Urumalqui Project
Location, Access and Climate
The Urumalqui Project ("Project"), an advanced-stage Au-Ag exploration property, is located in the Department of Libertad, Peru, 70 kilometres east of the city of Trujillo. Access to the Project is by paved and hard-packed road and then by unimproved roads to the property (2-3 hours driving time in total). The city of Trujillo is located 480 kilometres north of Lima, with direct daily flights (1 hour) between the two cities. Electric power is available nearby. The Project area is located at altitudes of between 3,400m to 3,700m, and the climate is typical of the western portion of the Andes - rainy season from November - March and dry otherwise. The property can be worked all year long.
Project History
The first mining activities in the area date back to 1980. However, these were principally only limited, artisanal exploration and exploitation activities. The SIMSA Group and Cambior each explored the Project in the 1990s, with Cambior completing 5 widely-spaced holes on 4 different targets. The Project was acquired by Gitennes Exploration and Meridian Gold in 2002 who formed a JV company. The JV was terminated in 2005, and Gitennes assumed a 100% ownership interest and is the current titleholder.
Land Position
The Urumalqui Project consists of four (4) contiguous concessions, totaling 2,700 hectares. Gitennes' Peruvian subsidiary owns 100% title to the concessions.
Title to the land encompassing the Project is owned by various individuals. Gitennes has agreements in place with the land owners that provide access to the land and permission to establish drill pads. Most of the agreements also include an option allowing Gitennes to purchase the land after a period of time.
Geology and Prior Exploration Activities
Based on the NI 43-101 Report (March 2009) filed by Gitennes Exploration:
- Mineralization at the Project is volcanic hosted and comprised of several gold-silver quartz veins. The principal vein is the Urumalqui Vein which is a near-vertical zone, up to 20m wide, comprising a core of one or two banded quartz veins ranging from 0.5 to 11m aggregate thickness.
- The Urumalqui Vein outcrops at surface over a 1,500m strike.
- Vein mineralogy and textures and associated alteration are characteristics of Low sulphidation, vein-style, epithermal, gold-silver mineralization
- This style of mineralization can potentially reach depths of 400 - 600m. To date, the drilling at the Project has been to the 200mM level with indications that that the deepest holes were still in the upper sectors of the "boiling zone" of the epithermal system. Thus, the potential for good mineralization at deeper levels is considered favourable.
- The mineralization remains open along strike and at depth.
The majority of the drilling to date has been focused on the 1,000 metre long central and southeastern segment of the Urumalqui Vein and from the surface down to about 200 metres vertical depth. Some of the noteworthy reported drill intersections were:
| DRILL HOLE # |
FROM (Metres) |
TO (Metres) |
TRUE WIDTH (Metres) |
AU G/T |
AG G/T |
AUE * G/T |
|---|---|---|---|---|---|---|
| URU03-01 | 32.75 | 40.30 | 7.09 | 1.55 | 112.00 | 3.42 |
| URU03-03 | 94.35 | 98.30 | 3.11 | 2.91 | 179.20 | 5.90 |
| URU03-05 | 65.85 | 69.05 | 2.45 | 2.29 | 189.80 | 5.45 |
| URU03-07 | 156.05 | 162.65 | 4.06 | 2.29 | 196.10 | 5.56 |
| URU03-09 | 133.80 | 147.00 | 8.48 | 2.01 | 211.60 | 5.54 |
| URU04-32 | 128.50 | 132.40 | 2.30 | 2.84 | 194.70 | 6.09 |
| URU04-33 | 197.95 | 204.80 | 3.42 | 1.31 | 293.30 | 6.20 |
| URU08-36 | 60.15 | 62.15 | 1.53 | 3.05 | 493.00 | 11.27 |
| URU08-42 | 156.05 | 162.50 | 4.40 | 2.48 | 157.18 | 5.10 |
| URU08-45 | 211.90 | 222.80 | 8.59 | 1.91 | 191.72 | 5.11 |
| * AUE = Gold equivalent based on a 60:1 Ag - Au ratio and assuming 100% recoveries. | ||||||
For the 35 holes (5,835m) drilled in the Urumalqui Vein to date, the average vein intersection true width and weighted average Au and Ag grades were 3.31 metres of 1.33 g/t Au and 154 g/t Ag - 3.90 g/t AUE.
