Lluvia de Oro Gold Project, Sonora, Mexico

Transcription

NI 43-101 TECHNICAL REPORT PERTAINING TO:
Lluvia de Oro Gold Project, Sonora, Mexico
Prepared For: Columbia Metals Corporation Limited
121 Richmond Street, Suite 402
Toronto, Ontario
M5H 2K1
Tel: (416) 364-6799
November 15, 2006
Revised December 15, 2006
Prepared By:
Rodney A. Blakestad, J.D., C.P.G.
1602 W. Placita Sin Nieve
Sahuarita, Arizona 85629
Tel./Fax: (520) 625-5046
MasOro@dakotacom.net
TABLE OF CONTENTS
1.0 SUMMARY..............................................................................................................................6
1.1 Project Overview .................................................................................................................6
1.2 Geology...............................................................................................................................6
1.3 Exploration and Resource Status .......................................................................................6
1.4 Data Integrity.......................................................................................................................7
1.5 Conclusions ........................................................................................................................8
1.6 Recommendations ..............................................................................................................8
2.0 INTRODUCTION ..................................................................................................................10
2.1 Purpose.............................................................................................................................10
2.2 Principal Sources of Information .......................................................................................10
2.3 Scope of Personal Inspections..........................................................................................10
3.0 RELIANCE ON OTHER EXPERTS ......................................................................................11
4.0 PROPERTY DESCRIPTION AND LOCATION.....................................................................11
4.1 Mining Concession Description.........................................................................................11
4.2 Agreements and Encumbrances.......................................................................................13
4.3 BioteQ/SART Recovery Process ......................................................................................13
Columbia Metals entered into a joint development agreement with BioteQ ...............................13
4.4 Environmental Liabilities and Permits ...............................................................................13
5.0 ACCESSIBILITY, CLAIMATE, LOCAL RESOURCES, INFRACTURE.................................14
5.1 Physiography ....................................................................................................................14
5.2 Climate ..............................................................................................................................15
5.3 Access ..............................................................................................................................15
5.4 Local Resources and Infrastructure ..................................................................................15
6.0 HISTORY ..............................................................................................................................17
6.1 Ownership History.............................................................................................................17
6.2 Exploration and Mining History .........................................................................................18
6.3 Resource History...............................................................................................................19
6.4 Production History.............................................................................................................24
7.0 GEOLOGICAL SETTING......................................................................................................26
7.1 Regional Geology .............................................................................................................26
7.2 Local and Project Geology ................................................................................................26
7.3 Structure ...........................................................................................................................28
8.0 DEPOSIT TYPES .................................................................................................................28
9.0 MINERALIZATION................................................................................................................29
9.1 Upper Zone Mineralization ................................................................................................29
9.1 Lower Zone Mineralization ................................................................................................30
10.0 EXPLORATION ..................................................................................................................34
10.1 Data Reliability ................................................................................................................34
11.0 DRILLING ...........................................................................................................................34
11.1 Columbia Metals Corp. Ltd. Drilling.................................................................................35
11.2 Fresnillo Drilling ..............................................................................................................36
11.3 Great Lakes – CMLO Drilling .........................................................................................37
12.0 SAMPLING METHOD AND APPROACH ...........................................................................38
12.1 Historical Trench and Drill Hole Sampling.......................................................................38
12.2 Columbia Metals - Drill Sampling ....................................................................................39
12.3 Columbia Metals - Leach Pad Sampling Program ..........................................................40
13.0 SAMPLE PREPARATION ANALYSES AND SECURITY ...................................................46
13.1 Soil Sampling ..................................................................................................................46
13.2 Trenching ........................................................................................................................46
Columbia Metals Corp. Ltd.
Technical Report – November 2006
Page ii
13.3 Core Drilling and Leach Pad Samples ............................................................................46
13.4 Sample Quality................................................................................................................47
14.0 DATA VERIFICATION ........................................................................................................47
15.0 ADJACENT PROPERTIES.................................................................................................48
16.0 MINERAL PROCESSING AND METALLURGICAL TESTING ...........................................50
16.1 Column Leach Results Discussion..................................................................................51
16.2 Paddle Abrasion and Impact Crushability .......................................................................52
16.3 Agglomeration Tests .......................................................................................................53
16.4 Metallurgical Tests 2006 .................................................................................................53
17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES......................................57
18.0 OTHER RELEVANT DATA AND INFORMATION ..............................................................78
18.1 Processing Plant .............................................................................................................78
18.2 Leach Pad Crush and Re-Leach Program ......................................................................79
19.0 INTERPRETATION AND CONCLUSIONS.........................................................................80
20.0 RECOMMENDATIONS.......................................................................................................83
21.0 REFERENCES ...................................................................................................................86
22.0 CERTIFICATES ..................................................................................................................87
22.1 Rodney A. Blakestad ......................................................................................................87
22.2 G.H. Giroux .....................................................................................................................88
23.0 APPENDICES.....................................................................................................................89
23.1 Appendix 1- LISTING OF DRILL HOLES USED IN STUDY...........................................89
23.2 Appendix 2 ......................................................................................................................94
23.3 Appendix 3- LEACH PAD BOULDER SAMPLES .........................................................100
Page iii
TABLE OF FIGURES
Figure 4.1 Mining concessions controlled by Columbia Metals Corp. Ltd.
Figure 6.1 Distribution of 128 RC drill holes used to define the Leahey resource model
Figure 6.2 Location map for resource areas
Figure 7.1 Geology map of the Lluvia de Oro area
Figure 9.1 Satellite image showing trace of long sections and sites for deep drill holes
at Lluvia de Oro
Figure 9.2 Long section view of the northeast end of the Creston Pit and Pit Extension
area showing Upper Zone and Lower Zone mineralized envelopes
Figure 9.3 Long section view of Lluvia Shear area showing drill hole intercepts of gold
mineralization
Figure 11.1 Satellite image showing distribution of Fresnillo drill holes relative to the
Lluvia Shear Zone
Figure 12.1 Typical boulders on leach pad
Figure 12.2 Map of Boulder Line
Figure 12.3 Leach pad pit sample location map
Figure 12.4 Leach pad showing indicated resource area
Figure 15.1 Mining Concessions held by Columbia Metals
Figure 16.1 Schematic diagram of the column leach tests
Figure 16.2 Bulk sample location map for the Lluvia leach pad
Figure 16.3 Acid-solubility curves for Cu from bulk samples of the leach pad
Figure 16.4 Extraction curves for variable NaCN concentration bottle roll tests
Figure 17.1 Lognormal Cumulative Probability Plot for Gold
Figure 17.2 Lognormal Cumulative Probability Plot for Silver
Figure 17.3 Lognormal Cumulative Probability Plot for Copper
Figure 17.4 Cross section looking northwest showing mineralized zones and open pit
Figure 17.5 Satellite picture of open pit and drill hole fences
Figure 17.6 Lluvia de Oro 875 level
Figure 17.9 Resource Model 810 level
Figure 18.1 Photo solution ponds, recovery plant, office buildings
Figure 19.1 Fresnillo drill holes
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TABLE OF TABLES
Table 1.1 Measured and Indicated Resources – Upper Zone
Table 1.2 Inferred Resources – Upper Zone
Table 1.3 Measured and Indicated Resources – Lower Zone
Table 1.4 Inferred Resources – Lower Zone
Table 1.5 Cost estimate for recommended drilling and exploration programs
Table 4.1 Core group of mining concessions at Lluvia de Oro
Table 4.2 Mining concessions surrounding the Lluvia de Oro core group of concessions
Table 6.1 Resource summary table by Howe (1995), showing resource compilations
Table 6.2 Resource compilation
Table 6.3 Production recovery records
Table 9.1 Table of drill hole intervals
Table 11.1 Collar information for Columbia Metals’ 2006 drill holes
Table 11.2 Drill intercepts values for gold and copper in four drill holes
Table 12.1 Summary of trench sample results
Table 12.2 Summary of leach pad samples
Table 12.3 Pad pit sample results
Table 12.4 Resource categories
Table 15.1 Mining concessions
Table 15.2 Range of resource values
Table 16.1 Standard bottle roll results for Lluvia de Oro leach pad composite samples
Table 16.2 Extraction results for solution-exchange bottle roll tests
Table 16.3 Average bottle roll extraction
Table 17.1 Summary of Statistics
Table 17.2 Summary of lognormal gold populations
Table 17.3 Summary of lognormal silver populations
Table 17.4 Summary of lognormal copper populations
Table 17.5 Summary of statistics for 5 meter composites
Table 17.6 Summary of semivariogram parameters
Table 17.7 Search parameters for ordinary kriging
Table 17.8 Summary of specific gravity determinations
Table 17.9 Total Resource
Table 17.10 Upper Zone Resource
Table 17.11 Lower Zone Resource
Table 17.12 Material Mined from Open Pit
Table 19.1 Resource estimates upper and lower zone
Table 20.1 Cost estimate for recommended drilling and exploration programs
Table 20.2 Recommended drill holes for lower zone exploration
Table 20.3 Recommended drill holes
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1.0 SUMMARY
1.1 Project Overview
The Lluvia de Oro property is a former-producing, advanced-stage, gold project located 13
km northwest of Magdalena de Kino, Sonora Mexico. The project is being developed by
Columbia Metals Corporation Limited (hereafter “Columbia Metals”), a TSX Venture
Exchange listed company (Symbol: COL), through its Mexican subsidiary Minera Columbia
de Mexico, SA de CV. Columbia Metals controls all mining, surface and water rights and the
assets of the Lluvia de Oro property under a purchase agreement with the, Tara Gold
Resources Corporation (OTC: TRGD.PK, hereafter “Tara Gold”) subject to a 20% net cash
flow interest (NCF).
Assets of the Lluvia de Oro property include a complete recovery plant with three solution
ponds, two 700 gal/min (2,650 l/min) carbon column sets, carbon stripping equipment,
carbon regeneration unit, doré furnace and field office facilities are in-place at the mine. In
addition, there is a double-lined leach pad with 2,921,000 tonnes placed on the pad by
previous operators, and a drill hole database of 260 drill holes, which partially defines two
zones of gold-silver-copper mineralization. The Upper Zone of mineralization includes the
remaining un-mined resources in the floor and walls of the Creston Pit, and northeast
extensions of that mineralization from near-surface to a depth of approximately 75 meters
below surface.
A Lower Zone of mineralization, identified by previous work on the property and partially
confirmed through drilling by Columbia Metals in 2006, is a relatively flat-lying zone of
mineralization, below the Upper Zone. This Lower Zone mineralization is only partially
identified by drilling. Due to the apparent higher grade and potential for greater lateral
distribution of the Lower Zone of mineralization, as reported in this document, aggressive
exploration of the zone is warranted.
1.2 Geology
Lluvia de Oro gold-silver-copper mineralization is primarily contained within the upper
plate of a detachment fault block of Early Cretaceous sedimentary rocks. The
detachment block is approximately 3,000 meters long, 800 to 1,500 meters wide, and
220 to +234 meters thick in the central portion. The allochthonous block lies in
structural contact above metamorphosed Jurassic to Mid-Tertiary volcanic,
sedimentary and intrusive rocks of the Magdalena Metamorphic Core Complex
(Nourse, 1992).
1.3 Exploration and Resource Status
Exploration of the Lluvia de Oro mine area is in an advanced stage with 264
exploration and resource definition drill holes comprising more than 26,000 meters of
drilling. Work to date has identified two envelopes of gold-silver-copper mineralization
comprising the Upper and Lower Zones. Mineral resources for the two zones are
defined in a series of grade-tonnage tables for a variety of gold cutoff grades. The
Page 6
Measured and Indicated resources for the Upper Zone are shown in Table 1.1, while
the Inferred Resources for the Upper Zone are shown in Table 1.2. The resources
are reported for a cutoff grade of 0.4 g/t Au. The Measured and Indicated resources
at the 0.4 g Au/t for the Lower Zone are shown in Table 1.3, while the Inferred
Resources for the Lower Zone are shown in Table 1.4.
UPPER ZONE MEASURED
UPPER ZONE INDICATED
UPPER ZONE M + I
Cutoff
g Au/t
Tonnes
g Au/t
Oz. Au
Tonnes
g Au/t
Oz. Au
Tonnes
g Au/t
Oz. Au
0.40
263,000
0.693
5,860
2,130,000
0.632
43,280
2,390,000
0.639
49,101
Table 1.1: Measured and Indicated Resources – Upper Zone.
UPPER ZONE INFERRED
Cutoff
g Au/t
Tonnes
g Au/t
Oz. Au
0.40
3410000
0.588
64,465
Table 1.2: Inferred Resources – Upper Zone.
LOWER ZONE MEASURED
LOWER ZONE INDICATED
LOWER ZONE M + I
Cutoff
g Au/t
Tonnes
g Au/t
Oz. Au
Tonnes
g Au/t
Oz. Au
Tonnes
g Au/t
Oz. Au
0.40
25,000
1.328
1,067
480,000
1.17
18,056
636,000
1.025
20,959
Table 1.3: Measured and Indicated Resources – Lower Zone.
LOWER ZONE INFERRED
Cutoff
g Au/t
Tonnes
g Au/t
Oz. Au
0.40
5760000
0.716
132,595
Table 1.4: Inferred Resources – Lower Zone.
A resource analysis of the existing leach pad indicates that 30,100 ounces of gold
remain in 2,921,000 tonnes of rock materials placed on the pad between 1996 and
1998. Mineral Resource calculations show that an Indicated Resource of 10,926
ounces of gold are contained in 640,000 tonnes within 7.0 meters of the surface of
the northeast end of the leach pad, as set forth in Table 1.5.
LEACH PAD - NE END
LEACH PAD INDICATED
TOTAL M + I
Tonnes
g Au/t
Oz. Au
Tonnes
g Au/t
Oz. Au
Tonnes
g Au/t
Oz. Au
0
0
0
640,000
0.531
10,926
640,000
0.531
10,926
LEACH PAD INFERRED
Tonnes
g Au/t
Oz. Au
725,600
0.378
8,818
Table 1.5: Summary table of Mineral Resources for the Lluvia de Oro leach pad.
1.4 Data Integrity
Assay data and maps summarizing results of exploration by previous operators at
Lluvia de Oro have been reviewed and corrected where necessary, to establish a
reliable database for current and future resource assessment. The current database
is considered to be reliable.
Page 7
1.5 Conclusions
Lluvia de Oro is a detachment-fault, bulk-tonnage gold deposit with 264 drill holes
and other exploration results that suggest a substantial in-situ gold-silver-copper
resource with excellent potential for increasing the mineral resources. The data
support recommendations to consider near-term production scenarios for a crush and
re-leach plan regarding the northeast end of the leach pad, continued exploration and
definition of resources for the in-situ mineralization defined for the Upper Zone
mineralized envelope, and for additional exploration of the potentially larger and
higher-grade Lower Zone mineralization. The recovery plant at Lluvia de Oro is in
good condition, and additional improvements and rehabilitation are warranted.
1.6 Recommendations
Drilling is recommended to increase the resource base and convert established
Inferred Resources to higher categories. Drilling should be conducted so that both
the Upper Zone and Lower Zone mineralized envelopes can be evaluated by the
same drill hole layout.
