UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
20-F
(
) REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE
ACT OF 1934
OR
(X)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For
the fiscal year ended December 31, 2004
OR
(
) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
For
the transition period from
to
Commission
file number 0-28528
ALMADEN
MINERALS LTD.
(Exact
name of Registrant as specified in its charter)
British
Columbia, Canada
(Jurisdiction
of incorporation or organization)
750
West Pender Street, #1103, Vancouver, British Columbia V6C
2T8
(Address
of principal executive offices)
Securities
registered or to be registered pursuant to Section 12(b) of the
Act.
|
Title of each class |
Name of each exchange on which
registered |
|
None |
N/A |
Securities
registered or to be registered pursuant to Section 12(g) of the
Act.
Common
Stock without par value
(Title
of Class)
Securities
for which there is a reporting obligation pursuant to Section 15(d) of the
Act.
None
Indicate
the number of outstanding shares of each of the issuer's classes of capital or
common stock as of the close of the period covered by the annual
report.
31,142,767
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 12 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
(
X ) Yes ( ) No
Indicate
by check mark which financial statement item the registrant has elected to
follow.
(
X ) Item 17 ( ) Item 18
TABLE
OF CONTENTS
|
Page | ||
|
Glossary
of Geologic and Mining Terms |
||
|
PART
I |
||
|
Item
1 |
Identity
of Directors, Senior Management and Advisers |
12 |
|
Item
2 |
Offer
Statistics and Expected Timetable |
12 |
|
Item
3 |
Key
Information |
12 |
|
Item
4 |
Information
on the Company |
19 |
|
Item
5 |
Operating
and Financial Review and Prospects |
82 |
|
Item
6 |
Directors,
Senior Management and Employees |
86 |
|
Item
7 |
Major
Shareholders and Related Party Transactions |
94 |
|
Item
8 |
Financial
Information |
95 |
|
Item
9 |
The
Offer and Listing |
96 |
|
Item
10 |
Additional
Information |
98 |
|
Item
11 |
Quantitative
and Qualitative Disclosures About Market Risk |
105 |
|
Item
12 |
Description
of Securities Other than Equity Securities |
105 |
|
PART
II |
||
|
Item
13 |
Defaults,
Dividend Arrearages and Delinquencies |
105 |
|
Item
14 |
Material
Modifications to the Rights of Security Holders and |
|
|
Use
of Proceeds |
105 | |
|
Item
15 |
Controls
and Procedures |
105 |
|
Item
16A |
Audit
Committee Financial Expert |
106 |
|
Item
16B |
Code
of Ethics |
106 |
|
Item
16C |
Principal
Accountant Fees and Services |
106 |
|
Item
16D |
Exemptions
from the Listing Standards for Audit Committees |
106 |
|
Item
16E |
Purchase
of Equity Securities by the Issuer and Affiliated
Purchasers |
106 |
|
PART
III |
||
|
Item
17 |
Financial
Statements |
107 |
|
Item
18 |
Financial
Statements |
107 |
|
Item
19 |
Exhibits |
107 |
|
Signatures |
142 | |
2
Glossary
of Geologic and Mining Terms
Adularia:
A
colourless, moderate to low-temperature variety of orthoclase feldspar typically
with a relatively high barium content. It is a prominent constituent of low
sulphidation epithermal veins.
Alkalic
Intrusive: An
igneous rock emplaced below ground level in which the feldspar is dominantly
sodic and or potassic.
Alkalinity:
The
chemical nature of solutions characterized by a high concentration of hydroxyl
ions.
Andesite:
A dark-coloured, fine-grained extrusive rock that, when porphyritic, contains
phenocrysts composed primarily of zoned sodic plagioclase (esp. andesine) and
one or more of the mafic minerals (eg. Biotite, horn-blende, pyroxene), with a
ground-mass composed generally of the same minerals as the phenocrysts; the
extrusive equivalent of diorite.
Andesite grades into latite
with increasing alkali feldspar content, and into dacite
with more alkali feldspar and quartz. It was named by Buch in 1826 from the
Andes Mountains, South America.
Anomalous:
A
geological feature, often subsurface, distinguished by geological, geochemical
or geophysical means, which is detectably different than the general
surroundings and is often of potential economic value.
Anomaly:
Any
concentration of metal noticeably above or below the average background
concentration.
Argillic:
A form of alteration characterised by the alteration of original minerals to
clays.
Arsenopyrite:
A sulphide of arsenic and iron with the chemical composition FeAsS.
Assay:
An analysis to determine the presence, absence or quantity of one or more
components.
Axis:
An imaginary hinge line about which the fold limbs are bent. The axis of a fold
can be at the top or bottom of the fold, can be tilted or horizontal.
Batholith:
An intrusion, usually granitic, which has a large exposed surface area and no
observable bottom. Usually associated with orogenic belts.
Breccia:
Rock consisting of more or less angular fragments in a matrix of finer-grained
material or cementing material.
Brecciated:
Rock broken up by geological forces.
Bulk
sample: A
very large sample, the kind of sample to take from broken rock or of gravels and
sands when testing placer deposits.
Calc-silicate:
Calcium-bearing silicate minerals. These minerals are commonly formed as a
result of the interaction of molten rock and its derived, hot hydrothermal
fluids with very chemically reactive calcium carbonate (limestone).
Calc-silicate minerals include garnet, pyroxene, amphibole and epidote. These
minerals are commonly described as skarn and are genetically and spatially
associated with a wide range of metals
Chert:
A
very fine grained siliceous rock. Many limestones contain nodules and thin
lenses of chert.
Chip
sample: A
sample composed of discontinuous chips taken along a surface across a given
line.
Claim:
That portion of public mineral lands, which a party has staked or marked out in
accordance with provincial or state mining laws, to acquire the right to explore
for the minerals under the surface.
Clastic:
Consisting
of rock material that has been mechanically derived, transported, and deposited.
Such material is also called detrital.
3
Cleavage:
The
tendency of a crystal to split, or break, along planes of structural
weakness.
Columnar
Jointing: A
pattern of jointing that breaks rock into rough, six-sided columns. Such
jointing is characteristic of basaltic flows and sills and is believed to result
from shrinkage during cooling.
Concordant
Bodies: Intrusive
igneous bodies whose contacts are parallel to the bedding of the intruded
rock.
Conglomerate:
Rock
composed of mostly rounded fragments which are of gravel size or larger in a
finer grained matrix.
Craton:
A
central stable region common to nearly all continents and composed chiefly of
highly metamorphosed Precambrian rocks.
Crystalline:
Means the specimen is made up of one or more groups of crystals.
Cut-off
grade:
The minimum grade of mineralization used to establish quantitative and
qualitative estimates of total mineralization.
Dacite:
A
fine grained acid volcanic rock, similar to rhyolite in which the feldspar is
predominantly plagioclase.
Degradation:
The
ongoing process of erosion in a stream.
Diabase:
Igneous hypabyssal rocks. The name is applied differently in different parts of
the world leading to considerable confusion.
Diagenesis:
The
changes that occur in a sediment during and after lithification. These changes
include compaction, cementation, replacement, and
recrystallization.
Diamond
drill: A
type of rotary drill in which the cutting is done by abrasion using diamonds
embedded in a matrix rather than by percussion. The drill cuts a core of rock
which is recovered in long cylindrical sections.
Dilution:
Results from the mixing in of unwanted gangue or waste rock with the ore during
mining.
Dip:
Geological measurement of the angle of maximum slope of planar elements in
rocks. Can be applied to
beddings,
jointing, fault planes, etc.
Discordant
Bodies: Intrusive
igneous bodies whose contacts cut across the bedding, or other pre-existing
structures, to the intruded rock.
Disseminated
deposit:
Deposit in which the mineralization is scattered through a large volume of host
rock, sometimes as separate mineral grains, or sometimes along joint or fault
surfaces.
Dolomite: A
magnesium bearing limestone usually containing at least 15% magnesium carbonate.
Dunite:
An
intrusive, monomineralic, ultramafic rock composed almost completely of
magnesian olivine.
Dyke:
A
tabular, discordant, intrusive igneous body.
Earn
in: The
right to acquire an interest in a property pursuant to an Option
Agreement.
Ejecta:
Pyroclastic
material thrown out or ejected by a volcano. It includes ash, volcanic bombs,
and lapilli.
Epithermal:
Epithermal deposits are a class of ore deposits that form generally less than 1
km from surface. These deposits, which can host economic quantities of gold,
silver, copper, lead and zinc are formed as a result of the
precipitation
of ore minerals from up-welling hydrothermal fluids. There are several classes
of epithermal deposits that are defined on the basis of fluid chemistry and
resulting alteration and ore mineralogy. Fluid chemistry is largely controlled
by the proximity to igneous intrusive rocks and as a result igneous fluid
content.
4
Extrusive
Rock: Igneous
rock that has solidified on the earth’s surface from volcanic
action.
Fault:
(a) A fracture or fracture zone along which there has been displacement of the
sides relative to one another parallel to the fracture. (b) A break in the
continuity of a body of rock.
Feasibility
study:
Detailed study to determine if a property can be mined at a profit and the best
way to mine it.
Feldspar:
A
group of aluminum silicate minerals closely related in chemical composition and
physical properties. There are two major chemical varieties of feldspar: the
potassium aluminum, or potash, feldspars and the sodium-calcium-aluminum, or
plagioclase, feldspars. The feldspars possess a tetrahedral framework of silicon
and oxygen, with the partial substitution of aluminum for the silicon. They make
up about 60 percent of the earth’s crust.
Felsic:
Light coloured silicate minerals, mainly quartz and feldspar, or an igneous rock
comprised largely of felsic minerals (granite, rhyolite).
Fluid
inclusion: A
cavity, with or without negative crystal faces, containing one or two fluid
phases, and possibly one or more minute crystals, in a host crystal. If two
fluid phases are present, the vapour phase (bubble) may show Brownian motion.
Folds:
Are flexures in bedded or layered rocks. They are formed when forces are applied
gradually to rocks over a long period of time.
Fracture:
Breaks in a rock, usually due to intensive folding or faulting.
Gabbro:
A
group of dark-colored, basic intrusive igneous rocks composed principally of
basic plagioclase (commonly labradorite or bytownite) and clinopyroxene
(augite), with or without olivine and orthopyroxene; also, any member of that
group. It is the approximate intrusive equivalent of basalt. Apatite and
magnetite or ilmenite are common accessory minerals.
Gambusino: Small
miners working without machinery.
Gangue:
Term used to describe worthless minerals or rock waste mixed in with the
valuable minerals.
Geochemical
Anomaly: An
area of elevated values of a particular element in soil or rock samples
collected during the preliminary reconnaissance search for locating favourable
metal concentrations that could indicate the presence of surface or drill
targets.
Geochemistry:
The study of the chemistry of rocks, minerals, and mineral deposits.
Geophysics:
The study of the physical properties of rocks, minerals, and mineral deposits.
Gneiss:
A
coarse grained metamorphic rock characterized by alternating bands of unlike
minerals, commonly light bands of quartz and feldspar and dark bands of mica and
hornblende.
Gossan:
The leached and oxidised near surface part of a sulphide mineral deposit,
usually consisting largely of hydrated iron oxides left after copper and other
minerals have been removed by downward leaching.
Grade:
The concentration of each ore metal in a rock sample, usually given as weight
percent. Where extremely low concentrations are involved, the concentration may
be given in grams per tonne (g/t) or ounces per ton (oz/t). The grade of an ore
deposit is calculated, often using sophisticated statistical procedures, as an
average of the grades of a very large number of samples collected from
throughout the deposit.
Granite: A
coarse grained, plutonic igneous rock that is normally pale pink, pale
pink-brown, or pale grey, and composed of quartz, alkali feldspar, micas and
accessory minerals.
5
Grid:
A
network composed of two sets of uniformly spaced parallel lines, usually
intersecting at right angles and forming squares, superimposed on a map, chart,
or aerial photograph, to permit identification of ground locations by means of a
system or coordinates and to facilitate computation of direction and distance
and size of geologic, geochemical or geophysical features.
Hanging
wall and Footwall: Terms
used in reference to faults where when mining along a fault, your feet would be
in the footwall side of the fault and the other side would be “hanging” over
your head.
Hectare: A
square of 100 metres on each side.
Host
rock: The
rock within which the ore deposit occurs.
Hydrothermal:
Of
or pertaining to hot water, to the action of hot water, or to the products of
this action, such as a mineral deposit precipitated from a hot aqueous solution;
also, said of the solution itself. “Hydrothermal” is generally used for any hot
water, but has been restricted by some to water of magmatic origin.
Igneous:
Means a rock formed by the cooling of molten silicate material.
Ignimbrite:
The
rock formed by the widespread deposition and consolidation of ash flows and nues
ardentes. The term includes welded
tuff
and nonwelded but recrystallized ash flows.
Indicated
Mineral
Resource: 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 out-crops, trenches, pits,
workings and drill holes that are spaced closely enough for geological and grade
continuity to be reasonably assumed.
Induced
polarization (I.P.) method:
The method used to measure various electrical responses to the passage of
alternating currents of different frequencies through near-surface rocks or to
the passage of pulses of electricity.
Inferred
Mineral
Resource:
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 limited information
and sampling gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes.
Intermediate:
An igneous rock made up of both felsic and mafic minerals (diorite).
Intrusion:
General term for a body of igneous rock formed below the surface.
Intrusive
Rock: Any
igneous rock solidified from magma beneath the earth’s surface.
Joint
venture agreement:
An agreement where the parties agree to the terms on which a property will be
jointly explored, developed, and mined. (See also “Option agreement” and “Earn
in”).
Kimberlite:
A
kimberlite is a pipe-like volcano sourced from deep within the earth under
extreme temperatures and pressures. It is the host rock for diamonds and diamond
indicator minerals such as kimberlitic ilmenites and garnets.
K-silicate:
Potassium-bearing
silicates. Potassium silicates are very common rock-forming minerals, however
they are also formed by the interaction of hyrothermal fluids derived from the
cooling intrusive rocks that are genetically
and
spatially associated with porphyry and epithermal deposits. Potassium feldspar
(orthoclase) and potassium mica (biotite) are both commonly closely associated
with copper-molybdenum ore in porphyry copper deposits.
6
K-spar:
Potassium
feldspar.
Lamprophyre:
A
group of dike rocks in which dark minerals occur both as phenocrysts and in the
groundmass and light minerals occur in the groundmass. Essential constituents
are biotite, hornblende, pyroxene, and feldspar or feldspathoids. Most
lamprophyres are highly altered. They are commonly associated with carbonatites.
Lava:
Means an igneous rock formed by the cooling of molten silicate material which
escapes to the earth’s surface or pours out onto the sea floor.
Limestone:
Sedimentary rock that is composed mostly of carbonates, the two most common of
which are calcium and magnesium carbonates.
Lithosphere:
The
crust and upper mantle, located above the asthenosphere and composing the rigid
plates.
Mafic: A
term used to describe ferromagnesian minerals. Rocks composed mainly of
ferromagnesian minerals are correctly termed melanocratic.
Mafic:
A
general term used to describe ferromagnesian minerals.
Magma:
Naturally
occurring molten rock material, generated within the earth and capable of
intrusion and extrusion, from which igneous rocks have been derived through
solidification and related processes. It may or may not contain suspended solids
(such as crystals and rock fragments) and/or gas phases.
Massive:
Implies large mass. Applied in the context of hand specimens of, for example,
sulphide ores, it usually means the specimen is composed essentially of
sulphides with few, if any, other constituents.
Measured
Mineral Resource: 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.
Metamorphic:
Means any rock which is altered within the earth’s crust by the effects of heat
and/or pressure and/or chemical reactions.
Metamorphic:
Pertaining
to the process of metamorphism or to its results.
Metasediment:
A sediment or sedimentary rock that shows evidence of having been subjected to
metamorphism.
Metavolcanic:
An
informal term for volcanic rocks that show evidence of having been subject to
metamorphism.
Mineral
claim: A
legal entitlement to minerals in a certain defined area of ground.
Mineral
Deposit or Mineralized Material: A
mineralized underground body which has been intersected by sufficient closely
spaced drill holes and or underground sampling to support sufficient tonnage and
average grade of metal(s) to warrant further exploration-development work. This
deposit does not qualify as a commercially mineable ore body
(Reserves),
as prescribed under Commission standards, until a final and comprehensive
economic, technical, and legal feasibility study based upon the test results is
concluded
Mineral:
A
naturally occurring, inorganic, solid element or compound that possesses an
orderly internal arrangement of atoms and a unique set of physical and chemical
properties.
Mineral
Resource: 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.
7
Mineral
Reserve:
A Mineral Reserve is the economically mineable part of a Measured or Indicated
Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This
Study must include adequate information on mining, processing, metallurgical,
economic and other relevant factors that demonstrate, at the time of reporting,
that economic extraction can be justified. A Mineral Reserve includes diluting
materials and allowances for losses that may occur when the material is
mined.
Mineralization:
Usually implies minerals of value occurring in rocks.
Monocline:
A
structure in which a bed exhibits local steepening of otherwise uniform
dip.
Net
profits interest:
The profits after deduction of expenses. Often a form of royalty.
Net
smelter returns:
Means the amount actually paid to the mine or mill owner from the sale of ore,
minerals and other materials or concentrates mined and removed from mineral
properties. A royalty based on net smelter returns usually provides cash flow
that is free of any operating or capital costs and environmental liabilities.
Option
agreement:
An agreement where the optionee can exercise certain options to acquire or
increase an interest in a property by making periodic payments or share
issuances or both to the optionor or by exploring, developing or producing from
the optionor’s property or both. Upon the acquisition of such interest all
operations thereafter are on a joint venture basis..
Ore: A
natural aggregate of one or more minerals which may be mined and sold at a
profit, or from which some part may be profitably separated.
Ore
reserve:
The measured quantity and grade of all or part of a mineralized body in a mine
or undeveloped
mineral
deposit for which the mineralization is sufficiently defined and measured on
three sides to form the basis of at least a preliminary mine production plan for
economically viable mining.
Orogeny:
The process of forming mountains by folding and thrusting.
Outcrop:
An
in situ exposure of bedrock.
Overburden: A
general term for any material covering or obscuring rocks from view.
oz/t
or opt:
Ounces per ton.
Paleozoic:
An
era of geologic time, from the end of the Precambrian to the beginning of the
Mesozoic, or from about 570 to about 225 million years ago.
Panel
Sample:
A large volume/weight continuous rock chip sample collected over a definite area
(e.g. 0.25m X 0.50m), and to a uniform depth (e.g. 2.5cm or 1 inch), on a
mineral zone. Panel sampling is generally employed in a trenching program to
obtain more representative grades particularly of a narrow mineralized structure
such as a vein.
Peridotite:
A
coarse grained ultramafic rock commonly consisting of olivine and
pyroxenes.
Phenocrysts:
An unusually large crystal in a relatively finer grained matrix.
Phonolite:
Any extrusive rock composed of alkali feldspar, mafic minerals and any
feldspathoid, such as nepheline, leucite, or sodalite.
Pluton:
Term for an igneous intrusion, usually formed from magma.
8
Porphyry:
An
igneous rock composed of larger crystals set within a finer ground
mass.
Probable
Mineral Reserve:
A ‘Probable Mineral Reserve’ is the economically mineable part of an Indicated,
and in some circumstances a Measured Mineral Resource demonstrated by at least a
Preliminary Feasibility Study. This Study must include adequate information on
mining, processing, metallurgical, economic, and other relevant factors that
demonstrate, at the time of reporting, that economic extraction can be
justified.
Proven
Mineral Reserve:
A 'Proven Mineral Reserve’ is the economically mineable part of a Measured
Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This
Study must include adequate information on mining, processing, metallurgical,
economic, and other relevant factors that demonstrate, at the time of reporting,
that economic extraction is justified.
Pyroclastic
rock: A
rock of volcanic origin consisting of highly variable mixture of rock fragments,
cinders and ashes and bits of crystals and glass.
Pyroclastic
Rock: Fragmental
rock material resulting from explosive volcanic eruptions. Such material is
literally deposited from the air and includes volcanic bombs, blocks, tuff,
cinders, ash, and pumice.
Pyroxenites:
Ultramafic
plutonic rock chiefly composed of pyroxene, with accessory hornblende, biotite,
or olivine.
Rare
Earth: A
group of rare metallic chemical elements with consecutive atomic numbers of 57
to 71.
Reclamation
bond: A
bond usually required by governmental mining regulations when mechanized work on
a property is contemplated. Proceeds of the bond are used to reclaim any
workings or put right any damage if reclamation undertaken does not satisfy the
requirements of the regulations.
Reserve:
That
part of a mineral deposit which could be economically extracted or produced at
the time of the reserve determination.
Reserves:
A
natural aggregate of one or more minerals which, at a specified time and place,
may be mined and sold at a profit, or from which some part may be profitably
separated.
Reverse
circulation drill: A
rotary percussion drill in which the drilling mud and cuttings return to the
surface through the drill pipe.
Rhyolite:
The fine grained equivalent of a granite.
Royalty
interest: A
royalty, the calculation and payment of which is tied to some production unit
such as tonne of concentrate or ounce of gold or silver produced. A common form
of royalty interest is based on the net smelter return.
Sample:
Small amount of material that is supposed to be absolutely typical or
representative of the object being sampled.
Sandstone:
Composed
of sand-sized fragments cemented together. As a rule the fragments contain a
high percentage of quartz.
Schist:
A
strongly foliated crystalline rock, formed by dynamic metamorphism, that has
well-developed parallelism of more than 50% of the minerals present,
particularly those of lamellar or elongate prismatic habit, e.g. mica and
hornblende.
Sedimentary:
A
rock formed from cemented or compacted sediments.
Sediments:
Are composed of the debris resulting from the weathering and breakup of other
rocks that have been deposited by or carried to the oceans by rivers, or left
over from glacial erosion or sometimes from wind action.
9
Sericite: A
fine-grained variety of mica occurring in small scales, especially in schists.
Shale:
An argillaceous rock consisting of silt or clay-sized particles cemented
together. Most shales are quite soft, because they contain large amounts of clay
minerals.
Shear
zone:
Where a fault affects a width of rock rather than being a single clean break,
the width of affected rock is referred to as the shear zone. The term implies
movement, i.e. shearing.
Silicate:
Most rocks are made up of a small number of silicate minerals ranging from
quartz (SiO2) to more complex minerals such as orthoclase feldspar (KAlSi3O8) or
hornblende (Ca2Na(Mg,Fe)4(Al,Fe,Ti)Si8)22(OH)2).
Sill:
Tabular intrusion which is sandwiched between layers in the host rock.
Skarn:
A
thermally altered impure limestone in which material has been added to the
original rock. Skarns are generally characterized by the presence of calcium and
silica rich minerals. Many skarns contain sulphide minerals which in some cases
can be of economic value.
Sonic
drill: A
drill used to penetrate soft sediments where the drill advance by means of slow
rotations and sonic vibrations. Samples of very soft material can be collected
with this system.
Stock:
An
igneous intrusive body of unknown depth with a surface exposure of less than 104
square kilometers. The sides, or contacts, of a stock, like those of a
batholith, are usually steep and broaden with depth.
Stockwork: A
mineral deposit consisting of a three-dimensional network of closely spaced
planar or irregular veinlets.
Strike:
The
bearing, or magnetic compass direction, of an imaginary line formed by the
intersection of a horizontal plane with any planar surface, most commonly with
bedding planes or foliation planes in rocks.
Sulphide
minerals:
A mineral compound characterized by the linkage of sulfur with a metal or
semimetal; e.g., galena.
Syncline:
A
fold in which the bed has been forced down in the middle or up on the sides to
form a trough.
Tailings:
Material rejected from a mill after recoverable valuable minerals have been
extracted.
Tailings
pond: A
pond where tailings are disposed of.
Tourmaline:
A
group of minerals of general formula (Na,Ca)(Mg,Fe+2,Fe+3,Al,Li)3Al6(BO3)3Si6O18(OH)4;
it sometimes contains fluorine in small amounts. Also, any mineral of the
tourmaline group. Tourmaline occurs in 3-, 6-, or 9-sided prisms, usually
vertically striated, or in compact or columnar masses; it is commonly found as
an accessory mineral in granitic pegmatites, and is widely distributed in acid
igneous rocks and in metamorphic rocks. It can indicative of alteration
associated with porphyry style mineralization.
Tremolite:
A
white to dark-gray monoclinic mineral of the amphibole group: Ca2Mg5Si8O22(OH)2.
It occurs in long blade-shaped or short stout prismatic crystals, and also in
columnar or fibrous masses, esp. in metamorphic rocks such as crystalline
dolomitic limestone and talc schist. It is a constituent of much commercial
talc.
alteration — usually referring to chemical reactions in a rock mass resulting
from the passage of hydrothermal fluids.
Tuff
: A
finer grained pyroclastic rock made up mostly of ash and other fine grained
volcanic material.
Veins:
The mineral deposits that are found filling openings in rocks created by faults
or replacing rocks on either side of faults.
Waste:
Rock which is not ore. Usually referred to that rock which has to be removed
during the normal course of mining in order to get at the ore.
10
Notes
Concerning Terminology Related to Resources and Reserves
The
terms
"mineral resource", "measured mineral resource", "indicated mineral resource",
"inferred mineral resource", “mineral reserve”, “probable mineral reserve” and
“proven mineral reserve” used in this Annual Report are Canadian mining terms as
defined in accordance with National Instrument 43-101, Standards
of Disclosure for Mineral Projects under the guidelines set out in the Canadian
Institute of Mining, Metallurgy and Petroleum (the "CIM") Standards on Mineral
Resources and Mineral Reserves, adopted by the CIM Council on August 20, 2000 as
may be amended from time to time by the CIM. In accordance with Industry Guide
7, Description of Property by Issuers Engaged or to be Engaged in Significant
Mining Operations, issued by the U. S. Securities and Exchange Commission,
resource is termed “mineralization” or “mineral deposit”.
Cautionary
Note to U.S. Investors concerning estimates of Measured and Indicated
Resources
This
Annual Report uses the terms "measured" and "indicated resources." We advise
U.S. investors that while such terms are recognized and permitted under Canadian
regulations, the U.S. Securities and Exchange Commission does not recognize
them. U.S. investors are cautioned not to assume that any part or all of the
mineral deposits in these categories will ever be converted into reserves.
Cautionary
Note to U.S. Investors concerning estimates of Inferred
Resources
This
Annual Report uses the terms "inferred resources." We advise U.S. investors that
while such term is recognized and permitted under Canadian regulations, the U.S.
Securities and Exchange Commission does not recognize it. "Inferred resources"
have a great amount of uncertainty as to their existence, and great uncertainty
as to their economic and legal feasibility. It cannot be assumed that all or any
part of an inferred mineral resource will ever be upgraded to a higher category.
Under Canadian rules estimates of inferred mineral resources may not form the
basis of feasibility or other economic studies. U.S. investors are cautioned not
to assume that any part or all of an inferred resource exists, or is
economically or legally minable.
Glossary
of Abbreviations
Ag:
Silver
Au:
Gold
Ba:
Barium
Co:
Cobalt
Cu:
Copper
EIS:
Environmental
Impact Statement
Fe:
Iron
gpm:
gallons
per minute
gpt:
grams
per tonne
g/t:
grams per tonne
IP:
Induced Polarization geophysical survey
Ni:
Nickel
NSR:
net
smelter return royalty
Oz:
Troy
ounce
Pb:
Lead
Pd:
Palladium
PGM:
Platinum
group minerals
Pt:
Platinum
S:
Sulphur
tpd:
Tonnes
per day
ton:
Short
ton (2,000 pounds)
tonne:
Metric
ton (1000 kilograms - 2204.62 pounds)
VLF:
Very
low frequency electromagnetic geophysical survey
VMS:
Volcanogenic
massive sulphide
Zn:
Zinc
11
PART
I
Item
1. Identity of Directors, Senior Management and Advisors
Not
applicable
Item
2. Offer Statistics and Expected Timetable
Not
applicable
Item
3. Key Information
On
August 1, 2001, Fairfield Minerals Ltd. (“Fairfield”) and Almaden Resources
Corporation (“Resources”) entered into an Amalgamation Agreement providing for
the amalgamation of the two companies and continuation as one company under the
name “Almaden Minerals Ltd.” It was the view of the Boards of Directors of
Fairfield and Resources that the amalgamation of the two companies would create
an entity which will be able to attract more senior financing and would also
result in administrative savings by the consolidation of the
operations.
