More for the geo-geeks,
Understanding HOW porphyry deposits form can really help an investor evaluate the bona fides of a porphyritic mineral deposit. The story usually starts way down deep in the earth’s crust in a huge body of rock sometimes referred to as a “batholith” or “pluton”. These are made out of previously cooled “igneous rocks” (magma) and the top surface often takes on a dome shape.
So where did the heat come from to re-melt this blob of once molten magma? Through many millions of years the South American Oceanic “Nazca” crustal plate off the coast of Chile has been butting borders with the South American Continental plate. The more dense Nazca Oceanic plate which is migrating east slid under (“subducted under”) the less dense S.A. Continental plate and the heat from the friction caused a “partial crustal melt” of massive batholiths in the region. This “subduction” process provided the “heat engine” driving the entire process. The molten magma is less dense than the surrounding rock so it rises through the various layers of overlying rock similar to what you see in a lava lamp (ask your dad!).
As time went on, metal bearing fluids rose through these batholiths and accumulated under weak spots in the roof of their dome and an upward bulging “bleb” or “apophysis” projected out of the “roof” of the pluton. This activity continued and the apophysis elongates upward to form a finger-like projection called a “porphyritic stock”. Several porphyritic stocks can emanate out of the roof of any given batholith/pluton. Often they are collinear and they tend to line up in a N to S alignment. From here on, almost all of the action occurs in the center of these porphyritic stocks as if it were the flue of a “chimney” channeling the heated fluids upwards.
As the incredibly hot hydrothermal fluids rise and get funneled into this porphyritic stock/chimney all kinds of different phenomena can occur depending on the contents of the fluids and gases, the nature of the overlying rocks being “intruded” and the pressure and temperature dynamics playing out. Down deep in the earth’s crust it is super hot and there are super high pressures built up due to the weight of the overlying rock.
In their upward migration, sometimes the fluids will encounter ground water and tremendous amounts of “phreatomagmatic” explosivity will be induced that results in the host rock being literally blown to bits and converted into angular pieces of gravel. As the mixture of the gravel and the fluids and gases cools sometimes the pieces of gravel become glued together by the cooling fluids and they form a solid “breccia”. This often occurs directly above the chimney/porphyritic stock. “Breccias” are good things in that they suggest a lot of upward flow of hydrothermal fluids and the gravel-like consistency provides a wonderful “plumbing system”/conduit that helps the fluids flow to locations very close to surface where they can be detected and hopefully mined economically.
The ADL deposit has a very large number of these “breccias”. The ADL story started at the centrally located “Gordon breccia” which fortunately made it all of the way to surface. Medinah’s and ACA Howe’s drilling program revealed about 1.5 million ounces of gold equivalent in just the Gordon bx. AMC came along and found an entire network of breccias extending to the south and west of the Gordon bx. Further south, there are two main breccias at the Pegaso Nero referred to as the “tourmaline bx” and the “intrusive bx”. There are also breccias located north of the Fortuna Mine in the NE corner of the property complex.
What’s noteworthy to me is how collinear the PN breccias, the Gordon breccias and the Merlin 1 Vein are. These all seem to share a common “fault” system representing the space between two rock masses which often serve as the ultimate favorable “plumbing system”. In order to keep a sense of context, AMC’s current mining of the northern aspects of the 1.8 Km long Merlin 1 Vein (the “Caren Mine”) represents an extremely small portion of this entire N to S trending fault system.
In the idealized copper/gold and copper/moly porphyry systems breccias tend to be located directly above the porphyritic stocks. The areas directly above the porphyritic stocks/nucleus of the porphyry also typically have “advanced argillic” alteration (clay) present which is exactly what we have at the Merlin 1 Vein outcropping. In close proximity to the porphyritic stock is typically found molybdenite and potassic alteration (K feldspar). This is exactly what we have at the PN AT SURFACE AND NOT AT 2,000 METERS DEPTH AS IS THE NORM. This suggests a very favorable “vertical emplacement” (near surface) of the Cu-Mo porphyry.
I’m picturing the main porphyritic stock(s) as being under the area in between the Gordon breccia and the 2 main PN breccias. The epithermal vein systems that sometimes “telescope” out of porphyry systems often occur “distal” (away from) the centralized porphyritic stock(s). You can see how the Merlin/Fortuna epithermal system occurs to the north and east of the Gordon and PN brecciated areas. The ADL’s Merlin/Fortuna epithermal vein system is different than many others in that the 4 distinct vertical layers are all intact and have not been eroded.