In conjunction with additional drilling, it is recommended that a detailed operating
plan and capital expenditure budget be created to become the basis of an economic
analysis of a “crush and re-leach” program for the Lluvia de Oro leach pad materials,
and for potentially restarting mining at the Creston Pit. Said operating plans and
budgets should incorporate the economics of copper recovery and cyanide
regeneration from process solutions utilizing the BioteQ or SART recovery process.
The following exploration activities and support work are recommended:
•
•
•
•
•
•
Conduct an induced polarization (IP) survey over the central portion of the
detachment block to determine if IP will aid in selecting drill sites for defining
the distribution and grade of the two mineralized envelopes.
Conduct a topographic survey of the Creston Pit and mine facilities to tie the
existing surface conditions to the pre-mining topographic map of the area.
Conduct exploration drilling to evaluate the Lower Zone mineralization; to
include 21 vertical RC drill holes west of the Lluvia Shear Zone and 8 vertical
drill holes SW of the Creston Pit.
Conduct resource definition drilling in addition to exploration drilling; 52 holes
to include approximately 50% diamond drill holes.
Complete metallurgical studies to define expected Au-Ag-Cu recoveries for the
leach pad materials, and to evaluate recovery expectations for in-situ
mineralization of the Upper Zone utilizing the BioteQ/SART recovery process.
Conduct in-house feasibility analysis to evaluate restart of in-situ mining at the
Creston Pit.
Page 8
The estimated cost of the recommended activities is shown in Table 1. 6.
A reasonable contingency should be added to account for actual contract costs.
PROGRAM
Drilling - exploration
Drilling - resource definition
Geochemical and laboratory
expense
IP Survey
Metallurgical Testing
Evaluate Restart of In-Situ Mining
Rehabilitation Lluvia Plant
Engineering-Geological and Misc.
Office support and Overhead
#
HOLES
29
52
METERS
4,350
8,580
N/A
4,800
N/A
N/A
N/A
N/A
N/A
DRILL
TYPE
RC
RC- DD
COST/m
75
90
5.21
Total US$:
Table 1.6: Cost estimate for recommended drilling and other recommended programs.
COST
326,250
772,200
230,000
25,000
65,000
40,000
250,000
150,000
93,000
1,951,450
Page 9
2.0 INTRODUCTION
2.1 Purpose
This report was prepared for Columbia Metals Corporation Ltd. to adhere to the
requirements of National Instrument 43-101, “Standards of Disclosure for Mineral
Properties”, its companion Instrument 43-101F1, and was prepared in accordance
with the "CIM Definition Standards on Mineral Resources and Mineral Reserves as
prepared by the CIM Standing Committee on Reserve Definitions and as adopted by
CIM Council, November 14, 2004”, which pertains to reporting of mineral resources
and mineral resource reserves.
Work undertaken in the period April through October 2006, also serve to evaluate the
near-term production potential for the Lluvia de Oro leach pad materials and nearsurface mineralization, which are reported in this document.
2.2 Principal Sources of Information
Historical reports and mineral resource data pertaining to the Lluvia de Oro mine and
surrounding mineralization were prepared by Great Lakes Minerals, Ltd., Santa Cruz
Gold, Inc., Compania Mineral Lluvia de Oro, SA de CV, and a variety of other
sources. These reports, and information generated by Columbia Metals Corporation
Ltd. (Columbia Metals), were used to compile the information set forth in this
document. Rodney A. Blakestad, C.P.G., a Qualified Person (QP), hereafter referred
to as “the writer”, is the principal author of the report. Mr. Gary Giroux, P. Eng., an
independent QP, prepared the section pertaining to Mineral Resources. The writer
believes that all sources of information used to compile this report constitute reliable
sources of information and the information was prepared by professional persons
using standards generally accepted by the North American mining industry, except
where noted in this report. Outside sources of data and information used in this
document are referenced in the text and set forth in the “References” section at the
end of this report.
2.3 Scope of Personal Inspections
The writer first investigated the subject property in 1997 and 1998 while conducting
minerals exploration at a nearby property having similar geologic attributes. In 2006,
the writer investigated the property on behalf of Columbia Metals and directed certain
exploration activities that are instrumental in derivation of the opinions and
conclusions set forth in this document. Mr. Giroux, and Independent QP responsible
for assessing the mineral resources for the property, has not inspected the property,
as his work is a product of assimilation of the electronic database obtained by prior
workers.
Page 10
3.0 RELIANCE ON OTHER EXPERTS
The writer is not qualified to provide comprehensive opinions regarding the legal,
environmental, and political issues that may affect the property. All comments set
forth below that pertain to these issues are the opinion of the writer based on many
years of experience in the minerals exploration and mining business and should not
be relied upon except in that context. All other matters presented in this report are
deemed to be the work product of Mr. Blakestad, and as such, he accepts full
responsibility therefore.
4.0 PROPERTY DESCRIPTION AND LOCATION
The area of interest is situated approximately 100 kilometers south of the border town
of Nogales, Arizona and about three hours drive from Tucson, Arizona. The mine site
is located 13 kilometers northwest of Magdalena de Kino, Sonora Mexico, and can be
located at UTM coordinates 496,300E 3,398,600N, NAD-27 Zone 12, on the
1:50,000 scale topographic map Santa Ana (H12B61).
4.1 Mining Concession Description
The Lluvia de Oro mine and associated exploration targets are wholly situated within
a core group of four exploitation concessions that aggregate 589 hectares. Table 4.1
lists the core concessions and provides other pertinent information.
Lot Name
Title
Number
Date of
Expiration
File Number
Surface Area
in Hectares
Lluvia de Oro
192050
Dec 18, 2041
321.1.4/746
Lluvia de Oro, N° 2
195124
Aug 25, 2042
321.1.4/581
El Sahuaral “A”
201469
Oct 10, 2045
4-1.3/1161
El Sahuaral Dos
210805
Nov 29, 2049
4-1.3/1301
Table 4.1: Core group of mining concessions at Lluvia de Oro.
5.53
100
479
4.47
The core group of mining concessions is subject to a purchase agreement between
Columbia Metals and Tara Gold Resources Corp. whereby Columbia will acquire the
mining, surface and water rights, and all assets of the Lluvia de Oro property for a
sum of US$4,487,500 to be paid in installments by December 1, 2008. Columbia has
paid a total of US$712,500 under the installment plan as of the date of the report.
Tara will retain a 20% net cash flow (NCF) interest regarding all production from the
property, however, Columbia shall have the right to purchase the NCF interest in the
Lluvia property for a payment of US$250,000 for each 1% NCF, for a period of 24
months from the date of approval of the transaction by the TSX Venture Exchange.
Columbia Metals controls a 100% interest in concessions surrounding the core group
of concessions at Lluvia de Oro property as set forth in Table 4.2 and Figure 4.1
below.
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Lot Name
Title Number
Date of Expiration
File Number
Surface Area
in Hectares
Lluvia de Oro 3
221512
February 18, 2054
82/28570
447
Lluvia de Oro 4
222583
July 22, 2054
82/28861
744
Lluvia de Oro 5
227504
June 26, 2056
82/30358
712
Sahuaral Sur
221473
February 10, 2010
82/28567
56
Sahuaral Norte
221474
February 16, 2010
82/28568
24
Table 4.2: Mining concessions surrounding the Lluvia de Oro core group of concessions.
Figure 4.1: Mining concessions controlled by Columbia Metals Corp. Ltd. in the vicinity of Magdalena
de Kino. Map by R. Blakestad.
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4.2 Agreements and Encumbrances
Surface access to the area is controlled by the owners of Agua Dulce Ranch (the
Lopez family). Columbia Metals has implemented an access agreement with the
Lopez family that provides for exclusive access in the area of the mine and joint
access to the surrounding area for exploration purposes. The access agreement
involves 92 hectares in the production area, surrounded by 208 hectares for
exploration (total of 300 ha.). The agreement is for ten years, ending July 2016, with
a renewal option, and requires payments of US$72,000 per year. Columbia has
agreed to construct a protective fence along the access corridor to the mine area,
and to construct certain water facilities for the owner’s cattle. The cost of the
additional work is estimated to be US$10,000.
4.3 BioteQ/SART Recovery Process
Columbia Metals entered into a joint development agreement with BioteQ
Environmental Technologies Inc. (TSX-V: BQE) regarding a process water treatment
facility for the Lluvia de Oro recovery plant. Initial studies have commenced related to
the metallurgy of the recovery process, which, if deemed to be appropriate, will
support construction and operation of a regeneration plant using biological sulfide to
recover free cyanide and copper-complexed cyanide from the barren solution
process stream. The process will also recover copper from solution, thereby
converting a liability in the gold-silver recovery process (copper) into a salable asset.
It is recommended that Columbia Metals continue with the metallurgical studies
necessary to evaluate the efficacy of the Bioteq process.
4.4 Environmental Liabilities and Permits
Though located only 18 kilometers by road from the town of Magdalena de Kino, the
Lluvia de Oro mine site is essentially isolated from human habitation. No permanent
habitations exist within two kilometers of the mine site and access is restricted by the
local ranch owner to all the workings and exploration targets identified to date.
There are no perennial streams within six kilometers of the project area, and only one
stock watering impoundment is known to be within the mine drainage pattern.
Diversion systems divert storm runoff from uphill drainages around the leach pad to
the natural drainage (arroyo La Tinaja) leading to the southwest of the operations.
Solution collection ponds for the mine provide 100 percent containment of
operational solutions, as well as storm runoff storage from the lined leach pad,
ditches, and ponds, as set forth in the prefeasibility design criteria by WESTEC
(1994). A leak detection system was constructed to include operational pond leak
detection wells and sumps, and groundwater monitoring wells up-gradient and down
gradient of the leach pad area.
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Although cattle have found their way into the operational area in the past, the Lluvia
mine area and recovery facilities are fenced by barbed wire to surround a 92-hectare
operational area. The access road from the Agua Dulce ranch boundary to the main
gate to the operational area has also been fenced to protect cattle from mine traffic.
Permits to cover all aspects of mine operations have been obtained by prior
operators of the Lluvia de Oro mine. It is expected that permits will be applied for and
obtained without undue delay by following the protocols set during prior operations.
Columbia Metals has submitted a notice letter to accommodate initial exploration
drilling operations at the property (Minera MasOro, 2006). As a general proposition,
the following permits are required prior to commencing mining operation in Sonora:
REQUIRED ACTION
Environmental Impact
Land Use Study
Risk Analysis
Municipal Authorization
Explosives Permit
Archaeology Review
Water Use Title
Sewage Permit
Plant Operation Permit
Access and Land Use
AGENCY
DELEGATION
SEMARNAT
Sonora
SEMARNAT
Sonora
SEMARNAT
Mexico City
Municipality
Magdalena
SEDENA
Mexico City
INAH
Sonora
CNA
Sonora
CNA
Sonora
SEMARNAT
Sonora
Private
Lopez Family
STATUS
Update needed
Update needed
Update needed
Update needed
Update needed
Transfer Permit
Transfer needed
Transfer needed
Due 6 mo. After start
Agreement in place
5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRACTURE
5.1 Physiography
Lluvia de Oro is located in the southern portion of the Basin and Range province of
western North America. The area is characterized by low, rolling hills and pediment
plains in valleys bounded by fault-block mountains having moderate topographic
relief. Relief in the immediate area ranges from 880 meters to 1,240 meters above
sea level. The mine site is located totally within the lower elevations of the region,
which is drained by arroyo La Tinaja.
The land surface is characteristic of a desert environment with a thin veneer of sand
and alluvial cover punctuated by intermittent bedrock outcrops. Vegetation is sparse
consisting of cactus, desert grasses, brush, and thorny trees such as palo verde and
mesquite.
Page 14
5.2 Climate
The Lluvia de Oro project is situated in the Sonoran Desert region of Northern
Mexico. The area is semi-arid and normally warm (to hot) and dry, with monsoon
rains in the summer and infrequent periods of light rain in the other months.
Precipitation records for the project area were reviewed by Welch Engineering
Science and Technology (WESTEC) to determine the water balance for the heap
leach pad and recovery pond system at Lluvia. Based on precipitation records from
three local stations dating back to 24 years prior to 1995, Breitenbach (1995)
determined that annual “average year” precipitation is 20.8 cm (8.18 inches) and that
“wet year” conditions can be up to 87.4 cm (34.4 inches).
Average high temperatures during the summer months range just below 40° C, while
in the winter months the average low is about 9° C in the Magdalena de Kino area
(Breitenbach, 1995).
5.3 Access
Access to the Lluvia de Oro project can be gained from Magdalena de Kino by driving
west to km 6 on the paved highway to Tubatama, then north about 12 kilometers
along an improved gravel road that follows arroyo San Lorenzo to Agua Dulce ranch.
The gravel road may be impassable for short periods of time during monsoon rain
storms; otherwise access is excellent.
5.4 Local Resources and Infrastructure
Two water wells (366m and 213m deep) were permitted and developed by prior
operators of the Lluvia de Oro mine. The wells are located at the Agua Dulce ranch
house, three kilometers northeast of the mine. Water of sufficient capacity (28 and 18
liters/sec. installed capacity) can be pumped by diesel generator to the mine through
a six-inch water line that is already in-place and operational.
The mine is not connected to the local power grid. Two Caterpillar diesel generators
provide power to the mine and recovery facilities.
The mine facilities include two office trailers adjacent to a complete gold recovery
plant capable of 25-thousand ounce per year production capacity, including carbon
regeneration columns and a gold doré smelting room. The facilities include two 700
gpm carbon leach circuits and a one-tonne carbon strip circuit. The recovery plant is
associated with a leach pad 258m long x 150m wide, constructed with two waterproof
membranes (40-mil and 60-mil HDP liners) with leak detection system, and three
solution storage ponds. The project site includes sufficient land for additional
recovery facilities and waste disposal.
Page 15
Experienced mining labor is available in the nearby town of Magdalena de Kino.
Equipment and supplies are also available there, but some supplies and equipment
will need to be acquired from elsewhere in Mexico or the U.S.
Page 16
6.0 HISTORY
6.1 Ownership History
Small scale mining had taken place at the Lluvia de Oro property for many years prior
to the 1980s, but the ownership and production record for that time is incomplete.
Compania Fresnillo, S.A. de C.V. (hereafter "Fresnillo") conducted reconnaissance
exploration in northern Sonora during the period 1984-89, which included the area of
Lluvia de Oro. Fresnillo apparently had an ownership position on part of the property
commencing about 1987, however, the writer has no record of that initial ownership
interest.
In 1993, Great Lakes Minerals Inc. acquired an option to earn a 100% interest in the
Lluvia de Oro gold project (in-part from Fresnillo), and in the same year sold a 3% net
smelter return (NSR) royalty on all mineral production to Repadre Capital Corp.
