Magellan Expands Two Brazil Gold Fields
By Ted Niles
It’s always a good sign when a project has promising neighbours. As with Magellan Minerals, whose Cuiú Cuiú property is located 25 kilometres northwest of Eldorado Gold’s Tocantinzinho deposit. Tocantinzinho currently has proven and probable gold reserves of 1.98 million ounces and is anticipated to begin production in late 2014. An even better sign, in this case, is that Magellan’s President and CEO, Alan Carter, and VP of Business Development Dennis Moore were themselves the ones who discovered Tocantinzinho—indeed, they retain a 3.5% Net Smelter Royalty on the project. As Carter remarks, “We know this part of the world quite well.”
Cuiú Cuiú, and Magellan’s other advanced gold project, Coringa, are both situated in Brazil’s prolific Tapajos region in Para State. “We’ve spent a lot of time and energy and effort screening literally hundreds of gold prospects in Brazil,” Carter says, “and these are two of the best that we’ve come across.”
Because Tapajos is located in the remote Amazon Basin, the region has historically been exploited entirely by artisanal miners. Carter declares, “The Tapajos region is the largest placer-gold field in Brazil and the third largest placer gold field in the world. Cuiú Cuiú itself is one of the two largest placer fields within that part of Brazil, so it’s produced an awful lot of gold.” Between the years 1972 and 1992 the Tapajos region was the site of one of the largest historical gold rushes, with Cuiú Cuiú producing up to 2 million ounces. Since then, the area has drawn the interest of giants Barrick Gold, Rio Tinto and Kinross Gold, as well as several juniors.
Cuiú Cuiú currently has a mineral resource estimate of 100,000 ounces gold indicated and 1.2 million ounces inferred. “The gold-in-soil anomaly at Cuiú Cuiú is now 12 kilometres long,” says Carter, “and that’s based on 10,000 soil samples. And there are large parts of that anomaly that have not been tested yet, so we expect to find additional deposits there.”
He continues, “We’ve got three rigs turning on the property right now, and all the drilling we’re doing this year is step-out drilling. We’re looking for extensions and new deposits in the immediate vicinity of the existing deposits there. We’re hoping to update the resource in 1Q 2012.”
July 21 assays of the Cuiú Cuiú project include 8.44 g/t gold over 7.8 metres, 58.7 g/t over 0.5 metres, 30.2 g/t over 0.5 metres, 0.51 g/t over 18.9 metres and 0.7 g/t over 10.3 metres. May 12 assays included 0.76 g/t gold over 17 metres, 0.53 g/t over 53.4 metres, 4.06 g/t over 24 metres (including 85.5 g/t over 1 metre), 0.73 g/t over 15 metres and 0.55 g/t over 13.5 metres.
There were 20 million to 30 million ounces of placer gold that came out of the Tapajos region. What we’re doing is looking for the source of that gold —Alan Carter
Magellan’s 235-square-kilometre Coringa project—located 200 kilometres southeast of Cuiú Cuiú—is apparently the smaller of the two properties but, according to Carter, more advanced. “We already have a scoping study done at Coringa on a relatively small resource of about 370,000 ounces—but the average grade on that is 9 grams per tonne,” he relates. “And the scoping study was very positive. It was done about 18 months ago, assuming a gold price of $950—so obviously things have changed a lot since then. We have a mineralized shear zone there which is 10 kilometres long. Our resources are confined to three very small parts of that, and we keep finding new zones all the time. I’d be very surprised if Coringa does not increase in size by several times. I’m not talking about a 20% or 30% increase, I’m talking several hundred percent larger than it already is.”
Carter adds, “The idea for Coringa next year is to update the resource and then complete a feasibility study by the end of 2012. We won’t get the feasibility study done on Cuiú Cuiú yet, but the idea there would be to at least start a scoping study in 2012. But the immediate objective for 1Q of next year for both projects is to update the resources.”
The Midas Letter’s James West said of Magellan in 2009 that it was “perfectly positioned to become the next target of a mid-tier to senior level joint-venture partnership.” Two years later, no such partnership has materialized, but its positioning seems no less ideal. “Either we take the project all the way through to production, or at some point we might consider some sort of arrangement,” Carter says. “There were 20 million to 30 million ounces of placer gold that came out of the Tapajos region. What we’re doing is looking for the source of that gold. It’s probably multiple sources, but we’ve got a couple of those in Coringa and Cuiú Cuiú, and we think we’re going to find other ones.”
At press time, Magellan Minerals has 109.4 million shares outstanding at $0.83 for a market cap of $90.8 million.