Projects /Quarterly Exploration Update



2013 First Quarter Report

FIRST QUARTER HIGHLIGHTS

During the quarter ended March 31, 2013 exploration activity continued on the Company's projects in Chile and Argentina. Highlights from the quarter include:
  • Completion on January 29, 2013 of a non-brokered, private placement of 10 million shares of the Company at a price of $3.40 per share for gross proceeds of $34 million;
  • Completion of 30,000 metres of drilling on the Company's South American projects including Los Helados, Josemaria and Filo del Sol. A total of 44,306 metres of drilling was completed during the 2012-2013 field season. The 2012-2013 season at Los Helados and Filo del Sol ended during the quarter, and the Josemaria program ended on April 4th;
  • Completion of an updated mineral resource estimate for the Josemaria copper-gold porphyry deposit which resulted in a significant increase in the resource. Preliminary metallurgical test work was also completed and yielded positive results. A step-out drill program targeting possible extensions of higher grade supergene enriched mineralization intersected last season was completed subsequent to the quarter end. Initial assay results from this drill program were received, and included 231 metres at 0.62% copper and 0.24 grams per tonne gold which extended the high grade zone by approximately 100 metres to the north of previous drilling.
  • Receipt of initial assay results from the Los Helados drill program which included infill holes designed to convert inferred resources to the indicated category and holes designed to test possible extensions of the existing resource. Highlights include infill holes: LHDH50 with 1,175 metres of 0.65% CuEq (0.52% Cu and 0.19 gpt Au) and; LHDH55 with 886 metres of 0.68% CuEq (0.55% Cu, 0.19 g/t gold) including 304 metres of 1.06% CuEq (0.86% copper; 0.29 g/t gold).
  • Completion of an initial drill program which included 3 diamond drill holes totaling 1,482 metres on the Colmillos Property. Colmillos is located in Region 4, Chile, approximately 275 kilometres south of Los Helados.
SOUTH AMERICAN PROJECTS

Field exploration programs were conducted on the Company's South American projects during the quarter as described in more detail below.

Vicuña Property (Los Helados and Filo del Sol Projects), Chile and Argentina

The Vicuña properties comprise a large land package of approximately 31,650 hectares that covers a number of porphyry copper and high sulphidation gold targets in Region III of Chile and immediately adjacent parts of San Juan Province, Argentina. Los Helados and Filo del Sol are individual exploration projects within the overall Vicuña Property. Nearby deposits held by other companies include Caserones-Regalito (Pan Pacific Copper Co., Ltd. ("PPC")) and El Morro-La Fortuna (Goldcorp/New Gold). The Vicuña Properties are adjacent to the Company's Josemaria copper-gold porphyry deposit and are subject to a Joint Exploration Agreement (the "Vicuña JEA") in which the Company holds a 60% interest and PPC holds a 40% interest. Each party funds its pro-rata share of exploration expenditures. PPC is a Japanese mining and smelting company that is owned by JX Nippon Mining and Metals (66%) and Mitsui Mining and Smelting (34%).

Los Helados Project, Chile

Los Helados is a large copper-gold porphyry system located in Region III of Chile. Los Helados has a current Mineral Resource, estimated at a base case 0.30% copper equivalent* cutoff, as follows:
  • 1,114 million tonnes at a grade of 0.42% copper and 0.19 g/t gold for a copper equivalent grade of 0.55% (10.34 billion pounds of copper and 6.65 million ounces of gold) in the Indicated Resource category; and
  • 1,015 million tonnes at a grade of 0.38% copper and 0.14 g/t gold for a copper equivalent grade of 0.47% (8.41 billion pounds of copper and 4.70 million ounces of gold) in the Inferred Resource category.
*CuEq - Copper Equivalent is calculated using US$3.00/lb copper and US$ 1,400/oz gold, with no provision for metallurgical recoveries. Silver is not included in the CuEq. The formula used is CuEq% = Cu% + 0.6806*Au (g/t).

