THE GEOLOGY OF SANTA ANA, A NEWLY DISCOVERED EPITHERMAL SILVER DEPOSIT, PUNO PROVINCE, PERU By Christian Ríos Vargas ___________________ A Manuscript Submitted to the Faculty of the DEPARTMENT OF GEOSCIENCES In Partial Fulfillment of the Requirements For the Degree of MASTER OF SCIENCE In the Graduate College THE UNIVERSITY OF ARIZONA 2008 1 STATEMENT BY THE AUTHOR This thesis has been submitted in partial fulfillment of requirements for the Master of Science degree at The University of Arizona and is deposited in the Antevs Reading Room to be made available to borrowers, as are copies of regular theses and dissertations. Brief quotations from this manuscript are allowable without special permission, provided that accurate acknowledgment of the source is made. Requests for permission for extended quotation from or reproduction of this manuscript in whole or in part may be granted by the Department of Geosciences when the proposed use of the material is in the interests of scholarship. In all other instances, however, permission must be obtained from the author. __________________________________________ (author’s signature) _____________ (date) APPROVAL BY RESEARCH COMMITTEE As members of the Research Committee, we recommend that this thesis be accepted as fulfilling the research requirement for the degree of Master of Science. Eric Seedorff __________________________________________ Major Advisor (type name) (signature) _____________ (date) Mark D. Barton __________________________________________ (type name) (signature) _____________ (date) Spencer R. Titley __________________________________________ (type name) (signature) _____________ (date) 2 ACKNOWLEDGMENTS I would like to express my gratitude to Eric Seedorff, for his time, editorial comments, and assistance in translation throughout the writing of this thesis. I would like to thank Mark D. Barton and Spencer R. Titley for their comments and suggestions on previous versions of the thesis. I would like to thank Mr. David Lowell for his financial support via the Lowell Scholarship, and Bear Creek Mining for their financial support during my stay in the United States, and especially to Andrew Swarthout for motivating me to come here. I would like to thank to the people that motivated me in general. Thanks to Cesar Rios, David Volkert, and Mike McClave for their comments on the paper. I thank Greg Corbett for the use of some of his figures and for giving me some papers before arriving in the U.S. I thank Edwin Gutierrez for his patience in helping me understand the MineSight Software. I thank Luis Romero for his time helping me with some figures and maps. I thank Rene Tonconi for his help with some figures and photos. I thank Doug Kriener and Brad Christoffersen for their help with language and grammar issues in some parts of the paper. My most special thanks goes to Carolina, my wife. Thank you for your understanding, unconditional love, and never ending support. 3 DEDICATION Dedicated to my loved ones – the people who support and believe in me. To my wife Carolina, the most special person in my life, To my newborn Ana Camila, the one who inspires me to be responsible and who motivates me to work to my full potential, To my father (El Abuelo), mother, and my sister for their love, support and education throughout my life. To God, the One that gave sense to my life. 4 TABLE OF CONTENTS LIST OF ILLUSTRATIONS……………………………………………………...8 LIST OF TABLES………………………………………………………………..10 ABSTRACT……………………………………………………………………….11 INTRODUCTION………………………………………………………………...13 EXPLORATION HISTORY……………………………………………………..16 METHODS………………………………………………………………………..17 Geologic mapping………………………………………………………………..17 Rock chip sampling……………………………………………………………....17 Trenching…………………………………………………………………………18 Geophysical surveying…………………………………………………………...18 Drilling and logging……………………………………………………………...18 Petrography………………………………………………………………………19 Soil sampling……………………………………………………………………..19 Geologic modeling……………………………………………………………….19 EXPLORATION OPERATIONS……………………………………………….20 REGIONAL GEOLOGY AND TECTONICS………………………………….23 DISTRICT GEOLOGY…………………………………………………………..25 GEOLOGY OF ANOMALY B AREA OF THE SANTA ANA DEPOSIT…..27 Overview…………………………………………………………………………27 Rock types……………………………………………………………………….27 Mesoscopic characteristics……………………………………………………..27 5 TABLE OF CONTENTS-Continued Petrography……………………………………………………………………...28 Structural geology…………………………………………………………………28 Mineralization……………………………………………………………………..29 Mode of occurrence………………………………………………………………29 Mineralogy……………………………………………………………………….30 Wall-rock alteration………………………………………………………………..32 Alteration in andesitic lava flows………………………………………………...32 Alteration in dacite dike…………………………………………………………..33 GEOLOGY OF ANOMALY A……………………………………………………34 GEOPHYSICAL CHARACTERISTICS………………………………………...35 SOIL SAMPLES…………………………………………………………………. .36 GEOLOGIC INTERPRETATIONS AND DISCUSSION………………………37 Structural interpretation…………………………………………………………...37 Parageneses………………………………………………………………………..38 Geochemical environment………………………………………………………...40 Influence about fluid sources……………………………………………………...41 Classification and distinctive characteristics of Santa Ana……………………….42 Comparison of Santa Ana with other