Agreement Type Sought: Option to
Purchase, Retained Royalty
Property Summary:
We evaluated the potential of the property for open pittable
bulk tonnage gold ore. The property is situated in Sonora, Mexico. The project area is
contiguous with concessions covering a porphyry stockwork system and likely includes
related mineralization. We sampled reported high-grade structures and workings in the
vicinity of the two prominent bills that contain essentially all of the old workings, and
we sampled the entire project area on an east-west grid. We spaced the grid lines at 40
meter intervals and took samples along each line at 20 meter intervals. We also
constructed geologic and topographic maps of the prospect. The sampling program delineated
a zone of clustered gold assays >0.5 g/t encompassing the area of old workings
and extending to the north and northeast. We tested this zone with a 1,200 meter reverse
circulation drill program performed by a reputable drilling company. Chemex Labs assayed
the drill cuttings. While the drill program did have numerous ore-grade (> 1.0
g/t Au) intercepts, these intercepts were generally thin and appeared to represent narrow
structures and veins. This type of intercept persisted to the northern limit of drilling
and it is possible that the gold-bearing structures coalesce to the north or northeast to
form a significant ore body.
Geology Summary:
The rock package in the project area
consists of Tertiary (or possibly Cretaceous) rhyolite tuff, Tr, underlain by Tertiary (or
Cretaceous) andesite, Ta. In a few places in the southern portion of the concession, the
Tr rhyolite tuff is cut by subvertical flow-banded rhyolite dikes, Trd, up to two meters
in thickness. The rhyolite tuff in the vicinity of the southern portion of East Hill and
the southern and western portions of West Hill has been intensely silicified with
preservation of many of the original fabric features of the tuff. This unit is designated
Tr+Sil. This type of silicification is very often associated with de-vitrification of
rhyolite tuffs and is unassociated with hydrothermal alteration. This type of
silicification is also seen as lenses and elongated zones within the Tr to the south of
the two prominent hills. This rock is generally light to medium grey in color. In the
vicinity of (undisclosed) on the map grid, there is a zone of east-west trending quartz
veining with schorl tourmaline cutting the Tr. Schorl is a common alteration mineral
within the entire rock package, including the Ta andesites. It is found as thin wisps,
veinlets, clots and, in places, as discrete veins. We found schorl mineralization
throughout the entire area examined, including zones over a kilometer to the east and
northeast in which we did reconnaissance mapping. We interpret the schorl mineralization
as due to boron metasomatism associated with the (undisclosed name) Cu-Mo porphyry
stockwork system.
Along the crests of East and West Hill, the rock unit is probably
rhyolite tuff that has been strongly hydrothermally altered. The hydrothermal alteration
in this unit is characterized by silicification with quartz veinlets and argillic
alteration. We designated this unit Tr+Sil+Arg. Much of the silicic alteration is
associated with sericite. The unit contains numerous zones which exhibit dissolution casts
after sulphides, predominately pyrite, and the iron oxides derived from the oxidation of
this pyrite have colored much of this rock an intense brick red. All of the old workings
are within this Tr+Sil+Arg unit. Shears and fractures in the silicified rhyolite to the
immediate south suggest that the Tr+Sil+Arg unit has been thrusted from northeast to
southwest and is in fault contact with the Tr+Sil. The subsequent drilling program
demonstrated that this unit is in fact bounded below by a sole fault, and that the
north-to-south thrusting concept is probably correct. While the northwest strike of its
contact with the Tr+Sil gives the unit and its contained Au-Ag mineralization an overall
northwest-southeast geometry, it is probable that many of the high-grade Au-Ag zones are
localized along high angle northeast-southwest trending tear faults in the thrusted plate.
This configuration is suggested by a continuous stope on West Hill that is open to the
surface on its southwestern end and was twice intersected by drill holes (R- 1 and R-6) to
the northeast. Exposure of structures in both the old access roads and the new drill roads
revealed a number of northeast structures. Shears in the plate perpendicular to the
direction of transport would account for the northwest trending mineralized structures
mapped in some of the workings.
The Tr+Sil+Arg unit is bounded to the east, north and below by the Ta
andesite unit. Along the sole fault contact, it is separated from the andesite by a gouge
zone up to eight meters thick.
The Ta andesite is a grey-green unit that underlies the rhyolite units.
It is the predominant rock unit cropping out in the northern portion of the (undisclosed
name) concession, and also crops out to the east and northeast of East Hill. Surface
assays of Ta taken during the grid sampling were generally very low in Au-Ag (<5 ppb
Au). However, the drilling program intersected several silicified zones within the
andesite that yielded >1.0 g/t Au assays and Ag assays up to 168 g/t (DH R-15).
