Golden Arrow Resources (TSXV: GRG; US-OTC: GARWF) is best known for its Chinchillas silver-lead-zinc project in Argentina’s Jujuy province, but the prospect generator also has properties in the country’s San Juan and La Rioja provinces, and is now extending its reach into Catamarca province in an option deal to acquire a silver and base metals project called Antofalla.

“It’s one of the ones that we’ve had our eye on for a couple of years,” says Brian McEwen, the company’s vice president of exploration and development. “You can see this large area of alteration at Antofalla and we started looking at it on Google Earth two or three years ago.“

“When we signed our due diligence deal and did some chip channel sampling on outcrops we came back with some spectacular results, like 14.9 metres of 271 grams silver and 1% lead.”

Under the option deal with the private vendor—an Argentine lawyer—Golden Arrow will pay $1.56 million in staged payments over a five-year period to earn 100% of the project. The vendor retains a 1% net smelter return royalty (NSR), but Golden Arrow has the option to buy it back for $1.5 million.

“It’s an incredible deal and it’s back-ended, so we’re not putting too much upfront,” McEwen says, noting that the company’s management team and the seller had come up with the structure of the deal a year and a half ago.

“It’s fair to say that if we were going to go in and try to negotiate a deal today, it would be difficult to strike one this attractive in today’s market, given the positive outlook in Argentina [following the election of President Macri in late 2015] and the uptick in the market and metal prices in general.”

Geologists have known about Antofalla for many years and it has been looked at by other companies, McEwen says.

“We weren’t the only ones knocking on the door, but the vendor also knows that we will advance it, and put the money into the ground, and that’s really what he wants to see happen.”

 Golden Arrow’s management team believes Antofalla has a similar style and type of mineralization as its Chinchillas project, which the company is advancing to a feasibility study with the help of Silver Standard Resources (TSX: SSO; NASDAQ: SSRI).

“Back in 2012 as we started working on Chinchillas, it was recognized that the Antofalla system is similar to the Miocene dacite domes and breccia complexes seen at Chinchillas which are related to silver-lead-zinc mineralization,” McEwen explains. “The mineralization also occurs in quartz veins within red beds, but following the Chinchillas model we believe the best proposition for delineating resources is to assess the project for mineralization associated with the dacite domes and volcaniclastic tuffs and breccias.”

McEwen adds that Chinchillas has been a “real success” in demonstrating strong exploration techniques. “People believed Chinchillas was too small and we went in and found it is not,” he says. “It’s a big deposit and it’s getting bigger. At Antofalla we see a similar environment with younger rocks and mineralizing events intruding much older sediments with a big footprint. The potential is there to find something significant.”

This year Golden Arrow will spend up to about $500,000 following up some of its theories about Antofalla, although if the junior gets encouraging results it might consider a drill program.

“We need to understand what we have in the existing data base and develop an understanding of the geological model,” he says. “From there we will develop and implement a plan that will include remote sensing, sampling and mapping. Geophysics may also be an option, all with an end game of delineating drill targets.”

Mineralization at Antofalla occurs in two main styles: silicified breccias that cross-cut the volcaniclastics related to the dacite domes; and in quartz veins within the red beds. 

Previous operators included Northern Orion (1997) and Silex Argentina (2004-2005). Northern Orion focused mainly in the dome zone in the volcaniclastic breccias, drilling six reverse circulation drill holes. Unverified results of historic drilling include 102 metres averaging 45 grams silver and 0.58% lead, with an 18-metre interval of 128 grams silver, 0.23 gram gold and 0.88% lead.

Silex focused on the vein style mineralization, drilling six diamond drill holes—three in the Los Españoles vein and three in the Los Jesuitas vein. The best intercepts were 3 metres averaging 3.8 grams gold and 16 grams silver, and 16 metres averaging 0.5 gram gold, 77 grams silver and 1.2% lead. Trench sampling returned a best result of 2 metres averaging 9.2 grams gold, 52 grams silver and 5% lead.

The Antofalla project is made up of six continuous mining claims totalling 8,760 hectares, about 50 km south of the border separating Catamarca from Salta province. The project is road accessible and sits at an elevation of between 3700 and 5300 metres above sea level.

With interest heating up in Argentina, McEwen says, Golden Arrow is continuing to look at other potential acquisitions or option deals in the provinces of Salta and Santa Cruz, as well as in San Juan.

“One of the things that’s happened over the years—just because Argentina has not been a very attractive place to invest and it’s been difficult for companies to raise money for projects there—is that a lot of companies have left and that has given us a lot of attractive properties to look at and we are considering a lot of them.”