$1.05  even
NGEx Resources Inc.
The NGEx District

Chile's Biggest New Copper-Gold Camp

Projects

Argentina

Josemaria

Introduction

Josemaria is a porphyry copper-gold deposit located in the Andes Mountains of San Juan Province, Argentina 135 km southeast of the city of Copiapó. The Josemaria deposit is centred at, 28.4359º S, 69.5486º W in Argentina. The area is accessible by road from both Copiapo, Chile and San Juan, Argentina. Major provincial highways run north from the city of San Juan through San Jose de Jachal to the town of Guandacol (in La Rioja Province) and from there by approximately 150 km of regional unpaved roads and trails to Josemaria. Total driving time from San Juan is approximately 10 hours. The best access to the Project is from Copiapó, a driving distance of about 170 km, or three hours. Copiapó is a regional mining centre with a population of about 150,000. It has a modern airport, with several daily flights to Santiago. While further away, San Juan is also a major regional mining center with a domestic airport and numerous mining suppliers.

Elevations in the Josemaria area range from approximately 4,000 m to 5,300 m at the pass between Josemaría and Los Helados. Topography is comprised of broad, flat-bottomed valleys with moderately steep slopes

The climate in the Project area is dry to arid and the temperatures are moderate to cold. Annual precipitation is about 250 mm, with snow at higher altitudes in the winter. Exploration fieldwork is generally possible from mid-October to early May. It is anticipated that mining operations will be conducted year round.

Josemaria is part of Project Constellation which contemplates an integrated mining operation that would incorporate production from both Josemaria and the Company's Los Helados deposit located approximately 10 km to the north. In January, 2016 the Company completed a Preliminary Economic Assessment of this concept. The project description here is summarized from the Technical Report completed in support of the PEA. For more detailed information on Project Constellation including Josemaria, please see the Project Constellation page.

Geology and Mineralization

The Cu-Au mineralization at Josemaría is is associated with a porphyry intrusive complex of Late Oligocene age that intrudes rhyolites and tonalites of presumed Permo-Triassic age. The porphyry forms an elongated body with minimum dimensions of 800 to 900 m north-south, 600 to 700 m east-west and 600 to 700 m vertically. A well-developed leached cap overlies the entire Josemaría deposit, and is related to oxidation at and below the modern-day surface. The leached cap ranges from 10-20 m in thickness. The porphyry intrusions occur along an important structural corridor that displays both pre- and post-mineral displacement. Structures along this corridor played an important role in focusing magmatic phases and their associated hypogene Cu-Au mineralization, as well as controlling the location and distribution of subsequent supergene Cu enrichment. A post-mineral volcanic unit of Early Miocene age partly covers the Josemaría porphyry system. Click here to see the geological map of Josemaria.

Alteration zonation within the Josemaría porphyry system is centred on the porphyry intrusions. Alteration types include: potassic, sericite-chlorite-clay (SCC), sericite, propylitic, and advanced argillic alteration. Click here to see the alteration map for Josemaria.

There appears to have been significant telescoping of the system, possibly aided by permeability along pre-mineral structures. Detailed logging shows that in places along the structural corridor, advanced argillic alteration occurs in rocks that display relict potassic alteration. Relationships are complicated by post-mineral movement along structures that now locally juxtapose deeper potassic- and SCC-altered tonalite with advanced argillic-altered rhyolite.

The hypogene Cu and Au mineralization is associated with the upper parts of the potassic alteration zone. Chalcopyrite and pyrite are disseminated through the potassic zone, with minor bornite. Quartz-magnetite ± chalcopyrite veining occurs through much of the main mineralized zone, as discrete veins and locally as a more intense stockwork.

Hypogene chalcocite mineralization is found predominantly along the western part of the system, associated with the roots of the advanced argillic domain. The occurrence of both hypogene and supergene chalcocite in close proximity complicates the differentiation of these two zones, a situation that is compounded by the fact that they are likely in local gradational contact.

A well-developed leached cap overlies the entire Josemaría deposit, related to oxidation at and below the present topographical surface. The leached zone ranges from 10-20 m in thickness over the relatively impermeable felsic volcanic rocks in the west to a maximum of 230 m into the Josemaría structural corridor and the tonalite farther east.

Mineral zones within the Josemaría deposit were defined by the relative abundance of chalcopyrite, pyrite and chalcocite, as well as the mode of occurrence of chalcocite (hypogene or supergene) and level of oxidation. Chalcopyrite and pyrite are disseminated through the potassic zone, with minor bornite. Quartz-magnetite ± chalcopyrite veining occurs through much of the main mineralized zone, as discrete veins and locally as a more intense stockwork.

