mailed news items should be 5 Mb maximum. Send to [email protected]. Short items may be faxed. Please include your name and contact information for verification purposes. Please e-mail Christine Horrigan at the above address if you have questions. Advertising: Paid advertising is solicited to help offset publication and mailing costs; for rates, contact the Production Manager.

DEADLINE FOR NEWSLETTER #86:

May 31, 2011

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Student Chapter Field Trip Video Series: New Online at YouTube LaSalle Institut Polytechnique SEG Student Chapter University of Leicester SEG Student Chapter

EXPLORATION REVIEWS 29– Africa · 30– Alaska · 30– Australasia · 31– Europe · 31– Northern Eurasia · 32– Contiguous United States

MEMBERSHIP 33 34 38 39

SEG 2011 Officers and Committees SEG Membership: Candidates and New Fellows, Members and Student Members SEG Announcements & Deadlines Personal Notes & News

ANNOUNCEMENTS 2 6 40 41 42 42 43 44 44 45 46-47 48-49 51 52 52

Northwest Mining Association’s 2011 Annual Meeting, Exposition & Short Courses (inside front cover) New Part-time Staff The Inaugural SOLOMON Meeting, Yallingup, Western Australia CERCAMS—Copper Deposits of Central Asia Workshop 2011 Geomin Seminar XVI Congreso Colombiano de Mineria, Medellín, Colombia LaSalle Student Chapter—3rd European SEG Student Chapter’s Conference II International Geology & Mining Forum, September 3–5, 2011, Magadan, Russia SGA 11th Biennial Meeting, September 26–29, 2011, Antofagasta, Chile GAC-MAC-SEG-SGA Ottawa Meeting 2011, Ottawa, Canada Western Mining Services—Senior Exploration Management Course SEG at GSA 2011 XXX Curso Latino Americano de Metalogenia (inside back cover) U2011 Short Course—Geology of Roll-Front Uranium Deposits (back cover) SEG Contact Information (back cover)

CALENDAR 50

Calendar

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Geocon, Inc. Geosense (inside front cover) Howard, Avrom E. Laravie, Joseph A. Logemin S.A. LTL Petrographics Lufkin, John L., Ph.D Oldroyd, Geoffrey C. Petrographic Consultants Intl.

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SEG NEWSLETTER

No 85 • APRIL 2011

FROM THE EXECUTIVE DIRECTOR

Summary of Activities for the Year 2010 NEW OFFICERS In the August election of officers for January 2011, the membership elected Lluís Fontboté as President-Elect, Anthony C. Harris as Vice President for Student Affairs, and Judith A. Kinnaird, T. Campbell McCuaig, and Moira T. Smith as Councilors.

MEMBERSHIP As of December 31, 2010, SEG membership in all categories totaled 6,083, 9 percent higher than the level at the end of last year. Members are currently distributed throughout 105 countries worldwide, compared with 100 countries at the end of last year. Two-thirds of the membership works for industry (corporate or self-employed); the remainder are in academia and government. Approximately 60 percent of our members are from three countries, namely, the United States (28%), Canada (18%), and Australia (14%). The majority of members (54%) come from outside the United States and Canada. About 82 percent of new applicants are from outside the United States, with the bulk of applications coming from Latin America (22%), Europe (17%), and Canada (15%). For the year to date, the Society has processed 953 new applications (14 Fellows, 484 members, and 455 student members). In addition, 64 members upgraded to Fellowship, with Fellows now making up 24 percent of total membership. The Society ended the year with 51 active student chapters located in 20 countries: Canada (12), the United States (6), Australia (5), United Kingdom (4), Argentina (3), Chile (2), Colombia (3), South Africa (2), Switzerland (2), Brazil (2), France (1), Germany (1), Greece (1), Hungary (1), Indonesia (1), Papua New Guinea (1), Peru (1), Portugal (1), and Ukraine (1). Students make up 20 percent of the overall membership. The SEG Foundation continues to provide important subsidies required to sustain special membership classes such as students, Senior Fellows, and Lindgren awardees.

CONFERENCES, FIELD TRIPS, AND SHORT COURSES

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SEG was a co-sponsor of the MDSG Meeting in Glasgow, Scotland, January 5–7, 2010. Richard Tosdal, SEG 2009 Thayer Lindsley Lecturer, was a keynote speaker. SEG was an exhibitor at the AME BC Mineral Exploration Roundup in Vancouver, Canada, January 18–21, 2010. 5,841 delegates attended this event entitled “Go for the Gold (and Everything Else).” SEG and the Universidad Nacional Autónoma de México held a two-day short course, “Epithermal Deposits: Formation and Exploration” in Mexico, February 17–18, 2010. Presenters were Jeffrey W. Hedenquist and Antoni Camprubi. CODES SEG Student Chapter Field Trip 2010, “Geology & Ore Deposits of Thailand & Laos,” was held February 21–March 2, 2010. SEG held a PDAC pre-meeting, twoday short course, “Uranium Geology and Deposit Types” on March 5–6, 2010, in Toronto, Canada. Daniel Brisbin and Michel Cuney presented. SEG was an exhibitor at the PDAC convention, March 7–10, 2010. This event attracted an estimated 22,000 delegates including 417 trade show exhibitors. The SEG Council, Foundation Trustees, Executive Committee, Program Committee, and Publications Board held meetings at the Radisson Admiral Harbourfront Hotel in Toronto, March 5–7, 2010. The SEG-CSM two-day short course on Epithermal Gold Deposits was held at the SEG Course Center in Littleton, Colorado, USA on March 11–12, 2010. Course presenters were Antonio Arribas R. and Jeffrey Hedenquist. The course was sold out with 52 paying attendees. SEG co-sponsored the one-day Third International Exploration Forum CESCO in Santiago, Chile, April 6, 2010.

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SEG sponsored the 13th Quadrennial IAGOD Symposium, BRIAN G. HOAL “Giant Ore SEG Executive Director Deposits Downand Editor Under,” in Adelaide, Australia, April 6–9, 2010. Richard J. Goldfarb, SEG International Exchange Lecturer, and Michel Cuney, SEG Thayer Lindsley Lecturer, were speakers at this event. Jeff Mauk, Regional VP for Australasia, coordinated the SEG exhibit booth activities. The SEG-PNG Minerals three-day workshop took place on April 15–17, 2010, at the University of Papua New Guinea, Port Moresby, Papua New Guinea. The SEG program (April 15–16) consisted of presentations by Jeffrey Hedenquist, Jeffrey Mauk, Richard Goldfarb, and Douglas Kirwin. All presenters volunteered their time at the SEG booth as well. SEG was a sponsor of the GSN 2010 Symposium, “Great Basin Evolution & Metallogeny,” in Reno/Sparks, Nevada, USA, May 14–22, 2010. As part of this meeting, the SEG Gold Workshop, “Gold in 2010—Geological Features and Exploration Criteria,” was held on May 15–16, 2010. Presenters were Richard Goldfarb, John Muntean, Craig Hart, and Jeffrey Hedenquist. The SEG exhibit booth was organized by Richard Nielsen. The SEG co-sponsored the Simexmin 2010-IV Brazilian Symposium on Mineral Exploration in Ouro Preto, Minas Gerais, Brazil, May 23–26, 2010. SEG participated in two symposiums and two short courses. The “Gold Deposits: Orogenic, Epithermal Gold, and the Transition to Au-Rich Porphyry” short course was presented by Richard Goldfarb and Jeffrey Hedenquist. The “Sedimentary Phosphate Deposits: Ore Formation and Exploration” short course was presented by Peir Pufahl and Eric Hiatt. The SEG was also an exhibitor at this event. SEG sponsored the annual “Ore Deposits Models and Exploration”

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workshop at the China University of Geosciences (CUG), in Wuhan, China, on May 24–29, 2010. Lecture and Laboratory instructors were Z. Chang, H. Chen, D. Cooke, J. Gutzmer, C. Hart, D. Leach, C. Li, S. Scott, N. White, and K. Yang. SEG co-sponsored the 11th International Platinum Symposium in Sudbury, Ontario, Canada, June 21–24, 2010. The SEG Laurentian student chapter coordinated and ran the SEG exhibit booth. SEG co-sponsored the International Commission on the History of Geological Sciences (INHIGEO) Annual Conference in Spain, July 1–14, 2010. SEG participated in and co-sponsored the IMA 2010 Budapest Meeting in Budapest, Hungary, August 21–27, 2010. Feri Molnár was the meeting organizer. Maria Boni, along with Feri Molnár, coordinated the SEG booth activities, with Doug Kirwin, Jeffrey Hedenquist, Lluís Fontboté, Judith Kinnaird, and the SEG Eötvös Loránd University student chapter members volunteering their time at the booth. SEG sponsored the session, “Mineral deposits in terrestrial volcanic-hydrothermal systems,” with Jeffrey Hedenquist, Jaroslav Lexa, and Ferenc Molnár as convenors and Lluís Fontboté as Keynote speaker. SEG co-sponsored the Irish Association for Economic Geology: Zinc 2010 Conference in Cork, Ireland, September 17–19, 2010. The SEG Foundation StudentDedicated Field Trip, “Ore Deposits of Utah and Colorado” took place September 25–October 1, 2010. Trip leaders were W. Chávez and E. Petersen. SEG organized and hosted the SEG 2010 Conference in Keystone, CO, October 2–5, 2010. Record attendance of 812 with 165 students. The Organizing Committee was chaired by Jim Franklin. SEG co-sponsored the UNESCO-SEGSGA Latin American Metallogeny Course in Concepción, Chile, October 11–22, 2010. SEG sponsored several events at the annual GSA meeting in Denver, Colorado, October 31–November 3, 2010, including a pre-meeting course, SEG sessions, SEG Presidential Address (J. Hedenquist), SEG Distinguished Lecture (Craig Hart),

SEG NEWSLETTER

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and an exhibit booth. The presidential address was entitled, “Formation of Advanced Argillic Lithocaps over Porphyry Systems, and Exploration Implications,” and the distinguished lecture was entitled, “A Redox Paradigm for Intrusion-related Gold Systems.” The pre-meeting SEG course, “Environmental Geochemistry for Modern Mining” had 103 participants. The two lead presenters were R. Seal and K. Nordstrom. SEG-Colorado School of Mines (CSM) Porphyry Epithermal Course, November 11–12, 2010 was held in Littleton, Colorado, and presented by J. Richards. There were 47 participants. SEG collaborated with MGEI on two gold workshops, “Epithermal and Porphyry Deposits,” held in Bandung and Lombok, Indonesia, November 18–22, 2010. Speakers were N. White, S. Simmons, and S. Garwin. Each workshop had over 100 participants and four post-workshop field trips were attended by 10 to 20 participants each. SEG co-sponsored and exhibited at the 2010 AusIMM New Zealand Branch Conference in Auckland, New Zealand, November 24–26, 2010. Regional VP, J. Mauk, organized the SEG booth activities. SEG was an exhibitor at the 116th NWMA Annual Meeting, “Our Future is in Today’s Mines,” held in Spokane, Washington, December 5–10, 2010. J. Myers and A. Bookstrom manned the SEG booth. The SEG-Western Mining Services (WMS) Senior Exploration Management Course was held at the SEG Course Center, December 7–10, 2010. Presenters were B. Suchomel and J. Hronsky. With 30 participants, this course was sold out.

EDUCATION The SEG Foundation (SEGF) and the SEG Canada Foundation (SEGCF) received a total of 100 student research grant applications. SEGF awarded 51 grants for a total US$137,950, while the SEGCF awarded 9 additional grants for CDN$32,000. Research Grant awardees attend 39 different universities in 14 countries: United States – 20, Canada – 15, Australia – 7, Great Britain – 4, Argentina – 3, Germany – 2, Switzerland – 2, and one each from

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Hungary, Japan, New Zealand, Russia, South Africa, Spain, and Sweden. In the Graduate Student Fellowship program, a total of US$168,000 was awarded to 24 students entering graduate school in 2010, or who were currently enrolled as first-year graduate students. Recipients attend 10 different universities in five countries: USA – 10, Canada – 8, Australia – 4, Argentina – 1, and Germany – 1.

AWARDS AND LECTURESHIPS The SEG Awards Dinner was held on Sunday, October 3, 2010, at the Keystone Resort and Conference Center in Keystone, Colorado, during the SEG 2010 Conference. The following SEG Awards were presented: R.A.F. Penrose Gold Medal 2009 to David I. Groves (SEG 1973 F); SEG Silver Medal 2009 to Lawrence D. Meinert (SEG 1989 F); Ralph W. Marsden Award 2009 to Gerald G. Carlson (SEG 1983 F); Waldemar Lindgren Award 2009 to Iain K. Pitcairn (SEG 2006 M); SEG Distinguished Lecturer 2010 to Craig J.R. Hart (SEG 1993 F); SEG International Exchange Lecturer 2010 to Richard J. Goldfarb (SEG 1989 F); and the Brian J. Skinner Award 2009 to Ronner Bendezú (SEG 2005 M) was accepted by co-author Lluís Fontboté on his behalf. The SEG Thayer Lindsley Lecturer 2010, Michel L. Cuney (SEG 2006 F), and the SEG Regional Vice President Lecturer 2010, Alvaro P. Crósta (SEG 2008 F), could not attend. International Exchange Lecturer. Richard J. Goldfarb (senior research geologist with the Mineral Resources Program of the U.S. Geological Survey, Denver, Colorado) presented lectures at the National University Colombia, Bogota; National University Colombia, Medellin; Auburn University, Alabama; IAGOD conference, Adelaide, Australia; SEG Gold Workshop, Port Moresby, PNG; SEG Gold Workshop, GSN, Reno; Brazil Mining Conference, Ouro Preto, Brazil; Georgian Academy of Sciences, Tblisi; Uzbekistan National University, Tashkent; Bolivia National University, La Paz; Bolivian Geological Congress, Tarija; Universidad Nacional de Salta, Argentina; Universidad Nacional de la Plata, Argentina; Asociación de Mineros de Sonora, Mexico; University of Arizona; and Arizona Geological Society. Thayer Lindsley to page 6 . . . Lecturer. Michel L.

