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Urumalqui is an advanced silver-gold project containing an inferred mineral resource.
Gitennes retains an uncapped 1.5% Net Smelter Royalty on all mineral products produced from the Project and also has a $475,000 Convertible Debenture (“CD”) issued by AndeanGold Ltd. which owns 100% of the Project. The CD has an interest rate of 6%, a term of three years and is convertible into AndeanGold shares at six cents per share. AndeanGold must also pay Gitennes 12% of any funds it raises in order to pay down the CD.
Inferred Mineral Resource
AndeanGold commissioned a resource estimate in the fourth quarter of 2011.
Summary of Inferred Mineral Resource Estimate*
|Tonnes||Silver Grade||Silver Ounces||Gold Grade||Gold Ounces|
*See Notes at the bottom of the page.
The Project consists of four contiguous mineral concessions totalling 2,700 hectares, owned 100% by AndeanGold. Urumalqui was originally acquired by Gitennes in 2002 through a joint venture but in June, 2005 the JV was terminated and Gitennes assumed 100% of the project. AndeanGold acquired 100% of the Project in December, 2014 through the exercise of two option agreements originally signed in 2010 and 2012. Under the two option agreements, AndeanGold completed 7,000 metres of diamond drilling; incurred exploration expenditures of C$3.0 million; granted Gitennes the 1.5% NSR and the Convertible Debenture and made cash payments of C$1,035,000 and share payments totalling 1,230,000.
Location and Access
The Project is situated in north-central Peru approximately 70 kilometres by road east of the port city of Trujillo. Property elevations range from 3,500 to 3,700 metres a.s.l. and topography is gently rolling.
Old workings exist at Urumalqui, including short adits, pits and an exploration shaft that was sunk to 50 metres on the Urumalqui Vein. An underground exploration operation was described in a summary for a technical talk given in 1982. Based upon this it appears that there was limited development on the -28-metre level, with a 250-metre drift and winze on the -50-metre level to another minor drift at -80m. The property was acquired in 1993 by Minera Andina de Exploraciones and optioned to Minera Cambior Perú S.A. in 1996. It was reported that Cambior drilled five scattered holes on four targets. The concessions at Urumalqui were declared open for staking in 2002 and in were acquired by Gitennes in late 2002 through its wholly owned Peruvian subsidiary, Mineral Corimalqui S.A. (“Corimalqui”).
Exploration 2003 to 2013
Corimalqui’s exploration activities between 2003 and 2008 included preparing base maps, mapping the veins, mapping the overall geology of the property, B-horizon soil sampling, two ground geophysical programmes of induced polarization and magnetometer surveys, rock sampling, a limited rehabilitation of the old exploration shaft, preliminary metallurgical tests of core and rock samples, and environmental, archeological and socioeconomic studies. In late 2003 seventeen holes totalling 2,283 metres were drilled, 14 of which were on the main Urumalqui Vein. In late 2004 eighteen holes totalling 2,619 metres were drilled, nine of which were on the Urumalqui vein. In 2008 twelve holes were drilled on the Urumalqui Vein totalling 2,434 metres and the -28 level was examined and sampled and then the shaft was capped for safety. There was little activity at the Property in 2009.
During the last half of 2010 AndeanGold’s Peruvian subsidiary, PeruGold, re-established topographic control followed by detailed geological mapping of the main Urumalqui Vein structure, then re-logging the stored drill cores from the 2003 to 2008 drilling programs. In March, 2011 PeruGold commenced a fourth diamond drilling campaign that confirmed and in-filled Corimalqui’s previous drilling along the central and southeastern segments of the Urumalqui vein structure, resulting in a nominal drill hole penetration spacing of 50 metres to a depth of 200 metres. The 2011 drilling totalled 31 holes and 5,071 metres. In July 2013 PeruGold completed a further 2,053 metres of diamond drilling in 13 holes with all holes intersecting the Urumalqui vein.
The current Inferred Resource Estimate is based upon all 66 diamond drill holes that intersect the Urumalqui Vein, including the 35 holes (5,835 metres) drilled by Corimalqui and the 31 holes (5,071 metres) drilled by PeruGold in 2011.
Results indicate that the Urumalqui structure is open for extension both to the northwest and especially to the southeast. Furthermore, the strong continuity at depth coupled with the textural features of the vein mineralogy indicates that it may have significant depth potential. Additionally, seven other veins outcrop on the property and have little or no drilling.
