Rio Seco Project
Location, Access and Climate
The Rio Seco Project ("Project") is located in the Department of Libertad, Peru, 33 kilometres southeast of the city of Trujillo. There is excellent access to the Project, mainly on paved highway. The city of Trujillo is located 480 kilometres north of Lima and can be easily reached by direct daily flights (45 minutes). The Project area is characterized by a moderate topography at altitudes of between 200m to 600m. The climate is arid and dry, typical of a desert environment.
There is excellent infrastructure already in place for the Project, which includes:
• road access along the Pan-American Highway just 45 minutes from Trujillo (population more than a million)
• a 10 km long well-compacted and easy to maintain dirt road from the highway turn off to the project location
• a major power line located within a couple of kilometers east of the Pan-American Highway
• a large government-owned concrete water channel running through the concessions
Project History
The first mining activities in the area date back to 1980. However, there has been principally only limited, artisan exploration and exploitation activities carried on to date. Newmont Mining and Barrick Gold carried out some limited exploration activities in the early 2000s. The Government of Peru (Proyecto Especial Chavimochic) owns the land encompassing the Project area.
Geology
The Project area contains numerous outcrops of the Late Cretaceous "Coastal Batholith", composed of porphyritic diorite, granodiorite and tourmaline granodiorite rocks affected by a zone of strong shearing. These rocks have intruded metamorphic and volcanic sequences. On the western section of the Project area, and hosted in granodiorite, are several sets of sub-parallel veins and veinlets striking N40°E, E-W and N-S and dipping sub-vertically.
To date, four mineralized zones have been outlined and ten main veins have been identified. Preliminary data suggest the shear-controlled West and South Zones have the best potential for hosting significant gold mineralization.
In the West Zone, two targets have been identified to date:
Camino Target area containing:
• Stockwork Target covering approximately 600 metres x 100 metres and containing anomalous gold and silver in rock trenches. This is a potential open pit mining target.
• Multiple Vein Target located to the south and contiguous with the Stockwork target, with an approximate overall length of up to 350 metres. This is a potential underground mining target.
Santa Catalina Target area containing:
• two sub-parallel main veins with an overall strike length of up to 300 metres and including assays of 9.0 g/t gold and 6.30 g/t silver over 0.62 metres and 6.73 g/t gold and 184 g/t silver over 0.60 metres in channel samples.
In the South Zone, three gold-bearing veins have been identified to date with strike lengths of approximately 300 metres and including assays of 33.76 g/t gold and 3.00 g/t silver over 0.12 metres and 13.90 g/t gold and 13.10 g/t silver over 0.10 metres in channel samples.
The Company is presently focusing its activities on the Stockwork and Multiple Vein Targets within the West Zone, where the principal mineralized trend that lies within a shear system created by two major N-S faults exhibits both potential open pit stockwork targets and potential underground multiple vein targets. Based on a recently completed detailed structural and geological mapping and trenching program, the Company reported favourable assay results for both the Stockwork and Multiple Vein Targets, and is proceeding with permitting applications to initiate a Phase I drill program of approximately 1,400 metres on the Rio Seco Project, focusing initially on the 600 x 100m Stockwork Target. (See news releases of April 20 and May 12, 2009)
For a Summary Report on the Rio Seco Project, as of April 2009, please click on the PDF link, below:
RIO_SECO_FINAL_PHASE_II_RESULTS_MAY2009-051509.pdf
Land Status
The Project consists of 17 gold-silver concessions covering an area of approximately 3,325 hectares. In December 2008, the Company's wholly owned Peruvian subsidiary, PeruGold Resources S.A.C. ("PGR"), signed Assignment and Purchase Option Agreements ("Agreements") with three concessionaires to acquire eleven concessions, covering an area of 1,325 hectares. PGR also applied for an additional six concessions, covering an area of approximately 2,000 hectares that are contiguous with the eleven concessions. The overall Project area covers approximately 3,325 hectares.
According to the terms of the Agreements signed on December 11, 2008, PGR has the option (the "Option") to purchase, for US$340,000, a 100% interest in each of the 11 concessions by making the following cash payments, in total, to the Concessionaires:
| On signing the Agreements | US$50,000 (less a credit of US$4,500 for prior cash advances) |
|
| 6 months after Signing | US$30,000 | |
| 12 months after Signing | US$50,000 | |
| 18 months after Signing | US$50,000 | |
| 24 months after Signing | US$50,000 | |
| 30 months after Signing | US$50,000 | |
| 36 months after Signing | US$60,000 |
The Company has the right to exercise the Option at any time during the three-year Option period.
In addition, the Concessionaires are entitled to receive a 2% Net Smelter Return Royalty (the "NSR") on any production from the concessions. Once PGR has exercised the Option and made all of the Option payments, PGR has the right to purchase the NSR on the basis of US$200,000 per 1% of NSR. PGR has the right to exercise the Option at any time during the three-year Option period.
Planned Exploration
Based on the favourable assay results from the recently completed detailed structural and geological mapping and trenching program, the Company is proceeding with permitting applications to initiate a Phase I drill program of approximately 1,400 metres on the Rio Seco Project, focusing initially on the 600 x 100m Stockwork Target. The various regulatory approvals of the drilling permit are expected to be in hand by August 2009 and drilling would commence shortly thereafter.
Maps & Figures
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