epithermal polymetallic vein deposits…….43 Pachuca-Real del Monte…………………………………………………………43 Peripheral zones of Butte………………………………………………………...43 Laykakota………………………………………………………………………..44 6 TABLE OF CONTENTS-Continued RESOURCE ESTIMATION……………………………………………………..45 Assembly of drilling and geologic data…………………………………………..45 Defining 3-D solid………………………………………………………………..45 Geostatistical analysis…………………………………………………………….45 Grade interpolation and resource estimation……………………………………..46 OTHER ECONOMIC IMPUTS…………………………………………………47 Infrastructure……………………………………………………………………..47 Mining……………………………………………………………………………47 Metallurgy………………………………………………………………………..47 ECONOMIC POTENTIAL………………………………………………………48 CONCLUSIONS………………………………………………………………….49 REFERENCES……………………………………………………………………51 FIGURE CAPTIONS…………………………………………………………….58 7 List of Illustrations FIGURE 1. Location map of the Santa Ana deposit…………………………………… 63 FIGURE 2. Location map of Anomaly A and Anomaly B…………………………...… 64 FIGURE 3. Photographs of old workings ……………………………………………… 65 FIGURE 4. Geologic map of Anomaly B………………………………………………. 66 FIGURE 5. Detailed geological map of East Breccia………………………………….. 67 FIGURE 6. Photographs of trenches at Anomaly B……………..................................... 68 FIGURE 7. 3D Interpretation of induced polarization and resistivity survey………….. 69 FIGURE 8. Interpretation of 3D induced polarization and resistivity section.……….... 70 FIGURE 9. Representative photograph of drill core…………………………………… 71 FIGURE 10. Photomicrographs of lavas………………………………………….……. 72 FIGURE 11. Photomicrographs of opaque mineralogy ……………………...…………73 FIGURE 12. Location map of soil samples, Anomaly B………………………………. 74 FIGURE 13. Projection of drill holes to plan view, MineSight® Software…………… 75 FIGURE 14. Projection of drill holes to section view, MineSight® Software……….… 76 FIGURE 15. Solid shape from different views, MineSight® Software…………..….… 77 FIGURE 16. Histogram of Ag assay values…………………..…..………………….… 78 FIGURE 17. 3-D Block model, plan view……………………………………………… 79 FIGURE 18. 3-D Block model, section view……………………………………………80 FIGURE 19. Photographs of drill core…………………………….…………………… 81 FIGURE 20. Stratigraphic column, Puno. ……………………………...…..………….. 82 8 FIGURE 21. Surface photographs……………………………………………………… 83 FIGURE 22. Sketch of geological relationships including dilational splays………….....84 FIGURE 23. Conceptual geological model for Santa Ana……………………………....85 FIGURE 24. Comparison of three phases of metallurgical test results……………….... 86 9 List of Tables TABLE 1, Diagnostic Minerals and Textures of Various States of pH, Sulfidation and Oxidation State…………………………………………………………………… 87 TABLE 2, Resource Estimate Determined with MineSight® Software……………….. 88 TABLE 3, Drill holes results, Phase 1…………………………………….…………… 89 TABLE 4, Drill holes results, Phase 2…………………………………………………. 90 TABLE 5, Drill holes results, Phase 3…………………………………………………. 91 TABLE 6, Drill holes results, Phase 3, continued…………………………………...…. 92 TABLE 7, ALS Shaker Test results………………………………………………….… 93 TABLE 8, Plenge Bottle Roll Test results…………………………………………….... 94 TABLE 9, McClelland Bottle Roll Test results……………………………………….... 95 10 Abstract The Santa Ana project is an epithermal silver vein deposit in the Andes discovered in 2006 by geologists of Bear Creek Mining. It comprises seven claims that cover an area of 6,300 hectares. The main property anomaly is located 4 km south of the village of Huacullani and about 120 km south of Puno, southeastern Perú, South America. The mineralogy and geometry of the veins of this deposit show similarities with certain intermediate sulfidation epithermal deposits, such as Pachuca mine in Mexico. The characteristics of the Santa Ana deposit are known primarily from outcrop mapping, rock chip and soil sampling, and drilling. Mineralization is hosted by andesitic lava flows of the Oligocene to Miocene Tacaza Group and associated dacitic dikes. The veins contain sphalerite, galena, pyrite, minor chalcopyrite, and argentite and a late carbonate. Most silver occurs as argentite that overgrows sphalerite. The veins are bordered by chlorite-pyrite-illite alteration envelopes of assemblages are products of from these structures. Mineralization is localized mainly along two trends: north-south and east-west. Most of the mineralized veins strike north to northeast and dip 15º to 60º west. The principal veins range in width from centimeters to 2 meters, although the total width of a mineralized interval, including zones of stockwork veins, breccias, and open- space filling structures can be up to 40 meters. The highest silver values occur in areas of openspace filling that may represent dilatant flexural zones associated with variations in strike of the veins. Fluidized breccia dikes, hydrothermal magnetite veins (at depths >170m), 11 and illite-pyrite alteration are present at Santa Ana, which some workers regard as evidence of a magmatic fluid component. Santa Ana has characteristics in common with other Ag-Zn-Pb polymetallic vein deposits of southern Perú. The mineralogy of Santa Ana has similarities with Pachuca, Hidalgo, Mexico, the outer zones of Butte, Montana, and Laykakota, Perú, but the quartzpoor character and lack of evidence for adularia at Santa Ana are distinctive. A resource estimate based on the first 50 drill holes, made using MineSight® software is ~48 million tonnes containing ~40 million ounces of contained Ag at an average grade of ~30 g/t Ag and demonstrates that Santa Ana has the potential to be a bulk-minable deposit. Metallurgical testing indicates the potential for cyanide leaching of ores at Santa Ana, which is economically favorable and thus strongly encourages further exploration and possible future development of the deposit. 