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No 85 • APRIL 2011

Summary of Activities for the Year 2010 (Continued)

Cuney (director of the research team, Genesis and Management of Mineral Resources, at the Henri Poincaré University in Nancy, France) presented lectures at the University of Western Ontario, London, Canada; Laurentian University, Sudbury, Canada; McGill University, Montréal, Canada; Laval University, Ste. Foy, Québec, Canada; Université du Québec à Chicoutimi, Canada; Inter. Assn. Geology of Ore Deposits (IAGOD) meeting, Adelaide, Australia (chairman of the U session), Keynote Speaker; Goldschmidt Conference, Knoxville, Tennessee USA (co-chair of the Uranium session); Amman University, Jordania; IGEM (Institute of Ore Geology, Petrography, Mineralogy, and Geochemistry); Moscow, Russia; Bucaramanga University, Colombia; Humboldt University, Berlin, Germany; Southern Illinois University Carbondale, Carbondale, IL, USA; Cardiff University, UK; La Salle, Beauvais, France; Genève University, Suisse; and CERCAMS, London, UK. Regional Vice President Lecturer. Alvaro P. Crósta (professor of geology and remote sensing at the Institute of Geosciences, University of Campinas (Unicamp), Brazil) presented lectures “Remote Sensing in Mineral Exploration”, Colorado School of Mines, Golden, Colorado, USA; “Remote Sensing & Spectral Geology” and “Remote Sensing in Mineral Exploration” at the Institute of Geosciences, University of Campinas, Campinas, SP, Brazil; geology department, Federal University of Rio de Janeiro, Rio de Janeiro, Brazil; SEG student chapter in Bogota, Colombia; geology department, Universidad Nacional de Ingenieria, Lima, Peru; and Geosciences Institute, Federal University of Bahia, Salvador, Brazil. Distinguished Lecturer. Craig J.R. Hart, Director of the Mineral Deposit Research Unit (MDRU) at the University of British Columbia, Vancouver, Canada gave two presentations on behalf of the SEG. The SEG Distinguished Lecture, “A Redox Paradigm for Intrusion-related Gold Systems” was presented at the GSA 2010 annual meeting in Denver, Colorado, USA, November 1, 2010, and a talk entitled, “Asia’s Golden Architecture– the tectonic foundations for Asian Gold,” was presented at the 34th annual winter meeting of MDSG, January 5–7, 2011. Honorary Lecturers. The current list of SEG Honorary Lecturers follows: M.

Stephen Enders (Consultant, Denver, Colorado, USA), Richard J. Goldfarb (U.S. Geological Survey, Denver, Colorado, USA), William X. Chávez, Jr. (New Mexico Institute of Mining and Technology, Socorro, New Mexico), Michael C. de Wit (BRC Diamond Core, Irene, South Africa), Mark D. Hannington (University of Ottawa, Ottawa, ON, Canada), Chusi Li (Indiana University, Bloomington, Indiana), Yasushi Watanabe (Institute for Geo-Resources and Environment AIST, Tsukuba, Ibaraki, Japan), Francisco I. Camus (Independent Consulting Geologist, Santiago, Chile), Jeffrey W. Hedenquist (Hedenquist Consulting Inc, Ottawa, Canada), Douglas J. Kirwin (Ivanhoe Mines Ltd., Bangkok, Thailand), and Noel C. White (Asia Now Resources Corp., Kenmore East, Australia). Andrew M. Killick (formerly of The Mineral Corporation, Emmarentia, Gauteng, South Africa) has retired but is available to contribute should the opportunity arise.

PUBLICATIONS Publication sales were made up largely of bookstore orders (54%) with the remainder (46%) coming from exhibit booth sales, overwhelmingly driven by the Keystone event. Members sales made up about 74 percent of total publication sales. Revenue is attributed to sales of 15 different Guidebooks (including 10 CDs), 16 Reviews volumes (including 5 CDs), 15 Special Publications (including 4 CDs and new e-docs), 4 Monographs (including 1 CD), 3 Compilation Series (CDs), 22 Videos, 5 Conference Series volumes (including 2 CDs and 1 DVD), as well as Economic Geology back issues, the Dummett DVD, 100th Anniversary Volume of Economic Geology, SEG history volume, and the Tables for Opaque Minerals (CD). The most popular print publication was the latest Special Publication No. 15, The Challenge of Finding New Mineral Resources: Global Metallogeny, Innovative Exploration, and New Discoveries, edited by R.J. Goldfarb, Erin E. Marsh, and Thomas Monecke. Following SP 15 in overall unit sales was Special Publication Number 14 on Supergene Environments, Processes, and Products, edited by Spencer Titley, and the 100th Anniversary Volume of Economic Geology, edited by Hedenquist, Thompson, Goldfarb, and

Richards. In the VHS/DVD series, Jon Hronsky’s Video No. 21, 1) Self-Organized Critical Systems and Ore Formation: The Key to Spatially Predictive Targeting, and 2) The Case for a Greenfields Renaissance, was most popular. The four scheduled issues of the SEG Newsletter and seven issues of Economic Geology were released through December. The latter included one journal issue carried over from 2009. The January, April, July, and October issues of the SEG Newsletter were published according to schedule. The third CD in the SEG Compilations series, on gold in metamorphic terranes, was released in May. Special Publication 14 was released in January; Special Publication 15 was released at the Keystone conference in October. Three new Guidebooks were readied for CD, and materials for nine workshops were compiled. The new website for Economic Geology, hosted by HighWire, launched in mid-October. Initially, the online publication is for subscribers only but will subsequently provide RBAC for members instead of the current access to GSW. A modified subscription structure was introduced for 2011 to allow for various combinations of print and digital content and recognition of nonprofit and for-profit subscribers.

SEG OFFICE ADMINISTRATION The office was staffed by nine persons including four on a part-time basis– effectively eight full-time equivalents. While association management software (iMIS) and outsourcing have helped moderate the need for additional staff, two additional full-time equivalents will be needed in 2011 to manage the increasing workload tied to copyediting, website-IT administration, and fund development. 1

NEW PART-TIME STAFF Lauren Anand (website-IT) and Lori Robertson (editorial assistant) have been hired as new support staff at SEG headquarters!

APRIL 2011 • No 85

SEG NEWSLETTER

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PRESIDENTIAL PERSPECTIVE

SEG in the 21st Century By the time you read this SEG Newsletter, the conference frenzy for the first quarter of 2011 will be over. For those of you who attended Roundup, Indaba, ProExplo, SME, or PDAC, you will be all too familiar with the hype, both real and imagined, in the exploration and mining business today. You will also be painfully aware of the acute demand for geological talent. I’ve had the opportunity to participate in many informal discussions as well as formal panels and workshops devoted to education and training of the next generation of economic geologists and explorers. As a result, I’ve come to the following conclusions: 䡵

Faced with a continuing decline in economic geology education, industry will have to develop its own internal training programs, similar to what has happened in the oil business, as well as supporting those universities committed to economic geology. 䡵 To be effective, industry will have to rely mainly on universities to produce graduates of high quality with a strong fundamental background in science or engineering and geology, regardless of whether or not this background includes classic economic geology training. 䡵 Industry will select students for employment with a broad background and a potential to excel in a variety of areas—students who are critical thinkers with ability to integrate, interpret, and predict in 3-D and 4-D from multiple datasets. This creates a wonderful opportunity for the Society of Economic Geologists to collaborate with universities and companies to provide this training. Even for the biggest companies, it’s difficult to fill the need for targeted education and training that addresses the special needs of the mineral exploration and mining business. The oil companies figured this out long ago. Some training is provided by the companies, but much of it is now available from American Association of Petroleum Geologists (AAPG)-sponsored short courses, workshops, and field trips. The AAPG has developed an excellent

curriculum that is available for basic and continuing education (www.aapg.org/education). SEG can do something similar for our specialty. At a series of Publication Board, SEG Council, SEG Foundation, and SEG ExCom meetings in late February and early March, we made several decisions to work toward building a curriculum in economic geology. These decisions include the following: 䡵

SEG Council supported the formation of an ad hoc Curriculum Committee to further develop the approach and substance for a regular series of short courses, workshops, and field trips. The Curriculum Committee will report to SEG Council no later than at the next council meeting with their recommendations. 䡵 SEG Foundation supported the formation of an SEG Field Camp in Economic Geology to be designed in a similar fashion to university-run field camps and for academic as well as continuing-education credit in field methods. The Curriculum Committee will include this opportunity in its evaluation of a recommended SEG curriculum. 䡵 ExCom asked the Curriculum Committee to consider the potential to create an SEG curriculum developer position that would cooperate with economic geology programs at universities, and that would develop, coordinate, and collaborate in the delivery of the SEG curriculum in Littleton and elsewhere. This sponsored position would work closely with the Executive Director, VP Regional Affairs, and short course and field trip coordinators. In addition, Pub Board and SEG Council approved the transition of publishing Economic Geology and other Society publications from hard copy to digital copies of record. This digital format will transform the way SEG delivers and develops content for our members and open a number of new opportunities, benefitting from new technologies. This is not as big a stretch for our Society as it might seem. We already can get the journal, newsletter, and

other content in digital form, and we already deliver many short courses, field M. STEPHEN ENDERS trips, workshops, SEG President 2011 and symposia around the world and at SEG headquarters in Littleton. In 2010, the Society sponsored 26 of these events—that is one every other week! In a wonderful stroke of good fortune for SEG, Stewart Wallace’s estate donated almost $4M to SEG in 2010, of which almost $0.5M has been used to complete the build-out of the SEG conference center in the lower level of the SEG headquarters. SEG anticipates increasing the number of short courses they host each year in this facility. SEG is a 501(c)3 organization, which means we operate as a tax-exempt business subject to certain U.S. tax regulations and in line with our stated purpose of disseminating information through education. This requires thinking beyond a break-even approach to ensure that we generate sufficient revenue from delivering the SEG curriculum and publications to cover all related costs, provide subsidies to student attendees, and generate some profit in the process. We will reinvest these proceeds in the Society to further develop content, provide additional services, and improve the Society’s programs. SEG’s mission is to advance science and discovery in the field of mineral resources. There is an excellent opportunity to better fulfill this mission through the establishment of a formal SEG curriculum and courses that meet the needs of our members and businesses. This is the 21st century, and it is time we become a 21st century professional society. Our new tag line could read as follows: “SEG prepares the world’s geologists and explorers today to make discoveries tomorrow.” 1

8

SEG NEWSLETTER

No 85 • APRIL 2011

F O U N D AT I O N P R E S I D E N T I A L P E R S P E C T I V E

Sustaining and Expanding Global Student Support Programs Greetings to all SEG members. The Society of Economic Geologists Foundation trustees held their first meeting of 2011 the day prior to commencement of the mammoth Prospectors and Developers Association of Canada (PDAC) convention. This annual event, expected to attract more than the 22,000 delegates attending last year’s event, brings exploration personnel together from all over the world and is an ideal and convenient place for the Foundation trustees to meet each year. At that meeting, SEG President Stephen Enders and SEG Executive Director Brian Hoal reported on some exciting activities within SEG, Treasurer Harry Noyes and Brian Hoal reviewed the financial status and investments of the Foundation, the 2011 budget was presented, discussed, and approved, and reports were received from the student program chairs. The following are highlights from the meeting. Three new trustees joined the board this year: Bill Chávez, Andy Swarthout, and Diane Nicolson, who will each serve a five-year term, through 2015. Welcome Bill, Andy, and Diane. The new board vice president is Peter Megaw, and David Broughton will continue as secretary. Some other important changes were formalized at the meeting as well. Mary Little agreed to chair the Trustee Nominating Committee, a position formerly, and very ably, held by Len Krol, and Patrick Highsmith will be the new chair of the Fund-Raising Committee— both important committees at the forefront of the sustainability and continuity of the Foundation. Bart Suchomel completed his term as SEGF President at the end of 2010, but fortunately will continue as past president and will also assist the Fund-Raising Committee. I would also like to recognize three SEG Fellows who are managing key student programs: former Trustee James Macdonald is coordinating the Student Research Grants program, Stephen J. Piercey, professor at Memorial University of Newfoundland, chairs the Graduate Student Fellowship program, and Trustee Borden Putnam chairs the Student Field Trip program and also serves on the

Fund-Raising committee. These individuals bring keen interest and enthusiasm to their roles, and I am pleased to work with such committed economic geologists. Foundation trustees approved a budget totaling more than US$645,000, which is about 12 percent larger than the audited 2010 expenses, reflecting the increased support for the Foundation’s student programs. This budget also provides for a new fund development coordinator. The person filling this important new position will be responsible for working with the Executive Director, The Executive Director Emeritus, the SEGF Foundation President, and the SEGF Fund-Raising Committee to coordinate fund-raising efforts involving both corporations and individuals. A hallmark of the SEGF programs is their global scope. Last year, SEGF provided over US$360,000 in support of its student programs worldwide: student research grants, graduate student fellowships, student field trips, SEG student chapters, and SEG student membership subsidies. A total of 89 students received research grants, graduate student fellowships, and field trip travel grants. The geographic distribution of this support is illustrated on the following map. Summary data for the three core student programs are as follows: 䡵

Student Research Grants: Since inception in 1996, more than US$1,507,000 has been awarded to 734 students worldwide. In 2010, student research grants totaling US$167,320, with an average grant of $2,836, were awarded to 59 students in 14 different countries.

