Santiago Project

Location

The Santiago property is located about 150 km to the north of the city of Durango (population 450,000) and 34 km ENE of the small town of Santiago Papasquiaro (population 28,000).

The project is situated in the mountain range “Sierra San Francisco”. Abandoned historic mines and numerous smaller Au prospects occur throughout the entire mountain range at altitudes between 2000 and 3100 m above sea level. The famous historic “Promontorio” mining camp, located 7 km north of the Santiago project, was one of the most important Mexican silver and gold producer between 1880 and 1946.

Local Geology

Host rock for all Au-Ag bearing quartz veins within the property is a porphyritic rhyodacite ignimbrite from the Lower Volcanic Sequence. In the north of the property crop out post-mineral rock units belonging to the “Upper Volcanic Sequence” they consist at the base of an up to 40 m thick conglomerate unit at the erosional unconformity to the Lower Volcanic Sequence; it is overlain by rhyolitic rocks including pumiceous tuffs, ignimbrites and minor lava flows.

Within the property gold mineralisation is found in several quartz veins at altitudes between 2600 and 2900 m. The principal “Bella Vista Vein” is about 1200 m long and 0.15 to 2.0 m wide, vein width in the ore shoots averages approximately 0.80 m. The “Bella Vista Vein” strikes NW-SE and dips with 55° to 80º (in average 60°) to the SW. In the past small-scale miners (Gambusinos) exploited the Au-ore from a number of workings. The most extensive historic workings (Tascate mine) in the Bella Vista vein are found at its northern termination in the Soledad claim (8 ha third party concession); here exist still about 2500 tons of mine dump with considerable Au grades. A great portion of the old mine is still accessible. Drifts and stopes appear over a length of 200 m and a vertical extend of 60 m. Up to three parallel veins had been worked at the Tascate mine.

Ore shoots in the Bella Vista vein are tectonically controlled by changes in dip and strike, but occur also at vein and fault intersections. The tectonic stress during Au-Ag mineralisation was dominated by E-W extension. Barren quartz was deposited in a late hydrothermal stage under N-S extension. Favourable are steeper dips and strike inflections from the general NW-SE trend to a NNW-SSE direction. The southern vein segment is partly hidden below a cover of 5 to 15 m deep colluvium (gravel and boulders). Here structural geologic observations indicate two vein inflection zones with NNW-SSE strike; suggesting two blind ore shoots.

Mineralisation

The vein-fill comprises several paragenetic stages of comb quartz and crustiform bands of fine grained to “cherty” recrystallisation quartz (often with high Au grades), chloritic altered and silicified wall-rock fragments, pyrite (1-6%) and native gold/electrum. In the upper 20 to 80 m of the veins pyrite has been oxidised supergenely to limonite-hematite (Fe-oxide). Most of the gold grains appear here within the limonite. In the sulfide zone the gold/electrum occurs as inclusions in pyrite grains or as small particles in quartz in the vicinity of pyrite grains. The size of the gold particles range between smaller 0.001 mm to over 3 mm. Noteworthy are the relatively low silver values and the absence of base-metal values in the veins. The Ag:Au ratios range normally between 0.5 and averaging about 1.5:1.

The wall-rock adjacent to the veins exhibit an alteration assemblage of chlorite-sericite-adularia-pyrite.

The hydrothermal activity responsible for mineralisation at Bella Vista can be classified as Au-dominated, low-sulfidation epithermal system (or adularia sericite type). Similar mineral occurrences have been observed in a number of places throughout the Sierra San Francisco mountain range. The vertical interval with the highest recognized Au grades lies between an elevation of 2300 to 3100 m. Below this elevation ore shoots with high Au values do still exist, but they appear more isolated. From the only limited data it is indicated that quartz textures, alteration assemblage and Ag:Au ratios do not change very much within the exposed vertical extend of over 1000 m.

Resources & Exploration Potential

A preliminary estimation indicate inferred gold resources (not 34-101 compliant) in known ore shoots in the Bella Vista vein of 70,000 ounces of gold (cut-off grade 5g/t).

Significant additional resources are expected in the two suspected ore shoots in the southern Bella Vista vein and in Pedro’s vein (a North-South trending vein). Further potential for more Au ounces is given in the still unexplored Tascate vein and its indicated continuation to the north under post-mineral cover rocks. Finally the discovery of a blind north continuation of the Bella Vista vein could add even more Au resources. Based on the highly favourable geologic-tectonic framework the entire Santiago Au-Ag vein system (including yet undiscovered veins) appears to posses the potential for the discovery and definition of 0.5 to 1.5 million ounces of gold (to a depth of 600 m).

The project exhibits excellent opportunities for discovering significant high-grade vein hosted Au-Ag mineralisation. Further detailed mapping (including alteration zones) and sampling is recommended. Veins exhibit an alteration zone (pyritic halo) in their vicinity, consequently geophysical surveys could indicate the presence of mineralised vein portions, I recommend 3D induced polarization & resitivity, but also 3D high resolution magnetics followed by diamond drilling.