Gitennes conducted preliminary metallurgical tests on core and rock samples, entailing a combination of gravity, flotation and cyanide test work. Based on the limited, but favourable, test results, it may be possible to achieve favourable recoveries by a process that includes a combination of crushing and milling, followed by gravimetric separation and cyanide leaching. Additional metallurgical tests will be required in the future to determine the ultimate method of recovering gold and silver at the Urumalqui Project.
AndeanGold - Gitennes Joint Venture Agreement
In April 2010, AndeanGold signed a Joint Venture ("JV") Agreement with Gitennes, which gives AndeanGold the right to earn a 60% shareholder's interest in the JV company that will hold title to and operate the Urumalqui Project. AndeanGold will be the operator of the JV. To earn its 60% interest, AndeanGold must:
- Incur $3 million in qualifying expenditures by the end of a four (4) year earn-in Term.
- Complete 3,000m of drilling by end of Year 2 and 7,000m of cumulative drilling by the end of Year 3 of the Term.
- Issue Gitennes 20,000 shares (post the Company's June 29, 2010 share consolidation) of the Company on signing of the public deeds of the Peruvian agreements (July 14, 2010, the date of the Initial Term) and 20,000 shares, each, at the end of Year 1, 2 and 3 of the Initial Term. Except for the first issue, Gitennes has the option to be paid cash in-lieu of shares, with the cash component not to exceed $25,000, $50,000 and $100,000 in Year 1, 2 and 3, respectively. Any excess share market value will be satisfied by issuance of equivalent shares.
Exploration Programs
Q4 - 2010
Environmental and Community Relations consultants were engaged and worked productively on the requisite tasks necessary to timely obtain a permit from the Peruvian governmental authorities to allow the Company to initiate a proposed Phase I infill drilling program (the "Program") on the Project.
New agreements were signed with the key surface owners controlling lands covering the Urumalqui Vein to permit the Company to undertake its proposed drilling and exploration programs. Also, an agreement was signed with a surface owner for a core storage facility.
A new core storage facility was constructed, and the drill core from the Project's previous drilling programs was transferred to this new facility.
The Company's geologists relogged all Urumalqui Vein drill core from previous drilling programs and remapped the entire 1.5 kilometre Urumalqui Vein outcrop.
A topographical firm was engaged to relocate all the Project's previous drill collars covering the Urumalqui Vein and to establish the locations of the Company's proposed Phase I drill collars. This work was completed successfully during December.
2011
In February 2011, Peru's Ministry of Energy and Mines issued the approval voucher of the Company's Declaration of Environmental Impact Study ("DIA") application for the Project. The DIA authorized the Company to initiate the proposed Phase I infill drilling program ("Program"). Also in February, Peru's Local Water Authority approved the Company's water permit application for the Program. With the approval of the DIA and water permit applications, the Company was fully permitted to initiate the Program on the Project.
On March 28, 2011, the Company commenced the Program on the Project. The contract driller, Explomin Del Peru S.A.C., timely mobilized the diamond core rig during the week of March 21st, following the signing of the drilling agreement. The original Program envisaged up to 23 diamond core holes and up to 4,000 metres. In order to provide additional infill drilling in some key areas, the Program was revised to include 31 diamond core holes, representing up to 5,100 metres.
The Program is focused on infill drilling to a depth of 200 meters so as to provide a drill spacing of approximately 50 metres along the central and southeastern segments of the Urumalqui Vein, which cover 1.0 kilometre of the 1.5 kilometre long Urumalqui Vein outcrop, where the majority of the Project's historical drilling was concentrated. This level of drilling density should be sufficient for the preparation of a NI 43-101 resource estimate, which the Company plans to commission upon completion, and subject to the results, of the Program.
All 31 holes have now been completed for 5,071 metres, and all 31 completed holes have intersected the Urumalqui Vein as predicted in cross sections prepared by the Company.