䡵

Graduate Student Fellowships: Since inception in 2006, over US$623,500 has been awarded to 64 outstanding students, representing 28 different universities in 12 countries. Currently, 42 fellowship applications

for 2011 awards are under review. 䡵

D ONALD J. B IRAK Student Field SEG Foundation Trips: Six stuPresident 2011 dent field trips have been held since this program was initiated in 2006, with the first field trip held in 2007. Through 2010, 96 students from 51 different universities in 19 countries have participated in these field trips. This is a very popular program with three to four times the number of applications than spaces available on each trip. Two student field trips are being held in 2011—both will be held in northern Chile—the first in March and the second in May.

SEG student membership in 2011 will exceed 1,000 worldwide. With the continued growth in student membership and corresponding expansion of SEGF student programs, one can sense the challenge faced by the trustees to source new, sustainable funding for the Foundation’s programs. I know the trustees are committed to the task. Thanks to our corporate sponsors and contributions from individual members, we had a great year in 2010. We will strive to make 2011 even better. My thanks to John Thoms and Vicky Sternicki for the updated student program statistics. As with my column in the January issue of the SEG Newsletter, I encourage your participation in the Foundation’s mission. Thank you for your contributions.1

Areas represented by the various SEGF student programs in 2010

APRIL 2011 • No 85

SEG NEWSLETTER

9

FROM THE TREASURER

2010 Year-End Summary The Society and the Foundation begin 2011 with a solid base. With excellent control of expenditures, both the Society and Foundation experienced operating income well in excess of budget. The combined investment portfolio has increased US$5,577,409. The Foundation has received contributions of $397,219, which is $178,219 above budget. This generosity of individuals and companies has allowed substantial increases in support for students, such as grants and field trips, furthering the Foundation’s efforts to enhance student interest in the profession. In 2010, the Foundation spent a total of $462,459 in programs and services. The Keystone conference conYear End 2010 Revenues/ contributions, total Expenses, total Portfolio Value

tributed substantially to the Society’s excellent financial performance, netting several hundred thousand dollars more than projected, and reflecting member interest in Society products. Total financial assets (portfolio plus cash) at year end 2010 for the combined Society and Foundation totaled $15,826,903. The substantial increase over 2009 is due mainly to the addition of the Stuart Wallace Fund. Stu Wallace’s astounding generosity that provided funding for the Headquarters a decade ago was augmented in 2010 with a nearly $4 million donation from his estate, significantly enhancing the Society’s financial position. The portfolio continues to be managed

SEG, Inc.

SEG Foundation, Inc.

Total

$ 2,485,430 $ 2,020,178 $11,280,313

$ 397,219 $ 575,052 $4,546,590

$ 2,882,649 $ 2,595,230 $ 15,826,903

under the direction of the SEG Investment Committee with the guidance of Innovest Portfolio HAROLD J. NOYES Solutions LLC, a SEG Treasurer Colorado investment advisory firm. Quarterly meetings of the Investment Committee and Innovest provide the opportunity to rebalance the investments, largely domestic and international bond and equity funds, for optimum growth and security for Society and Foundation objectives. The Society and Foundation are closing on 2010 with a hopeful outlook of a quick, near-term return to improved market performance and a stronger financial position, with a broad array of programs, publications, and other benefits to support members and students around the world in this increasingly international organization. 1

Resource Geosciences de Mexico S.A. de C.V. Celebrates our 10 Year Anniversary by announcing the opening of

Resource Geosciences Inc. Providing Exploration Services Throughout the Americas Project Management; Technical, Logistical and Administrative Services; Independent QP evaluations and NI 43-101 Technical Reports (for long term clients) What’s New for 2011: We now provide on-site TerraSpec Vis/NIR Spectrometer Mineral Analyses

Dr. Matthew D. Gray, C.P.G. #10688 – President Calle 14 de Abril #68, Colonia San Benito Hermosillo, Sonora, Mexico, 83200 www.resourcegeosciences.com

Tel. +52 (662) 214-2454 Fax +52 (662) 214-2455 [email protected] PAID ADVERTISEMENT

10

SEG NEWSLETTER

Contributions Foundation Corporate Sponsors AngloGold Ashanti Australia, Australia Bear Creek Mining Corp., USA Coeur d’Alene Mines, USA Inmet Mining Corp., Canada Newmont Corp., USA Newmont Corp., USA

$50,000 $5,000 $10,000 $6,500 $15,000 $30,000

SEG Corporate Sponsors IAMGOLD Corp., Canada

$5,000

SEG Ireland, George R., USA

Foruria, Jon, USA Patton, Thomas C., USA Queen, Lawrence D., Australia

Ainsworth, Ben, Canada Albinson, Tawn D., Mexico Anderson, Thomas P., USA Bailey, Mark H., USA Belkin, Harvey E., USA Berry, James M., USA Bout, Jean-Paul F., Australia Bundtzen, Thomas K., USA Cooper, Christopher, Scotland Coupard, Michel M., Australia Fleming, Adrian W., Canada Funaioli, Giovanni, Italy Goryachev, Nikolay A., Russia Hitzman, Murray W., USA Hodkiewicz, Paul F., Australia Hu, Ruizhong, China Jolly, James H., USA Krcmarov, Rob L., Canada May, David J., USA Novajas, Roberto A., Chile Pierson, John R., USA Potucek, Tony L., USA Rayner, Jeffrey G., Italy Rusk, Brian G., Australia Sanchez Nannig, Geovanni C., Chile Schneider, Albrecht, Chile Schulz, Klaus J., USA Scogings, Andrew J., Australia Scott, Elizabeth A., USA Simmons, Stuart F., New Zealand Struhsacker, Eric M., USA Taylor, Anthony P., USA Williams, Neil, Australia

Abbott, Jeffrey T., Canada Archer, Noel R., Australia

Armstrong, Frank C., USA Asare, Anthony A., Ghana Ashley, Roger P., USA Baar, Eric E., USA Bailey, Robert V., USA Bakker, Pieter J., Thailand Beale, Timothy J., Canada Belther, Jones, Brazil Bersch, Michael G., USA Bettles, Keith H., USA Boswell, Jonathan T., USA Boutes, Georges, France Bowell, Robert J., United Kingdom Boyes, Matthew G., United Kingdom Bradshaw, Herbert E., USA Bryndzia, L. Taras, USA Butcher, Nicholas J. D., United Kingdom Canales, Juan J., Peru Cardenas, Alan F., Colombia Collins, William D., USA Diaz Rodriguez, Julian M., Colombia Elston, Wolfgang E., USA Evans, David T. W., Canada Evans, Michael J., South Africa Evans, Thomas L., USA Flint, Delos E., USA Fontbote, Lluis, Switzerland Fournier, Robert O., USA French, Andrew G., Canada Gendall, Ian R., Canada Gize, Andrew P., United Kingdom Godefroy, Marcelo, Mexico Halbert, Gary R., USA Hannah, Judith L., USA Hanneman, Harold P., USA Hashimoto, Koji, Japan Hlabangana, Sitshengiso, Zimbabwe Hoag, Corolla K., USA Joslin, Gregory D., Sweden Keller, John W., USA Koski, Randolph A., USA Laidlaw, Robert O., USA Logsdon, Mark J., USA Machamer, Jerome F., USA Marinov, Daniel R., Canada Mcdonald, Bruce A., Malaysia Moye, Robert J., Australia Mudry, M Phillip, Canada Murakami, Hiroyasu, Japan Nakamura, Takeshi, Japan Ortiz Ramos, Giovanny J., Colombia Pop, Nicolae, Canada Quijano Laime, Freddy G., Ecuador Reid, David C., USA Reid, Richard F., USA Richards, Thomas A., Canada Robertson, Jacques F., USA Rosta, Zsolt F., USA Ruppel, Edward T., USA Sale, Marc J., Scotland Sauve, Pierre, Canada Shannon, James R., USA Sharp, W. Edwin, USA Sicoli Seoane, J. Carlos, Brazil Silva, Pedro G., Chile Skyllingstad, Paul E., USA Smith, Charles S., USA Suarez Llerena, Jaime C., Peru Texidor-Carlsson, Jose, Canada Trammell, John W., USA Twyerould, Stephen C., USA

No 85 • APRIL 2011

12/1/2010–2/28/2011 Udubasa, Sorin S., Romania Van Oss, Hendrik G., USA Vanderwall, William, USA Villa-Iglesias, Luis, Spain Whiteford, Sean M., USA Woodman, John R., USA Zohar, Pamela B., USA

SEG Foundation General Fund Coeur d’Alene Mines, USA

Inmet Mining Corporation, Canada Bear Creek Mining Corp., USA

Christensen, Odin D., USA Fahey, Patrick L., USA Innovest Portfolio Solutions, Llc., USA Swarthout, Andrew T., USA

Babcock, Russell, USA Barton, Paul B., USA Belkin, Harvey E., USA Eggers, Alan J., Australia Glavinovich, Paul S., USA Guilbert, John M., USA Hammer, Donald F., USA Hardy, David G., USA Harris, Marcus F., Australia Jennings, Donald K., USA Juhas, Allan P., USA Kyle, J. Richard, USA Lipske, Joanna L., USA Muessig, Siegfried, USA Pinsent, Robert H., Canada Powers, Sandra L., USA Schmidt, Paul G., USA Struhsacker, Eric M., USA Westervelt, Thomas N., USA

Anderson, Thomas P., USA Arauz, Alejandro J., Costa Rica Ashley, Roger P., USA Beale, Timothy J., Canada Belther, Jones, Brazil Berger, Byron R., USA Campbell, Finley A., Canada Conway, Clay M., USA Erickson, A. J., USA Lapoint, Dennis J., USA Little, Mary L., USA Rezende, Nelio G. A. M., Benin Rotert, Joel W., USA Smith, Shea C., USA Twyerould, Stephen C., USA Villa-Iglesias, Luis, Spain Wire, Jeremy C., USA

Student Fellowship Fund AngloGold Ashanti Australia, Australia

Newmont Corporation, USA

Seavoy, Ronald E., USA

Hitzman, Murray W., USA Hoag, Corolla K., USA Jara, Constanza H., Chile Urbina, Octavio A., Chile

Adiya, Borohul, Australia Danne, Torsten, Peru Dietrich, Andreas, Chile Gagnon, Matthieu, Canada Gize, Andrew P., United Kingdom Grose, Thomas L. T., USA Hayston, Paul, Brazil Kell, Robert E., USA Mo, Xuanxue, China Murray, Suzanne I., Australia Ocubalidet, Seare G., USA Prevec, Stephen A., South Africa Riedell, K. Brock, Canada Rodriguez Alvarez, Rafael, Colombia Santos, Tatiana R., Brazil Shaw, Eleanor M., United Kingdom Teasdale, Nicholas, Peru Texidor-Carlsson, Jose, Canada Twyerould, Stephen C., USA Vanderwall, William, USA

Hugo Dummett Fund Flood, Raymond E., USA

Harvey, Bruce A., USA Okita, Patrick M., USA Swarthout, Andrew T., USA

Barron, Lawrence M., Australia Cocker, Mark D., USA Gosse, Richard R., Canada Haynes, Douglas W., Australia Hoag, Corolla K., USA Kirwin, Douglas J., Thailand Koutz, Fleetwood R., USA Krewedl, Dieter A., USA Laskowski, Keith A., USA Little, Mary L., USA Mathewson, David C., USA Newell, Roger A., USA Nistratov, Alexander G., Canada Padilla Garza, Ruben A., Canada Paul, E. Kenneth, USA Stanaway, Kerry J., New Zealand Tyrwhitt, David S., Australia Waldie, Craig, Canada

APRIL 2011 • No 85

SEG NEWSLETTER

Thank you for your generous contributions to the Society and the SEG Foundation.