During 1993-95, Great Lakes earned its 100% interest in the project through work
commitments and payments totaling US$450,000 (A.C.A. Howe, 1995). In 1995 the
company commenced construction of a recovery plant capable of 25,000 ounces of
gold per. In 1996, Great Lakes sold an additional 1% NSR in the project to Repadre
International Corp., and the mine commenced commercial production in October
1996 (MD&A, Great Lakes Minerals, 1998). In 1997, Great Lakes transferred its
Mexican assets to Newmex Mining Company Ltd., including its Mexican subsidiary
Compania Minera Lluvia de Oro S.A. de C.V. (CMLO), the owner of the Lluvia de Oro
mining operation. In September 1997, Newmex amalgamated with Santa Cruz to
form Santa Cruz Gold Inc., which became the operator of the mine, through the
Mexican subsidiary CMLO.
Mining operations at Lluvia de Oro encountered financial difficulties during 1997-98
due to decreasing gold prices and recovery problems at the Lluvia de Oro recovery
plant. Mining operations were suspended in June 1998, and recovery operations
from the leach pad were terminated in December 1998. Subsequently, various debt
settlement agreements were entered into by Santa Cruz and several mine employees
filed embargoes (mechanic’s leans) against the properties and assets of the mine. In
March 1999, Santa Cruz entered into an agreement with Queenstake Resources Ltd.
that provided for the amalgamation of the two companies by way of statutory
arrangement. In April 1999, while the amalgamation was under consideration, Santa
Cruz entered into a letter agreement to sell Minera Lluvia (specifically, the Lluvia de
Oro assets) to the Mexico company, Pecamin S.A. de C.V. At an undisclosed date
Pecamin conveyed the property to Atotonilco Contrucciones, S.A. de C.V. of Mexico
(hereafter “Atotonilco”). Atotonilco optioned the property to Tara Gold Resources
Corp. (OTC: TRGD.PK) at an undetermined date.
In February 2005, Columbia Metals acquired ownership interest in the recovery plant
and equipment at the Lluvia de Oro mine through the purchase of embargo claims by
certain former employees of the mine operators.
Page 17
In April 2006, Columbia Metals entered into a binding letter of intent with Tara Gold to
acquire all mining, surface and water rights, and all assets of the Lluvia de Oro gold
property from Tara Gold and Atotonilco. Under that agreement, Tara Gold agreed to
deliver to Columbia a full and final release in respect to the vendor’s claims and any
other outstanding liens on the Lluvia de Oro property. Columbia paid Tara Gold
US$150,000 at the time of signing and has agreed to make additional payments of
US$4,337,500 by December 1, 2008.
Upon completion of the payment obligations, Columbia Metals will acquire all
interests in- and to the Lluvia Property, free of debt, royalty and embargo obligations,
subject to a 20% net cash flow interest ("NCF") to Tara Gold. Columbia will have a
right to purchase all of Tara Gold's NCF interest for a period of 24 months from the
date of approval of the transaction by the TSX Venture Exchange, for a payment of
US$250,000 for each 1% of the NCF, for a total of US$5,000,000 (Columbia Metals
news release, April 7, 2006).
6.2 Exploration and Mining History
Small scale mining has taken place at the Lluvia de Oro property for many years prior
to the 1980s. Most of these operations focused on high grade veins and fracture
systems, including several small shafts and limited underground workings
accomplished at the “El Creston” area, which is now the location of the Lluvia de Oro
Creston open pit. Total tonnage mined from these early operations is believed to be
in the range of several thousand tonnes, and therefore, considered to be insignificant
with respect to more recent exploration and mining events.
From 1984 to 1987 Compania Fresnillo, S.A. de C.V. (“Fresnillo”) conducted
reconnaissance exploration in northern Sonora, which included sampling of rocks in
the Lluvia de Oro area. Based on the presence of early mining activity, favorable
reconnaissance sampling, structure and hydrothermal alteration, the Lluvia de Oro
property was identified as an exploration target. In 1988, Fresnillo commenced a
program to include shallow trenching and channel sampling, which was followed by
drilling of 31 drill holes.
Exploration by Great Lakes in 1993-94 initially consisted of trench sampling and
drilling to confirm the Fresnillo results, followed in 1995 by aerial photography
interpretation, detailed trenching, sampling, in-fill drilling of the El Creston area, and
exploration of various targets such as El Cobre, Easte and El Pozo prospects. Great
Lakes also initiated detailed and comprehensive engineering studies for an open pit
mine at the property. The exploration and mine plan studies were reviewed by A.C.A.
Howe International Ltd. (Ewert, 1995) and W.M. Calhoun, Inc. (Calhoun, 1996). Great
Lakes decided to proceed with mine development and construction in September
1995. Mine production from the Creston Pit commenced in March 1996 and was
carried out until June 1998. The recovery plant operated until December 1998, and
intermittently thereafter until early 1999.
Page 18
Since mid-2006, Columbia Metals has been evaluating various approaches to
exploration and reactivating mining operations at Lluvia de Oro. Production
opportunities include three components: 1) crushing the run-of-mine rocks placed on
the leach pad during 1996-98, and re-leaching of these materials; 2) commencing
mining operations on in-situ ore left in and around the Creston Pit and its northeast
extensions; and 3) exploration of- and potential development of other zones of
mineralization near the Lluvia de Oro mine.
6.3 Resource History
An independent resource analysis for the Lluvia de Oro property was prepared for
Great Lakes Minerals Inc. by Computer-Aided Geoscience Pty., Ltd. (“CAG” - an
Australian firm) based on 82 reverse-circulation (RC) drill holes. Following completion
of 46 additional RC drill holes in December 1994, Leahey (1995) reviewed and
updated the “resource” and “reserve” study and compiled a table (a pre-NI 43-101
study) depicting the differences between manual ore calculation, inverse-distance to
power 2 (IDP2) computer-generated reserves, and a grade-controlled shortestdistance between composite grade model for three different grade models. The three
models were compared using an OVERLAY system developed by CAG. A review of
the methodologies employed in the resource determinations was conducted by
A.C.A. Howe (Ewert, 1995), wherein it was determined that the “reserves”
established by the OVERLAY system were “reasonable [and] within normal North
American engineering standards.” These initial resource studies are summarized in
Table 6.1.
The resource categories in the table by Ewert (1995) were based on the 1992
AuslMM Reserve Guidelines definition, which defined “Measured Resource” as:
“a mineral resource intersected and tested by drill holes, underground
openings, or other sampling procedures at locations which are spaced close
enough to confirm continuity and where geoscientific data are reliably known.”
In terms of resource modeling, the definition has two components: 1) geological
continuity and 2) grade continuity. Geological continuity is defined by geological
interpretation of the available data; grade continuity is defined primarily during grade
modeling based on the selected interpolation parameters. Interpolation parameters
are defined by the variography, and are thus a function of data distribution and grade
continuity.
Page 19
Table 6.1: Resource summary table by Ewert (1995), showing three resource compilations.
The Howe study was done by building three different grade models and comparing
the gold grade and tonnes. All three models were created using the same CAG Rock
Code model, composite values, and modeling search parameters by area (ie: using
SW, Central, and NW search ellipsoids). A series of combinations of Low Grade
composites and High Grade composites were assembled to build various models (a
Low Grade to Low Grade, a Low Grade, and a High Grade to Low Grade). The
different area models were merged and reserves were reported using the CAG
“Measured”, “Indicated”, and “Inferred” classifications defined by variography for 60
meters along strike, 90 meters down dip, and 40 meters cross-dip and search radii of
30, 45, and 65 meters, respectively. Criteria involving the distribution of
mineralization along structures and attitude of mineralization were utilized to restrict
the distribution of mineralization for calculation of the resource table for the Creston
Pit. This work was performed based on the initial 128 RC drill holes for the Creston
Pit area. Figure 6.1 shows the distribution of drill holes for these early studies.
Ewert (1995) used the 1992 AuslMM Reserve Guidelines definition for “Minable
Reserve” as:
Page 20
“that part of a Measured or Indicated Mineral Resource which could be mined,
inclusive of dilution, and from which valuable or useful minerals could be
recovered economically under conditions realistically assumed at the time of
reporting.”
The Minable Reserve included material categorized as measured and indicated only.
Inferred resources were treated as waste. The resulting resource data are reported
here as historical resource calculations, because the data are pertinent to
conceptualizing the grade and tonnage estimates for the Creston Pit and immediately
adjacent mineralization. It is also valuable in comparing early mineral resource
estimates with the production records for the mine, and in consideration of the
resource estimates contained in Section 17 of this document (Mineral Resource and
Mineral Reserve Estimates).
Figure 6.1: Distribution of 128 RC drill holes used to define the Leahey (1995) resource model,
superimposed with outline of the existing Creston open pit boundary and former topography contours.
Map from Ewert (1995).
Page 21
It is the opinion of the writer that the drill hole density, as described more fully in the
“Drilling” section of this report, was sufficiently dense for the Creston Pit area to
define the majority of the mineral resources as Measured and Indicated mineral
resources pursuant to the requirements of NI 43-101 and the Canadian Institute of
Mining, Metallurgy and Petroleum CIM Definition Standards on Mineral Resources
and Mineral Reserves adopted by the CIM Council, and that the resulting Proved +
Probable mineral resource estimate of 132,000 ounce for the Creston Pit (Leahey,
1995) is acceptable.
Subsequent to commencement of production at the Creston Pit, a number of
internally prepared grade and tonnage projections were prepared by Compañía
Minera Lluvia de Oro S.A. de C.V. (CMLO). These resource studies were compiled
after various phases of drilling provided additional information to the data base.
Although of interest from an historical perspective, only one of the interim resource
calculations is of sufficient value to report in this document. The resource summary
report of interest, was prepared in September 1998, and includes all the drill hole
data completed at the property prior to the acquisition by Columbia Metals. All
subsequent resource summaries produced by CMLO appear to be variations of the
September 1998 study. Table 6.2 sets forth a summary of the 1998 resource
compilation.
Source – Lluvia de Oro Mine Staff - Sept. 1998:
"Geologic Reserves" at 0.40 g/t Au Cut Off
Area
Total Ore
g/t Au
Oz. Au
2,631,325
0.711
60,149
Creston Pit:
2,567,346
0.68
56,129
Pit Extension:
951,305
0.78
23,857
Lluvia Shear:
6,149,976
0.709
140,135
Sum:
Table 6.2: Resource compilation for Lluvia de Oro by CMLO staff, September 1998.
These data summarize all drill data through drill hole L-260 and report the “geologic
reserves” for three areas of near-surface gold mineralization. The “Creston Pit”
denotes the ore remaining below the surface of the pit as of September 1998. The
“Pit Extension” and “Lluvia Shear” areas are to the northeast of the Creston Pit, as
shown in Figure 6.2. The term “geologic reserves” was not defined, so the resource
estimate is considered to be a pre-NI 43-101 resource estimate and is treated here
as an historical estimate. The resource summary used a 0.40 g/t gold cutoff for
“geologic reserve” definition.
The data indicate 6,150,000 metric tonnes of in-situ ore grading 0.709 g/t Au, for the
three areas of Upper Zone mineralization. These non-43-101 compliant “geological
reserves” are compared and contrasted with current mineral resource estimates of
Section 17 below (also, see Section 18.2).
Page 22
Figure 6.2: Location map for resource areas defined by Compania Minera Lluvia de Oro SA de CV
(CMLO) mine staff in 1998. UTM grid is NAD-27, Zone 12. Map by Blakestad, 2006.
Page 23
6.4 Production History
There is no record of pre-1996 production from the Lluvia de Oro property, however,
early surface and underground production (perhaps as early as the 1700’s) was
accomplished by hand mining of high-grade veins and mineralized structures near
the surface. Total production from early mining is probably in the range of a few
thousand tons, which is considered by the writer to be insignificant in the scope of
bulk-tonnage gold deposits such as Lluvia de Oro.
Large-scale mining, by open pit, bulk-tonnage methods, began at the behest of Great
Lakes Minerals on March 30, 1996. The first gold production was May 15, 1996, and
commercial production was commissioned as of October 1, 1996. Mine production
was terminated by Santa Cruz/CMLO on June 12, 1998, and leaching operations
were officially terminated December 1998; at which time the mine and plant were put
onto care and maintenance.
After subsequent acquisition of the mine assets by Atotonilco, various mining options
were reviewed, but no actual mining or mineral processing were conducted.
Columbia Metals has conducted no mining operations to date at the property.
During the course of mining operations by Great Lakes-Newmex-Santa Cruz-CMLO
over the period 1996-1998, detailed mine production records indicate 2,921,025
tonnes of ore were mined and placed on the leach pads, and approximately
2,687,343 tonnes of waste disposed of, with a waste to ore ratio of 0.92:1.
According to the production records for the Creston Pit, the crusher operated from
April through December 1996, and crushed a total of 570,900 tonnes of relatively
high-grade material (weighted average grade of 1.01 g/t gold, with a 0.44 g/t Au
cutoff). This tonnage, plus an additional 1,060,633 tonnes of un-crushed material
grading 0.97 g/t Au were deposited onto the leach pad, along with 1,289,492 tonnes
of lower grade material (referred to as ROM) averaging 0.501 g/t Au. In all, mine
production placed 72,528 ounces gold in 2,921,025 tonnes of ore during the life of
operations. Reported gold recovery from operations amounted to 40,909 ounces gold
through November 1998, with an additional 1,511 ounces gold recovered from
recovery plant operations between December 1998 and mid-1999, for a total
production of 42,420 ounces gold, and approximately 20,250 ounces of silver.
According to the production and recovery records, overall recovery amounted to
58.5% of the gold placed on the leach pads. The production and recovery record is
reproduced in Table 6.3 below.
Page 24
Date
Crushed
Ore:
Grade
Crushed
H-G
(Au g/t)
H.G Oz.
Au on
Pad
Not
Crushed
Ore
on Pad
Grade
H-G Not
Crushed
(Au g/t)
UN-Crushed
Oz. Au
on Pad
ROM Ore
Placed on
Pad
ROM
Grade
(Au g/t)
ROM
Oz.
Cumulative Oz.