The Mineral Resource Estimate for the Los Helados Project, dated November 26, 2012, was prepared by Gino Zandonai, B.Sc., M.Sc. Mining, SME, MAusIMM, CRIRSCO, Senior Associate of Behre Dolbear International Ltd. in accordance with NI 43-101 and filed on SEDAR under the Company's profile. Mr. Zandonai is the Qualified Person for the estimate and is independent of the Company. It should be noted that the Mineral Resource estimate presented here is not a Mineral Reserve, and has not demonstrated economic viability. While the Company strongly believes that the Mineral Resource warrants additional study to determine the development potential, there can be no guarantee that any or all of the Mineral Resource will ultimately be determined to be economically viable.

A total of 19,550 metres was drilled at Los Helados during the quarter, bringing the total for the 2012/2013 program to 32,707 metres. The objectives of this season's drilling were to upgrade a portion of the resource from the inferred category to the indicated category and to test for possible extensions of the resource. Significant results received to date from this season's (2012/2013) program include:
  • LHDH50 with 1,175 metres of 0.65% CuEq (052% Cu and 0.19 gpt Au), including 308 metres at 0.82% CuEq (0.70% Cu and 0.17 gpt Au); and
  • LHDH22 with 1,168 metres of 0.53% CuEq (0.40% Cu and 0.20 gpt Au) including 376 metres at 0.63% CuEq (0.51% Cu and 0.16 gpt Au).
  • LHDH21 (extension of previously reported hole) with 1,286 metres of 0.58% CuEq (0.46% copper, 0.18 g/t gold) including 304 metres of 0.77% CuEq (0.63 % copper, 0.20 g/t gold) and;
  • LHDH55 with 886 metres of 0.68% CuEq (0.55% Cu, 0.19 g/t gold) including 304 metres of 1.06% CuEq (0.86% copper; 0.29 g/t gold).
The drill program was concluded on March 28, 2013 with work now focused on completing core logging and sampling. Additional metallurgical test work is also underway with results expected in the third quarter of 2013. The results of this year's drilling will be incorporated into an updated resource estimate that is expected to be completed later this year.

Filo del Sol Property, Argentina

The Vicuña Property covers several copper-gold targets in addition to Los Helados including Filo del Sol. A total of 804 metres was drilled at Filo del Sol during the quarter, bringing the total for the 2012/2013 program to 829 metres. The drill program was concluded on February 18, 2013. Assay results from Filo del Sol are pending.

Josemaria Project, Argentina

Josemaria is a large copper/gold porphyry project located in San Juan Province, Argentina near the Vicuña group of properties. The Josemaria deposit is located 11 kilometres southeast of Los Helados. The project is being explored under a Joint Exploration Agreement with Japan Oil, Gas and Metals National Corporation ("JOGMEC") and is owned 60% by the Company and 40% by JOGMEC. Each party funds its pro-rata share of expenditures.

The Company completed an updated Mineral Resource estimate for the Josemaria deposit during the quarter. The updated estimate resulted in a substantial increase over the previous resource estimate. It was completed by Gino Zandonai, senior associate of Behre Dolbear International Ltd. in accordance with NI 43-101 and filed on SEDAR under the Company's profile. The Report is dated February 22, 2013 and replaces and increases the previous resource estimate completed in 2007. The updated resource estimate is summarized below:

Sulphide Copper-Gold Mineralization (0.30% copper equivalent* cutoff)
  • 656 million tonnes at a grade of 0.36% copper and 0.26 g/t gold for a copper equivalent grade of 0.54% (5.2 billion pounds of copper and 5.6 million ounces of gold) in the Indicated Resource category; and
  • 326 million tonnes at a grade of 0.33% copper and 0.19 g/t gold for a copper equivalent grade of 0.46% (2.4 billion pounds of copper and 2.0 million ounces of gold) in the Inferred Resource category.
Oxide Cap (0.30% copper equivalent* cutoff)
  • 44 million tonnes at a grade of 0.22% copper and 0.33 g/t gold for a copper equivalent grade of 0.45% (0.22 billion pounds of copper and 0.47 million ounces of gold) in the Indicated Resource category; and
  • 6 million tonnes at a grade of 0.10% copper and 0.35 g/t gold for a copper equivalent grade of 0.34% (10 million pounds of copper and 70 thousand ounces of gold) in the Inferred Resource category.
*CuEq - Copper Equivalent is calculated using US$3.00/lb copper and US$ 1,400/oz gold, with no provision for metallurgical recoveries. Silver is not included in the CuEq. The formula used is CuEq% = Cu% + 0.6806*Au (g/t).

