San Lucas has significant geological potential, evidenced by the plethora of artisanal miners, to become a major gold producing province. It has attracted exploration geologists with significant experience in Colombia and a history of making discoveries, including Ian Park (who began consolidation of the Marmato district in Caldas with Colombia Goldfields), and companies including AngloGold Ashanti (AGA) and B2Gold (TSX: BTO).

Although exploration in San Lucas is at a relatively early stage, it is worth recalling that exploration began just 15 years ago in the California district of Santander, when Greystar Resources [now Eco Oro Gold (TSXV: EOM)] entered, and subsequently lead the way to discoveries by various other companies that have set it on the road to potentially become a +30 Moz Au district.

The San Lucas province generally runs parallel to the Segovia gold district to the west that has produced at least 5.5 Moz Au since 1850 and is characterized by high grade gold veins up to 10m wide. This is where Gran Colombia Gold (TSX: GCM) has its Segovia Operations and where merger hopefuls Touchstone Gold (AIM: TGL) and Atlantis Gold (Private) have their projects (see page 10), amongst others.

The geology of San Lucas is dominated by Jurassic intrusive and volcanic rocks including diorites and granodiorites and their coeval volcanic equivalents. Metamorphic basement rocks are exposed in the north and west. Pluton-related and volcanic-hosted stockworks, breccias and vein-type gold mineralization, containing high-grade quartz-tourmaline-sericite and mixed sulphide associations, hosted in NE- and NW- striking fractures, are also observed. Some draw a parallel between the San Lucas province and the Segovia district to the SW, however, there are significant differences. San Lucas typically has volcanic as well as intrusive rocks, multiple mineralization events and vertical structures rather than the 45-degree dipping structures in the Segovia region generally have. “This is the true El Dorado,” said an executive of a mid tier gold miner interested in the province, “and the future of gold in Colombia.”

The San Lucas province has seen gold mining for over 200 years and it is home to an estimated 40,000 informal miners and some 70 small miner associations, some of which have been operating for generations. The largest association, FedeAgromisbol, is estimated to be producing about 500 tpd of mineral at an average grade of 15-30 g/t Au, according to explorers. Despite this abundance, Bolivar receives few royalties as lack of infrastructure and major towns means the majority of the gold is refined in Bucaramanga, in neighbouring Santander, which is where the royalties stay.

The Segovia district began to be developed as a gold mining centre well over 150 years ago whilst the San Lucas province, in general, was not, due to its remoteness. To the east and west of San Lucas are the vast Magdelena and Cauca-Nechi river systems, respectively, that need to be crossed to access the area, and the region is not close to any major population centres. Segovia, by contrast was/is relatively close to Medellin and even today it lacks modern connecting infrastructure.

In more modern times, the remoteness of the province made it a suitable hideout for the FARC and ELN guerrilla, but the fact that the government has cleared out the guerrilla has allowed explorers to enter the area for the first time in about fifty years. Little else has improved however, and the lack of infrastructure means it is a challenging frontier area in which to work.

The government of Bolivar is prepared to invest in infrastructure, such as improved highway access heading north from the Santa Rosa del Sur area, to improve the rudimentary transportation corridor to Barranco de Loba. In addition to improving access for exploration and other economic activity, better infrastructure and connectivity would help towns in the region grow.

Other government initiatives in the province include the proposed creation of the Serrania de San Lucas National Park, a process that began in December 2010 and that could encompass up to 600,000 hectares. Deforestation due to wood production and clearing land for agriculture and alluvial mining has removed much of the tropical forest habitat that the proposed park aims to protect, and it is likely that this proposal will not go ahead.

Exploration

AGA was the first company to start exploration in the region since Colombia began to welcome back explorers earlier this century. Its focus has been the Buena Sena area and its work was based on prior work completed by Metallic Resources (now New Gold) in 1994-96. It was also explored by BTO under option, who dropped it after drilling did not encounter high enough grades to take it further. Other major’s active in the district include Hudbay Minerals (TSX: HBM) that has an option on some exploration concessions, and Yamana Gold (TSX: YRI) that is exploring at Santa Rosa del Sur, NE of where Quia Resources (TSXV: QIA) is. Neither HBM or YRI has released information about these exploration programmes.

What follows is a general outline of some of the main districts of interest to gold explorers in the San Lucas province.

Guamoco

Guamoco is an area between Segovia and San Lucas that is mostly underlain by metamorphic rocks along the western contact with the Norosi Batholith. While not well understood from a geological point of view, this area is included here as part of the San Lucas gold province because it is located along the western margin of the area of interest. Mina Walter, a traditional 50 tpd mine, typifies the potential that explorers are searching for with a main vein structure 4-5m wide in a sheer zone that has experienced multiple mineralization events that can be traced over 2km, and that contains grades up to 100 g/t Au.

Quia Resources was one of the first Canadian juniors to work the region, with its 7,000 hectare San Lucas project spread over 18 concessions along the Palestina fault. With backing from companies such as Yamana and Mineros SA, Quia completed a 5,000m Phase I drilling programme in May 2012 that demonstrated the potential for a district-scale mesothermal gold discovery, as well as porphyry potential. At La Colina, it found a disseminated system 5-15m wide and running up to 2 g/t Au; at La Rueda, it also found a high grade narrow structure running 3-7 g/t Au and up to 3m wide; and at Libertad it found a breccia vein system that gets to about 4m wide. The company is planning a large-scale Phase II drill programme following a Phase II surface programme at Libertad and Durmiente to define the broader dimensions of the system and to discover high grade shoots within the system.