The Josemaría deposit remains open to the south, beneath a thickening cover of post-mineral volcanic rocks, and also at depth.

Exploration History

Prior to 2001 there is no known history of mineral exploration fieldwork or mining on the Josemaría property other than several regional prospecting programs conducted during the 1990s that probably collected talus or drainage samples, and a program of LANDSAT imagery interpretation, which identified a large area that had spectral response characteristics of hydrothermal alteration. The project was acquired in 2002 by a predecessor company to NGEx.

Work conducted by NGEx and precursor companies has included reconnaissance prospecting; geological mapping; talus fines sampling; rock chip and trench sampling; ground-based magnetic, controlled source audio-magnetic telluric (CSAMT) and induced polarization (IP)-resistivity geophysical surveys; reverse circulation (RC) and core drilling; resource estimation, and metallurgical testwork.

Nine drilling campaigns have been carried out at the Josemaría deposit, from 2003 to 2014.

Exploration Upside

The Josemaría deposit remains open to the south, beneath a thickening cover of post-mineral volcanic rocks, and also at depth. Drilling was planned with a conceptual open-pit configuration in mind, and only two drill holes were extended beyond depths of about 600 m (JMDH06 and 07). Both drill holes encountered lower-grade mineralization; however, they intersected the porphyry unit, which tends to be lower grade, and potential remains to extend the mineralization at depth within the tonalite unit.

Additional targets present in Project Constellation area, include geochemical anomalies similar in size and tenor to those that were identified over the known deposits, and have coincident geophysical targets and mapped alteration features that are consistent with porphyry-style mineralization. The highest-priority targets occur along two parallel north-south-oriented trends interpreted to represent large-scale structural breaks. The western trend includes the Los Helados deposit, while the eastern trend links the Josemaría deposit in the south with the Caserones deposit in the north. Given that porphyry deposits occur in clusters, and the exploration targets are in the vicinity of the Josemaría and Los Helados deposits, there is excellent exploration potential to identify additional porphyry-hosted mineralization.

Mineral Resource Estimates

The Mineral Resource Estimate for Josemaria is based on 61,100 m of drilling in 142 drill holes, of which 48 holes (17,535 m) are RC holes, and 94 holes (43,565 m) are core holes. More than 90% of the metres drilled were HQ (63.5 mm diameter core). To see the current Mineral Resource Estimate and a detailed description of assumptions and methods used to estimate the Mineral Resource please refer to the Technical Report.

Mining

The Josemaria deposit is planned to be mined by conventional open-pit methods. The mine plan includes a two-year pre-strip period, and a five-month ramp-up, during which production will increase in stages from 20% to 100%. Full production will extend over a six-year period at 150 kt/d, followed by a six-year ramp-down period as material from the underground mine at Los Helados becomes available. Material from Josemaria will be transported to the process plant, 4 km away, by surface conveyors.

Processing

Josemaría run-of-mine material will be trucked from inside the pit to two gyratory jaw crushers that will be located just outside of the Josemaría open pit. The material will be primary crushed and then conveyed to a common primary crushed stockpile located at the plant by a surface conveying system. The base case comminution circuit design is a conventional high pressure grinding roll (HPGR) crushing circuit followed by conventional ball mill grinding. Following comminution processing will be by conventional sulphide flotation.

For a more detailed description of the production plan for Project Constellation please see the Project Constellation home page and the Project Constellation Technical Report.

A two phase metallurgical test work program for Josemaria was conducted at SGS Minerals S.A. laboratories in Santiago, Chile under the supervision of Amec Foster Wheeler. Based on the testwork completed to date, life of mine metal recovery for Josemaria is expected to be 89% for copper, 68% for gold, and 67% for silver. Copper concentrate grades are expected to average 30% copper over the life of the Project. It is anticipated that the concentrate will be clean, precious metals rich, and likely to receive premium terms in the market.

Project Ownership

NGEx holds an indirect 60% interest in the Josemaría deposit through its Argentine subsidiary Deprominsa SA (DPM). Josemaría is subject to a Joint Exploration Agreement with Japan Oil, Gas and Metals National Corporation (JOGMEC) which holds the remaining 40%. JOGMEC is a Japanese government agency that invests in exploration projects.

Each party (Participant) in the Josemaria JEA is expected to fund its pro-rata share of expenditures or be diluted. If the Participant interest in the Joint Venture is diluted to below 5%, the Participant interest will automatically convert to a 0.5% net smelter return royalty (NSR). The Josemaria JEA includes a reciprocal right of first offer in the event that one Participant wishes to sell its interest.

For as long as NGEx holds at least a 50% interest in the Joint Venture, NGEx has the right to act as the Operator.  
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