Contributions Bolton, Barrie R., Australia Bradley, Mark A., USA Burt, Philip D., Canada Chapple, Kenneth G., Australia Closs, L. Graham, USA Danne, Torsten, Peru Evans, Michael J., South Africa Frost, John E., USA Hauck, Steven A., USA Henderson, Frederick B., USA James, Laurence P., USA Kivi, Kevin, Canada Larson, John E., USA Logsdon, Mark J., USA Mancuso, Thomas K., USA Mango, Helen N., USA Marmont, Christopher, Canada Maynard, James B., USA Ortiz, Francisco J., Chile Parker, Harry M., USA Roe, Robert, USA Schafer, Robert W., USA Sharp, Robert J., Canada Steed, Geoffrey M., United Kingdom Walsham, Bruce T., United Kingdom Wilde, Andy R., Australia Wurst, Andrew T., USA

Hickok-Radford Fund Alaska Earth Sciences, Inc., USA

Barker, Alan L., Canada Bundtzen, Thomas K., USA Eng, Tony L., USA Lipske, Joanna L., USA Loskutoff, William, USA Millholland, Madelyn, USA Morris, Alan J., USA

Cox, Bruce C., USA Hawley, Charles C., USA Hedderly-Smith, David A., USA Kurtak, Joseph M., USA Larson, John E., USA Leonard, Kevin W., USA Lindberg, Paul A., USA Szumigala, David J., USA

McKinstry Fund

Frost, John E., USA Gomez, Anabel L.R., Argentina Kelson, Christopher R., USA Larson, John E., USA Mannion, Lawrence E., USA Perkin, Donald J., Australia Walsham, Bruce T., United Kingdom

The Timothy Nutt Memorial Fund Coakley, George J., USA Davies, Chris, United Kingdom Jones, Paul C., USA Moody, Ian W., Australia Schafer, Robert W., USA

Bloom, Lynda, Canada Bowell, Robert J., United Kingdom Deane, John G., South Africa Hall, David J., Ireland Hlabangana, Sitshengiso, Zimbabwe Karpeta, Wladyslaw P., South Africa Kerr, David J., Canada Miller, Graham C., Australia Moore, John M., South Africa Nowak, Gregory, USA Olson, Steven F., USA Robb, Laurence J., United Kingdom Thamm, Albert G., Australia

The Alberto Terrones L. Fund Vidal, Cesar E., Peru

Escandon-Valle, Francisco J., Mexico Griffith, David J., USA Schroer, George A., Chile

Guerrero M., Tomas E., Peru James, Laurence P., USA Nunez Othon, Aristeo, USA Redfern, Richard R., USA Rivera A, Reynaldo, Mexico Tristram, Esme J., Chile Valdivia, Jose T., Peru Vanderwall, William, USA Zamora-Diaz, Percy P., Peru

Student Field Trip Fund Hardesty, Ian R., USA

Jones, Richard D., USA Kriewaldt, Michael, Australia Myers, Harold E., USA Paul, E. Kenneth, USA Salazar, Guillermo, Canada Torrealday, Heidie I., USA Walford, Phillip C., Canada

Astorga Delgadillo, Carlos E., Peru Coveney, Raymond M., USA

Putnam, Borden R., USA

Hunt, John Paul P. M., South Africa Leon, Eduardo, Peru Morrison, Reuben E., New Zealand Seavoy, Ronald E., USA

Butler, Roland W., Canada Byrne, Kevin, Canada Durning, William P., USA

11

Ellsworth, Peter C., USA Hantler, Aaron G., Australia Harris, Marcus F., Australia Ihlen, Peter M., Norway Jeffs, Caitlin L., Canada Kirwin, Douglas J., Thailand Lipske, Joanna L., USA Mccool, Ronan D., Ireland Myers, Russell E., USA Parratt, Ronald L., USA Van Voorhis, Gerald D., USA Woodbury, Michael James, Australia

Adiya, Borohul, Australia Basha, Michael G., Canada Bennell, Michael R., Brazil Bettles, Keith H., USA Bogdan, Kevin R., USA Bradley, Mark A., USA Brodie, Colin G., Argentina Brueckner, Stefanie M., Canada Cathles, Lawrence M., USA Corriveau, Louise, Canada Creel, Leslie K., USA $70.00 Doucet, Dominique, Canada Erlfeldt, Asa B., Sweden Fournier, Robert O., USA Guilbert, John M., USA Gurevich, Dimitriy V., Kazakhstan Halbert, Gary R., USA Hammond, John M., Australia Hatton, Owen J., Australia Ilchik, Robert P., Australia James, Laurence P., USA Kell, Robert E., USA Kodolanyi, Janos, Germany Lelacheur, Eric A., USA Lentz, Brian C., USA Manion Baar, Jennifer L., USA Margeson, G. Bradford, USA Mathewson, David C., USA Mcnamara, Galen S., Canada Medrano, Bruno R., Peru Moye, Robert J., Australia Murray, Suzanne I., Australia Nunez Othon, Aristeo, USA Pudack, Claudia, Switzerland Pulido Rodriguez, William A., Colombia Redfern, Richard R., USA Riedell, K. Brock, Canada Santos, Tatiana R., Brazil Schloderer, John P., Australia Shannon, James R., USA Shaw, Eleanor M., United Kingdom Sicoli Seoane, J. Carlos, Brazil Sidder, Gary B., USA Skinner, H. Catherine W., USA Stanton-Cook, Kim, Australia Suarez Llerena, Jaime C., Peru Sutcliffe, John, Ecuador Texidor-Carlsson, Jose, Canada Twyerould, Stephen C., USA Vanderwall, William, USA Wallis, Toni L., Canada

The Discovery Fund Harvey, Bruce A., USA

Gostevskikh, Alex V., Canada Haynes, Douglas W., Australia Idziszek, Chet, Canada Mathewson, David C., USA Parratt, Ronald L., USA Salazar, Guillermo, Canada

Cuadra, Waldo A., Chile De Carvalho, Delfim, Portugal Evans, Michael J., South Africa Frost, John E., USA Hall, David J., Ireland Hawley, Charles C., USA Perkin, Donald J., Australia

Canada Foundation Collins, Michael, Canada Hutchinson, Richard W., Canada

Anglin, Lyn D., Canada Burrows, David R., Canada Chamberlain, Claire M., Canada Fonseca, Anna L., Canada Fournier, Antoine, Canada Galley, Alan G., Canada Hocking, Michael W. A., Canada Jefferson, Charles W., Canada Leishman, Douglas A., Canada Mackean, Boyd E., Canada Mactavish, Allan D., Canada Pop, Nicolae, Canada $101.00 Reeve, Edward J., Canada Sauve, Pierre, Canada Walford, Phillip C., Canada

Beaulieu, Christian, Canada Blann, David E., Canada Brisbin, Daniel I., Canada Carr, Patrick M., Canada Channer, Dominic M. D., Ecuador Covello, Louis, Canada Dick, Lawrence A., Canada French, Andrew G., Canada Gonzalez, Ralph A., USA Gostevskikh, Alex V., Canada Griffith, Twila D., Canada Harper, Charles T., Canada Hoy, Trygve, Canada Jebrak, Michel, Canada Lake, John H., Canada Lambert, Andre C., Mali Leech, Geoffrey B., Canada Lesher, C. Michael, Canada Lydon, John W., Canada Marsden, Henry W., Canada Mersereau, Terry G., Canada Mudry, M Phillip, Canada Nistratov, Alexander G., Canada Prevec, Stephen A., South Africa Price, Barry J., Canada Roberts, R. Gwilym, Canada Sebert, Christopher F. B., Canada Suarez Llerena, Jaime C., Peru Texidor-Carlsson, Jose, Canada Tremblay, Robert J., Canada Weick, R. James, Canada Whiteford, Sean M., USA

12

SEG NEWSLETTER

No 85 • APRIL 2011

Views columns are the opinions of the authors and do not necessarily reflect the opinions of SEG. SEG members are invited to submit opinion pieces of 1000-2000 words on an issue facing economic geologists. Authors may wish to send a 50-word synopsis for consideration ([email protected]; subject line, Views). Letters to the Editor on past Views columns, up to 300 words, are also welcome. VIEWS ARE NOW AVAILABLE ONLINE FOR THE PUBLIC TO READ, NOT JUST SEG MEMBERS, AS WE STRIVE FOR OUTREACH.

VIEWS I

VIEWS

Exploration Approaches: Comparison of the Former Soviet Union with the Rest of the World In recent issues of this Newsletter, a discussion was initiated on why discoveries, particularly of world-class deposits, have not kept pace, despite the recent upward spiral of money invested in exploration. I look at this situation from the position of having worked, both as an explorer and in academia, in many different business cultures and systems, including the Soviet Union, and then independent Russia, Kazakhstan, Kyrgyzstan, and Uzbekistan, plus Mongolia and China, as well as several Western countries (Canada, Australia, the EU, and Turkey). My experience suggests that the problems contributing to this situation are universal regardless of the system. Dan Wood mentioned in the January 2010 SEG Newsletter (no. 80) that there are two principal approaches to explore for and delineate orebodies: a cautious spacing between follow-up drill holes and the initial discovery hole vs. quick, bold assessment with widely spaced holes. Growing the assets slowly by closely spaced drilling is particularly encouraged by stock price-driven considerations and the need for additional phases of fund-raising. As a result, the mineral endowments in most Western deposits tend to grow with time. However, major companies and some of the Alexander Yakubchuk is COO and Director of Exploration for Orsu Metals Corporation, based in London. He has worked for Gold Fields, BHP Minerals, Moscow State University, and the USSR Geological Survey, and has provided consultation to many companies. Field assignments have taken him to the FSU and numerous other countries worldwide. Alexander was one of the top three finalists of the Goldcorp Challenge in 2001 for best exploration proposal of the company’s Red Lake property. He was involved in the re-discovery of the >11 Moz Au equivalent Taldybulak AuCu-Mo porphyry deposit in Kyrgyzstan, plus other discoveries and resource calculations in Russia, Mongolia, Kazakhstan, and Australia. E-mail: [email protected]

well-funded intermediate and junior companies (e.g., Ivanhoe at Oyu Tolgoi, Hunter Dickenson at Pebble, Imperial at Red Chris) drilled deep holes and stepped out boldly. This approach helps to recognize the upside potential relatively quickly, although the deposits must still be carefully drilled out for proper delineation of the resources. In the Former Soviet Union (FSU), the exploration approach was designed to cover and quickly assess vast territories of the world’s largest country by zooming in from regional to local scales, with recognition of the largest possible mineral potential of an occurrence, classified as P1 to P3 resources. “P” stands for prognosticated or potential, with P3 being the least certain; resource in this case is not used in a Western sense. Russia, for example, declares itself as possessing the largest gold resources after South Africa, but most of this resource is in the “P” categories. Still, there are some notably wellexplored but undeveloped resources like Sukhoi Log (Au), Natalka (Au), and Udokan (Cu-Ag). Further testing of this potential would usually convert the initially large “P” resources into smaller-sized C2 and C1 categories, roughly equivalent, respectively, to inferred and indicated resources in the West. These could then be converted to B (during preparation for mining) and A (after reconciliation with the actual recovered metal). As a result, the endowment of deposits in the FSU had a noticeable tendency to shrink with time during conversion from “P” to “C.” However, this does not always mean that the initial “P” estimate was incorrect, although it is often very speculative and overly optimistic. Because of such an approach to exploration and resource delineation, there is a split in opinion whether the FSU is over- or underexplored. On one hand, the entire FSU territory (one-sixth

of the world’s land surface) is mapped ALEXANDER and sampled at a YAKUBCHUK scale of at least (SEG 1999 F) 1:200,000 (i.e., it is covered by geological traverses or geochemical samples with 2-km spacing). This means that the FSU geologists, especially in Russia, just scratched the surface and, therefore, the potential of most areas remains large. My focus here starts with an analysis of some recent world-class discoveries about which I have first-hand knowledge, both in the FSU and the rest of the world, to set the scene for a comparison and contrast of various systems, followed by discussion of the differences and implications for the future of the mineral resource industry.

BROWNFIELDS VS. GREENFIELDS Brownfields Exploration In Russia, an old saying by explorationists is “Explore for ore near the ore” (in Russian: ), and this seems to be internationally universal. Indeed, the leap-frogging of Goldcorp into the Top 10 gold producers was possible after a 1998 brownfield discovery at deeper levels of their 60year-old mine in Ontario, Canada. In 2009, Gold Fields announced the recognition of 4 Moz gold potential at its mature St Ives gold mining camp in Western Australia. These two examples are the result of better geological understanding and slow endowment growth in mature mining camps through additional detailed exploration. In the FSU, recognition by Polyus Gold during last five years of a huge (>60 Moz gold) resource at Natalka in Magadan took place at a mine that had been in production since 1945. The large, low-grade resource potential of Natalka, in the P1+P2 categories, was

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Greenfields Exploration The discovery of the >6 Moz Kupol gold-silver epithermal deposit in Chukotka, Russia, would have been unlikely if the country was overexplored. What were the critical factors at Kupol? Chukotka is remote, mapped mostly at 1:200,000 scale; the epithermal veins at Kupol have a northsouth strike, occurring close to the north-south boundary of the map sheets. For these reasons, as emphasized by the late Dr. Sergey Strujkov, the area of outcropping veins was simply not visited, falling between the 2km-spaced, north-south–oriented traverse lines of the mapping survey. However, samples with anomalous gold were found in the 1980s at small prospects nearby and plotted on the maps; field checks of these occurrences by the local Russian exploration company in 1996 (in spite of the map boundaries) led to discovery of a 3-kmlong vein with initially modest resource. The full potential of the deposit was then recognized by Bema Gold during a few years of aggressive drilling. Bema Gold was subsequently purchased by Kinross, which is building on this success by acquiring underperforming assets nearby, such as the recently announced Dvoinoe acquisition, located ~80 km north from Kupol.

Kupol-like experiences drive explorationists into immature terranes to conduct greenfield exploration. The risks are definitely higher, but the rewards can be significant, sufficient to overcome the costs related to a common lack of infrastructure. One of the best recent examples is the Oyu Tolgoi Cu-Au porphyry in Mongolia, an area where the FSU approach was previously applied as well. In the 1990s, the future Oyu Tolgoi property was acquired by Magma Copper, and Garamjav, a Mongolian geologist hired by the company, recommended returning to a turquoise hill (Oyu Tolgoi, in Mongolian) that he had observed during Soviet exploration, which was indicated as a molybdenum occurrence in the government database. The deposit was subsequently first drilled by BHP in 1998 after they acquired Magma Copper. The BHP exploration philosophy was to identify a large, open-pitable deposit with 1×1 km Andean-style footprint within 2 to 3 years from first recognition, employing widely spaced drilling in the first instance, an approach similar to that of the FSU. However, in contrast to the Soviet-style exploration, which would focus on the same promising prospect for up to 10 years, BHP management advice was to not fall in love with a project, and if necessary, walk away to hunt for another one. BHP drilled relatively shallow holes in the hunt for an open-pit porphyry target with secondary enrichment, and identified a medium-size (~400 Mt), mostly hypogene potential resource; however, the 1998 economic crisis forced it to reconsider its exploration strategy. As a result, the license was optioned to Ivanhoe Mines, who then identified a giant resource via closely spaced drilling of deeper and vertically elongated targets, with the larger deposits being essentially blind. It is now more than 10 years since the discovery of Oyu Tolgoi, but only in late 2009 was an agreement reached with the Mongolian government for development. Thus, timing-wise, the result is not so different from the practice used in the FSU. Persistence is therefore essential regardless of the politicoeconomical system! A similar persistent approach also led to the discovery of the giant Pebble East porphyry in Alaska. Only a few examples of recent world-class discoveries have been mentioned here. With the exception of Kupol, they have been discovered under cover, typically using indirect evidence. As there is some degree of database

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available for almost all areas, many companies now employ a probabilistic approach. The outcomes of these studies drive explorationists to work in underexplored regions, which tend to include politically and culturally less familiar and less stable countries in Africa, Asia, and the FSU, most closed to international exploration before the 1990s.

