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NGEx Resources Inc.
The NGEx District

Chile's Biggest New Copper-Gold Camp

Projects

Chile

Los Helados

Introduction

Los Helados is a porphyry copper-gold deposit located in the Andes Mountains of Chile approximately 125 km southeast of the city of Copiapó. The Los Helados deposit is centred at 28.3408º S, 69.5857º W. The area is accessible by road, a driving distance of about 170 km southeast from Copiapó. Copiapó is a regional mining centre with a population of about 150,000. It has a modern airport, with several daily flights to Santiago.

Los Helados is part of Project Constellation which contemplates an integrated mining operation that would incorporate production from both Los Helados and the Company's Josemaria deposit located approximately 10 km to the south. 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 Los Helados please see the Project Constellation page.

Geology and Mineralization

Mineralization at Los Helados occurs within a large Miocene age breccia body which intrudes granites and felsic volcanic rocks of late Palaeozoic age. Mineralization has been dated at 13.13 ± 0.32 Ma (Re-Os, Molybdenite; Kapusta, 2012). Click here to see geological map.

Four main alteration zones are present in the Los Helados deposit. From the top downwards the alteration types are: advanced argillic; phyllic; SCC; and potassic. Alteration assemblages also include combinations of these principal alteration types, indicating transitional boundaries between the zones. Four mineral zones are recognized within the deposit based on sulphide occurrence. In order of increasing depth, the zones are: pyrite-only (Py); pyrite>chalcopyrite (Py>Cpy); chalcopyrite>pyrite (Cpy>Py); and chalcopyrite-only (Cpy). This sulphide zoning sequence reflects a progressive downward increase in the amount of chalcopyrite relative to pyrite.

The highest-grade mineralization is centred on the breccia and disperses outwards to form a broad halo of lower grade mineralization in the surrounding country rock. The breccia has minimum dimensions of 1,100 metres East-West by 1,200 metres North-South by 1,500 metres vertically and its northern limit and full vertical extent remain unknown. The breccia body is surrounded by a broad halo of moderate to low grade Cu-Au mineralization which diminishes in grade with increasing distance from the breccia contact.

The breccia limits have been established by drilling to the west, east and south; however, the northern limit of the breccia body has not yet been identified. The system also remains open at depth, and the lateral extent of the breccia at depth is also poorly constrained by the current drilling. The eastern contact appears to be subvertical, whereas the western contact dips outwards at roughly 70°, hence the width of the breccia body increases progressively downwards. Copper grade increases downwards, and elevated grades are maintained into the potassic alteration zone. Although Cu grades typically diminish towards the bottoms of the deepest holes drilled to date, there is an exception in that drill hole LHDH34 located on the southwestern edge of the deposit, encountered some of the best grades in the whole deposit at depth. Gold grades generally correlate well with Cu. Consistently high Cu and Au grades are present in the potassic plus chlorite-sericite and potassic zones where chalcopyrite is more abundant than pyrite. Chalcopyrite is the main copper mineral to the depths drilled to date. Traces of bornite occur in the deepest drill holes including LHDH34 described above.

Exploration History

There is no record of significant exploration activity at Los Helados prior to NGEx's interest. There are no historical Mineral Resource estimates, and no reported production from the area.

Work programs conducted by NGEx include geological mapping; soil, rock-chip and talus sampling; a number of geophysical surveys including induced polarization (IP)-resistivity, magnetometer, and Mount Isa Mine's Distributed Acquisition System methodology (MIMDAS) surveys; reverse circulation (RC) and core drilling, and Mineral Resource estimation. A number of environmental baseline studies have been undertaken. A preliminary economic assessment of the potential development of the Los Helados deposit as a stand-alone operation was completed in 2014; that assessment is superseded by the results of the study in the PEA Technical Report completed in February, 2016.

Eight drilling campaigns have been carried out at the Los Helados deposit, from 2006 to 2015. No drilling was conducted during the 2013-2014 season.

Exploration Upside

The Los Helados deposit remains open at depth and to the north. Recent internal NGEx studies have indicated the presence of a discrete, higher-grade breccia phase along the western and southwestern breccia margins. The breccia dips at about 70º to the west, and remains untested below these drill holes.

The genetic model for the deposit, and porphyry deposits in general, describes breccias as occurring, and being sourced from, the upper portions of mineralizing porphyry systems. Los Helados is unique in that it is a single, very large, breccia body rather than a more typical porphyritic intrusive with disseminated and stockwork-hosted mineralization. The genetic model, as well as analogy with other porphyry deposits in the Andes, suggests there is potential to continue to expand the deposit at depth.

Drilling has intersected the boundary between the breccia and host granite to the south, west and east of the deposit; however, granite has not been intersected to the north, and the breccia remains open in this direction.

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. These targets, as defined by copper in talus fine samples, are shown in the regional geochemistry map.

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 Los Helados is based on 75,634 m of drilling in 95 drill holes, of which 90 holes (74,268 m) are core and five holes (1,366 m) are RC. 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 Los Helados deposit will be mined using block caving, with material sent to a process plant to be located in Argentina through a combination of underground and surface conveyors. The Los Helados mine will reach peak production of 120 kt/d and will be in operation for 36 years.

Processing

Run-of-mine material from Los Helados will be primary crushed underground, and conveyed to the process plant. The base case comminution circuit design considers a conventional high pressure grind roll (HPGR) crushing circuit followed by conventional ball mill grinding. Conventional sulphide flotation will follow the comminution stage. The tails will go to the tailings storage facility where approximately 20% of the contained water in the tailings will be recovered and sent back to the process plant. 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 Los Helados 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 Los Helados is expected to be 88% for copper, 76% for gold, and 60% for silver. Copper concentrate grades are expected to average 29% 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 a majority interest in the Los Helados deposit through a wholly-owned subsidiary.

Los Helados is subject to a Joint Exploration Agreement (the PPC JEA) with Pan Pacific Copper Co., Ltd. (PPC) PPC is a Japanese mining and smelting company that is owned by JX Nippon Mining and Metals and Mitsui Mining and Smelting.

Each party (Participant) in the PPC JEA is expected to fund its pro-rata share of expenditures or be diluted. Effective September 1, 2015, PPC has elected not to fund its pro-rata share of expenditures and, as a result, has elected to dilute its interest pursuant to the PPC JEA. Accordingly, NGEx, through its wholly-owned subsidiary, has funded 100% of the Los Helados project starting September 1, 2015. Please refer to NGEx's latest MD&A for the current interest held by each Participant. If a Participant's interest in the Joint Venture is diluted to below 5%, that Participant's interest will automatically convert to a 0.5% net smelter return royalty (NSR). The PPC 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 Los Helados, NGEx has the right to act as the Operator.  
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