Indeed, it’s a strategy that capitalizes on a newly developed airborne geophysical target-finding tool, a technological breakthrough that is working so well that Far West is surely primed for a very bright future. This is why this high-flying Company is now attracting the investment dollars of sophisticated stock market professionals such as institutional funds. Even BHP-Billiton Plc – one of the world’s largest mining companies – is a shareholder, as well as a project collaborator. SmallCapMedia has therefore selected Far West as one of our top three prospects to offer investors a ‘home run’ win within the next 12-18 months.

 

In essence, the key to Far West’s strong performance to date involves the discovery of a prospectively large tonnage copper deposit in the northern margins of central Chile. The region is known in mining circles as ‘elephant country,’ meaning that it is a largely-unexplored, geologically fertile region that hosts several world-class copper mines – and the obvious potential for more comparable discoveries. One such mine, Manto Verde, can be found a mere 30 kilometres to the west of Far West’s recent attention-grabbing San Domingo Sur discovery. Hence, the odds in favour of unearthing another world-class copper deposit in this region are becoming increasingly tantalizing.

 

However, readers should take note that Far West’s much-envied find is no lucky overnight success story in-the-making. On the contrary, the Company’s rare talent for striking paydirt (as suggested by an abundance of closely-spaced economic grades in a sizeable mineralized area) has more to do with old-fashioned hard work, superlative geological sleuthing and shrewd deal-making.

 

Technological Competitive Edge

Meanwhile, if there is any mystique to Far West’s story, it relates more to the Company’s privileged access to secret aerial ‘black box’ target-finding technology. This competitive edge certainly set the stage a while ago for Far West’s recent emergence as a clear stand-out in the junior mining sector. Specifically, it all stems from the Company’s arrangement in 2001 with BHP Billiton Plc, one of the world’s most powerful mining multinationals, to form a strategic alliance. 

The alliance concerns an agreement to jointly explore district-scale grass roots project areas generated by BHP-Billiton.  They are situated in regions that exhibit geological merit and promise to benefit the most from utilizing their proprietary surveying expertise. These expensive surveys span thousands of square kilometers and can outline target areas with the potential to host viable mineral deposits. The unprecedented terms of the alliance agreement essentially permit Far West to earn up to a 70% participating interest in each prospective discovery area.  BHP Billiton has certain claw-back rights which they may elect to exercise or allow their interest to be reduced to a 2% NSR if a discovery does not meet their criterion for development.

In the early going, Far West’s privileged role in this alliance has been to follow-up on BHP-Billiton’s proprietary Falcon™ airborne gravity gradiometer surveys covering the Chilean Candelaria Project areas. This primarily involves ground-based exploration and drilling of multiple targets. Readers should note, however, that Far West can now boast of outright ownership of the Candelaria Project, subject to a 2% Net Smelter Return Royalty payable to BHP-Billiton. More on this later. 

And what’s so special about the Falcon™ airborne surveys? In short, they have the unique and ingenious ability to locate non-magnetic mineral targets that have the potential to host Iron-Oxide-Copper-Gold (IOCG) deposits by highlighting their higher density compared to surrounding barren rock. Prior to this relatively recent innovation, there was no effective methodology for blanket-surveying large areas to identify IOGC deposits that have no magnetic signature. This now represents a major competitive advantage over the rest of the world’s mining industry, which has yet to demonstrate the capabilities of competing airborne gravity technologies.

Far West and BHP-Billiton are also working together to replicate their early-stage Chilean successes elsewhere. Other such under-explored hunting grounds for copper deposits include northwestern Argentina. This early-stage project will be discussed later on in this article.

Candelaria Project, Chile

The real catalyst for the impressive performance of the Company’s share price during the last four months has been the ongoing success of a 2005 spring/summer drill program on the Candelaria Project. Nonetheless, the share price was already primed for a news-driven breakout as this latest round of drilling attests to the impressive accomplishments of close to three years of systematic exploration.

In fact, BHP-Billiton’s 2002 airborne Falcon geophysical surveys originally spanned no less than 475,959 hectares (5,145 square kilometers) covering eight very large areas of investigation in the Candelaria Copper Belt. In other words, Far West’s now 100%-owned mineral claims cover a north-south-oriented mining district exceeding 300 kilometres in length within this 1,000-kilometre-plus historic copper belt.

A total of 76 widely dispersed, more localized target areas were originally identified by the Falcon™ surveys. Again, the role subsequently played by Far West, was to follow-up on these prospects to determine their true potential. Needless to say, this has proved to be an expensive and laborious process, involving a wealth of geological mapping, geochemical sampling and further ground geophysical surveying. This daunting work load eventually led to the drilling of a total of 140 holes encompassing nearly 26,000 metres in 18 target areas. Far West has since narrowed down its focus even further to seven high-priority target areas.