POLITICAL, ECONOMIC, AND HISTORICAL CONSIDERATIONS We currently live in a time of global economic uncertainty. The earlier crisis affected everyone everywhere to a varying degree, but countries responded differently. Crisis is also a time of opportunity and we have witnessed economic repartitioning of the world, with the Chinese government and public companies being more aggressive in the last couple of years. The international activity of Chinese companies is largely inversely proportional to the economic situation outside China, owing to it possessing the world’s largest hard currency reserves. This has led to a major expansion of Chinese investment worldwide during the economic upheaval. In countries such as Canada and Australia, this has taken the form of huge investments in major mining companies, sometimes blocked by protective governments. In South America and Africa, Chinese companies have made major acquisitions of mining and development projects. In Russia, the government remains protective, using legislative means to prevent foreign entrance into its natural resources sector, although recently some potential liberalization was announced. Because major Russian companies prefer not to enter into greenfields projects domestically due to their high risk, only three large discoveries have been announced in Russia since the breakup of the FSU in 1991: Kupol epithermal Au in Chukotka, Blagodatnoye orogenic Au in Krasnoyarsk, and Bystrinskoye Cu-Au skarn in Chita. After accumulating a large amount of cash before the current crisis, Russian companies also started international expansion, but they are more comfortable expanding into FSU countries to acquire past Soviet treasures, as they feel it is easier and faster to buy rather than to spend years conducting greenfields exploration. The lack of attento page 14 . . . tion to greenfields

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known for many years; there were several failed attempts to convert an underground mine of relatively narrow high-grade (~5.5 g/t Au) veins into a bulk-minable operation in the 1980s and 1990s. A new exploration effort to convert this potential into C1 and C2 categories was fuelled by increasing gold prices, which justified exploration expenditure and allowed economies of scale to be potentially applied; this is now being investigated with construction of the pilot plant. The Natalka example was quickly followed with varying degrees of success by Russian junior companies in adjacent Pavlik, Ridionovskoye, and other deposits of the Tenka mineral district in Kolyma. However, a similar approach by Polyus Gold at the Nezhdaninskoye gold deposit in Yakutia was not as successful because of an overestimate of geological similarities with Natalka. In essence, this brownfields exploration activity in the Russian Far East is similar to what happened during the 1980s in Western Australia, when expansion of the Golden Mile and other Yilgarn projects was realized.

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exploration from modern Russian companies has an historical basis. Geological education was usually broad to allow for coverage of large territories, but the practical experience of individual geologists was rather narrow, and they were never asked to think in economic terms. As a result, the exploration divisions of most modern major Russian companies are run by nongeologists with an education in economics or finances; thus, there is a wide gap in expectations and understanding between management and geologists. Consequently, greenfields risk is not now undertaken by Russian management; rather, the Russian government funds early stage projects (with a $200M budget in 2009), essentially taking the same risk that junior companies do in the West. On a much smaller scale, some other FSU governments are doing similar things. The Metals Economic Group (MEG), which surveyed the budgets of 1,846 companies worldwide, reported that the FSU region accounted for seven percent of the global $7.32 billion exploration budget in 2009. According to MEG, five percent (or $366M) of this expenditure was spent in Russia alone, sharing fifth place with Mexico and Chile, after Canada (16%), Australia (13%), Peru (7%), and the United States (6%). In reality, exploration expenditure in Russia is much higher if greenfields expenditure by the government is added in. The Russian Ministry of Natural Resources has just released a report stating that foreign and domestic companies invested about $600M in exploration work in 2009, indicating that the total exploration expenditure was around $800M, much higher than the MEG estimate.

DIFFERENCES IN EXPLORATION APPROACHES BETWEEN THE FSU, CHINA, AND THE WEST In summary, the main difference in exploration approaches between the FSU, China, and the West is how early-stage projects are funded. In the West, governments are unwilling to fund risky greenfields projects. This role is undertaken by the stock exchange or private money. The risk is high, but the reward can be high as well. As a result, it is not uncommon for several exploration companies

(as many as 7 or 8) to have worked on the same ground, resulting in a long lead time to discovery of an economic deposit. Even in terms of producing mines, Western governments generally prefer to simply collect taxes, a fundamental historical difference between the diversified Western economies to the emerging markets of the FSU and China. In FSU countries, economies are based on mineral resources. Consequently, some governments (e.g., Uzbekistan and Tadjikistan) directly control the mineral resource extraction and access to exploration, whereas others (e.g., Russia and Kazakhstan) are less restrictive. But in general, with few exceptions, FSU governments allow limited access to their potential wealth, thus preventing or delaying the discoveries of new deposits, possibly because they do not want to deal with the organized chaos of Western-style exploration. China, with its cheap labor, became a global factory for the world; however, from my point of view, the country is relatively deficient in base metals, both geologically and relative to its huge population. Consequently, there is also no easy access to its ground for international exploration. The country also has a cultural and historical tradition of not allowing direct access by foreigners. This restriction is aided by a language barrier and different economic traditions. Also, many deposits are worked at grades below international standards, which is possible to achieve through a combination of cheap labor and Chinese efficiency.

SPECULATION ON FUTURE TRENDS What might future exploration trends and economic plus corporate tendencies be over the next 10 to 20 years? The structure of country economies is unlikely to change within such a short period of time. In addition, the current decline in discoveries in the Western world suggests that mining companies will have to “sweat” their existing mines while becoming more sophisticated in the exploration for and discovery of blind deposits in more mature terranes, or they will need to enter the riskier markets, which in the case of the FSU means forming 50/50 JVs to minimize the risks.

The FSU territory is underexplored. The lack of discoveries during recent years largely reflects small and inefficient investment. Being largely driven by the resource-oriented structure of their economies, FSU governments are likely to remain restrictive in allowing access to their ground. For example, after expansion of the gold resource at Kupol, Russia introduced a law on strategic deposits that limited access foreign companies can have to mineral assets above a certain size. For instance, the threshold for gold deposits was set at 1.6 Moz, obviously to prevent potential world-class deposits from ending up in the hands of foreigners, whether from the West or China. One possible scenario could be that Russia and other FSU countries will try to establish a role as mineral resource suppliers to China. FSU companies may become more active in their own wellendowed regions (and adjacent jurisdictions), perhaps with some increased penetration into Africa. Chinese companies will have to look for opportunities in other areas of the world. However, it is unlikely that the world will be dominated by Chinese resource companies in 10 to 20 years, as these companies generally feel uncomfortable outside their native domain. Rather, Chinese companies prefer to acquire substantial stakes in Western resource companies, a move that may be supported or restricted depending on different Western governments. Perhaps China is more likely to provide finance for new developments against off-take and equipment for international projects, just as Japan did for many years; by contrast, China is likely to continue exploitation of its low-grade domestic resources. What will be the response from Western companies? Who will develop the most effective approach to exploration? I hope to receive answers to these questions in ongoing discussion in future Newsletter columns. 1

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Views columns are the opinions of the authors and do not necessarily reflect the opinions of SEG.

VIEWS II Exploration—It’s All About Turning Rocks into Money INTRODUCTION

Exploration Geology— A Lifestyle Choice Exploration geology is not a job; it’s a way of life with fortunes tied to the cyclical nature of the global economy and metal prices. The people who are best at it, the ones who are ultimately successful, stay with it through good and bad times. I realize that there are those amongst our SEG membership who would have it otherwise, who would like to make the profession more secure Brent Cook is a geologist (BSc Geology, Utah State University 1978) who has been involved in the minerals exploration and mining business for 32 years. During this time he has evaluated and valued grassroots through feasibility stage projects on nearly all deposit types in over 60 countries. In 1997 he got tired of promoters making all the money on questionable properties while he was left standing soaking wet in the jungle and joined Global Resource Investments. He was principal mining analyst at Global until going independent again in 2002. Since 2002 he has been an outside analyst and advisor to several investment funds and high net worth individuals. He is author of the investment letter Exploration Insights, which covers select investment opportunities in the junior exploration and mining sector. E-mail: [email protected] www.explorationinsights.com

It’s All About Money and Odds In the end, true exploration is about creating value through discovery: the recognition and delineation of a potentially economic mineral deposit—one that actually makes money for the people putting up the high-risk dollars needed to explore. The money angle is a very important point that is all too often overlooked by geologists and the Society of Economic Geologists. More SEG papers should address the basic economics of mining and the cost of exploration as it pertains to the science behind mineral deposits. The time and cost to delineate the tonnes and grade of a deposit are critical aspects of economic geology. That cost for a junior exploration company is borne by speculators who are taking a long-odds gamble that the team can find something of potential interest before the money runs out. Each

dollar spent by a junior explorer has to be replaced, BRENT COOK which means (SEG 1997) shareholder dilution at the company level through the issuance of more shares. For a speculator in the junior exploration sector, i.e., the person putting up the high-risk dollars to drill, that cost and dilution is crucial. Of what value is a discovery to the shareholders if the share price goes nowhere because a ten-fold increase in the market capitalization is accompanied by a ten-fold increase in shares issued? It’s all about the share price! Ditto your stock options. We, as a profession, are wasting substantial sums of money on bureaucratic activities (Sillitoe, SEG Newsletter, October 2010) that have little if anything to do with discovery, and drilling properties that don’t warrant drilling. Think about it; how many dog properties have you walked over that someone is promoting —trying to raise money to drill test— and the money actually comes through? That’s another way of saying money is too easy to come by ($5.2 billion was raised on the Toronto Venture exchange for mining equities last year alone), as opposed to the more commonly pitched “not enough is being spent on exploration.” The reality is that the available money is not being spent efficiently on work that leads to a discovery: field work and intelligent drilling. All too often, an exploration geologist seems to see his or her job as one of finding a drill target. It isn’t. The job is, or at least should be, delineating a drill target that honestly offers a viable shot at a game-changing discovery—a find that takes a junior stock from $0.25 to $2.50 or $25, or truly adds to the bottom line of a mining company. The common shortsighted junior explorer’s business plan of raising money and drilling every anomaly commonly ignores the characteristics and probable economics of the mineral system being tested. It means a lot of money gets wasted, and ultimately to page 16 . . . the company share

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I’ve been in the exploration and mining business for 32 years, during which time my professional career has evolved from mapping and sampling rocks into “turning rocks into money.” During this time I’ve evaluated and valued everything from grassroots properties to feasibility stage projects in over 60 countries as a consultant to junior or major mining companies and, more recently, as an advisor to funds and retail investors. This history forms the basis of the perspective presented here, that there is a disconnect between the geologists and financiers. This disconnect between rocks and money is due to a lack of understanding between the two and results in inefficiencies and poor capital allocation within the exploration business.

for those young, energized learners just joining our ranks. Thompson and Kirwin (SEG Newsletter, April 2010) recommend the perfectly logical (and true) approach, that mining companies should mentor and employ explorationists during the bust times because every bust is followed by a boom—a boom in which the mining companies desperately need the people they just laid off. I wholeheartedly agree, but it ain’t gonna happen. The company’s cash position and balance sheet trumps all else. When metal prices are low and a mine isn’t making money, it will always be the guy or gal who is spending money looking for yet another deposit who will be let go. Therefore, my sincere advice to all of you is that during boom times (NOW—when your intellectual capital is most needed) you should double your rates if you are independent and demand stock options if you are working for a company. If neither of these is feasible, go where they are. There is no reason why the promoters and brokers should make big money off the explorationists’ ideas without compensating them in full. The exploration geologist is the invaluable linchpin for the whole junior stock machine.

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structure gets blown out to a level where a discovery is almost meaningless to the share price.

Mother Nature and High Finance

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A big part of the predicament is that Mother Nature has been very generous to exploration geologists and financiers by scattering geochemical and geophysical anomalies all over the world. She has not, however, been as generous in providing us with economic mineral deposits, or even anomalies that warrant serious work. Hence, we have too many geologists and financiers chasing too few truly prospective anomalies. Therein lies the rub. Finance is a very profitable business that derives a 5 to 8 percent commission from the money raised, plus about 5 percent in broker warrants (B warrants) before a deposit is delineated, and often before a drill hole is even put into the ground. On a $10M financing deal that’s up to $800,000 in commissions. The B warrants represent additional leverage on a nearly free ride if the company gets lucky. That’s a strong monetary incentive, especially if you have a condo in Cabo, two kids in private school, and your eye on a Bentley. Because minerals exploration is such an inexact science—described by a unique and obscure jargon referencing grams per tonne—that is devoid of any economic basis, selling an exploration play to someone with a limited understanding of mining and geology isn’t that hard. That pitch is made all the easier because it is generally accepted that most exploration ventures are destined to fail, anyway; therefore, “Who’s really to blame?” However, because the profit potential from that 1 in 1,000 discovery is unparalleled, I find that most people are willing to take the gamble based on very little hard data or research. The net result is that the simplest story to sell to most of the people with money ends up being the promotion of historically good drill holes or ounces or pounds in the ground— basically, recycled projects. Flashy drill holes and resources are something nearly everyone can readily comprehend without having to concern themselves with the scientific or economic details. Promoters know this, and it seems to me that more money is raised on old drill holes and worthless resources than is actually raised for

legitimate exploration plays. It’s beyond me why time after time investors fund the twinning of a good drill hole, when in fact the original problem with the property wasn’t the good hole but all the other miserable ones. Wouldn’t it make more sense to test those lesser holes in the hopes that there was a mistake in the previous assays as opposed to confirming the previous good assays? Likewise, valuing a property based on ounces or pounds in the ground without some sort of economic reality is a sham. But these are the stories that too often seem to bring in the money. The mining community’s tacit support of this financing model is borne out by commonly repeated maxims that suggest that the more companies that drill a property the better the odds, and the only way to discover a deposit is to drill, drill, drill. This only works if you have the money to do so and recognize when you are in the right place. Although it is true that discoveries are commonly made on properties that have undergone many previous rounds of exploration, and that it can take dozens or even hundreds of holes to find a deposit, the reverse logic that every property needs to be tested and drilled ad nauseam is untrue. Add money and stir is not the answer. Intelligent drilling is.