12 Introduction The mineralogy, wall-rock alteration, and structure of epithermal deposits provide key information necessary to understand their genesis (Simmons et al., 2005), and the location, size, grade, and metallurgical characteristics of deposits are important factors relevant to their economic viability (e.g., Hoal et al., 2006). The Santa Ana project, located about 120 km south of Puno in the Miocene andesite-dacite arc terrane constructed on the Altiplano in the Andes of southeastern Perú (Fig.1), is an epithermal silver vein deposit discovered in 2006 by geologists of Bear Creek Mining with similarities to certain intermediate sulfidation epithermal deposits. Mineralization is structurally controlled in andesitic lava flows of the Eocene to Miocene Tacaza Group and dacitic dikes, which are altered to chlorite-pyrite-illite assemblages. Elevations in the area vary between 3800 and 4300 m above sea level (~14,000 ft). Epithermal deposits, as originally defined, are products of hydrothermal activity at shallow depths and low temperatures (Lindgren 1922, 1933). Deposition normally takes place within about 1 km of the surface in the temperature range of <100 to 320° C. During formation of these deposits, fluids can reach the surface as hot springs. Epithermal deposits are more common in areas of active volcanism, including volcanic arcs. Epithermal deposits are important hosts of precious metals but also contain other metals, such as Cu, Pb, Zn, and Bi. Comparison of the hydrothermal evolution of major silver veins in Tertiary volcanic rocks reveals contrasting thermal histories, sulfidation states, and degree of hydrolysis associated with ore fluids (e.g., Tayoltita and Guanajato, 13 Mexico; Graybeal et al., 1986). Vein assemblages indicate little restriction on the availability of sulfur and other constituents. Vein temperatures for ore-grade mineralization fall into a narrow range. In all deposits economic amounts of precious metals are deposited at 250º - 300º C from solutions containing 10-2 to 10-3 total sulfur at pH = 4-6 (Graybeal et al., 1986). The Andes are a major producer of precious metals (Anonymous, 1972; Noble et al., 1989, 1999; Noble and Vidal, 1994), and Perú is particularly known for its silver production (Kamilli et al., 1977). Polymetallic veins in the Andes are sulfide - rich veins containing sphalerite, galena, silver and sulfosalt minerals in a carbonate and quartz gangue. Regional faults, fault sets, and fractures are important ore controls. The Miocene volcanic arc in the Peruvian Andes is an important metallogenic province for precious metal epithermal vein deposits such as Caylloma (Echavarria et al., 2006), Arcata (Candiotti et al., 1990), Orcopampa (Gibson et al., 1990, 1995), and the recently discovered Corani deposit. Veins largely form by several phases of open-space fillings of faults, but some degree of wall-rock replacement, particularly in breccia fragments, is usually present (Colqui, Perú; Kamilli et al., 1977). Veins commonly have complicated parageneses and may exhibit spatial zoning with silver overlying base metal assemblages, although superposition is also common. Santa Ana is a structurally controlled, Ag-rich vein deposit with mineralogic similarities to intermediate-sulfidation deposits (Table 1) such as Pachuca, Hidalgo, Mexico, but the quartz-poor character and lack of evidence for adularia at Santa Ana are distinctive. Certain characteristics may indicate proximity to an intrusion that could be a source of metals for the deposit. The size, grade, and metallurgical properties of the ores 14 are economically favorable for possible future development of the deposit, thus supporting further exploration of the deposit. The purpose of this paper is to describe the geology of this new volcanic-hosted silver-polymetallic deposit, to compare its characteristics with other epithermal deposits, and to make a preliminary resource estimate. I first describe the geologic setting of the region and the district that contains the Santa Ana deposit, then document the methods that Bear Creek Mining followed to make this discovery. I summarize the results of my field work and describe the structure and mineralogy of the deposit. I compare Santa Ana with other silver - polymetallic deposits and offer speculations on its origin. Finally, I use data of the first 50 drill holes to make a resource estimate of the deposit with MineSight® software to evaluate the economic potential of the Santa Ana deposit. 