The assay results for the Company's 31 holes drilled were, as follows (See Urumalqui Longitudinal Section, below, for the locations of the holes):
| DRILLHOLE | DEPTH BELOW SURFACE (metres) |
FROM (metres) |
TO (metres) |
INTERVAL (metres) |
TRUE WIDTH (metres) |
AU (g/t) |
AG (g/t) |
AG EQUIVALENT |
|
|---|---|---|---|---|---|---|---|---|---|
| (g/t) | (oz/t) | ||||||||
| PGUR #1 | 86.77 | 103.9 | 108.8 | 4.9 | 3.92 | 3.42 | 184.45 | 355.45 | 11.4 |
| INCLUDING | |||||||||
| 103.9 | 107.8 | 3.9 | 3.12 | 4.26 | 208.95 | 421.85 | 13.6 | ||
| PGUR #2 | 146.74 | 161.3 | 168.12 | 6.82 | 3.78 | 3.03 | 189.21 | 340.93 | 11 |
| INCLUDING | |||||||||
| 162.15 | 166.2 | 4.05 | 2.24 | 4.98 | 240.27 | 489.24 | 15.7 | ||
| PGUR #3 | 146.03 | 165.25 | 170.4 | 5.15 | 3.42 | 1.96 | 183.66 | 281.83 | 9.1 |
| INCLUDING | |||||||||
| 166 | 169.8 | 3.8 | 2.52 | 2.65 | 235.67 | 368.03 | 11.8 | ||
| PGUR #4 | 129.91 | 142.5 | 155.1 | 12.6 | 7.48 | 0.35 | 321.23 | 338.88 | 10.9 |
| INCLUDING | |||||||||
| 142.5 | 150.91 | 8.41 | 4.98 | 0.46 | 455.47 | 478.53 | 15.4 | ||
| PGUR #5 | 177.85 | 185.2 | 193.75 | 8.55 | 3.8 | 0.28 | 95.78 | 109.9 | 3.5 |
| INCLUDING | |||||||||
| 185.2 | 188.1 | 2.9 | 1.29 | 0.27 | 148.33 | 162.06 | 5.2 | ||
| PGUR #6 | 57.9 | 80.35 | 86.1 | 5.75 | 4.5 | 2.03 | 142.83 | 244.1 | 7.8 |
| INCLUDING | |||||||||
| 80.85 | 84.45 | 3.6 | 2.81 | 2.94 | 172.21 | 319.37 | 10.3 | ||
| PGUR 7 | 102.7 | 133.6 | 137.7 | 4.1 | 3.11 | 0.44 | 80.57 | 102.52 | 3.3 |
| INCLUDING | |||||||||
| 133.6 | 135.6 | 2 | 1.52 | 0.78 | 110.5 | 149.5 | 4.8 | ||
| PGUR #8 | 138.8 | 155.7 | 160.81 | 5.11 | 3.09 | 2.38 | 228.09 | 347 | 11.2 |
| INCLUDING | |||||||||
| 157.7 | 160.81 | 3.11 | 1.88 | 3.82 | 274.68 | 465.46 | 15 | ||
| PGUR #9 | 52.3 | 68.75 | 72.1 | 3.35 | 2.28 | 0.34 | 93.22 | 110.29 | 3.5 |
| INCLUDING | |||||||||
| 70.1 | 71.6 | 1.5 | 1.02 | 0.29 | 201.63 | 215.98 | 6.9 | ||
| PRUR #10 | 102.3 | 112.4 | 117.95 | 5.55 | 2.43 | 1.54 | 203.25 | 280.26 | 9 |
| INCLUDING | |||||||||
| 114.04 | 116.8 | 2.76 | 1.2 | 2.74 | 391.85 | 528.85 | 17 | ||
| INCLUDING | |||||||||
| 114.73 | 116.11 | 1.38 | 0.6 | 4.72 | 645 | 881.23 | 28.3 | ||
| PGUR #11 | 151.5 | 179.4 | 185.5 | 6.1 | 4.21 | 2.14 | 180.45 | 287.62 | 9.2 |
| INCLUDING | |||||||||
| 180.5 | 184.5 | 4 | 2.76 | 3.03 | 201.4 | 352.75 | 11.3 | ||
| PGUR #12 | 53.2 | 64.2 | 68.2 | 4 | 2.79 | 1.32 | 377.11 | 443.15 | 14.2 |
| INCLUIDNG | |||||||||
| 65.2 | 67.7 | 2.5 | 1.75 | 1.78 | 577 | 666.09 | 21.4 | ||
