AusQuest seeks to re-write history books with its growing Peru copper find

In January, the company reported the discovery of a porphyry copper-gold deposit at its Cangallo project in Peru, with results including 348m at 0.26% copper and 0.06 parts per million gold from 6m and 188m at 0.28% copper and 0.07ppm gold from 214m.

This week, AusQuest announced that diamond drilling had extended the copper mineralisation in stockwork veins to depths beyond 800m, more than doubling the known depth extent of the mineralisation.

Mineralised porphyry indicators, including chalcopyrite and bornite, within stockwork veins is strong evidence of a mineralised porphyry centre nearby, while a 300m-plus zone of copper oxide mineralisation intersected from surface with evidence of supergene enrichment highlights the potential for higher copper grades near surface.

“It’s really our first look at what the geology and what the relationships are likely to be,” AusQuest managing director Graeme Drew said.

AusQuest’s previous drilling has been with a reverse circulation rig as it’s cheaper and the lack of water means the company can drill quite deep holes.

“We’re comfortable that the samples we’re getting and the geochemistry that we’re getting from those [RC] samples is telling us a real story, but it’s always nice to get some core so you can actually see what the relationships are and start to understand and really confirm, in many ways, that we are dealing with a porphyry system,” Drew said.

“There’s no doubt in our minds that that’s exactly what it is, so it just adds another little point in our favour, because these things can be really quite large, and there could be multiples of them, so it’s an exciting time for a junior, that’s for sure.”

The job for AusQuest now is defining how big the system is and the grade, as well as finding the porphyry itself.

“All the copper we’ve got to date is in veins, microveins, stockworks, fractures, and that’s all within the host volcanic, so the system has been able to blast into these volcanic rocks which were there at the time that the porphyry system was in operation, but we haven’t actually found the porphyry itself yet, which is where we’d expect to find potentially higher grades,” Drew said.

“And if you find the primary zone – the hypergene, as they call it – then those things can extend down hundreds, if not thousands, of metres.”

The second diamond hole is underway now with further results expected in the coming weeks.

RC drilling to kick off

Yesterday, AusQuest announced it had received permits for a stage three, 6000m RC program, which will begin as soon as diamond drilling is complete.

The program will focus on the area to the south of current drilling, where AusQuest believes the centre of the porphyry system could be.

“Once we’ve done that drilling, we’ll have a much better idea of what the distribution of copper is like and whether we should be drilling a lot more diamond holes,” Drew said.

“We don’t think we’re in the guts of it. We think we’re on the edge. And if we are on the edge, then this thing is getting bigger and stronger every day, because if you can inject copper fluids into hundreds of metres of volcanic rocks at the time, then you need a pretty strong system to be able to do that.

“I guess when we get there and start drilling, which should be towards the end of this month, the rotary lie detector will test that for us, and we’re pretty confident that’s what is going to happen.”

Drilling will take 4-6 weeks with results expected about four weeks following completion.

Location, location

Drew said Cangallo had plenty of advantages, including that AusQuest owned 100% of the project.

The company has also discovered copper from surface.

“If you’ve got copper in oxide form near surface, then you’ve got the chance of getting early cashflow, so some of the others, if they’re deep, then you’ve got to get down to them. It’s just a high cost. We’re hoping ours is much lower cost,” Drew said.

Another advantage is its location, sitting just 8km from the coast.

“We’re only about 400m above sea level, so the cost of getting water to our site is going to be quite minimal compared to others,” Drew said.

AusQuest is also confident it won’t have the sort of community issues that have plagued other copper mines in Peru, including MMG’s Las Bambas.

“If you’re up in the Andes, you often interact more with communities,” Drew said.

“Where we are, it’s pretty much desert. There’s no agriculture where we’re working at the moment.”

The project’s coastal location may explain why Cangallo has sat undiscovered.

“I think a lot of the major companies were not that interested in working along the coast, because the rationale of the time was that the really big ones, which is what the big companies want to find, tend to be inland,” Drew said.

The big companies have tended to stick to that part of the territory, whereas the coastal belt, when we got there, was fairly open from tenement point of view.

“We may rewrite the history books. Who knows?”