Au on Pad
0.36
116
1,842
Actual Au
Production
Cumulative
Recovery
Apr-96
37281
1.44
1,726
10000
May-96
84600
0.83
2,258
0
0
4,099
413
413
Jun-96
99439
1.15
3,677
0
0
7,776
813
1226
Jul-96
91792
0.73
2,154
0
Aug-96
22138
0.62
441
95502
0.43
0
9,930
1224
2450
1,320
11,692
1024
3474
4288
Sep-96
68591
1.10
2,426
50182
0.60
968
15,086
814
Oct-96
47041
0.96
1,452
22723
0.52
380
16,917
1452
5740
Nov-96
56762
1.11
2,026
50338
0.54
874
19,817
1521
7261
Dec-96
63256
1.16
2,359
Jan-97
125659
0.94
3,798
22453
0.52
375
22,552
1578
8839
54843
0.51
899
27,248
1756
10595
Feb-97
61137
1.34
2,634
85508
0.50
1,375
31,257
2021
12616
Mar-97
89657
0.94
2,710
70594
0.49
1,112
35,079
2040
14656
Apr-97
71626
0.83
1,911
79049
0.51
1,296
38,286
1514
16170
May-97
93471
1.13
3,396
13331
0.50
214
41,896
1892
18062
Jun-97
35120
1.00
1,129
98580
0.53
1,680
44,705
1864
19926
Jul-97
73353
1.24
2,924
89592
0.50
1,440
49,070
1757
21683
Aug-97
62124
0.87
1,738
59369
0.48
916
51,724
1957
23640
25152
Sep-97
85189
1.06
2,903
68449
0.47
1,034
55,661
1512
Oct-97
132363
0.86
3,660
25194
0.59
478
59,799
1511
26663
Nov-97
65391
0.96
2,018
108621
0.49
1,711
63,528
1853
28516
Dec-97
0
0
0
63,528
1057
29573
Jan-98
0
0
0
63,528
1405
30978
Feb-98
15003
0.93
Mar-98
30827
Apr-98
76448
May-98
Jun-98
449
36336
0.55
643
64,619
1202
32180
0.97
961
47332
0.53
807
66,387
1508
33688
0.75
1,843
54757
0.50
880
69,111
1622
35310
40751
0.77
1,009
82590
0.48
1,275
71,394
1373
36683
2514
0.76
61
64149
0.52
1,072
72,528
1121
37804
Jul-98
72,528
1030
38834
Aug-98
72,528
770
39604
Sep-98
72,528
550
40154
Oct-98
72,528
430
40584
Nov-98
72,528
325
40909
Dec-98
72,528
143
41052
Jan-99
72,528
260
41312
Feb-99
72,528
155
41466
Mar-99
72,528
36
41502
Apr-99
72,528
63
41565
May-99
72,528
510
42075
72,528
345
42420
72,528
42,420
42,420
Jun-99
Total
Oz. in
Crushed
H-G:
18,518
Total Oz
in H-G
Uncrushed:
33,144
Total Oz
in ROM:
20,866
Table 6.3: Production and recovery records for Lluvia de Oro mine.
Page 25
7.0 GEOLOGICAL SETTING
7.1 Regional Geology
Lluvia de Oro is situated near the southeastern margin of the Basin and Range
physiographic province. The region to the west is characterized by northwest trending
block-fault valleys and linear mountain ranges typical of the Basin and Range
province. The region to the east, including Lluvia de Oro, is part of a broad region of
metamorphic core complexes and later volcanic rock cover that extends to the base
of the Sierra Madre Mountains, about 40 kilometers east of Magdalena. The local and
property geology are dominated by a metamorphic core complex setting and
subsequent detachment-fault geology.
7.2 Local and Project Geology
The basement rocks below the Lluvia de Oro mine and the higher elevations
surrounding the area of interest consist of metamorphic rocks of the Magdalena
Metamorphic Core Complex (Nourse, 1992). The metamorphic core complex exhibits
three metamorphic belts: 1) Low Strain Belt, 2) Central High Strain Belt, and 3) the
Upper Plate sequence.
The Northeast trending Low Strain Belt is exposed to the north and east of the town
of Imuris, about 20 kilometers northeast of the property. Those metamorphic rocks
are comprised of a weakly metamorphosed Jurassic volcanic-arc assemblage of
predominantly felsic rocks, and an overlying Upper Jurassic to Lower Cretaceous
fluvial sedimentary rock sequence named the Cocspera Formation.
Felsic rocks of greenschist to amphibolite grade metamorphism comprise the Central
High Strain Belt, which includes Sierra Magdalena, Sierra Jojoba, and the immediate
vicinity of the Lluvia de Oro area. These rocks constitute the deepest exposures (the
core) of the metamorphic complex and exhibit schist to gneiss fabric of a highly
deformed sedimentary rock provenance. The complex includes a widespread
distribution of stretched pebble conglomerate, quartzite, pelitic schist and phyllite.
The High Strain Belt lithologies are intruded by several igneous rock masses that
exhibit local dynamic metamorphic textures. The oldest of these rocks are rhyolite
porphyry, believed to be contemporaneous with Jurassic andesite-dacite volcanic
rocks. Peraluminous two-mica granite, interpreted to be Early Tertiary (Rothemund,
2000), has been identified intruding the core complex rocks in the vicinity of Lluvia de
Oro.
The oldest rocks in the region are Jurassic volcanic and sedimentary rocks which
define an era of volcanic arc development. Overlying these by unconformity are
shallow marine calcareous siltstone and siliciclastic sediments of the Lower
Cretaceous Represo Formation.
Page 26
Between Late Cretaceous and Mid-Tertiary, the region experienced orogeny
associated with a regional N-S compressional regime. Local lithologies subsequently
became metamorphosed with concomitant intrusive activity and attendant uplift to
transcend the region into a continental, intermontane depositional environment.
Relaxation of the compressional regime was followed by tensional tectonics and
detachment fault blocks developed in the region. Represo Formation sediments form
an allochthonous block in a detachment fault setting (the Upper Plate sequence) and
constitute the host lithologies for mineralization at Lluvia de Oro (see Figure 7.1).
Figure 7.1: Geology map of the Lluvia de Oro area. Map by Consejo De Recursos Minerales (2000),
modified by R. Blakestad to emphasize faults (in blue).
Page 27
7.3 Structure
Two dominant structural trends are recognized in the area of interest: one trends
northeast and the other northwest. These structural trends are defined by major
drainage patterns in the area and are assumed to be faults of variable character.
The more important structural setting observed at the Lluvia de Oro mine is the
modified klippe (Rothemund, 2000) that forms the upper plate of a detachment fault
block resting upon the Magdalena Core Complex lithologies. A gently southwest
plunging, trough-like, low-angle detachment fault bounds the hanging wall
sedimentary rocks, except on the east and southwest sides where northeast and
northwest trending normal fault structures bound the upper plate rocks. The
detachment block is about 3,000 meters long, 800 to 1,500 meters wide, and 220 to
+234 meters thick in the central portion of the trough.
The northeast trending Lluvia Shear Zone is the principal mineralized structure in the
area of interest. It consists of the broad zone of sheared and structurally dissected
rock units that can be traced in discontinuous outcrop for more than 1,700 meters
along strike. The shear zone is approximately 120 meters wide, with poorly defined
margins that probably feather-out into less affected rocks on both sides of the zone.
Many low-angle to high-angle faults and curvilinear listric faults occur within the shear
zone and throughout the upper plate sequence with a dominant northwest strike
direction. A myriad of small faults with diverse orientation are superimposed on the
main Lluvia Shear Zone structure with a seemingly random distribution. The intensity
of faults, shears, and associated fractures and brecciation within the shear zone are
believed to be important for the localization of mineralization in the upper plate rocks
due to associated enhancement of rock permeability.
8.0 DEPOSIT TYPES
Lluvia de Oro is a detachment fault, disseminated gold-silver-copper deposit hosted
by pervasively fractured, faulted and brecciated sediments of the Cretaceous
Represso Formation. Though the mineralization is concentrated in the proximity of
the northeast trending Lluvia Shear, it is not restricted thereto; mineralization and
alteration propagate into the adjoining country rock from the main and subsidiary
structures. Mineralization appears to be associated with disseminated sulfides and
structurally-controlled sulfide veinlets and fracture coatings in the upper plate of the
detachment fault system. Locally, gold mineralization is incorporated in the
detachment fault, and occurs in the metamorphic lithologies below the fault in some
areas.
Page 28
9.0 MINERALIZATION
Two principal zones of bulk-tonnage mineralization have been recognized on the
property. These were identified based on the relative position of mineralized
envelopes as: the “Upper Zone” and the “Lower Zone”. The Upper Zone appears to
constitute a mass of rock with a dip component, while the Lower Zone appears to be
near horizontal in attitude.
In both mineralized envelopes, gold-silver-copper (Au-Ag-Cu) mineralization occurs
as diffuse mineralization in rocks pervasively altered by weak to moderately intense
hydrothermal alteration. Field evidence indicates that the mineralization is
associated, at least in part, with disseminated-, and fracture-controlled, sulfides, or
their oxidation products, in the siliciclastic and calcareous sedimentary rocks of the
upper plate sequence. Locally, the two mineralized envelopes merge together so that
a distinction between the two zones is not practical. Taken as a whole, the
mineralization is bulk-tonnage in nature, with a propensity for higher grade sections
to be related to structural controls.
9.1 Upper Zone Mineralization
The Upper Zone includes four areas of mineralization: the Creston Pit, Pit Extension,
Lluvia Shear, and the Lluvia Shear North Extension (see Figure 6.2). In each of these
areas, gold-silver-copper mineralization occurs at- or near the surface, and extends
to a depth of approximately 75 meters below surface. The Upper Zone can be traced
by drilling and surface trenching for 1,700 meters along strike, and shows evidence of
a cross-strike width ranging from 60 to 120 meters.
Upper Zone mineralization has been characterized as a zone striking N40ºE to
N55ºE, dipping moderately steeply to the southeast in the area of the Creston Pit,
rotating to near vertical in the area of Pit Extension, and dipping moderately steep to
the southwest in the Lluvia Shear and North Extension areas. This condition indicates
a progressive rotation of the Lluvia Shear Zone to the northeast of Creston Pit.
Based on the drilling conducted to date (264 drill holes, exclusive of the Fresnillo drill
holes), the grade of the Upper Zone is defined by resource calculations described
elsewhere in this report (see Section 6.3 and Section 17). At a 0.4 g/t Au cut off
grade, Upper Zone mineralization ranges between 0.68 to 0.78 g/t Au according to
historical resource estimates by CMLO (silver and copper values were not
estimated). The grade of Measured plus Indicated Resources, reported in Section
17.6 for the Upper Zone mineralized envelope, is 0.639 g/t Au, 2.82 g/t Ag, and
0.035% Cu at a cutoff grade of 0.40 g/t Au.
Grade continuity of mineralization is continuous between the individual areas of the
Upper Zone mineralization. However, drilling indicates that irregular zones of
intervening low-grade material (<0.3 g/t Au) occur between the areas, thus giving rise
to the distinct names for the respective areas.
Page 29
9.1 Lower Zone Mineralization
Commencing from approximately 100 meters below surface to depths in excess of
165 meters below surface (at drill hole L-259) is a lower zone of mineralization,
similar in character to the near-surface zone. Though as many as 63 drill holes may
have been deep enough to reach the top portion of the Lower Zone, only a few of the
264 drill holes in the CMLO database have penetrated through the Lower Zone
mineralized envelope. Those that have penetrated the entire zone lie along the axis
of the Lluvia shear zone (see Figures 9.1 to 9.3).
Figure 9.1: Satellite image showing trace of long sections and sites for deep drill holes at Lluvia de
Oro. UTM grid NAD-27 zone 12, image by Digital Globe, 2005.
The Lower Zone mineralized envelope is defined by deep drill holes put down by
CMLO, as depicted in Figure 9.1. Certain drill intercepts indicate that the Lower Zone
mineralization is missing or is discontinuous in certain areas. Drill samples from holes
L-72, L-238, and LC-4, shown in Figure 9.1 for example, indicate that significant
grades of Au-Ag-Cu do not pass through these localities.
Page 30
Figure 9.2: Long section view of the northeast end of the Creston Pit and Pit Extension area showing
Upper Zone and Lower Zone mineralized envelopes. The mined-out portion of Creston Pit is shown in
black (upper left) and a potential open pit outline to accommodate future mining of the Lower Zone is
shown in blue. Original map by CMLO staff,1997; modified by Blakestad, 2006.
Figure 9.3: Long section view of Lluvia Shear area showing drill hole intercepts of gold mineralization.
Note that all six drill holes terminate in mineralized rocks. Location lines are UTM Local Grid
coordinates. Original map by CMLO staff, 1997; modified by Blakestad, 2006.
Page 31
The broad distribution of- and the relatively deep drill holes put down by Fresnillo in
1988 help to define the potential distribution of the Lower Zone environment laterally
from the Lluvia Shear (see Section 11.1). Fresnillo drill intercepts (hole 88-22 and 8828) indicate that the Lower Zone extends up to 550 meters perpendicular to the axis
of the Lluvia Shear Zone, but it is constrained in the northeast part of the system by a
number of blank drill holes.
The density of deep drill holes in the southwest part of the system is poor, and the
potential for extension of the zone in that direction is favorable. In addition, the area
to the west of the shear zone is open to resource expansion for both the Upper Zone
and the Lower Zone, because the only drill holes northwest of the shear zone were
drilled vertical or inclined holes collared near the edge of the shear. Geologically, the
permissible distance for mineralization in a west or northwest direction from the axis
of the shear zone is greater than 700 meters wide and 1,500 meters long.
Due to the excessive distance between Fresnillo drill hole penetrations (140 meters
between holes), the relatively few sample points from all drill holes, and the
incomplete data from those holes that tap just the top part of the zone, only a
tentative grade estimate can be made. This is an important issue, because, if the
Lower Zone has the same average grade as the Upper Zone, it may not be economic
to extract from the deeper levels.
Grade parameters for the Lower Zone are defined by the resource calculations
described in Section 17 and by the table of intercept values set forth in Table 9.1.
Based on the mineral resource cut off at of 0.40 g/t Au, the grade of Measured plus
Indicated rock of the Lower Zone is 1.025 g/t Au, 4.05 g/t Ag, and 0.119% Cu. Based
on drill assay data for the Pit Extension area, the weighted average grade for drill
holes penetrating the entire Lower Zone mineralized envelope (five holes) is 1.357 g/t
Au, 4.16 g/t Ag, and 0.208% Cu, with an average thickness of 40.8 meters. Average
grade of ten drill holes terminated in the top of the zone returned 1.54 g/t Au over an
average 9.2 meters. Parameters for these drill holes are reported in Table 9.1,
including six drill holes that were deep enough to penetrate through the zone, but
failed to return significant gold assays.
These data suggest that the Lower Zone mineralization is higher grade than the
Upper Zone, but also indicate that the zone is not uniformly distributed at depth.
Further exploration of the zone is warranted. An IP survey of the central area of the
detachment fault block is recommended, followed by 21 drill holes of 150 meters
each. Eight additional drill holes are recommended for the southwest extension of the
Lower Zone.
