Robert Schnell
Principal Owner of Chañarcillo Mine
EXECUTIVE SUMMARY
The following mining prospect offering relates the potential of the Chañarcillo mine, which was famous, as being the third most important silver mine in the world, between 1832 and 1902. The mine is located about 65 Km south from the city of Copiapó, in Region III, northern Chile. Access is by good gravel road 14 km east of the Pan American highway, at an elevation between 850m and 1.250 m. It produced in total on the order of 100.000.000 oz of silver and is known as a “bonanza” type deposit due to its high grades, as mining was restricted to “Direct Smelting Ore” (DSO).
The main point which comes to anybody’s attention at Chañarcillo, is the existence of more than 100 shafts, each with its manway for access of personnel, throughout a 3Km x 3Km area, where each pair belonged to a different Company.
In studying the original reports in reference to the work done during the main period of operation (1832-1888) before the mines got flooded making inaccessible the lower levels, it is clear from the descriptions of the time, that the deposit is polymetallic and contained mostly zinc, lead, copper, magnetite, and manganese mineralization, associated as byproducts to the silver which was their only interest at the time. The extracted material must have been visually upgraded and sent to nearby smelters.
At present, the mine is owned mainly by two parties; Erwin Robert Schnell (RUT 4.043.669- 3) and Sociedad Legal Minera Juan Godoy Uno de Chañarcillo (RUT 85.491.700-5). Mr. Schnell owns a total of 1899 Ha of mining and exploration concessions, while the SLM Juan Godoy owns 131 Ha of mining concessions.
The Chañarcillo mine is presently available for sale, where value creation may be added through a proper drilling exploration campaign to estimate accurately the reserves and resources of the prospect, getting proper governmental permits, and finally starting production operations.
Available additional information is currently available on the Chañarcillo project and is summarized in annex 4 and 5.
POTENTIAL:
The mineralization comes mainly from several “mantos” within limestone beds, which fed by more or less vertical veins, veinlets and micro cracks, with an approximate N 30° E direction. During the heydays of the operation, this material, was mined from underground, and sent to nearby smelters or on-site installations. Grades of the ore being mined in the XIXth century reaching up to 5.000 gr Ag/MT.
There were a large number of mines in operation under different ownership in the area, all producing “DSO”. We have obtained information on 66 of these mines with production records for certain specific years. The actual present target corresponds to the remaining material, between the approximately 100 shafts found in the area which produced ore from these “manto” type structures, as evidenced from remaining waste dumps reclaimed in the 80´s and which averaged on the order of 300 gr Ag/MT.
It must also be understood that mining in those days, when room and pillar or sub level caving was not in use, was mainly done manually, by winding workings within the mineralized horizons, which necessitated leaving a large number of “pillars” within the mineralized zone from which the “DSO” was being extracted. It is speculated that an equal amount of material to that which was extracted during the mining period (1830 to 1890), could still be within such areas as “pillars”. This in itself would already correspond to a huge starting base given the fact that 100M oz Ag, were said to have been produced.
The potential of the “mantos” horizons with silver mineralization and evidenced by the extensive number of access shafts and man-ways, covers an area about 1,5 km long and 2,5 km wide within the property, with thickness of the mineralized “mantos” of 60m for the “Hilltop Brecia”, 130m for the “Mantos Pintadores” and 150m for the “Manto Delirio”, and 70m of the “Panizo Azul” limestone.
RESERVES AND RESOURCES
1. “Hilltop Breccia”: +13.000.000 MT
Mining would start within the Oxide zone in the “Hilltop Breccia”, containing in itself 13.000.000 MT of mineralized material, with silver halides amenable to leaching, but not flotation, a method previously used unsuccessfully, which from previous mining contained above 300grAg , valued today at about US$300/MT, obviously a good start, as alone it would contain about US$ 4 billion in silver at today’s price.
The plan below shows the mining which has taken place within the “Hilltop Breccia” known to be mineralized with high grade of silver halides, which have been extracted. Mining by Open Pit the material of the “Hilltop Breccia”, which as experienced from previous mining always high in silver (+ 300 grAg/MT), plus the “Mantos Pintadores”, which volume can be easily determined, will have a relatively low cost.
A drilling program, using the largest available size core (EX), in order not to lose the powdery contained silver halides, will be necessary. This will not be a very costly undertaking, as to cross the width of the outcropping “Hilltop Breccia” and the “Mantos Pintadores”, will require relatively short holes. In parallel metallurgical tests to confirm the recovery of the silver by leaching and flotation, would also need to be done.
