Yamana Resources third quarter results
Yamana Resources Inc YRI
Shares issued 27,390,859 Jan 29 close $0.61
Mon 1 Feb 99 Company Review
Mr. Victor Bradley reviews the company
Operations
During the quarter, Yamana drilled 125 holes (16,249 metres), of which 91
(7,547 metre) were in Santa Cruz province, Argentina: 48 on Bacon, 33 on
Lejano, five on Abril, and five (to date) on Ciclon West; 34 holes (8,702
metres) were drilled in Chile. In Argentina, Yamana's primary focus was on
second-phase drilling on two promising silver properties. In Chile
reconnaissance drilling was undertaken on nine properties in the northern
porphyry copper belt.
Yamana has fulfilled its Papua New Guinea spending requirement through
January 2000 and has now reached a 40 per cent equity interest in the
D'Entrecasteaux Islands gold project. All other projects are being held on
standby, drawing minimal expenditures while maintaining key land positions.
Santa Cruz, Argentina
Yamana launched its latest round of drilling in western Santa Cruz on Sept.
22 1998, focusing on targets in a newly-recognized silver district where
several recent discoveries have attracted international attention. Yamana
engaged mineral industry consultants, Micon International Limited to
perform independent technical audits of its Santa Cruz project. Following
site visits in October, Micon's senior geologist reported: "Yamana has
established a strong and experienced exploration team supported by
competent and diligent technics staff," following standard industry
protocols. He concluded "Micon believes that the North Bacon target offers
excellent potential for further discovery of epithermal silver-gold
mineralization."
Bacon
The latest drilling confirms a high-grade silver lode with gold on North
Bacon over more than 1.5 kilometres of a quartz fissure-vein system
displaying classic epithermal characteristics of a low sulphidization-type
deposit. The primary ore-mineral is pyrargyrite (ruby silver), together
with native silver, set within a gangue of quartz and adularia (a feldspar
mineral of potassium, aluminum and silica).
The program had a two-fold purpose: scout drilling to further explore
indicated extensions of the vein system; and pattern drilling involving
fences every 25 metres across a 250-metre section, known as Veta Martha, to
begin to establish a silver resource.
A total of 41 diamond-core drill holes (DDH) were drilled for 2,061 metres
and seven reverse circulation (RC) holes for 314 metres.
At least six DDHs hit highs of more than 5,000 grams per tonne Ag over true
thicknesses (tt) of 0.5 metres to 1.5 metres within wider intervals of
excellent grade. The best intercept is DDH 37Ä810 metres (tt) of 2,989
grams per tonne Ag with 4.42 g/t Au.
The 66 holes drilled thus far in 1998 represent an initial appraisal of the
Bacon silver deposit. As with all epithermal veins, Bacon will be
challenging to evaluate, because it will abruptly pinch and swell both
along strike and downdip with only a certain percentage of it being
mineralized.
High-grade silver mineralization in Veta Martha occurs as discrete shoots
within the quartz-adularia vein. Current drilling has identified at least
one major high-grade shoot (see Veta Martha Silver Shoot long section) more
than 150 metres long, 30 metres to 50 metres wide, two metres to nine
metres thick and open to depth. This was penetrated by eight DDHs returning
excellent assays. One, DDH 70, hit the shoot 65 metres down the dip of the
vein, intercepting 8.86 metres (tt) of 440 g/t Ag and 1.91 g/t Au,
including 0.58 metres (tt) of 5.096 g/t Ag and 28.04 g/t Au.
The top of this shoot is exposed in a trench which produced a 3.8-metre
(tt) interval of 20, 144 g/t Ag with 54.51 g/t Au including 1.9 metres (tt)
of 39,280 g/t Ag and 107.98 g/t Au within which is 0.67 metres (tt) of
90,456 g/t Ag and 60.10 g/t Au.
Yamana estimates that this one shoot represents an in situ resource of
about six to seven million ounces of silver.
Further promising drill targets have been identified around Veta Martha
including to the east at Sugar Hill (float sample: 16,761 g/t Ag with 16 69
g/t Au), at Veta NE (DDH intercept: 0 32 metres (tt) of 2.317 g/t Ag) at
Veta Medio (DDH intercept: 1.03 metres (tt) of 468 g/t Ag) and to the west
at Veta Martha Oeste (RC intercepts: 100 to 400 g/t Ag).
These assays, together with the mineralogical and textural characteristics
of the veins indicate Yamana's drilling may have nicked the top of more
silver shoots.
Extensive surface sampling has discovered two other promising drill targets
north of Veta Martha. At Far North Bacon, one kilometre north, the best
rock-chip sample (6,821 g/t Ag, with 19.27 g/t Au) was taken from a
prominent, silverbearing quartz-sulphide vein system more than 1.5
kilometres long. At Argenta Centro, six kilometres north, a quartz vein
system covers an area about 0.5 by three kilometres with different samples
containing up to 31 per cent Cu, 4.7 per cent Pb, and 8.8 per cent Zn; up
to 10.70 g/t Au and a high of 314 g/t Ag.
A third campaign on North Bacon will begin next year and will include the
new targets precious-metals extraction tests will also be conducted, using
drill cores.
Lejano
At Lejano, 150 kilometres north of Bacon, Yamana completed 33 holes for
4,094 metres, involving 17 DDHs (1,536 metres) and 16 RC holes (2,558
metres). Large-diameter (HC) drilling is providing better core samples,
especially for metallurgical testing. Most assays are pending.
Lejano hosts polymetallic mineralization with good silver and gold values
on numerous sites spread over a four-square-kilometre area. Mineralized
sites are associated with concentric, inward-dipping, ring fracture zones
encircling rhyolite domes. This series of fissures is variously cemented
with base-metal sulphides, forming discrete massive sulphide lodes which
pinch and swell both downdip and along strike. Surface oxidation has
destroyed the sulphide outcrops, forming numerous gossans.