Final
determination of the basis for the share exchange ratio for the shareholders of
the two companies in the amalgamated company was determined upon completion of a
Valuation Report and a Fairness Opinion on the proposed amalgamation conducted
by two independent evaluators retained by the companies. The basis for the share
exchange was determined to be 1 common share of Almaden Minerals Ltd. for every
one share of Fairfield held and 0.77 common shares of Almaden Minerals Ltd. for
every one common share of Resources held.
Ontario
Securities Commission Rule 61-501 and Toronto Stock Exchange policies required
majority of minority approval. Accordingly, the amalgamation also required the
approval of a majority of the shares voted on the Special Resolution excluding,
in the Fairfield meeting, the shares held by Resources, its insiders, associates
and affiliates, and in the Resources meeting, the shares held by Fairfield, its
insiders, associates and affiliates. On December 20, 2001, both companies held a
Meeting of Members at which time members of each of the amalgamating companies
were asked to consider, and if thought adviseable, adopt a Special Resolution to
approve the amalgamation. The Special Resolution was approved.
The
amalgamation was further subject to the approval of the Supreme Court of British
Columbia. The Order of the Supreme Court of British Columbia was dated December
28, 2001, which Order included a hearing and determination that the issuance and
exchange of securities was fair.
The
terms of the Articles and Memorandum of the amalgamated company was approved by
the Registrar of Companies on September 28, 2001. Essentially, under the
provision of the Company
Act
pursuant to which the amalgamation proceeded all matters of substance were
accomplished by December 31, 2001. The application for the Certificate of
Amalgamation was filed with the Registrar of Companies but its issuance was
requested held in order to permit co-ordination with the listing of the shares
of Almaden Minerals Ltd. on the Toronto Stock Exchange and to avoid any extended
trading of Fairfield on the Toronto Stock Exchange and Resources on the Canadian
Venture Exchange.
The
Company was advised in late January, early February 2002 that the Toronto Stock
Exchange had accepted the application for the listing of the shares of Almaden
Minerals Ltd. On February 1, 2002, the Registrar of Companies issued the
Certificate of Amalgamation.
Based
on the chronology of these events, the Company has determined that for
accounting and taxation purposes the amalgamation is effective December 31,
2001.
The
amalgamation of Almaden Resources Corporation and Fairfield Minerals Ltd. was
completed effective December 31, 2001. The Consolidated Balance Sheets as at
December 31, 2001 include the assets of Almaden Resources Corporation at their
carrying value and the assets of Fairfield Minerals Ltd. at fair value. The
Consolidated Statements of Loss and Deficit for the years ended December 31,
2001 and 2000 report the results of activities of Almaden Resources
Corporation.
The
following selected financial data of the Company for Fiscal 2004, Fiscal 2003
and Fiscal 2002 ended December 31st was derived from the financial statements of
the Company which have been audited by Deloitte & Touche LLP, Independent
Registered Chartered Accountants, as indicated in their report which is included
elsewhere in this Annual Report. The selected financial data set forth for
Fiscal 2001 and Fiscal 2000 ended December 31st are derived from the Company's
audited consolidated financial statements, not included herein. The selected
financial data should be read in conjunction with the consolidated financial
statements and other information included elsewhere in the Annual
Report.
12
Reference
is made to Note 17 of the audited consolidated financial statements of the
Company included herein for a discussion of the material differences between
Canadian generally accepted accounting principles (“Canadian GAAP”) and United
States generally accepted accounting principles (“U.S. GAAP”), and their effect
on the Company's financial statements.
Table
No. 1
Selected
Financial Data
(expressed
in thousands of Canadian dollars, except per share data)
|
Year |
Year |
Year |
Year |
Year |
||||||||||||
|
Ended |
Ended |
Ended |
Ended |
Ended |
||||||||||||
|
12/31/2004 |
12/31/2003 |
12/31/2002 |
12/31/2001 |
12/31/2000 |
||||||||||||
|
Canadian
GAAP |
||||||||||||||||
Revenues |
$ |
243 |
$ |
110 |
$ |
123 |
$ |
31 |
$ |
73 |
||||||
Net
loss |
-3,066 |
-1,326 |
-3,198 |
-650 |
-2,795 |
|||||||||||
Loss
per common share |
-0.11 |
-0.06 |
-0.16 |
-0.05 |
-0.22 |
|||||||||||
Weighted
average shares (000) |
30,232 |
23,379 |
19,524 |
13,412 |
12,758 |
|||||||||||
Working
capital |
4,660 |
5,101 |
1,522 |
860 |
1,082 |
|||||||||||
Properties |
4,440 |
4,198 |
3,338 |
4,786 |
3,150 |
|||||||||||
Net
assets |
9,756 |
9,854 |
5,181 |
5,839 |
4,705 |
|||||||||||
Total
assets |
10,215 |
10,342 |
5,636 |
6,297 |
4,780 |
|||||||||||
Capital
stock |
25,529 |
21,477 |
17,389 |
15,011 |
13,227 |
|||||||||||
|
U.S.
GAAP |
||||||||||||||||
Net
loss for period(1) |
-3,935 |
-2,001 |
-2,410 |
-738 |
-689 |
|||||||||||
Loss
per common share |
-0.13 |
-0.09 |
-0.13 |
-0.05 |
-0.05 |
|||||||||||
Weighted
average shares (000) |
30,232 |
23,379 |
19,524 |
13,412 |
12,758 |
|||||||||||
Working
capital |
5,200 |
6,000 |
1,703 |
921 |
1,144 |
|||||||||||
Properties |
2,551 |
2,840 |
2,654 |
3,471 |
1,923 |
|||||||||||
Net
assets |
8,407 |
9,395 |
4,728 |
4,586 |
3,540 |
|||||||||||
Total
assets |
8,866 |
9,883 |
5,133 |
5,044 |
3,615 |
|||||||||||
|
Capital
stock |
25,259 |
21,477 |
17,389 |
15,011 |
13,227 |
|||||||||||
(1)Cumulative
U.S. GAAP deficit since inception of the exploration stage to 12/31/2004 has
been $18,632,507.
Canadian/U.S.
Dollar Exchange Rates
In
this Annual Report, unless otherwise specified, all dollar amounts are expressed
in Canadian dollars (CDN$). The Government of Canada permits a floating exchange
rate to determine the value of the Canadian dollar against the U.S. dollar
(U.S.$)
Table
No. 2 sets forth the exchange rate for the Canadian dollars at the end of the
five most recent fiscal periods ended at December 31st,
the average rates for the period, the range of high and low rates and the close
for the period. Table No. 3 sets forth the range of high and low rates for each
month during the previous six months.
For
purposes of this table, the rate of exchange means the noon buying rate in New
York City for cable transfers in foreign currencies as certified for customs
purposes by the Federal Reserve Bank of New York. The table sets forth the
number of Canadian Dollars required under that formula to buy one U.S. Dollar.
The average rate means the average of the exchange rates on the last day of each
month during the period.
13
Table
No. 2
U.S.
Dollar/Canadian Dollar Exchange Rates for Five Most Recent Financial
Years
|
Average |
High |
Low
|
Close |
||||||||||
Fiscal
Year Ended 12/31/2004 |
$ |
1.30 |
$ |
1.40 |
$ |
1.18 |
$ |
1.20 |
|||||
Fiscal
Year Ended 12/31/2003 |
1.39 |
1.58 |
1.29 |
1.29 |
|||||||||
Fiscal
Year Ended 12/31/2002 |
1.57 |
1.61 |
1.51 |
1.58 |
|||||||||
Fiscal
Year Ended 12/31/2001 |
1.55 |
1.60 |
1.49 |
1.59 |
|||||||||
|
Fiscal
Year Ended 12/31/2000 |
1.50 |
1.56 |
1.44 |
1.50 |
|||||||||
Table
No. 3
U.S.
Dollar/Canadian Dollar Exchange Rates for Previous Six
Months
|
September |
October
|
November |
December |
January |
February |
||||||||||||||
High
|
$ |
1.31 |
$ |
1.27 |
$ |
1.23 |
$ |
1.24 |
$ |
1.24 |
$ |
1.26 |
|||||||
|
Low |
1.26 |
1.22 |
1.18 |
1.19 |
1.20 |
1.23 |
|||||||||||||
The
exchange rate was 1.23 on February 28, 2005.
Risk
Factors
General
Risk Factors Attendant to Resource Exploration and
Development
Resource
exploration and development is a speculative business, characterized by a number
of significant risks including, among other things, unprofitable efforts
resulting not only from the failure to discover mineral deposits but from
finding mineral deposits which, though present, are insufficient in quantity and
quality to return a profit from production. The marketability of minerals
acquired or discovered by the Company may be affected by numerous factors which
are beyond the control of the Company and which cannot be accurately predicted,
such as market fluctuations, the proximity and capacity of milling facilities,
mineral markets and processing equipment, and such other factors as government
regulations, including regulations relating to royalties, allowable production,
importing and exporting of minerals, and environment protection, the combination
of which factors may result in the Company not receiving an adequate return on
investment capital.
Presently,
the Company is in the exploration stage and there is no assurance that a
commercially viable ore deposit (a reserve) exists in any of its properties or
prospects until further exploration work is done and a comprehensive economic
evaluation based upon that work is concluded. The Company retains an inventory
of gold from previous production by its predecessor (“Fairfield”) from the
Siwash mine on the Elk property. The gold was mined in 1994 and shipped to the
smelter in 1996. The gold produced was retained as inventory by Fairfield. Both
the Company and it’s predecessor have financed their operations principally
through the sale of equity securities and entering into joint venture
arrangements, and in Fairfield’s case, the sale of its inventory of gold. While
the Company believes it has sufficient capital and liquidity to finance current
operations, nevertheless, its ability to continue operations is dependent on the
ability of the Company to obtain additional financing.
Exploration
and Development Efforts May Be Unsuccessful
There
is no certainty that the expenditures to be made by the Company in the
exploration of its properties and prospects as described herein will result in
discoveries of mineralized material in commercial quantities. Most exploration
projects do not result in the discovery of commercially mineable ore deposits
and no assurance can be given that any particular level of recovery of ore
reserves will in fact be realized or that any identified mineral deposit will
ever qualify as a commercially mineable (or viable) ore body which can be
legally and economically exploited. Estimates of reserves, mineral deposits and
production costs can also be affected by such factors as environmental
permitting regulations and requirements, weather, environmental factors,
unforeseen technical difficulties, unusual or unexpected geological formations
and work interruptions. In addition, the grade of ore ultimately mined may
differ from that indicated by drilling results. Short term factors relating to
ore reserves, such as the need for orderly development of ore bodies or the
processing of new or different grades, may also have an adverse effect on mining
operations and on the results of operations. There can be no assurance that
minerals recovered in small-scale tests will be duplicated in large-scale tests
under on-site conditions or in production scale. Material changes in ore
reserves, grades, stripping ratios or recovery rates may affect the economic
viability of any project.
14
Uncertainty
of Obtaining Additional Funding Requirements
If
the Company’s exploration programs are successful, additional capital will be
required for the development of an economic ore body and to place it in
commercial production. The only sources of future funds presently available to
the Company are the sale of its inventory or gold, sale of equity capital or the
offering by the Company of an interest in its properties and prospects to be
earned by another party or parties carrying
out further development thereof.
Although the Company presently has sufficient financial resources to undertake
all of its currently planned exploration programs through Fiscal 2005 and has
been successful in the past in obtaining financing through the sale of equity
securities, there is no assurance that it will be able to obtain adequate
financing in the future or that such financing will be favorable. Failure to
obtain additional financing on a timely basis could cause the Company to forfeit
its interest in such properties, dilute its interests in the properties and/or
reduce or terminate its operations.
Lack
of Cash Flow
The
Company currently has no revenues from operations as all of its properties and
prospects are in the exploration stage. There is no assurance that the Company
will receive revenues from operations at any time in the near future. The
Company has had no prior year’s history of earnings or cash flow other than the
NSR royalty from the La Trinidad Mine. Neither the Company nor its predecessor
have paid dividends on their shares since incorporation and the Company does not
anticipate doing so in the foreseeable future. Historically, the only source of
funds available to the Company was through the sale of its equity shares and
entering into joint venture agreements. The only source of funds available to
the Company’s predecessor was through the sale of its inventory of gold, the
sale of its equity shares and entering into joint venture agreements. Any future
additional equity financing would cause dilution to current
stockholders.
Mineral
Prices May Not Support Corporate Profit
The
mining industry in general is intensely competitive and there is no assurance
that, even if commercial quantities of mineral resources are developed, a
profitable market will exist for the sale of same. Factors beyond the control of
the Company may affect the marketability of any substances discovered. The price
of minerals is volatile over short periods of time, and is affected by numerous
factors beyond the control of the Company, including international economic and
political trends, expectations of inflation, currency exchange fluctuations,
interest rates and global or regional consumption patterns, speculative
activities and increased production due to improved mining
techniques.
Environmental
Regulations
The
current and anticipated future operations of the Company, including development
activities and commencement of production on its properties, require permits
from various federal, territorial and local governmental authorities and such
operations are and will be governed by laws and regulations governing
prospecting, development, mining, production, exports, taxes, labor standards,
occupational health, waste disposal, toxic substances, land use, environmental
protection, mine safety and other matters. Companies engaged in the development
and operation of mines and related facilities generally experience increased
costs, and delays in production and other schedules as a result of the need to
comply with applicable laws, regulations and permits. The Company’s exploration
activities and its potential mining and processing operations are subject to
various laws governing land use, the protection of the environment, prospecting,
development, production, exports, taxes, labor standards, occupational health,
waste disposal, toxic substances, mine safety and other matters. Such operations
and exploration activities are also subject to substantial regulation under
these laws by governmental agencies and may require that the Company obtain
permits from various governmental agencies. The Company believes it is in
substantial compliance with all material laws and regulations which currently
apply to its activities. There can be no assurance, however, that all permits
which the Company may require for construction of mining facilities and conduct
of mining operations will be obtainable on reasonable terms or that such laws
and regulations, or that new legislation or modifications to existing
legislation, would not have an adverse effect on any exploration or mining
project which the Company might undertake.
Failure
to comply with applicable laws, regulations and permitting requirements may
result in enforcement actions thereunder, including orders issued by regulatory
or judicial authorities causing operations to cease or be curtailed, and may
include corrective measures requiring capital expenditures, installation of
additional equipment or remedial actions. Parties engaged in exploration and
mining operations may be required to compensate those suffering loss or damage
by reason of the mining activities and may have civil or criminal fines or
penalties imposed for violation of applicable laws or regulations.
The
enactment of new laws or amendments to current laws, regulations and permits
governing operations and activities of mining companies, or more stringent
implementation thereof, could have a material adverse impact on the Company and
cause increases in capital expenditures or production costs or reduction in
levels of production at producing properties or require abandonment or delays in
development of new mining properties.
15
To
the best of the Company’s knowledge, the Company is operating in compliance with
all applicable environmental regulations.
No
Guarantee of Title to Mineral Properties
While
the Company and it’s predecessor have investigated title to all of its mineral
properties and prospects, and, to the best of its knowledge, title to all of its
properties and properties in which it has the right to acquire or earn an
interest are in good standing as of the date of this Annual Report, this should
not be construed as a guarantee of title. The properties and prospects may be
subject to prior unregistered agreements or transfers unknown to the Company and
title may be affected by undetected defects, e.g. defects in staking or
acquisition process.
As
there are unresolved native land claim issues in British Columbia and the Yukon
Territory, the Company’s properties and prospects in these jurisdictions may be
affected in the future. The MOR prospect is on category B lands which means the
local native group has surface rights to the area of the claims and their
permission is required to perform work on the claims.
Possible
Dilution to Present and Prospective Shareholders
The
Company’s plan of operation, in part, contemplates the financing of the conduct
of its business by the issuance of cash, securities of the Company, or a
combination of the two, and possibly, incurring debt. Any transaction involving
the issuance of previously authorized but unissued shares of common stock, or
securities convertible into common stock, would result in dilution, possibly
substantial, to present and prospective holders of common
stock. The Company usually seeks joint venture partners to fund in whole or in
part exploration projects. This dilutes the Company’s interest in properties it
has acquired. This dilution of interest in properties is done to spread or
minimize the risk and to expose the Company to more exploration plays but means
that any profit that might result from a possible discovery would be shared with
the joint venture partner. There is no guarantee that the Company can find a
joint venture partner for any property.
Lack
of Trading Volume
The
lack of trading volume of the Company’s shares reduces the liquidity of an
investment in the Company’s shares.
Volatility
of Share Price
Market
prices for shares of early stage companies are often volatile. Factors such as
announcements of mineral discoveries, financial results, and other factors could
have a significant effect on the price of the Company’s shares.
Risks
Associated with Penny Stock Classification
The
Company’s stock is subject to “penny stock” rules as defined in 1934 Securities
and Exchange Act rule 3a51-1. The Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks.
Transaction costs associated with purchases and sales of penny stocks are likely
to be higher than those for other securities. Penny stocks generally are equity
securities with a price of less than U.S. $5.00 (other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system).
The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction,
and monthly account statements showing the market value of each penny stock held
in the customer’s account. The bid and offer quotations, and the broker-dealer
and salesperson compensation information, must be given to the customer orally
or in writing prior to effecting the transaction and must be given to the
customer in writing before or with the customer’s confirmation.
In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from such rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser’s written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for the Company’s common shares in the
United States and shareholders may find it more difficult to sell their shares.
The Company’s common shares are subject to these penny stock rules.
16
Material
Risk of Dilution Presented by Large Number of Outstanding Share Purchase Options
and Warrants
As
of March 11, 2005 there were share purchase options outstanding allowing the
holders of these options to purchase 4,176,783 shares of common stock and share
purchase warrants outstanding allowing the holders to purchase 1,848,105 shares
of common stock. Directors and officers of the Company hold 3,619,783 of these
share purchase options. An additional 557,000 share purchase options are held by
employees and consultants of the Company. None of the share purchase warrants
are held by Directors. Given the fact that as of March 11, 2005 there were
31,172,767 shares of common stock outstanding, the exercise of all of the
existing share purchase options and warrants would result in further dilution to
the existing shareholders and could depress the price of the Company’s
shares.
These
shares may be issued and could depress the price of the Company’s
shares.
History
of Net Losses
Both
the Company and its predecessor (“Fairfield”) had net losses in a number of
years since their dates of incorporation - 9/25/1980 for the Company and
10/23/1984 for Fairfield. Due to the nature of the Company’s business, there can
be no assurance that the Company will be profitable. The Company had net losses
of $3,065,803 in Fiscal 2004, $1,326,305 in Fiscal 2003 and $3,198,025 in Fiscal
2002.
The
cumulative net loss of the Company as at December 31, 2004 was
$16,762,004.
No
Proven Reserves
The
properties and prospects in which the Company has an interest or the properties
in which the Company has the right to earn an interest are in the exploratory
stage only, are without a known body of ore and are not in commercial
production.
Uncertainty
of Reserves and Mineralization Estimates
There
are numerous uncertainties inherent in estimating proven
and probable reserves
and mineralization, including many factors beyond the control of the Company.
The estimation of reserves and mineralization is a subjective process and the
accuracy of any such estimates is a function of the quality of available data
and of engineering and geological interpretation and judgement. Results of
drilling, metallurgical testing and production and the evaluation of mine plans
subsequent to the date of any estimate may justify revision of such estimates.
No assurances can be given that the volume and grade of reserves recovered and
rates of production will not be less than anticipated. Assumptions about prices
are subject to greater uncertainty and metals prices have fluctuated widely in
the past. Declines in the market price of base or precious metals also may
render reserves or mineralization containing relatively lower grades of ore
uneconomic to exploit. Changes in operating and capital costs and other factors
including, but not limiting to, short-term operating factors such as the need
for sequential development of ore bodies and the processing of new or different
ore grades, may materially and adversely affect reserves.
Foreign
Incorporation
and Civil
Liabilities
The
Company amalgamated under the laws of the Province of British Columbia, Canada.
All of the Company’s directors and officers are residents of Canada and
substantially all of the Company’s assets and its subsidiary are located outside
the United States. Consequently, it may be difficult for United States investors
to effect service of process in the United States upon those directors and
officers who are not residents of the United States, or to realize in the United
States upon judgements of United States courts predicated upon civil liabilities
whether under the United States Securities Exchange Act of 1934, as amended, or
otherwise.
Conflict
of Interest
Some
of the Company’s directors and officers are directors and officers of other
natural resource or mining-related companies. These associations may give rise
from time to time to conflicts of interest. As a result of which, the Company
may miss the opportunity to participate in certain transactions and may have a
material, adverse effect on its financial position.
17
Foreign
Operations
The
Company currently has exploration projects located in Mexico. The Company’s
foreign activities are subject to the risk normally associated with conducting
business in foreign countries, including exchange controls and currency
fluctuations, limitations on repatriation of earnings, foreign taxation, laws or
policies of particular countries, labor practices and disputes, and uncertain
political and economic environments, as well as risks of war and civil
disturbances, or other risk that could cause exploration or development
difficulties or stoppages, restrict the movement of funds or result in the
deprivation or loss of contract rights or the taking of property by
nationalization or expropriation without fair compensation. Foreign operations
could also be adversely impacted by laws and policies of the United States
affecting foreign trade, investment and taxation.
Foreign
Currency Fluctuations
At
the present time, some of the Company’s activities are carried on outside of
Canada. Accordingly, it is subject to risks associated with fluctuations of the
rate of exchange between the Canadian dollar and foreign
currencies.
The
Company is currently not engaged in currency hedging to offset any risk of
exchange rate fluctuation and currently has no plans to engage in currency
hedging.
Operating
Hazards and Risks Associated with the Mining Industry
Mining
operations generally involve a high degree of risk, which even a combination of
experience, knowledge and careful evaluation may not be able to overcome.
Hazards such as unusual or unexpected geological formations and other conditions
are involved. Operations in which the Company has a direct or indirect interest
will be subject to all the hazards and risks normally incidental to exploration,
development and production of minerals, any of which could result in work
stoppages, damage to or destruction of mines and other producing facilities,
damage to or loss of life and property, environmental damage and possible legal
liability for any or all damage or loss. The Company may become subject to
liability for cave-ins and other hazards for which it cannot insure or against
which it may elect not to insure where premium costs are disproportionate to the
Company’s perception of the relevant risks. The payment of such insurance
premiums and the incurring of such liabilities would reduce the funds available
for exploration activities.
The
Ability to Manage Growth
Should
the Company be successful in its efforts to develop its mineral properties or to
raise capital for such development or for the development of other mining
ventures it will experience significant growth in operations. If this occurs
management anticipates that additional expansion will be required in order to
continue development. Any expansion of the Company’s business would place
further demands on its management, operational capacity and financial resources.
The Company anticipates that it will need to recruit qualified personnel in all
areas of its operations. There can be no assurance that the Company will be
effective in retaining its current personnel or attracting and retaining
additional qualified personnel, expanding its operational capacity or otherwise
managing growth. The failure to manage growth effectively could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Lack
of a Dividend Policy
The
Company does not presently intend to pay cash dividends in the foreseeable
future, as any earnings are expected to be retained for use in developing and
expanding its business. However, the actual amount of dividends which the
Company may pay will remain subject to the discretion of the Company’s Board of
Directors and will depend on results of operations, cash requirements and future
prospects of the Company and other factors.
Competition
There
is competition from other mining exploration companies with operations similar
to those of the Company's. Many of the mining companies with which the Company
competes have operations and financial strength many times greater than that of
the Company.
Dependence
on Key Personnel
The
Company strongly depends on the business and technical expertise of its
management and key personnel, in particular, Duane Poliquin and Morgan Poliquin.
There is little possibility that this dependence will decrease in the near term.
As the Company’s operations expand, additional general management resources will
be required, especially since the Company encounters risks that are inherent in
doing business in several countries. The Company carries no life insurance on
its management and key personnel.
18
Item
4. Information on the Company
History
& Development of the Company
The
head office of the Company is located at 750 West Pender Street, Suite 1103,
Vancouver, British Columbia, Canada, V6C 2T8. The registered and records office
of the Company is 1185 West Georgia Street, Suite 1550, Vancouver, British
Columbia, Canada, V6E 4E6.
The
contact persons are Duane Poliquin, President and Morgan Poliquin, Director. The
telephone number is (604) 689-7644. The fax number is (604) 689-7645. The email
address
is info@almadenminerals.com.
The web-site address is
www.almadenminerals.com.
James
E. McInnes is Chair of the independent directors. The telephone number is (604)
662-4480. The fax number is (604) 685-0553. The email address is
jmcinnes@telus.net.
On
August 1, 2001, Fairfield Minerals Ltd. (“Fairfield”) and Almaden Resources
Corporation (“Resources”) entered into an Amalgamation Agreement providing for
the amalgamation of the two companies and continuation as one company under the
name “Almaden Minerals Ltd.” It was the view of the Boards of Directors of
Fairfield and Resources that the amalgamation of the two companies would create
an entity which will be able to attract more senior financing and would also
result in administrative savings by the consolidation of the
operations.
Final
determination of the basis for the share exchange ratio for the shareholders of
the two companies in the amalgamated company was determined upon completion of a
Valuation Report and a Fairness Opinion on the proposed amalgamation conducted
by two independent evaluators retained by the companies. The basis for the share
exchange was determined to be 1 common share of Almaden Minerals Ltd. for every
one share of Fairfield held and 0.77 common shares of Almaden Minerals Ltd. for
every one common share of Resources held.
Ontario
Securities Commission Rule 61-501 and Toronto Stock Exchange policies required
majority of minority approval. Accordingly, the amalgamation also required the
approval of a majority of the shares voted on the Special Resolution excluding,
in the Fairfield meeting, the shares held by Resources, its insiders, associates
and affiliates, and in the Resources meeting, the shares held by Fairfield, its
insiders, associates and affiliates. On December 20, 2001, both companies held a
Meeting of Members at which time members of each of the amalgamating companies
were asked to consider, and if thought advisable, adopt a Special Resolution to
approve the amalgamation. The Special Resolution was approved.
The
amalgamation was further subject to the approval of the Supreme Court of British
Columbia. The Order of the Supreme Court of British Columbia was dated December
28, 2001, which Order included a hearing and determination that the issuance and
exchange of securities was fair.
The
terms of the Articles and Memorandum of the amalgamated company were approved by
the Registrar of Companies on September 28, 2001. Essentially, under the
provision of the Company
Act
pursuant to which the amalgamation proceeded all matters of substance were
accomplished by December 31, 2001. The application for the Certificate of
Amalgamation was filed with the Registrar of Companies but its issuance was
requested held in order to permit co-ordination with the listing of the shares
of Almaden Minerals Ltd. on the Toronto Stock Exchange and to avoid any extended
trading of Fairfield on the Toronto Stock Exchange and Resources on the Canadian
Venture Exchange.
The
Company was advised in late January, early February 2002 that the Toronto Stock
Exchange had accepted the application for the listing of the shares of Almaden
Minerals Ltd. On February 1, 2002, the Registrar of Companies issued the
Certificate of Amalgamation.
Based
on the chronology of these events, the Company has determined that for
accounting and taxation purposes the amalgamation is effective December 31,
2001.
The
Company was amalgamated in British Columbia and operates under the laws of the
Province of British Columbia, Canada. At the Annual and Special General meeting
of the Company scheduled for May 18, 2005, shareholders will be asked to
consider and if deemed advisable to pass appropriate resolutions to, among other
things, to complete transition procedures in accordance with the Business
Corporations Act (British Columbia),
(the “New Act”), increase the number of common shares which the Company is
authorized to issue to an unlimited number of common shares and to cancel the
Company’s present Articles and adopt new Articles to take advantage of
provisions of the New Act. The New Act was adopted in British Columbia on March
29, 2004 replacing the Company
Act
(the “Former Act”).
19
The
Company’s common shares began trading on The Toronto Stock Exchange (“TSX”)
under the symbol “AMM” on February 11, 2002. Almaden Resources Corporation’s
initial public offering on the Vancouver Stock Exchange was pursuant to a
prospectus dated October 10, 1986. The shares of Fairfield Minerals Ltd. began
trading on the Vancouver Stock Exchange on July 18, 1986 and on The Toronto
Stock Exchange on May 21, 1990.
There
have been no public takeover offers by third parties in respect of the Company’s
shares and the Company has made no public takeover offers in respect of other
company’s shares.
Organizational
Structure
The
Company currently has five wholly-owned subsidiaries that were formed to hold
properties in their respective jurisdictions-refer to Exhibit 8 to this 20-F
Annual Report.