What’s the answer? We are finding fewer and fewer deposits despite spending more on exploration. The exploration community has covered Earth fairly comprehensively; at this point most big discoveries will require even more money and commonly hightech methods of exploration. That means more cost and a lower success rate. We also face increasing issues of metal production due to rising demand for the metals (reserves are being depleted faster than ever), higher capital cost, longer lead times to build a mine, and more social realities to work through. To me, this all points to long-term higher metal prices and premiums for significant discoveries, and if you are savvy, higher pay. Exploration will continue to be a great profession for those willing and able to handle a bit of uncertainty during the inevitable lower part of the cycle. I concur with all the previous contributors to this op-ed series who say that we need mentors to pass on their knowledge and wisdom. Geology and explo-

ration require observational skills, abstract thinking, and the ability to see what others may have missed. These skills take time to develop. Boots-on-theground field experience is priceless, and creating hand-drawn maps and sections should be a requirement—the thought that goes into actually drawing that contact cannot be replicated by a computer. These skills need to be backed by an understanding of what succeeds in making an economic deposit and what fails. It is important to know what it is you are actually looking for, what it looks like, and what it doesn’t. Next, what are the costs to get to a go, no-go decision, and how (and at what price) do you raise the money to get there? Exploration funding is success-based, so what constitutes success (and failure) at the exploration level needs to be flexible but based on someone’s economic assumptions and understood by the investors. These topics, plus exploration case histories, more deposit descriptions, and maybe a bit more empiricism in SEG papers would be helpful in reaching this goal. On the finance side, I would like to think that the people approving the budget or putting up the money understand the business and the science. Exploration is the research and development arm of mining. However, most accountants, lawyers, and engineers are not equipped with the experience to differentiate the relative potential of a number of exploration proposals presented by the research department. Most brokers and retail investors face similar hurdles; exploration is generally not their field of expertise. Finally, it’s worth remembering that the people who put up the money for exploration are doing so for a profit, hoping to do so via a discovery. When the business relationship between financier and geologist is structured such that their financial interests are closely aligned, the odds of success improve and capital can be more efficiently employed. A discovery relies on explorers successfully executing the job of exploration with the money available. It also relies on the financiers understanding an outline of the science behind exploration, and recognizing that discovery is a process that takes talented explorers and time. How to best execute this relationship should be the topic of a whole new dialogue. That’s the way I see it. 1

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Discoveries of Low-Sulfidation Epithermal Au-Ag Veins at Cerro Negro, Deseado Massif, Argentina (Continued)

REGIONAL SETTING OF THE CERRO NEGRO DISTRICT The Cerro Negro gold-silver veins are situated near the western margin of the Deseado Massif, a 60,000 km2 crustal block in southern Argentina bounded to the north by the Río Deseado, to the south by the Río Chico, to the east by the Atlantic coast and to the west by the Andean Cordillera (Fig. 1). The Massif is in a back-arc position relative to the Andean subduction system, and is flanked by the Golfo de San Jorge and Austral sedimentary basins to the north and south, respectively. All known deposits are hosted by Jurassic volcanic sequences which form part of the Late Triassic to Cretaceous extension linked to the opening of the South Atlantic Ocean. Pankhurst el al (1999) concluded from U-Pb zircon ages that Jurassic volcanism occurred over >30 m.y., with periods of peak activity at 188–178, 172–162 and 157–153 Ma. Mineralization at Cerro Negro and elsewhere in the Deseado Massif (Fernández et al., 2008) is hosted and, in places, overlain by rocks deposited in the third phase. Basaltic volcanism commenced in the Cretaceous and continued throughout the Cenozoic, accompanied by more sporadic episodes of felsic volcanism. The youngest units are Pleistocene gravel terraces and Holocene colluvial and alluvial deposits. Prior to the 1990s, there was no history of hard-rock precious metal mining within the Massif in Santa Cruz province. Then, starting in the 1990s, a number of major and junior companies became active in exploration. These programs identified commercial gold and/or silver resources at Cerro Vanguardia (AngloGold/Fomicruz), San José (Hochschild/Minera Andes), Manantial Espejo (Pan-American Silver) and Mina Martha (Coeur d’Alene). All of these mines were in production during 2010.

nomenclature. However, the mapping by Andean geologists identified some shortcomings with the traditional volcanostratigraphic nomenclature, especially when attempts were made to place units with local distribution in a regional stratigraphic framework. Instead, work by Andean emphasized the sequence and environment of deposition of the volcanic rocks, which suggests that the six known deposits are distributed within and east of a volcanic-subvolcanic complex that is surrounded and overlain by a series of rhyolite domes (Fig. 2). The complex is flanked to the east by lake sediments and to the north and south by extensive ignimbrites. These ignimbrites postdate the mineralization and have preserved both the epithermal systems and their paleosurface manifestations, which include travertine, fluid vents, and probable sinter. Post-Jurassic cover includes localized Tertiary ash, extensive Tertiary basalt, remnants of previously extensive fluvial gravels, and unconsolidated Holocene deposits. The area shows a pattern of northwest and local east-west faults that are thought to form the margins of a series of grabens. Gold-silver veins are located

in both the east-west and northwest faults, or in splays off them.

PROPERTY ACQUISITION The Cerro Negro district is within a 26,487-hectare group of claims and applications held 100 percent by Goldcorp (Fig. 2). Before December 1997, the Cerro Negro tenements comprised two blocks: a western group covering the Eureka-Mariana area, held by Minera Newcrest SA, and an eastern group, covering the Vein Zone prospect, held by MIM Argentina Exploraciones. These two companies amalgamated their respective areas in December 1997, and explored them under a joint venture agreement in which MIM was the operator, with 70 percent interest. Newcrest withdrew in 1999, leaving MIM as the sole tenement holder. In May 2001, an unlisted Brisbanebased company, Oroplata Ltd., signed a joint venture agreement with MIM that gave Oroplata the right to earn a 49 percent interest in the property subject to expenditure commitments, or to buy the property outright for $4.1 M. On December 10, 2003, to page 18 . . . Andean Resources Ltd.

PROSPECT GEOLOGY All known mineralization at Cerro Negro consists of low-sulfidation epithermal quartz veins hosted by Upper Jurassic andesitic to rhyodacitic volcanic and/or intrusive rocks. Cobos and Panza (2003) describe the general geology of the region in terms of the traditional Deseado stratigraphic

FIGURE 2. Simplified geology and deposit locations, Cerro Negro property.

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Discoveries of Low-Sulfidation Epithermal Au-Ag Veins at Cerro Negro, Deseado Massif, Argentina (Continued)

signed an agreement with MIM to acquire the remaining 51 percent of the Cerro Negro tenements for $US1.5 M payable over the next 15 months. The following April, Andean shareholders approved an off-market takeover of Oroplata, thereby consolidating Andean’s equity to 100 percent of the project. Goldcorp’s acquisition of the project through a merger with Andean Resources was finalized on December 31, 2010.

EARLY EXPLORATION 1992–2004 When Andean acquired the Cerro Negro tenements in 2004, 112 (mostly RC) drill holes totaling 14,446 m, as well as geological, geophysical, and geochemical programs had been completed by previous explorers. Most of this exploration was concentrated at the Vein Zone prospect, in the eastern part of the property, but the Eureka and San Marcos areas in the western half had also received some attention. Table 1 summarizes exploration between 1992 and 2004 by Andean’s predecessors.

ANDEAN EXPLORATION 2005–2010: VEIN ZONE, EUREKA, AND BAJO NEGRO Vein Zone Andean’s exploration of the Cerro Negro property commenced at Vein Zone

because it appeared to offer the best short-term opportunity to define a gold resource which might be fast-tracked into production. To that end, a program was initiated that involved detailed remapping of surface exposures, relogging of drill core, compilation and validation of all data, and replotting of cross sections. Based on these data, the first hole was collared by Andean on March 10, 2005. Vein Zone continued to be the focus of Andean’s exploration for the next two years and sporadically thereafter until January 2010. By then, 19,744 m had been drilled in 113 exploration, geotechnical, and metallurgical holes. East-west–striking structures were recognized early in the northwestern part of the Vein Zone deposit, changing to a northwest-southeast strike in the central and southeastern parts. Acquisition of further data and, in particular, detailed mapping by consultant geologist Jeff Edwards, identified a steeply north dipping east-west structural domain, and steep to shallow northeast-dipping, northwest-striking structural domains as the main controls to Vein Zone mineralization. This most recent interpretation of the geology underpins the following resources at a cutoff grade of 0.5 g/t Au equivalent (Ausenco, 2010): • Indicated: 8.36 Mt at 2.21 g/t Au, 5 g/t Ag; • Inferred: 3.12 Mt at 1.05 g/t Au, 2 g/t Ag.

Eureka As drilling advanced, Andean became aware that the Vein Zone would never be a “company maker,” prompting a move away from the Vein Zone area and new geological mapping around the previously known Eureka vein. Prospecting soon located a narrow but prominent quartz vein 500 m west of the impressive Eureka Main Vein outcrops (Figs. 3, 4). The vein was initially interpreted to be in fault contact to the west with younger volcaniclastic rocks that are overlain by Pleistocene gravels. The outcrop coincided with a gradient array resistivity anomaly that was at least as strong as anomalies over the Eureka Main Vein. Unknown to Andean at the time, Universidad Nacional de La Plata student Ramiro López had also mapped the vein outcrop, which appears in the geologic map accompanying his 2006 doctoral thesis. The new site was named the Eureka West Vein. It was first sampled by Andean geologists in May 2006. Chip samples returned assays of up to 7.7 g/t Au, and subsequent channel samples assayed up to 14 g/t Au. Based on these results, a 16-hole, 4,000-m drill program was proposed to test the West Vein and the more prospective parts of the Main Vein. Drilling commenced in January 2007. The first

TABLE 1. Summary of Pre-Andean Resources Exploration at Cerro Negro Period

Activity

1992

“Silica Cap” south of Vein Zone discovered on Cerro Negro summit by Argentine prospector Roberto Schupback Newcrest regional reconnaissance of Deseado Massif discovers Eureka Main Vein outcrops, and acquires Eureka-Mariana tenements; Newcrest holds option over Silica Cap, 1993–1994 MIM obtains tenements covering Vein Zone and adjacent areas Newcrest signs JV agreement with Pegasus Gold International; the latter drills 11 holes at Eureka, San Marcos (then called Mariana Norte) and Mariana Sur; MIM drills first 17 RC holes at Vein Zone MIM (70%) and Newcrest (30%) form JV and amalgamate tenements; exploration at Vein Zone provides the basis for an internal resource of 3.6 Mt grading 2.6 g/t Au; at Eureka Main Vein, 5 more holes drilled with a best result of 62 m at 1.2 g/t Au, 15 g/t Ag from 58 m in CNRC-50; Newcrest withdraws from JV, and MIM acquires 100% of project, September 1999 MIM submits final report on Cerro Negro, February 2000 MIM options 49% property to Australian company Oroplata Ltd May 2001; Oroplata drills 11 holes at Eureka; Andean buys remaining 51% of property from MIM, December 2003 Oroplata drills 11 more RC holes at Vein Zone; Andean takes over Oroplata (April 2004) and thereby acquires 100% of property

1993–1995

1995 1996–1997

1998–1999

2000 2001–2003

2004

FIGURE 3. Eureka West Vein discovery outcrop, looking NW toward a hill of younger volcanic rocks and gravels which conceal most of the vein.

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into the Main Vein and an adjacent area of complex east-west–trending veins between the Main and West veins, the focus of exploration and the bulk of the resources are concentrated in the West Vein (Figure 4). One of the most important holes in the exploration of the West Vein was EDD-723, drilled in April to May 2007, following a suggestion by consultant Richard Sillitoe to explore for a possible extension of the vein into the covered area northwest of both its outcrop and the corresponding geophysical anomaly. The hole intersected 51.8 m of 25.3 g/t Au and 379 g/t Ag from 227 m. It confirmed that the vein was not faulted, as previously thought, and high-grade mineralization extended westward below the postmineral unconformity overlain by younger volcanic rocks. Subsequent drill holes traced these high-grade values to the west and at depth, thus delineating most of the resource, and confirmed the unconformity by detecting abundant quartz vein clasts at the base of the cover sequence. Drilling also determined that the West Vein is wide, locally, averaging 9 m. By July 2009, 248 diamond and RC holes (67,946 m) had been completed to delineate a resource, using a 3 g/t Au equiv cutoff, estimated (Ausenco, 2010) as follows: • Indicated: 3.61 Mt at 12.25 g/t Au, 179 g/t Ag; • Inferred: 0.96 Mt at 7.59 g/t Au, 79 g/t Ag.