15 Exploration History The earliest work done at Santa Ana dates back to colonial times. Similar to many of the early discoveries in Latin America, it was mined by the Spanish in the 1600’s. Some miners returned in the earliest 1980’s, in which small workings mostly mined narrow, structurally controlled high-grade zones. In 2004, geologists of Bear Creek Mining Corporation became aware of these old workings and took eight chip samples that returned values of up to 200 grams per tonne of silver in a “crestone” structure (term used for vein-breccias with hackly texture). Samples from rock chips returned values of 20-35 grams per tonne. Consequently, Bear Creek decided to begin serious exploration during the second half of 2004. The areas containing the most significant geochemical anomalies were given names designated by letters (e.g., Anomaly A, Anomaly B, etc.). Anomaly A, Anomaly B and Anomaly C (1 km south of the main Anomaly B) (Fig. 2) contain some of the small mine workings that were dug in the 1980’s (Fig. 3). Little is known about mining close to the Huacullani District but “comuneros” (indigenous people who live in Huacullani, the closest village to the project) said that people used to mine a gray colored mineral (supposed to be lead). The focus of exploration completed to date has been on Anomaly B. Bear Creek geologists started grid sampled (50 x 50 meters) in the Anomaly B zone, taking 446 samples that averaged 83 grams per tonne. Later, four trenches were dug totaling 160 m in length. Three phases of drilling have been completed since then. More recently, increasing attention has been focused on Anomalies C and A. 16 Methods Geologic mapping Detailed mapping was completed at a scale of 1:2500 (meters) in 2004 (Fig. 4). A more detailed map was made at a scale of 1:1000 for the main structural trend called “East Breccia” because of the abundant structures present there (Fig. 5). Mapped observations were plotted on two layers: one for structures and the other for outcrops and alteration. Outcrops and mineralized structures where drawn in layers using Provisional South American 1956 map datum recorded on a Garmin GPS 12. Rock chip sampling Sampling was done in an area of 2.8 kilometers long by 600 meters wide. A total of 582 samples were taken in the area (“Anomaly A” and “Anomaly B” areas, see Fig.2), with an average of 85.4 g/t silver. Samples include chip samples from outcrops and structures. Samples were taken randomly (spaced 1.5 – 2 m) on outcrops. In the case of structures, samples were collected continuously along a channel line perpendicular to the structure. The footwalls and hanging walls were also considered for sampling of structures. Each sample was described in the field; they later were recorded in an Excel spreadsheet. 17 Trenching Trenching was done in order to check if the silver anomalies continue between structures (Fig. 6). Four trenches were completed for a total of 224 m. Each sampled interval was 1.5 – 2 m long. They were taken in a channel (25 – 30 cm wide) across the different outcrops. Each sample was described and recorded in Excel spreadsheet. Geophysical surveying Geophysical exploration was performed by Valdor Geophysics in early 2005. Valdor used induced polarization and resistivity (IP/Res), differential GPS and Total Field Magnetic (TFM) methods covering 1.2 km of strike length along the north-south corridor trend. Each section line (100 m spacing between lines) was interpreted in the Lima office for future consideration of drill holes (Fig. 7 and Fig. 8) Drilling and logging Drilling occurred in three phases. Forty-two shallow core drill holes for a total of 5033.6 meters were drilled as of May 31, 2007 (Bear Creek is still drilling the project). Holes were drilled with a L-250 model drill rig. Each HQ core interval was placed in a carboard box and then was taken by truck to the field camp for geologic logging and preparation of analytical samples. Logging attempted to distinguish different type of host 18 rocks ore and gangue minerals, characteristics of the structures, and alteration. Each box of core was photographed (Fig. 9). Petrography Petrographic examination of 13 thin sections was done in order to identify the main ore minerals and alteration products, paragenetic sequences, and textures relevant to likely metallurgical behavior. Photos were taken (Fig. 10, 11). Soil sampling Soil samples were made in a grid of 50 x 50 meters in the northern and southern parts of Anomaly B (Fig. 12). Samples were collected from the B soil horizon in 1 x 1 x 0.8-meter pits dug with a pickax. Samples were then seived and then placed in a special bag for analysis. Geologic modeling A 3-D solid was constructed using Mintec MineSight® software. Drilling and geologic information from the first 50 drill holes were imported (Fig. 13, 14) to develop a 3-D solid of the initial shape of the deposit (Fig. 15). The data were then subjected to geostatistical analysis (Fig. 16), and a 3-dimensional block model (Fig. 17, 18) was constructed that resulted in a possible resource estimate (Table 2). 