The region is underlain by rocks of the Cretaceous- to Tertiary-age Calipuy Group. This major unit overlies the pre-Cretaceous basement rocks as a relatively flat-lying, unconformable plate up to 1,500 metres in thickness that caps landforms above 3,200 metres asl. The Calipuy is comprised of subaerial andesitic flows, breccia and pyroclastic tuffs, with subordinate dacite and rhyodacite. These rocks are broadly warped and often transected by northerly, northeasterly and easterly fault structures. Within the Property there is a possible volcanic source that may be one of the youngest in the region at 16.7 Ma.
Calipuy rocks at Urumalqui are green to maroon, porphyritic andesitic flows with plagioclase phenocrysts, volcanic glass and hornblende, interbedded with volcaniclastic rocks and autobrecciated andesitic lavas. These are overlain by a pyroclastic unit containing lapilli and block-sized lithic clasts as well as essential blocks. Overlying is a cap of magnetite-bearing andesitic flows. These are cut by a series of normal faults trending 135, 045 and 090.
The mineralization at Urumalqui is low sulphidation epithermal vein-type. A low sulphidation (sometimes referred to as “quartz-adularia type”) deposit is epithermal based upon the implied temperature of formation estimated to range from less than 1000C to about 3000C, by its distinct mineral assemblage and suite of metals, and low sulphidation because the primary minerals are quartz-adularia with only traces of sulphide minerals, implying the amount of sulphur dissolved in the mineralizing fluid was relatively low. These types of veins cut across the bedding of its host rocks, are found within (what were) open cracks or fissures, and are often “crustiform” – banded (bands parallel to vein walls with bands defined by differences in mineralogy, colour and/or textures) and “colloform” – banded (bands are rhythmic but are reniform, or kidney-shaped) in appearance. This type of epithermal deposit is formed approximately a kilometre from surface, often in areas of active volcanism and in areas subject to blanket-like alteration due to steam and hot spring activity. Metals of economic interest that are associated with low sulphidation veins are gold and silver, and vein minerals are quartz (including chalcedony), carbonate, adularia (potassic feldspar), pyrite, sphalerite and galena. Elements in trace levels may include arsenic, antimony, and mercury.
Many examples of low sulphidation epithermal silver and gold deposits exist worldwide in Japan, Canada, Mexico, Australia, Honduras, El Salvador, Nicaragua, Papua New Guinea, Indonesia, Argentina, Chile, Ecuador, elsewhere in Peru, Russia, New Zealand and the western United States. Contemporary examples of active geothermal fields that are likely in the process of making low sulphidation deposits maybe found in Yellowstone National Park (Wyoming) and New Zealand.
The outcropping nature of the Urumalqui Vein allows it to be easily mapped and sampled, and to equate the results of geochemical and geophysical surveys to a known target. The possibility of blind veins occurring or extending under overburden or later volcanic cover cannot be discounted, and for this reason, surveys on the Urumalqui Property have extended well beyond the known limits of the Urumalqui Vein. Results of the surface exploration were used to select sites for core drilling.
Two main vein orientations have been mapped at Urumalqui. A 125 trend includes the Urumalqui Vein, La Mariscala West Vein, La Mariscala South Vein, and the Penélope Vein. A 090 trend includes La Mariscala East Vein, Candual East Vein, the Candual West vein zone, and the Candual Vein. These veins are developed south of the Urumalqui Vein and occur in pyroclastic and andesite flow units.
Three distinct styles of epithermal mineralization have been recognized from surface mapping and drilling on the property:
- The main Urumalqui vein is a classic “crack-and-fill” style open-space-filling quartz – adularia structure, characterized by sharp vein boundaries, multi-stage quartz mineralization as banded and crustiform veins, and ore-grade gold and silver mineralization. Also present are vugs and cockade, bladed, pelletal (moss) and breccia textures. Gold and silver are the analytical elements of interest, with little or no arsenic, antimony, mercury, lead, zinc or copper. Silver minerals include argentite and electrum, while gold reports to electrum. Portion of both La Mariscala Este and Oeste Veins have similar banded, pelletal and crustiform textures.