Bajo Negro

FIGURE 4. Plan and sections of the Eureka area. Footprint of the Eureka resource shown in red on the plan; vein outcrops omitted from the plan for clarity. See text for discussion of vein-fault relationships.

increase in grade with depth below the two holes, EDD-701 and EDD-702, were outcrops, and suggested that the West drilled into the known Eureka Main Vein had the potential to host a Vein below previous shallow drilling, resource (Table 2). including hole CNRC-50, drilled by Although exploration of the Eureka MIM. These two holes gave moderately system has included many holes drilled encouraging results, with a best intercept of 2 m at 25.5 g/t Au and 129 g/t Ag in EDDTABLE 2. Initial intersections, Eureka West Vein 702 at 222 m. The next four holes Hole From (m) Width (m) Au (g/t) Ag (g/t) were drilled on four secEDD-703 158 6 14.5 79 tions 50 m apart below the 182 4 35.9 115 West Vein outcrops and EDD-704 137 10 28.7 356 the corresponding resistivEDD-705 119 19 8.6 26 ity anomaly. These holes EDD-706 141 17 7.8 165 indicated a significant

As part of the initial programs at Vein Zone, a concerted effort was made in 2005 to compile and interpret a comprehensive database of surface soil and rock chip geochemistry acquired by MIM and others during their exploration. By filtering out areas of known mineralization (essentially the Vein Zone, Eureka, and Mariana-San Marcos areas), Andean geologists isolated anomalous rock chip samples that had not been systematically investigated. These included a 1.4-g/t Au assay near barren silicified outcrops that MIM had called the Bajo Negro prospect (Fig. 2). In May 2005, Andean found a small quartz vein outcrop near the reported location of the anomalous MIM sample. A rock chip across the vein returned 3.32 g/t Au over 1 m width. Other small outcrops to page 20 . . . and a trench exposure

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also gave encouraging results. A drilling program was recommended but was postponed due to ongoing drilling at Vein Zone and the subsequent discovery of the Eureka West Vein. Toward the end of 2008, exploration at Eureka was at an advanced stage and attention turned once again to the Bajo Negro prospect. Andean excavated five trenches to explore the strike extent of the vein. These defined a structure at least 300 m long, consisting of one or two splits, 1 to 2 m wide, grading up to 2.8 g/t Au with anomalous Ag, Pb, Mn, Sb, Ba, and Hg. An initial program of 12 RC holes (2,356 m) was completed in February 2009. All of the holes intersected significant gold grades, including 7 m of 60.7 g/t Au and 90 g/t Ag from 160 m depth in BRC-911. By 30 June 2010, 137 holes (34,719 m) had been drilled into the Bajo Negro Vein, all of them cored except the first 12. These demonstrated the continuity of mineralization above a 2.5 g/t gold cutoff grade over a strike length of 1.1 km, to a maximum depth of 350 m. As with the Eureka West Vein, the northwest part of the Bajo Negro Vein was found to be concealed by what David Coller (pers. commun., October 2009) regards as a slide block of hydrothermally brecciated ignimbrite containing vein quartz clasts at its base and remnants of a barren silica cap at the level of the present ground surface. At a 3 g/t Au equivalent cutoff, resources at Bajo Negro are estimated (Ausenco, 2010) as follows: • Indicated: 1.87 Mt at 8.74 g/t Au, 24 g/t Ag; • Inferred: 0.94 Mt at 6.07 g/t Au, 16 g/t Ag.

FURTHER DISCOVERIES, 2009–2010: SAN MARCOS AND THE MARIANAS San Marcos In 1996, Pegasus Gold had identified a northwest-trending fault breccia with an east-west quartz vein splaying off it at San Marcos, which was then called Mariana Norte (not to be confused with the current Mariana Norte Vein). Pegasus had trenched across these two structures and reported that trench samples averaged 18.5 g/t Au over 12 m in the east-striking vein. One of five

RC holes drilled by Pegasus in the area intersected this structure at shallow depth, with a best assay of 3 m of 3.7 g/t Au. Discouraged by this result, Pegasus terminated exploration. Andean did not consider that the prospect had been adequately tested by the single Pegasus hole that intersected the vein, which in fact had passed over the top of a major ore shoot. Andean chip-sampled outcrops of both the eastwest vein and the northwest-trending breccia in September 2009. Sixteen samples from the former averaged 12.2 g/t Au and 55 g/t Ag, and six samples from the latter averaged 1.1 g/t Au and 2 g/t Ag, excluding a seventh sample, which assayed 121.6 g/t Au and 51 g/t Ag. In October 2009, Andean drilled five RC holes to test the east-west vein on north-south sections 100 m apart. Three adjacent holes intersected potentially economic grades (Table 3). By June 30, 2010, 53 core and RC holes had been drilled into the eastwest vein for a total of 11,171 m. Ongoing exploration is defining a shallow, easterly plunging shoot which remains open down-plunge.

The Marianas

was first reported, and found to be concentrated on the flanks of a low ridge studded with silicified and hematitecemented breccia outcrops. Fifty float samples of quartz, many of which showed colloform banding, averaged 7 g/t Au and 41 g/t Ag. Three trenches were excavated in an area where float seemed to be concentrated at the base of the ridge. They exposed strongly brecciated andesitic rock, now considered to be a rubble breccia (see below), with a few quartz clasts but no veins. Initial drilling of the prospect commenced in November 2009, and consisted of a northeast-southwest–oriented fence of six RC holes across the low ridge regarded as a likely source of the float. These holes obtained the intersections noted in Table 4. The structure intersected by MRC-905 and MRC-906 was subsequently named the Mariana Central Vein; the one intersected by MRC-909 and MRC-911 was called the Mariana Norte Vein. Drilling continued to intersect strong grades over significant widths in both structures throughout 2010, with 43 holes (9,082 m) completed at Mariana Norte and 47 holes (10,719 m) at Mariana Central by June 30, 2010. Neither of the Mariana veins reaches the surface, and both are concealed below a blanket of rubble breccia with clasts that include vein quartz, similar

Andean geologists had been aware since 2005 of reports by Pegasus Gold, Newcrest, and MIM of highly anomalous vein quartz float to the east of Eureka. In particular, these companies had reported TABLE 3. Initial Drill Intersections, San Marcos anomalous vein quartz float in the Mariana Sur Hole From (m) Width (m) Au (g/t) Ag (g/t) area in the 1990s. IndeSRC-901 177 26 7.5 51 pendently, during regional SRC-902 195 16 10.3 86 mapping in 2007, Andean 218 2 6.0 27 had found small vein out223 3 7.0 37 crops with bonanza silver SRC-903 189 7 8.1 77 grades in the Mariana Sur SRC-904 No significant intersection area. Follow-up drilling had SRC-905 No significant intersection intersected narrow quartz vein structures with similar and higher grades below TABLE 4. Initial Drill Intersections, Mariana Norte and Central these outcrops. Clearly, the area had become the next Hole From (m) Width (m) Au (g/t) Ag (g/t) priority exploration target. In the second half of MRC-905 80 4 10.9 6 2009, the area where 87 5 3.3 8 MRC-906 186 7 18.5 87 Pegasus and others had 205 18 20.6 33 found mineralized quartz MRC-907 No significant intersection float was mapped and MRC908 No significant intersection prospected in detail. MRC-909 96 5 12.8 104 MRC-911 131 7 12.3 142 Colloform-banded quartz 147 6 41.8 81 float was traced well to the 150 5 7.1 18 north of the area where it

APRIL 2011 • No 85

to the breccia which occurs above the western part of the Eureka West Vein (Fig. 5). The mineralized quartz float which led to the discovery had apparently been re-cycled from the veins into the breccia and distributed on the surface as a lag deposit during erosion of the breccia. Resource assessments have been completed at San Marcos and the Marianas with results detailed below.

THE ROLE OF GEOLOGY AND GEOPHYSICS IN EXPLORATION Geology Early understanding of the geologic and structural setting of the Cerro Negro mineralization in 2005 was based to a large extent on work done 10 years earlier by Newcrest geologists Tim Heenan, Steve Nano, and Johan Smit. Andean geologists soon realized, however, that the Newcrest mapping, although extremely useful, needed to be updated and remapped in more

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detail. Accordingly, regional mapping began in 2005 in the area surrounding Vein Zone, and later extended west to the Eureka-Mariana area. Mapping led to several key observations which contributed to subsequent discoveries: • The geology at Eureka-Mariana was much more complex than at Vein Zone-Silica Cap, and it was difficult to fit the geology into the conventional stratigraphic framework (e.g., Cobos and Panza, 2003) of the Deseado Massif. • There were more outcropping veins than previously recorded, especially in the Eureka and Mariana areas. One of these was the Eureka West Vein. • The Eureka vein outcrops showed shallow-level textures, including colloform and crustiform banding, which suggested that previous drilling might not have been deep enough to fully test the zone with potential for precious metal deposition.

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• Geologists who had previously worked in the area, especially Steve Nano and Ramiro López, reported hot-spring discharge deposits in the Mariana area, which they considered to be preserved at the paleosurface of the epithermal mineralizing system. Andean geologists agreed with this interpretation, which provided further evidence of the very shallow nature of the Eureka-Mariana veins. Geologic mapping supported by geophysical studies (see below) has shown that northwest- and east-west–trending faults, and their intersections or jogs, are important controlling structures to mineralization. These features include the following. • Vein Zone: E-W and NW striking veins • Eureka: NW veins linked by an east-west jog • Bajo Negro: NW veins • San Marcos: E-W vein splaying off NW fault • Mariana Norte: E-W veins • Mariana Central: NW veins Most of these structures dip vertically to steep north or northwest, but the Eureka and part of the San Marcos veins dip toward the south, consistent with the graben tectonics. A study by David Coller in late 2010 showed that mineralization within the Eureka Complex occurs in splays off major north-west–trending faults that have undergone prolonged normal displacement in response to Jurassic extension. The major faults were conduits to mineralizing fluids but did not necessarily host mineralization; the most productive veins may be splays of small displacement, decoupled from the parent structure and dilated by longlived normal displacement on the latter (Fig. 4). Erosional degradation of the footwalls of major faults rapidly buried the veins in rubble breccia and other types of graben-fill material, as occurred at Eureka West and the Marianas (Figs. 4, 5). The Bajo Negro vein was also buried beneath a wedge of hydrothermally brecciated ignimbrite above a shallow-dipping fault plane which truncates the upper part of the vein.

Geophysics FIGURE 5. Plan and section of the Mariana veins. The plan shows surface geology (approx. 650 m elev) with projected vein positions at 550 m elev.

Gradient array resistivity was first tried in 2005 at Vein Zone, ... where it defined a strong to page 22

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Discoveries of Low-Sulfidation Epithermal Au-Ag Veins at Cerro Negro, Deseado Massif, Argentina (Continued)

anomaly over the deposit. This encouraged Andean to try the method at Eureka in 2006, and three anomalies were delineated; one over the strong Main Vein outcrops tested earlier by Newcrest and MIM, a second anomaly over an adjacent area of east-west veining drilled by Oroplata in 2002, and a third, 250 m long, over the newly discovered Eureka West Vein to the west. The initial gradient array surveys were extended in a somewhat piecemeal fashion, and in April to June 2007, a 749-line-km ground magnetic survey was completed over the EurekaMariana area. It clearly delineated regional structural trends, including major northwest and east-west faults which control the vein systems. In 2009, Andean extended the earlier gradient array and magnetometer surveys over the newer prospects and prospective areas. The new ground magnetic survey was performed over 1,419 line km, giving continuous coverage of the Eureka-Mariana-Vein ZoneBajo Negro area. The new gradient induced polarization data covered 39 km2 in the Eureka-Mariana and Vein Zone-Bajo Negro areas. Whereas only resistivity was recorded in the 2005–2006 surveys, both resistivity and chargeability were measured in 2009. Data from both resistivity surveys were merged, as were the data from the two magnetic surveys. Aeromagnetic data acquired by MIM in the 1990s were reprocessed and used where ground magnetic information was lacking. This generated over 20 geophysical targets to be investigated eventually, including strong resistivity and chargeability anomalies in the San Marcos area that have yet to be tested.

CURRENT STATUS The Cerro Negro feasibility study (Ausenco, 2010) provides probable reserves for the Cerro Negro project, shown here in Table 5. These reserves form part of an indicated resource of 2.54 Moz Au and 23.5 Moz Ag, along with an inferred resource of 0.52 Moz Au and 3.1 Moz Ag in these three deposits (Ausenco, 2010). A decline to access the Eureka resource began in early 2010. As of October 2010, Andean had drilled 196,208 m in 858 diamond and RC

extent, and Mariana Norte and Mariana Central have no surface expression at all except for quartz float and barren silicification. Erosion or gravity sliding of the footwalls of fault systems rapidly buried the epithermal systems and preserved them intact, creating opportunities for the discovery of blind orebodies under relatively shallow cover. • The lack of erosion of the paleosurface created opportunities to drill below barren alteration, or to explore low-grade vein outcrops at depth. The willingness of management to support drill testing of such targets was a crucial element in the success of the program. The Eureka West and Bajo Negro deposits, in which the precious metal zones in outcropping veins barely reach the surface, are good illustrations of this point. One of the lessons learned by Andean is that deep (>250-m) drill holes may be required to effectively test these systems. • The extent of cover also means that there are opportunities to use geophysics to prospect for blind deposits. Geophysics, especially gradient array I.P., provided a strong incentive to drill the Eureka vein system, and there is close coincidence between the Eureka resource footprint and the resistivity image. Geophysical surveys will continue to provide drill targets and hopefully new resources and reserves.

holes at Vein Zone, Eureka, Bajo Negro, San Marcos, and the Marianas. On December 31, 2010, Goldcorp Inc acquired all of the Andean shares in a merger deal which valued the Andean equity at approximately C$3.6 billion. On February 9, 2011, Goldcorp announced measured and indicated resources of 2.7 Moz Au, with inferred resources of 720,000 oz Au, in the San Marcos, Mariana Norte, and Mariana Central deposits, in addition to the reserves and resources cited above. To June 2010, Andean had spent $68.8M. The expenditure equates to a discovery cost of about $13 per ounce of indicated gold resources, or $33 per ounce of probable reserves.