19 Exploration Operations Trenching Four trenches were excavated in the Anomaly B area with the following results: Trench Total meters sampled (2m/sample) Location Ag average grade (ppm) 1 126 East Breccia 23.66 2 24 West Breccia 80.13 3 4.5 close to W Breccia 80.67 4 6 north of W Breccia 106.50 Drilling There have been three phases of drilling at Santa Ana since its discovery in 2006. This paper is based on the first 42 drill holes (5033.6m) that Bear Creek completed as of May 31, 2007. (See drill core samples Fig. 19A-F). First phase: Eleven extremely widely spaced holes (more than 250 m apart on average) were drilled by the contractor, Bradley, during June 2006. A total of 1120 m of HQ core were drilled. The holes confirmed the possible bulk tonnage potential of the property and provided the first strong evidence for mineralization controls. 20 These holes (e.g., SA-2) indicated that the type and degree of alteration of lavas and dike were similar at the surface and at depth. Small volcanic breccias (autobreccias?) were found in a few holes (e.g., SA-3) with the same alteration patterns: feldspars are altered to illite-sericite, and mafics are chloritized. Similar patterns were found in all holes. Disseminated pyrite is present in amounts of <1% to 2% in a few holes. Crackle breccias in drill holes correlate with the surface projection of crestones, the vein-breccias that exhibit a hackly texture. The degree of fracturing, abundance of barite, and abundance of jarosite correlate with presence of silver mineralization, though they are not necessarily indicative of economic values. Most of the holes had an azimuth between 100º and 300º, with a dip of -60º (to the E or W) and a depth of 100m. Sulfides are predominantly oxidized in the upper 60 m, but in a few holes mixed zones appear beginning at 40 m (e.g., SA-2). See Table 3 for silver values. Second phase: Twenty-three additional holes were drilled before the end of 2006, totaling 3191 m in this phase. Deeper holes were drilled (171.40m in drill hole SA-19A). Holes were drilled mainly oriented between 130º and 180º with dips of -60º. Holes oriented in a scissor pattern were drilled from some platforms (e.g., SA-3, SA-3A, SA3B, SA-3C). Lavas, volcanic breccias, and dikes were also found in this phase, with similar characteristics and alteration patterns as in the first phase. The structures (veinlets and veins, from mm up to 30 cm) observed dip at low angles (between 45 and 15º) to the drill core axis. Oxidation persists to approximately 60 m. Good silver grades are related to degree of fracturing, presence of barite, and presence of chalcedonic silica + carbonate infill (see Fig. 19C). See Table 4 for results. 21 Third phase: This paper considers holes drilled through SA-39A (as on May 31, 2007), but drilling continued at least through all of 2008. Characteristics of host rocks and alteration observed in this phase were similar to earlier phases. Lavas are intercalated with volcanic breccias; both are clay – chlorite altered, and both are cut locally by the dacitic dike. The best mineralization is restricted to low-angle centimetric structures and dilational open-space filling. Barren Puno sandstones also were encountered in this phase of drilling (drill hole SA-30A at 32m) for the first time. It is not clear yet what controls the presence of these sedimentary rocks, but maybe there presence is related to a secondary structure and associated uplift and erosion on the north-northeastern side of the project. Some important results are shown in Table 5 and Table 6. 22 Regional Geology and Tectonics The Santa Ana deposit is located in a Miocene andesite-dacite arc terrane constructed on the Altiplano as part of the Andes in southeastern Perú. Southeastern Perú contains rocks that range from Paleozoic clastic sedimentary rocks to Recent volcanic rocks, including immense volcanic centers that produced Late Miocene to Pliocene Barroso pyroclastic rocks. There are different opinions about the importance of the Cenozoic strike-slip faulting in southeastern Perú, especially in the Altiplano area (Herail et al., 1996; Horton, 1996). Paleozoic sedimentation started with marine sandstones of Ordovician age, which are overlain by Siluro-Devonian marine shales. Early tectonic activity in the region occurred mainly in two phases. Early Hercynian tectonism (Late Devonian) was characterized by tectonic compression, which formed the folds that are responsible for the angular discontinuity between Lower Devonian rocks and the overlying deltaic sedimentary rocks of the Mississippian Ambo Group (INGEMMET, 1995). A minor disconformity between Mississippian sedimentary rocks and overlying Permian sedimentary rocks is a result of strong folding north of Lake Titicaca that formed during Late Hercynian orogenesis. The Paleozoic closed with the basic volcanism of the Iscay Group (270 Ma). Mesozoic sedimentation started with deposition of Lower Jurassic to Lower Cretaceous rocks in the Yura basin, which was filled with terrigenous sediments of the Yura and Lagunillas Groups. In the lower to middle Cretaceous, the site of deposition 23 shifted to the east from the Yura basin to the Putina basin, which continued into the lower Tertiary as the Puno Group (INGEMMET, 1995). Three phases of calc-alkaline volcanism developed in the Tertiary in the western Cordillera (INGEMMET, 1995), forming rocks of the Tacaza Group (upper Oligocene to lower Miocene), Sillapaca Group (middle Miocene), and Barroso Group (upper Miocene to Pliocene) (Fig. 20). Volcanism