At
December 31, 2004, the Company owned a 40% share interest in ATW Resources Ltd.
("ATW"), a company incorporated in the Northwest Territories, Canada on January
6, 1993. On January 21, 2005 the Company purchased a further 10% share interest
in ATW and now owns a 50% share interest in ATW.
Business
of the Company
The
Company is engaged in the business of the acquisition, exploration and when
warranted, development of mineral properties. The Company has property interests
in Canada and Mexico. None of the Company's property interests are beyond
exploration stage. Presently there is no assurance that any of the Company's
mining properties or prospects contain a commercially viable ore body (reserve)
until further exploration work is done and final feasibility study based upon
such work is concluded. The Company is in the exploration stage and has not
generated any revenues from operations.
Company’s
Principal Properties
The
Company has five principal property interests: (1) the Elk gold, silver property
which includes the Siwash Gold deposit in Canada (100% interest), (2) the ATW
diamond prospect in Canada (50% share interest = net 37.5% property interest),
(3) the Caballo Blanco gold, silver, copper prospect in Mexico (option to
purchase 100% interest subject to a 60% option agreement earn in right by
Comaplex Minerals Corp. and a sliding scale NSR), (4) the Fuego copper, gold
prospect in Mexico (100% interest subject to a 60% option agreement earn in
right by Horseshoe Gold Mining Inc.), and (5) the San Carlos copper, gold,
silver prospect in Mexico (consists of the San Carlos concession (100% interest)
and the San Jose claim (100% interest subject to a 2% NSR) all subject to a 60%
option agreement earn in right by Hawkeye Gold and Diamond Ltd.). The El Pulpo
copper, gold prospect in Mexico has, subject to regulatory approval (granted
March 24, 2005), been sold to Ross River Minerals Inc.
Company’s
Secondary Properties
The
Company’s secondary property interests include the Ram prospect in Canada (100%
interest subject to a 70% earn in right by Ross River Minerals Inc.), the Rock
River Coal project in Canada (50% interest), the PV prospect in Canada (100%
interest subject to a 60% earn in right by Consolidated Spire Ventures Ltd.),
the MOR prospect (100% interest subject to a 60% earn in right by Kobex
Resources Ltd.), the Sam, Cabin Lake, Caribou Creek, Tim, Meister River and
Merit prospects in Canada (100% interests), the Logan property in Canada (40%
net carried interest to production), the Yago prospect in Mexico (consists of
the Tepic claim (100% interest) and the La Sarda concession (100% interest)),
the Galeana prospect in Mexico (option to acquire 100% interest), the Santa
Maria prospect in Mexico (100% interest), the Guadalupe prospect in Mexico (100%
interest subject to a 60% earn in right by Grid Capital Corporation), and the
Tropico prospect in Mexico (40% interest).
The
Company has several other property holdings in Canada, United States and Mexico
that are not considered
either principal or secondary properties.
The
Company also entered into a joint venture agreement in Fiscal 2002 with BHP
Billiton World Exploration Inc. to undertake exploration in eastern Mexico.
Phase I results are currently being reviewed.
20
Business
Overview
PRINCIPLE
PROPERTY INTERESTS IN CANADA
21
The
Elk Property - Canada
22
The
Elk Property contains a known mineral deposit but all current work by the
Company on the property is exploratory in nature.
Option
to Acquire Interest
Initial
staking was undertaken in November 1986 with additions in 1987, 1988 and 1989. A
block comprising 72 units was optioned in October 1988. The Siwash North mining
lease was issued in September 1992. Claim acquisition and subsequent work were
conducted by Cordilleran Engineering Ltd. for the Company’s predecessor
(“Fairfield”) until April 1995 when Fairfield assumed operations. Fairfield
merged with Almaden Resources Corporation in February 2002 and the claims were
transferred to the amalgamated company Almaden Minerals Ltd.
Expenditures
to Date
During
Fiscal 2004, the Company incurred $912,549 in exploration costs including a
diamond drill program on the property. As at December 31, 2004, the Company had
deferred $2,557,245 of exploration costs on this property.
Location
and Access
The
Elk Property consists of 82 contiguous mineral claims comprising 491 units plus
a 6 unit mining lease located 40 kilometers west of Peachland, British Columbia
in the Similkameen Mining Division. The claims cover forested, gently rolling
hills with fair to poor bedrock exposure. The property is accessible by paved
highway, 50 kilometers from Westbank, British Columbia, or 50 kilometers from
the town of Merritt, British Columbia.
History
and Recent Work
The
property includes the Siwash Gold Mine, which, between 1992 and 1997, produced
51,460 ounces (1,600400 gm) of gold at an average grade of 2.78 oz/t
(95.32gm/t).
Work
conducted on the property from 1986 to 1991 consisted of geological mapping,
prospecting, linecutting, soil sampling, geophysics, excavator trenching (8.69
km), diamond drilling (111 holes, 12,524 m) and road construction.
During
1992, a bulk sample was extracted from an open pit on the Siwash vein in the
Siwash North area. It totalled 2240 tons (2032 tonnes) grading 4.016 ounces/ton
(137.7 gm/t) gold. A total of 70 reverse circulation holes were drilled to
confirm the vein grade and continuity in the 1993 pit expansion area. Open pit
mining was carried out by Wiltech Developments of Kelowna, B.C. under the
supervision of Cordilleran Engineering. The ore was shipped to the Noranda
smelter in Rouyn, Quebec in November.
In
1993, bulk sampling from the open pit continued with the extraction of 3733 tons
(3386 tonnes) of mineralized material grading 3.080 oz/t (105.6 gm/t) gold.
Wiltech Developments was contracted to carry out the open pit mining under
supervision of Cordilleran Engineering personnel. Mainstreet Mining of
Whitehorse, Yukon was contracted to undertake underground development to provide
access for test mining and underground drilling. The 3.5 by 3.0 metre decline
was collared at the 1628m elevation in June and reached the 1570m elevation in
October. Test mining stopes were excavated at the 1611 and 1570 levels. Ore from
the open pit and underground operations was shipped through the summer and fall
to the Asarco smelter in Helena Montana. Eleven reverse circulation holes were
drilled to the south of the open pit to provide closer spaced data for the
planning of the 1994 open pit expansion.
In
1994, Fairfield received a mining permit, the open pit was expanded to a total
size of 458,000 cubic metres and 10,119 tons (9,180 tonnes) of ore grading 2.669
oz/ton (91.51gm/t) gold were extracted. Ledcor Industries of Vancouver, B.C. was
contracted to carry out the open pit excavation under the supervision of
Cordilleran Engineering Ltd. The ore was crushed to minus 6 inches and was
shipped to the Asarco Smelter in Helena Montana. Fairfield received credits for
gold, silver and silica. An underground drill program was carried out at ten to
twenty metre centres for a total of 2419 metres in 84 NQ holes to help define
underground mineable shoots.
During
1995 underground development was completed to the 1511m elevation and longhole
and shrinkage mining tests were carried out with shrinkage proving to be the
more applicable method. An underground drill program comprising 217 NQ holes at
ten metres centres for a total of 7612 metres was undertaken to fully test the
area accessible by the existing underground development. Ninety-eight surface NQ
diamond drill holes tested the areas beyond the reach of the decline and other
targets on the claim group for a total of 4645m. Including all previous
drilling, an area of about 340m by 150m had been tested at a hole spacing of
less than 20m.
23
Surface
diamond drilling totalling 6946.34 meters in 88 holes was completed on the
Siwash mining lease during 1996. Detailed drilling in the area of the proposed
Phase 5.5 open pit at approximately 20 meter centers outlined an open pitable
volume of mineralized material of 16,200 ounces of (503,820 gm) gold in 10,146
tons (9204 tonnes) at a grade of 1.597 oz/t (54.75 gm/t). Five holes were
drilled in the Deep B area down dip from the existing underground development
and increased the amount of mineralized material in this area to 12,200 tons
(11,070 tonnes) at a grade of 2.925 oz/t (100.29 gm/t). A new vein, known as the
WD zone was outlined by 25 holes over a strike length of 440 meters and added
6000 tons (5,440 tonnes) of mineralized material at 3.049 oz/t (104.5 gm/t) Au
to the property inventory. A soil geochemistry anomaly in the Gold Creek West
area was examined with five drill holes and another vein was defined over a
strike length of 160 meters with grades up to 0.574 oz/ton (19.7 gm/t) of gold
over 0.33m.
Limited
prospecting, environmental monitoring and reclamation was done on the property
between 1997 and 1999.
During
August 2000, Fairfield completed a twelve-hole 1400-metre drill program on the
property which targeted three gold bearing quartz vein systems in the Siwash
Mine area. Prospecting in a new logging clearcut one kilometre to the east of
the mine area has resulted in the discovery of two northeast trending structures
coincident with anomalous gold soil values.
All
rock and soil samples were sent to Acme Analytical Labs of Vancouver, Canada for
assay and analysis. Check samples were sent to Chemex Labs of Vancouver.
Environmental water quality samples were sent to ASL Labs of
Vancouver.
During
2001, a 230-metre trenching program comprising seven trenches was carried out on
the claims in the Siwash East and Gold Creek West areas. The trenches were dug
to determine the source of gold bearing quartz fragments found on surface and in
road cuts. Six trenches in the Siwash East area, located 1.7 km to the east of
the Siwash Mine site, exposed quartz veins up to 20cm thick and narrow pyritic
fault zones cutting quartz monzonite adjacent to an andesite dyke. The andesite
dyke was traced over 150 metres in four trenches with strong alteration and
narrow bands of pyritic gouge containing quartz fragments in the immediate
vicinity of the dyke. Trench SE01-4 was dug to a depth of 2.5 metres and exposed
a steeply dipping quartz vein about 20cm thick. A 0.5 by 0.5 meter panel sample
of the same vein taken in the wall of the trench returned 0.635 oz/ton (21.8
gm/t) gold and 0.96 oz/ton (32.9 gm/t) silver. Adjacent trenches 35 meters to
the west and 50 meters east exposed the andesite dyke with a strong alteration
zone but no quartz veins and weak gold values.
Trench
GCT01-1 was excavated the Gold Creek West area, 400 meters southwest of the mine
site, to further expose a quartz vein discovered earlier in the year by hand
trenching. Deeper excavation revealed a discontinuous quartz vein approximately
30cm thick over a length of nine meters hosted in strongly argillically altered
quartz monzonite that shows evidence of slumping and deformation. The vein
returned a value of 0.598 oz/ton (20.5 gm/t) gold and 1.74 oz/ton (59.6 gm/t)
silver from a 0.8 meter by 0.5 meter panel sample.
A
comprehensive review of the property database
was completed on August 31, 2001 by
Leo King, P.Eng., an independent consultant. His report recommends a three stage
9500 meter drill program to further explore the Siwash, Gold Creek West and WD
vein systems.
During
the 2002 field season twenty six NQ diamond drill holes tested the WD, B Zone,
Gold Creek West and Bullion Creek vein systems for a total of 4996m. Seven holes
were drilled into the WD zone to test the perimeter of the known shoot. The WD
veins were intersected in all holes close to the projected depths with grades up
to 2.66 oz/t (91.2 gm/t) Au over a true width of 0.50m. Eleven holes were
drilled into the Deep B shoot located immediately below the existing underground
development to fill-in the drill spacing to less than 25 meters and to test the
perimeter of the known mineralization. Two holes were drilled on the west side
of the existing open pit to help determine the feasibility of a pit expansion to
the west. The Gold Creek West vein located approximately 450m southwest of the
existing open pit was tested with four holes in two 50 meter step-outs to the
west of the existing grid. Two holes were drilled into the Bullion Creek
structure located 700 meters to the north of the open pit to test a geochemical
anomaly.
During
Fiscal 2002 the Company purchased a mill for possible use at the Siwash
property. The mill, with a rated capacity of 125 tons per day, was purchased for
US$75,000 (CDN$118,500). During Fiscal 2003, the mill was dismantled and moved
to a storage facility near the property at a cost of $204,766. There has been no
feasibility study to justify construction of the mill nor have permits to
construct the mill been applied for. The mill was purchased because it would be
suitable for processing the Siwash mineralized material and the price was below
replacement cost. This low cost could have an impact on project economics. If
studies indicate it would not be feasible to install this mill on the Siwash
project, the mill will be sold. The Company has received an estimate that the
mill could be sold for approximately $380,000.
24
Water
sampling from eight sites around the mine area has been carried out since 1991
to determine changes in element concentrations due to mining and exploration
activities. Metal levels in the major creeks have remained well within guideline
limits though some minor increases in Cu and Zn have been noted in the sumps and
minor creeks in the immediate minesite area. Benthic invertebrate studies were
carried out during 2003 and 2004 and determined that invertebrate populations
have not been significantly effected.
Geology
and Mineral Deposits
Gold-silver
mineralization on the Elk Property is hosted by mesothermal pyritiferous quartz
veins and pyritiferous altered granite and volcanics. The mineralized features
generally trend northeasterly and are thought to be Late Cretaceous or Tertiary
in age. To date, mineralization has been located in eight areas of the Elk
property: Siwash North, South Showing, Discovery Showing, Lake Zone, End Zone,
Great Wall Zone, Elusive Creek, Gold Creek West, WD Zone and the Bullion Creek
area.
The
most recent estimate of contained mineralized material in the Siwash Mine area
was calculated by Giroux Consultants Ltd. on completion of the 2003 drill
program.
This
calculation used geostatistical methods and incorporated drill results from 2002
and 2003 that were not included in the last estimate which was calculated in
2000. The year 2000 estimate reported an indicated
resource of 87,700 oz (2,727,700 grams) gold in 61,300 tons (55,600 tonnes) and
a probable reserve of 45,200 oz (1,405,900 gm) gold in 44,500 tons (40,400
tonnes) for a total of 141,962 ounces (4,415,500 gm) in 123,142 tons (111,710
tonnes) using a cutoff grade of 0.438 oz/t over a 3.3 ft true width (15
gmt-m).
In
the course of analysing the data for the calculation of the new resource
estimate it was recognised that, adjacent to both the B and WD vein systems,
parallel, less continuous splay veins have been intersected in the drilling. As
a result two resource estimates were produced; a two dimensional model which
considers only the B and WD veins in what would be an underground mineable
resource and a three dimensional model which considers the parallel splay veins,
in the B vein only, to allow for the possibility of bulk tonnage mining. It must
be noted that the tonnage and volume contained in the second, three dimensional
model, would include a significant proportion the B Flat, B Steep and B East
vein resource estimated in the 2D resource estimate. A tabular presentation of
the two resource estimates are as follows:
25
Underground
2D Resource Estimate 2004
|
Measured
and Indicated Resource |
Inferred
Resource | ||||||
|
Area |
Gold
Cut off Grade |
Tonnes |
Gold
Grade (g/t) |
Contained
Ounces Gold |
Tonnes |
Gold
Grade (g/t) |
Contained
Ounces Gold |
|
B
Flat Vein |
7
g/t |
20,700 |
19.41 |
12,900 |
500 |
7.74 |
100 |
|
B
Steep Vein |
7
g/t |
71,800 |
44.69 |
103,200 |
59,800 |
19.77 |
38,000 |
|
B
East Vein |
7
g/t |
28,900 |
22.30 |
20,700 |
36,200 |
15.51 |
18,100 |
|
WD
Vein |
7
g/t |
42,600 |
29.82 |
40,800 |
98,700 |
14.69 |
46,600 |
|
Total |
7
g/t |
164,000 |
33.69 |
177,600 |
195,200 |
16.38 |
102,800 |
Bulk
Mining 3D Resource Estimate 2004
|
Measured
and Indicated Resource |
Inferred
Resource | |||||
|
Gold
Cut off Grade |
Tonnes |
Gold
Grade (grams per tonne) |
Contained
Ounces Gold |
Tonnes |
Gold
Grade (grams per tonne) |
Contained
Ounces Gold |
|
0.5
g/t |
808,200 |
3.264 |
84,800 |
1,488,300 |
2.570 |
123,000 |
|
1.0
g/t |
564,100 |
4.361 |
79,100 |
1,138,900 |
3.126 |
114,500 |
Combining
the portions of the 2D underground resource not included in the bulk mining
resource, with the 3D bulk mining resource results in a new global inferred,
indicated and measured resource for the Siwash Project of resource as tabulated
below:
Combined
Global Resource Estimate 2004
|
Measured
and Indicated Resource |
Inferred
Resource | ||||||
|
Area |
Gold
Cut off Grade |
Tonnes |
Gold
Grade (grams per tonne) |
Contained
Ounces Gold |
Tonnes |
Gold
Grade (grams per tonne) |
Contained
Ounces Gold |
|
B
Flat Vein |
7
g/t |
19,100 |
26.70 |
16,400 |
500 |
7.74 |
100 |
|
B
Steep Vein |
7
g/t |
39,700 |
54.50 |
69,600 |
53,300 |
19.93 |
34,200 |
|
B
East Vein |
7
g/t |
2,800 |
19.43 |
1,700 |
25,800 |
14.98 |
12,400 |
|
WD
Vein |
7
g/t |
42,600 |
29.82 |
40,800 |
98,700 |
14.69 |
46,600 |
|
1.0
cut off open pit |
1.0
g/t |
564,100 |
4.361 |
79,100 |
1,138,900 |
3.126 |
114,500 |
|
Total |
668,300 |
9.66 |
207,600 |
1,317,200 |
4.91 |
207,800 | |
Both
the bulk tonnage and high grade vein resources are open along strike in both
directions and to depth.
Mr. Gary Giroux, M.A.Sc., P.Eng. of Giroux Consultants Ltd. supervised the
resource calculation and is the qualified person under the meaning of National
Instrument 43-101. The qualified person and supervisor for the 2002 and 2003
exploration drill programs was Wojtek Jakubowski, P. Geo. All samples were
analyzed at Acme Analytical Labs in Vancouver using wet geochemical, fire assay
and metallics techniques. Duplicate and blank samples and standards were
included in the sample shipments sent to Acme and confirmed procedural quality.
Check assays were carried out by ALS Chemex Labs in Vancouver.
Infrastructure
All
major services and labour can be found in Merritt or Westbank, towns accessible
by four lane highway to the east and west of the property. There is good road
access throughout most of the property by logging roads and a major highway
(97C) crosses the northern claims. Two phase power is available at the highway
2km north of the mine site. A gas station, motel and restaurant are located at
the highway access on the northern claims. Cell phone and radio phone
communications are available from the mine site.
Recent
Drilling Results
Thirty
NQ diamond drill holes drilled between August 6 and November 1, 2003 tested the
WD Zone for a total of 6570.56m. Seven holes were drilled into the WD vein
system to the west of the north-northwest trending RB fault located roughly
between 2340E and 2400E.
Twenty
five holes were drilled to the east of the RB fault between 2370E and 2670E to
extend the known resource. The WD zone(s) were intersected in all but three
holes which were terminated before the target depth due to excessive deviation
or bad ground conditions. The known zone was extended to 2670E and to a depth of
340m below surface and 380m down dip. Fill-in drilling on sections 2445E, 2495E
and 2545E intersected the WD veins at the expected depth however gold grades
were not as high as those found on adjacent fences. A summary of composited
drill results greater than 10 gm/t-meter Au is listed below.
26
|
Hole
|
Depth |
Depth |
Interval |
True |
Specific |
Au |
Ag |
Au |
Ag
| |
|
Number |
From
(m) |
To
(m) |
(m) |
Width
(m) |
Gravity |
Zone |
gm/t |
gm/t |
oz/t |
oz/t |
|
SND03338 |
11.65 |
32.45 |
20.80 |
17.31 |
2.70 |
B |
1.20 |
0.51 |
0.035 |
0.015 |
|
SND03339 |
44.20 |
44.71 |
0.51 |
0.50 |
2.70 |
B |
22.60 |
31.58 |
0.659 |
0.921 |
|
SND03339 |
29.00 |
60.25 |
31.25 |
29.67 |
2.70 |
B |
0.53 |
0.00 |
0.015 |
0.000 |
|
SND03349 |
38.30 |
51.25 |
12.95 |
12.37 |
2.70 |
B |
0.96 |
0.00 |
0.028 |
0.000 |
|
SND03357 |
35.50 |
43.80 |
8.30 |
8.14 |
2.70 |
Ba |
2.22 |
0.70 |
0.065 |
0.020 |
|
SND03357 |
43.29 |
43.80 |
0.51 |
0.50 |
2.70 |
Bb |
29.84 |
11.39 |
0.870 |
0.332 |
|
SND03357 |
35.55 |
48.00 |
12.45 |
12.19 |
2.70 |
Bb |
1.49 |
0.47 |
0.043 |
0.014 |
|
SND03348 |
139.23 |
140.15 |
0.92 |
0.50 |
2.82 |
C? |
35.09 |
52.76 |
1.023 |
1.539 |
|
SND03340 |
49.89 |
50.40 |
0.51 |
0.50 |
2.69 |
C1 |
24.91 |
7.12 |
0.726 |
0.208 |
|
SND03340 |
47.20 |
61.20 |
14.00 |
12.92 |
2.70 |
C1 |
1.16 |
0.28 |
0.034 |
0.008 |
|
SND03340 |
41.35 |
58.15 |
16.80 |
16.24 |
2.70 |
C1 |
0.93 |
0.22 |
0.027 |
0.006 |
|
SND03341 |
50.97 |
51.48 |
0.51 |
0.50 |
2.73 |
C1 |
78.56 |
38.83 |
2.291 |
1.133 |
|
SND03341 |
48.45 |
70.10 |
21.65 |
21.05 |
2.70 |
C1 |
2.02 |
0.94 |
0.059 |
0.027 |
|
SND03342 |
52.00 |
73.60 |
21.60 |
19.05 |
2.70 |
C1 |
0.65 |
1.16 |
0.019 |
0.034 |
|
SND03346 |
20.50 |
40.71 |
20.21 |
19.54 |
2.70 |
C1 |
0.84 |
1.43 |
0.025 |
0.042 |
|
SND03343 |
88.55 |
96.70 |
8.15 |
7.88 |
2.71 |
D |
4.39 |
9.52 |
0.128 |
0.278 |
|
SND03363 |
9.35 |
37.80 |
28.45 |
26.85 |
2.70 |
D1 |
0.57 |
0.06 |
0.017 |
0.002 |
|
SND03343 |
95.60 |
96.75 |
1.15 |
1.00 |
2.78 |
D2 |
33.18 |
73.10 |
0.968 |
2.132 |
|
SND03337 |
253.12 |
254.30 |
1.18 |
1.00 |
2.95 |
WD |
28.25 |
125.07 |
0.824 |
3.648 |
|
SND03340 |
267.92 |
269.07 |
1.15 |
1.00 |
2.75 |
WD |
11.47 |
35.12 |
0.335 |
1.024 |
|
SND03346 |
152.75 |
153.91 |
1.16 |
1.00 |
2.74 |
WD |
15.90 |
87.07 |
0.464 |
2.539 |
|
SND03347 |
202.88 |
204.10 |
1.22 |
1.00 |
2.72 |
WD |
27.79 |
49.97 |
0.810 |
1.458 |
|
SND03364 |
196.57 |
197.70 |
1.13 |
0.80 |
2.76 |
WD |
16.14 |
44.40 |
0.471 |
1.295 |
|
SND03365 |
171.64 |
173.10 |
1.46 |
1.10 |
2.71 |
WD |
10.09 |
21.73 |
0.294 |
0.634 |
|
SND03354 |
274.30 |
274.82 |
0.52 |
0.50 |
3.15 |
WD2 |
219.96 |
354.42 |
6.415 |
10.337 |
|
SND03358 |
336.29 |
337.71 |
1.42 |
1.20 |
2.74 |
WDa |
11.88 |
36.64 |
0.346 |
1.069 |
|
SND03355 |
345.20 |
345.80 |
0.60 |
0.50 |
2.68 |
WDaZ |
85.84 |
18.19 |
2.504 |
0.530 |
The
2004 diamond drill program in the Siwash Gold Mine area was completed in early
November for a total of 10265 meters of NQ drilling in 44 holes. The program
extended the known perimeter of the WD zone 150 metres to the east and 100
meters downdip in 50 meter step-outs. Seven holes were drilled into the B zone
to test a southwest shoot to depth and to fill in between existing 50 meter
intercepts below the existing mine workings. Four holes were drilled to test the
Bullion Creek zone over a 100m strike length. All completed holes intersected
the projected zones. Two holes were abandoned due to poor ground conditions.
Geological interpretation and re-assaying has been completed and a summary of
composited drill results greater than 10 gm/t-meter Au is listed
below.
27
|
Hole
|
Depth |
Depth |
Interval |
True |
Specific |
Au |
Ag |
Au |
Ag | |
|
Number |
From
(m) |
To
(m) |
(m) |
Width
(m) |
Gravity |
Zone |
gm/t |
gm/t |
oz/t |
oz/t |
|
SND04391 |
55.23 |
55.74 |
0.51 |
0.50 |
2.77 |
B |
74.83 |
119.25 |
2.182 |
3.478 |
|
SND04390 |
55.05 |
55.65 |
0.60 |
0.60 |
2.73 |
B |
43.40 |
90.68 |
1.266 |
2.645 |
|
SND04390 |
55.15 |
68.39 |
13.24 |
13.15 |
2.70 |
B |
3.11 |
4.71 |
0.091 |
0.137 |
|
SND04390 |
43.00 |
68.39 |
25.39 |
24.01 |
2.70 |
B |
1.76 |
2.58 |
0.051 |
0.075 |
|
SND04400 |
297.29 |
297.80 |
0.51 |
0.50 |
2.99 |
B |
48.12 |
27.14 |
1.403 |
0.792 |
|
SND04403 |
337.80 |
338.34 |
0.54 |
0.50 |
2.79 |
B |
20.26 |
9.64 |
0.591 |
0.281 |
|
SND04408 |
192.00 |
192.58 |
0.58 |
0.50 |
2.71 |
B |
22.14 |
12.64 |
0.646 |
0.369 |
|
SND04374 |
50.10 |
53.61 |
3.51 |
3.42 |
2.72 |
Bb |
8.51 |
32.79 |
0.248 |
0.956 |
|
SND04375 |
14.87 |
36.40 |
21.53 |
20.43 |
2.70 |
Bb |
0.69 |
0.14 |
0.020 |
0.004 |
|
SND04390 |
67.39 |
68.41 |
1.02 |
1.00 |
2.70 |
C |
13.73 |
6.89 |
0.401 |
0.201 |
|
SND04369 |
160.55 |
161.20 |
0.65 |
0.50 |
2.74 |
WD |
24.75 |
44.22 |
0.722 |
1.290 |
|
SND04406 |
202.23 |
203.42 |
1.19 |
0.50 |
2.70 |
WD |
22.81 |
32.61 |
0.665 |
0.951 |
|
SND04384 |
155.70 |
156.88 |
1.18 |
1.00 |
2.78 |
WDa |
61.81 |
99.82 |
1.803 |
2.911 |
|
SND04386 |
198.50 |
199.21 |
0.71 |
0.50 |
2.67 |
WDa |
21.62 |
26.05 |
0.631 |
0.760 |
|
SND04367 |
214.63 |
222.74 |
8.11 |
5.79 |
2.71 |
WD2 |
5.97 |
4.81 |
0.174 |
0.140 |
|
SND04367 |
214.59 |
215.34 |
0.75 |
0.60 |
2.72 |
WD2 |
20.51 |
14.55 |
0.598 |
0.424 |
|
SND04368 |
157.76 |
158.32 |
0.56 |
0.50 |
2.74 |
WD2 |
31.18 |
32.93 |
0.910 |
0.960 |
|
SND04372 |
233.00 |
235.60 |
2.60 |
2.22 |
2.86 |
WD2 |
4.80 |
7.56 |
0.140 |
0.220 |
|
SND04407 |
179.37 |
179.90 |
0.53 |
0.50 |
2.78 |
WD2 |
20.70 |
53.26 |
0.604 |
1.553 |
|
SND04366 |
176.05 |
193.20 |
17.15 |
11.27 |
2.70 |
WD2-3 |
2.39 |
1.85 |
0.070 |
0.054 |
|
SND04367 |
222.00 |
222.74 |
0.74 |
0.50 |
2.75 |
WD3 |
31.71 |
31.30 |
0.925 |
0.913 |
|
SND04367 |
217.33 |
222.83 |
5.50 |
4.60 |
2.71 |
WD3 |
5.94 |
4.15 |
0.173 |
0.121 |
All
samples were analyzed at Acme Analytical Labs in Vancouver using wet
geochemical, fire assay and metallics techniques. Duplicate and blank samples as
well as standards were included in the sample shipments sent to Acme and
confirmed procedural quality. Check assays will be carried out by ALS Chemex
Labs in Vancouver.