Yet, by far the best prospect drilled to date is in the Santo Domingo Area, which is now generating considerable excitement among investors. Ironically, BHP-Billiton chose to opt out of the Candelaria joint venture in May of this year to hold a 2% NSR. It seems that the major mining company had merely grown impatient with the protracted hunt for a world-class discovery in this part of the world.

But the timing of this strategic decision soon proved to be rather unfortunate for BHP-Billiton. That’s because it came about only weeks before Far West started to consistently intersect its best grades to date for the whole Candelaria Project area. Located in the southern part of the Santo Domingo Property, these drill results suggest that a world-class discovery may be in the offing after all.

Indeed, Far West’s near-term focus is without a doubt the Santo Domingo Sur discovery zone. This one prospect constitutes part of the extensive Santo Domingo land holdings that straddles the east-west trending Santo Domingo fault structure. This is where a number of high-grade copper veins, breccias and mantos are exposed at surface. Notably, historic ‘artisanal’ (primitive small-scale) workings along this fault and other cross faults also attest to the presence of near-surface economic mineralization.

Thus far, a total of 53 drill holes encompassing 16,000 metres have tested various geophysical anomalies and fault features along this ‘contiguous’ (adjoining) target zone. It soon became obvious that the southernmost Santo Domingo Sur area was where the best grades were being intersected.  This is because this particular well-mineralized area appears to consist of a thick sequence of rocks that form a particularly good host for IOCG mineralization.

In this particular case, the copper is well-distributed throughout layers of horizontally-oriented rock formations that have been impregnated by iron and copper bearing fluids causing deposition of iron oxides and associated copper minerals. These bedded deposits are known as mantos. Mantos are often stacked like layered cake, offering the potential for multiple strata of mineralization. Especially thick mantos, such as the ones found at Santo Domingo Sur, can provide the tonnage required to yield a world class deposit.

To put matters in more simple terms, the drilling has confirmed the presence of a large copper-bearing IOCG system. This recent development is extraordinarily good news for Far West – especially since there appears to be significant large tonnage potential. This is indicated by the fact that the copper mineralization appears to be fairly evenly-dispersed through much of the expansive 150-metre-thick plus sequence of IOGC mantos being intersected.

Furthermore, assays from the two initial drill programs have returned impressive grades. They average about 0.77% copper for the initial fifteen holes reported from the drill programs comprising 18- RC holes.  (As an aside, it is worth mentioning that Chile’s Iron - Copper belt’s flagship Candelaria Mine is a very lucrative operator with a comparable average mining grade of 0.95% copper). In some of Far West’s two-metre drill intersections, grades even run as high as 2-4% copper. Meanwhile, the Company is testing the extension and size of the mineralized zone with a 24 hole drill program which commenced on the 20^th of October.

Notably, Far West also reports that the well-mineralized Santo Domingo Sur manto sequences start from a mere 30 metres below the surface in some drill holes while further to the north mineralization starts at depths of around 150 metres. The mineralization is as yet also ‘open’ (continuous) towards the north and the east, suggesting that the full dimensions of this emerging deposit are as yet unknown and have considerable scope for expansion. Moreover, the presence of consistently economic mineralization within 30 metres of the surface suggests that this deposit offers the prospect for low-cost, open-pit mining. These key logistics offer very favourable odds in support of an economically viable mining operation (assuming Far West proves up a sufficiently sized resource base).

Thus far, a careful examination of all the assays to date by SmallCapMedia suggests that an estimated 50 - 60 million tonnes of ore-grade rock have been delineated by way of the last phase of drilling. However, it should be pointed out that this is merely a preliminary drill-inferred resource calculation that does not in any way conform to Canadian National Policy 43-101 guidelines – a Canadian federal government recognized standard of a ‘measured resource’.

This rough resource estimate is relevant, nonetheless, as it forms the parameters of a preliminary geological model of the deposit. And this allows the Company to hypothesize that a program of grid-based step-out drilling along ‘strike’ is likely to continue to build upon this initial resource estimate. Similarly, future in-fill drilling is also expected to validate the initial resource estimate. Likewise for any subsequent drill-inferred estimates as the deposit’s scope continues to expand.

Accordingly, the Company intends to embark upon a follow-up drill program in the coming months that will involve drilling on a 100-metre-spaced grid. This next phase of drilling should help to develop a better understanding of the size and scope of this deposit, as well as better attesting to its true economic potential. If all goes well, Far West hopes to outline a world-class deposit of between 300 and 500 million tonnes in size over the next 12-18 months. And in a ‘rising tide’ market for metal prices, SmallCapMedia believes that the deposit’s fundamental economic picture promises to go from strength to strength.

The Santo Domingo Property location also benefits from robust infrastructure. This involves the proximity to a nearby town, as well as the city of Copiapo, less than 100 kilometres due south. Additionally, the property also has ready access to power, water, paved roads and railway lines. All of this would go a long way towards reducing most major start-up capital expenditures for a prospective mine, as well as long-term mine operating costs.