continued until the Quaternary. In southeastern Peru, Andean orogenesis started in the Santonian with the Peruvian orogeny. Folds were formed in the Yura basin during epeirogeny and erosion that define the Incaic orogeny, which started a phase of molasse facies deposition of the Puno Group in the Altiplano that continued until the Oligocene (INGEMMET, 1995). Five phases of the Neogene Quechuan orogeny are recognized on the basis of stratigraphy and geochronology (INGEMMET, 1995): post- Puno/ pre-Tacaza (~30 Ma); intra-Tacaza and pre-Palca (~22 Ma); post-Palca to post-Puno (~16 Ma); and post-Maure to pre-Barroso (~7 Ma); and overthrusting of the Ayabaca Shale (<7 Ma). Mineralization occurs along a wide belt that trends northwest-southeast (INGEMMET, 1995). Paleozoic rocks are mineralized with W, Mo, and Sb near posttectonic Permian intrusive rocks. Tertiary mineralization is principally associated with outcrops of the Tacaza Group, west of the Alto de Cabanillas. The principal metals associated with the Tertiary mineralization are silver, lead, and zinc, with minor copper and gold. 24 District geology The Santa Ana deposit contains continental sedimentary rocks that have been assigned to the Puno Group, mineralized volcanic lava flows and auto-breccias of the Tacaza Group, a pre-ore Cenozoic dacitic subvolcanic intrusive dome and dike, and postore pyroclastic rocks of the Barroso Group. The Puno Group consists of a broad accumulation of arkosic red sandstones and conglomerates with rounded clasts of fluvial origin. Shales, mudstones with intercalations of calcareous beds, and evaporites are present locally. The Puno Group was deposited between the Upper Cretaceous and the early Oligocene (83 - 35 Ma). In the Santa Ana area, sandstones of the Puno Group are observed in the northeastern part of Anomaly B (Fig. 2) and in drill hole SA-30A at 32 m. To date, sedimentary rocks of the Puno Group are barren of mineralization. The Tacaza Group of Oligocene-Miocene age is composed of andesitic lavas that commonly were deposited discordantly on Mesozoic rocks or rocks of the Puno Group. Locally, however, rocks of the Tacaza Group were deposited on Paleozoic rocks. The Tacaza Group is one of the main hosts for epithermal deposits across Perú (e.g., Corani deposit in Puno; Yanacocha district in Cajamarca). In the Santa Ana area, the Tacaza Group is the principal host of silver mineralization. Lavas of the Tacaza Group dip 15º to 60º west. The Tacaza Group is overlain by the Cenozoic tuffs of the Barroso Group. 25 The dacitic quartz-feldspar porphyry seems to be one of the Cenozoic intrusions that occur in southeastern Perú. It is present in Santa Ana in the Anomaly B area as a crescent-shaped dike and in the Anomaly A area as a lava dome (Fig. 21B). The Barroso Group of Mio-Pleistocene age is related to volcanic centers that closed the effusive and explosive volcanic Tertiary sequence in the Peruvian Andes. Lithologically the Barroso is composed of andesitic, trachyandesitic, and dacitic lavas, breccias, agglomerates, and tuffs. The lavas are mostly basaltic andesites or hornblende andesites. Some rocks of the Barroso Group are of interest because they host epithermal Au-Ag mineralization. In the area of Santa Ana, a tuff of the Barroso Group is in the western part of the Anomaly B (Fig. 2) overlies mineralization. No silver anomalies have been found in the Barroso Group. 26 Geology of Anomaly B Area of the Santa Ana Deposit Overview Anomaly B is the most important area of mineralization at Santa Ana (Fig. 2 and Fig. 21a). It is located approximately at 8158000 North and 466000 East UTM grid coordinates using the PSAD 56 map datum (zone 19). Colonial workings are present (approximately 50 small workings) (Fig. 3). Anomaly B comprises a zone of 1,300 m north - south by 500 m east - west. Recent drilling has shown that this area has been extended by at least 200 m in both directions and still remains open in all directions. Rock types Mesoscopic characteristics: The main outcrops are andesitic lavas of the Miocene Tacaza Group that are cut by a Cenozoic dacitic dike that is related to a dome located 1.5 km to the north-northeast. Felsic tuffs of the Barroso Group overlie the mineralized lavas. Between the lava flows, it is common to find volcanic breccias (mostly monolithic autobreccias but apparently locally including heterolithic breccias). Volcanic breccias have been observed mostly found in drill holes. Hydrothermal intrusive(?) breccias have been reported in recent drilling, although they were observed since the beginning of exploration on a dump in the southern part of the area before any holes were drilled (A. Swarthout, pers. commun., 2005) and at the end of drill hole SA-2A. Petrography: These three samples (see Fig. 10) correspond to a porphyritic volcanic rock with microgranular to microcrystalline matrix. Plagioclase occurs as 27 phenocrysts and in a microcrystalline matrix, with different shapes from subhedral to anhedral crystals and sizes up to 2,6 mm. Quartz, located in the groundmass, comprises approximately 5% of a sample, and is up to 0.3 mm in size. Accessory minerals present in the sample are zircon, sphene, and apatite. Hydrothermal minerals