• Cu: $
  • Au: $
  • FRA: N7D2

Sierra Blanca Gold-Silver Project

Austral Gold Earn-In to 80%, Option to Acquire Remaining 20%

Targeting High-Grade Gold-Silver Deposits in the Deseado Massif, Santa Cruz Province

The Sierra Blanca gold-silver project is located 40km NW of AngloGold Ashanti’s Cerro Vanguardia gold-silver mine in the highly-prospective Deseado Massif of Santa Cruz Province, southern Argentina (Figure 1). The project consists of a series of NW- and E-W-trending low to intermediate sulfidation epithermal gold-silver veins/breccias. Previous work at Sierra Blanca had been focused on the E-W-trending Chala-Achen and Lucila vein systems (Figure 2), where high-grade silver values had been derived from surface channel sampling (including 9.4m @ 2,362 g/t Ag at Chala-Achen; see New Dimension News Release dated March 4, 2019). During 2019 and early 2020, exploration activities at Sierra Blanca were focused on trenching and sampling on the NW-trenching Ana/Ana Splay, Tranquilo, and Laguna “vein fields”, with a total of 10 individual target areas having been identified for further work and drill testing.

Capella announced the signing of a divestiture agreement with Austral Gold Limited (“Austral”) (ASX:AGD; TSX-V AGLD) in 2020 through which Austral obtained the right to acquire an initial 80% interest in the Sierra Blanca project for a total of USD 800,000 in cash and work commitments, with a “follow-on” option to purchase the remaining 20% interest for an additional USD 2,300,000 in cash and work commitments. Austral is 100% owner of the Pingüino project, which neighbours the Sierra Blanca Project to the east. On December 10, 2021, the Company reported that Austral had successfully completed its Year 1 investment commitments on the property.

Project Snapshot

Location 40km NW of Cerro Vanguardia Mine, Santa Cruz Province, Argentina
Ownership 100% Capella Minerals Ltd. Austral Gold Ltd earn-in to 80%; follow-on option to acquire the remaining 20%.
2% NSR to Sandstorm Gold Inc (with option to buyback 1% for CAD 1M),
1.5% NSR to Iamgold Corp (with option to buyback 0.75% for CAD 750K)
Status Exploration stage, drill ready
Deposit types Low to intermediate sulfidation epithermal veins/breccias
Property Size 7,000 hectares (70 square kilometres)
Host Rocks Sedimentary and volcaniclastic rocks, plus ignimbrites
Age Jurassic
Commodities Gold & silver
Access All weather road gravel roads

Location Map

Figure 1. Location of the Sierra Blanca and Pingüino Projects in the Deseado Massif, southern Argentina

Project-Scale Geology

Figure 2. Sierra Blanca and Pingüino Projects - Priority Target Areas.

Terms of the Austral Agreement

Austral has agreed to purchase the first 80% interest in the Argentine subsidiary that owns the Sierra Blanca project (Sierra Blanca S.A.) in two tranches through a combination of cash payments and project-level work commitments as follows:  

  • Tranche 1: Austral will acquire a 51% interest for US$100,000 in cash payments to Capella Minerals plus the expenditure of US$100,000 in work commitments at the Sierra Blanca project over the 12-month period following closing.
  • Tranche 2:  Austral will acquire an additional 29% interest for US$600,000 in work commitments on the Sierra Blanca project over the second and third years following closing (US$200,000 during the second year and US$400,000 during the third year).

Austral has also agreed to pay up to US$10,000 per year towards the cost of maintaining the Sierra Blanca mining properties in good standing over the three-year term.

After it has acquired its 80% interest in the project, Austral will have the option to acquire the remaining 20% as follows:

  • 10% in Year 4 for the expenditure of an additional US$400,000 in work commitments on the project over the 12-month period following payment to Capella Minerals of US$500,000. 
  • 10% in Year 5 for the expenditure of an additional US$400,000 in work commitments on the project over the 12-month period following payment of $US1,000,000 to Capella Minerals.

Austral has the option to accelerate these earn-in commitments at their discretion.

December 2021 Update

On December 10, 2021, the Company reported that Austral had successfully completed the “Tranche 1” exploration investment required to earn-in to the initial 51% interest in Sierra Blanca S.A. Austral may now invest USD 600,000 in exploration over the next two years in order to earn-in to a further 29% interest (80% total) in Sierra Blanca S.A. (the “Tranche 2” investment). Thereafter, Austral retains the option to acquire the remaining 20% interest in return for cash payments and further work commitments over an additional two-year period (see Company News Release dated April 1, 2020, and MD&A dated August 31, 2021).

Austral’s work program as part of the “Tranche 1” investment included detailed geological mapping and ASTER interpretation (specifically calibrating alteration anomalies at Sierra Blanca with those known from the nearby Cerro Vanguardia gold-silver deposit), which resulted in the definition of a potential new Dome-Diatreme complex hosted in favourable Chon Aike Formation in the Vetarron sector. Work currently being undertaken includes further core re-logging (Vetarron, Lucia, and Chala sectors) and reinterpretation of historical data.