| PGRU #13 | 112.92 | 115 | 121.47 | 6.47 | 2.73 | 2.56 | 205.19 | 333.03 | 10.7 |
| INCLUDING | |||||||||
| 115.73 | 120.67 | 4.94 | 2.08 | 3.1 | 250.88 | 405.96 | 13.1 | ||
| PGUR #14 | 152.72 | 172.17 | 176 | 3.83 | 2.5 | 0.2 | 163.91 | 173.94 | 5.6 |
| INCLUIDNG | |||||||||
| 172.17 | 175.2 | 3.03 | 1.98 | 0.24 | 195.63 | 207.47 | 6.7 | ||
| PGUR #15 | 46.94 | 53.98 | 58.93 | 4.95 | 3.16 | 0.83 | 179.55 | 221.27 | 7.1 |
| INCLUIDNG | |||||||||
| 54.98 | 58.4 | 3.42 | 2.18 | 0.92 | 239.84 | 285.8 | 9.2 | ||
| PGUR #16 | 82.01 | 100.61 | 105.97 | 5.36 | 3.63 | 1.37 | 329.23 | 397.51 | 12.8 |
| INCUDING | |||||||||
| 100.61 | 104.74 | 4.13 | 2.8 | 1.68 | 412.33 | 496.2 | 16 | ||
| PGUR #17 | 144.82 | 151.9 | 166 | 14.1 | 6.83 | 0.86 | 203.27 | 246.34 | 7.9 |
| INCLUIDNG | |||||||||
| 154.85 | 160.2 | 5.35 | 2.6 | 0.29 | 286.79 | 301.07 | 9.7 | ||
| INCLUIDNG | |||||||||
| 162.11 | 166 | 3.89 | 1.88 | 2.63 | 244.51 | 376.13 | 12.1 | ||
| PGUR #18 | 122.79 | 128.95 | 138.4 | 9.45 | 4.57 | 1.68 | 325.13 | 409.02 | 13.2 |
| INCLUDNG | |||||||||
| 131.3 | 134.35 | 3.05 | 1.48 | 0.63 | 812.3 | 843.86 | 27.1 | ||
| PGUR #19 | 45.62 | 60.1 | 61.6 | 1.5 | 1.17 | 0.39 | 158.27 | 178 | 5.7 |
| PGUR #20 | 84.81 | 90 | 93.7 | 3.7 | 1.93 | 0.87 | 331 | 374.3 | 12 |
| PGUR #21 | 87.96 | 106.98 | 110 | 3.02 | 2.46 | 0.48 | 78 | 102 | 3.3 |
| PGUR #22 | 28.21 | 35.6 | 39.49 | 3.89 | 3.15 | 2.48 | 181.8 | 305.6 | 9.8 |
| PGUR #23 | 40.33 | 55.41 | 58.9 | 3.49 | 2.85 | 0.63 | 72.83 | 104.35 | 3.4 |
| PGUR #24 | 88.32 | 121.28 | 124 | 2.72 | 2.14 | 3.84 | 287.88 | 479.73 | 15.4 |
| INCLUIDNG | |||||||||
| 122.53 | 124 | 1.47 | 1.16 | 6.8 | 414.9 | 754.73 | 24.3 | ||
| PGUR #25 | 82.41 | 127 | 130.7 | 3.7 | 3.04 | 0.49 | 310.62 | 335.03 | 10.8 |
| PGUR #26 | 80.34 | 109.1 | 114 | 4.9 | 3.83 | 1.03 | 76.22 | 127.84 | 4.1 |
| PGUR #27 | 205.12 | 233.83 | 238.21 | 4.38 | 2.9 | 0.55 | 180.36 | 207.65 | 6.7 |
| INCLUDNG | |||||||||
| 235.8 | 237.55 | 1.75 | 1.16 | 0.96 | 218.43 | 266.29 | 8.6 | ||
| PGUR #28 | 193.41 | 223.93 | 226.8 | 2.87 | 1.94 | 0.21 | 114.91 | 125.26 | 4 |
| INCLUDING | |||||||||
| 223.93 | 225.85 | 1.92 | 1.3 | 0.29 | 159.72 | 174.1 | 5.6 | ||
| PGUR #29 | 218.97 | 225.8 | 235.34 | 9.54 | 3.58 | 0.38 | 48.95 | 68.13 | 2.2 |
| PGUR #30 | 50.37 | 70.76 | 76.4 | 5.64 | 4.62 | 0.9 | 116.71 | 161.81 | 5.2 |
| PGUR #31 | 39.67 | 63.9 | 77.7 | 13.8 | 11.71 | 2.35 | 218.86 | 336.27 | 10.8 |
| INCLUDING | |||||||||
| 75.3 | 77.7 | 2.4 | 2.04 | 1 | 633.56 | 683.44 | 22 | ||
oz/t - Troy ounces per metric tonne.