A
magnetometer survey was carried out between the Siwash East area and Siwash
North to trace andesite dykes that are associated with gold bearing
mineralization.
Biological
studies of the watercourses affected by the minesite have been completed and
flow measurements are in progress to determine rates of dewatering of the mine
workings.
The
qualified person and supervisor for the 2004 exploration drill program was
Wojtek Jakubowski, P. Geo.
Planned
Work Program - Fiscal 2005, Ending December 31, 2005
The
Company’s exploration program for Fiscal 2005 includes further diamond drilling,
mainly on the Siwash and WD veins, at a budgeted cost of $1,000,000.
28
The
ATW Prospect - Canada
29
This
diamond exploration prospect is without known reserves and all current work by
the Company on the prospect is exploratory in nature.
Option
to Acquire Interest
In
Fiscal 1992, these claims were acquired directly by staking and additional
claims were acquired from Michael Magrum by ATW Resources Ltd. (“ATW”). The
Company owned a 40% share interest in ATW along with Williams Creek Explorations
Limited-40% share interest and Troymin Resources Ltd.-20% share interest (now
Santoy Resources Ltd.). ATW
acts as trustee and these companies are the beneficiaries of a declaration of
trust for their respective interest in the prospect.
In
1993 the property was optioned to Kennecott Canada Exploration Inc. (“KCEI”).
KCEI’s interest reverted back to ATW in 2001. ATW then completed a joint venture
agreement with Aberex Minerals Ltd.-15% property interest and SouthernEra
Resources Limited-10% property interest. A 2% gross overriding royalty on
diamonds produced from TR 107 (a portion of the ATW property) is payable to
KCEI. An option granted to KCEI under an agreement made as of November 30, 2001,
by the Company, together with all other shareholders of ATW, to acquire a 40%
share interest in ATW lapsed unexercised.
In
January 2005, the Company and Williams Creek acquired Santoy’s 20% share
interest in ATW and now own a 50% share interest each in ATW.
Expenditure
to Date
During
Fiscal 2004, the Company’s portion of exploration costs totalled $37,646 which
included gravity, electromagnetic and magnetic surveys. Recoveries totalled
$12,163. As at December 31, 2004, the Company had deferred $196,944 in
acquisition and exploration costs on the prospect.
Location
and Access
The
ATW property is located roughly equidistant between the Diavik and Snap Lake
diamond deposits, on MacKay Lake, Lac de Gras area, Northwest Territories. A
winter road to the Diavik and Diamet diamond mines passes through the
property.
History
and Recent Work
Government
geological surveys, widely spaced airborne magnetic surveys and regional mineral
exploration programs were carried out in the property area before
1992.
In
the summer of 1992, ATW conducted limited a summer till sampling program for
diamond indicator minerals, and contracted an airborne magnetic -
electromagnetic (EM) survey of the western half of the property. After optioning
the property, KCEI conducted several phases of prospecting, till sampling using
sonic and reverse circulation drills, ground geophysical surveys, a small
helicopter borne magnetic survey, and limited diamond drilling in two programs
that totalled 671metres. This work identified a kilometres long train of diamond
indicator minerals in glacial till that was followed east under MacKay Lake.
Their work also found one kimberlite body, TR107, which contains no diamond
indicator minerals, and therefore can not be the source of the indicator mineral
train being followed.
Subsequent
to the return of the property by KCEI, the joint venture group conducted an
airborne magnetic EM survey in 2001 over the five by five kilometre projected
source area of the diamond mineral indicator train. This was followed up by
ground geophysics which confirmed the presence of four anomalies found by the
airborne survey.
These
four targets were diamond drilled in the spring of 2002, but no kimberlite was
found.
In
early 2003, a sonic drill program of 77 holes was completed to further trace the
indicator mineral train previously found and to narrow down the possible source
area.
During
December 2003, surface Magnetometer and HLEM surveys were carried out on the
northeast end of MacKay Lake to determine the source of an indicator mineral
trend defined by the sonic drill program. Surface gravity, bathymetry and
further HLEM survey were carried out over the same area to help outline the
indicator mineral source during February of 2004. The gravity and bathymetry
surveys grid were extended in April 2004. All the geophysical work carried out
in 2003 and 2004 was done by Aurora Geosciences of Yellowknife, NT. The data
from the geophysical surveys was reviewed and interpreted by Martin St. Pierre
in December of 2004 and nine low to moderate priority drill targets were
defined.
30
Geology
and Mineralization
The
property area is within the Slave Structural Province. This terrain was formed
in the late Archean with late diastrophism. The oldest known rocks appear to be
remobilized granitoids, emplaced in a thick volcano-sedimentary sequence. All of
these units were subsequently metamorphosed, deformed and also intruded by other
mainly granitoid bodies.
The
ATW claims overlay Yellowknife Supergroup rocks of the Slave Craton. These
Archean rocks consist of, metasediments (greywacke, pelite, minor quartzite,
conglomerate, iron formation, and metavolcanics). Some of these formations give
magnetic and electromagnetic responses. Large granitoid bodies intrude these
rocks. The Proterozoic MacKenzie dyke swarm dominates the airborne magnetics as
long continuous magnetic high responses that traverse the property.
Exploration
and Drilling Results
Exploration
work by KCEI between 1993 and 1998 identified a long diamond indicator mineral
train or anomaly in glacial till that extended southeasterly up glacial ice
direction. Several geophysical targets were also identified from an airborne
magnetometer-EM survey. In 1994, four geophysical targets were drilled, and one
of these, TR-107 intersected a kimberlite body, that was not diamondiferous and
did not contain diamond indicator minerals. In January 1998, KCEI informed the
Company that the main exploration target on the property was the source of the
prominent indicator mineral till anomaly. This anomaly contains indicator
minerals (garnets and chromites) with chemistry from within the diamond
inclusion field suggesting the source will be diamondiferous. This indicator
mineral anomaly was been traced to the western edge of MacKay Lake. Reverse
circulation (RC) drilling was carried out on the lake ice in early 1998 follow
the till anomaly easterly back up the original direction of glacial ice movement
towards the anticipated source location. Thirty-three holes for a total of 390
metres drilled at about 100 metre on three lines were completed to sample the
till on the lake bottom. The easterly line has four holes 100 metres apart that
had elevated counts pyrope garnets (>5) in the basal till, one of these had a
very high count of olivines (>50) with elevated values in three holes. The
work thus extended the indicator mineral train but no source area was delimited.
In 1999, a sonic drill used to sample the till in a fence of holes across the
ice movement direction and 13 holes for a total of 479 metres in a single line
were drilled about five kilometres up ice direction from the last previous line
of RC drill holes. These were essentially devoid of indicator minerals, and so
it was concluded that the source area had been narrowed down to a five kilometre
by five kilometre area, and that a potential source for the diamond indicator
minerals should be looked for between these two lines of holes. Analyses were
done at KCEI’s Thunder Bay laboratory, an ISO Guide 25 facility.
ATW’s
1992 airborne survey did not cover this area, so a contract was given in March
2001 to Fugro Airborne Surveys to carry out a survey of the area between these
two lines of holes, and also over a small area in a bay of MacKay Lake further
down ice on the mineral train where a small magnetic low was outlined on an old
(1960s) government magnetic survey of the area. This work outlined two targets
with pipe like characteristics and a long dike like structure that is not
magnetic indicating it is not caused by a diabase dike. Surface geophysics
confirmed the size and strength of the two pipe targets.
In
early 2002, results of microprobe analyses performed on indicator minerals from
sampling of the glacial dispersion train on the property were received by the
Company from Kennecott Canada Inc. Mineral Services Canada Inc. (Mineral
Services), a subsidiary of Mineral Services International, reviewed these
microprobe results. The following is an excerpt from the summary of the report
provided from Mineral Services:
“A
prominent kimberlitic indicator dispersion has been traced up-ice in till
samples over a distance of 20 km, and was found by drill sampling to continue in
MacKay Lake sediments for a further 3 km, leading to geophysical target ATW-02.
The available kimberlitic indicator mineral analyses from this, the MacKay Lake
dispersion, comprises 74 olivines, 18 orthopyroxenes, 127 clinopyroxenes and 198
garnets, but no kimberlitic ilmenite or chromite. The compositional
characteristics of this indicator assemblage show it to be derived from
kimberlite source(s) that have entrained predominantly diamond-stable mantle
peridotite along a cold cratonic geotherm similar to that defined by garnet
peridotite xenoliths in the Diavik kimberlites. Various samples show this
indicator assemblage contains from 16 to 20% G10 garnets, with moderate-Cr2O3
G10 garnets well represented. Based on available data, and assuming that these
data are representative of the samples from which they are derived, the source
kimberlite(s) are predicted to be at least moderately diamond-bearing. A more
definitive assessment of their diamond potential cannot currently be made due to
the fact that: eclogitic garnet compositions are not reported; the extent to
which the available data are representative of the full indicator mineral
population present in the tills and sediments or in specific source bodies is
not known; and several critical kimberlite-specific mineralization factors have
yet to be determined.
31
Kimberlitic
garnet, orthopyroxene and clinopyroxene recovered from a composite core sample
of the TR107 kimberlite reveal compositions quite unlike that seen in
exploration samples on the rest of the MacKay Lake property. The TR107
kimberlite apparently sampled essentially only graphite-stable mantle peridotite
on an elevated geothermal gradient. The kimberlite core sample is assigned zero
diamond potential and it manifestly does not correlate with the intrinsically
higher diamond potential of the vast majority of kimberlitic indicator minerals
recovered from the property.”
In
April 2002 a program of drilling geophysical anomalies on the project was
completed. No kimberlite was found. Three resistivity low anomalies were tested.
Two were explained by graphitic conductors. No explanation was
found
for the third anomaly.
In
early 2003, a till sampling program with seventy-seven holes were drilled to
recover samples of basal till samples on several lines of hole between the last
two lines of till sampling holes described above. This work narrowed down the
anticipated source area to a one kilometre by one kilometre square.
During
December 2003, surface Magnetometer and HLEM surveys were carried out on the
northeast end of MacKay Lake to determine the source of an indicator mineral
trend defined by the sonic drill program. Surface gravity, bathymetry and HLEM
survey were carried out over the same area to help outline the indicator mineral
source. The gravity and bathymetry surveys grid were extended in April 2004 for
a total of 6.5 line km. All the geophysical work carried out in 2003 and 2004
was done by Aurora Geosciences of Yellowknife NT. The data from the geophysical
surveys was reviewed and interpreted by Martin St. Pierre in December of 2004
and nine low to moderate priority targets were defined for
drilling.
Planned
Work Program - Fiscal 2005, Ending December 31, 2005
The
Company plans a bathymetric survey of the area of interest for the summer of
2005 at a budgeted cost of $30,000 to better refine the results of the 2004
gravity survey. The Company is also waiting for the results of a review of the
geophysical data by an expert.
32
PRINCIPAL
PROPERTY INTERESTS IN MEXICO
33
The
Caballo Blanco Prospect - Mexico
34
The
Caballo Blanco Prospect is without known reserves and all current work by the
Company on the prospect is exploratory in nature.
Option
to Acquire Interest
In
1996, the Company signed an option to purchase agreement with two private
Mexican individuals for the approximately 40,000 acre property. Under the terms
of the agreement, to earn a 60% in the property, the Company had to issue a
total of 200,000 shares and pay US$500,000 plus value added tax over four and a
half years. To earn the remaining 40% interest, the Company had to pay an
additional US$500,000 plus value added tax within a year of earning its 60%
interest, plus a 2.5% NSR from any production. The Company could have reduced
this NSR to 1.5% for a fixed payment of US$2,000,000 plus value added tax
payable equally over 10 years.
The
agreement was amended in January 2003. To earn a 100% interest, the Company must
issue a total of 200,000 shares of its stock and pay US$668,500 plus value added
tax by February 26, 2007. The underlying owner would also receive a NSR of 2.5%
to 1% based on the rate of production. The Company can purchase 50% of this NSR
for a fixed payment of US$750,000 plus value added tax.
In
Fiscal 2003, the Company entered into an agreement with Comaplex Minerals Corp.
(“Comaplex”). To earn a 60% interest, Comaplex must keep the property in good
standing and incur exploration expenditures totalling US$2,000,000 by January
16, 2007.
Expenditures
to Date
To
December 31, 2004, the Company had incurred a total of $2,524,885 in acquisition
and exploration costs on this prospect but during Fiscal 2002 the prospect was
written-down by $2,000,000. As at December 31, 2004, the Company had deferred
costs of $524,885 on this prospect.
Location
and Access
The
Caballo Blanco project, consisting of mineral concessions, currently comprising
about 8,200 hectares, is located in the state of Veracruz about 75 kilometres
northwest along the Pan American highway in eastern Mexico from the city of
Veracruz.
History
and Recent Work
The
area was staked in 1993 as a new discovery. The Company carried out limited
exploration on the property in 1995 with mixed results, and subsequently
provided the owner with funding to continue prospecting under a “grubstake”
agreement. Further mineralization was found and an option agreement was
negotiated. Since 1996, the Company’s efforts have focussed on three distinct
areas of alteration and mineralisation known as the Central Grid Zone, Highway
Zone and Northern Zone respectively. Most of the work to date has been carried
out on the Central Grid and Highway zones. Geological mapping, sampling,
geochemical surveys, magnetic and induced polarization (IP) geophysical surveys
were carried out, mostly in 1997. A 2,390 metre reverse circulation drill
program was carried out by the Company in 1998 on the Central Grid Zone. This
drilling intersected both porphyry-style copper-gold mineralization and
high-grade gold-silver mineralization in veins apparently spatially peripheral
to the porphyry system. In the Highway Zone, soil geochemistry, geologic
mapping, and induced polarisation geophysical surveys identified a large altered
area containing evidence of a high sulphidation epithermal system. The Northern
Zone is a large area of argillic alteration, within which preliminary
prospecting and geochemical surveys have identified areas of elevated
gold-copper-arsenic in silcified rock. Highly anomalous values have been found
in stream silt samples and boulders in streams, and this area is thought to
represent a large unexplored high-sulphidation gold system. In 1999, 2000, and
early 2001, the Company carried out limited geological, geochemical, and IP
surveys. Late in 2000, the Company purchased exploration data and surrounding
claims from Lucero Resources Corp. The Company also purchased a small net
smelter return royalty on these claims for $1,000 Canadian dollars from Lucero’s
successor in early 2003.
In
Fiscal 2001, the Company’s subsidiary, Minera Gavilan, S.A. de C.V., signed an
agreement with Noranda Exploracion Mexico S.A de C.V. (“Noranda”), a subsidiary
of Noranda Inc., which was terminated in Fiscal 2002. Noranda carried out
geological mapping, some regional geochemical surveying and diamond drilling.
Starting in March 2002, Noranda completed 1789 metres of drilling in seven
holes, four in the Central Grid area, and three into the Highway Zone area,
aimed at porphyry copper targets.
At the Company’s expense, two short holes were drilled to test a gold target in
the Central Grid part of the property.
35
Later
in Fiscal 2003, Comaplex optioned the property from the Company. Work during
2003 at the Highway and Northern zones consisted of sampling, geologic mapping
and induced polarization (IP) geophysics and was complimented by analysis of
alteration mineralogy with a PIMA portable infrared spectrometer.
Comaplex
started building roads for drilling in mid 2004 but experienced difficulty with
construction on the Northern Zone. In November 2004, Comaplex started a 3000
metre drill program to test the Central Grid, Highway and Northern zones of the
prospect, the centres of which are located roughly 7 kilometers
apart.
Geology
and Mineralization
The
property occurs in a caldera setting in flat lying volcanic rocks of Miocene
age, along the northeastern edge of the Trans- Mexican Volcanic Belt. It is a
new discovery, first identified by sampling in acid sulphate altered quartz
stockwork veining, in a road cut for the main coastal highway which yielded
anomalous gold values. The property covers three large hydrothermal alteration
zones called the Central Grid, the Highway Zone, and the Northern Zone. The
Central Grid area is the most deeply eroded and demonstrates porphyry Cu-Au, and
low sulfidation Au-Ag style mineralization. The
centres of the Highway and Northern zones of the property, are located roughly 7
kilometers apart. Geologic and alteration mapping in these areas has identified
extensive zones of acid-sulphate alteration including quartz alunite and
residual or vuggy silica alteration zones. These zones of alteration, developed
in flat lying volcanic rocks, are interpreted to represent high sulphidation
gold-silver epithermal systems. Mineralogical
evidence is interpreted to indicate that minimal erosion has taken place and the
hydrothermal systems are mainly preserved.
Exploration
Results
A
geochemical soil survey on a grid that covers roughly 3 kilometers by 3
kilometers in the Central Grid area of the property outlined a number of
coincident gold-copper anomalies associated with what appears to be two styles
of mineralization within a very large alteration zone. In one area, two creeks
contain float rock of porphyry style quartz stockwork veining associated with
copper-gold mineralization and K-silicate alteration. In a geochemical soil
anomaly over this location, the 200 parts per million copper contour outlines an
area roughly 700 meters by 500 meters, with coincident anomalous gold values.
The other style of mineralization, gold-silver-copper-lead quartz stockwork and
quartz barite veins, is found in several areas. One such area has an irregular
shaped soil anomaly that is roughly 700 metres by 200 metres with up 2.89 gm/t
gold and up to 0.22% copper.
Geological
mapping found that the anomalous gold values are closely associated with areas
of widespread k-silicate alteration and copper staining. The geochemical grid
was extended northwards to cover possible extensions to the known highly
anomalous values.
An
induced polarization and ground magnetic geophysical program over the Central
Grid area identified a very broad zone of elevated chargeability enveloping
several intense chargeability highs. These chargeability highs are linear in
orientation, and are over one km long. Profiles indicate these anomalies extend
from surface to significant depths. These linear highs relate spatially to the
presence of outcrop and float of quartz-barite-sulfide veining and associated
gold soil geochemistry.
A
2,390 meter reverse circulation drill program started in April and was completed
in May 1998.
Holes
CB-1 and CB-2 were drilled in the porphyry-copper-gold style target.
Hole
CB-1 (located at 5100E and 3400N, drilling east at -60o,
167.6m deep) intersected a mineralized feldspar porphyry cut by quartz stockwork
veining. Chalcopyrite, pyrite and magnetite occur as coatings on fractures and
in disseminated form. Bornite is sparsely disseminated. Anomalous results are:
from 3m to 167.6m (164.6m) of 0.15% Cu and 0.223 grams/tonne Au, including from
3m to 110m (107m) of 0.18% Cu and 0.254 grams/tonne Au.
Hole
CB-2 (located at 5295E and 3400N, drilling west at -50o,
193.5m deep) was similar to hole CB-1 but sections of the porphyry are more
highly clay altered with quartz stockwork veining containing pyrite
chalcopyrite, minor galena and sphalerite. Anomalous results are: from 26m to
193.5m (167.5m) of 0.09% Cu and 0.159 grams/tonne Au, including 96m to 108.2m
(12.2m) of 0.13% Cu and 0.322 grams/tonne Au; from 153.9m to 193.5m (39.6m) of
0.15% Cu and 0.394 grams/tonne Au; and the last sample 192m to 193.5m (1.5m) of
0.23% Cu and 0.720 grams/tonne Au.
36
IP
geophysical and soil geochemical anomalies were targeted with the drilling over
a roughly 1 by 2.2 kilometer area within this 150 square kilometer property. The
water table was consistently intersected at shallow depths. The water flow
encountered in many holes limited the practical depth of drilling with the
drilling system employed. Future reverse circulation drilling could achieve
better penetration depths and rates with equipment designed for higher water
flow.
An
involved quality control program was employed for the project and included the
insertion of blanks, standards and duplicates into the sample stream. Samples
were submitted blind to Bondar Clegg/ITS labs of North Vancouver for analysis.
Industry standard methods of analysis were employed.
Hole
CB-3 was collared into a ground magnetic high at 5545 meters east on line 3295N.
The hole, drilling west at
-50o,
passed through 10.7 metres of overburden before intersecting andesite which
continued to 153.9 metres, the end of the hole. The andesite is highly altered
to hydrothermal magnetite, epidote, chlorite and pyrite. Magnetite and epidote
occur as veins and clots throughout the andesite. This style of alteration is
similar to magnetite-epidote skarning developed in volcanics adjacent to
porphyry Cu-Au deposits elsewhere. Several gold values over 1.52 meter sample
widths were elevated with a high of 0.774 grams/tonne Au. This hole was drilled
across the assumed dip of the skarned zone and did not penetrate through to an
expected andesite/intrusive contact.
Hole
CB-4 (collared at 5600 East on line 3524N; drilling east at -50o)
passed through 16.8 metres of overburden before penetrating the same andesite to
the end of the hole. The andesite is skarned as in hole CB-3, however at depth
in the hole silicification, clay alteration and pyrite associated with
quartz-sulfide veining were intersected. Several zones contained anomalous assay
results.
Results
in Hole CB-4 included 39.62 meters from 96.01m to 135.63 meters that averaged
0.25g/t gold and about 1.0 g/t Ag with 0.15% Cu and 0.10% Pb and 0.18% Zn. This
interval included a higher grade section from 96.01 meters to 108.20 meters
totaling 12.19 meters averaging 3.8 g/t Au, 23 (g/t) Ag, 0.37% Cu, 0.19% Pb and
0.34% Zn. This section relates to strong veining and included a high of 19.9 g/t
Au and 26 g/t Ag over 1.52 meters from 102.1 to 103.63 meters. A further zone of
mineralization and veining was intersected from 123.4 to 126.5 meters over 3.10
meters of 1.7 g/t Au, 14 g/t Ag, and 0.11% Cu, 0.21% Pb and 0.35%
Zn.
Holes
CB-5 and CB-6 were drilled further south on line 2000 N at 5760 E and 5600 E
respectively. CB-5 was drilled to the west at -50o
and CB-6 was drilled east at -50o.
Both holes collared in similarly altered andesite but at shallow depths
penetrated a highly silicified, clay altered and pyritized feldspar porphyry.
The porphyry is cross-cut by narrow, dark quartz-pyrite-chalcopyrite veinlets.
Intersections
in CB-5 included a 13.72 meters zone of veining, from 21.33 meters to 35.05
meters of 1.8 g/t Au, 31 g/t Ag and 0.10% Cu. A second zone was intersected
48.77 meters from 54.86 to 103.63 meters averaging 0.241 g/t Au and 0.06% Cu.
Included in this section is a 19.81 meter zone from 83.82 to 103.63 meters
averaging 0.446 g/t Au and 0.11% Cu.
CB-6
intersected similar porphyry style mineralization over 67.05 meters from 35.05
meters to 102.1 meters averaging 0.188 g/t Au and 0.05% Cu. This includes a
13.72 meter section from 35.05 to 48.77 meters averaging 0.361 g/t Au and 0.09%
Cu.
The
results from holes CB-5 and CB-6 indicate that porphyry Au-Cu mineralization
exists over 1.4 kilometres to the south of the previously released holes, CB-1
and CB-2. The mineralization is associated with the highly altered feldspar
porphyry, an entirely different intrusive rock from that intersected in CB-1 and
CB-2.
The
remaining holes returned lower but still anomalous gold and copper
values.
Fluid
inclusion work on drill cuttings from the reverse circulation drilling program
in the main grid, identified three stages of quartz with several types of
inclusions. The early and late stages of quartz and the inclusion
characteristics are diagnostic of a classic copper-gold-porphyry system. The
intermediate banded quartz is common only in the shallow porphyry systems of the
Maricunga Au belt.
Geological
mapping, line cutting and geochemical soil sampling on the Highway Zone extended
the gold in soils anomaly to cover an area 2 kilometres long, and up to 400
metres wide. Geological mapping and prospecting of this area has found extensive
vuggy silica in float and some outcrops in an area of widespread deep weathering
and overburden.
37
On
the Northern Zone, the Company conducted further geochemical stream silt
sampling to find the source of anomalous gold values in drainages that contained
float with multigram gold values in vuggy silica and breccia. The stream silt
sampling and follow up geological mapping and prospecting isolated an area of
extensive large angular boulders of vuggy silica and subcrop with anomalous gold
values.
In
order to test the Central Grid and Highway Zone porphyry targets, Noranda
drilled 1,789 meters in seven holes. Four were drilled in the Central Grid
looking for the extension of the outcropping copper bearing porphyry and three
holes were drilled into the previously undrilled Highway Zone. The report
summary states “Despite pervasive K-spar flooding potassic alteration associated
with the porphyry in the Central Grid and the huge argillic alteration zone that
occurs at the Highway Zone, significant copper mineralization was not found.”
Noranda states the presence of an important gold deposit in the Central Grid
area has not been ruled out but possibilities for an open pittable copper
porphyry have been reduced. On the Highway Zone, very low values of copper were
found but drilling did intersect short intervals of elevated gold. Hole
CB-02-07, Noranda’s last hole, which was drilled in an area of extensive
argillic alteration associated with elevated gold in soil geochemistry had
several interesting gold intersections. These included stockwork veining from
51.35 to 84 meters depth within which a 6 meter section averaged 1.42 g/t gold.
A sample from 192 to 195 meters depth within a zone of argillic alteration
averaged 2.5 g/t gold and the final sample of the hole from 212.0 to 212.5
meters depth returned a gold value of 4.98 g/t gold. The hole was lost at this
point due to poor drilling conditions.
Two
further holes were attempted
at the Company’s
expense at the end of Noranda’s program, under the supervision of an independent
consultant. These were located near reverse circulation Hole CB98-04, from
Almaden’s 1998 program, which intersected 12.2 meters of 3.8 grams of gold per
tonne. Hole CB-02-08 was drilled east at -50°, parallel to and about thirty
metres south of hole 98-4. It intersected fault gouge in the area where the vein
was expected. Hole CB-02-09 was located ninety meters north of CB 98-04 and also
aimed east at -50°. This hole intersected a mineralized vein zone from 57.3 to
60.0 meters, and from 69.0 meters to 73.0 meters the recovered material
contained fragments of quartz vein material that is mineralized with
chalcopyrite, galena, and pyrite. The hole was abandoned in bad ground at 73.0
meters, which is a few metres before the expected location of the zone found in
hole CB 98-04.
Comaplex’s
2003 program on the Highway zone outlined several prominent areas of alteration
and mineralisation. A significant resistivity and chargeability anomaly has
resulted from this work over a roughly 5 by 3 kilometer area of acid sulphate
alteration characterised by hypogene alunite and vuggy silica.
At
the Northern zone, sampling, geologic mapping and PIMA analyses have defined a
huge, roughly 6 by 5 kilometer area of acid sulphate alteration and vuggy
silica, including many breccia bodies. Past
sampling in these areas by Almaden has returned anomalous gold values, the
highest being 11 g/t. The alteration in the Northern zone is very similar to
that in the Highway zone, however up until this program very little work had
been carried out in this area. Initial sampling by Comaplex returned anomalous
gold values from outcrop, the highest being 1 g/t.
Outcrop in this area includes breccia bodies containing clasts of vuggy silica.
An IP section over the zone outlined a large high resistivity
feature.
A
drill program that was to have commenced earlier in 2004 was delayed due to
additional permitting requirements, shortage of drilling equipment, difficulties
in road building and the summer rainy season. Drilling on a portion of the
southern Highway zone commenced in November 2004 and shut down for the Christmas
season. The core has been logged and sampled by Comaplex staff and results have
not yet been reported by Comaplex.
Planned
Work Program - Fiscal 2005, Ending December 31, 2005
The
Company has no planned exploration program for Fiscal 2005 with all work being
conducted by Comaplex Minerals Corp. who is working to earn their interest in
the prospect. A diamond drill program to test the principal targets of interest
on the Highway Zone and Northern Zone is currently planned for March/April 2005
and is expected to utilise a man-portable diamond drill rig. Utilising this
equipment is anticipated to greatly reduce the difficulties in access and road
building encountered in the past due to very hard and rocky ground conditions.
38
The
Fuego Prospect - Mexico
39
The
Fuego Prospect is without known reserves and all current work by the Company on
the prospect is exploratory in nature.
Option
to Acquire Interest
During
Fiscal 2003, the Company’s subsidiary, Compania Minera Zapata, S.A. de C.V.,
acquired 100% interest in the prospect by staking. The project fell under the
area of influence of the BHP Billiton joint venture discussed below, and under
terms of this joint venture it was offered to BHP, who declined to participate
and have released any interest in the prospect.
