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-- Posted Thursday, 17 February 2011 | | Source: GoldSeek.com
The Cordillera del Condor region, located on the contentious Ecuador-Peru border, has proven to be rife with precious metals and political risk. In this exclusive interview with The Gold Report, Geologist Bob Casaceli delves deep beneath the earth's crust to explain why this dynamic region's formation points to further discoveries in the area.
The Gold Report: Bob, it seems like everyone knows you. How did you get your start in this business?
Bob Casaceli: I first became interested in geology through mountain climbing, which was an offshoot of my ski-racing career at the University of Colorado. My ski teammates would take me to areas to learn technical rock climbing, and I would study the geology of those areas.
I was always intrigued by the Andes. In graduate school, I was very interested in the mineralogy, tectonic origins and lithochemistry of the ore deposits. I studied isotope geochemistry as a methodology of determining the origin of ore deposits and was able to get some consulting work in Mexico, Central America and throughout the Andean region. I worked with some partners who were former colleagues and formed a consulting company. It was a great springboard to understanding the systems of gold, copper and silver mineralization in the Andes.
TGR: You've visited the Fruta del Norte gold deposit. Could you tell our readers about the region and why it's highly prospective for high-grade gold deposits?
BC: The primary reason is that it sits atop the main subduction zone of the Andes. A subduction zone is where the oceanic plates from the eastern Pacific Plate are pushed underneath the South American continent and melted. Magmas are generated, which rise and melt the lower crust.
Based on the work I did with isotope geochemistry in graduate school, it appears that the majority of the metals in the melts actually come from the lower crust with a lesser contribution from the mantle. They're incorporated by the magmas rising above the subduction zone and spending what's called "residence time" to allow for more melting of the lower crust and further incorporation of the metals that are contained therein. The magmas come up to the surface through fractures in the upper crust and are expressed as volcanoes. They formed a range along the continental margin in the Late Jurassic period about 150 million years ago in the area of Fruta del Norte. The continental margin was evolving from what's called an "island arc," where volcanoes are separated into distinct islands and later compressed to form the continental mass we see now—the high Andes, lower coastal ranges and the coast itself.
The magmas, or molten rocks, form the volcanoes—usually stratovolcanoes—for the most part, which are the tall, cone-shaped volcanoes. Subsequent to the formation of the stratovolcanoes, there is time for gases and waters to mix with metals, which partition off into a fluid phase. That fluid phase is the source of the metal deposits. A subduction zone that's active for many millions of years has a lot of time to generate metal-rich hydrothermal deposits. They deposit upon and enrich each other. That's the main reason there are many deposits along the South American Cordillera mountain ranges.
There are cross-structures that create open spaces and better intersections that are more permeable. There is oblique subduction, which occurs when a subduction slab doesn't meet the continental margin at 90 degrees, but rather meets it at an angle and creates what's called "strike-slip faulting" as a result. That strike-slip faulting causes the rocks to move horizontally past each other and jump in their movement. When they jump, they create these small areas of extension within the jump—or jog—and that creates the open space. Any time there's open space created above a magmatic source, such as a subduction zone, it facilitates the creation of ore deposits at the surface along the open spaces.
TGR: The biggest gold deposit found to date in that area is Fruta del Norte, which is close to 14 million ounces (Moz.) of high-grade gold. That was the biggest story in the mining industry for years. Something like that would usually spawn a staking rush, but that didn't happen. Why?
BC: Political reasons, but that's my bias. The president of Ecuador, Rafael Correa Delgado, has said he is dedicated to nationalizing certain industries, including the mining industry. The reality is that Correa is of the political persuasion that minerals are a part of the realm of the state, but more than just simply through royalty ownership or payments. He has made statements that he would consider nationalizing oil, gas and mining. That definitely put fear into exploration companies and kept many out.
TGR: What role do the indigenous tribes play in keeping development at bay?
BC: Aboriginal people are concerned about the exploitation of their ancestral lands. That's certainly true in the Amazonas region of northern and northeastern Peru, which borders Fruta del Norte. This movement has been exacerbated by support from Venezuelan President Hugo Chavez and his supporters. I believe that it's become a more difficult situation because of Hugo Chavez's financial support, but I have no direct evidence of that—I've only heard rumors. The movement has received other support; for example, a leader of the aboriginal movement in Peru was given protection in an embassy in Nicaragua to avoid his capture.
TGR: It's taken a little while, but some companies are coming to the Fruta del Norte area and exploring again, especially on the Peruvian side of the border with Ecuador. What's the political climate like on the Peruvian side?