Quality Assurance / Quality Control:
AndeanGold has in place a detailed QA/QC program consistent with Canadian Securities Administrators National Instrument 43-101 and using best industry practices. The program includes chain of custody of samples; standards and blanks submitted to the independent Inspectorate Lab in Lima Peru with each batch of samples, and a check assay program on a proportion of sample pulps with a second independent laboratory. The results of the QA/QC program to date have been satisfactory.
Future drilling programs will be designed to achieve an initial reserve estimate for the Project and will be dependent on the results of the Phase I infill drilling results and the recommendations of the consulting firm chosen to prepare the NI 43-101 resource estimate.
Mineral Resource Estimate
On November 15, 2011, the Company announced that it had received the results of its initial National Instrument 43-101 ("NI 43-101") compliant, independent mineral resource estimate on the Urumalqui Vein, as follows:
Mineral Resource Estimate
| Silver Cut-Off Grade (g/t) |
Tonnes | Silver Grade (g/t) |
Silver (ounces) |
Gold Grade (g/t) |
Gold (ounces) |
|---|---|---|---|---|---|
| 120 | 1,535,000 | 188.47 | 9,299,000 | 1.513 | 74,700 |
| 90 | 1,945,000 | 171.01 | 10,692,000 | 1.378 | 86,200 |
| 60 | 2,147,000 | 162.15 | 11,192,000 | 1.340 | 92,500 |
Notes:
- 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 was estimated 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.
- The Estimate is based on 66 diamond drill holes collared on the Urumalqui Vein. These included 35 holes (5,835 metres) drilled by Minera Corimalqui S.A. (a subsidiary of Gitennes Exploration Inc.) during the period 2003 - 2008, and 31 holes (5,071 metres) drilled by PeruGold Resources S.A.C. (a subsidiary of AndeanGold) in 2011.
- The density utilized in the mineral resource estimate was 2.37 tonnes per cubic metre.
- Equal length one-metre assay sample composites were calculated from capped assay gold and silver values for all drill holes. Based upon statistical results, capping levels were determined to be 850 g/t silver and 8.6 g/t gold.
- A modeling cut-off grade of 60 g/t AgEQ ("silver equivalent") was only used to create a three-dimensional assay domain solid (the "Domain") for later interpolation. The silver equivalent grade was calculated based on a combination of a gold value at a 3-year trailing average price of US $1,300 / troyozand85%metallurgicalrecoveryrate,and a silvervalueat a 3-year trailing average price of US $26 / troy oz and 65% metallurgical recovery rate.
- A block model was created with 5x5x5 metre blocks. Mineral resources were classified as Inferred within a maximum true distance of 70 metres from an interpolated block to the nearest capped grade composite sample point.
- The mining cut-off grade of 90 g/t Ag for the estimated inferred mineral resource was based upon reported mining operation cut- off grades for similar gold-silver vein deposits currently in production elsewhere in Peru and South America.
- The Inferred Mineral Resource was estimated using GEMS software.
Qualified Persons & Technical Report
The Inferred Mineral Resource Estimate, with an effective date of November 8, 2011, meets the guidelines and form as set out in NI 43-101 and was prepared for AndeanGold Ltd. and Gitennes Exploration Inc. ("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.
The NI 43-101 Technical Report in support of the Resource Estimate was filed by the Company in its entirety on SEDAR (www.sedar.com) on December 22, 2011.
As stated in the NI 43-101 report, "The exploration potential of the Urumalqui Vein is good. Exploration results show that the known Vein mineralization may continue along its trend in both strike directions and to depth along its entire known length." Six drill holes have intersected the structure 200 metres below surface, and all six were mineralized. In addition, there has been only limited exploration done on the Project's other mineralized vein structures identified to date.
Maps & Photos
)
)
)
)
)
)
)
)
)