Regional Potential for World-Class Discoveries

Far West’s ambitions for the Santo Domingo Sur deposit are by no means excessively optimistic. Indeed, Chile’s Candelaria Belt is widely regarded as one of the most geologically fertile IOGC territories in the world. Most importantly, the San Domingo Sur discovery is situated at the heart of a rich copper-gold belt that hosts at least four other, large-scale IOCG deposits.

 

They include the 470-million-tonne Candelaria Mine, which is located about 100 kilometres due south of the Santo Domingo Property claims. This renowned mine has a gross metal value of over U.S. $16 billion (based on historically high 2005 copper prices upwards of U.S. $1.60 per lb). Significantly, the Santo Domingo Property is also located a mere 30 kilometres to the east of the Manto Verde Mine, which weighs-in at 350 million tonnes and is has an ‘in-situ’ (in-the-ground) value of close to U.S. $10 billion. 

Indeed, now might be an appropriate juncture to point out that Chile is the world’s largest copper producer, accounting for over a third of global output. The one and a half dozen major deposits in this mining-friendly country collectively host the world’s largest copper reserve base – in excess of 88 million tonnes of this indispensable industrial metal.

And many of the more remote, elevated regions of this politically stable democracy have never before experienced any systematic regional-scale exploration. So the potential for more ‘elephant-sized’ discoveries is very real. This is especially the case with the recent advent of highly sophisticated airborne geophysical surveying technologies such as BHP-Billiton’s proprietary Falcon™ gravity gradiometer.

Farallon Negro Project, Argentina

Far West and BHP-Billiton have now teamed up again in neighbouring Argentina and they are using the same proprietary airborne surveying technology that has served them so well in Chile. Their high hopes are not unwarranted. That’s because conventional exploration for giant porphyry copper deposits in much of the Argentinean Andes is hindered by extensive post-mineral cover. Such is the case for the region currently being explored. Hence, the alliance hopes to solve this geological puzzle, starting out by locating anomalous targets under cover.

In this regard, the partners recently received the data from a major 7,270-square-kilometre survey conducted in the under-explored, frontier province of Catamarca in northwest Argentina. BHP-Billiton holds 42 permits totaling 17,388 hectares within the project area.

Far West is to follow-up multiple airborne targets in early 2006 by using ground geophysical methods on the various targets to try to corroborate the airborne findings. On this note, the project area covers geologically prospective terrain to the north and south of mining district that hosts the 752-million-tonne Alumbrera copper-gold mine, as well as the equally prolific 802-million-tonne Agua Rica copper-gold prospect.

Georgetown Project, Australia

Meanwhile, Far West is also active in Australia with BHP Billiton, where they are employing a similar strategy of district-scale exploration in largely unexplored, remote hinterland regions. With a view to finding world-class prospects, their initial focus is northern Queensland. This is where a number of anomalous and highly prospective geophysical targets have been identified in the Georgetown Project area by way of a 7,817-line-kilometre airborne electromagnetic survey.

 

Thus far, a total of ten target areas have been selected from the four concession blocks that were flown. These targets will be examined up close in the spring of 2006 by way of detailed ground geophysics with the aim of identifying high-priority drill targets. The Georgetown Project area is believed to have the potential to host Broken Hill Type (BHT) style mineral deposits that are comparable to the renowned Broken Hill Deposit, which once hosted 280 million tones of ore, grading 150 g/t of silver, 10.0 % lead and 8.5 % zinc. Mineralized areas of the Georgetown Project also exhibit similar geological footprints to the 45-million-tonne Cannington Deposit, which boasts grades averaging 520 g/t silver, 11.9% lead and 4.8 % zinc.

 

Investment Summary

On a corporate note, Far West benefits from an accomplished team that collectively has decades of experience in the skilled management of publicly-traded natural resource companies. Moreover, the Company has amassed an impressive treasury of over Cdn. $11 million, precluding the need to dilute the company's stock with additional financings any time soon. The continuation of successful drill results should also give the company easy access to future financings – and at higher share price multiples.

 

From a technical perspective, the Company has approximately 47.75 million shares outstanding (about 52.67 million fully diluted) which permits good day-to-day liquidity in trading volumes. However, nearly 23% of this stock is held by management and other insiders. This presents plenty of incentive for the Company to aggressively pursue its near-term goal of outlining an economic copper deposit.

In summary, SmallCapMedia believes that there are numerous compelling dynamics converging to power the sustained upward trajectory of the Company’s share price during the balance of 2005 and beyond. Not the least of which is the prospect that continued drilling will soon reveal a sizeable, economically viable copper deposit – one that may yet exhibit world class potential. SmallCapMedia will thus be following this exciting story very closely in the coming months.