In
February 2004, the Company entered
into an agreement (the “Horseshoe Option” with Horseshoe Gold Mining Inc.
(“Horseshoe”). To earn an initial 50% interest, Horseshoe must maintain the
property in good standing, incur exploration expenditures totalling US$2,000,000
and issue 1,000,000 shares to the Company by December 31, 2006. Horseshoe can
increase its interest to 60% by incurring a further US$1,000,000 of exploration
expenditures by December 31, 2007. Upon earning a 60% interest in the prospect ,
Horseshoe would have 120 days to acquire Almaden’s remaining 40% interest in the
prospect in return for a 40% interest in the issued capital of Horseshoe, to be
issued by Horseshoe to Almaden at that time. Horseshoe’s right to increase its
interest to 60% is subject to approval by its shareholders of the acquisition of
Almaden’s remaining 40% interest. By reason of delays in obtaining requisite
permits to conduct exploratory drilling and consequent delays in securing
appropriate drilling equipment, Horseshoe was unable to make requisite
expenditures within the times provided in the Horseshoe Option. By amendment
dated as of the 31st
of January 2005, times to perform work requirements and to meet share issuances
were extended essentially by one year.
Expenditures
to Date
During
Fiscal 2004, the Company incurred $27,763 in exploration costs, net of
recoveries. As at December 31, 2004, the Company had deferred $58,135 in
acquisition and exploration costs on the prospect.
Location
and Access
The
prospect is located in south central Oaxaca State, Mexico and is accessible from
the city of Oaxaca by paved highway southeast for 114 kilometers to San Pedro
Totolapan, then by unpaved road south for 24 kilometers to San Maria Zoquitlan
and a further 32 kilometers of rough winding road extending in a southeasterly
direction.
Infrastructure
There
is no infrastructure within the immediate area of the prospect.
History
and Recent Work
Limited
historic mining was last carried out on the prospect in 1905 from open cuts and
small scale, shallow underground openings on at lease 3 separate quartz veins.
Horseshoe
completed a surface geologic mapping and rock and soil sampling program on the
prospect. A small Induced Polarization (IP) geophysical survey was carried out
to test the effectiveness of this methodology in identifying vein structures
that are not exposed.
Geology
and Mineralization
The
prospect is a high-level, classic quartz-adularia epithermal vein system. The
textures identified, including fine grained silica and electrum banding and
bladed calcite, are typical of that associated with epithermal vein systems
worldwide. Some limited historic workings exist on one of several banded veins
identified within a more than 20 meter wide zone of veining and silicification
in volcanic rocks. Banded quartz-adularia veins within the vein system generally
dip shallowly and are up to 5 meters wide. In the initial work the parallel vein
system has been traced nearly a kilometre along strike. To date 16 grab and chip
rock samples have been taken on the property of both banded quartz adularia vein
material and silicified volcanic wall rock. Visible gold was recognised in
several hand specimens collected on the property which were not sent for
analysis. The property has excellent infrastructure and represents an epithermal
vein system that has had no modern exploration.
Exploration
Results
The
El Fuego vein system was first examined and sampled by Almaden during a
helicopter-supported reconnaissance exploration project in March 2003. There is
no evidence of any recent work on the prospect. In December 2003, a
reconnaissance style, field appraisal that included geological mapping and
limited rock sampling was carried out by an independent geologist. In early
2004, reconnaissance geological mapping, sampling and an Induced Polarization
survey gave better definition to the vein. This work identified the known veins
as resistivity and chargeability highs. Additional resistivity and chargeability
highs were identified in this work which suggests that further veins may exist.
40
Planned
Work Program - Fiscal 2005, Ending December 31, 2005
The
Company has no planned exploration program for Fiscal 2005 with all work being
conducted by Horseshoe who is earning its interest in the prospect. Early in
2005, Horseshoe advised the Company that it will be conducting further mapping,
prospecting and sampling, preparatory to drilling anticipated by mid
year.
41
The
San Carlos Prospect - Mexico
42
The
San Carlos Prospect is without known reserves and all current work by the
Company on the prospect is exploratory in nature. The San Carlos Prospect
consists of the San Carlos and San Jose claims located in the State of
Tamaulipas in Mexico
Option
to Acquire Interest
The
prospect is owned through the Company’s subsidiary, Compania Minera Zapata, S.A.
de C.V. The San Carlos claim was acquired directly by staking. The San Jose
claim, initially held under option, was purchased outright in February 2001 for
US$100,000 plus a 2% NSR. These claims surround several small claims totaling 97
hectares which were optioned for a purchase price of US$1,000,000 over six years
subject to a sliding scale royalty of from 2.5% to 1.5% depending on the rate of
production.
During
Fiscal 2001, Aurcana Corporation (“Aurcana”) was granted the option to acquire
up to a 60% interest in the project. To earn an initial 50% interest, Aurcana
had to maintain the property in good standing, incur exploration expenditures of
US$2,000,000 by January 1, 2007 and issue a total of 300,000 common shares to
the Company. Aurcana earned a 10% interest in the San Jose concession upon
payment of the US$50,000 to the Company. At the end of Fiscal 2003, Aurcana
relinquished their option on the property. They also ceded their 10% interest in
the San Jose claim to Almaden in return for a release from further work
commitments.
In
March 2004, the Company entered into an agreement (the “Hawkeye Option”) with
Hawkeye Gold and Diamond Ltd. (“Hawkeye”). To earn an initial 51% interest,
Hawkeye must maintain the property in good standing, incur exploration
expenditures totalling US$2,000,000 and issue 500,000 shares to the Company
within four years. US$350,000 must be spent by March 15, 2005 (“Initial
Expenditures”). As of February 2, 2005, Hawkeye had not reimbursed Almaden for
taxes paid for the prospect on Hawkeye’s behalf (the “Tax Obligation”) and a
notice of default was issued, giving Hawkeye 90 days to rectify the failure to
pay the Tax Obligation. As of March 16, 2005, Hawkeye has provided no
information as to Initial Expenditures and a notice giving 30 days to cure the
default has been given. If the default is not cured, Notice of Termination of
the Hawkeye Option will be given.
Expenditures
to Date
During
Fiscal 2004, the Company incurred $111,790 in exploration of which $95,238 was
recovered from Hawkeye who are earning their interest in the prospect. The
deemed value of securities received from Hawkeye pursuant to the option
agreement was $58,000. As at December 31, 2004, the Company had deferred
acquisition and exploration costs of $203,142, net of write-downs, on the
property.
Location,
Access and Climate
The
prospect is located in the state of Tamaulipas, which is in the north-eastern
part of Mexico. The town of San Carlos is located roughly in the center of the
San Carlos claim block. There is two phase power, telephone service, general
supplies and a small hotel in this town.
San
Carlos is connected by paved road, and is about 100 kilometres north of the
capital of Tamaulipas, Ciudad Victoria. The town of Linares, Nuevo Leon is
located approximately 80 kilometers northwest of San Carlos. Intermediate to San
Carlos and Linares, and connected by an all season dirt road is the mining
district of San Jose.
The
climate is arid and hot. During the summer months temperatures can average
greater than 35 degrees centigrade. The duration and timing of the summer rainy
season varies considerably; however, rains generally are expected during the
months of June, July and August.
The
town of San Carlos is approximately a three and one half hour drive from
Monterrey which is a major industrial city with a population of about three
million people. Ciudad Victoria and Linares are both about a one and one half
hour drive from San Carlos and have populations of over 100,000 people. All
necessary supplies can be purchased at these towns and labour is
abundant.
History
and Recent Work
Accurate
historic data is difficult to find, however, it appears that up until 1911
copper-gold mining did occur. At that time, the operator was an English company
that built a narrow gauge rail line to the property and a small smelter on the
property. There is no record of total production at that time. Several attempts
were made to establish production on a small scale from these skarn zones as
recently as 1950, records are incomplete but indicate 4,067 tons of direct
shipping ore that averaged 4.02% copper (Cu) and 11.24 grams/ton gold (Au) was
mined during this period. Fairfield was attracted to this area following a
review by management of the geological literature on eastern Mexico. The
literature indicated that the many of the igneous rocks are alkalic in
composition. This is of interest because many large copper-gold deposits are
associated with these types of rocks. The literature also described a skarn zone
up to five hundred metres wide. The San Jose area was the site of an historic
mining camp (Begonia and Santa Helena mines) that was active during the late
1800's and early 1900's. Production from this area was from a number of
high-grade copper-gold skarn orebodies. The old workings are reported to be
limited to less than 100 metres below surface. There has been only limited
exploration, development, and production from that time until the present
activity.
43
Fairfield
acquired a large block of ground over the area and then negotiated terms to
acquire the San Jose and Begonia claims. The San Jose Claim was subsequently
purchased subject to a 2% royalty.
Property
scale prospecting and stream sediment sampling were undertaken in May 1998 and
February 1999 by Fairfield’s personnel. An airborne
magnetometer-electro-magnetic survey was carried out over most of the claim
block in April 1999 by Terraquest Ltd. of Mississauga, Ontario. In June 2000 a
baseline was cut for geochemical surveying. Assaying and analysis was carried
out by Acme Analytical Labs of Vancouver, Canada.
In
Fiscal 2001, Aurcana carried out geological mapping, geochemical surveys,
underground mapping and sampling in the Begonia and Santa Helena mine areas, and
two phases of geophysical surveys. Targets outlined by this work were drilled in
two phases in late 2002 and early in 2003. Further limited geochemical surveys
to check a gold anomaly on the eastern edge of the previous grid was also
carried out. No further work was carried out by Aurcana.
In
2004 Hawkeye carried out a geologic mapping, geochemical and geophysical survey
and rock and soil sampling program over the area of anomalous soils identified
by Aurcana. This work delineated several areas that are deemed anomalous with
respect to gold, silver, lead and zinc responses in soil samples and elevated
chargeability responses recorded in the induced polarization geophysical survey
carried out. Hawkeye has informed Almaden that it intends to drill these targets
in 2005.
Geology
and Mineralization
A
trend of alkalic intrusive centers has been recognized in eastern Mexico. These
rocks generally form distinct, isolated high relief areas and intrude deformed
and thrust faulted, dominantly carbonate strata of the eastern extent of the
Sierra Madre Oriental mountain range.
Extrusive
and intrusive rocks in the San Carlos area are interpreted to represent the
erosional remnant of a denuded shield volcano. The volcanic rocks have been
recognized along the margins of a major intrusive complex, and the intrusives
are thought to represent shallowly emplaced magmas. The San Jose area is cored
by a strongly fractured quartz-microdiorite. To the south of the San Jose area
both calc-alkaline and alkaline intrusives occur and have been cut by
lamprophyre and phonolite dykes.
Several
styles of mineralization are known in the San Carlos district. Manto and vein
silver-lead-zinc orebodies hosted in limestone were exploited in the
18th
century east of the San Jose district at San Nicolas. These orebodies were very
important at that time and at one point the town of San Nicolas reportedly had a
population of over 10,000. Several grab samples were taken from dump material
and exposures in workings. Most of these showings are held by others but are
proximal to the San Carlos claim group.
Mineralization
in the San Jose district is closely related to intrusive rocks. Copper sulphides
and gold are associated with calc-silicate minerals and magnetite (skarn) that
have replaced the limestone country rock. Copper sulphides and gold are also
associated with extensive K-silicate alteration and veining within the intrusive
body, which present the potential for a porphyry style gold-copper deposit in
the intrusive complex. The geologic setting of the San Carlos project bears many
similarities to that of the Grasberg and Bingham Canyon porphyry
copper-gold-molybdenum deposits where similar intrusive rocks intrude folded
limestone strata forming porphyry, skarn mineralization and more distal lead
zinc silver mineralization.
44
Exploration
Results
Stream
sediment sampling and prospecting along with examination of old workings in the
Begonia and Santa Helena areas, when related to the known geology and airborne
magnetic survey results, indicated several areas for follow-up with potential
for porphyry and skarn related copper gold deposits. The San Jose area has
evolved into the main area of interest and this is the focus for further
work.
A
second area of interest, the Magnum zone, located 15 kilometres south of the San
Jose mining camp was defined by an airborne magnetic anomaly, and a number of
stream silt samples anomalous in copper and gold from the creeks draining this
area. Follow-up geologic mapping and prospecting identified skarn boulders and
large areas of outcropping gabbro and pyroxenite. Further prospecting and
sampling to locate the source of these anomalies failed to find a significant
zone of mineralization.
The
third area of interest on the property, the El Jatero zone, where Fairfield’s
work identified an interesting gold stream sediment anomaly, is located roughly
15 km east of the Magnum zone. The anomalous streams appear to drain an area of
highly clay altered intrusive rocks, and follow-up mapping and prospecting
failed to find significant mineralization.
Aurcana
Work
A
preliminary prospecting and mapping program confirmed the presence of widespread
porphyry style alteration, and copper-gold mineralization in the multi-phase
intrusive complex. Aurcana’s next program of work was carried out over the San
Jose zone and consisted of 1,002 soil samples, ground magnetics and one line of
induced polarisation (IP) geophysics, all carried out on a cut grid. The soil
survey identified an approximately 1.5 km by 2.0 km area of coincident, elevated
copper and molybdenum soil geochemistry, spatially associated with an area of
altered and veined intrusive rocks. The copper and molybdenum anomaly remained
open to the north and is flanked by elevated Zn, Pb and Mn in soil. This
zonation is typical of that seen in many Cu-Au-Mo porphyry systems world wide.
The copper-molybdenum in soil anomaly had a high magnetic response in the ground
magnetic geophysical data. In addition to the copper-molybdenum soil anomaly,
several Au-Cu soil geochemical anomalies were identified. Of these anomalies,
most are associated with known skarn bodies with past copper-gold production but
several also constitute new discoveries as they are not spatially associated
with known mineralization or past mining.
Detailed
mapping and sampling by Aurcana of the La Begonia workings identified a
skarn-breccia complex measuring approximately 50 metres by 250 metres. The
highly porous and permeable nature of the breccia has permitted oxidation and
supergene processes to take place. Within the heavily oxidized, sulphide poor
skarn-breccia area, average assay values for continuous channel samples (2 m
lengths) were taken. Underground mapping and sampling was also conducted on the
Santa Elena Mine, approximately two km north of La Begonia, however access was
limited to two stopes due to a high water level in the main access tunnel. While
the geological setting at the Santa Elena Mine is similar to La Begonia, the
Santa Elena Mine has a lower gold content. It appears that most of the past
mining and development was from the oxide horizon. Mapping of the underground
workings combined with surface observations identified what appears to be an
important structural orientation in the southern portion of the San Jose area.
It appears that the gold-copper bearing breccia bodies have formed along
north-east trending zones which coincide with several trends identified from
results of a soil geochemical survey conducted in late 2001. The significance of
this controlling structure and the coincident geochemical trends is the
potential to discover additional high-grade breccia-skarn bodies on the
property.
The
cut grid was extended approximately 1.0 km to the north and provided control to
complete a soil geochemical survey. This work, combined with further induced
polarization (IP) geophysical surveying and a ground magnetic survey identified
a large copper-gold soil anomaly coincident with a chargeability high in the IP
results.
In
December 2002, Aurcana drilled two diamond drill holes totaling 440 metres to
test the Begonia skarn zone. Due to rugged topography, the drill setup was 150
metres from the area of high grade underground sampling. Both holes were from
the same setup and did not intersect any sulphide mineralization in the skarn
zone in the western end of Begonia.
A
second phase of diamond drilling started in February 2003 to test the
approximately 1.5 km by 2.5 km area containing the IP anomaly and elevated
copper and gold values in soils. Four holes totaling 765 metres were drilled.
All holes targeted a depth of approximately 200 metres and all encountered
geology indicative of a porphyry system however grades of copper, molybdenum and
gold were low.
45
During
its last phase of surface work, Aurcana further defined a gold in soils anomaly
at the northeastern edge of the surveyed area. This anomalous area lies over the
contact between intrusive rocks and limestone.
Hawkeye
work
Hawkeye’s
work program designed to evaluate the potential for Carbonate Replacement
Deposits (CRD) style and copper-gold skarn mineralization around the 9 km
periphery of the Tertiary intrusion into the thick section of Cretaceous
carbonates.
A
total of 21 km of Induced Polarization survey was completed using a pole-dipole
technique in a six to eight level array at 50 m slope chained
intervals.
The
results obtained to date have identified six areas of interest underlain by
significant Induced Polarization (IP) anomalies (chargeability highs and
coincident resistivity highs and lows) and a combination of coincident anomalous
soil and rock geochemical responses. The six targets are outlined in the
north and eastern parts of the project area within the carbonate sequence at
various distances peripheral to the main San Jose monzonite intrusion. Two
of the targets are classified as Au-Cu (Gold-Copper) targets likely associated
with proximal and contact skarn and/or fracture mineralization whereas the
remaining four are believed to represent more distal carbonate replacement
deposit (CRD) style mineralization.
The
most widely anomalous element of significance for CRD style mineralization is
zinc, forming an intermittent linear north trending band 3 km long and 1.3 km
wide. Clusters of moderately anomalous response outline northwest trends
up to 1 km long and 100 m wide. One of these anomalies is believed to
coincide with the southeastern extension of the smithsonite silicification
zone. Manganese and arsenic response are also largely coincident with zinc
while silver and lead values are weakly elevated but do form small clusters that
are coincident within the outer periphery of the grid.
Planned
Work Program - Fiscal 2005, Ending December 31, 2005
The
Company has no planned Fiscal 2005 exploration program with all work being done
by Hawkeye who is earning its interest in the prospect. Hawkeye has advised that
it is currently designing a work program which the Company anticipates will
include drill testing of the anomalies found.
The
El Pulpo Prospect - Mexico
The
El Pulpo Prospect is without known reserves and all current work by the Company
on the prospect is exploratory in nature.
Option
to Acquire Interest
The
Company’s subsidiary acquired a 100% interest in the Gavilan claims by staking
in Fiscal 2001.
Two
additional claims, which are surrounded by the Gavilan claims, were optioned
from private Mexican individuals in Fiscal 2003. To earn a 100% interest, the
Company must pay US$162,000 plus value added tax by February 2005. The two
claims are subject to a 1% NSR which can be purchased for a fixed payment of
US$300,000 plus value added tax. The optionors have the right to conduct small
scale (less than 40 tonnes per day) mining operations. An agreement to option a
further three claims is expected to be finalized when the optionors (the same
group of private Mexican individuals) complete underlying documentation. Similar
terms are agreed to with the NSR buyout amount to be US$200,000. These will all
come under the deal with Ross River, and that company is responsible for all
payments on these claims while its option is in good standing.
In
Fiscal 2003, the Company entered into an agreement with Ross River Minerals Ltd.
(“Ross River”). To earn an initial 50.1% interest, Ross River must maintain the
property in good standing, incur exploration expenditures totalling US$2,000,000
and issue 425,000 shares to the Company by April 30, 2008. Ross River can
increase its interest to 60% by incurring a further US$1,000,000 of exploration
expenditures by April 30, 2010.
In
December 2004, the Company entered into an agreement (the “Ross River
Acquisition”), subject to regulatory approval (granted March 24, 2005), with
Ross River in which the Company agreed to sell a 100% of its right, title and
interest in the prospect. In consideration for the Company’s interest, Ross
River will issue to the Company 2.2 million shares of Ross River. Ross River is
required to issue an additional 1.0 million shares when exploration and
development expenditures on the property meet or exceed US $10.0 million and an
additional 1.0 million shares on the delivery of a positive feasibility study
recommending production on any part of the property. Almaden will retain a 2%
NSR regarding any minerals from it’s formerly 100% owned concessions. After a
feasibility study is completed on a mineral deposit, one half of this 2% NSR (a
1% NSR) can be purchased by Ross River from Almaden for fair market value as
determined by an internationally recognised engineering firm acceptable to both
parties. Since entering into the original agreement with Ross River during
Fiscal 2003, Ross River has issued 225,000 shares to the Company and informed
the Company that it has made expenditure of close to US$2.0 million which
included 1,561.2 meters of diamond drilling.
46
Expenditures
to Date
As
at December 31, 2004, the Company had recoveries exceeding its deferred costs on
the property and is carrying it at $1, subject to approval of the agreement
discussed above.
Location
and Access
El
Pulpo is located north-east of Mazatlan, Mexico and covers an area of
approximately 120 square kilometres. Access to the mineral claims is by Highway
15 to San Ignacio and then by all season dirt road to Vado Hondo.
History
and Recent Work
The
optioned claims have numerous old historic workings explored in the past for
gold and copper.
The
El Pulpo prospect was discovered by a major company in the early 1970’s. A soil
and rock geochemical sampling program was carried out at that time and produced
a copper anomaly associated with a K-silicate altered and stockwork veined
intrusive body. A prominent consultant visited the property at that time and
wrote a report, now in the Company’s possession, recommending work including
exploration tunnelling. The Company believes that no other significant work has
been performed on the property until the current claim was staked. Late in 2002,
the Company conducted stream silt geochemical survey over parts of the claim
block, this work detected several gold-copper anomalies, rock sampling also
found several areas with anomalous gold copper and silver values.
Geology
and Mineralization
The
El Pulpo project represents a large area of porphyry-style alteration and
mineralization developed in the Teriary age Sinaloa batholith and known
alteration and mineralization covers an area 8 km by 8 km. This alteration is
manifested by quartz-tourmaline veining, associated with copper-gold and
molybdenum values peripheral to a zone of stockwork quartz veining associated
with copper values. Later Miocene lithic tuffs cover part of the claim
area.
Ross
River has informed the Company of the following results from fieldwork carried
out by Ross River during March and April 2003:
El
Bagre Target: The El Bagre Target exhibits altered calc-alkaline intrusive
quartz stockwork mineralisation hosting both oxide and sulphide copper
mineralisation. Four widely spaced rock samples were collected over an area of
one square kilometre and contained significant copper, gold and silver values.
Papaya
Target: The Papaya Target is one kilometre north of the El Bagre Target. Seven
samples collected from a vein by Ross River contained anomalous gold values.
El
Tiburon Target: The El Tiburon target is a further one kilometre north of the La
Trucha target. Grab samples indicate a zone where follow-up is
warranted.
In
May 2003 Ross River reported initial results from a large sampling and mapping
program. In this program several vein systems were identified and sampled
including the Papaya and Trucha areas. Ross River reported that the Papaya vein
system has been traced over 2 kilometers. Ross River has reported that the vein
was identified 1.0 to 1.3 kilometers along strike where grab samples taken have
returned anomalous values in gold and copper. On the Trucha vein system located
2 kilometers north of the Papaya area, Ross River reported that the mineralized
zone explored so far is 1,200 metres long and 850 metres wide within which six
veins have been recognized. The discovery showing occurs on a ridge and consists
of sub-outcrop of quartz-tourmaline veining exhibiting hematite and copper
oxides and is three metres wide. Ross River reported analyses from two new grab
samples taken across the width of the showing.
47
Ross
River also reported that two additional veins to the west and within 400 metres
of the Papaya vein (Juana and Cerro Blanco veins) have been traced over the same
strike length as the Papaya vein and that four additional parallel veins in the
same area have been discovered but have yet to be sampled. This system is open
along strike both to the north and south and the full widths of all the veins
remain to be delineated.
Ross
River also reported results from the La Trucha target located 2 kilometres
northeast of the Papaya target.
Approximately
one kilometre along strike to the southwest another area of sub-outcropping
quartz-tourmaline veins exposed through overburden cover and Ross River has
reported the results of sampling from this zone.
Ross
River has reported that the veins whose assays were reported on La Trucha and
its southwest extension are open along strike to the southwest and
northeast.
In
November 2003, Ross River informed Almaden that is has discovered a new area of
porphyry style alteration and mineralization. Ross River released the results of
the initial findings of this work in a news release, an excerpt from which
follows:
“Ross
River Minerals has discovered a new copper porphyry zone and extended the known
mineralized zones of both the Papaya and La Trucha targets on its El Pulpo
property in Mexico. To date, the company has identified three copper porphyry
targets and four gold-silver-copper vein targets on the 200-square-kilometre
property.
A
new area, named the Langosta target, consisting of strong quartz-sericite-pyrite
(phyllic) alteration with stockwork quartz veining, has been identified
extending southward along a tributary creek (Quebrada Magistral) 2,000 metres
east of the Papaya target, approximately 2,500 metres southwest of La Cetolla
copper porphyry target and 600 metres northeast from the El Bagre copper target
on Rio Los Frailes. Phyllic alteration is observed, to date, on the north side
of Rio Los Frailes over a distance of 100 metres and over a distance of 150
metres on the south side of Rio Los Frailes. This alteration extends outward
from a core of potassic alteration consisting of secondary biotite and potassium
feldspar and minor magnetite over a distance of 210 metres in a southerly
direction. These two styles of alteration characteristic of porphyry systems are
hosted within an altered granodiorite to quartz-diorite intrusive
complex.
Copper
mineralization observed along Quebrada Magistral, within the altered
granodiorite to quartz-diorite, consists of veinlets, disseminations and
clusters of chalcopyrite (approximately 5 to 10 per cent). At higher elevations
within this mineralized area, clusters of arsenopyrite mineralization
(approximately 1 to 5 per cent) have also been identified. Secondary copper
oxides within this area consist of malachite and black copper oxides. The extent
of the mineralized area mapped so far measures approximately 100 metres (north
to south direction) and 75 metres (east to west direction) and remains open in
all directions. A total of 25 panel and chip samples have been taken from this
area and analytical results are pending. Geologic mapping and sampling are
continuing to determine the dimension and grade of this altered and mineralized
porphyry system. Samples are being prepared at GM-Lacme Laboratories in
Guadalajara, Mexico, with final analyses being carried out by Acme Analytical
Laboratories Ltd. in Vancouver, B.C. Victor Jaramillo, P.Geo, is the qualified
person supervising the work in this area.”
In
December 2003, Ross River provided the Company with the following results in the
form of a news release, an excerpt from which follows:
“Continued
geological mapping and sampling of the La Langosta target have outlined a zone
of potassic and phyllic alteration covering an area approximately 2.0 kilometres
long by 1.5 kilometres wide. A larger propylitic alteration zone occurs outside
the phyllic alteration envelope. The potassic core is characterized by secondary
biotite and potassic feldspar veining. Outside this zone occurs a
quartz-sericite-pyrite alteration (phyllic) envelope and then an outer
propylitic altered zone characterized by pervasive chlorite, disseminated pyrite
and calcite veinlets. The limits of the propylitic alteration have yet to be
defined. These alteration zones remain open to the southwest.
48
From
observations of limited outcrop, copper (chalcopyrite and copper oxides) and
minor molybdenite mineralization appears to be concentrated within an area of
approximately 1,500 metres by 750 metres. The earlier identified El Bagre target
lies within the La Langosta porphyry system, within the potassic altered
envelope and is characterized by chalcopyrite, copper oxide and minor
molybdenite mineralization as veinlets and disseminations.
Ross
River is still defining the structural controls within this porphyry system.
However, the topographic relief, from Rio Frailes to the ridges 750 metres
southeast, exposes the mineralized system vertically over 200 metres. This
extends from a potassic zone, with chalcopyrite mineralization, near Rio
Frailes, in the north, to a topographically higher phyllic altered zone
containing secondary iron and copper oxides to the southeast.
Preliminary
analyses have been received for 24 samples, taken from the initial discovery
area of 100 metres by 75 metres, include copper sulphides, mixed copper
sulphides and oxides and leached oxide cap.”
In
January 2004, Ross River provided the Company with the following results in the
form of a news release, an excerpt from which follows:
“Ross
River Minerals Inc. (the 'Company') is pleased to report that the 2003 field
season concluded with the Company completing 9.5 kilometres of new trail
construction and expanding the already extensive Papaya and La Trucha vein
systems on the Company's property located in Sinaloa State, Mexico. In addition,
the Company discovered seventeen new mineralized veins. Of these, seven have
greater than 300 metres of strike length traced to date. All seventeen remain
open along strike.
The
new 1.5 kilometre access trail to the La Trucha target passed through a
well-mineralized new area (La Plancha) which shows very strong
tourmaline-quartz-copper oxide and sulfide mineralization in five shallow
dipping veins, one of which has 2.0 metres of exposed width. Four other veins
have been identified in this area with lesser-exposed widths but with equally
strong mineralization. A total of 37 rock samples were collected from the La
Plancha area.
At
the La Trucha target 500 metres of trenching using a Cat D7E bulldozer has been
completed to date. The southerly vein ('F'vein), was cut in two locations and
showed strong fracturing and faulting within tourmaline-quartz veining and
copper oxides. Assay results are pending. Further trenching using a tracked
excavator will commence mid January 2004.