Page 32
Hole
E
N
Elev
Depth
Azimuth
Dip
TopElev
DRILL HOLES PENETRATING ENTIRELY THROUGH THE LOWER ZONE:
L-239
L-240
L-241
L-242
L-259
10,105.23
10,166.55
10,213.55
9,965.85
10,052.52
10,231.92
10,293.52
10,296.53
10,027.83
10,151.00
896.06
894.9
897.33
870.33
888.77
243.84
201.17
256.03
304.80
164.59
0
0
0
0
0
-90
-90
-90
-90
-90
795.5
798.9
773.9
785.0
791.2
From
To
100.6
138.7
96.01
141.73
123.44
152.4
85.3
117.35
97.54
163.06
Weighted Ave.:
Intercept
Au g/t
Ag g/t
Cu g/t
38.1
45.7
29.0
32.1
65.5
40.84
1.337
1.075
0.948
0.42
1.296
1.357
4.9
3.17
6.6
2.15
4.0
4.16
1635
1486
2262
827
3244
2077
1.10
0.538
2.297
0.644
1.80
0.47
0.502
3.778
2.128
1.903
1.54
0.7
1.77
3.84
2.78
5.8
0.2
5.62
4.78
8.5
9.43
5.54
2265
1447
3545
NA
NA
NA
1907
723
NA
965
2057
DRILL HOLES PENETRATING ONLY THE TOP PORTION OF THE LOWER ZONE MINERALIZED ENVELOPE:
L-199
L-187
L-188
L-193
L-194
L-196
L-198
L-202
L-206
L-211
10170.98
10127.62
10121.68
10151.63
10146.53
10181.63
10190.17
10205.15
10243.25
10256.21
10238.77
10132.51
10162.03
10160.64
10187.39
10179.3
10222.56
10255.45
10264.71
10302.44
896.46
892.16
891.95
892.16
895.67
895.08
899.65
899.32
901.33
900.18
121.9
128.01
134.1
134.1
134.1
134.1
128.02
121.92
140.2
121.92
315
350
350
350
350
350
315
315
315
315
-60
-60
-60
-60
-60
-60
-60
-60
-60
-60
801.5
789.2
789.0
782.6
796.7
784.2
795.4
800.3
794.4
799.9
95.0
99.0
102.9
110.9
103.0
116.1
109.5
116.1
99.0
116.1
110.8
116.1
104.3
110.9
99
105.6
106.9
121.4
100.3
105.6
Weighted Ave.:
4.0
7.9
13.2
6.6
17.1
5.3
6.6
6.6
14.5
5.3
9.2
DEEP HOLES WITH NO SIGNIFICANT MINERALIZATION:
L-72
L-185
L-192
L-195
L-238*
9842.45
10049.8
10169.17
10187.36
9,802.24
9936.74
10190.91
10104.04
10153.55
9,923.32
909.62
891.97
893.85
895.4
869.99
272.5
146.3
140.2
134.1
243.84
0
350
350
350
0
-90
-60
-60
-60
-90
LC-4
10385
10395
894.5
134.11
0
-90
Table 9.1: Table of drill hole intervals intercepting the Lower Zone mineralized envelope at Lluvia de Oro. Copper values are not available for
some drill data (NA).
* Note: Drill hole L-238 intercepted 26 meters of 0.83 g/t Au between 202.7 and 228.9 meters depth, but that zone is below the Lower Zone
mineralized envelope, and is not included in the table.
Page 33
10.0 EXPLORATION
Reconnaissance exploration and trench sampling of the Lluvia de Oro area was
initiated by Fresnillo in the mid-1980s. Initial drilling of the project area was
commenced by Fresnillo in 1988. Additional surface exploration and trench sampling
was conducted by Great Lakes Minerals in 1993-94, followed by drilling of 128
angled RC drill holes to define the Upper Zone mineralization of the Creston ore
body. Other zones of near surface mineralization, including the Pit Extension and
Lluvia Shear areas, and satellite zones of mineralization such as El Pozo, East Zone,
and Cobre targets (see Figure 6.2) were identified.
Additional drilling and exploration by CMLO in 1996, and the deep drill holes put
down in 1997, resulted in the current definition of mineralization at Lluvia de Oro.
There does not appear to be any systematic soil sampling or geophysical exploration
data for the property.
Columbia Metals has completed four diamond core drill holes in the Pit Extension
area and has conducted reconnaissance of the property and various target areas
during 2006. In addition, the company conducted a comprehensive evaluation of the
leach pad materials for assessment of its near-term production potential.
10.1 Data Reliability
Except for the limited exploration work conducted by Columbia Metals in 2006, the
writers (Blakestad and Giroux) have no first-hand knowledge of the methodology of
data collection, storage and security measures employed during previous exploration
programs.
The exploration data of CMLO has been reviewed in detail by the writer (Blakestad)
and appears to be complete. The maps, tables, drill logs, and geochemical data has
been recorded and archived in a manner reflecting a high standard of care, and is
thus considered to be reliable. Original laboratory assay sheets have been compared
against drill logs and trench maps (Blakestad), and the electronic database has been
validated (Blakestad and Giroux), with only a few corrections being required.
Plotting of the electronic data base for drill hole geochemistry detected what appears
to be a systematic attempt, by persons unknown, to increase the apparent grade of
certain drill holes. These data errors have been identified and corrected for all drill
samples, and the database is now considered to be reliable.
11.0 DRILLING
A total of 264 drill holes have been drilled for exploration and resource definition on
the property in the period 1988 through 2006. An additional seven large-diameter
Page 34
core holes were drilled for metallurgical samples and 82 shallow condemnation drill
holes were drilled adjacent to the leach pad area.
11.1 Columbia Metals Corp. Ltd. Drilling
Columbia Metals commissioned the drilling of four diamond core drill holes in the Pit
Extension area in 2006. These holes were drilled to verify drill intercepts recorded by
previous operators and to extend drill depths to test the Lower Zone of mineralization.
Location and collar information are presented in Table 11.1.
DH
LC-1
LC-2
LC-3
LC-4
E_Local
10389
10426
10321
10385
N_Local
10546
10501
10474
10395
Elev
893.1
895.2
890.8
894.5
Azimuth
315
315
315
0E
Dip
-60
-60
-60
-90
Total:
Table 11.1: Collar information for Columbia Metals’ 2006 drill holes.
Length
185.01
181.77
173.4
134.11
674.3
E_UTM
497161
497195
497094
497152
meters
N_UTM
3399237
3399195
3399171
3399086
The drilling encountered Au-Ag-Cu mineralization in the Upper Zone in holes LC-1
through LC-3 and a thin intercept of the Lower Zone in hole LC-2. The drill holes
indicate that multiple intervals of mineralization occur with intervening intervals of
low-grade mineralization within the Upper Zone envelope, which is consistent with
previous drill data (see Table 11.2).
LLUVIA DE ORO - 2006 DRILL RESULTS
DRILL HOLE
LC-1
Including
and
and
AXMUTH
315
ANGLE
-60
FROM
0
6.71
44.81
73.76
TO (m)
92.1
9.75
47.85
78.33
INTERVAL1
92.1
3.04
3.04
4.57
GOLD g/t
0.682
5.498
3.585
1.575
Cu ppm
482
LC-2
315
-60
12.19
65.53
112.78
18.29
97.54
120.39
6.1
32.01
7.61
0.781
0.461
0.425
3931
766
140
LC-3
315
-60
47.24
77.72
65.53
102.1
18.29
24.38
0.609
1.522
619
529
LC-4
0
-90
1
2
No significant intervals of gold mineralization
Intercept intervals are believed to be true thickness of an inclined zone of mineralization
One drill sample interval of 1.52 meters was cut from 29.6 g/t Au to 10 g/t Au. The average
grade over 24.38 meters, using uncut gold value, is 2.47 g/t Au
Table 11.2: Drill intercepts values for gold and copper in four drill holes by Columbia Metals 2006.
The first three drill holes were drilled to the northwest, inclined at -60 degrees, to
intercept the Upper Zone mineralization at a high angle. Reported intercept intervals
Page 35
are believed to be true thicknesses of inclined zones of higher grade mineralization
within a broad envelope of lower grade material.
Drill hole LC-4 did not intercept significant mineralization.
Holes LC-1, LC-2, and LC-3 were drilled within two meters of the collars of L-253, L251, and L-245A, respectively. Assay results of comparable portions of the twinned
drill holes are compared below:
Twinned Drill Holes
L-253 - LC-1
L-251 - LC-2
L-245A - LC-3
Interval
0-61 m
0-48.8 m
0-54.9 m
Au g/t
0.796 – 0.744
0.312 - 0.291
0.277 – 0.166
Ag g/t
3.63 – 1.15
4.35 – 1.75
6.35 – 0.79
Cu ppm
554 - 519
639 - 1337
355 - 362
Comparative assay results between respective intervals correlate reasonably well for
gold, but do not correlate well for silver in all holes, and copper values do not
correlate well for the LC-2 – L-251 twin. The data has been examined in detail, but no
discrepancy can be identified to account for the differences. Other assay data
reviewed by the writer indicates a nugget effect for gold in some areas, but normally,
nugget effect does not pertain to silver or copper.
Based on these data, six additional drill holes are recommended to twin existing drill
holes so the variability between drill intervals and earlier assay results can be further
evaluated. The recommended holes for this purpose are:
Hole
L142
L147
L191
L192
L214
L218
East
North
10,644
10,566
10,099
10,169
10,327
10,509
10,616
10,694
10,251
10,104
10,374
10,481
Elev.
Azimuth
Dip
Length
897.5
894.3
894.8
893.9
892.6
895.3
330
330
350
350
315
315
-60
-60
-60
-60
-60
-60
Total:
97.8
98.2
121.9
140.2
121.9
121.9
702 m
11.2 Fresnillo Drilling
Compania Fresnillo, S.A. de C.V. drilled 31 vertical drill holes in 1988. It is not known
if the drill used was reverse-circulation or percussion, but the bit diameter was 13.3
cm (5 ¼ inches). Total drilling amounted to 3,578 meters in holes ranging between 54
and 150 meters deep. Hole spacing was nominally 140 meters between drill holes
(see Figure 11.1).
Copies of drill logs for each hole are in the paper data base for the property. The logs
show lithology, gold assay results, and drill hole collar information. Logs indicate that
the holes were sampled in 2-meter intervals (except for hole 88-1, which was in onemeter intervals). The assay results indicate that standard fire assay procedures were
used, having a detection limit of 0.1 g/t Au.
Page 36
Plotting and assessing the Fresnillo data reveals gold mineralized intercepts in all
holes, except two, over an area about 55 hectares lying to the south, southeast, and
east of the Creston Pit. Only the area east of the edge of the upper plate of the
detachment fault is closed-off to potential gold mineralization by these drill data.
Figure 11.1: Satellite image (Digital Globe 2005) of Lluvia de Oro mine area showing distribution of
Fresnillo drill holes relative to the Lluvia Shear Zone. Map by Blakestad (2006).
11.3 Great Lakes – CMLO Drilling
Drilling commissioned by Great Lakes Minerals in 1993-94 consisted of 128 angled
RC holes located on a series of 24 drill lines oriented at a high angle to the strike of
the Lluvia Shear. Total drilling amounted to 11,995 meters in these holes, generally
Page 37
spaced at 15 meter intervals on lines 50 meters apart in the vicinity of the Creston
Pit.
A second campaign of RC drilling in 1995, expanded coverage to the northeast along
the Lluvia Shear and included some in-fill drilling at the Creston area.
A third drilling campaign was conducted in 1996-97, which included more drilling
along the Lluvia Shear and deep holes to explore for mineralization below the Upper
Zone. Most of the drilling was conducted as -60º angle holes on drill lines crossing
the Lluvia Shear at a high angle. Deep drill holes comprised of widely spaced vertical
holes drilled within the Lluvia Shear zone.
The total exploration and resource definition drilling by Great Lakes/CMLO amounted
to 260 RC drill holes. A complete paper record of the drill results was obtained by
Columbia Metals and the data has been checked against laboratory assay sheets
and the electronic drill hole assay data base. These data were incorporated into the
mineral resource analysis presented in Section 17.
12.0 SAMPLING METHOD AND APPROACH
12.1 Historical Trench and Drill Hole Sampling
The writer was not involved with, nor did he observe, sampling techniques employed
by Fresnillo or Santa Cruz during the era of exploration and definition drilling at the
Lluvia de Oro property. Based on a review of independent consultant reports (Ewert,
1995, Calhoun, 1996) and internal company reports by CMLO, the following
description details the sampling methodology and approach used for trench sampling
at the property.
Trenching was conducted predominantly in period 1994-96. A total of 2,286 linear
meters of trenches were excavated using a wheel-mounted excavator to depths
ranging one to three meters. Average width of the trenches was two meters. Walls of
the trenches were cleaned with shovels and yucca brooms then channel sampled at
the base over three-meter intervals. Channel samples were cut using hammer and
chisel to depth of five centimeters over a 6.5 cm width. The samples were collected
with a Huchinson Sampler (an open-ended jug-like device with a handle) and
averaged approximately six to seven kilograms per sample (Ewert, 1995). Samples
were bagged and tagged in the field and sent to Chemex Labs in Hermosillo,
American Assay Labs in Tucson, or Bondar Clegg in Vancouver. Original assay
certificates (or copies thereof) occur in the paper data recovered from the MCLO
offices at the mine site. There is no indication that duplicate, standards or blank
samples were submitted with the samples to the analytical laboratories.
Page 38
Fresnillo and CMLO constructed and sampled 16 trenches in the area now occupied
by the Creston Pit. 21 Other trenches were constructed and sampled northeast of the
Creston Pit and at other target areas identified in Table 12.1.
AREA
TRENCH
NUMBER
Pit Extension
Pit Extension
Lluvia Shear
Lluvia Shear
Lluvia Shear
E. of Creston Pit
E. of Creston Pit
E. of Creston Pit
E. of Creston Pit
El Cobre
El Cobre
El Cobre
El Pozo
El Pozo
El Pozo
East Area
East Area
Lluvia Shear North
14
19
20
21
22
23
24
25
26
29
30
31
32
33
34
35
36
37
SIGNIFICANT RESULTS
Width (m) Au g/t Width (m)
none
18
18
9
24
3
15
9
3
15
9
24
24
66
none
84
39
48
0.3
0.1
0.2
2.4
0.5
0.1
0.5
1.0
0.7
0.3
0.3
0.2
1.3
Au g/t
6
12
0.2
3.5
6
0.6
0.5
0.2
0.7
Table 12.1: Summary of trench sample results.
Trench sampling data indicate that significant exploration results were obtained along
the Lluvia Shear Zone, and at the target areas depicted on Figure 6.2. Follow up
exploration is warranted for these areas.
There is no description of sampling methods used during the drilling phases by
Fresnillo, Santa Cruz, or CMLO. Review of assay certificates for the CMLO drilling
does not indicate that sample standards were submitted with the drill samples.
12.2 Columbia Metals - Drill Sampling
Drilling in 2006 by Columbia Metals was conducted under contract to the Mexico
subsidiary of Major Drilling Group International, Inc. (Major). Four drill holes were
completed using a NQ diamond core drill rig. Drilling conditions were very good.
The writer observed the drilling and core collection process numerous times during
the course of the drilling program. The core was generally good quality and
competent, leading to overall high core recovery and RQD measurements. No
adverse factors were observed that would impact the accuracy and reliability of the
drilling or the sampling program.
Page 39
During the core splitting portion of the drill program, the writer observed and provided
oversight for the methods of sample splitting and selection of materials for archive vs.
analysis. No bias was observed in the sampling processes. Sample standards were
submitted for each 24 drill samples submitted and the sample bags were secured
with numbered tags prior to shipment to the lab.
12.3 Columbia Metals - Leach Pad Sampling Program
All ore mined in 1997 through 1998 was un-crushed, run-of-mine (ROM) material.
During June-July 2006, Columbia Metals carried out a comprehensive program of
rock chip and channel-chip sampling of materials on the heap leach pad. Two
sampling methods were employed (chip-channel sampling and trackhoe sampling) to
systematically sample the boulders-cobbles and the fine materials on the leach pad.