BC: I've worked there for many years and have a high regard for the Peruvian people and their support of mining. It is a mining-mentality nation, though there have been some inconsistencies over the years. Recently, legislation was proposed to double the royalties from a 1%–3% range to a 2%–6% range, as well as to put up to a 10% gross sales revenue royalty on gold and 5% on copper.
Nevertheless, Peru is firmly a mining country. I've seen many properties develop there. Newmont has made great profits on its mining efforts in northern Peru. The country is a more secure investment than Ecuador. I'm very skeptical of Correa's administration. There are, however, other discoveries on the Ecuadorian side.
TGR: You did some due diligence work at the Taricori and Lucero deposits.
BC: At the time, the hope was that Taricori would fit a Fruta del Norte model. It doesn't, exactly. Fruta del Norte is an intermediate-sulfidation epithermal deposit of Late Jurassic age and Taricori is considerably younger and formed in a sub-epithermal environment.
TGR: It's in the pull apart basin, correct?
BC: Yes, but the pull apart basin is a complex basin. I believe it was originally part of a back-arc continental rift or extension zone graben formed by upwelled magma. The oblique nature of the subduction slab to the coast created left-lateral strike-slip movement on the north-south structures, which I believe were originally extensional structures that formed from magmas that created the core of the Andes. Pre-existing northwest-southeast crosscutting structures then were pulled apart by the strike-slip movement. It's a complex mechanism to create open space, but that's one of the critical things necessary for developing these ore deposits. It's what created Fruta del Norte.
Lucero, Taricori and Cobrecon are on the same regional feature. In Fruta del Norte's case, it happened in the Late Jurassic. It appears that Cobrecon and Lucero's mineralization is of Late Cretaceous or Tertiary age, possibly some 40–65 million years old. It's also not truly epithermal, as it is formed at deeper sub-epithermal zones with somewhat higher temperatures in the mesothermal range, more like a porphyry-type system.
It's still unclear whether these are going to be as big as some of the porphyry gold deposits in Chile—for example, the Capische deposit—but these areas still host sizeable deposits that will likely prove very valuable. The grades are excellent, there's a bit more sulfides, copper and molybdenum involved than in the system in Fruta del Norte, but gold is there, as well. TGR: Do you foresee Ecuador becoming more mining-friendly in the future?
BC: It can and likely will. There are political cycles. Ecuador is endowed with a lot of mineral wealth. It's a marvelous place to explore and develop mines under the right political circumstances. Eventually, such circumstances will come about. Rafael Correa is no idiot. He allowed the government to give enough assurance to Kinross to make purchases and develop mines. He will allow certain levels of development.
However, the real development of Ecuador and the ultimate realization of its mineral wealth will only come under a different philosophy, one similar to those in Chile and Peru. Companies need encouragement because these are rugged areas—jungle that is difficult to traverse and explore, and there aren't many roads. Companies need mining laws that will encourage them to take the difficult steps to explore the area. I think that will come, and it will probably be driven by economic necessity.
TGR: Bob, thanks for your in-depth explanations.
Robert J. Casaceli holds a master's degree in geology from Oregon State University and a bachelor's in geology from the University of Colorado. His mining career spans 36 years and has involved every facet of mineral exploration for precious metals, base metals and uranium. He is currently president and CEO of Creso Exploration Inc. (TSX.V:CXT; OTCQX:CRXEF). Until recently, he served as chief geologist for Franco-Nevada Corp., the world's most-respected royalty acquisition company. He has also been president and chief executive of a TSX-listed resource company for more than 12 years and has been involved in the design, funding and implementation of numerous reconnaissance, advanced-stage exploration projects and prospect/mine evaluations in some 50 countries. He was previously president and COO of L.A. Nevada, a subsidiary of Euro-Nevada Mining Corp., for two years. His primary function was the identification and acquisition of royalty interests from mining properties located throughout Latin America and elsewhere in the world. Casaceli has published numerous technical and scientific papers. His technical skills are enhanced by his extensive experience in negotiating mining deals, structuring legal agreements and establishing companies in many countries. Streetwise - The Gold Report is Copyright © 2011 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part. The GOLD Report does not render general or specific investment advice and does not endorse or recommend the business, products, services or securities of any industry or company mentioned in this report. From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise. Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported. Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734. Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.
-- Posted Thursday, 17 February 2011 | Digg This Article | Source: GoldSeek.com
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