This latest drilling follows two earlier campaigns, where 81 shallow scout
RC holes were drilled (3,210 metres), and examines an area around South
Ridge more than one kilometre long and 250 metres wide containing many
gossan shows. The primary objective is to define the limits, tenor and
continuity of the South Ridge mineralization along strike and downdip.
Twelve fences of holes, 50 metres to 100 metres apart, were drilled across
the zone. The resulting database wil be used to construct geological cross
sections and long sections to define the geometry of the oxide and sulphide
mineralization.
The initial holes probed an argentiferous massive sulphide lode on the west
end of South Ridge, following up on two previous RC hole intercepts which
returned an average of four metres (tt) of 384 g/t Ag, 2.12 g/t Au, 0.3 per
cent Cu. 4.5 per cent Pb, and 4.4 per cent Zn. Recent drilling targeted
downdip extensions of this mineralization DDH 87 encountered two metres
(approx tt) of sulphides with 1,406 g/t Ag, 3.34 g/t Au, 0.4 per cent Cu,
8.2 per cent Pb, and 10.3 per cent Zn, encased in low-grade stockwork
mineralization. RC 88 further downdip, intercepted two metres (approx. tt)
with 178 g/t Ag, 0.33 g/t Au, 0.1 per cent Cu, 1.2 per cent Pb and 2.0 per
cent Zn, also encased in a halo of lower grade mineralizatino.
Intercepts (assays pending) around DDH 87 and RC 88 indicate that the
tabular massive sulphide body has a minimum strike length of 250 metres, at
least 120 metres of dip length, and is two metres to four metres thick. It
appears to dissipate at depth and may be closed off to the west, but
remains open to the east, where other holes (assays pending) indicate it
may extend an additional 200 metres, to a point under the South Ridge
gossan. There, DDH 86 hit 1.4 metres of 1,520 g/t Ag and 6.88 g/t Au,
possibly correlating to the same zone in DDH 87. This intercept is
partially oxidized and just above the water table, below which fresh
sulphides are expected.
The recent drilling also expanded on previous high-grade silver intercepts
on North Ridge, in western Lejano Here, four new holes tested
mineralization in quartz veining associated with the inner ring fault of
the western Lejano rhyolite dome. Of 10 RC holes drilled earlier in the
year, the best was RC 22, which hit four metres (approx tt) of 716 g/t Ag
and 0.09 g/t Au. Recently, RC 95, drilled 250 metres from RC 22 along the
curvilinear structure, hit 16 metres of oxidized mineralization showing 122
g/t Ag with 0.05 g/tAu within a thicker intercept of 40 metres of 92 g/t Ag
and 0.07 g/t Au. RC 108, drilled 350 metres north of RC 95 on the other
side of the rhyolite dome in the same ring fracture zone, hit 2.6 metres
(approximate feet) of 940 g/t Ag and 0.57 g/t Au within 12 metres of 400
g/t Ag.
Ciclon West
After drilling at Lejano, both the RC and DDH drills were moved 20 km west
to Ciclon West, where geologic mapping, surface rock-chip sampling, and a
reconnaissance IP survey defined several drill targets. Drilling began on
Nov. 25, following 10 km of access road construction. This first-pass
drilling will likely involve six DDH and nine RC holes, each to depths of
100 metres to 250 metres.
Ciclon West is a polymetallic prospect geologically similar to Lejano,
except that is is larger and shows a more pervasive hydrothermal system.
Mineralization is found over a vertical relief of about 100 metres.
Numerous discreet brecciated and silicified fault structures carry good
precious-metals values, frequently between 1 g/t Au and 3 g/t Au (with a
high of 7 g/t Au), 100 and 500 g/t Ag (with a high of 1,260 g/t Au) and
several per cent lead and anomalous zinc. These studies are many metres
wide, with lengths exceeding one kilometre.
Chile
Yamana began its drill program in late September, targeting nine properties
in its northern porphyry copper belt project and two recently-acquired
properties. Targets were fixed from ground surveys showing anomalous
geochemical or geophysical conditions.
The program is continuing, with 34 holes completed of a planned
40-hole-first-pass program. Analytical results have been received for 23
holes covering six of the nine project areas. These results indicate that
copper and molybdenum mineralization does not exist beyond trace amounts to
Capricornio, Anto North, Anto Central, Elvira,and Paciencia. At Plomo,
three holes started and terminated in gravel at depths to 270 metres, and
no samples were submitted for assay. Viento, Pan Am and Inca are awaiting
drilling results. Pan Am, on a highly-silicified volcanic centre, is being
targeted for its gold, rather than copper potential. Inca has surface
alteration, which is the guide to drilling and is in a district where
Codelco, Minorco and Rio Algom are actively exploring.
CONSOLIDATED STATEMENT OF LOSS
Nine months ended Nov. 30
(in U.S. dollars)
1998 1997
Revenue
Interest and
other income $ 137,017 $ 529,047
---------- ----------
Loss on
writedown of
investment 1,481,804 -
Salaries and
consulting
fees 673,470 1,181,468
General and
admin 475,735 818,881
Professional
fees 244,951 369,956
Investor
relations 170,458 300,211
Depreciation 49,210 46,761
Filing and
transfer agent
fees 37,565 52,222
Federal, state
and provincial
taxes 34,661 62,704
Bank charges and
foreign exchange 33,085 55,968
Relocation
expenses 28,455 30,123
General
exploration 10,962 36,395
Mineral properties
written off 2,636 314,459
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3,242,992 3,269,148
---------- ----------
Net loss for
the period ($3,105,975) ($2,740,101)
========== ==========
Loss per share (11 cents) (10 cents)
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