Exploration
at the Papaya target included 1,200 metres of trail rehabilitation and over 350
metres of trenching at two locations in the down-dip (western) direction of the
vein. At the northern location (Papaya Norte) the 40 degrees dipping
quartz-tourmaline vein was exposed over 7 metres width. At the southern trenched
area (Papaya Sur), 350 metres south of Papaya Norte, five subparallel veins
identified to date, ranging from 0.1 to 1.5 metres wide, occur on the footwall
(east) side of the 10 metre wide main vein. Assays are pending.
A
newly discovered vein (Pitayo) has been found 200 metres southeast of the
trenched Papaya Sur zone. The Pitayo vein appears to be subparallel to the
Papaya vein and is exposed over greater than 4.0 metres width. Six other veins
identified to date with lesser-exposed widths were discovered during trail
access construction. Two of these veins are observed to be crosscutting and
exhibit extensive copper and iron oxides. Assays are pending.
During
January, as development of the 2 kilometre access trail along the Papaya vein
continues, trenching to expose the full width of these veins will take place.
Over 1,000 metres of reconnaissance geological mapping and rock sampling along
the proposed trail/trench has revealed five mineralized areas to date.
The
Company has discovered a new zone (El Sauz), extending 1.6 kilometres north of
the Papaya target, of tourmaline-quartz-copper oxide vein mineralization. A
total of 26 samples were collected and analyzed.
49
In
addition, during geological reconnaissance, a float sample of massive sulfide
was found in a creek bed in the El Sauz area near the La Trucha and La Plancha
drainage divide. The float sample returned values of gold and silver. Its
geochemistry is similar to other veins in the La Trucha area, however the source
of this float has yet to be discovered.”
On
May 13, 2004, the Company reported that Ross River had provided the Company with
the following results in the form of a news release, a partial excerpt from
which follows:
Papaya
Target: Inversion analysis and geophysical interpretation has identified four
structures trending in a northwest/southeast direction on the Papaya grid. The
first 800 metres long is open to the southeast, the second 3,500 metres long is
open to the north and southeast, the third 700 metres long is open to the
northwest
and the fourth 2,100 metres long is open to the northwest and southeast.
Resistivity depth slicing at 100 metres shows, as expected, resistivity
anomalies associated with the northwest/southeast trending chargeability
anomalies and at surface are shown to be correlative with known mineralization.
Three of the anomalies, including the main Papaya vein zone, are associated with
anomalous gold, silver, copper, tellurium and bismuth identified in soil
geochemistry. In addition, a large chargeability anomaly (7 - 18 mV/V) occurs at
the southeast corner of the grid over an east/west distance of 900 metres and is
open to the south and east. Geophysical surveying in progress on the La Langosta
grid will better define this anomaly.
La
Trucha Target: Three chargeability anomalies have been identified on the La
Trucha target. The first 700 metres long by 500 metres wide, trending northeast
to southwest, disappears under Quaternary overburden cover. The second anomaly
500 metres long by 400 metres wide is located immediately to the south. The
third anomaly extending to the Papaya grid immediately adjacent to the west
trends in a northwest southeast direction over 1100 metres in length and 300
metres in width and plunges under a ridge capped by volcanic rocks to the
southeast. All three chargeability anomalies are associated with co-incident
resistivity anomalies and known outcrops of quartz tourmaline veining. As
anticipated, due to the thick overburden the soil geochemistry was of limited
use, however, where known outcrops of gold, silver and copper occur, spot
anomalies of gold, silver, copper, tellurium and bismuth were reported. The
extent of the geophysical anomalies on the La Trucha, particularly over known
mineralization, indicate the target at depth appears to be much larger than
originally anticipated.
La
Langosta Target (including El Bagre): The I.P. and soil geochemistry surveys
have been completed on the La Langosta grid. The surveys show an elliptical
chargeability anomaly ring extending in a northeast/southwest direction over
2,100 metres and 1,000 metres in a northwest/southeast direction. The width of
the ring ranges from 150 - 300 metres. The chargeability ranges from 10 - 54
mV/V. This anomaly is coincident with porphyry style mineralization within the
La Langosta target. Follow-up work within this high chargeability zone has
discovered two new outcrops, the first 30 metres by 20 metres in size, 500
metres south of El Bagre within intrusive rock containing disseminated
chalcopyrite plus copper oxides. A second outcrop 200 metres to the west and 20
metres wide of strongly potassically altered quartz monzonite with sheeted
quartz tourmaline veins containing disseminated pyrite and chalcopyrite.
Additional I.P. lines are being cut to the east as the chargeability anomaly is
open in that direction.
Cerro
Colorado Target: The I.P. geophysical survey has just commenced on the Cerro
Colorado grid. Soil geochemistry has outlined two large zones anomalous in gold,
silver and copper. The largest of these is also anomalous in bismuth and
tellurium. The largest zone extends in a northeast/southwest direction and is
coincident with known gold, silver and copper mineralization and is 200 - 300
metres in width and at least 1,700 metres long and is open along strike at both
ends. Additional soil lines are being cut. The second anomaly is new and is 100
- 250 metres in width and 1,100 metres long in a northwest/southeast
direction.
La
Cetolla: Six trenches up to 2 metres deep and between 8 and 20 metres in length
were dug by hand over 900 metres in an east west direction. Five of the trenches
exposed disseminated and stockwork copper mineralization consisting of
chalcopyrite and copper oxides. Assays are pending.
In
addition, a new area of stockwork copper mineralization has been discovered 2.2
kilometres southeast of the La Cetolla porphyry copper-gold target. Exploration
work is continuing in this area.
50
The
above from a Ross River news release refers to the unit of measurement “mV/V”.
This is the geophysical unit of measurement for chargeability, or the
overvoltage induced in the geophysical survey. Chargeability is a function of
the metallic mineral content of the area surveyed.
On
May 26, 2004, the Company reported that Ross River had provided the Company with
the following results in the form of a news release, an excerpt from which
follows:
“Ross
River Minerals Inc. (the "Company") is pleased to announce that drilling has
commenced on its 200 sq. km. El Pulpo property located in Sinaloa State, Mexico.
Drilling will begin on the Papaya gold-silver-copper target, followed by the La
Trucha and Cerro Colorado gold-silver-copper targets.
Additional
soil and geophysical lines have been cut at the south end of the Papaya grid and
east of the La Langosta grid and east and west of the Cerro Colorado grid, in an
attempt to close off the geophysical and soil geochemistry anomalies extending
beyond the existing grids.
To
date the Company has identified four high grade gold-silver-copper vein targets
(Papaya, La Trucha, El Tiburon and El Sauz), a stockwork gold-silver target
(Cerro Colorado) and two copper-gold porphyry targets (La Langosta/El Bagre and
La Cetolla) on the property, with less than a third of the property explored to
date. Data from the current exploration program will assist in identifying drill
locations for the La Langosta copper-gold porphyry target. On-going exploration
of the known targets is continuing to discover new mineralized
zones.”
On
June 11th,
2004, the Company reported that Ross River had provided the Company with the
following results in the form of a news release, a partial excerpt from which
follows:
Ross
River Minerals Inc. is pleased to announce that it has confirmed Cerro Colorado
as the third and largest copper-gold porphyry target identified to date on its
200 square kilometre El Pulpo property. This is in addition to the previously
identified La Langosta/El Bagre and La Cetolla copper-gold porphyry targets and
the Papaya, La Trucha, El Sauz and El Tiburon gold-silver vein
targets.
As
previously reported, a large I.P. chargeability anomaly was outlined associated
with gold, silver and copper soil geochemistry anomalies. Previous work focused
on the gold potential along a northeast-southwest trending ridge characterized
by sheeted and stockwork gold bearing quartz-tourmaline veining within zones of
phyllic alteration in an intrusive setting. Prospecting and geological mapping
of anomalous soil geochemistry and geophysical anomalies north of the
northeast-southwest trending ridge in topographically lower areas has discovered
widespread fractured controlled and disseminated porphyry style chalcopyrite
mineralization within potassically altered granodiorite. At higher elevations
the anomalies are associated with a widespread reddish-brown soil overlying
altered oxidized granodiorite with remnant chalcopyrite, pyrite and iron oxides
with anomalous copper in soils.
The
porphyry mineralization on Cerro Colorado appears to be outlined by three
chargeability anomalies >10mV/V at n=1, forming a rough ellipse. On most
lines, which are spaced at 200 metres, the chargeability increases at depth with
greater than 15mV/V to >30mV/V. The largest anomaly has a length of 1,900
metres and a width of 750 metres and trends northeast-southwest. The second
anomaly 520 metres northwest of the first has dimensions of 800 metres by 300
metres trending in a northwest-southeast direction. The third anomaly 200 metres
west of the first is 450 metres by 300 metres in size.
All
the chargeability anomalies have coincident copper soil geochemistry anomalies,
silver soil geochemistry anomalies and gold soil geochemistry anomalies.
Molybdenum and zinc overlap and are outboard of the copper anomalies. Where the
anomalies outcrop, potassic (biotite+/-potassium feldspar+/-hematite after
magnetite) and phyllic (sericite+/-quartz+/-pyrite) alteration with chalcopyrite
and/or copper oxides are observed. The surficial distribution of these metals is
consistent with large porphyry copper deposits.
51
To
date at least forty percent of the Cerro Colorado area has been mapped and
sampled as part of a follow-up program of prospecting and mapping the soil
geochemistry and geophysical anomalies. Assays are pending for rock samples.
James R. Reeves P.Geo. is the qualified person supervising the geologic work in
this area.
Drilling
is continuing on the Papaya and La Trucha gold, silver, copper vein targets and
results will be reported when received. Trenching is also continuing on the
Cerro Colorado, La Langosta and Papaya targets. Management is extremely
encouraged by the on-going field program that continues to identify new and
larger copper, gold, silver targets.
The
above from a Ross River news release refers to the unit of measurement “mV/V”.
This is the geophysical unit of measurement for chargeability, or the
overvoltage induced in the geophysical survey. Chargeability is a function of
the metallic mineral content of the area surveyed.
On
August 20, 2004, the Company reported that Ross River had provided the Company
with the following results in the form of a news release dated August 20, 2004,
a partial excerpt from which follows:
“Vancouver,
BC: Ross River Minerals Inc. (TSX-V: RRM) (the "Company") is pleased to announce
that it has completed compiling surface and trench samples collected during 2004
on its Cerro Colorado, La Langosta and La Cetolla copper-silver-gold porphyry
targets located in Sinaloa State, Mexico, and that it has discovered a fourth
area of porphyry-style copper mineralization on the 200 square kilometre El
Pulpo property.
Jocquistes:
Prospecting in the eastern part of the El Pulpo claim area has revealed a fourth
area of porphyry style mineralization approximately four kilometres east and
south of La Cetolla. The prospect, called Jocquistes, features widespread
malachite/azurite encrustations on fractures and outcrops and 1-3 centimetre
quartz stockwork veins containing chalcopyrite with associated pervasive phyllic
alteration overprinting potassic alteration over a minimum area of 500 by 1,000
metres. The intensity of alteration and the continuity of mineralization is
similar to the La Cetolla prospect. The Company plans to conduct extensive
prospecting on this target early in the fall to better determine the extent of
the mineralization. The discovery of the Jocquistes prospect has given a new
perspective to exploration of the El Pulpo claim block. An overall pattern is
emerging of copper prospects surrounding a molybdenum-rich core.
Cerro
Colorado: Soil geochemistry and Induced Polarization (IP) and magnetometer
geophysical surveys were completed over an area of 6.8 square kilometres. An
area 1,900 by 750 metres anomalous in copper, gold, silver and molybdenum in
soils was outlined associated with an extensive IP anomaly. Satellite anomalies
also occur 200 metres west (dimensions: 450 by 300 metres) and 520 metres north
(dimensions: 800 by 300 metres) of the major anomaly (see press release dated
June 9, 2004 and refer to Ross River’s website). Mapping in the southeastern
part of the major anomaly identified significant widespread areas of potassic
and phyllic alteration related to disseminated and stockwork copper
mineralization within the granodiorite host rock. One hundred seven rock chip
samples were collected from outcrops and from trenches and road cuts at depths
of 2 to 4 metres within this area. Individual samples were collected over widths
of 0.2-7.0 metres.
La
Langosta: Soil geochemical and IP/magnetometer surveys were carried out over a
grid 2,200 metres by 1,800 to 2,500 metres in the La Langosta area. Prospecting
and mapping was conducted over a small portion of the anomalous area to identify
the origin of the IP chargeability anomalies. One hundred six rock samples were
collected, including 95 chip samples, mostly from leached bedrock in hand-dug
trenches at depths of 1 to 2 metres.
These
results are extremely encouraging considering these are from preliminary
sampling over a small part of the extensive anomalous areas of the Jocquistes,
Cerro Colorado and La Langosta targets and are mainly from leached bedrock.
La
Cetolla: Preliminary prospecting of the La Cetolla target east of the La
Langosta area has confirmed the copper-gold porphyry extending over an area of
1,100 by 230 metres previously discovered by Placer Mexicana in the 1970’s.
Subsequent exploration has extended this area to 1,575 by 430 metres and is open
in all directions. Fifty-nine samples were taken from outcrops and from hand-dug
trenches at depths of 1 to 2 metres. Fifty-three chip samples were taken from
61.7 metres of trenches and 59.6 metres of outcrops over widths of 0.3 to 5.40
metres.
52
The
initial 2004 exploration program on the El Pulpo property was curtailed by the
rainy season in early July. The Company has not received all the assays and
re-assays from the drilling program of the Papaya and La Trucha gold-silver vein
systems. These results will be released as soon as they become available.
Reassays have been requested for those samples over the reportable limit. Data
review, checking and compilation of the initial 2004 program is presently
underway which will be followed by the planning of a major exploration and
drilling program of El Pulpo to commence this October.
Victor
Jaramillo P. Geo. and James R. Reeves P. Geo. were the Qualified Persons
supervising exploration of these targets.
Planned
Work Program - Fiscal 2005, Ending December 31, 2005
The
Company has no planned exploration program for Fiscal 2005. Ross River has
advised that it has applied for regulatory approval (granted March 24, 2005) of
the Ross River Acquisition.
The
Ram Prospect - Canada
The
Ram Prospect is without known reserves and all current work by the Company on
the prospect is exploratory in nature.
Option
to Acquire Interest
The
Ram claims were acquired from the Company’s predecessor (“Fairfield”) and are
100% owned by the Company.
In
May 2000, Fairfield entered into an agreement with Ross River Gold Ltd. (now
Ross River Minerals Inc. (“Ross River”)) whereby Ross River can earn a 70%
interest in the prospect by incurring $500,000 in exploration expenditures by
April 1, 2006 and issuing to the Company a total of 390,000 shares (amended).
Ross River has also paid the Company $21,000 in consideration for an extension
to the agreement.
Expenditures
to Date
During
Fiscal 2004, the Company incurred $44 on this prospect. The proceeds from
securities received pursuant to the agreement with Ross River was $37,910.
$37,866 of excess recoveries has been charged to mineral properties revenue for
Fiscal 2004. As at December 31, 2004, the Company is carrying this prospect at
$1.
Location
and Access
The
Ram prospect is in the Watson Lake Mining District, 260 kilometers northeast of
Whitehorse, and 45 kilometers south of Ross River, Yukon Territory. The claims
are accessible by seasonal four-wheel drive road originating from the South
Canol Road (Highway 8).
History
and Recent Work
The
current 69 Ram claims formed part of a much larger block of 758 claims staked in
1984 and 1985 by Regional Resources Ltd. (Fairfield’s predecessor), to cover
gold-silver and base metal geochemical anomalies and mineral occurrences. Work
completed by Regional in 1985 included line cutting, grid geochemical surveys,
geological mapping, prospecting and minor hand trenching.
Title
to the entire claim group was transferred to Fairfield in 1986. During 1987,
Fairfield conducted further grid soil sampling, reconnaissance rock sampling and
ground geophysical surveys. In 1988, Fairfield and joint venture partner Equity
Silver Mines Ltd. carried out diamond drilling and additional soil geochemistry.
Thirty-one BQ core holes totaling 3723 metres were drilled to test five separate
targets on the property. Fifteen of these holes tested the Vole, Trout and Mouse
Showings located on the presently existing (69) claims.
From
1991 to 1999, the property was under option to Pacific Comox Resources Ltd.
which conducted airborne and ground geophysical surveys, and a reverse
circulation drill program that included six short holes on the present (69)
claims. The claim holdings were reduced to this number by December
1993.
53
In
May 2000 the Ram claims were optioned by Ross River which in turn optioned them,
together with its larger adjoining Tay-LP land package, to Newmont Exploration
of Canada Limited (“Newmont”). Fieldwork in the Ram area by Newmont during 2000
included airborne magnetic and electromagnetic (EM) geophysical surveys,
geological mapping and prospecting, soil and rock geochemical sampling, and
auger overburden drill sampling. Newmont terminated its option on the entire
Ram/Tay-LP project in December, 2001.
During
2002, Ross River carried out further prospecting and rock sampling on the Ram
claims, as well as diamond drilling of four holes totaling 342.6 metres to test
EM and geochemcial anomalies.
Geology
and Mineralization
The
present claim area is underlain by a sequence of moderately deformed and
metamorphosed Lower Paleozoic sediments intruded by probable Cretaceous age
granitic rocks. Lithologies comprising the stratigraphic assemblage include
phyllite, schist, dolostone, quartzite and slate. Calc-silicate hornfels and
chlorite-magnetite skarn occur at or near intrusive contacts.
Auriferous
mineralization on the property is dominantly hosed by phyllite and occurs as
irregular quartz-sulphide masses, veins and stockworks, breccias,
skarn/hornfels, and local replacements of thin calcareous interbeds. Sparse
intrusive exposures are variably silicified, clay altered and also locally
contain quartz-sulphide veins and sulphide disseminations. A prominent regional
domal uplift of the stratified rocks is interpreted to reflect the presence of
buried intrusions responsible for the mineralizing events. The style and setting
of the various occurrences are consistent with the model of intrusion related
gold systems along the Tintina Gold Belt of central Yukon and Alaska, within
which the Ram prospect is situated.
The
gold is associated with quartz-tourmaline, pyrrhotite, pyrite, bismuthenite,
tellurides, chalcopyrite, arsenopyrite and galena. Best mineralization
discovered to date occurs at the Vole Showing, where drilling in 1988
intersected a quartz-sulphide stockwork zone assaying 2.2 g/t gold over 5.3
metres. Approximately 1300 metres south of this area, a 5-metre wide
quartz-sulphide vein outcrops at the Trout Showing. This showing was also drill
tested in 1988; silver assays of up to 101.8 g/t over 1.74 metres were returned,
but gold values were low.
Infrastructure
There
is no infrastructure in place on the prospect.
Drilling
Results
During
Fiscal 2002, Ross River completed four diamond drill holes totaling 342.6 metres
on the Ram claims, to test EM and geochemical anomalies. No significant gold
assays were obtained from core samples.
Planned
Work Program - Fiscal 2005, Ending December 31, 2005
The
Company has no planned exploration program for Fiscal 2005. Ross River is
maintaining its option on the property. The claims have expiry dates from
December 31, 2013 to December 31, 2019.
The
Rock River Coal Prospect - Canada
The
Rock River Coal Prospect is without proven reserves and all current work by the
Company on the prospect is exploratory in nature.
Option
to Acquire Interest
During
Fiscal 2002, the Company acquired a 50% interest in four coal exploration
licenses covering 187,698 acres in the Yukon Territory through application to
Indian and Northern Affairs Canada. Santoy Resources Ltd. (“Santoy”), formerly
Troymin Resources Ltd. (“Troymin”), holds the remaining 50% interest. The
licenses were originally applied for by the Company’s President during Fiscal
2001 and when granted, a 50% interest was for the benefit of the Company and a
50% interest was for the benefit of Troymin. The licenses are subject to a gross
over riding royalty (‘GORR”) of 3% payable to H. Leo King upon the licenses
being issued. The joint venture can also purchase up to 2% of the GORR for
$1,000,000 for each per cent.
54
Expenditures
to Date
During
Fiscal 2004, the Company renewed the licenses for a second three-year term. The
Company’s portion (50%) of the lease deposit was $4,712 for this first year. Its
portion of recoveries based on exploration work applied against previously paid
lease deposits was $10,541. As at December 31, 2004, the Company had deferred
costs of $39,337 on this prospect.
Location
and Access
The
licenses are located in the Watson Lake Mining District in the Yukon Territory,
100 kilometres north east of Watson Lake. Access is by helicopter. A winter road
extends to 10 kilometres of the property.
History
and Recent Work
Coal
was discovered by Sulpetro Minerals Ltd. in the Rock River Basin in July 1980
and five holes were drilled in 1981 for a preliminary evaluation of the coal
potential. A gravity survey of the entire basin on widely spaced lines was
carried out in 1982. This survey identified nine responses possibly sourced by
coal units. These can be divided into six anomalous areas, one of which includes
the known coal beds. Near surface coal was intersected in drill holes one and
two. A Yukon Government publication, “Yukon Exploration and Geology 1983”
reports that Sulpetro staff estimated 56,000,000 tonnes of lignite coal lies
within 80 metres of the surface in the vicinity of holes 1 and 2. Analyses
indicated a thermal content of 6645 BTU at equilibrium moisture and a waste to
coal ratio of 2:1. The coal ranks from lignite A to subbituminous C. The
Almaden/Troymin joint venture conducted a review of government and Sulpetro
data. During the summer of 2003, a geological review and reconnaissance program
was carried out on the prospect by Aurora Geosciences Ltd.
Geology
and Mineralization
Tertiary
strata in the Rock River Basin accumulated in an inter montane valley whose
geometry and history was probably controlled by subsidence related to the Rock
River fault. Coal deposits in the Rock River Basin are interpreted as products
of desposition in forest moor environments associated with stable channel
fluvial systems. If the elongate gravity anomalies identified by Sulpetro are
coal the ultimate coal potential of the property is very high. To prove up coal
resources would require an extensive program of closely spaced
holes.
Planned
Work Program - Fiscal 2005, Ending December 31, 2005
The
Company has no planned exploration program for Fiscal 2005. The Company is
required to file a statement of work or remit fees based on $0.05 per acre in
year one, $0.10 per acre in year two and $0.20 per acre in year three. The
licenses expire on July 30, 2007.
The
PV Prospect - Canada
The
PV Prospect is without known reserves and all current work by the Company on the
prospect is exploratory in nature.
Option
to Acquire Interest
The
initial 10 claims (40 units) comprising the PV prospect were acquired by staking
by the Company’s predecessor (“Fairfield”) in October 2001 and are 100% owned by
the Company. The Company added 26 single-unit PV claims by staking in February
and June 2003, and also staked a separate block of 12 single-unit NIC claims
during October 2003.
In
March 2004, the Company entered
into an agreement with Consolidated Spire Ventures Ltd. (“Spire”). To earn a 60%
interest, Spire must incur exploration expenditures totalling $1.3 million and
issue 600,000 shares to the Company by January 10, 2007.
In
May 2004, the Company completed the staking of an additional 22 mineral claims
and was reimbursed by Spire for the costs of this work.
These new claims partly overlap and substantially expand the previous PV and NIC
claim groups, joining them into one contiguous block currently comprising 353
units or approximately 88 square kilometres.
Expenditures
to Date
As
at December 31, 2004, the Company had incurred $46,929 in acquisition and
exploration costs on the prospect of which $33,835 was recovered by Spire who
are earning their interest in the prospect. The deemed value of securities
received pursuant to the option agreement with Spire was $14,000. As at December
31, 2004, the Company has $130,897 in deferred acquisition and exploration costs
on the prospect.
55
Location
and Access
The
property is located approximately 50km west of Merritt, British Columbia and
access to all but the (new) central claims is by road. The central claims are
accessed by helicopter.
History
and Recent Work
A
preliminary program carried out in October 2001 consisted of prospecting and
reconnaissance scale rock and soil geochemistry. This work resulted in the
discovery of widespread and locally abundant gold bearing quartz vein float.
Initial soil sampling at 50-meter intervals was conducted along a network of old
logging roads and trails throughout the claim block. Analytical results from the
280 soil samples taken outlined anomalous gold and arsenic, mainly within the
one square kilometer area containing the most abundant mineralized quartz
float.
In
2002 field work consisted of initial coarse grid soil geochemistry, multiple
stages of detailed (infill grid) soil geochemistry, minor portable auger (soil)
sampling, substantial further prospecting and reconnaissance (rock, silt, soil)
sampling, plus mechanical excavator trenching and test pitting with related
mapping and rock/basal soil sampling. Totals of 1241 soil, 123 rock and 11
stream sediment samples were collected and shipped to Acme Analytical
Laboratories Ltd. in Vancouver, BC for 35-element geochemical analysis.
The
2001-02 total of 1385 grid and road soil samples defined multiple element
geochemical anomalies in the area of Bonanza Creek resulting in a 660-metre
(2,165-ft.) trenching program undertaken in October 2002. Test pits were dug to
a depth of five metres (16.4 ft.) at fifteen locations on the west side of
Bonanza Creek but no bedrock was reached. Intermediate volcanic flows and
pyroclastics with varying degrees of carbonate and clay alteration were
uncovered by excavation on the east side of Bonanza Creek. Narrow north-trending
quartz stringers were exposed and sampled but no significant gold values were
returned.
The
2003 exploration work consisted of limited prospecting and reconnaissance
geochemical sampling on the northern PV claims, and a five line-kilometre
induced polarization (IP) geophysical test over the central Bonanza Creek area
(PV 1 claim). Totals of 17 rock, nine stream sediment and two soil samples were
collected and submitted to Acme Analytical Laboratories Ltd. in Vancouver, BC
for 36-element geochemical analysis. The results identified several new gold ±
arsenic ± antimony ± mercury stream sediment anomalies, and new occurrences of
gold bearing quartz vein float. The IP survey results outlined two resistivity
features which may be reflecting blind alteration zones related to vein
structures underlying the main soil geochemical anomaly along central Bonanza
Creek valley.
Work
on and around the (then) separate NIC claim block in 2003 included prospecting,
reconnaissance geochemical sampling, and minor hand trenching. Totals of 51
rock, 24 silt, and 68 soil samples were collected and tested for 36 elements by
Acme Analytical Labs in Vancouver, BC. The silt sample results provided better
definition of previously identified gold ± arsenic ± antimony ± mercury
anomalies. The rock and soil sample results identified a two-kilometre long by
roughly 500-metre wide gold-silver geochemical anomaly containing forty
mineralized quartz vein float occurrences and one bedrock occurrence. Limited
hand trenching on the bedrock occurrence (NIC Discovery Zone) intermittently
exposed a < 0.5-metre to ~ 1.5-metre wide northeast trending subvertical
quartz vein/breccia zone, over a strike length of about 20 metres. Ten channel
samples taken at various sections across the exposures yielded gold and silver
analyses ranging from 0.32 g/t to 6.15 g/t, and from 0.70 g/t to 56.7 g/t,
respectively. Check assays on five of these samples reported gold values ranging
from 0.89 g/t to 9.24 g/t, and silver values ranging from 3.4 g/t to 81.1
g/t.
In
May 2004 the new claims joining the PV and NIC groups were staked to cover
additional multi-element silt geochemical anomalies and gold-silver bearing
quartz float occurrences located during previous regional sampling conducted by
the Company.
Later
in 2004 Spire carried out a two-phase exploration program at a total cost of
$81,848. The first phase of exploration was conducted over the month of July.
Work carried out included establishing, prospecting and soil sampling a control
grid over the NIC Zone. A regional prospecting and silt sample survey was also
conducted on the property’s central and northern areas. The second phase was
carried out during the first week of November. This follow-up program included
(a) a short extension of the NIC Discovery Zone hand trench, numerous soil test
pits on the NIC gold-in-soil anomalies and (b) limited prospecting, seven
reconnaissance soil lines and two-hand trenches in the newly identified gold
Anomaly Clusters. A total of 38.65 Km of soil grid lines were sampled and a
combined total 25 rocks, 997 soils and 90 silts were collected. All samples were
analyzed for 36 elements by Acme Analytical Labs in Vancouver, BC.
56
The
NIC Zone multi-element soil anomaly was expanded to a size of 2,600m by 900m.
