Lara Copper Project
Overview
This 1,800-hectare Lara property is located about 40 km east of the Pan American Highway, 400 km southeast from Lima, in Peru. The claims are 100% owned by Minas Dixon S.A., a wholly owned Peruvian subsidiary of Lara Exploration Ltd. Porphyry style copper and molybdenum mineralization was originally discovered at Lara in the mid-1990s. Two porphyry centers known Lara and Socos have been delineated within a corridor of hydrothermal alteration extending over several kilometres.
The Company believes there to be excellent potential for discovery of additional copper mineralization on the Lara property, particularly in the following areas: (1) Supergene/Hypogene porphyry copper enrichment zones beneath the leached cap east, west and south of the known resource at Lara; (2) Supergene porphyry copper enrichment zones beneath the gravel cover at Socos; (3) Extensions to the known copper sulphide mineralization in the Lara and Socos areas; and (4) Oxide copper mineralization within the entire Lara Porphyry System.
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Redzone Joint Venture
On January 28, 2010, Lara entered into an Agreement with Redzone Resources Ltd., whereby Redzone could earn up to a 75% interest in the Lara Project. Under the agreement, Redzone must spend US$2.5 million in exploration on the Property and issue 850,000 Redzone common shares to Lara over a three year term to earn an initial 55% interest in the Project. Redzone can then elect to earn an additional 20% interest in the Project by completing a bankable feasibility study and making one time cash payment of US$1.5 million on or before January 28, 2015. Lara retains a 1% net smelter royalty on all production from the Project. Redzone is Project operator.
The Company is currently engaged, on behalf of Redzone, in the permitting of the first stage drill program, which aims to increase the existing Lara resource and test the nearby Socos Target.
Geology and Mineralization
The Lara Hill Porphyry is assigned to a specific group of ‘detached porphyry systems’ that began their development in a deep setting where the earliest phases of alteration and mineralization developed in wall rock lithologies above the causative intrusion. The Rio Blanco porphyry deposit in Northern Peru and the Yanadera copper‐molybdenum porphyry cluster in Papua New Guinea are similarly developed in pre mineral batholithic rocks.
The Lara deposit occurs within a porphyry copper‐molybdenum system that hosts primary, secondarily enriched, and transported mineralization. The estimated inferred mineral resource of 18.6 million tonnes grading 0.53% copper using a 0.2% copper cut‐off and a simple polygonal resource model for the Lara deposit documented in the independent National Instrument 43‐101 technical report on the property entitled ‘Summary of Exploration, Metallurgy and Scoping Studies on the Lara Porphyry Copper Property and Proposed 2005 Exploration Program, Rio Viscus, Palpa, Peru, authored by John Nebocat, P. Eng. dated February 9, 2004 and revised March 31, 2005 (“Nebocat, 2005”), is relevant and accurate for the secondarily enriched material given the data provided and methodology used. The technical report is available for viewing under the corporate profile of Lara Exploration Ltd. at www.sedar.com.
Preliminary metallurgical testwork was conducted in September 1998 by Plenge Laboratories, Lima (Plenge, 1999) on twenty‐four contiguous samples from each of two drill holes on the enriched zone of the Lara deposit. The results, while preliminary in nature, indicate that the enriched mineralization is amenable to acid heap leaching.
In 1999, a scoping study completed by Rescan Engineering (“Rescan”), a unit of Hatch Associates Ltd. (Rescan Engineering, 1999) calculated a mineral inventory of 19.7 million tonnes grading 0.47% Cu also at a 0.2% cut‐off using the IDW statistical method for 20m x 20m x 10m blocks. The scoping study concluded that if greater than 64 million tonnes grading greater than 0.51% copper could be established, a 20,000 tonne per day operation would be economically feasible for a copper price in the range of US$0.90 – US$1.00 per pound. This study was not intended, nor does the Company consider the study to be an economic evaluation for the Lara deposit but merely a guide to determine the direction of further exploration. The mineral inventory predates CIM standards and is not to be relied upon, but has been included for information purposes as it is indicative of the exploration potential of the Project.
A comparison of the copper grades between the reverse circulation drill holes LRC‐9A and LRC‐11 with twinned diamond drill holes LDD‐13 and LDD‐14 (Nebocat, 2005), showed a 9% and 72% increase in copper values for the diamond drill holes, suggesting that the reverse circulation drilling may have under reporting the copper grades in the enriched zones.
Exploration Program
In July 2010, joint venture partner Redzone filed an updated Technical Report on the Lara Porphyry Copper-Molybdenum Deposit, Peru, authored by Simon J. Meldrum, Consulting Geologist and dated March 1st, 2010. The Technical Report is available for viewing under the corporate profile of Redzone at www.sedar.com.
In preparation of the new Technical Report, Mr. Meldrum re‐logged all the diamond drill core, re-compiled and re-coded the RC drill logs and collated the geological database including 251 drill hole log records and 61 field samples. He concluded that the overall mineralizing system is much larger than the current mineral resource estimate indicates, with the secondarily enriched portion of the deposit open to the east and west and the primary mineralization open in all directions. Most notably, a large portion of the core of the deposit and the Socos copper target remain untested by drilling.
Mr. Meldrum further noted that there is good potential to expand both the tonnage and grade of the current resource estimate and that the Project deserves a comprehensive evaluation of the low grade (0.15% copper cut‐off) potential and what would be economically feasible at US$2.00 & US$3.00 per pound copper prices in line with current and foreseeable metal prices.
Mr. Meldrum recommended that Redzone embark on a rigorous exploration campaign that would involve detailed geological and structural mapping and sampling to define the overall limits of the Lara Porphyry system and core drilling aimed at infilling and expanding the Lara porphyry through to the 1,475m level. A two-staged program is recommended with the first stage comprising project permitting and 4,250 metres of core drilling. The initial program of step out drilling has an approximate cost of US$882,125. The Phase two program is contingent on the results of the first phase program and includes an additional 4,400 metres of drilling, additional metallurgical test work and completion of an updated mineral resource estimate. The estimated cost of the second phase program is US$887,000.