The “porphyries” themselves represent what’s left of the relict magma chamber and its roof region that ruptured and emanated the hydrothermal fluids and gases that brought the metals closer to surface. The metals within the porphyry proper are usually contained in a nexus of tiny “veinlets” and/or “stockworks”. We know that the “South Road” going from the Gordon bx area to the PN area has road cuts that revealed over 2 Km of these “veinlets”. The geomodel of the ADL mining district derived to date becomes beyond compelling.
Sometimes the rising hydrothermal fluids come upon horizontal layers of limestone or dolostone especially if the deposit is of a “Cretaceous Age” (about 90 million years old). The fluids easily drive away the limestone and “replace” it with a “skarn” (a type of a “replacement deposit”) like we see at the LDM skarn. Skarns are often located well under the surface but thankfully the LDM skarns made it all of the way to surface at about the 1,300 meters above sea level elevation at the LDM. In order to form a “skarn” you need the hydrothermal fluids emanating out of a porphyritic stock. The skarns end up surrounding the porphyritic stocks like the battered crust of a corn dog surrounds the hot dog.
These porphyritic stocks, veins, breccias, mantos, skarns are constantly remelting and then resolidifying through time. There’s a concept called the “paragenesis” of a deposit like the ADL. This involves studying the order of events throughout the 91 million year history of this deposit. It’s akin to studying a 91 million year long “video” of this deposit if there were such a thing. For instance, our Merlin and Fortuna Veins show a lot of “banding” of the crystalline quartz and chalcedonic (noncrystalline quartz). Each linear and parallel “band” within the vein represents a new remelt/recool/resolidify cycle. The earlier linear “bands” of quartz get moved to the side of the vein as a new mineralization event takes place in the center of the vein. The sought after metals are often held in the darker areas in between the whitish quartz bands.
If there were a geo-fact regarding this deposit that I don’t think has gotten the attention it deserves it would probably be the significance of Aguilera dating the molybdenite samples from the PN. They came back at 91 million years of age which is the same age of the extremely large Andacollo deposit to our north. We now know that the ADL deposit represents the current southern terminus of Chile’s “Early Cretaceous Porphyry Belt” which we thought ended well to our north. Since the same underlying rocks gave rise to both of these deposits (the Lo Prado and Veta Negro formations) modeling efforts can be used to predict the current unknowns at the ADL deposit.
If there were a silver lining to the recent share structure developments involving Medinah it would be that Medinah had already been transformed into a “holding company” without any of their own “operations”. Medinah’s assets are 2 pieces of paper probably held in a safe deposit box somewhere. They are a share certificate for 25% of AMC and a share certificate for 15% of Nuoco. The “value” of these assets as recognized by the mining industry did not drop with these developments. Our individual share ownership percentages did get diluted by a yet to be determined amount pending the results of the efforts to clawback inappropriate share issuances.
Without having any ongoing operations Medinah didn’t suffer a black eye with any vendors of mining products, permitting authorities or anything that would affect the mining operations of AMC. One of the shareholders of a private company called AMC had some serious internal issues. The Chilean mining industry has relations with AMC only. We are fortunate that this transition to being a somewhat robotic “holding company” had already taken place.
From this time onwards, I believe that our focus should be on two items. The first is the “value” of those two pieces of paper as measured by mining industry standards and the second is the success of the clawback efforts to restore our shareholders’ original percentage ownership or as close thereto as possible. I don’t sense that the ability of this holding company/Medinah to sell any of its ownership interests have been compromised. I don’t think a mining major desiring Medinah’s assets cares a great deal about a holding company’s share structure issues. I do believe that the structure of any strategic alliance with a major in the short term would be more likely to be along the lines of an “asset sale” than a tender offer because of recent events at least until these events are fully addressed.
If anything, I would think that the financial incentives of Masglas/AMC and the average Medinah shareholder might have even tightened up a bit with this share structure issue. They have clearly taken the lead on addressing these issues in a professional manner and are highly financially motivated to rapidly seek redress for this behavior. Hopefully we can soon study the text of both Bocanegra’s dissertation on the ADL deposit and Maurizio’s dissertation on buying deposits in market downcycles.