CONCLUSIONS A number of factors contributed to the discovery of a 5-Moz gold resource at Cerro Negro in six years of exploration: • The Deseado Massif is a highly prospective and still underexplored region for low-sulfidation precious metal deposits. The Eureka West, Bajo Negro, and San Marcos veins show that outcropping mineralization can still be found by conventional prospecting. • Andean had a head start at Cerro Negro by inheriting the results of over 100 drill holes, as well as geological, geophysical, and geochemical data acquired by previous explorers. • Exploration success at Cerro Negro depended heavily on field geology. Mapping and prospecting located the Eureka West Vein; data mining combined with prospecting located the Bajo Negro Vein; careful mapping of float and outcrop resulted in the Mariana Norte and Central discoveries; the Vein Zone and San Marcos resources were largely delineated by following up previous exploration. • Four of the six known deposits at Cerro Negro are covered to some

Andean was fortunate to have a skilled and enthusiastic exploration team composed largely of Argentine geologists and technicians, supported by expatriate exploration consultants and backed by a management group which ensured that exploration continued to be funded when money was scarce. The final ingredient in the exploration-success recipe was luck.

TABLE 5. Cerro Negro Project Ore Reserves Deposit Eureka Bajo Negro Vein Zone Total

Contained ounces

Ore (Mt)

Au grade (g/t)

Ag grade (g/t)

Au (oz)

Ag (Moz)

2.93 1.83 2.38 7.14

13.6 7.7 4.3 9.0

198 21 9 90

1,284,000 457,000 331,000 2,072,000

18.6 1.2 0.7 20.6

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ACKNOWLEDGMENTS We thank Andean Resources and Goldcorp for permission to publish this paper. We gratefully acknowledge the contribution of the many geologists and technicians from Andean Resources, whose work has been crucial to the success of the project. We also thank Diego Guido, Ramiro López, Jeff Edwards, Jon Foruria, Steven Nano, Richard Sillitoe, Greg Corbett, and Dave Coller for providing us with fresh insights into the geology of the deposits. We are grateful to Jeffrey Hedenquist and an anonymous SEG reviewer for revisions and comments to an early draft of this paper.

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REFERENCES Ausenco Solutions Canada Inc, 2010, Unpublished technical report on the Cerro Negro feasibility study, Santa Cruz province, Argentina (July 20, 2010). Cobos, J.C. and Panza, J.L., 2003, Hoja Geológica 4769-I El Pluma, Provincia de Santa Cruz: Buenos Aires, Instituto de Geología y Recursos Minerales, Servicio Geológico Minero Argentino, Boletín 319, 89 p. Fernández, R.R., Blesa, A., Moreira, P., Echeveste, H., Myketiuk, K., Andrada de Palomera, P., and Tessone, M., 2008, Los depósitos de oro y plata vinculados al magmatismo jurásico de la Patagonia: Revista de la Asociación Geológica Argentina, v. 63, no. 4, p. 665–681. López, R.G., 2006. Estudio geológico-metalogenético del área oriental del curso medio del Río Pinturas, sector noroeste del Macizo del Deseado, provincia de Santa Cruz,

Canada Mining Innovation Council Conseil canadien de l’innovation minière

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Argentina: Unpublished doctoral thesis, Argentina, Universidad de la Plata, Facultad de Ciencias Naturales y Museo 226 p. Pankhurst, R. J., Riley, T. R., Fanning, C. M. and Kelley, S. P., 1999. Episodic silicic volcanism in Patagonia and the Antarctic peninsula: Chronology of magmatism associated with the breakup of Gondwana: Journal of Petrology, v. 41, p. 605–765. 1

Author affiliations: D. Shatwell, former chief geologist, Andean Resources Ltd; J.A. Clifford, consulting geologist; D. Echavarría, senior geologist, Cerro Negro; G. Irusta, former project manager, Cerro Negro; D. Lopez, former senior geologist, Cerro Negro.

Job Posting

The Canada Mining Innovation Council is a network of high level industry, academia and government leaders interested in enhancing the competitiveness of a responsible Canadian mining industry thorough excellence in research, innovation, education and commercialization. Exploration Program Director Reporting to the Executive Director, the Exploration Program Director will be responsible to deliver the outcomes required by the implementation of the Exploration Innovation Consortium within the Canada Mining Innovation Council. Key Responsibilities • The Exploration Program Director is the proponent of the Exploration Innovation Consortium and its representative among stakeholders such as Universities and Research Centers; NSERC and other funding agencies; Geological Surveys; and service Companies. • Establish R&D projects that meet the needs of industry as represented by the Technical Committee and ensuring timely projects outputs and on budget. • Liaise with the Technical Committee to establish technical project priorities (i.e., which needs/topics should be addressed in which order). • Establish collaborative relationships with all stakeholders, including public lectures to promote CMIC and the Exploration Innovation Consortium. • Facilitate the technical proposal review process by the Technical Committee, Advisory Committee and Project Leaders. • Assist in other CMIC activities and initiatives, as required.

Requirements • Must possess M.Sc. in geological sciences; Ph.D. is an asset. • Eligible for professional registration in Canada (P.Eng., P.Geo.). • Proven record of delivery of programs/projects; preferably including collaborative projects. • Demonstrated knowledge and experience with mining industry highly desirable. • Demonstrated ability to manage contracts and budgets. • Diversified experience with academia, government and/or R&D preferred. • Must have commitment to successful mineral exploration in Canada. • Excellent organizational and time management skills. • Excellent written and verbal communication skills. • Ability to deliver public lectures preferred. • French language an asset.

An attractive compensation package will be offered to the successful candidate. Please send your resume by May 13, 2011, to the following e-mail address: [email protected] We thank all the applicants, but only those selected for an interview will be contacted. PAID ADVERTISEMENT

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SEG Presence at MDSG

SEG Regional VP-Europe Maria Boni (SEG 1991 F) models the SEG ball cap while manning the SEG booth at the 34th annual meeting of the Mineral Deposits Study Group, London, UK, held January 5. Craig Hart, SEG Distinguished Lecturer for 2010, gave a presentation at the meeting.

JOSEPH R. ANZMAN Exploration Geophysicist • • • • • P.O. Box 370526 Denver, Colorado 80237 [email protected]

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WHY DO GEOMETALLURGICAL STUDIES? NO SURPRISES! The reason for embracing geometallurgy, as cited by a senior manager at a major mining company, is “no surprises”! This goal neatly encapsulates what geometallurgy is all about—understanding the deposit and the variables that exist in that deposit and using the information to make best decisions on project exploitation. It is not uncommon to hear of mining projects that have not lived up to their feasibility requirements or their having hit significant production problems due to metallurgy. Many problems can befall a mining operation, but certainly ore variability that creates problems in either comminution (grinding circuit throughput) or in metallurgical performance is a common cause of production expectations not being met. Sometimes, such problems occur in a particular geologic zone(s) of a deposit. There are, however, cases in which the overall metallurgical approach to exploiting a deposit is fundamentally wrong. Typically, these problems are worked around by either adjustment in the mine plan, blending of ore type, or blending of product (concentrate). However, this type of response is less than economically optimal and shareholder value is eroded by these maneuvers. A geometallurgical approach, or methodology, aims to quantify all significant ore variability and to develop plans to deal with it. Four key benefits from a geometallurgical approach are in the areas of project strategy, project metallurgical plant design, project financial forecasting, and mine production optimization strategies. Strategic analysis of a greenfields project can be aided greatly by an early understanding of metallurgical response and the variability that exists in a deposit. Geometallurgical methodology can guide this type of assessment even at a scoping level stage of project development. The design of the concentrator for the mining operation should consider the range of ores expected to be fed to that mill in order to best optimize the design of that mill. This is particularly important for the comminution circuit, in which design must consider the harder ore component of the deposit in the equipment sizing (without simply oversizing this capital-intensive part of the plant). A geometallurgical investigation attempts to establish mathematical models that forecast metallurgical output when a variable feed is fed to the “black-box concentrator.” These models can then feed into project cash flow analyses and economic optimization and/or strategic planning for the project cash flow. A mine plan, for an operating mine, can be manipulated to optimize concentrator production and hence mine economics, using geometallurgical information about the metallurgical deportment of various subdomains and mining areas within the mine. In summary, geometallurgy goes directly to a “no surprises” approach for new project development. Further than that, it enables us to economically optimize a project by considering variables in advance of dealing with them. 1

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Steve Williams (SEG 2010) Geometallurgy looks for the drivers of metallurgical response that lie in the geology and mineralogy of the deposit. After some of the key drivers for metallurgy are identified, the next step is to build mathematical models that capture metallurgical response as a function of defined, independent, geologic or mineralogical parameters. These are called metallurgical or geometallurgical models. To identify the variability that exists in a deposit, a usual approach is to consider the geologic model, by which a range of geologic subdomains are defined. It is also useful to relate this deposit model to that of the deposit type class of geologic models (such as porphyry copper model type). This enables us to check that we have captured all possible geologic subdomains in our deposit and can appropriately sample them for our investigation. Thus, geologic models form an important starting point for a geometallurgical investigation. They provide the investigator with a theoretical definition of geologic subdomains, a basis for understanding and defining mineralogical differences, and a guide to suggested sampling strategy in order to capture the full variability in the deposit. The porphyry copper deposit model (USGS Scientific Investigations Report 2010-5070-B, David A. John et al.) is the prototypical geologic model—it is well known and serves as a valuable guide to the geometallurgical investigator. Some other geologic models, unfortunately, do not capture the metallurgical variability of a deposit as well as this model. Chilean miners, in particular, have embraced geometallurgy for their work on porphyry copper deposits and have applied it both to new projects and existing operations for economic and strategic project optimization. Consequently, much is known about the key drivers for metallurgy for these deposits. Some of the key parameters that drive metallurgical response in

them include copper mineralogy (hypogene, supergene, oxide), abundance of pyrite, the presence of problematic nonsulfide gangue such as clay minerals and sericite, and the presence of deleterious elements (often the main concern being the presence of arsenic). These parameters are well defined by the porphyry copper model, reflecting geologic variability with alteration, oxidationweathering, and type of mineralization. VMS-type deposits, on the other hand, are much more metallurgically complex and are less well defined through their geologic model descriptions. Some of the key metallurgical driver parameters for these deposits include texture and grain size, presence of complex microtexture such as rimming and “sphalerite disease,” abundance of pyrite or marcasite or pyrrhotite, mineral association, presence of surface tarnishing or surface activation (a chemical aspect of the ore mineralogy), nonsulfide gangue minerals such as clays, talc, and sericite, and presence of deleterious elements. Some of these components are captured in the geologic models but others are not. In that case, the geometallurgical investigator must consider not only the geologic subdomains of the deposit but also must be sure to sample broadly enough to ensure that all relevant mineralogical variability is captured in the study. An interesting early metallurgical paper that describes mineralogical classification for VMS-type deposits and their metallurgical response is “Selection of reagent scheme to treat massive sulphide ores,” by S.M. Bulatovic and D.M. Wyslouzil, in Complex Sulphides, TMS, 1985. The authors subclassify the domains by degree of oxidation, grain size, pyrite and/or pyrrhotite content, surface tarnishing, surface activation, and problematic nonsulfide gangue. The authors foretold geometallurgy! As the use of geometallurgy advances and more studies are published, it is

STEVE WILLIAMS

possible to see the evolution of geometallurgical models as an adjunct to the current geologic models. These models can be rooted in the geologic models but further define domains in terms of the parameters that drive metallurgical response from those type of deposits. 1

Geometallurgy Workshop A one-day geometallurgy workshop will be held June 7, 2011, as part of the “geomin2011” conference, at the Hotel de Desierto Enjoy in Antofagasta, Chile. The workshop is titled, “Workshop in Geometallurgy: The Moment of Truth,” and will feature invited speakers on geometallurgy from around the world, case studies, and panel discussions. For more information go to

Feedback on the Geomet Forum is welcome and can be addressed to [email protected].

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No 85 • APRIL 2011

VII Congreso Internacional de Exploradores

The SEG was pleased with its booth activities at the ProExplo meeting, held February 6–8 in Lima, Peru. Representing SEG in this photo are (from left) Steve Enders (2011 SEG President) and Brian Hoal (Executive Director), standing next to Brescia Rojas of Gold Fields. Jeff Hedenquist (2010 SEG President) looks over a Newsletter while John Chulick (SEG 1998) examines potential purchases. Volunteer booth duty by Brescia Rojas and Denise de la Torre, Gold Fields coworkers, was invaluable to Brian.

Brian Hoal (second from left) and Gold Fields volunteer Denise de la Torre pose with SEG members at the booth.

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SEG STUDENT CHAPTER NEWS

The SEG invites student chapters as well as other student groups to make video recordings of the technical aspects of their SEG-supported field trips. Copies of complete recordings will be archived at SEG headquarters and edited clips (