Ore placed on the top lifts of the leach pad was arranged in such a manner that lines
of large boulders occur along the edges of the lifts (patios). These lines of boulders
were designated as sample lines B-1, B-2, B-3 and B-4. The boulder lines were
sampled by chip-channel sampling over three-meter intervals along the entire length
of the boulder lines (see Figures 12.1, 12.2 and 12.3). Similar sampling was
conducted of boulders on the perimeter of the upper portion of the leach pad.
Figure 12.1: Typical line of boulders on the Lluvia de Oro leach pad. Photo by Blakestad, 2006.
Page 40
A total of 191 chip-channel samples were collected from the boulder lines and 186
samples from the perimeter of the leach pad, as set forth in Figure 12.2 and Table
12.2. A list of these samples and analyses for Au-Ag-Cu can be found in Appendix
Section 23.2.
Figure 12.2: Map of boulder line and perimeter samples of Lluvia leach pad. Map by Blakestad, 2006.
Page 41
Pit sampling of the leach pad was accomplished by Hitachi trackhoe to a nominal
depth of seven meters. Pit samples were located at 50-meter intervals on lines 50meters apart. From each of these pits, four samples were obtained. One sample was
a composite of fine-grained material (less than 25 mm diameter) from the interval 0m
to 7m deep. Rock-chip samples of boulders and cobbles were obtained at intervals 02m, 2-4m, and 4-7m deep. Individual piles of leach pad material were stacked at the
indicated interval for sampling purposes. Rock chip samples from the pit sampling
were estimated to weigh 10 kg each; the fine-grained material samples, about 5 kg.
Intermediate pits were dug at 25-metrer intervals on the same lines as the 50-meter
pits. The intermediate 25-meter pits were sampled by one composite sample of
cobbles and boulders obtained over the interval 0-7m. All samples were analyzed for
gold using fire assay with AA-finish on 50-gram splits, plus 34 additional elements by
ICP. Figure 12.3 shows the distribution of pit samples and color coded assay results
for gold. A list of samples and Au-Ag-Cu values is tabulated in Appendix 23.3.
Sample
Count
BOULDER LINE
Line B-1
43
Line B-2
39
Line B-3
46
Line B-4
63
Weighted Ave. Un-Cut:
Weighted Ave. Cut at 8 g/t:
Sample Count:
191
PERIMETER BOULDERS
NE End
SW End
Weighted Ave. :
Sample Count:
PIT SAMPLES
Composite Fines <1-inch
Pit Rocks 0-2m
Pit Rocks 2-4m
Pit Rocks 4-7m
Composite Rocks
Weighted Average:
Sample
Count
74
112
Au (g/t)
0.181
0.073
0.418
1.911
0.787
0.712
Ag (g/t)
2.02
0.47
2.31
6.34
3.20
Cu
(ppm)
661
350
664
1,477
867
Au (g/t)
0.525
0.263
0.367
Ag (g/t)
3.04
2.34
2.62
Cu
(ppm)
702
994
878
Au (g/t)
0.329
0.495
0.372
0.400
0.374
0.394
Ag (g/t)
2.86
2.50
2.97
2.39
2.37
2.62
Cu
(ppm)
1002
590
943
606
673
765
186
Sample
Count
26
26
26
26
23
127
Sample
Cu
ALL LEACH PAD SAMPLES
Count
(ppm)
(Cut at 8.0 g Au/t)
Au (g/t)
Ag (g/t)
Total Samples / Wt. Ave.:
504
0.505
2.84
845
Table 12.2: Summary of Lluvia de Oro leach pad samples.
Page 42
Figure 12.3: Leach pad pit sample location map showing gold values for the 0-2m level. Map by
Blakestad, 2006; satellite image by Digital Globe, 2005.
Table 12.2 summarizes the results of sampling the boulders and fine-grained material
on the leach pad, and forms the basis of establishing a Mineral Resource for the
leach pad to a depth of 7.0 meters from the surface.
Page 43
Analysis of the leach pad samples and the recovery records for material mined and
placed on the leach pad indicates that the northeast 2/3 of the pad received higher
grade material than that which was placed on the southwest 1/3 of the pad during the
period January 1997 through cessation of mining in June 1998. Quarterly ore
placement maps of the pad material indicate this to be true both laterally and
vertically for the pad material. Pit sampling of the pad material to a depth of 7.0
meters and the distribution of higher grade gold boulder samples verify the ore
placement maps.
Table 12.3 summarizes the pad pit sample results for the northeast end and the
southwest end of the pad. These data indicate that the northeast end of the pad is
potentially economic for a crush and re-leach program. Boulder lines B-3 and B-4 and
perimeter boulder samples for the northeast end of the leach pad (see Table 12.2)
also support the pit sample summary of Table 12.3.
PIT SAMPLES NE
END
Composite Fines <1"
Pit Rocks 0-2m
Pit Rocks 2-4m
Pit Rocks 4-7m
Composite Rocks
Wt. Average:
Sample
Count
17
17
17
17
13
81
Au (g/t)
0.435
0.690
0.501
0.556
0.452
0.531
Cu
(ppm)
1014
673
742
522
503
700
Ag (g/t)
2.85
2.95
2.71
2.15
2.20
2.59
Sample
Cu
PIT SAMPLES SW
Count
(ppm)
END
Au (g/t)
Ag (g/t)
Wt. Average:
46
0.155
2.68
879
Table 12.3: Pad pit sample results arranged by pad area.
Computing the area for the northeast pad vs. the southwest pad portions, and
applying the tonnage factors used to verify the pad volume, an Indicated Mineral
Resource, as defined in Section 17.8, is determined to be 640,000 tonnes grading
0.531 g Au/t for the pad from zero to 7.0 meters depth. Inferred Resources of
725,600 tonnes grading 0.378 g Au/t are computed for the 7.0 meters below the
Indicated Resources, by calculating the grade of ore placed on the northeast end of
the pad during 1997-98 (0.741 g Au/t) and applying 49 percent gold recovery for
ROM material. By this means an Inferred Resource of 725,000 tonnes grading 0.378
g Au/t is established and reported in Table 12.4. The leach pad resource areas are
shown in Figure 12.4.
LEACH PAD - NE END
MEASURED
Tonnes
g Au/t
Oz. Au
0
0
0
LEACH PAD – NE END
INFERRED
Tonnes
g Au/t
Oz. Au
725,600
0.378
8,818
LEACH PAD – NE END
INDICATED
TOTAL M + I
Tonnes
g Au/t
Oz. Au
Tonnes
g Au/t
Oz. Au
640,000
0.531
10,926
640,000
0.531
10,926
Table 12. 4: Resource categories for Lluvia de Oro leach pad, NE-End.
Page 44
Figure 12.4: Leach pad showing the NE-End Indicated Resource Area (red) and the SW-End (blue).
Map by Blakestad, 2006; satellite image by Digital Globe, 2005.
Page 45
13.0 SAMPLE PREPARATION ANALYSES AND SECURITY
13.1 Soil Sampling
No significant amount of soil sampling has been conducted at the project site.
13.2 Trenching
Methods employed for trench sampling are described above. Sample preparation and
security measures employed for trench samples are not known. Columbia has not
performed any trench sampling at the subject property.
13.3 Core Drilling and Leach Pad Samples
Drill core was placed in wooden core boxes at the drill site by the drill crew. Core
boxes were nailed shut and transported to the core logging and sample preparation
area at the mine facilities. At this locality the core was logged and sampled by
independent field staff hired by Columbia for that purpose.
Core samples were obtained at intervals of 1.52 meters, or in shorter intervals when
lithology changes required so. Lithology, structure, RQD, alteration and
mineralization characteristics were recorded. Core samples were split in half by
percussion splitter or diamond core cutting saw. A one-half split was placed back into
the core box and the other into a plastic sample bag at the preparation area. The
bags were marked, tagged with a unique number, sealed with security tags, and
grouped into larger bags of five to seven samples each for transport to the laboratory.
Known standard samples were inserted in the sample sequence at each sample
number interval divisible by 25. These standard samples were analyzed at the same
time and by the same methods employed for the core samples. A review of the
standard sample results has been preformed by the writer and is deemed acceptable.
The Lluvia de Oro heap leach pad was extensively sampled by boulder chip-channel
sampling and by trackhoe pit sampling. More or less continuous chip-channel
samples were collected around the perimeter of the leach pad and along lines of
boulders forming the edges of pad leach cells. From trackhoe pits dug into the leach
pad, boulders and cobbles were sampled randomly from each of three vertical zones,
and composite samples of boulders-cobbles were obtained. Ten kilo samples were
obtained during each sampling procedure to ensure representative sample volume.
Individual samples were bagged, tagged, and secured with lock-out ties in the field,
and aggregated into larger bags for shipment to the laboratory.
Site pick-up of the samples and transportation to the ALS-Chemex laboratory in
Hermosillo, Sonora was accomplished by ALS-Chemex. At the laboratory, the
samples were crushed, split, pulverized and prepared for analysis by the standard
procedures developed by the lab. Pulverized splits of the samples were sent to
Page 46
Vancouver, B.C. for analysis. Analyses for gold were by fire assay and AA-finish
using 50-gram charges. 34 Additional elements were obtained for the samples by
induced-coupled-plasma (ICP) methods.
ALS-Chemex laboratories in North America are registered to ISO 9001:2000 for the
"provision of assay and geochemical analytical services" by QMI Quality Registrars.
In addition to ISO registration, the Vancouver laboratory of ALS Chemex has
received ISO 17025 accreditation from the Standards Council of Canada. All samples
submitted to ALS Chemex are subjected to QA/QC analyses using duplicate, blank,
and standard analyses which were reviewed by the writer and found to be
acceptable.
13.4 Sample Quality
The quality of samples obtained by Columbia Metals during the drilling and leach pad
sampling programs are considered by the writer to be within normal standards for
professional persons operating within the North American mining and exploration
industry.
14.0 DATA VERIFICATION
Analytical results for the Lluvia de Oro project were transmitted by electronic means
to management and staff of Columbia Metals. The data were systematically reviewed
for completeness and verified on a frequent spot-check basis against the signed
certificates produced by the lab.
For verification and scientific purposes, certain sample sequences of core samples
were re-submitted for duplicate analysis and re-analysis from original sample splits.
All such samples passed the verification check.
Page 47
15.0 ADJACENT PROPERTIES
At the date of this report, Columbia Metals Corporation Ltd. owns or controls all the
mining concessions in the immediate vicinity of Lluvia de Oro. The four core
exploitation concessions constituting 589 hectares, are surrounded by five
exploration concessions totaling 1,983 hectares (see Table 15.1). Figure 15.1 shows
the distribution of concessions held by Columbia Metals.
Figure 15.1: Mining concessions held by Columbia Metals. Lluvia de Oro exploitation concessions are
to the east and Lluvia de Oro concessions to the west. Blue colored concessions are exploration
concessions owned by Columbia. Chart by Blakestad, 2006.
TYPE
Table 15.1: Mining concessions at Lluvia de Oro.
Lot Name
Title Number
Expiration
File Number
Area (Has.)
Exploitation
Lluvia de Oro
192050
December 18, 2041
321.1.4/746
5.53
Exploitation
Lluvia de Oro, N° 2
195124
August 25, 2042
321.1.4/581
100
Exploitation
El Sahuaral “A”
201469
October 10, 2045
4-1.3/1161
479
El Sahuaral Dos
210805
November 29, 2049
4-1.3/1301
4.47
Exploration
Lluvia de Oro 3
221512
February 18, 2054
82/28570
447
Exploration
Lluvia de Oro 4
222583
July 22, 2054
82/28861
744
Exploration
Lluvia de Oro 5
227504
June 26, 2056
82/30358
712
Exploration
Sahuaral Sur
221473
February 10, 2010
82/28567
56
Sahuaral Norte
221474
February 16, 2010
82/28568
24
Exploitation
Exploration
Page 48
Four bulk tonnage gold deposits occur in the region of Lluvia de Oro; two of which
have public disclosure under NI 43-101. These are the La Jojoba property of
Columbia Metals Corporation Inc. (TSX: COL) and the El Chanate project of Capital
Gold Corporation (TSX: CGC; OTC/BB: CGLD).
La Jojoba, located 3.5 kilometers west of Lluvia de Oro, consists of six identified
zones of mineralization. The most noteworthy of which is the Northeast Zone, a
structurally controlled Au-Cu deposit similar in many respects to the Lluvia de Oro
deposit. Mineralization at La Jojoba occurs in a northeast trending detachment fault
block consisting of Lower Cretaceous to Upper Jurassic rocks comprised of
sediments, tuffaceous sediments and rhyolite to rhyodacite flows and tuffs. The
sedimentary sequence overlies the volcanic sequence. The Northeast Zone consists
of gold and gold-copper mineralization related to quartz veinlets, quartz-carbonate
veins, disseminated sulfides, and various mineralized structures of variable attitude in
the volcanic sequence. There is no identified relationship between the two properties,
and the host rocks for mineralization are fine grained siliciclastic sediments at Lluvia
de Oro versus volcanic rocks at La Jojoba, however, the nature of the mineralization
is similar and the Mineral Resources tonnage-grade are similar (see Table 15.2).
Cutoff
g Au/t
0.30
Cutoff
g Au/t
0.30
Cutoff
g Au/t
0.40
Cutoff
g Au/t
0.40
NORTHEAST ZONE MEASURED
NORTHEAST ZONE INDICATED
TOTAL M + I
Tonnes
g Au/t
Oz. Au
Tonnes
g Au/t
Oz. Au
Tonnes
g Au/t
Oz. Au
4,590,000
0.900
132,815
4,460,000
0.599
85,892
9,050,000
0.752
218,707
NORTHEAST ZONE INFERRED
Tonnes
g Au/t
Oz. Au
800,000
0.416
10,701
NORTHEAST ZONE MEASURED
NORTHEAST ZONE INDICATED
TOTAL M + I
Tonnes
g Au/t
Oz. Au
Tonnes
g Au/t
Oz. Au
Tonnes
g Au/t
Oz. Au
3,900,000
0.997
125,026
3,170,000
0.703
71,648
7,070,000
0.865
196,660
NORTHEAST ZONE INFERRED
Tonnes
g Au/t
Oz. Au
350,000
0.51
5,740
Table 15.2: Range of resource values for La Jojoba gold-copper deposit after Blakestad (2005).
The writer was the principal author of the Technical Report regarding the La Jojoba
property. A Technical Report concerning the property is available at www.sedar.com.
El Chanate is a structurally-controlled gold deposit consists of mineralized quartz
stockwork and quart veinlets localized along the south-dipping El Chanate fault. The
mineralization is hosted by fine- to coarse grained siliciclastic sediments. The writer
has reviewed exploration reports and data concerning the El Chanate deposit, but
has not verified these, therefore, THE INFORMATION CONCERNING EL CHANATE
IS NOT NECESSARILY INDICATIVE OF THE MINERALIZATION AT LLUVIA DE
ORO. Persons interested in further information on the deposit are encouraged to visit
the web site of Capital Gold Corp. (www.capitalgoldcorp.com) or to view their
information available at www.sedar.com . Authors of the data for El Chanate have no
relationship the Columbia Metals.
