Just received this from one of my houses.
HEADLINERS
YAMANA RESOURCES (YRI : TSE : $0.98 : Issued 27.3M : $6M cash) Yamana
is well into an extensive drill program on its precious metal projects
in Argentina and copper porphyry targets in Chile. Yamana has a 100%
interest in 21 properties for 1,347 square km in Santa Cruz Province,
Argentina. This region has no history of gold production, and until
15 years ago, no history of exploration. Yamana's holdings are spread
over a 250 km by 150 km area and cover epithermal gold-silver
discoveries geologically similar to large, low-grade gold deposits in
Nevada. An aggressive program of diamond drilling will follow up on
last year's high-grade silver with gold and base-metals discovery at
Lejano and on the high-grade silver and gold discovery at Bacon.
At Lajano, the structurally controlled, epithermal mineral deposit on
South Ridge exhibits potential to host more than 100M ozs. of silver
with ore-grade base-metals values. Semi-massive sulfides of iron,
lead, zinc, and copper fill quartz fault-veins and cement associated
fault breccia. Metallurgical tests will be conducted on this material
this year. So far Yamana has outlined a mineralized core zone of 4 m
true thickness averaging 550 g/t Ag, 1.56 g/t Au, and 6.1% Pb. A 1 km
zone of lower grade disseminated mineralization encases this core of
semi-massive sulfides, forming a deposit averaging 20-22 m thick.
Based on the 31 holes which penetrated this deposit, its average grade
is 200 g/t Ag, 0.5 g/t Au, and 2.5% Pb. Yamana believes that there is
good potential here for it to develop a deposit in the order of 10-30M
tonnes of ore containing 100-200M ozs. of silver.
Drilling has commenced at the Bacon property, which is 150 km
southeast of Lejano. Yamana plans a 1,500 m DDH program with two
initial objectives: pattern drilling on 25 m centers to begin
quantification of the high-grade silver mineralization occurring
within shoots beneath the discovery outcrop; and in-fill drilling to
ascertain the zone's continuity over its known 1 km strike length.
Additionally, Yamana plans to engage its own rig in a 2,300 m RC
program to scout out indicated extensions of the mineralized quartz
fault-vein over its 9 km host structure.
Previous drilling resulted in a precious metals discovery on North
Bacon. One of the more spectacular intercepts for the Santa Cruz
province (24 m approximate true thickness of 664 g/t Ag and 0.68 g/t
Au, including 6 m of 2,579 g/t Ag and 2.62 g/t Au) comes from hole 16.
Eighteen reverse-circulation (RC) drill holes, 13 of which were
completed, tested approximately a 1 km strike length of an epithermal
quartz fault-vein. Ten holes hit ore-grade silver and gold
mineralization. At this time drilling is insufficient to quantify
this discovery. Segments of the mineralized structure within the
discovery zone, yielding surface samples as high as 7,000 g/t Ag with
5 g/t Au across 2 m, remain to be drill tested. The large fissure
zone containing the discovery runs for 9 km across Bacon and contains
other mineralized showings that have yet to be explored. The quartz
fault veins of North Bacon occur within a favourable geologic sequence
of brittle rhyolitic volcanic rocks, excellent for the development of
big vein systems. The formation is estimated to be over 600 m thick
in the North Bacon area. Geology and mineralization are analogous to
that of the Tonopah, Nevada, mining district, which produced 174M ozs.
of silver and 1.86M ozs. of gold around the turn of this century.
In Chile, Yamana is systematically drilling a series of 14 porphyry
copper prospects within the Northern Porphyry Copper Belt (NPCB)-the
world's most productive copper zone. Drilling has been completed on
the Capricornio property, 65 km northeast of Antofagasta. Yamana is
currently drilling on several of its Bufalo area properties, 70 km
north of the Escondida copper mine.
Argentina is currently the exploration hotspot for new mineral
deposits. A list of junior companies currently working includes:
Price Shares o/s Mkt Cap.
Oct 21/98 (M) (M)
Argentina Gold (ARP-V) $1.90 35.5 67.45
Blackhawk Mines (BHK-T) $0.25 113.2 28.30
Corriente Resources (CTQ-V) $0.64 21.0 13.44
Mansfield Resources (MDR-V) $0.63 16.4 10.33
Minera Andes (MAI-A) $0.60 20.7 12.42
TNR Resources (TRR-V) $0.25 3.4 0.85
Viceroy Resources (VOY-T) $2.60 33.1 86.06
Yamana Resources (YRI-T) $0.95 27.3 25.94
Average 30.60
We believe that Yamana's current market cap. does not reflect the
drilling success on its Lejano and Bacon projects in Argentina. Given
the almost three-fold market cap. of Argentina Gold, we believe that
Yamana's share price could increase dramatically once the first round
of drilling news comes out on this season's drilling. We have a
six-month share price target of $2.50 for Yamana. Given the
risk-reward nature of the mineral exploration business, the shares are
rated as a SPECULATIVE BUY. Andrew Muir, Canaccord Research
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