Geochemistry Summary:
We constructed a grid over the project area by emplacing a
north-south baseline running the length of the approximate center of the (undisclosed)
concession. We then constructed east-west lines centered on the base line at 40 meter
intervals and extending 200 meters to each side using a brunton compass. Due to the
density of vegetation, it was necessary to clear the brush as the lines were being laid
out. We established a grid numbering system with point (undisclosed) in the saddle between
East and West Hills. We then sampled the east-west grid lines at 20 meter intervals,
taking care to take each sample from below the colluvium/alluvium where possible. We also
used these grid lines to map the geology of the project area and to construct a
topographic map. The 20 meter interval sample points and the topographic map were surveyed
using a hip chain and a Suunto clinometer, with appropriate distance corrections being
made for the slope of the topography. In places, the topographic slope exceeded 400. The
highest topographic point on the map is the top of East Hill, with an elevation of 412
meters.
Geophysics Summary:
Drilling Summary:
Based on the results of the rock
geochemistry and the geologic map, we designed a 1,200 meter reverse circulation drilling
program to test the East and West Hill areas and the area to the immediate north and
northeast for zones of continuous Au mineralization of economic grade. We selected
(undisclosed) as the drilling contractor. The drilling company used a track-mounted drill
with a center-return hammer bit. The track drill had the capacity to swivel its drill arm,
and was ideally suited to the narrow roads and pads of this project. Overall, the drilling
went well, with only relatively minor mechanical and rock problems. Ultimately, the entire
drilling program entailed 17 drill holes totaling 1,204 meters. Figure 3 is a map of the
drill hole locations with total depths.
The results of drillholes R-1 through R-l 1 confirmed that the
Tr+Sil+Arg unit is in fact a relatively thin plate in fault contact with the underlying
andesite. This plate of hydrothermally altered rhyolite dips to the northeast and is
separated from the andesite by up to eight meters of fault gouge along the sole fault.
Drill holes R-4, R-5, R-9 and R-10 had the best ore grades encountered in this upper
plate. The best intercept for the entire 17 hole program was nine meters of 3.17 g/t Au
and 71.33 g/t Ag intersected from zero to nine meters in R-9.
We encountered ore grade (>1.0 g/t) Au mineralization in the lower
plate Ta andesite in drill holes R-2, R-12, R-13, R-15 and R-16, which bottomed in rock
that assayed 1.56 g/t Au. Many, but not all, of the intercepts in Ta were
associated with zones of pyritization. However, most intercepts of pyritized andesite were
not associated with ore grade Au mineralization. Drill hole R- 10 intersected pyritic
andesite from 104 to 150 meters, with portions of this zone in excess of 10% pyrite. While
much of the zone was anomalous in Au, only one meter assayed 1.0 g/t Au. Like the zones of
ore grade Au mineralization intersected in the upper plate, the zones in the Ta tended to
be thin. Table 1 summarizes the significant drill hole intercepts. Most probably represent
narrow veins. Cross-sections B-B’ through E-E’ (plates 3-6) illustrate the
geology and show the drill holes with their significant Au intercepts.
Reserves Summary
Other:
Our geologic mapping program delineated a rock package of
variously altered and structurally disrupted rhyolite tuff units underlain by andesite.
Surface geochemical sampling indicated the possibility of a disseminated Au ore body on
East and West Hills, with potential for continuation to the north and northeast. However,
our assays from the sampling of structures and zones previously reported as high-grade
(>0.2 opt Au) were generally lower than expected. South of East and West Hills, sample
assays were generally <5 ppb Au, and we saw no
apparent drill targets in this area.
The 17-hole RVC drill program demonstrated that the
Tr+Sil+Arg rock package that contains all of the old workings and most of the surface rock
chip samples assaying >0.5 g/t Au is in fault contact with the underlying andesite and
in probable fault contact with the Tr+Sil to the south and west. The drill program did not
intersect ore grade Au mineralization with sufficient thickness and continuity to indicate
the presence of a minable ore body. The best intercepts were in the upper plate Tr+Sil+Arg
in the area tested by drill holes R-4, R-5 and R-9. Based on the geometry of the
higher-grade surface rock chip samples and the apparent geometry of the drill hole
intercepts, we conclude that ore grade Au mineralization is primarily contained in narrow
structures and veins with a generally minor disseminated character. Our interpretation
from the drill intercepts is that the Au-bearing structures/veins form a three-dimensional
anastomozing network, particularly within the andesite. Where veins intersect, zones of Au
mineralization are thicker and higher-grade. Away from vein intersections, Au
mineralization is thinner and lower grade.
Gold mineralization in the project area is probably genetically related to the quartz
diorite-hosted (undisclosed name) Cu-Mo porphyry stockwork system of Tertiary age.
Mineralization, as well as structural deformation/thrusting, may be related to the
emplacement of a subsequently altered and eroded lobe of quartz diorite postulated to
underlie the topographically flat area north of the concession. It is possible that the
network of Au-mineralized veins coalesces to the north or northeast to form a significant
ore body. Further exploration to the north and/or northeast could be rewarding.