Page 49
16.0 MINERAL PROCESSING AND METALLURGICAL TESTING
During 1994, Kappes, Cassiday and Associates (KCA) in Reno, NV, performed
column leach tests for gold on a bulk core composite sample from Lluvia de Oro.
Approximately 3,000 kilograms of 150mm diameter core material was obtained from
seven diamond core drill holes for metallurgical tests. All the holes were drilling in the
central portion of the Creston Pit.
These materials were composited into a single bulk sample, which was submitted to
a series of tests to determine the ore’s amenability to cyanide heap leaching.
Thirteen column leach tests were performed on crushed core sizes ranging from
75mm to 6.3mm nominal size fractions.
Intervals of core combined for the composite sample were as follows:
Core
Hole
Interval
From – To (m)
LOCH-1
LOCH-2
LOCH-2
LOCH-3
LOCH-6
LOCH-7
0.0
4.57
15.24
5.49
39.6
0.0
-
15.24
10.67
15.85
17.68
51.82
15.24
The average of fire assays performed on the core composite was 1.22 g/t Au.
Weighted average grade of head screen analyses on the five crush sizes was 1.22
g/t Au, with a range from 0.63 to 1.25 g/t Au (Albert, 1995).
A single bottle roll test was performed by KCA on a pulverized portion of the core
composite. A recovery of 93.3% was obtained after 24 hours of leaching based on a
calculated head grade of 1.34 g/t Au. Sodium cyanide consumption was 1.51 kg per
tonne of material leached and hydrated lime consumption was 1.0 kg Ca(OH)2 per
tonne. The bottle roll test returned 38.46 percent recovery for silver, and maintained
an average concentration of 42 ppm copper during the test period, however, the
head grade for copper was not reported.
Cyanide leach column tests were run on the composite material as continuouslydrained drip leach tests. This type of testing usually reflects actual heap leach
conditions. The apparatus used for the tests is shown schematically in Figure 16.1.
Page 50
Figure 16.1: Schematic diagram of the column leach tests performed on Lluvia de Oro composite core
samples by Kappes, Cassiday and Associates. Diagram from Albert (1995).
Average gold recovery results of the KCA column leach tests by crush size were as
follows:
Crush
Size
mm
75
50
25
16
6.3
Calc.
Head
g/t Au
1.18
1.09
1.17
1.23
1.14
Tails
g/t Au
0.35
0.25
0.23
0.24
0.18
% Au
Recov.
71
77
81
81
85
Leach
Time
Days
61
61
61
61
61
Reagent Consumption
Kilos / Tonne
NaCN Lime Cement
0.71
0.17
-0.83
0.18
-1.06
0.32
-1.09
0.35
-0.88
0.08
2.5
16.1 Column Leach Results Discussion
An analysis of the location and metal content of the large diameter core holes used
for the KCA metallurgical tests was conducted to determine a comfort level for how
representative the metallurgical samples were with respect to the Creston ore body
and to compare the assay data against the original drill holes used for resource
calculations for the Creston Pit. The locations were found to be along the central axis
of the Lluvia Shear Zone, within the bounds of the pit.
Page 51
The average grade of the core composite sample tested by KCA was determined to
be 1.22 g/t Au by fire assay and screen analyses. The weighted average grade of the
calculated head assays for the 13 column tests is calculated to be 1.17 g/t Au and
5.02 g/t Ag. Comparable intervals of the original drill holes twinned by the
metallurgical test drill holes was 1.59 g/t Au and 3.69 g/t Ag (copper values were not
determined for any of these drill holes), but these data are not perfectly comparable
due to slight off-sets of the drill collar locations, collar elevations, and slight
differences in sample intervals. The data indicate a higher gold value and a lower
silver value for the original drill holes over the respective intervals. The data are
reasonably close, however, that no concerns were raised on the representative
nature of the composite sample vs. the original drill assays.
Results of the KCA column leach tests indicate generally favorable recovery for the
sample materials tested. Two column tests of the coarser size fraction (75mm)
returned 73.1 percent and 68.3 percent recovery for gold (average of 71%). Cyanide
and lime consumption was moderate at 0.78 and 0.17 kg/tonne. As expected, gold
recovery increases with decreasing crush size, showing a maximum of 85 percent
recovery at 6.3 mm (nominal ¼-inch), with the pulverized ore sample returning 93.3
percent. Silver recovery ranged between 7 percent and 16 percent, with an average
of 11 percent recovery overall from the columns and 38.46 percent from the
pulverized rock in the bottle roll test.
These data indicate favorable conditions for heap-leach extraction of gold for the
ores at Lluvia de Oro. The silver recovery data indicates that silver would not leach
well under a conventional heap-leach recovery process. The affect of copper on the
leach chemistry was not evaluated.
16.2 Paddle Abrasion and Impact Crushability
In August 1994, a portion of the core composite material was submitted to Nordberg’s
Mineral Research and Test Center in Milwaukee, WI for paddle abrasion and impact
crushability tests. The paddle abrasion test recorded a paddle weight loss of 0.1650
grams from an initial 94.744 gram paddle, indicating that the material is classified as
“abrasive”. The ore is similar to Red Limestone from Vermont in the Abrasion Index.
Impact crushability tests for ten samples returned a maximum work index of 8.29 and
an average work index of 6.24 (Albert, 1995). These data indicate the ore from the
Creston Pit at Lluvia de Oro is relatively “soft” on the Impact Work Index scale.
The results of the abrasion and crushability tests indicate that the rock exhibits an
average abrasion and crushability index for rock materials, which is appropriate for
shale lithologies of the type found at Lluvia de Oro. The average density of the rocks
(specific gravity) was determined to be 2.50 g/cc.
Page 52
16.3 Agglomeration Tests
Tests to determine agglomeration characteristics for the composite sample were
performed by KCA in 1994 (Albert, 1995). Portions of the minus 6.3mm material were
agglomerated with varying amounts of Portland Type II cement. The results of this
study indicate 2.5 kilos of cement per tonne of ore is sufficient to agglomerate rock
crushed to minus 6.3 mm.
16.4 Metallurgical Tests 2006
MetCon Research of Tucson, Arizona was commissioned by Columbia Metals to
perform a series of bottle roll tests on bulk samples obtained from the Lluvia de Oro
leach pad in June-July 2006. For the purposes of these tests the bulk samples were
divided into three composite samples based on the distribution of gold determined by
127 pit samples and 377 chip-channel samples of rocks on the leach pad. Pits
comprising the bulk samples and the three areas of the leach pad on which bottle roll
tests were performed are shown in Figure 16.2.
Figure 16.2: Bulk sample location map for the Lluvia leach pad. Map by Blakestad, 2006.
Page 53
A series of 33 bottle roll tests were completed to ascertain Au-Ag-Cu recovery
parameters for the leach pad material under different leach solution parameters. The
first series of samples (BR-01 to BR-09) were acid bottle roll tests to determine the
acid-soluble copper for the three areas of the leach pad. The second series of tests
(BR-10 through BR-15) were standard cyanide leach bottle rolls (NaCN concentration
1.0 g/l) to determine the recovery of Au-Ag-Cu by standard techniques. The third
series of samples (BR-16 through BR-33) were cyanide solubility tests using different
NaCN solution concentrations free of soluble Cu.
The acid-soluble copper results indicate 25 percent to 61 percent of the copper in the
pad rock material is soluble, with the higher solubility in the SW ½ and NE-N
quadrant of the leach pad. Figure 16.3 summarizes these recovery data.
Copper Extraction Versus Feed Size
24 Hrs Acid Bottle Roll Leach Tests on Composite Sample
Metcon Project M-684-01, Lluvia de Oro Gold Mine Project
70.00
60.00
NEN-Quadrant
NES-Quadrant
Copper Extraction
50.00
SWOne-Half
40.00
30.00
20.00
10.00
0.00
P100=1/2"
P100=10 Mesh
Pulverized ( ≈ 200 mesh )
Feed Size
Figure 16.3: Acid-solubility curves for Cu from bulk samples of the Lluvia de Oro leach pad.
Standard 48-hour cyanide-solubility bottle roll tests were performed on the same bulk
sample composite samples to determine the Au-Ag-Cu solubility as a function of
crush size and area of the pad material (see Table 16.1).
CALC. HEAD
EXTRACTION %
CRUSH SIZE Au (g/t) Ag (g/t) Cu (g/t)
Au
Ag
Cu
0.90
4.79
1546
60.40
37.76
42.09
10-mesh
0.76
5.13
1588
94.77
51.57
49.90
NE-N
200-mesh
0.58
3.09
579
67.20
19.33
13.96
10-mesh
0.58
2.70
486
98.29
45.04
18.48
NE-S
200-mesh
0.09
2.68
564
67.10
25.77
29.36
10-mesh
0.12
2.86
496
47.80
39.84
0.11
SW 1/2 200-mesh
Table 16.1: Standard bottle roll results for Lluvia de Oro leach pad composite samples.
PAD
AREA
Page 54
Except for the low extraction value for gold in the SW½ area sample, the standard
bottle roll tests for pulverized material compare well with the gold and silver results of
the bottle roll test by KCA in 1995 (NaCN concentration 1.0 g/l for all standard bottle
roll tests). Copper extraction was not calculated for the KCA test.
A series of special bottle roll tests were performed on the composite leach pad
samples for bottle rolls BR-16 through BR-33. These tests were performed with
cyanide solution concentrations of 4 g/l, 8 g/l, and 12 g/l to determine the effect of
higher NaCN concentrations on Au-Ag-Cu extraction. In addition to the higher NaCN
concentrations, the tests were run over a 96 hour time frame and the pregnant
solution was changed at each sample interval to remove copper from the solution.
These tests were run to simulate the effect of implementing a copper removal system
in the recovery process. Results of the “solution-exchange” leach tests are
summarized in the graph below (Figure 16.4).
Figure 16.4: Extraction curves for variable NaCN concentration bottle roll tests, applying solutionexchange method to simulate removal of copper from the pregnant solution. (Data by MetCon
Research, 2006, graph by Blakestad, 2006).
Extraction results for the solution-exchange leach tests show enhanced recovery for
gold, silver, and copper at the 4 g/l NaCN concentration level, except that the ½ inch
sample for the NE-S quadrant was lower than expected due to a high tail assay (0.58
g/t Au) for that sample. In general, higher concentrations of NaCN resulted in higher
extraction percentages for Au-Ag-Cu in these tests (see Table 16.2).
Page 55
Strength
Au
Ag
Cu
96 Hours Cumulative
Extraction
Au
Ag
Cu
(g/l)
(g/t)
(g/t)
(g/t)
(%)
(%)
(%)
4.10
0.35
3.78
1228
83.14
42.40
51.63
8.15
0.53
4.25
1256
60.75
55.74
68.49
12.40
0.95
5.23
1928
74.10
62.28
69.31
4.10
0.97
4.36
1540
79.60
54.61
61.48
8.15
1.20
4.47
1469
92.64
58.26
59.91
12.40
1.00
4.48
1539
88.08
55.87
61.42
4.10
1.07
1.40
651
45.92
57.27
23.39
8.14
0.32
1.36
530
84.41
55.90
24.62
12.22
0.24
1.44
529
83.10
58.46
24.50
4.10
0.54
1.41
509
85.36
57.78
22.00
8.14
0.40
1.44
510
90.00
51.77
21.97
12.22
0.58
1.50
518
70.76
60.22
23.46
4.22
0.17
1.88
660
88.35
25.56
32.58
8.20
0.16
2.23
634
81.12
37.17
29.48
12.20
0.15
1.99
478
93.37
39.76
34.01
4.22
0.22
2.11
615
90.96
43.58
40.82
8.20
0.16
2.02
733
93.92
50.65
34.56
12.20
0.16
1.92
547
96.85
48.09
43.80
Cyanide
Pad Pit
Sample
Test
Number
Crush
Size
BR-16
BR-17
NE-N
Quadrant
P100 =
1/2"
BR-18
BR-19
BR-20
BR-21
P100 =
10
Mesh
BR-22
BR-23
NE-S
Quadrant
P100 =
1/2"
BR-24
BR-25
BR-26
BR-27
P100 =
10
Mesh
BR-28
BR-29
SW OneHalf
P100 =
1/2"
BR-30
BR-31
BR-32
BR-33
P100 =
10
Mesh
Calculated Head
Table 16.2: Extraction results for solution-exchange bottle roll tests (MetCon, 2006).
Average Au-Ag-Cu extraction from the ½-inch and 10-mesh bottle roll samples
determined by the solution-replacement metallurgical tests are reported in Table
16.3, with the average extraction for three standard bottle roll tests (NaCN
concentration of 1.0 g/l).
Crush Size
Cyanide
Strength
(g/l)
Calculated Head
Au
Ag
Cu
(g/t)
(g/t)
(g/t)
½”
½”
½”
Cumulative Extraction - 96 hours
Au
Ag
Cu
(%)
(%)
4.1
0.53
2.35
847
72.5
41.7
8.2
0.34
2.61
806
75.4
49.6
12.3
0.45
2.89
978
83.5
53.5
10 Mesh
4.1
0.58
2.63
888
85.3
52.0
10 Mesh
8.2
0.59
2.65
904
92.2
53.6
10 Mesh
12.3
0.58
2.63
868
85.2
54.7
10 Mesh
1.0
0.52
3.52
896
64.9
27.6
Table 16.3: Average bottle roll extraction by NaCN concentration (MetCon, 2006).
(%)
35.9
40.9
42.6
41.4
38.8
42.9
28.5
Page 56
17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES
The data base for the Lluvia de Oro, Sonora State Mexico consisted of 256 drill holes
with 17,007 assays for gold and silver and 4,518 assays for copper (see Appendix 1
for listing of drill holes used in resource estimate). Assays reporting grades of 0.000
were set to 0.01 g/t for gold and 0.05 g/t for silver. Assays coded as -1.0 were
assumed to be missing.
A data verification process was completed by the writer (Giroux) by comparing
original assay sheets to the database values. A total of 5,282 samples were checked
out of the total provided, a percentage of 31%. Of samples checked there were 114
errors found (2% of data checked) and of these, all but two were in areas outside the
mineralized zones and considered as waste. During the course of the study some
errors in drill hole locations and the “from”-“to” entries were found by routine software
applications, and these were corrected. In the writer’s (Giroux) opinion the data
accuracy is certainly within industry standards and suitable for a resource estimation.
The statistics for gold, silver and copper assays are shown below in Table 17.1.
Table 17.1
Summary of Statistics for Assays
Number of Samples
Mean Grade
Standard Deviation
Minimum Value
Maximum Value
Coefficient of Variation
Au (g/t)
17,007
0.268
0.847
0.001
46.62
3.16
Ag (g/t)
17,007
1.806
3.791
0.05
132.0
2.10
Cu (ppm)
4,518
293
751
0.6
18,079
2.56
The grade distribution for each variable was examined with cumulative probability
plots to determine if capping was necessary and if so at what level. In each case for
Au, Ag and Cu the distributions were positively skewed and lognormal
transformations were made. The lognormal cumulative probability plots are shown
below as Figures 17.1 to 17.3. In each case the grade distribution is shown by open
triangles. Each distribution shows multiple overlapping populations. In this graphical
format a single lognormal distribution will plot as a straight line. By a method called
partitioning the inflection points in the curved line (shown as vertical lines) are
selected and the individual populations shown as open circles are broken out. The
interpreted populations are then re-plotted as solid circles and can then be compared
against the original distribution. This procedure is explained in detail in a paper by A.