The Libertad structure is a N-S striking, steeply dipping mineralized vein-breccia system with 2km of strike identified by sampling and mapping and up to 4m in width. It is directly associated with the N-S striking Palestina fault system and the Libertad structure can be mapped over a strike length of 600m with a width of between 1m and 3.5m. Soil sampling indicates the structure has a continuous strike of at least 1km. Separate underground channel samples returned grades including 39 g/t Au & 100 g/t Ag.

Unfortunately, the depressed market for exploration financing has seen Quia run out of steam and it is currently looking to raise funds to continue exploration. “This is one of the most challenging projects to operate in Colombia. While it is expensive and difficult to operate, the long-term potential is correspondingly very high,” says CEO Yannis Banks.

Santa Rosa del Sur

In the east central part of San Lucas province is the Santa Rosa del Sur area. Touchstone Gold (AIM: TGL) entered into an option agreement in March 2012 to acquire a 90 pc interest in four mining concessions, over a total area of 57km2 that comprises the Santa Rosa project, an area  that hosts multiple gold-bearing vein systems. Initial exploration is aimed at systematically verifying historical assay results that show significant gold mineralization that is high-grade and close to surface. The area hosts numerous artisanal gold operations consisting of both underground mining operations that follow veins and shears, and alluvial gold operations, reflecting the gold endowment of the project.

Montecristo-Tiquisio

In the west central part of San Lucas province is the NE-trending Montecristo - Tiquisio belt, home to about 600 mines with over 3,000 people working gold veins up to 8.0m wide and up to 65.0 g/t Au and higher. Hudbay Minerals has concessions under option in this area while Vancouver junior Midasco (TSXV: MGC) has 4,893 hectares in this area and took 106 samples from mines and two large main structures in particular. 52 samples assayed returned values of over 1 g/t Au and 49 returned values of over 1 g/t Ag. Despite these encouraging initial results, Midasco received notice from the titleholder with whom it has an option agreement, that he wants to terminate their agreement. Having brought the concessions into good standing by paying surface canon arrears and making all regulatory filings, MGC will seek arbitration in order to return their option.

RedLion Resources (private) has 2,000 hectares in concessions and 13,000 hectares of applications in the Montecristo and Santa Rosa del Sur districts, where there are many small-vein mines, including some with open pit potential from a stockwork vein system that extends over a 2km by 5km area. Exploration is being undertaken by Ian Park’s Explore Colombia. RedLion is exploring for porphyry mineralization and Segovia district look-alikes with, “decent veins with good widths and grades, but there is a chance of something bigger than small veins,” says Park. Grab sampling has returned up to 42.1 g/t Au. RedLion is looking to define large open pit deposits and high grade underground mines.

Barranco de Loba

Barranca de Loba by the Magdelena river in east central Bolivar is located near the northern part of the San Lucas gold province which up to the village of Juana Sanches and has seen interest from a clutch of explorers including Cabia Goldhills (TSXV: CGH), Cuoro Resources (TSXV: CUA), and private companies Mineco Gold and Ashmont Gold.

To the SW of Barranco de Loba, private company Ashmont Resources can earn up to 80 pc of the Santa Cruz project where previous exploration by AGA produced results including 20m @ 1.8 g/t Au. The company completed mapping, sampling and geophysics and intended to start drilling in March.

Cabia has 6,946 hectares at its Mejia project to the north of the Gloria artisanal mine where there is the intersection of the main N-S and NE structural corridors and veins in a highly hydrothermally altered area. The area has four existing artisanal mining operations that exploit high-grade gold veins over a 600m trend with current workings up to 300m deep. Grab samples at the Mejia Mines returned grades ranging from 5.84 g/t Au to 171.5 g/t Au. Following the completion of an airborne magnetic and radiometric survey comprising 694 line-km over its property, CGH identified two areas on the property with the presence of vein type mineralization and two other with Cu-Mo-Au potential. A total of ten anomalies were identified, five of which were selected for a first phase of drilling through detailed field exploration activities. CGH is planning a 3,000-5,000m Phase I drilling programme scheduled for August 2012, over the southern portion of its concession, adjacent to the Mejia Mine to evaluate the potential for an extension of the high grade veins systems onto the CGH property.

Directly south of the La Gloria mine CUA discovered at least 40 mineralized veins inside historical artisanal mine adits at its Barranco de Loba project. Its sampling programme returned an average grade of 9.8 g/t Au over ten mineralized veins sampled in five different locations, including up to 31.6 g/t Au. The company is continuing the initial sweep of its concessions to define drill targets with the aim of commencing a 3,000m drill programme in late 2012.

Further south, and west of Rio Viejo, Minenco Gold is planning to IPO in 1Q13 on the back of eight areas it has in the San Lucas district where it has encountered grades of 1-2 g/t Au at surface, disseminated (5-6 g/t Au) and vein (50 g/t Au) . The company is targeting discovering a minimum 3 Moz Au resource.

The San Lucas province will become increasingly well known as exploration work at these and other projects well-known and results are published.