are observed and are described further below. Structural geology The main structures observed are vein-faults, and fracture sets that exhibit negligible or indeterminate offset of geologic markers. Where mineralized, bedding faults are observed, the faults exhibit a normal sense of displacement. Two main orientations of faults and fracture sets have been observed at Santa Ana: north-south and east-west. The majority of veins, vein–breccias, and crestones (vein-breccias that exhibit a hackly texture) have north-south strikes. Veins can be from 20 cm to 1.5 m wide at the surface, although open space fillings and stockworks related to the veins can mineralized over widths of up to 40 m. In drill core, vein-breccias occur in zones with intense crackling and/or shearing with chorite-illite-pyrite alteration, typically 10 cm to 3 m wide. Similar widths of mineralization occur with the crestones. Mineralization also occurs parallel to bedding in the lavas (15 – 60º to the west). Some north-south structures vary in strike to north-northeast (015°-045°), creating dilational zones. Some northnortheast to northeast-striking fractures can be considered splays or horsetails on the main east-west structures (Fig. 22). The old workings continue south of Anomaly B (for at least 1 km), where surface sampling is getting silver assays as high as 90 ppm. 28 The east-west trending structures are present as veins, veins-breccias, and lesser crestones. These structures divide the north-south trend structures into blocks. Mineralization Mode of occurrence: Main structures in the area are the “East Breccia”, the “Northwest Breccia” (Fig. 21a) with a predominantly trend of north-south, and the “EastWest Structure” in the southern part of Anomaly B (Fig. 22). These structures are considered to be hydrothermal - tectonic breccias that are moderate to strongly chloritized in parts. At the surface, breccias contain jarosite or argentojarosite?, barite, manganese oxides (presumably an alteration product of carbonates such as rhodochrosite or manganoan calcite), pyrite, primary magnetite, ,and hematite after oxidation of magnetite. A dacitic quartz-feldspar porphyry dike occurs in a dilational zone between both “crestones” (Fig. 4). At the surface, the dike is anomalous in silver (from 2 ppm to 21 ppm), but at depth high grade structures occur at the dike - lava contact or inside the dike, with values up to 1000 ppm silver. Some old colonial workings (rich structures) are present at the contact lava - dike. The dike can only be seen in an area of 600 m long by 15 m wide. Lavas are present in most of the area, and they are moderately fractured and can have values up to 31 ppm silver, even when they are not close to the vein-breccias. Jarosite (argentojarosite?), barite, and manganese after carbonates can be seen in those fractures. Volcanic breccias (autobreccias) intercalated with the lavas contain the same amount of Ag mineralization, with values up to one ounce Ag if there is no structure nearby. 29 To the east of Anomaly B, the same Tacaza lavas are exposed but no important mineralization has been found. The truck route on the extreme eastern end of Anomaly B may coincide with a major fault that is controlling the eastern limit of mineralization. Only some spots of manganese can be seen in the eastern part of this Anomaly, but no important structures have been recognized to date. Outcrops samples in this area (335) average 43g/t Ag and mineralized structures (78 samples) average 237 g/t Ag. Also, 25 samples taken from dumps average 154 g/t, but these samples are not included in the general average of 85.4 g/t Ag. Silver anomalies correlates with lead (0.37% average), zinc (0.32% average), and barium (up to 4200 ppm) anomalies. Mineralogy and texture: Veins that cut the lavas of the Tacaza Group are composed of galena, sphalerite, rutile, magnetite, hematite, chalcopyrite, argentite, and pyrite. At the microscopic scale, galena fills the open space and microfractures of the gangue minerals (e.g., as micro-veinlets in barite). In part it replaces hematite, pyrite, chalcopyrite, and sphalerite (Fig. 11a, 11b, 11c). Galena also fills some holes in sphalerite. Sphalerite can be found disseminated and in the cleavages of the alteration minerals. Magnetite is disseminated and is intergrown with rutile. Rutile is associated with magnetite and can be present as a weak alteration to leucoxene. Hematite is present as radial aggregates and is included in gangue minerals (Fig. 11c), and in this way its distribution is dispersed. There is also secondary hematite after magnetite. In few cases, hematite can be observed replacing sphalerite. Chalcopyrite fills the interstices of the gangue minerals. Argentite is present as veinlets filling the microfractures, and it replaces 30 sphalerite and galena (Fig. 11e). Pyrargyrite is possibly present as a dark ruby silver mineral. Pyrite is disseminated between the gangue minerals. At the surface, structures are in most cases veins-faults filled with barite-jarositemanganese-clay, and it is difficult to distinguish any silver mineral, although some people reported seeing argentite and pyrargyrite on some dumps (G. Corbett, D. Volkert, A. Swarthout