From 1940 to 1989, Compania Minera Algamarca S.A. (“Algamarca”) operated a copper-silver mine in the north-west area of the Shahuindo concession. In the 1980’s, exploration activities by Algamarca led to definition of gold mineralization to the north-west and north-east of the Algamarca Anticline, now known as the San Jose, Porphyry, Gap and San Jose zones, as well as several veins on the northeast limb of the Algamarca anticline.
- Sulliden acquires Shahuindo
In November 2002, Sulliden signed the final agreement with Compania Minera Algamarca S.A. to buy 100% interest in the Shahuindo project.
According to work performed between 1993 and 1998 by mining companies Asarco and its Peruvian affiliate Southern Peru, the Shahuindo property hosted several epithermal gold occurrences, including the oxidized, high-sulfidation San Jose zone. During that period, both companies incurred almost US$4.0 million in expenditures on the San Jose zone, including more than 198 drill holes, a detailed reserve calculation, composite metallurgical tests and a pre-feasibility study.
Exploration on the Shahuindo property began immediately after the acquisition in 2002. Geophysical surveys and surface exploration, as well as fieldwork and exploration drilling continued for approximately two years to confirm the geometry and extent of the known mineralization.
In 2003, a 3,450 metre (27 holes) diamond drilling program was undertaken and approximately 50% of the holes tested the extensions of known mineralization while the remaining holes tested new targets based on the results of geophysical sampling and mapping. The program was successful in identifying an extension in the San Jose zone as well as identifying new mineralization. A technical report 43-101 (Resource Estimate) prepared by Met-Chem Canada Inc., and dated March 29, 2004 has established then a new resource calculation then totalling 34.4 MT at 1.03 g/t Au and 23.6 g/t Ag using a 0.3 g/t cut-off representing a metal content of 1.14 M ounces of gold and 26.1 M ounces of silver.
In December 2004, Sulliden completed another phase of exploration drilling totalling approximately 8,500 meters of diamond drilling. The net result of this drilling program was an increase in the property’s total gold and silver resource by 31% and 35% respectively. These two exploration programs totalling approximately 12,000 meters of drilling have virtually doubled the resource base from that outlined by Asarco and Southern Peru Copper in the 1990’s based on 20,000 meters of drilling. In addition, they confirmed the presence of a large-scale gold system extending over an area of 8 kilometers by 4 kilometers and vertically to a depth of at least 400 meters. Following these drilling campaigns, an NI 43-101 compliant resource estimate on the Shahuindo Gold Project dated April 29, 2005 was prepared by Met-Chem Canada Inc.
In 2007, another exploration program was carried out to test a possible extension of the deposit to the North-West of the main mineralized corridor. This program included adit samples, geochemical soil surveys and 14 drill holes in areas of the Shahuindo property that had never been tested. The results indicated a clear potential for a substantial addition to the gold-silver resources (see January 2, 2008 press-release for more info).
Following the Transfer Contract of the Shahuindo property in 2002, original shareholders of Algamarca sold their shares to a third party Peruvian company, Alta Technologie and Invesio Minera y Metalurgia S.A. and since that time Algamarca, under the direction of its new shareholder claimed the transaction null and void. This marked the beginning of a 5 year legal battle over ownership of the project.
In March, 2009, an agreement was reached between both parties to settle all outstanding issues in the disputes and litigation surrounding the Shahuindo project. This included $13.5 million to be paid in instalments over 2 years, 9.5 million shared and a 1.5% NSR (redeemable for $10 million until 2012). With this resolution, Sulliden holds an undisputed, 100 percent registered ownership of the Shahuindo property as well as secured exploration options on sixteen adjoining mining concessions. (See March 2, 2009 press release).
In April 2009, a new management team is brought on board to accelerate the development of the Shahuindo project towards production. The new team includes Peter Tagliamonte, appointed President and CEO, a reputable mine builder and operator with over 25 years of professional experience.