- A broad zone of leaching and argillic alteration roughly symmetrical about the Urumalqui Vein, comprising silicified, chlorite and sericite-altered, zones marked by fine-grained pyrite that has elevated gold values and silver (the “Envelope”). Where unoxidized, pyrite has been the only sulphide observed to date, occurring as several percent or more fine disseminated grains and aggregates in well silicified volcanic tuffs and lapilli tuffs. Gold and silver values consistently in excess of 100 ppb and 20 ppm respectively are common, which increase in tenor toward the vein, and are considered to define the extents of this style of mineralization. Similar alteration occurs adjacent to La Mariscala Vein, and
- Brecciated and fissure-fill, diffuse-walled and locally replacement-style silicified zones, characterized by fine-grained, grey to black quartz, with highly anomalous to ore grade gold and silver content that are similar to but overall lower than in the Urumalqui-style of mineralization. Locally, quartz replaces clasts and to a lesser extent the adjacent country-rocks, and volcanic textures can still be recognized. These silicified zones appear to be oriented vertically in a vein-like fashion and are fracture-controlled. Mineralization is anomalous in arsenic and mercury, with erratic but sometimes anomalous lead, zinc and antimony. Penélope Vein, the central and eastern-most portions of La Mariscala Vein, and veins in the Candual area are examples of this style.
The principal target on the property, and subject of the Inferred Resource Estimate, is referred to as the Urumalqui Vein. This is a near-vertical zone, up to 20 metres wide, comprising a core of one or two banded quartz veins ranging from 0.5 to 11 metres aggregate thickness, and intervening oxidized vein breccias or altered volcanic rocks. The vein is exposed at surface over a strike length of 1,500 metres. Average strike is 125° ± 005° throughout much of this length. The vein displays some minor, northeast-stepping offsets. There are eight vein segments between offsets, ranging in length from 40 metres to 400 metres. For the most part, vein outcrop is continuous along each segment.
Despite having drilled the vein to depths just over 200 metres vertically below surface, the vein structure remains strong and mineralized. All holes are in the “boiling zone”, based upon vein textures, and the potential for good mineralization at deeper levels than those tested thus far is considered to be good.
*Notes for Summary of Inferred Mineral Resource Estimate:
- Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the estimated Mineral Resources will be converted into Mineral Reserves.
- The mineral resource estimate was calculated in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the Standards Committee on Reserve Definitions and adopted by the CIM Council on December 11, 2005.
- Inferred Mineral Resources are that part of a Mineral Resource for which quantity and grade can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. It is uncertain if further exploration will result in upgrading them to an indicated or a measured mineral resource.
- Mineral Resources tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add up due to rounding.
- As a step in the resource estimation process a silver equivalent (‘AgEQ’) grade was calculated to “capture” both the gold and silver values found within the Urumalqui vein. The silver equivalent grade was a calculated by combination of its ‘final’ gold value at a 3 year trailing average price of US$1,300/troy oz and 85% metallurgical recovery rate, and its ‘final’ silver value at a 3 year trailing average price of US$26/troy oz and 65% metallurgical recovery rate. Trailing average prices were determined graphically, effective August 26, 2011. Thus, a modeling cut-off grade of 60gpt AgEQ was utilized only for the grade domain modeling purposes, defining the grade shell. Otherwise estimation avoided the use of “metal equivalents” and the silver and gold tenor within the Inferred Mineral Resource Estimate is tabulated separately.
- The Inferred Mineral Resource Estimate has an effective date of November 8, 2011, meets the guidelines and form as set out in NI 43-101 and was prepared for AndeanGold and Gitennes by Mine and Quarry Engineering Services, Inc. (“MQes”). The assignment was carried-out by Mr Chris Kaye, FAusIMM, B.Eng Chemical, President and Principal Process Engineer, the modelling and estimates were carried out by Mr Doug Blanchflower, P.Geo of Minorex Consulting Limited and Mr. James McCrea, P.Geo. Messrs. Kaye, Blanchflower and McCrea are all qualified persons as defined under NI 43-101 reporting requirements and have consented to applicable disclosure contained herein regarding the Inferred Mineral Resource Estimate. MQes, Minorex, and Messrs. Kaye, Blanchflower and McCrea are independent of both AndeanGold and Gitennes.
- For further information view ”Technical Report Urumalqui Property” dated December 22, 2011 filed under the Company’s profile on SEDAR, or click here under ”Reports”.
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