In March 2023, Heliostar acquired 100% of the Ana Paula project from Argonaut Gold for U.S. $30 million.
Ana Paula holds a 1.47-million-ounce gold measured and indicated resource at 2.16 g/t gold. A Preliminary Feasibility Study completed in 2023 concluded that at $1,600 per ounce gold, the project had a $464 million net present value (NPV) and a 31% internal rate of return (IRR).
About Ana Paula
The Ana Paula Project is a gold resource development project located in Guerrero State, Mexico. The Project encompasses several gold occurrences within an exploration concession covering an area of more than six hundred square kilometres. Heliostar published an updated PFS Technical Report on February 28, 2023.
The Ana Paula Project is located in the north central part of the State of Guerrero in southern Mexico, halfway between Mexico City and the Port of Acapulco. The Project lies within the Sierra Madre del Sur Mountain range where topography can range from moderate to rugged with elevations varying from 900 to over 1,460 meters above sea level. The Balsas River, which divides the Sierra Madre del Sur Mountains into north and south ranges, flows just south of the project area.
Mineralization in the Guerrero Gold Belt (GGB) is characterized as a skarn porphyry setting related to a Cretaceous intrusive event. Ana Paula is located along the northwesterly trend of the GGB where it straddles a boundary between two older tectonic sub-terranes. To the west is the volcanic-volcaniclastic arc assemblage and to the east is a thick carbonate platform sequence overlain by younger marine deposits. A Cretaceous age intrusive calc-alkali magmatic event is associated with the timing of the skarn porphyry related gold mineralization of the GGB and overprinting epithermal mineralization is believed to be associated with a younger Tertiary intrusive event.
In general, there are four gold depositional settings at Ana Paula, including:
Gold mineralization occurs within a structurally controlled corridor of disseminated mineralization with replacement textures (settings 1, 2 and 3 above). The corridor trends to the north and dips to the west. The corridor contains marine sediments in contact with an intrusive sill/dyke complex which hosts a lower grade mineralization.
The bulk of the high-grade mineralization at Ana Paula occurs in a Complex Breccia domain. This lithological unit consists of a polymictic breccia in a steeply south plunging column. An alteration-mineralization halo surrounds the Complex Breccia, bearing gold mineralization characterized by veins, fracture zones, and massive sulphide contact replacements.
Models show the vertical extent of the Complex Breccia domain down to a depth of 950 m below surface that remains open at depth. Horizontally, the gold mineralization extends up to 250 m away from the center of the Complex Breccia domain near surface. The horizontal extent gradually reduces at depth, down to between 20 m to 30 m at the lowest extents of the Complex Breccia domain.
Mineralization is continuous and grade tends to be highest from the center of the complex breccia but also extends into sediments, intrusives, and hornfels lithologies. Outside the alteration-mineralization halo, the mineralization is lower grade and occurs in stockworks, as sulphide clots and disseminations in the hornfels and intrusive units.
The primary means of exploration was by core drilling from the surface. Drilling began with Goldcorp in 2005, continued with Newstrike 2010-2015, and finally with Alio Gold from 2016 to 2018.
Ana Paula - Project History
The Table below shows the drill hole summary by year and company.
The average drill hole spacing is approximately 50 m in the main part of the Ana Paula deposit, with a range from 20- 50 m in the high-grade Breccia Zone and 50-150 m to the north and south pit extremities.
Ana Paula has 43-101 compliant resource and reserve estimates in place from an updated 2023 Preliminary Feasibility Study1:
The Ana Paula grade models rely on 290 core holes completed byGoldcorp in 2005, Newstrike Capital from 2010 through 2015, and Alio Gold from2015 through 2018. The database totaled 129,499 m of core and contained 89,816assays.
The resource estimate outlined an open pit gold deposit with a strong, high-grade core as an economic driver for the mine. Heliostar’s interpretation is that the High-Grade Panel (shown below) was under-represented in the block model. This 250 m x 100 m x 60 m block has an average grade of approximately 5.5 g/t at a 2.0 g/t cut off.
Heliostar believes that there is a reasonable opportunity to significantly increase the grade and tonnage of the high-grade within the existing resource.
High-Grade Panel - Underground Mine Sequencing
As noted above, the “poddy” nature of the highest grade mineralization in Figure 5 is a function of drilling rather than geology. The company’s geological interpretation of the data suggests that the mineralization may be continuous.
Due to a conservative approach in calculating the existing resource estimate, gaps without drill holes have low or no grade assigned and small gaps between drill holes decrease in grade. While this was the correct approach to the resource estimate, it leaves room for improvement with further drilling.
Infilling these gaps could increase the grade in these gaps to above 10g/t. Successful infill of these gaps has the potential to increase the resource in the high-grade panel alone to 900,000 – 1,000,000 ounces of gold (see white circles in the figure below).
In addition to the infill drilling targets, two addition growth targets remain. The deposit is open to the west at depth. It is bounded by a fault, but there is no data on the extension of the deposit in that direction. That leaves substantial room to add more resources.
The 2023 Preliminary Feasibility Study1 estimated life of mine capital expenditures for the project at $257.6 million, excluding closure. Of the total expense, $233.6 million was initial capital.
Economic analysis of the project was as follows:
Sensitivity analyses on the Base Case economics shown in the Table below, to determine which factors most affected the project performance. The analysis revealed that the project is most sensitive to metal prices, followed by operating costs and initial capital.
The Ana Paula Business Case
Heliostar Metals Ltd. Ana Paula Project NI 43-101 Technical Report Preliminary Feasibility Study Update for Heliostar Metals Ltd. dated February 28, 2023
In addition to the Ana Paula deposit, the project comes with a large land package. The region is highly prospective for gold mineralization. As shown in Figure 9, there are several significant intercepts that remain open.
Ana Paula District - Upside In a Major Gold District