This soil anomaly is now closed in all directions, except to the northeast,
where it appears to be narrowing to less then 100m wide. The individual element
anomalies tend to have a northeastward trend, although a lesser northward trend
has been noted. A number of soil test pits were dug on select gold-in-soil
highs. Rock samples collected from these pits yielded sub-anomalous values. The
two rock chip samples collected from the extension of the Discovery Zone hand
trench reported 0.80 g/t and 0.67 g/t gold over 1.0m and 0.5m, respectively,
extending established gold mineralization an additional 3.2 metres in one strike
direction.
The
regional silt sampling and prospecting survey successfully identified 18 early
stage gold-in-silt geochemical anomalies, which collectively form three loosely
defined gold anomaly cluster areas. Preliminary work on the Anomaly Cluster 1
area identified a strong, northeast trending, open-ended multi-element soil
anomaly. Six one-metre contiguous rock chip samples collected from a 6.0m long
hand trench, within this soil anomaly, returned gold analyses ranging from 0.19
g/t to 0.82 g/t.
In
the Anomaly Cluster 2 area, preliminary soil and trench rock chip sampling
returned generally sub-anomalous gold and pathfinder element (Ag, Mo, As, Sb,
Hg) values. The overall geochemical response from three reconnaissance contour
soil lines is weak. All trench rock samples were sub-anomalous in
gold.
The
very early-staged Anomaly Cluster 3 area includes two silt samples collected
over a ~1.0 km range, with strongly anomalous gold values. A very brief visit
was made to the area during the November follow-up work. A single grab rock
sample collected from an outcrop of chlorite-altered basalt, with minor silica
flooding, yielded sub-anomalous analytical values. The source of these two
gold-in-silt anomalies remains unknown.
Geology
and Mineralization
The
newly expanded PV claim block is underlain dominantly by a northwest trending
belt of Cretaceous volcanics and lesser sediments known as the Spences Bridge
Group. These rocks include intermediate, locally felsic and mafic flows and
pyroclastics with some sandstone, shale and conglomerate, as well as a younger
basaltic unit differentiated as the Spius Creek Formation. The assemblage dips
gently to the northeast and unconformably overlies Triassic-Jurassic mafic
intrusive rocks exposed along the southwestern claim boundary. Locally, the
assemblage in turn is overlain by Tertiary (Eocene) mafic to felsic volcanics.
These younger volcanic units are cut by small (Miocene?) intrusions of
intermediate composition, which may be part of a feeder system to
them.
The
major structural features in the prospect area are steeply dipping normal
faults, parallel and subparallel with bounding regional fault systems. These
faults have dominant north-south and NNW-SSE trends. Within the claim area,
there are also several other orientations of prominent lineaments as interpreted
from aerial photographs, topographic maps and field observations. Most of the
major stream gullies (inferred structures) trend north to northeast, similar to
the presently defined main soil geochemical and mineral occurrence trends.
Mineralization
found to date includes approximately two hundred float occurrences of gold ±
silver bearing quartz veins and breccias, as well as the insitu NIC Discovery
Zone and Anomaly Cluster 1 showings. All of the occurrences exhibit compositions
and textures typical of low sulphidation type epithermal systems. Most of the
mineralized float is subangular in nature, indicating local sources. The
majority of the float occurrences lie within a 2.5-square kilometre area (PV
Zone) that straddles Bonanza Creek valley, and coincides with a multi-element
soil geochemical anomaly, on the original 40-unit PV claim group. Preliminary
fluid inclusion studies on a few quartz vein samples from this area have
reported formation temperatures of ~200oC,
indicating only shallow erosion of the source epithermal system.
The
NIC Discovery showing is an irregular zone of quartz veins and silica flooding
hosted in clay altered andesite (± basalt) tuffs, where vertical to subvertical
dipping veins have orientations varying from due north to N.35oE
(azimuth 035o).
A locally prominent ridge extends northeastward from the discovery (trench)
exposures, and roughly forms the long axis of the 2600m x 900m NIC Zone soil
anomaly and mineralized quartz float trend.
57
The
Anomaly Cluster 1 showing is situated five kilometres to the north-northeast of
the PV Zone, along the same structural and geochemical trend. Exposed bedrock in
the trench consists of limonitic quartz veins and breccias hosted in a variably
porphyritic basalt. Individual quartz vein widths vary from one to six
centimetres and have a relatively consistent orientation of 016o/50oE.
Planned
work Program - Fiscal 2005, Ending December 31, 2005
The
Company has no planned Fiscal 2005 exploration program with all work being
conducted by Spire which is earning its interest in the prospect. Spire has
advised the Company that future work plans include data compilation and further
field work with the aim of defining drill targets for 2005.
Spire’s
geological consultant has advised the Company that he has recommended to Spire
the following programs:
| a) |
Mechanized
trenching and rock sampling in the NIC Zone soil anomaly
area. |
| b) |
Detailed
grid soil sampling, prospecting and additional hand trenching at Anomaly
Clusters 1 and 2. |
| c) |
Additional
regional drainage prospecting and recon soil sampling of the Anomaly
Cluster 3 area, as well as the northwest corner of the claim
block. |
The
MOR Prospect - Canada
The
MOR Prospect is without known reserves and all current work by the Company on
the prospect is exploratory in nature.
Option
to Acquire Interest
The
claims comprising the MOR Prospect were acquired by staking by the Company’s
predecessor (“Fairfield”) during August 1997 (MOR 1-4), August 1998 (MOR 5-8)
and September 1998 (MOR 9-12). The MOR 13 to 52 claims were added in April 1999
when the prospect was optioned to Brett Resources Inc. (“Brett”). Brett carried
out an exploration program and then returned the prospect to Fairfield in
December 1999. The claims were transferred to the Company upon amalgamation. The
surface rights are held by the Teslin Tlingit Council/Yukon First Nations, from
whom permission is required for entry to conduct work.
In
August 2003, the Company entered into an agreement with Kobex Resources Ltd.
(“Kobex”) on the claims comprising the MOR, Caribou Creek and Cabin Lake
prospects. To earn an initial 50% interest Kobex must incur exploration
expenditures of $50,000 by August 31, 2004 and issue 100,000 shares to the
Company. To maintain the option in good standing, Kobex must incur a further
$450,000 in exploration expenditures by August 31, 2007 and issue an additional
300,000 shares to the Company in installments of 100,000 shares by August 31,
2005, 2006 and 2007 respectively. Kobex can increase its interest to 60% by
incurring a further $500,000 of exploration expenditures by August 31, 2008 and
issuing a further 100,000 shares to Almaden. Upon commencement of commercial
production, Kobex would be required to issue an additional 500,000 shares to
Almaden.
In
January 2005, Kobex returned the claims comprising the Cabin Lake and Caribou
Creek prospects to the Company but retained the MOR prospect.
Expenditures
to Date
During
Fiscal 2004, the Company incurred $391 of exploration on the prospect which was
written off to operations. Deemed proceeds from securities received pursuant to
the option agreement with Kobex was $30,500. As at December 31, 2004, the
Company had deferred $31,524 in acquisition and exploration costs, net of
proceeds, write-downs and recoveries, on the prospect.
Location
and Access
The
MOR prospect is located 9km north of the Alaska Highway in the Morley River area
of southern Yukon Territory and consists of 52 contiguous mineral claims in the
Watson Lake Mining District. Access is by helicopter from a staging area on the
Alaska Highway.
History
and Recent Work
The
initial MOR claims (1-4) were staked in August of 1997 to cover a small zone of
significant base and precious metal values in soil and in gossanous schist
subcrop (Discovery Showing), located during follow-up of regional stream
sediment anomalies identified by Fairfield’s predecessor company in 1980.
Subsequent work in 1997 focussed on hand pitting and trenching in this area, but
also included prospecting and reconnaissance (silt, soil, rock) sampling
elsewhere on and around the four claims.
58
During
1998 Fairfield added 8 claims (MOR 5-12) and carried out grid soil geochemistry
(21 line-km / 432 samples), ground magnetic and VLF-EM geophysical surveys (11
line-km), limited blast trenching in the Discovery Showing area, and minor
prospecting with reconnaissance rock sampling.
In
April 1999, Brett Resources Inc. optioned the property from Fairfield and staked
40 additional claims (MOR 13-52). Brett subsequently conducted a soil
geochemical survey (22 line-km / 442 samples) covering some of the new claims,
property-wide preliminary geological mapping at 1:10,000 scale, more detailed
(1:1,500) geological mapping in areas of known mineralization, prospecting and
rock sampling, plus claim tagging. Brett relinquished its option on December 31,
1999.
Field
work in 2000 consisted of additional grid soil geochemistry (43 line-km) and
ground magnetic, VLF-EM geophysical surveys (29.5 line-km); detailed grid based
soil profile and bedrock sampling by portable power auger, further prospecting
with reconnaissance rock sampling, plus handheld GPS-surveying of the claim
post, grid line and sample locations. A total of 1223 samples were collected and
shipped to Acme Analytical Laboratories Ltd. (Vancouver, B.C.) and ALS Chemex
(North Vancouver, B.C.) for multi-element analysis.
A
two-week prospecting program was undertaken in July 2001. A total of 197
portable power auger soil samples and 6 rock samples were collected. All samples
were shipped to Acme Analytical Labs for analysis.
During
in Fiscal 2004, Kobex completed an induced polarization (IP) geophysical survey
over the prospect which defined an 800 meter long linear chargeability anomaly
that remains open along strike. This anomaly is coincident with significant
mineralization identified in trenches and anomalous soil geochemistry. Kobex has
provided Almaden with the results of a two hole diamond drill program that it
completed in August, 2004. The holes were drilled roughly 100 meters apart and
were designed to test the IP chargeability feature. Both holes intersected
mineralization and alteration commensurate with a VMS system including massive
sulphides. At this time there is insufficient geologic information to be able to
determine the orientation of the massive sulphide units, including true widths.
Hole MO04001 intersected significant alteration and mineralization from the
collar to 25 meters depth. A further mineralised unit was intersected at roughly
42 meters depth in this hole. Analyses from these intersections are tabulated
below:
|
From
(m) |
To
(m) |
Interval
(m) |
Copper
% |
Zinc
% |
Silver
g/t |
Gold
g/t |
Lead
% |
|
18 |
22.9 |
4.9 |
0.69 |
1.31 |
39.70 |
0.82 |
0.15 |
|
Including: | |||||||
|
19.3 |
21.7 |
2.4 |
0.83 |
1.43 |
40.71 |
0.83 |
0.14 |
|
19.3 |
19.9 |
0.6 |
1.06 |
1.27 |
25.28 |
0.63 |
0.06 |
|
41.9 |
42.6 |
0.9 |
0.69 |
0.18 |
11.8 |
0.50 |
0.05 |
The
second hole (MO04002) also encountered significant mineralization in two
separate
units. The
first was intersected at roughly 23 meters depth and the second at roughly 66
meters depth. The results of the analyses from these intersections are tabulated
below:
|
From
(m) |
To
(m) |
Interval
(m) |
Copper
% |
Zinc
% |
Silver
g/t |
Gold
g/t |
Lead
% |
|
23.30 |
27.05 |
3.75 |
0.17 |
0.76 |
12.95 |
0.17 |
0.11 |
|
Including: | |||||||
|
24.50 |
24.85 |
0.35 |
0.44 |
2.17 |
26.20 |
0.41 |
0.27 |
|
66.12 |
68.00 |
1.88 |
0.97 |
0.21 |
19.78 |
0.35 |
0.05 |
Including: |
|||||||
|
67.30 |
68.00 |
0.70 |
1.23 |
0.37 |
37.65 |
0.50 |
0.12 |
The
companies believe these results represent a new Cu-Zn-Au-Ag-Pb VMS system hosted
by similar geologic units to that of the Kudz Ze Kayah and Wolverine VMS
deposits which also occur in the Yukon-Tanana terrane. The initial discovery of
the Kudz Ze Kayah deposit was made by Cominco Ltd. in 1994. Cominco (1999)
reported a resource of 11.3 million tonnes grading 5.9% zinc, 1.5% lead, 0.9%
copper, 133 g/t silver and 1.3 g/t gold. This was followed by the discovery of
the Wolverine deposit in 1995 by Westmin and Atna (currently owned by Yukon Zinc
Corporation). Drilling on the Wolverine deposit from 1995 to 1997 defined a
resource in all categories (Westmin Resources Ltd., 1998) of 6,237,000 tonnes
grading 12.66% zinc, 1.55% lead, 1.33% copper, 371 g/t silver and 1.76 g/t gold.
59
Geology
and Mineralization
The
MOR claims are underlain by deformed and metamorphosed volcanic and sedimentary
rock assemblages of Devonian-Mississippian age. These assemblages include the
Big Salmon Complex which in part has been correlated to Yukon-Tanana
stratigraphy that is host to several important volcanogenic massive sulphide
deposits in the Finlayson Lake district, 160 kilometres to the northeast.
The
main mineralized zone at MOR is closely associated with several subparallel
felsic schist/tuff horizons within a dominantly mafic volcanic sequence.
Mineralization at the Discovery Showing, exposed by limited hand trenching
during 1997-98, consists mainly of coarse grained pyrite and chalcopyrite in
quartz-sericite and chlorite schists. Work programs in 1998 and 1999 have traced
the mineralized unit(s) intermittently in outcrop over a strike length of 900
metres, and have outlined an encompassing 2000-metre long by 100 to 250- metre
wide multi-element soil geochemical anomaly with a partly coincident moderately
strong VLF-EM geophysical conductor.
The
2000/2001 auger sampling provided for better overall definition of the main
mineralized trend, and revealed significant blind mineralization at two widely
separated locations within this trend. Weathered and decomposed bedrock samples
from the new showings, which may represent different felsic horizons than any
previously sampled, yielded highly anomalous base and precious metal values as
shown in the following table:
|
Grid
Location
|
Depth
& Sample Interval (m)
|
Cu
(%)
|
Pb
(%)
|
Zn
(%)
|
Ag
(g/t)
|
Au
(g/t)
|
|
2450E/2500N
|
0.7
- 1.4
|
0.12
|
0.57
|
0.03
|
43.1
|
1.25
|
|
|
1.4
- 2.0
|
0.08
|
0.31
|
0.04
|
43.1
|
0.42
|
|
2450E/2510N
|
0.2
- 0.7
|
0.10
|
0.25
|
0.04
|
41.8
|
1.76
|
|
|
0.7
- 1.4
|
0.07
|
0.18
|
0.04
|
26.1
|
0.49
|
|
1.4
- 2.2
|
0.10
|
0.27
|
0.05
|
43.4
|
0.78
| |
|
3000E/2610N
|
0.4
- 1.3 *
|
0.02*
|
0.25
*
|
0.01*
|
60.7
*
|
0.99*
|
(*Averaged
result from 3 samples within this interval. Best individual sample results
include 109.2 g/t Ag and 2.14 g/t Au.)
Elsewhere
on the property, results from the 2000 program have outlined coincident
copper-silver soil anomalies together with several weak VLF-EM conductors within
a broad zone situated approximately one kilometre south from the main
(Discovery) trend.
Infrastructure
There
is no infrastructure in place on the prospect.
Drilling
Results
During
Fiscal 2004, Kobex completed two diamond drill holes totalling 185.3m to test IP
geophysical anomalies on the MOR claims. The results are as reported
above.
60
Planned
Work Program - Fiscal 2005, Ending December 31, 2005
The
Company has no planned exploration program for Fiscal 2005 with
all work being conducted by Kobex who are earning their interest in the
prospect. Kobex has not yet advised the Company concerning a work plan for 2005.
The claims
are in good standing until April 29, 2012 through to April 29, 2015.
The
SAM Prospect - Canada
The
SAM Prospect is without known reserves and all current work by the Company on
the prospect is exploratory in nature.
Option
to Acquire Interest
The
initial staking of 43 claim-units (1,075 hectares) was undertaken in late 2003.
During 2004, further staking expanded the prospect to 140 claim-units (3,500
hectares). In January 2005, a closely adjacent SAMS (Sam South) block comprising
300 BCGS grid cells (~6,190 hectares) were acquired via the new BC Minerals
Titles Online system. All claim-units are 100% owned by the
Company.
Expenditures
to Date
During
Fiscal 2004, the Company incurred $13,909 in staking costs and $33,152 in
exploration costs. As at December 31, 2004, the Company had incurred $57,599 in
acquisition and exploration costs on the property.
Location
and Access
The
prospect is readily accessible by road, 25 kilometres northeast from Lytton on
the Trans-Canada Highway.
History
and Recent Work
Pre-acquisition
work during 2003 consisted of prospecting and recon geochemical sampling based
on follow-up of a government (BC-RGS) regional gold stream sediment anomaly.
This program generated 22 rock, 41 silt, and 14 soil samples. The 2004
assessment work program included minor access road improvements, further
prospecting and recon sampling (25 rocks, 8 silts), approximately 21 line-km of
roadcut soil sampling (417 soils), and limited hand trenching at three sites (16
rock chip samples). All of the samples collected to date have been tested for 36
elements, by Acme Analytical Laboratories in Vancouver, BC.
The
rock sampling identified variable grade gold and lesser silver mineralization in
a number of widely scattered quartz float occurrences, and in two major insitu
vein showings named Discovery and JJ.
The
soil and stream sediment sampling outlined two broad areas of
gold-arsenic-antimony ± mercury enrichment which include and encompass the
Discovery and JJ mineral zones.
Geology
and Mineralization
The
prospect area is underlain by a northwest-southeast trending shallowly dipping
sequence of intermediate and mafic volcanic rocks of the Cretaceous Spences
Bridge Group. Sill-like bodies of feldspar porphyry are also present, and felsic
dyke (?) rubble has been noted in a few localities. The ages and relationships
of these rocks to the main volcanic assemblage are presently
unknown.
Major
structural features in the local area are north-south oriented high angle normal
faults. Two, east to ENE-trending, vague lineaments in the central property area
are discernible from aerial photographs, topographic maps and limited field
observations. These easterly striking features are roughly parallel with the
main soil geochemical anomaly trends and mineral showings identified to
date.
Quartz
hosted gold and lesser silver mineralization has been identified in widely
scattered float occurrences, and in two
major vein showings, located on the SAM 1 and SAM 2 claims. All of these
occurrences exhibit compositions and classic textures typical of low
sulphidation epithermal veins and breccias. The styles of mineralization include
massive multiphase vein, multistage breccia, stockwork veinlet, and pyritic
silica-carbonate replacement of hostrock. Disseminated pyrite and specular
hematite also occur in both quartz matrix and hostrock clasts at the Discovery
Showing. Fluid inclusion studies of two vein rubble samples from the discovery
area have reported formation temperatures in the range of <200oC
to 210oC,
indicating minimal erosion of the epithermal system at this site.
61
The
(2003) Discovery Showing represents a large but low grade vein breccia zone
having an estimated 4.2m true width over which the 2004 channel sampling
returned gold analyses ranging from 0.34 g/t to 0.48 g/t, with negligible
silver. This zone trends ENE and is subvertical. Better grade rubble (1.21 to
2.16 g/t Au) occurs ~250m along strike.
The
newly discovered high grade JJ Showing is situated nearly three kilometers to
the southwest of the Discovery Vein, on a subparallel ENE structural trend. It
consists of a moderately dipping zone containing two closely spaced veins (Jan
& Jodi Veins) and intensely altered andesite wallrock having an estimated
combined 2m true width. Channel sampling of the JJ exposure has yielded gold
assays of 12.79 to 53.38 g/t from vein material and 4.49 to 9.15 g/t from the
selvages. Corresponding sample silver assays range from 13 to 36 g/t (in vein)
and 4 to 7 g/t (in the selvages).
Planned
Work Program - Fiscal 2005, Ending December 31, 2005
The
Company has planned a 2005 exploration program to include the following: further
prospecting and recon rock/silt geochemical sampling, geological mapping, grid
based soil geochemical sampling, and mechanized trenching on both the Discovery
and JJ mineral zones at a budgeted cost of $70,000.
The
Cabin Lake Prospect - Canada
The
Cabin Lake prospect is without known reserves and all current work by the
Company on the prospect is exploratory in nature.
Option
to Acquire Interest
The
122 original claims comprising the Cabin Lake prospect were acquired by staking
between March and September 1997 by the Company’s predecessor (“Fairfield”). The
claims were transferred to the Company upon amalgamation and are owned 100% by
the Company.
In
August 2003, the Company entered into an agreement with Kobex Resources Ltd.
(“Kobex”) on the claims comprising the MOR, Caribou Creek and Cabin Lake
prospects. During April 2004, 103 of the Cabin Lake claims were allowed to
lapse. In January 2005, Kobex returned the 19 remaining claims comprising the
Cabin Lake prospect to the Company.
Expenditures
to Date
During
Fiscal 2004, the Company incurred $2,502 in maintenance costs on this prospect,
$1,995 of which was recovered from Kobex. The deemed value of securities
received from Kobex pursuant to the option agreement was $18,300. At December
31, 2004, the Company wrote-off $17,206 of costs incurred on this prospect and
is carrying it at $1.
Location
and Access
The
Cabin Lake prospect is located in the Watson Lake Mining District of Yukon
Territory. The claims are 190 kilometers southeast of the city of Whitehorse and
are accessed by helicopter. The Alaska Highway passes 20km south of the claim
group, but to date there is no road access.
History
and Recent Work
The
initial 100 Cabin Lake claims were staked during March to May of 1997 to cover
several multiple-element stream sediment and soil anomalies, and occurrences of
copper and copper plus molybdenum discovered in 1996. In June 1997, a 277
line-km airborne electromagnetic (EM) and magnetic survey was flown over this
claim group. Several EM anomalies and conductive trends parallel to stratigraphy
and to major fault structures were identified.
An
initial phase of baseline cutting, soil sampling, geological mapping,
prospecting and hand trenching was undertaken in July 1997. Very encouraging
results were returned from the Avalanche Area, where a large copper soil anomaly
with values greater than
150
g/t Cu was delineated over an area of approximately 900 by 500 meters.
Twenty-two
claims were added and a second phase of work in August and September of 1997
included fill-in soil sampling, intensified prospecting of anomalies, 390m of
excavator trenching, and 7.05 line-kilometers of induced polarization (IP)
geophysical surveying. The best results from trenching were 0.35% copper
averaged over 18.4m of continuous chip samples. The IP survey identified several
zones of chargeability and resistivity anomalies, with the strongest
chargeability values extending several hundred meters to the east and south of
known mineralization exposed at surface in the Avalanche Area.
62
During
the 1998 field season additional IP geophysical surveys, soil geochemistry and
prospecting were carried out. The IP chargeability and resistivity anomalies
detected in 1997 in the Avalanche Area were better defined and
extended.
In
the southern half of the property (South Area) partly underlain by a granitic
intrusion, widely spaced grid soil sampling (200m X 50m) outlined a number of
coincident copper-molybdenum anomalies over an area of 200m by 1500m, with
peak
values of 640g/t Cu and 68 g/t Mo.
No
work has been undertaken on the Cabin Lake claims since 1998.
Geology
and Mineralization
The
prospect is primarily underlain by Paleozoic to Triassic metasedimentary and
metavolcanic rocks of marine origin. Two distinct Mesozoic intrusive bodies are
present: a small diorite/granodiorite stock exposed in the central and
northwestern part of the property, and a larger granodiorite/quartz monzonite
pluton on the southwestern claims.
Pyrite,
chalcopyrite and minor other sulphide minerals are present as disseminations to
semi-massive bands in certain schist layers on the central and western claims
(Avalanche Area). The sulphide minerals appear to be stratabound, and may
represent remobilized and metamorphosed stratiform syngenetic type
mineralization similar to important polymetallic deposits recently discovered
within broadly correlative terranes in the Finlayson Lake map area located about
160 kilometers northeast of Cabin Lake.
Local
porphyry-type alteration and quartz stringers carrying chalcopyrite-molybdenite
mineralization are hosted by granodiorite in the south area. Angular quartz
float indicative of larger individual veins (10-30cm wide) occurs in linear
topographic depressions.
Infrastructure
There
is no infrastructure in place.
Drilling
Results
No
drilling has been carried out on the prospect to date.
Planned
Work Program - Fiscal 2005, Ending December 31, 2005
The
Company has no planned exploration program for Fiscal 2005. The claims are in
good standing to April 14, 2005 and will be renewed beyond that date by payment
of cash-in-lieu of work in the event that no new joint venture partner is found.
The
Caribou Creek Prospect - Canada
The
Caribou Creek prospect is without known reserves and all current work by the
Company on the prospect is exploratory in nature.
Option
to Acquire Interest
The
48 claims comprising the Caribou Creek prospect were acquired by staking by the
Company’s predecessor (“Fairfield”) during April, September 1997 and August
1998. The claims were transferred to the Company upon amalgamation and are owned
100% by the Company.
In
August 2003, the Company entered into an agreement with Kobex Resources Ltd.
(“Kobex”) on the claims comprising the MOR, Caribou Creek and Cabin Lake
prospects. In January 2005, Kobex returned the claims comprising the Caribou
Creek prospect to the Company.
Expenditures
to Date
During
Fiscal 2004, the Company incurred no costs on this prospect. The deemed value of
securities received from Kobex pursuant to the option agreement was $12,200. At
December 31, 2004, the Company wrote-off $22,799 of costs deferred on this
prospect and is carrying it at $1.
63
Location
and Access
The
Caribou Creek prospect is located in the Watson Lake Mining District of Yukon
Territory, 180 kilometres east of Whitehorse and 180 kilometres west of Watson
Lake. The prospect is accessed by helicopter from Morley River on the Alaska
Highway, which is located about 30km south of the area.
History
and Recent Work
Previous
mineral exploration work in the area covered by the present claims is limited to
reconnaissance programs carried out by Fairfield’s predecessor company in 1980,
and by Fairfield in 1996 and 1997. Stream sediment sampling and follow-up work
in 1980 identified a strong copper-lead-zinc silt and soil geochemical anomaly
in the vicinity of gossanous schist outcrop. The initial 30 claims were staked
in April 1997 to cover the stream sediment and soil anomalies from the 1980
sampling program, and additional claims were added in September to extend the
property over favourable lithologies. Further claims were added in August 1998
to cover the projections of anomalous zinc soil geochemical trends.
After
initial claim acquisition, an 85 line-km airborne electromagnetic (EM) and
magnetic survey was flown over the area during June 1997. Several weak EM
anomalies and magnetic trends were identified.
Programs
of soil sampling, geological mapping, prospecting and an induced polarization
(IP) geophysical survey were undertaken in later 1997 and in 1998. A 600-meter
by 100-meter band of anomalous copper, lead, zinc and silver values in soils was
identified on the central and western claims. Several occurrences of rusty,
pyritic schist float and bedrock were noted in two areas and were exposed by
blast trenching in 1998. Rock samples returned weakly anomalous gold and silver
values from one of these trenched areas. The IP geophysical survey conducted
along 3 line-km identified several zones of moderate chargeability within the
area of anomalous soil geochemistry.
The
prospect was optioned to Brett Resources Inc. (“Brett”) in 1999 which carried
out limited geological mapping and rock sampling. Brett relinquished its option
on December 31, 1999.
Geology
and Mineralization
The
prospect is primarily underlain by a package of Paleozoic metavolcanic and
metasedimentary schists, which are overlain (either structurally or
stratigraphically) by Mississippian limestone. A variety of small intrusive
bodies are present, at least some of which intrude both the schist and
limestone.
Strongly
disseminated pyrite is present within certain schist layers in the central and
western property area, and may represent stratiform syngenetic type
mineralization. These gossanous schist horizons are hosted within a bimodal
volcanic sequence in the vicinity of strong copper, lead, zinc, silver and gold
soil geochemical anomalies.
Infrastructure
There
is no infrastructure in place on the prospect.
Drilling
Results
No
drilling has been carried out on the claims.
Planned
Work Program - Fiscal 2005, Ending December 31, 2005
The
Company has no planned exploration program for Fiscal 2005. The claims are in
good standing until various dates ranging from September 4, 2005 through April
14, 2010.
The
Tim Prospect - Yukon Territory
The
Tim Prospect is without known reserves and all work done by the Company’s
predecessor (“Fairfield”) on the prospect has been exploratory in nature. No
work has been conducted on the prospect since 1988.
Option
to Acquire Interest
The
Company owns a 100% interest in the prospect, acquired during 2002 from
Fairfield through amalgamation.
Expenditures
to Date
During
Fiscal 2004, the Company incurred $1,050 of costs to maintain this prospect. As
at December 31, 2004, the Company has written off all acquisition and
exploration costs and is carrying this prospect at $1.
64
Location
and Access
The
Tim prospect consists of 10 contiguous claims located 72 kilometres (45 Mi.)
