Option agreement on separate "drill ready" copper porphyry and molybdenum porphyry systems and
joint venture on gold/silver high-grade vein mining
Rose Petroleum (AIM: Rose), the AIM-listed natural resources company, is pleased to announce that its wholly owned Mexican subsidiary Minerales VANE S.A. de C.V. ("MV") has entered into a joint venture and option agreement (the "JV" or "Agreement") with Minera Camargo S.A. de C.V. ("Camargo") in connection with Camargo’s Tango concessions located northeast of the town of El Rosario in southern Sinaloa, Mexico.
The Tango, Tango 2, Tango 3 and Tango 5 concessions host two porphyries, one containing copper (Cu) and the other molybdenum (Mo) mineralization as well as several historic high-grade, narrow-vein gold (Au) and silver (Ag) mines on the margin of and associated with the porphyries. Disseminated gold and silver deposits was the initial focus of exploration efforts by Camargo in 2003 on the concessions based on geological survey work by the Mexican government in the 1980’s. This survey work also identified separate porphyry Cu and Mo occurrences that were confirmed by Camargo and, starting in 2009, were followed up with extensive geochemical sampling and advanced to the “drill ready” stage. The narrow-vein gold and silver has been the focus of mining dating back to the Spaniards (16th century) and, although there are a number of underground workings on the property, none have seen recent significant production.
The Agreement with Camargo is to further explore the two copper- and molybdenum-bearing porphyries (base metals) and separately to seek to develop production on the high-grade gold and silver veins (precious metals) to provide ore to the Company’s San Dieguito de Arriba (“SDA”) mill in Acaponeta, Nayarit.
- 75% earn-in option for US$5m spent over five years on Porphyry targets (Base metals)
- 50:50 profit split JV on Gold/Silver (Au/Ag) mines within the property (Precious metals)
- Drill ready porphyry copper target with visible copper minerals within a 2km x 1.5km soil, rock-chip, and stream sediment copper anomaly – including a 2m channel sample in an oxide zone averaging 2,355 ppm Cu and 27 ppm Ag
- Drill ready porphyry molybdenum target with visible molybdenite within a 3km x 1km soil and rock-chip molybdenum anomaly, including a 21m channel sample with assays averaging 1.3% Mo
- 3,954 hectare (39.54km²) land position
- Near-term production potential for mill feed from the surrounding gold and silver veins
MV and Camargo have entered into a joint venture and earn-in option agreement whereby a MV and Camargo JV will split profits 50:50 on production from precious metals veins and MV separately holds the option to earn 75% ownership on base metals (the porphyries) by investing US$5 million in work expenditures over five years. MV is the operator on both the JV and earn in option. MV has made a conditional initial payment to Camargo of US$272,000 + 16% IVA (Impuesto al Valor Agregado or “VAT”) for the purpose of bringing the property into good standing by paying all outstanding Mining Duties to the Mexican government (which has now been verified as paid). Camargo will refund MV US$125,000 of this amount from any profits earned from the production of precious metals. The remainder of the initial payment is applied towards the earn-in.
Group CEO Matthew Idiens said: "With the expectation of the Utah Oil & Gas project becoming a significant stand-alone company, it is important for us to build up the mining side of Rose to a similar pedigree. I feel that sourcing projects of the calibre of the Tango project is essential for us to be able to create two stand-alone companies, one Oil & Gas and one Mining. The Agreement on the Tango property provides an excellent opportunity for the Company to move directly to the drilling stage on a major porphyry system. The initial drill programme is expected to cost in the region of US$500,000 to US$1m to complete and will give us a clear indication on whether we proceed further with the option.”
Idiens added: “These are exactly the type of projects our copper subsidiary AVEN Associates LLC has been looking to acquire, but with the near-term precious metals production potential and bearing in mind the location, they are even more advantageous and better held in MV. We believe the Agreement also gives the flexibility to fund the project internally through MV cash flow or with outside investors. We look forward to working with Minera Camargo in developing this exciting project."
Background to the Tango Property
The Tango property has had significant historic work completed by Camargo and through investments by previous parties that has advanced the project to the drill-ready stage. Camargo has been active on the property since 1996 with expenditures to date in excess of US$4m.
The Tango property covers a classic base and precious metals porphyry system. The property is located in southern Sinaloa, 70km east of Mazatlan (direct) and 43km by road northeast of the town of El Rosario. It consists of four Tango concessions totalling 3,954 hectares (39.54km²), sufficient to cover an open pit mine/mill complex. The project consists of copper (Cu) and molybdenum (Mo) bearing porphyries in a caldera setting surrounded by precious metals occurrences with mining activity dating back to the Spanish occupation. The caldera measures 8km across and is visible from an image altitude of 160km on Google Earth.
Three volcano-plutonic complexes occur on the Tango property, (i) lower mafic to intermediate volcanic rocks intruded by plutonic rocks, (ii) conglomerates intercalated with maroon-weathering, intermediate volcanic rocks, and (iii) rhyolite ignimbrites and felsic intrusions. The lowermost complex is at least 700 m thick and consists of Paleocene to Eocene basaltic andesite and intermediate volcaniclastic rocks intruded by porphyritic monzodiorite, alkali granite and aplite. Porphyry copper prospects occur in the porphyritic monzodiorite (Porfido La Guacamaya), and porphyry molybdenum prospects occur in mafic volcanic and volcaniclastic rocks (Porfido El Cuervo), presumably near or above an intrusive contact. Conglomerates intercalated with maroon-weathering intermediate volcanic rocks mark an erosional unconformity above the mafic rocks. Oligocene rhyolitic ignimbrites at least 1200 m thick define the uppermost volcano-plutonic complex. They are mainly intruded by felsic and mafic dikes, and mineralized by epithermal quartz veins.
