Cerro Bayo

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Reserves and Resources | Cerro Bayo NI 43-101 Technical Report  | Operating Statistics | Exploration News

Compañia Minera Cerro Bayo (“Cerro Bayo” or “CMCB”) owns and operates multiple underground silver (“Ag”)-gold (“Au”) mines in the Cerro Bayo district, Region XI, Chile. The mines feed a single conventional flotation plant. Ag-Au concentrate from the plant is sold to smelters in Asia and North America. Cerro Bayo offers Mandalay shareholders exposure to current, low-cost Ag and Au production and exciting exploration potential in one of the best mining jurisdictions in the world.

Mandalay Resources Corp. purchased 100% of CMCB, which was on care and maintenance at the time, in August 2010.  Mining was restarted in September 2010, processing was recommenced in January 2011, and the first gold-silver concentrate was shipped in February 2011. The ramp-up of Cerro Bayo ore production to 1,200 tonnes per day was achieved on time and completed in the fourth quarter of 2012, and again ramped-up to 1,400 tonnes per day in 2014.

Location, Property, and Permitting:
The Cerro Bayo district is located in southern Chile, just inside the border with Argentina approximately 130 kilometres (“km”) south of Coyhaique, the capital of Region XI. This district is part of an emerging precious metals province containing the Cerro Bayo and El Toqui mines in Chile and several mines and exploration projects extending eastward into Argentina.

The CMBC property, comprising 29,495 hectares (“ha”) of exploitation concessions and 45 ha of exploration concessions, lies east of the Andes mountain range at elevations ranging from 300 to 1,000 metres (“m”). The mine and plant, located 12 km west of the town of Chile Chico, are serviced by an all-weather road and operate year-round. The operations are fully permitted and CMCB either owns or has access agreements for surface rights where it operates.


Freeport Chilean Exploration Company (‘‘FCEC’’) identified epithermal gold and silver mineralization in the Cerro Bayo district in 1984 and explored the district until 1989, when it sold all its Chilean interests to Coeur d’Alene Mines Corporation (“Coeur”).

Coeur continued exploration, commissioned the plant in 1995, and mined from 1995 to 2000 and again from 2002 to 2008; initially from open pit operations in the Laguna Verde area and then from underground operations in the Cerro Bayo area Coeur continued exploration after the 2008 shutdown, discovering the large Delia vein in the Laguna Verde area late that year. Delia, together with the nearby, partially developed Dagny and Fabiola veins, contained most of the reserves upon which the 2010 Mandalay transaction and restart plan was based.

Ore Deposit Geology:
At Cerro Bayo, gold and silver mineralization is contained in stockwork and sheeted veins as well as silicified breccias hosted within a thick sequence of Jurassic ash-flow tuffs. Over 90 major veins have been identified to date within the property. These veins, which vary from 0.5 to 5 m in thickness, in-fill steeply dipping, pre-existing faults and fractures. These epithermal veins formed through multiple mineralizing events that produced open-space filling, banding, and brecciation typical of low-sulfidation style vein deposits. Economic mineralization within the veins typically occurs as sub-horizontal ore-shoots extending up to a kilometre or more along strike and 200 m vertically. Ore minerals comprise a complex sulfide suite, dominately pyrite, electrum and various silver sulfosalts, in a gangue of quartz with minor adularia and barite that exhibit assemblages suggesting at least three stages of precious metals deposition.  Base metal sulfides are common, though not abundant, in the veins. Mandalay has noted that outcrops of the Dagny, Fabiola, Yasna, Delia NW and Delia SE veins consist of narrow, chalcedonic quartz fracture fillings just a few tens of metres above ore whereas other veins, such as Bianca, have no surface expression at all.  This has led Mandalay geologists to re-evaluate a large number of similar exposures throughout the property, which are largely untested, since these structures provide abundant opportunities to discover new ore-bearing veins by drilling.

Exploration and Mineral Resources and Reserves:
Mandalay began exploration at Cerro Bayo in October 2010 with two drills, growing the program to eight drills by year-end 2011. The focus of the Company’s drilling has been expanding resources in the Laguna Verde area veins in order to increase reserves and extend the mine life as much as possible and concurrently test new target areas.  Combined drilling and underground sampling post-2010 have succeeded in discovering and converting significant resources to new reserves, which has doubled mine life from the initial three years to almost six years.

During 2014, Mandalay drilled in the Coyita, Yasna, Fabiola, Irene, Kasia, Esperanza, Cristal and Cerro Amarillo veins. As well, mapping and closely spaced sampling along 4,954 m of development drives in the Dagny, Dalila, Fabiola, Yasna, and Delia NW veins, 3,354 m of which were in mineralization. New reserves were added by infill drilling along extensions of the Coyita and Yasna veins under Laguna Verde, where initial high-grade intercepts were obtained in late 2013. Neither of these veins are completely drilled out and the Company expects to continue extending closely spaced drilling in these veins.

During 2015, detailed mapping was performed in the Brillantes zone. As a result, 20 new veins were defined on surface along a length of 11,500 m, and a new interpretation of the stratigraphy was completed. A magnetometer survey was performed under Laguna Verde to guide the 2016 drilling program, discover new targets, and define intrusive extensions. Also, hydrothermal pulse mapping was conducted for Coyita and Fabiola veins identifying the paragenesis in each mineralizing events and its relationship with gold and silver concentrations. Also during 2015, Mandalay completed 83 drill holes for 26,702 m, of which 83% was infill drilling, 8% was extensional definition drilling, and 2% was exploration drilling.

The drilling and resource/reserve estimation process are summarized in the independent technical report completed by Roscoe Postle Associates and filed March 30, 2016 (click here to see the NI 43-101 Technical Report).

Click here for latest Cerro Bayo exploration news.

Mining is currently focused on several veins in the Laguna Verde area (see image below). Three single-spiral ramp, long-hole stoping mines are in operation, one for the Fabiola and Yasna veins, one for the Dagny and Bianca veins, and one for the Delia NW vein.

Cerro Bayo Laguna Verde
The Company developed a second haulage access to the Delia NW mine, one of the three underground mines on the property, in 2013. This allowed the rate of ore production to increase from its current rate of 1,200 tonnes per day, to 1,400 tonnes per day in 2014.

Processing and Sales:
Ore is trucked on the surface from the mine portals to the plant where it is stockpiled and blended into the crusher. The processing circuit includes: a single sag mill; secondary ball mill; rougher, scavenger, and cleaner flotation cells; optional tower mill for concentrate regrind; and filter. Concentrate is trucked to the port at Chacabuco, Chile, from which it is shipped to smelters in Asia and North America. An alternative port at Lirguen, Chile has been developed in case of disruption at Chacabuco. (Click here for quarterly production and sales statistics).

Cerro Bayo Growth Projects:
Cerro Bayo contains a portfolio of growth projects that include, from early- to late-stage: target generation, discovery (target confirmation) drilling, infill and extensional (resource/reserve) drilling. Mandalay expects earlier-stage successes this year to restock later-stage programs for following years such that the current intensive drilling program will continue to generate growing reserves for several years.

Qualified Person:
Scott Manske, Chief Cordilleran Geologist of Mandalay Resources, and an Oregon registered Professional Geologist is a “Qualified Person” as defined by NI 43-101.  He has reviewed and approved the technical and scientific information on Challacollo contained on this web page.