Image 1: Chañarcillo Hilltop Breccia
2. “Mantos Pintadores” within the “Negro” limestone: +300.000.000 MT
From old reports and references to the abandoned mines, the zone classified, as “Mantos Pintadores” starts about 100 meters underneath the “Hilltop Breccia”, and extending about 130 meters further in depth. As this sequence outcrops, surface evidence shows that silver mineralization in oxidized form, is present throughout the entire sequence, and part would be amenable to an “Open Pit” operation. Considering the thickness of the mineralized horizon, and the fact that the area extends about 1,5 Km x 2.5Km, and a thickness of up to 130m, its mineralization potential would reach 300.000.000 MT.
Final grade will depend on the cutoff selected during mining, as within the mineralized “mantos”, grade would be adjusted by selecting which blast is to be sent as ore, which to a “marginal” stockpile, and which to waste.
The contained sulfide minerals in the Chañarcillo limestone units are, Mn, Zn, Pb, Cu, Fe, with the following minerals as byproducts; Ag, Ni, Cd, Co, V, and Ti, This deposit falls into the “IOCG” type.
As flotation did not become discovered and become generally applied until 1910, the associated minerals in this Polymetallic Deposit, namely: Zinc, Lead, Copper, Manganese, and Magnetite were not considered for extraction. A geochemical survey above the area of known sulphides mineralization indicated “Trace element values” confirming the existence of such deposit in depth.
The fact that there are more than 100 mine shafts erratically located over the 3Km x 3Km area, each belonging to a different company, would make the project feasible, as the continuity of the mineralization within the area these shafts are located, would be proven. Drilling is mainly necessary to determine the actual combined grades and value of all the mineral constituents of the deposit, plus determining geostatistical levels of distribution, to plan a drilling grid, to cover the 3Km x 3Km area.
3. Sulfide mineralization in “Delirio” and “Azul” limestone, under “Mantos Pintadores”: + 100.000.000 MT
This third area is a relatively, deep seated zone, composed of primary sulfide minerals below the oxidation table, and a barren horizon named the “Ahuesado Tuff”, about 200 meters thick. References indicate very high silver grades for these lower horizons. Existence of evidence for a potential of several hundred million MT is present over the potential zone 1,5 km x 2,5 km in area, within a mineralized “Delirio” horizon, between 120 to 150 meters thick, followed by the “Panizo Azul” mineralized horizon 30 meters below and 70 meters thick.
R.Sillitoe, a geological expert on deposits in this district, concluded that different from previous postulated theories, there is no secondary enrichment at Chañarcillo, thus leaving the potential within this zone open to exploration, for similar material which is found, in the “bonanza” oxide zone mined areas above.
4. Dumps 1.500.000 MT
There are about 1.5 M MT of remains of old dumps with coarse material on site, reported to have originally contained 300 gr Ag/MT, which were retreated in 1980, to remove the fines for treatment by flotation. Remaining grades for this material are said to still contain on the average 180 gr Ag/MT.
ADDING VALUE THOUGH EXPLORATION
A drill-hole “grid” will need to be defined over the entire 1,5 km x 2,0 km area, obviously an investment to be based on the results of the initial, say 3 holes, to determine geostatistically, the optimum spacing required.
Likewise, the existing Magnetic anomaly does not cover the entire “Area of Interest”, and will need to be completed, possibly even using “Global RSG” (Remote Sensing of Natural Resources), from satellite information
CONCLUSION
Many of the important mines in operation today, originated after renewed exploration, of old artisanal mines operating in mid-19th century, sending material with high enough grades to allow direct smelting, before “froth flotation” was invented and its use generalized, by about 1910. This is where, we believe, the future potential of Chañarcillo lies. To this previous production, we need to add the known contained Pb-Zn-Cu-Co-Ni-Mn and Fe in magnetite, which could not be recovered at the time, as techniques such as flotation had not been discovered, and the interest in cobalt has only recently exploded.
In our opinion, from all available information, Chañarcillo has all the elements to become a “world class” mining project.
Annex 1: Location of Chañarcillo Project (Atacama region, Chile)
Annex 2: Concessions owned by Erwin Robert Josef Schnell (Yellow)
Name of Concession Size (Hectars) Concession Type Linda 1, 1/104 104 Ha Mining Elizabeth 1, 1/242 242 Ha Mining David 1, 1/61 61 Ha Mining Susana 1, 1/188 188 Ha Mining David, 1/4 4 Ha Mining Chañarcillo 1 300 Ha Exploration Chañarcillo 2 300 Ha Exploration Chañarcillo 3 300 Ha Exploration Chañarcillo 4 100 Ha Exploration Chañarcillo 5 100 Ha Exploration Chañarcillo 6 100 Ha Exploration Chañarcillo 7 100 Ha Exploration Total Mining Concessions 1899 Ha Mining/Exploration
Annex 3: Concessions owned by SCM Juan Godoy
Name of Concession Size (Hectars) Concession Type Chañarcillo 1/20 100 Ha Mining
Juan Godoy 1/5 25 Ha Mining
Reventon Colorado 5 Ha Mining
Guanaquita 1 Ha Mining
Total Mining Concessions 131 Ha
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