The Porfido La Guacamaya (Cu porphyry) target located just west of the small settlement of Sitios de Picacho (“Picacho”) contains a 2km x 1.5km copper anomaly based on soil, rock chip and stream sediment samples including an average of 2,355 ppm Cu and 27 ppm Ag in assays from samples along a 2m channel sample in an oxide zone (as reported by Camargo). Camargo reports an average of 2423 ppm Cu, 89 ppm Mo, 294 ppm Pb and 360 ppm Zn in XRF measurements on 219 rock samples collected from the porphyry.
The Porfido El Cuervo (Mo porphyry) target located 5km north of Picacho contains a 3 km x 1 km soil and rock-chip molybdenum anomaly including assays from sampling along a 21m channel sample averaging 1.3% Mo (as reported by Camargo). This includes an assay result of 5.6% Mo, 1.3% Pb, 36 g/t Ag and 141 ppb Au across 4m. XRF measurements on 114 rock samples collected from Porfido el Cuervo by Camargo averaged 151 ppm Cu, 3640 ppm Mo, 72 ppm Pb and 400 ppm Zn.
Both Mo and Cu are clearly visible in outcrop in a number of areas within the copper and molybdenum anomalies. Although the main interest in the property is the potential value of the porphyry mineralization, the property is favourable for small, narrow-vein precious metals production suitable for Minerales VANE’s SDA mill operation.
Camargo became active in the area of the Tango concessions in 1996. The Tango concessions were acquired by staking by Camargo in early 2003, at the bottom of a prolonged cycle of depressed metals prices. The Tango property is located in the western foothills of the Sierra Madre Occidental, one of the world’s largest silicic igneous provinces (Aranda-Gomez et al., 2003). The property is located over part of the former “Viva Zapata” Mineral Reserve (the “Reserve”), a project that was staked and explored by the Servicio Geologico Mexicano (“SGM”) in the 1980’s (Bon-Aguilar, 1987 and Rodriguez-Rodriguez et al., 1984). Later regional geochemical work by the SGM at the turn of the millennium highlighted the Reserve as one of the largest contiguous anomalies for gold and base metals in southern Sinaloa and Northern Nayarit.
From 2004 to 2008, Camargo conducted intensive rock chip, stream sediment and soil sampling programmes over the Tango concessions following up on the previous mineral occurrences reported by SGM. The initial focus of Camargo’s work was to explore for disseminated gold and silver deposits, but the sampling programs also targeted elevated copper and molybdenum in samples collected by SGM in the porphyries. These Cu and Mo occurrences were confirmed, but not followed up on until later.
In January 2006, Camargo completed a detailed stream sediment survey (205 samples) over 90% of the Property. Of the 205 samples collected, 21 samples contained more than 500 ppb Au, and 52 samples (25%) contained more than 22 ppb Au. Values for Cu, Mo, Pb (lead) and Zn (zinc) were also markedly anomalous, particularly in creeks draining the veins.
A total of 2,161 B-horizon soil samples were then collected from 68 line kilometres of survey grid. Sample spacing was either 25m or 50m (slope-corrected) on lines spaced 100m to 400m apart. Collectively, about 1400ha (about 35%) of the Property has been covered by the soil geochemical survey grids.
A total of 1,746 rock samples were collected from the porphyry system and mine workings on the property. These samples were analysed by a combination of geochemical assay as well as analyses with a TerraSPEC SWIR spectrometer, Niton GOLDD portable XRF assayer and a Kappa magnetic susceptibility meter.
The average precious metal content of 908 rock samples from the vein mines and prospects is 1.43 g/t Au and 11.6 g/t Ag. Gold values from samples of several veins of approximately 1m wide were 40 g/T or greater. During due diligence work by MV, sampling in the San Agustin Mine and vein returned values up to 69.3 g/T Au with an average of 14.3 g/T Au from the 18 samples collected. Sampling in the La Gloria Mine returned assay values up to 167 g/T Au and 405 g/T Ag with an average of 8.2 g/T Au and 26 g/T Ag from the 8 samples collected, excluding the high values. The San Agustin and La Gloria Mines are the initial focus of MV’s efforts to establish production from the precious metals vein occurrences.
In 2008, some of the epithermal quartz veins were tested by reverse circulation (“RC”) drilling. A total of 14 RC holes were completed. This drilling was for the purpose of exploring for disseminated gold mineralization associated with the veins. The drilling did not show disseminated mineralization.
At the time the drilling was done, knowledge of the porphyry system centred north of Picacho was limited to the Cu and Mo occurrences reported by SGM and confirmed by Camargo during their initial sampling programmes. These results led Camargo to then initiate exploration for potential porphyry deposits in 2009. The follow-up sampling programmes identified the 2km x 1.5km Cu anomaly and separate 3km x 1km Mo anomaly previously mentioned.
Kristopher K. Hefton, BSc Geology, Chief Operating Officer Rose Petroleum plc, who meets the criteria of a qualified person under the AIM Rules - Guidance for Mining, Oil & Gas Companies, has reviewed and approved the technical information contained within this announcement. VANE Minerals, as operator of the project, is responsible for the contents of this press release.