Exploration is focused principally on discovery and delineation of low sulfidation, Au-Ag epithermal mineralization of the type well documented throughout the Deseado Massif [e.g. White and Hedenquist (1990 &1994), Corbett, G.J. (2001) and Sillitoe, R.H. (1993)]. Mineralization typically comprises banded fissure veins and local vein/breccias characterized by high Au and Ag contents and ratios of Au:Ag generally greater than 1:10. Mineralized veins and breccias consist of quartz (coliform, banded, and chalcedonic morphologies), adularia, bladed carbonate (often replaced by quartz), and dark sulphidic material termed ginguro (fine grained electrum or Ag sulphosalts banded with quartz). Discrete vein deposits, such as at COSE, develop where mineralizing hydrothermal fluids are focused into dilatant structures, producing ore shoots which host the highest precious metal grades. Low sulfidation mineralization can also develop where mineralizing fluids flood permeable lithologies to generate large tonnage, low grade disseminated deposits (e.g. Round Mountain, Nevada; McDonald Meadows, Montana)

Mineralization at COSE is also assigned to the low sulfidation type, based on the presence of fine-grained replacement quartz and adularia, widespread illite alteration, bladed textures indicative of hydrothermal boiling, and a mineral assemblage dominated by marcasite, arsenopyrite and silver-bearing sulphosalts. The presence of anomalous copper and molybdenum associated with higher grade Au-Ag mineralization suggests a component of magmatic-derived fluid.

The COSE deposit occurs predominantly as hydrothermal breccia, in combination with replacement, veinlet and disseminated styles of mineralization, rather than as one or more discrete quartz veins. This is somewhat atypical for the Deseado Massif deposits, perhaps reflecting a lack of open space during hydrothermal fluid flow.

The deposit at COSE is a sub vertical, gold and silver bearing breccia that averages 0.5 m to 4 m in width and dips approximately 75° to the southwest. The interpreted ore shoot has a strike length of about 35 m, with a down dip extension of approximately 170 m. The preliminary estimate of undiluted resources is 34,000 tonnes.

The deposit at COSE is a sub vertical, gold and silver bearing breccia that averages 0.5 m to 4 m in width and dips approximately 75° to the southwest. The interpreted ore shoot has a strike length of about 35 m, with a down dip extension of approximately 170 m. The preliminary estimate of undiluted resources is 34,000 tonnes.

The proposed method for mining the COSE deposit is mechanized cut and fill, where 3.0 m x 3.0 m access drifts to the ore are developed every 9 m, vertically, off of the access decline. Once a mining cut (3 m high, the length of the deposit) is completed, it is backfilled with un-cemented, screened, mine development waste rock, or possibly waste rock derived from the surface near the mine portal. The development waste rock will be hauled out of the mine and stored close to the access portal. 20-tonne ore haulage trucks are proposed to carry the backfill back into the mine.

Since the deposit is very small (about 34,000 tonnes undiluted), a production rate of 120 tonnes per day (3,600 tonnes per month has been estimated.

Small, epithermal vein/breccia pipe deposits are typically very irregular in both the vertical and horizontal directions. As the vein widens (> 4 m), there is generally less irregularity, and the effect of wall rock dilution is diminished substantially. However, at COSE, the deposit widths generally vary from very narrow (0.5 m) up to 5 m, with occasional wider areas.

The use of more productive stoping methods, such as blasthole stoping, where the ore is drilled from a drilling drift above to an extraction drift below, would result in excessive dilution from the deposit walls, and reduce the mineral recovery where it “bulges” outside the drilling limits. This would seem to be unacceptable, especially when high-value minerals (gold/silver) are being mined.

The use of a blasthole mining method would be slightly more productive, which would result in a slightly less unit operating cost per tonne mined. However, the resulting greater dilution and lower ore recovery should prohibit the use of this method at this deposit. In addition, a much larger stope must remain open until backfill is placed. The currently-available geotechnical information, which would give some indication as to whether there might be problems with larger stopes standing open for a period of time, is insufficient. In the absence of such data, common sense would indicate that a more conservative approach be considered.

These factors should more than offset any productivity and cost benefits there might be in using a sublevel blasthole mining method. Preproduction development for ramping from the surface to the deposit bottom should be about the same, except for a somewhat greater decline length due to the lower gradient, while access drifting between the main ramp and the deposit would increase due to more access drifts being required.

In addition, flexibility, with regard to deposit boundary variability, would be much greater with the use of a cut and fill mining method, equipment sizes would be smaller, dilution much less, and ore recovery much better. In addition, backfilling the stope cuts would be simplified, and cement in the backfill could be avoided.

The two mining methods that might be acceptable are shrinkage stoping, or mechanized, ascending cut and fill. Both of these methods are adaptable to narrow, high grade deposits and both are much more selective than a blasthole method. In shrinkage stoping, approximately 70% of the broken ore must remain in the stope as a working platform until the stope is completed. Considering all of this, and the fact that nothing is known at this time about the geotechnical parameters of the deposit or the wall rock strengths, it would be safer to base a scoping study mine plan on a cut and fill option.

The installation of a horizontal pillar, about half-way down the deposit (around elevation 248) would allow mining to begin in the upper half of the deposit, while development work continued to the bottom of the deposit. This would permit earlier generation of cash flow. The pillar could be recovered at the end of the bottom half mining by leaving a cemented floor in the bottom of the first stope cut in the top half of the deposit.

The material mined will be trucked to Manantial Espejo plant for processing at a rate of approximately 200 tonnes per day for 18 months. On average, the project is expected to produce approximately 112,000 ounces of silver and 2,300 ounces of gold per month.