Cerro Ccopane Property

Southern Perú

ccprop The Cerro Ccopane Iron property consists of 36 mining concessions covering 19,200 ha in Cusco Departamento in southern Perú. These concessions are wholly owned by Cuervo. The project area is located 65 km straight-line distance south of Cuzco, the capital city of the region, and 600 km straight-line distance southeast of Lima.

Physiography of the area of interest is mountainous and varies from rolling gentle to moderate relief at higher elevations on the pampa (up to 4,600 m) to tight gorges and canyons at lower elevations (3,200 m). The Company’s exploration camp at Bob 1 is at an elevation of 3,900 m.

Food, accommodations, electrical power, and telephones are available relatively nearby for non-camp supported exploration activities on the Cerro Ccopane Project, though Cuzco is the main source of supplies.

Geology

imageThe exploration targets on the Cerro Ccopane Property are near-surface iron skarns containing massive magnetite and some hematite. The property covers an area of the contact zone between the Tertiary-age Apurimac Pluton and an older (Cretaceous-age) outlier of the Arcurquina Formation (limestone) and has good potential for the discovery of additional iron skarn mineralization along this contact. The main showings already identified on the concessions have been dubbed the Orcopura (Wiychauccasa), Aurora and Huillque zones of magnetite mineralization. The iron (Fe) content of samples collected from the property by Cuervo and its consultants show potentially commercial grades for ore (see Technical Report).

The Cerro Ccopane Iron Project is a property of merit based on a review of the exploration and in conjunction with site visits by company personnel and independent “qualified person” consultants. The Cerro Ccopane Property warrants further exploration for iron skarns with the current high demand for iron ore.

The Company’s Category “C” Environmental Assessment regarding the Cerro Ccopane property was given final approval by the Ministerio de Energía y Minas del Perú as Directoral Resolution No. 229-2007 MEM/AAM on July 11, 2007. This approval allows the Company to commence advanced exploration including diamond drilling on concessions Posada 2, Posada 5 and Huini III (i.e. Huillque, Orocupra, and Aurora zones).

Diamond Drilling

image The Company commenced a program of diamond drilling on the Cerro Ccopane Property in mid 2007; this campaign of drilling was completed in April of 2009. The program targeted areas of known mineralization on surface and geophysical anomalies identified by magnetic and gravimetric surveys within only 1,500 ha of the total property area. Cuervo completed 21,000 m of drilling by the end of the program.  A Mineral Resource Estimate for the Orcopura zone, which represents only one of six known zones on the property and which is based on the results from 121 drill holes, is 56 million tonnes “measured and indicated”, grading 46.7% Fe and 51 million tonnes “inferred” grading 43.7% Fe. Diamond drilling was also performed on the Huillque zone of mineralization (21 holes) and the Aurora zones (25 holes).  Mineral Resource Estimates of 56 million tonnes “inferred” grading 53.5% Fe and 16 million tonnes “inferred” grading 49.3% Fe are reported from the Huillque and Aurora zones of mineralization respectively. During 2012, diamond drilling was also performed on the Bob1 zone of mineralization (17 holes), with a reported Mineral Resource Estimate of 453.5 million tonnes “inferred” grading 42.0% Fe. Reported results, maps, sections and photographs can be selected from the menu on the right-hand sidebar.

All drill holes are logged and sampled at the Cuzco facilities. A nominal sampling interval of 1.5 m is currently being used within sections of typical iron mineralization. Analyses are being performed by SGS Minerals Services at their laboratory facilities in Lima (Callao), Perú. Iron (Fe) analyses are performed by titration methods, sulphur (S) analyses are carried out with a LECO furnace and all other analyses are by performed ICP-AES after a multi-acid (“total”) digestion. Laboratory check analyses are performed on approximately 10% of the samples submitted while field duplicate samples are submitted on a rate of approximately 5% of the total samples sent to the laboratory. The Company is satisfied with the reproducibility of analyses for the elements reported.

Preliminary Metallurgical Study

imageThe Company recognized at an early stage that many of the samples submitted for analysis, while reporting iron contents in excess of 55%, also returned elevated sulphur and copper values; this was not to be totally
unexpected given the geological setting and metallogeny of other deposits and occurrences in the Apurimac - Andahuaylas skarn belt. For example, the belt hosts such deposits as the Tintaya Mine which is being exploited by Xstrata Inc. for its copper content. Cuervo therfore carried out a preliminary low-intensity magnetic separation (Davis Tube) metallurgical study which was executed by SGS Minerals Services in their facilities at Lakefield, Ontario, Canada. A total of 20 samples selected from the early stages of its on-going diamond-drill program were submitted for this study. Each sample represented 1.5 m of drill core length.

Based on the study results, the Company believes that the metallurgical issues can be addressed in a relatively simple manner. The preliminary Davis Tube results indicate that most of the contained sulphur-bearing minerals as well as the copper can be removed with limited processing while producing a very high-grade iron ore concentrate (66%-69% Fe). Silica values were also found to be within acceptable limits by analyses carried out as part of this testing. The Company is currently carrying out additional metallurgical testing and analysis.

Transportation Studies

imageTwo transportation studies have been commissioned by the Company to assess the potential development of the Cerro Ccopane iron ore project. The second, and more comprehensive report, was completed in March 2009.

The recently completed study, entitled “Cuervo Resources, Cerro Ccopane Mine Perú: Mine to Port Conceptual Transport Study” was prepared by Sandwell Engineering Inc. (“Sandwell”) of Vancouver, BC with input from PSI Engineering Inc. also of Vancouver. Mr. Frank Hanson of Frank Hanson Consulting of Kila, Montana, the Company’s transportation advisor, provided the initial specifications for the study. The study was initiated in response to the continuing success of the ongoing program of exploration drilling on the Cerro Ccopane property which is located 65 km south of Cuzco, Perú and approximately 320 km north of the Pacific tidewater port at Matarani, Departmento Arequipa, Perú.

The principal findings and recommendations of the Sandwell report may be summarized as follows:

  • Transportation of material from the Cerro Ccopane property does not present unique logistical challenges. All examined transport scenarios are technically feasible;
  • A slurry pipeline from the property to port is considered to be the best overall transportation alternative at this time. It is noted that similar pipelines for mining operations of comparable proposed capacities are presently in operation elsewhere; and
  • Recommendations for further studies include additional port studies at Matarani and linking future mineral-processing studies with future transportation evaluations.

The Company is encouraged by the findings of these reports as they give confidence in the potential to advance the project.