J. Sinclair on the Application of probability graphs in mineral exploration (Sinclair,
1976).
Page 57
Gold showed 5 overlapping lognormal populations as shown in Figure 17.1.
Population 1 with a mean of 29.06 g Au/t and representing 0.03 % of the data or 5
samples can be considered erratic in nature. A threshold to separate out this
population would be 2 standard deviations above the mean of population 2, a value
of 19 g Au/t. Using this cap level a total of 5 gold assays were capped at 19.0 g/t.
Table 17.2
Summary of Lognormal Gold Populations
Population
1
2
3
4
5
Mean
Au (g/t)
29.06
11.46
4.29
1.53
0.08
Proportion
Of Total
0.03 %
0.08 %
0.77 %
2.64 %
96.48 %
Number of
Assays
5
14
131
449
16,408
..
Figure 17.1 – Lognormal Cumulative Probability Plot for Gold at Lluvia.
Page 58
Silver showed 6 overlapping lognormal populations as shown in Figure 17.2. The
upper population 1 with a mean of 121.3 g Ag/t and representing 0.02 % of the data
or 3 samples can be considered erratic. A threshold to separate out this population
would be 2 standard deviations above the mean of population 2, a value of 77 g Ag/t.
Using this cap level a total of 3 silver assays were capped at 77 g/t.
Table 17.3
Summary of Lognormal Silver Populations
Population
1
2
3
4
5
6
Mean
Ag (g/t)
121.3
49.57
24.23
10.54
2.81
0.27
Proportion
Of Total
0.02 %
0.14 %
0.42 %
3.78 %
31.38 %
64.26 %
Number of
Assays
3
24
71
643
5,337
10,929
.
Figure 17.2 – Lognormal Cumulative Probability Plot for Silver at Lluvia
Page 59
A plot for 4,518 samples with copper assays showed 6 overlapping lognormal
populations as shown in Figure 17.3. Population 1 with a mean of 8450 ppm Cu and
representing 0.36 % of the data or 16 samples is not considered erratic. The upper
tail of this population should be capped, however and a threshold to separate out this
portion would be 2 standard deviations above the mean of population 1, a value of
10,000 ppm. Using this cap level a single copper assay running 18,079 ppm was
capped at 10,000 ppm.
Table 17.4
Summary of Lognormal Copper Populations
Population
1
2
3
4
5
6
Mean
Cu (ppm)
8450
4704
2602
272
51
9
Proportion
Of Total
0.36 %
0.25 %
0.91 %
49.03 %
34.73 %
14.72 %
Number of
Assays
16
11
41
2,215
1,570
665
.
Figure 17.3 – Lognormal Cumulative Probability Plot for Copper at Lluvia
Page 60
17.2 Geologic Model
Two mineralized zones, an upper and lower, were recognized on the Lluvia de Oro
deposit based on gold, silver and copper values. From cross sections and level
plans, the top of the Upper Zone was identified in 253 drill holes. The bottom of this
zone was tagged in 242 holes, with the remainder of the holes not deep enough to
penetrate through the zone. The top of the lower mineralized zone was identified in
98 drill holes with 5 of these penetrating through to establish the bottom of this zone.
An additional 6 holes were deep enough to penetrate through the zone, but failed to
intercept significant gold mineralization. Based on this information and the surface
topography, three dimensional solids were constructed to constrain the resource
estimate within these two mineralized zones.
The existing open pit was also modeled and a surface created to match, as close as
possible, the existing pit floor. Figure 17.4 is a schematic sectional view showing the
geologic block model and the relative proportions of blocks within the Upper (red) and
Lower (blue) mineralized zones and the existing Open Pit (green).
Figure 17.4: Cross section looking northwest showing mineralized zones and open pit
(Giroux, 2006).
Page 61
17.3 Composites
Drill holes were “passed through” the mineralized solids with the points the hole’s
entered and left each solid recorded. Uniform down-hole, 5 meter composites were
formed to honor the boundaries of the solids. Material above the upper solid,
between the Upper and Lower solids and below the lower solid was coded as waste.
In the area of the open pit, however, the material above the Upper zone included
material mined and as a result contained high assays (maximum Au – 6.96 g/t) (see
Table 17.5). These composites were used to estimate the material mined but were
not used to estimate the Upper Zone. Composites less than ½ the composite length
at solid boundaries were combined with adjacent composites to produce a uniform
support of 5.0 ± 2.5 meters. A summary of the statistics for 5 meter composites is
presented in Table 17.5.
Table 17.5
Summary of Statistics for 5 meter Composites
UPPER ZONE
Number of Samples
Mean Grade
Standard Deviation
Minimum Value
Maximum Value
LOWER ZONE
Number of Samples
Mean Grade
Standard Deviation
Minimum Value
Maximum Value
WASTE
Number of Samples
Mean Grade
Standard Deviation
Minimum Value
Maximum Value
Au (g/t)
2,111
0.296
0.462
0.004
9.41
1.56
Au (g/t)
470
0.436
1.024
0.007
15.85
2.35
Au (g/t)
2,627
0.213
0.478
0.003
6.96
2.24
Ag (g/t)
2,111
2.14
3.07
0.050
42.80
1.44
Ag (g/t)
470
2.76
4.18
0.05
46.51
1.52
Ag (g/t)
2,627
1.35
2.48
0.05
52.91
1.84
Cu (ppm)
634
285
344
5.6
4679
1.21
Cu (ppm)
217
661
1272
1.9
8932
1.92
Cu (ppm)
539
144
265
1.8
3508
1.84
17.4 Variography
Pairwise relative semivariograms were used in directions along strike and down dip in
each of the Upper and Lower mineralized zones, to determine grade continuity for
gold, silver and copper at Lluvia de Oro. Geometric anisotropy was demonstrated
with similar nugget effect and sil values in all directions. Nested spherical models
were fit to each direction and the results are summarized in Table 17.6, and six of 18
models are shown in Appendix 2. The nugget to sill ratio, a measure of grade
Page 62
variability ranges from a low of 17% for Cu and Ag to a high of 32% for gold in the
Upper Zone and from a low of 17 % for Cu to a high of 47% for Au in the less
sampled Lower Zone.
Table 17.6
Summary of Semivariogram Parameters
Variable Azimuth Dip Co
C1
C2 a1 (m) a2 (m)
Upper Zone
045
0
0.20 0.20 0.22
22
30
Au
Ag
Cu
315
135
045
315
135
045
315
135
-45
-45
0
-45
-45
0
-45
-45
0.20
0.20
0.15
0.15
0.15
0.15
0.15
0.15
0.20
0.20
0.42
0.42
0.42
0.30
0.30
0.30
0.22
0.22
0.13
0.13
0.13
0.45
0.45
0.45
10
10
40
30
35
40
60
30
50
28
150
100
60
50
80
70
Lower Zone
045
0
0.35 0.10 0.30
20
30
315
-45 0.35 0.10 0.30
15
40
135
-45 0.35 0.10 0.30
15
30
045
0
0.20 0.40 0.32
40
150
Ag
315
-45 0.20 0.40 0.32
38
100
135
-45 0.20 0.40 0.32
40
150
045
0
0.20 0.60 0.40
50
60
Cu
315
-45 0.20 0.60 0.40
50
60
135
-45 0.20 0.60 0.40
50
60
Where Co = Nugget Effect, C1 =Short Range Structure, C2 =Long Range Structure, a1 = Short Range
and a2 = Long Range
Au
17.5 Block Model
A block model with blocks 10 x 10 x 5 meters in dimension was superimposed on the
Lluvia deposit. Blocks were compared to the original topographic surface, the
existing Creston open pit, and the Upper and Lower mineralized zone solids to
determine the percentage of the block below topography, the percentage of the block
within the Upper and Lower zones and the percentage within the open pit and hence
mined out. The block model had the following coordinates.
Lower left corner Easting 9160 E
Lower left corner Northing 8830 N
Top block
Elevation 935
10 m wide
10 m long
5 m high
189 columns
229 rows
47 levels
No Rotation
Page 63
Figure 17.5: Satellite picture of Lluvia de Oro Creston Pit and location of drill hole
fences (Image by Digital Globe, 2005).
Page 64
17.6 Grade Interpolation
Grades for gold, silver and copper were interpolated into blocks using ordinary
kriging. Any blocks with some proportion of volume contained within the Upper Zone
solid were estimated using expanding search ellipses tied to the ranges of the
semivariograms and composites from within the Upper Zone. A similar strategy was
used on any block with some proportion within the Lower Zone. Finally, for blocks
that contained some proportion of waste, a grade was interpolated using composites
outside the two mineralized solids. A weighted average grade was then computed
for blocks less than 100% contained within the mineralized zones.
As a check on the validity of the methodology, blocks with some proportion within the
existing open pit were estimated in a similar manner but, used all composites, as the
mineralized zone was not interpreted above the current topography. These results
could then be compared with mining records.
All estimations were completed in a number of passes using expanding search
ellipses. Pass one, for each variable, used dimensions for the ellipse equal to ¼ of
the semivariogram ranges in the three principal directions. All ellipses were aligned
along the three principal directions of anisotropy. A minimum of 4 composites was
required to estimate the block. If the minimum four composites were not found, the
search ellipse was expanded to ½ the ranges. A third pass for blocks still not
estimated used dimensions equal to the full range and in some cases a fourth search
using ranges equal to twice the semivariogram ranges was used to fill in undersampled areas. In all cases, if more than 8 composites were found in any given
search, the closest 8 were used.
Table 17.7
Search Parameters for Ordinary Kriging
Variable
Au
Ag
Cu
Au
Pass
#
Est.
1
2
3
4
1
2
3
1
2
3
4
974
9,066
16,492
23,3311
18,167
21,682
22,971
2,914
7,374
11,714
24,679
1
2
3
4
64
1,829
6,476
10,689
Az.045 Dip 0
Az.315 Dip -45
Distance (m)
Distance (m)
UPPER ZONE
7.5
12.5
15.0
25.0
30.0
50.0
60.0
100.0
32.5
25.0
75.0
50.0
150.0
100.0
12/5
20.0
25.0
40.0
50.0
80.0
100.0
160.0
LOWER ZONE
7.5
10.0
15.0
20.0
30.0
40.0
60.0
80.0
Az.135 Dip -45
Distance (m)
7.0
14.0
28.0
56.0
15.0
30.0
60.0
17.5
35.0
70.0
140.0
7.5
15.0
30.0
60.0
Page 65
Ag
Cu
Au
Ag
Cu
Au
Ag
Cu
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
1
2
3
4
1
2
3
4
1
2
3
1
2
3
4
3,717
8,977
7,889
5,930
676
3,624
7475
19,953
37.5
25.0
75.0
50.0
150.0
100.0
300.0
200.0
15.0
15.0
30.0
30.0
60.0
60.0
240.0
240.0
WASTE ZONES
753
7.5
12.5
10,186
15.0
25.0
29,695
30.0
50.0
85,787
60.0
100.0
21,578
32.5
25.0
51,134
75.0
50.0
126,495
150.0
100.0
1,857
12/5
20.0
8,752
25.0
40.0
39,112
50.0
80.0
121,437
100.0
160.0
OPEN PIT (MINED OUT MATERIAL)
92
7.5
12.5
634
15.0
25.0
752
30.0
50.0
351
120.0
200
1,190
32.5
25.0
506
75.0
50.0
133
150.0
100.0
28
12/5
20.0
91
25.0
40.0
347
50.0
80.0
1,249
300.0
320.0
10.0
20.0
40.0
80.0
15.0
30.0
60.0
240.0
7.0
14.0
28.0
56.0
15.0
30.0
60.0
17.5
35.0
70.0
140.0
7.0
14.0
28.0
112.0
15.0
30.0
60.0
17.5
35.0
70.0
280.0
Page 66
17.7 Bulk Density
A total of 25 specific gravity determinations were made by Kappes, Cassiday and
Associates (Albert, 1995) and are presented below. Results range from a high of
2.69 to a low of 2.32 with an arithmetic mean of 2.49 and a median value of 2.50.
For this resource estimate a bulk density of 2.49 was used.
Table 17.8
Summary of Specific Gravity Determinations
Specific Gravity
2.37
2.69
2.51
2.51
2.45
2.51
2.45
2.49
2.48
2.51
2.61
2.54
2.64
2.57
2.40
2.45
2.44
2.32
2.59
2.39
2.37
2.53
2.50
2.50
2.33
Av = 2.486
17.8 Classification
Introduction
Based on the study herein reported, delineated mineralization of the Lluvia de Oro
Deposit is classified as a resource according to the following definition from National
Instrument 43-101:
Page 67
“In this Instrument, the terms "mineral resource", "inferred mineral
resource", "indicated mineral resource" and "measured mineral
resource" have the meanings ascribed to those terms by the Canadian
Institute of Mining, Metallurgy and Petroleum, as the CIM Standards on
Mineral Resources and Reserves Definitions and Guidelines adopted
by CIM Council on August 20, 2000, as those definitions may be
amended from time to time by the Canadian Institute of Mining,
Metallurgy, and Petroleum.”
“A Mineral Resource is a concentration or occurrence of natural, solid,
inorganic or fossilized organic material in or on the Earth's crust in such
form and quantity and of such a grade or quality that it has reasonable
prospects for economic extraction. The location, quantity, grade,
geological characteristics and continuity of a Mineral Resource are
known, estimated or interpreted from specific geological evidence and
knowledge.”
The terms Measured, Indicated and Inferred are defined in 43-101 as follows:
“A 'Measured Mineral Resource' is that part of a Mineral Resource for
which quantity, grade or quality, densities, shape, physical
characteristics are so well established that they can be estimated with
confidence sufficient to allow the appropriate application of technical
and economic parameters, to support production planning and
evaluation of the economic viability of the deposit. The estimate is
based on detailed and reliable exploration, sampling and testing
information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are
spaced closely enough to confirm both geological and grade continuity.”
“An 'Indicated Mineral Resource' is that part of a Mineral Resource for
which quantity, grade or quality, densities, shape and physical
characteristics, can be estimated with a level of confidence sufficient to
allow the appropriate application of technical and economic parameters,
to support mine planning and evaluation of the economic viability of the
deposit. The estimate is based on detailed and reliable exploration and
testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes that
are spaced closely enough for geological and grade continuity to be
reasonably assumed.”
“An 'Inferred Mineral Resource' is that part of a Mineral Resource for
which quantity and grade or quality can be estimated on the basis of
geological evidence and limited sampling and reasonably assumed, but
not verified, geological and grade continuity. The estimate is based on
Page 68
limited informatio

Lluvia de Oro Gold Project, Sonora, Mexico

Transcription

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