Productora Resource Upgrade
First Upgrade Near Doubles Resource
In February 2013 Hot Chili completed its first resource upgrade at Productora, which near doubled the resource to 165Mt grading 0.6% Copper, 0.1g/t gold and 123g/t molybdenum. The updated resource estimate extends the central resource to the north and south and accounts for the definition of at-surface copper resources over a strike length of approximately 7.5km.
Further resource potential remains within the 7.5km of strike extent with several areas of the resource remaining open along strike, on the eastern and western flanks, and at depth.
The mineral resource estimate was completed by independent consultants Coffey Mining Pty Ltd. The resource estimate includes all RC and DD drilling results returned from outside of the central resource area since August 2011. The resource has been estimated in accordance with the guidelines of the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2004).
The grade-tonnage curve shows the distribution of grade and tonnes within the resource estimate using increasing minimum copper cut-off grade. The average depth of the resource estimate base is approximately 400m from surface. The resource correlates well with the location and indicative production grade of the Productora underground mine. Underground assessment of mineralisation and geological controls provided valuable information which assisted in the interpretation of constraint models for the resource.
A nominal +0.3% copper grade-shell model was utilised to constrain the block model resource estimation. In addition, a low grade +0.1% copper grade shell model was also utilised to calculate the quantity of low-grade material that exists in the surrounding breccia hosting corridor. The company’s recently completed scoping study indicated a potential future marginal economic cut-off grade for Productora to be approximately +0.2% copper It is important to note that the low grade material surrounding material surrounding the resource may add further to the definition of additional potential in-pit tonnage at Productora.
Productora Resource Upgrade 1
Note: Figures in the above table are rounded to one significant figure in accordance with Australian JORC Code 2004 guidance on mineral resource reporting.
The resource is significantly enhanced by the presence of two substantial zones of high grade material located within the planned central pit development at Productora. This material now equates to approximately 53Mt grading 0.8% copper and 0.2g/t gold.
Mineralisation has remained consistently associated with a series of vertical lodes and some minor sub-horizontal lodes (mantos zones) within a felsic volcanic country rock which has been extensively intruded by a tourmaline breccia along the main mineralised north-east trend.
Sulphide ore mineralogy comprises pyrite, chalcopyrite, bornite and molybdenite developed as breccia, vein and cavity fill, as well as disseminations within the brecciated host rocks. Within the oxide zone copper is dominantly associated with malachite. The resource extends from surface with transitional and sulphide material dominant and accessible from near-surface owing to the limited distribution of surface oxide material over the deposit. The identification of a second, near-surface zone of high grade copper and gold as part of the first resource upgrade has continued to enhance the economic potential of the project. The new zone is located within the CCHEN South area and equates to 24.9Mt grading 0.8% copper and 0.2g/t gold from shallow. This area has the potential to act as a starter-pit location that may allow access to higher revenue material at the beginning of potential future mining operations.
Mineral Resource Upgrades Continuing
Second Resource Up-grade - Large Extensional Drilling Programme Nearing Completion
Hot Chili has commenced a major extensional drilling programme at Productora for 2013, comprising 85,000m RC and 15,000m of DD drilling. The drilling will focus on the immediate extensions that have been confirmed along the eastern margin of the central area of the Productora resource for over 2km.
The addition of any new resources along the eastern or western margins of the resource and located within the planned central pit development has the potential to rapidly add in-pit tonnes to the project.
In addition, drilling is scheduled to test the remaining 2km of strike extent over the identified 9.5km deposit footprint at Productora. The company has already confirmed drilling intersections of high-grade gold and wide zones of copper mineralisation from the southern extension of the deposit at Sierra Zapallo.
A second major resource up-grade for the Productora copper project is expected in the first quarter of 2014.
Iron Ore Resource Definition at Productora in 2014 - Drilling to Commence in 2014
A drilling programme comprising approximately 20,000m of RC is planned to assess two large zones of magnetite identified within the Productora landholding.
The parallel magnetite zone lies immediately along the western flank of the Productora copper-gold-molybdenum resource with a large component of the potential iron zone likely to be within the western waste-rock wall of the Company’s planned pit development.
The Western magnetite zone is approximately 6km in strike extent within Hot Chili’s 100 per cent-owned landholdings on the western extent of the project. Preliminary drilling undertaken by Hot Chili has confirmed the presence of a very large, shallowly dipping magnetite zone from surface.
The definition of iron ore resources for the Productora project is a parallel stream of work aimed at facilitating further co-operation with Hot Chili’s strategic shareholder and major project partner Compañia de Aceros del Pacifico (CAP) and its operating subsidiary Compañía Minera del Pacífico S.A. (CMP).
In July 2012, CMP and Hot Chili executed two non-binding Letters of Intent (LOI) to co-operate on technical studies and commence negotiation for a joint infrastructure and iron production option for the Productora copper project.
Any such future development of an additional iron source in such close proximity to CMP's existing iron processing and transport network has the potential to add significantly to CMP's current production expansion at its existing operations. It also has the potential to add another valuable revenue stream to Productora.