West of Watson Lake, Yukon Territory at latitude 60 degrees 03' North and
longitude 130 degrees 05' West. A seasonal four-wheel drive road originating at
kilometre 1128 (Mile 701) of the Alaska Highway provided access to the claims
during previous exploration programs.
History
and Recent Work
The
original group of 130 TIM claims was staked by Regional Resources Ltd.
(Fairfield's predecessor) in 1983, to cover silver-lead-zinc geochemical
anomalies and mineralized float occurrences in an area highly prospective for
replacement type massive sulphide deposits. Fairfield staked 30 additional
claims during 1986, following transfer of title from Regional. Work conducted
from 1983 to 1986 consisted of reconnaissance stream sediment sampling, soil
geochemistry, prospecting and geological mapping.
In
1988 work included road construction, line cutting, soil sampling, induced
polarization (IP) geophysical surveys, and excavator trenching. Eighteen
trenches totalling 2712 linear metres were excavated in two mineralized areas
named North and South Zones. The 1988 soil geochemical survey involved higher
density sampling within the anomalous areas outlined by prior (1984/86)
sampling.
A
diamond drill program was recommended following evaluation of the 1988
exploration results, but was never carried out. The property has been reduced to
10 claims covering the main (North Zone) trend of mineralization.
Geology
and Mineralization
The
TIM claims are underlain by a folded succession of Lower Cambrian and earlier
sedimentary rocks comprising intercalated limestone, phyllite, quartzite,
siltstone and mudstone. A nearby buried intrusion is inferred from geophysical
signatures on published maps and from local thermal alteration effects observed
in limestone. The limestone unit is cut by fault breccias, quartz-calcite veins
and oxide mineral bodies.
Soil
geochemical surveys have outlined two large coincident silver (Ag) - lead (Pb) -
zinc (Zn) anomalies measuring approximately 1500 metres long by 300 metres wide,
and containing geochemical values of up to 20.8
g/t Ag, 6660 g/t Pb and 1700 g/t Zn. Within these anomalous areas trenching has
exposed two zones of Ag-Pb-Zn bearing oxide mineralization. The main or North
Zone has been traced over a strike length of 1000 metres.
The
mineralization consists of massive iron and manganese oxides, with minor remnant
sulphides including galena, sphalerite and pyrite occurring as isolated cobbles
or as discrete grains within the oxides and wall rock material. North Zone oxide
bodies uncovered by trenching range in width from four to 30 metres and occur
mainly in limestone, at or near an inferred major fault contact with overlying
phyllite rocks.
Infrastructure
There
is no infrastructure on the claims.
Drilling
Results
No
drilling has been conducted to date.
Planned
Work Program - Fiscal 2005, Ending December 31, 2005
The
Company has no work program planned for Fiscal 2005. A joint venture partner is
being sought to fund potential future work.
The
Meister River Prospect - Canada
The
Meister River Prospect is without known reserves and all work by the Company’s
predecessor (“Fairfield”) on the prospect has been exploratory in nature. No
work has been conducted on the prospect since 1986.
Option
to Acquire Interest
The
Company owns a 100% interest in the prospect, acquired during 2002 from
Fairfield through amalgamation.
65
Expenditures
to Date
During
Fiscal 2004, the Company incurred $735 in maintenance costs on this prospect. As
at December 31, 2004, the Company has written-off all acquisition and
exploration costs and is carrying this prospect at $1.
Location
and Access
The
Meister River prospect is located 90 kilometres (56 miles) west of Watson Lake,
Yukon Territory and 14 kilometres (9mi.) northwest of kilometre 1110 (Mile 690)
on the Alaska Highway. A seasonal four-wheel drive road from the Alaska Highway
provided access to the claims during previous exploration programs.
History
and Recent Work
All
of the original 410 Meister River (MR) claims were staked by Regional Resources
Ltd. (Fairfield’s predecessor) in 1981 to 1984, to cover geochemical anomalies
and mineral occurrences in a geological setting favourable for hosting
replacement type massive lead-zinc sulphide deposits.
Property
exploration programs from 1981 to 1985 included grid layout, aerial photography,
geological mapping, prospecting, geochemical sampling, airborne and ground
geophysical surveys, hand trenching, backhoe trenching/test-pitting, sonic
overburden drilling, and diamond drilling comprising five NQ (core) holes
totalling 1,077 metres in the West Zone oxide mineral body. The access road from
the Alaska Highway as well as trench and drill site access trails were also
constructed during this time period.
In
May 1986 the property was transferred to Fairfield. A diamond drilling program
carried out later that season consisted of 2,413 metres in 22 NQ holes of which
eight holes (687m) further tested the West Zone, and 14 holes (1,726m) which
tested four separate areas of mineralization in the South Zone.
Following
the 1986 program, additional diamond drilling was recommended for the West Zone
to test for sulphide mineralization at depth but this work has not been carried
out. As at December 31, 2004, all except seven of the claims have been allowed
to lapse.
Geology
and Mineralization
The
MR claim group is underlain by a deformed and metamorphosed sequence of Lower
Cambrian or earlier sedimentary rocks. A small Cretaceous (?) quartz monzonite
stock occurs nearby. Mineralization consisting of zinc-silver-lead bearing
massive iron and manganese oxides, with sparse remnant sphalerite and galena,
appears to be related to replacements and/or fault structures at or near
phyllite-carbonate contacts. Five separate mineral zones have been identified of
which the most substantial is the West Zone oxide body.
The
West Zone mineralization has been traced in outcrop and in trenches over a
strike length of 1000 metres, revealing true widths ranging from less than one
metre to 18 metres. It occurs as mantos or elliptical shaped lenses aligned
along a moderately dipping fault structure. The best averaged assay results from
trench samples are 12.01% zinc (Zn), 0.32% lead (Pb) and 1.39 oz/ton silver (Ag)
over 14.0 metres that included a 9.0 - metre section of massive oxides. The
oxide material has been intersected to a vertical depth of 105 metres by diamond
drilling, and has been encountered in 12 of the 13 holes which have tested the
West Zone. Drill intercepts of oxide ranged in length from 1.0 to 29.0 metres;
the 29-metre interval, from Hole 86-MR-8, assayed 3.79% Zn and 1.22 oz/ton Ag
and included a 14-metre section which assayed 4.57% Zn, 0.94% Pb, 2.01 oz/ton
Ag.
In
the South Zone, based on the 1986 drill program, the best results were returned
from a partially oxidized graphitic phyllite unit where a 12.0-metre intercept
assayed 2.56% lead, 2.06% zinc and 0.05 oz/ton silver. A 5.0-metre section
within this interval assayed 5.02% lead, 4.11% zinc and 0.10 oz/ton
silver.
Infrastructure
Two
lumber and plywood buildings, as well as core storage racks, remain at the old
exploration campsite.
Drilling
Results
No
recent drilling has been conducted by the Company.
66
Planned
Work Program-Fiscal 2005, Ending December 31, 2005
The
Company has no planned exploration program for Fiscal 2005. The Company is
seeking a joint venture partner to fund potential future work.
The
Merit Prospect - Canada
The
Merit Prospect is without known reserves and all current work by the Company on
the prospect is exploratory in nature.
Option
to Acquire Interest
The
Merit claim group comprises about 1,700 hectares (17 sq. km) and was acquired by
staking during 2004 and early 2005 and is 100% owned by the
Company.
Expenditures
to Date
During
Fiscal 2004, the Company incurred $7,202 in staking costs and $11,188 in
exploration costs on the prospect. As at December 31, 2004, the Company had
deferred $18,390 of costs on the prospect.
Location
and Access
The
prospect is readily accessible by road, 30 kilometres west of Merritt, British
Columbia.
History
and Recent Work
Pre-acquisition
work during July to September 2004 consisted of prospecting and recon
geochemical sampling, based on follow-up of earlier government (BC-RGS) and
Company-generated regional gold stream sediment anomalies. This program
generated 71 rock, 56 silt, and 16 soil samples. Following initial claim
staking, in September-October 2004, further similar work was carried out which
generated an additional 28 rock and 109 soil samples. All of the samples were
tested for 36 elements, by Acme Analytical Laboratories in Vancouver,
BC.
The
rock sample results have identified numerous gold-silver bearing quartz (±
calcite) float occurrences, and insitu quartz-carbonate
alteration/mineralization along two major northerly (to NNE) - trending
structures. Initial grid soil sampling conducted over an area of 800 metres by
200 metres on one segment of the main structure has outlined a multi-element
anomaly.
Geology
and Mineralization
The
Merit prospect is underlain dominantly by the northwest trending belt of
intermediate to mafic volcanics and minor sediments of the Cretaceous Spences
Bridge Group. This assemblage dips gently to the northeast and is locally
overlain by Tertiary (Eocene) mafic to felsic volcanics. Major structural
features in the local area are north to northeast trending, steeply dipping
normal faults. One such feature, situated adjacent to the eastern claim
boundary, is a prominent structural break that extends northward for over 40
kilometres through to and beyond the Highland Valley porphyry copper producing
district.
Within
the claim area, all of the (float and bedrock) mineral occurrences found to date
show characteristics of low sulphidation type epithermal veins and
breccias.
The
main or El
Gordo structure has been traced intermittently along a strike length of 2,700
metres and is highlighted by two segments of exposed alteration and
mineralization called Discovery Hill and Sullivan’s Ridge zones. Both of these
zones are characterized by intense iron carbonate-hematitic silica and clay
alteration containing elevated to strongly anomalous values of one or more of
the epithermal suite trace elements arsenic, antimony, mercury, barium, plus
copper and manganese. The more prominent Sullivan’s Ridge consists of a 10- to
50-metre wide zone that is readily traceable in outcrop and talus over a length
of 750 metres. Locally abundant quartz vein and carbonate-quartz breccia rubble
occurs within the alteration envelope. Rock samples of this material from random
sites along the zone have yielded anomalous gold and silver analyses.
A
second, parallel northerly trending structure has been identified 1.5 kilometres
to the west of El Gordo. This structure is characterized by the West Zone quartz
vein and rubble train which has been traced over a 350-metre strike length.
Initial hand trenching across this zone at three closely spaced intervals has
revealed a massive hematitic quartz vein having true widths of 1.5 to 2.5
metres. Ten continuous chip samples across the vein have returned anomalous
gold, silver, copper, arsenic, antimony, barium and mercury
analyses.
67
The
nature of the alteration and mineralization found to date at Discovery Hill,
Sullivan’s Ridge and West zones, including the presence of high mercury and
barium values, suggests that these
zones may represent the very upper reaches of an epithermal system.
Planned
Work Program - Fiscal 2005, Ending December 31, 2005
The
Company is currently planning a 2005 exploration program to include detailed
prospecting, grid based soil geochemical sampling, geological mapping, and
trenching at a budgeted cost of $70,000.
The
Logan Property - Canada
The
Logan
Property contains an inferred mineral resource of
13.08 million tonnes (14.42 million tons) grading 5.10% zinc and 23.7 gm/tonne
(0.69oz/ton) silver, as recently re-estimated by an independent party to comply
with the Canadian Securities Administrators (CSA) National Instrument 43-101
standards (Form 43-101F1).
Interest
The
Company owns a 40% carried interest in the property, acquired from its
predecessor (“Fairfield”) through amalgamation. The owner of the 60% joint
venture interest is required to fund 100% of exploration expenditures until a
production decision is made, at which time the Company may elect to pay its
proportionate share of future expenditures after the production decision or
convert its property interest into a 15% Net Profits Interest. In 2003, the 60%
owner agreed to sell its joint venture interest to Expatriate Resources Ltd.
(“Expatriate”). To simplify documentation, a new agreement was entered into at
this time directly between the Company and Expatriate with all details of the
previous agreement remaining the same. In late 2004 Expatriate was restructured
into two successor corporate entities, resulting in a transfer of the 60% joint
venture interest to one of the successors named Yukon Zinc
Corporation.
Expenditures
to Date
During
Fiscal 2004, the Company incurred no costs on this prospect. As at December 31,
2004, the Company has written off all acquisition and exploration costs and is
carrying this property at $1.
Location
and Access
The
Logan Property comprises 156 claims located 108 kilometres northwest of Watson
Lake, Yukon at latitude 60 degrees 30 minutes North and longitude 130 degrees 27
minutes West. The claims are situated 38 kilometres north of the Alaska Highway
and 258 kilometres east of Whitehorse. Principal access is by fixed-wing
aircraft or helicopter. A 52 kilometre trail originating from Milepost 687 (Km
1105) on the Alaska Highway provides minimum winter access to the property for
track-equipped machinery.
History
and Recent Work
The
initial 36 Logan claims were staked in July and October 1979 to cover showings
of zinc-silver-copper-tin mineralization discovered during a reconnaissance
prospecting and stream sediment sampling program undertaken by Regional
Resources Ltd. (Fairfield’s predecessor). Additional claims (Logan 37-106) were
staked at various dates in 1984 and 1986. Property exploration programs
including geological mapping, geochemical and geophysical surveys, detailed
prospecting and hand trenching were carried out between 1979 and
1985.
In
May 1986 the property was transferred to Fairfield and subsequent exploration
programs during 1986 to 1988 included diamond drilling (103 holes totalling
16,439 metres of NQ core), excavator trenching (15 trenches totalling 2,412
linear metres), additional soil geochemistry, Induced Polarization geophysical
surveys, as well as aerial photography, various ground control surveys,
construction of a 700-metre long gravel airstrip, and reclamation work. Most of
the drilling was conducted at 100-metre by 50-metre grid spacing.
All
of the above work programs were performed or supervised by Cordilleran
Engineering Ltd. of Vancouver, Canada. All project sample assays and analyses
were performed by Bondar Clegg & Company Ltd. in North Vancouver. In late
1988 an initial mineral resource estimate for the Main Zone deposit was
calculated by J.J. Hylands, P.Eng., and M.A. Stammers, FGAC, of Cordilleran
Engineering Ltd. These calculations, utilizing sectional and plan methods,
resulted in a determination of 12.25 million tonnes (13.5 million tons) grading
6.17% zinc and 26.4 gm/tonne (0.77 oz/ton) silver. However, this estimate was
not strictly defined according to Canadian Institute of Mining (CIM) standard
resource/reserve classifications.
68
In
early 1989 preliminary metallurgical testing was undertaken on composite samples
of drill core assembled from 16 selected intersections of the Main Zone deposit.
This work was conducted by Lakefield Research under the direction of Strathcona
Mineral Services Ltd. of Toronto, Canada. The results demonstrated that high
zinc (93-97%) and silver (85-87%) recoveries are readily achievable from a
concentrate grading 50-54% zinc.
The
project was dormant from 1989 through 2002.
In
early 2003 Expatriate purchased a 60% joint venture interest in the property
from Energold Minerals Inc. (formerly Total Energold) and became the operator of
the project. A baseline environmental survey was conducted in and around the
property in advance of further exploration and/or engineering studies. Staking
of the LOGAN 107 to 152 and STRIP 1 to 4 mineral claims was completed to cover
areas of potential infrastructure. Core storage facilities at the old
exploration camp were refurbished and core inventoried for future
examination.
In
November 2003, Expatriate commissioned Hatch Associates Ltd. (”Hatch”) to
complete a resource estimate and data compilation as part of an Independent
Technical Report to NI 43-101 standards. Hatch completed this assignment with
the assistance of Mr. Gary Giroux, P.Eng., while Hatch’s Qualified Person for
this assessment is Mr. Callum Grant, P.Eng. who visited and inspected the
property in October 2003. The resource estimation portion of the report was
released on March 24, 2004.
The
Hatch re-estimation of resources at Logan uses the block model method, with
Kriging applied to the assay data from 58 drill holes completed in the Main Zone
during 1986-88. The model relies wholly on this historical drill-hole
information and does not include any new exploration data. The model is
constrained by geologic boundaries to mineralization as interpreted on 23
cross-sections of the Main Zone over a 1.53 km (0.95 mile) strike length. No
mineralized intercepts are included from the East or West Zones. The published
Inferred Resource of 13.08 MT grading 5.10% Zn and 23.7 g/t Ag uses a 3.5%
zinc-equivalent cutoff that is based upon metal prices of US 43 cents per pound
zinc and US$5.50 per ounce silver, with recoveries of 94% and 64%
respectively.
Geology
and Mineral Deposits
The
property is dominantly underlain by granodiorite and pegmatites of the
Cretaceous Marker Lake Batholith, which has intruded Lower Cambrian and possibly
older metasedimentary rocks. Tertiary andesite dykes, quartz-feldspar
monzonite-latite porphyry dykes, quartz veins and breccia bodies are associated
with an eight kilometre long northwest trending mineralized structure. Within
this structure, at least three mineral bodies have been identified and named as
the Main, West and East Zones.
The
Main Zone deposit has been defined by 58 drill intersections, to an average
vertical depth of 185 metres (~600 feet). It is contained within a steeply
dipping fault bounded tabular body 1100 metres long by 50 to 140 metres wide.
Sphalerite with lesser pyrite, arsenopyrite, chalcopyrite, pyrrhotite,
silver-bearing lead sulphosalts and cassiterite occur as fracture fillings,
disseminations and coarse masses in quartz veins or breccia and silicified
hostrock.
Infrastructure
With
the exception of the airstrip and connecting network of drillsite access trails,
there is no infrastructure in place on the property.
Planned
Work Program - Fiscal 2005, Ending December 31, 2005
The
Company has no planned exploration program for Fiscal 2005. Yukon Zinc
Corporation has renewed the Yukon Government permits required for exploration
land use and winter road access. No exploration work is currently planned for
Fiscal 2005 by Yukon Zinc with exception of some possible property maintenance
(e.g. claim tagging).
69
The
Yago Prospect - Mexico
The
Yago prospect is without known reserves and all current work by the Company on
the prospect is exploratory in nature.
Option
to Acquire Interest
In
Fiscal 1997 the Company’s subsidiary, Minera Gavilan, S.A. de C.V., completed
the assembly, from several Mexican individuals, of claims covering a large
epithermal gold target near Yago, Nayarit, Mexico. The claims under option
consisted of the Guadalupe, Sagitario and Yago claims. To earn a 100% interest
in the Guadalupe claim, the Company had to pay US$30,000 plus value added tax
over six years (amended). To earn a 100% interest in the Sagitario claim, the
Company had to pay US$250,000 plus value added tax by January 1, 2005 (amended).
There is a 2% NSR to only one owner on any production from his property. In
Fiscal 2000 the Company terminated its option on the Yago 1 to Yago 7 claims to
reduce property payments. The Tepic claim was acquired directly by staking,
reduced in size and then partially restaked in 2002 at the request of an
optionee. Only a reduced portion of this ground is still held.
In
Fiscal 1999 the Company entered into an agreement to acquire a 100% interest in
8 mining concessions which comprise the adjoining La Sarda mine and surrounding
property for payments totalling US$2,000,000 plus value added tax over four
years, as well as improvements, a 300 tpd mill and equipment located within the
mining concessions. If the mill was not included when the option was exercised
in full, the purchase price would have been reduced by US$200,000. In Fiscal
2000, the Company purchased this prospect outright for US$110,000 plus
value-added tax, not including the mill.
In
Fiscal 2002, the Company optioned the project to Ascot Resources Ltd. (“Ascot”).
Under the terms of the agreement, to earn an initial 50% interest Ascot had to
issue 300,000 shares to the Company and incur exploration expenditures of
US$1,000,000 within two years. Ascot relinquished their option in Fiscal
2003.
During
Fiscal 2004, the Company completed the acquisition of a 100% interest in the
Guadalupe claim for US$15,000 plus value added tax and a 100% interest in the
Sagitario claim for US$10,000 plus value added tax. The Company also completed
documentation for the purchase of the Don Alonzo claim.
Expenditures
to Date
During
Fiscal 2004, the Company incurred $43,960 in acquisition costs and $27,643 in
exploration costs on this prospect, primarily on the payment of Mexican mining
taxes and duties to keep the property in good standing. During Fiscal 2004, the
Company wrote the prospect down by $647,629. As at December 31, 2004, the
Company had deferred costs of $223,479 on the prospect.
Location
and Access
The
Yago prospect is located in the state of Nayarit, on the Pacific Coast of
Mexico. The claims encompass the town of Yago, which is located by paved road
approximately seven kilometers from Highway 15, which is the major thoroughfare
from the United States to Mexico. Yago is located roughly 50 kilometers north of
Tepic, the capital of Nayarit.
History
and Recent Work
Southern
Part:
The
assembled claims cover a large alteration zone centered on a northwest trending
extensional structure with numerous separate gold veins, many of which had had
historic small scale mining operations from numerous old workings. It is
believed that this was the first time in many years that all these claims had
been assembled into a single property. The separate owners each controlled a
part of the main area of interest in the southern part of the property which is
a large stockwork zone of chalcedonic banded quartz veins where small scale
mining was carried out. Wider veins within the stockwork zone were mined by
underground open stopes accessed by adits and by glory holes mined out to
surface.
In
1997, soil sampling and geological mapping were carried out on a grid over the
southern area of interest. Numerous rock samples were also taken at this time.
Encouraging results were followed up by expanding the grid and detailed in fill
soil sampling in areas of interest.
70
In
Fiscal 1998, the Company optioned the property to Santoy Resources Ltd.
(“Santoy”) who conducted a 975.2 metre drill program late in the year. Results
did not meet their expectations and Santoy dropped their option in July 1999.
During
November and December 1999 a program of mapping, sampling and road building was
carried out on the project. Work was focussed on the Guadalupe-Tejona-Korina
vein system in the southern portion of the project. Samples of ore from recent
development and production blasts were also taken from the La Sarda area active
operations, roughly seven kilometres north. The La Sarda Prospect had been in
continuous production for about 5 years and mining during the option period was
to be for the benefit of the current owner but restricted to 150 tonnes per day
maximum and to material above the lowest level of workings on the La Sarda vein
which is roughly 100 metres below the surface. Mining operations ceased in early
2000.
In
March 2000, the Company and its predecessor (“Fairfield”) entered into an
agreement where Fairfield could earn 51% of the Company’s interests and rights
to the prospect. Fairfield drilled two holes on the southern part of the
property with discouraging results, and completed the acquisition of the
northern part of the property.
In
2002, the Company optioned the property to Ascot. The optionee carried out
further sampling, geological mapping, induced polarization geophysical surveys
and limited diamond drilling. Ascot dropped their option in 2003.
Northern
Part:
In
this area, the thrust of the Company’s exploration effort was to find new,
larger zones of high grade material at greater depths on both the La Sarda and
parallel vein zones.
In
December 1999 some mapping was carried out on the La Sarda vein. Because the
mine and mill were operating without established reserves, production and grade
were somewhat erratic. The La Sarda vein had provided most of the production
over the previous four or five years. This vein was found by mapping to be just
underneath the opaline silica horizon, further indication that only the top
portion of this extensive system is exposed.
The
La Sarda area active workings were inspected. Four major sub parallel vein
systems have been recognized in this area, and three were being actively worked
at that time. High grade ore was reported in the active faces of the La
Cucaracha vein workings. A sample taken from muck from an ore face returned
values of 20.2 grams/tonne Au and 151 grams/tonne silver.
Geology
and Mineralization
The
assembled claims cover a large alteration zone centered on a northwest trending
extensional structure with numerous separate gold veins.
The
country rocks in the area are Tertiary andesitic tuffs and flows that are
observed to be flat-lying. The alteration zone is characterized by strataform
silicification spatially associated with friable argillic alteration dominated
by kaolinite with subordinate alunite and cristobalite.
This
alteration zone is interpreted to represent the paleowater table of a
shallowly-eroded epithermal system. Gold-bearing quartz veins with prominent
crustiform, colloform banding and stockwork quartz veining, are exposed beneath
the strataform alteration and are the target of the exploration
efforts.
Infrastructure
A
main railway line crosses the prospect and there are electric powerlines to the
town of Yago. The prospect is approximately seven kilometeres from Highway 15
and is traversed by numerous gravel roads.
Exploration
Results
Southern
Part:
In
1997, a 1 by 1 kilometer grid was cut over the area of intense quartz-adularia
veining and float and a soil sampling program was carried out at 50 meter
spacing on lines 100 metres apart. Several large multi-line gold-silver-antimony
anomalies resulted that extended to the edge of the grid. A follow-up survey was
carried out in which the grid was expanded to roughly 1.5 by 2 kilometers.
Samples were taken intermediate to anomalous samples taken in the initial
program to provide greater detail and to serve as a check on previous sampling.
Sampling was also carried out to define the extent of anomalies discovered in
the first phase of sampling. The in fill sampling confirmed the results of the
previous survey while the additional soil sampling provided better definition of
the existing anomalies and resulted in new anomalies which still remain open.
This anomaly lies in the central and south-west part of the grid in an area
devoid of old workings and remains open in two directions. Veins mapped in this
area strike roughly 10 degrees east of north. Emanating from the north-east part
of this anomaly is a linear gold-silver-antimony soil anomaly trending
approximately 40 degrees east of north. The trend coincides with the attitudes
of veins measured in outcrop in the north-east portion of the grid. Several
other multi-line gold in soil anomalies resulted from the soil sampling.
Antimony and silver for the most part correlate well with gold geochemistry,
defining similar trends throughout the grid.
71
At
the time of soil sampling more than sixty rock samples were taken over the
property. These samples were taken from exposures in historic workings and the
associated dumps as well as the vein float prevalent over the property.
Conventional Fire Assay and ICP techniques were employed on both rock and soil
samples.
Several
areas of intense banded quartz-adularia veining, stockwork veining and one area
of hydrothermal brecciation and silicification were defined which are coincident
with areas of anomalous soil geochemistry. The initial geologic data indicates
that the veining represents high elevations within a shallowly eroded
low-sulfidation epithermal system, of which the paleo-water table is preserved
over much of the property. Exploration was designed to seek bonanza vein type
mineralization.
Geologic
work and road building in the southern Guadalupe-Tejona-Korina area was designed
to provide access and investigate areas for future diamond drilling. During the
course of this work several new veins and previously unknown historic workings
were discovered. In the La Korina area (on the Sagitario claim), the lowest
elevation workings, several shafts and adits were discovered in heavy
undergrowth. The work completed has enabled the Company to select several sites
for drilling in this area. Several banded quartz-adularia veins were discovered
in the new road cuts within areas of high gold in soil geochemistry. In one area
banded veining was discovered in an area of very high gold soil geochemistry
along the La Guadalupe vein trend over 500 metres from known historic
workings. These
areas and the Korina area were not tested by past drilling and are relatively
lower in elevation than the depth tested by past drilling.
This
program of work resulted in the definition of several key drill hole locations
in the southern Guadalupe-Tejona-Korina area. These locations would test the
correct elevations for potential bonanza grades at depth along the strike and
intersection of several banded quartz-adularia veins. Road building provided
access for these holes. Drill holes were also been designed to test the La Sarda
area vein systems to the north including the Cucaracha vein.
Numerous
small scale old workings are present on the property.
Hydrothermal
alteration mapping and fluid inclusion studies support the conclusion that the
present erosion surface represents shallow depths beneath the paleo-water table
of the hydrothermal system. The potential for high-grade gold-silver
mineralization is expected to extend from surface to significant depths beneath
the present surface.
In
December 1998, seven (7) widely spaced holes totaling 975.2 metres were
completed by Santoy to test epithermal vein targets at depth. Widespread quartz
veining and stockwork systems were encountered at depth, many of which
correlated well with surface zones.
Widespread
anomalous gold, silver and base metal values were obtained from the drilling
with the most significant mineralized intervals as follows:
72
|
Hole
No. |
From
- To (m) |
Interval
(m) |
Au
(g/t) |
Ag
(g/t) |
|
98-01
(Tejona
Vein) |
53.3
to 54.8 |
1.5 |
0.37 |
24.9 |
|
98-02
(Guadalupe
Vein) |
44.2
to 47.2
67.0
to 70.1
121.9
to 126.4 |
3.0
3.1
4.5 |
0.44
0.51
0.54 |
43.8
15.1
16.7 |
|
98-03
(between
Creek & Tejona) |
38.1
to 54.8
incl.38.1
to 39.6 |
16.7
1.5 |
0.15
0.63 |
22.6
99.8 |
|
98-04
(La
Morraya) |
42.6
to 44.2 |
1.6 |
0.32 |
35.7 |
|
98-05 |
198.1
to 201.1 |
3 |
1.8 |
0.9 |
|
98-06
(Creek
Zone) |
32.0
to 36.5 |
4.5 |
0.13 |
9.4 |
|
98-07 |
No
significant values | |||