Cerro Ccopane Property

Southern Perú

ccprop The Cerro Ccopane Iron property consists of 21 contiguous mining concessions covering 13,000 ha in Cusco Departamento in southern Perú. These concessions are wholly owned by Cuervo. The Company also has an additonal 5,200 ha of concessions in the vicinity of Cerro Ccopane. 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 Orcopura is at an elevation of 3,850 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 and Posada 5 (i.e. Huillque and Orocupra zones). A Category “B” permit which pertains to the Aurora zones on concession Huini III is pending.

Diamond Drilling

imageThe Company commenced a program of diamond drilling on the Cerro Ccopane Property in mid 2007. This program targets 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 had completed 14,500 m of drilling on the Orcopura zone by July of 2008. An initial Mineral Resource Estimate for the Orcopura zone, which represents only one of four known zones on the property and which is based on the results from 73 of 115 drill holes, is 60.5 Mt “inferred” grading 51.5% Fe. Diamond drilling has also commenced on the Huillque zone of mineralization.  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 project campsite on the property (Orcopura). 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. A sample preparation facility is planned for installation at Orcopura. 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.

As a result of the study 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. 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.

Preliminary Transportation Study

imageA preliminary transportation study was commissioned by the Company to provide support to the future of any development potential of the Cerro Ccopane iron ore project. While the Company is very early in its exploration program, the availability of cost effective transportation facilities is integral to the economics of developing iron ore properties. The mandate of the study was to assess, on a preliminary basis, the adequacy of existing port, road and rail transportation infrastructure relevant to the site and to identify probable needs for upgrading, expansion and new construction. Underlying the study was a prospective annual production volume of 5 million tonnes of iron ore.

The study, entitled “Cerro Ccopane Mine Transportation Study: A Conceptual Study of Transportation Alternatives Associated with a Potential Development of The Cerro Ccopane Mine near Cusco Perú” was prepared by Frank Hansen Consulting of Kila, Montana.

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

  • Truck transport is favoured over upgraded roadway from the prospective mine site to the railhead near Cusipata, a distance of approximately 105 km. The alternative of a direct rail connection was considered, as was a slurry pipeline, but each was deemed less attractive, principally due to capital cost considerations;
  • Overland rail carriage from Cusipata to the Pacific tidewater port at Matarani, a distance of approximately 712 km, could be handled with some slight modifications to the track and roadbed. Ferrocarril Transandino S.A. (PeruRail) is the current leasor of the tracks and right-of-way;
  • The port at Matarani is an efficient and ISPS Code-compliant facility and is capable of handling a variety of cargo ships including Handy Class and smaller Panamax Class vessels. With some modifications the ship loading system could be used to load iron ore into SuperHandimax vessels;
  • PeruRail has indicated its interest in developing an entire overland transport system to facilitate the movement of iron ore to Matarani; and
  • TISUR (Operator of the port) has indicated an interest, if warranted, in developing Cape Class ship loading facilities at Matarani.

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