It should be noted that the Mineral Resource estimate presented here is not a Mineral Reserve, and has not demonstrated economic viability. While the Company strongly believes that the Mineral Resource warrants additional study to determine the development potential, there can be no guarantee that all or any of the Mineral Resource will ultimately be determined to be economically viable.

A program of metallurgical test work completed during the quarter indicated that the Josemaria mineralization is amenable to standard flotation concentration. One locked-cycle test was completed, achieving copper recoveries of 85.1% and gold recoveries of 69.4%, with test concentrate grades of 25.1% copper and 16.8 g/t gold. The concentrate samples produced by this work were clean, with all deleterious elements below penalty levels and also had silver grades that would provide payment for part of the silver content under current general smelter contract terms. Additional metallurgical test work is underway with results expected later this year.

Drilling at Josemaria during the quarter totaled 7,708 metres and an additional 37 metres were drilled in April 2013. The final total for the 2012/2013 season was 8,242 metres with 18 drill holes completed. Significant intersections from the first three holes of this program included JMDH61 with 231 metres at 0.62% copper and 0.24 g/t gold. The results received to date have extended the higher grade zone discovered during the 2011/2012 drill campaignby about 100 metres to the north of previous drill holes. Once all assay results have been received the Company plans to produce an updated resource estimate for Josemaria.

Other Chilean Projects

Tamberias Property, Chile

The Tamberias property is located in Region III, Chile and is adjacent to the Filo del Sol Project which is discussed above and located just across the international border in Argentina. Work on the Tamberias property by previous operators has defined potential for both porphyry copper and high-sulfidation gold mineralization. The Company has an option agreement (the "Agreement") with Compania Minera Tamberias SCM ("Tamberias SCM") whereby the Company can earn a 100% interest in the Tamberias property by making option payments totaling US$20 million on or before September 30, 2020 of which US$2.8 million is payable on or before June 30, 2016, US$5 million on or before June 30, 2018 and US$10 million on or before June 30, 2020.

Tamberias SCM will retain a 1.5% NSR royalty that will be paid only after the Company has recovered all of its exploration and development costs. The Company has cumulatively paid US$800,000 as at March 31, 2013. During the quarter base line environmental work was completed. This work will be filed in support of an application for drilling permits for next season.

Colmillos Project, Chile

The Colmillos project consists of 100% owned exploration licenses covering approximately 3,400 hectares. Mapping and sampling to date have defined a 4.3 by 0.7 kilometre trend of tourmaline breccia bodies with occasional copper oxides and strongly anomalous molybdenum analyses in rock chip samples.

Copper mineralized tourmaline breccias are a common feature of many major porphyry copper systems. Three holes totalling 1,482 metres were drilled at Colmillos during the quarter, and the program is now complete. Assay results are expected to be received during the second quarter.

GJ Project, British Columbia, Canada

The GJ Project located in northern British Columbia covers an area of about 150 square kilometres and covers a number of significant mineral showings, including the Donnelly, GJ and North zones.

The project has a Measured and Indicated resource of 153.3 million tonnes grading 0.32% copper and 0.37 g/t gold, at a cut off grade of 0.20% copper which contains 1.09 billion pounds of copper and 1.82 million ounces of gold. The resource estimate was prepared to NI 43-101 standards by qualified person Mr. Gary Giroux P.Eng. and is filed on SEDAR under the Company's profile.

The Company has optioned the GJ Project to Teck Resources Limited ("Teck") whereby Teck can earn an initial 51% interest in the project by spending $12 million by December 31, 2014 and up to a 75% interest by making exploration expenditures totaling $44 million by December 31, 2020.

Teck has cumulatively spent $9.1 million to December 31, 2012. Teck has not yet advised the Company as to its exploration program for 2013.



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