pers. commun., 2007) At depth in the mixed sulfide-oxide zone (below 40m depth in many cases), it is easier to see sphalerite, galena, and a little chalcopyrite. Silver grades increase when light green sphalerite and galena occur with carbonate (ankerite?) in veins that are at low angles to the core axis and when these reduced polymetallic minerals are mixed with specular hematite. A positive correlation has also been observed between vein width and silver grade in certain areas, but this is not a general correlation. There is also a positive relation between silver grade and barite that occurs as invasivebrecciated open-space fillings in the andesitic lavas. Quartz content increases with depth (generally deeper than ~60 m), where it has been observed that chalcedonic silica (low-temperature quartz) that is typical of upper zones changes to a comb quartz texture at depth. This change, however, has been observed only in certain drill holes (e.g., DDH-15, DDH-15A). Broadly, the mineralogic zoning will be an oxide zone of jarosite-manganesehematite-barite in the first 20 m, an oxide-mixed zone from ~20 to ~80 m with oxides, carbonate, and intermediate sulfidation minerals , and a sulfide zone beginning at ~80100 m, where pyrite, low-iron sphalerite, galena, argentite, tetrahedrite(?), plus secondary hematite appear together in some holes. Pyrite is present as 1-2% disseminated grains in the host rock (lava), and there is not a clear increase in abundance except close to 31 structures (in the alteration halo) or in the structure (10-20%, e.g., DDH-SA6 @ 170 m). Hydrothermal magnetite is present (e.g., DDH-SA6) in very few parts of the area (it may be detected where the chargeability geophysical anomaly increased, e.g., DDH-SA6). The more abundant sulfide mineral in the host rock is pyrite, and in the structures are sphalerite and pyrite, follow by galena. Pyrite is a mineral that is present as 1-2% disseminated in the host rock (lava) and there is not a clear increase of it until it is close to structures (as alteration halo) or part of the structure (10-20%, e.g., DDH-SA6 @ 170 m). Hydrothermal magnetite is present (e.g., DDH-SA6) in very few parts of the area (it may be detected where the chargeability geophysical anomaly increased, e.g., DDH-SA6). The more abundant sulfide mineral in the host rock is pyrite, and in the structures are sphalerite and pyrite, follow by galena. Wall-rock alteration Alteration in andesitic lava flows: The main hydrothermal minerals observed in the andesitic lavas of the Tacaza Group (Fig. 4) are illite-sericite as a product of alteration of the plagioclase phenocrysts (Fig. 10), chlorite after ferromagnesian minerals, and calcite associated with chlorite and possibly originating from alteration of ferromagnesian minerals. Quartz is also present in trace amounts, giving the samples the common district propylitic assemblage: chlorite-sericite-calcite-quartz. Rocks seem to be more intensely bleached (illite-pyrite-chlorite) adjacent to structures, but this occurs for a few centimeters on each side. In the northwestern part of this area, there is a slight increase in kaolin close to the old workings, where values can be as high as 20 ppm Ag. 32 Alteration in dacite dike: The dike presents the same alteration as the lavas. Its feldspars are altered to illite- sericite and its mafics are altered to chlorite. Pyrite and primary magnetite are disseminated in the dike. Surface mapping, sampling, and logging show few spatial variations in alteration. In Anomaly B, veins of barite-jarosite-manganese, 10 cm to 2 m wide with illite-pyritechlorite halos in the northern and western parts of the area (more typical maybe in crestones), with a more chlorite-clay-pyrite halos in the rest of the area. Illite may be dependent of a supergene effect, and it clearly evident in some dumps and old workings in the northern and west parts of the area. Adularia has not been observed either on the surface or in drill holes to date. Quartz is found in minor quantities on some old dumps, but very little quartz was mapped at the surface. Veins, vein-breccias and open space fillings and stockworks wall rocks in Santa Ana are mainly altered to chlorite-pyrite assemblages, although structures in core show more abundant illite or other phyllosilicates near the surface, probably due to weathering effects. Some structures are bleached for up to 1.5 m from structures in the upper parts of the drill core, but this halo disappears at depths of 20 to 30 m. The only obvious change in alteration is that halos of chlorite-pyrite alteration increase in width when the structure is wider. 33 Geology of Anomaly A This area is located north of Anomaly B (see Fig. 2 and Fig. 21A-B), and it is about 800 m long by 300 m wide. Anomaly A is composed of lavas of the Tacaza Group with the same clay-chlorite alteration as observed in Anomaly B. Anomaly A contains a quartz feldspar porphyry (QFP) dome that is the root for the dike that crops out in Anomaly B (see Fig. 21 and Fig. 4). The dome is outcropping with the same clay-chlorite alteration seen in Anomaly B. Most of the barite, jarosite, manganese structures are oriented north-south to north-northeast, with sub-vertical dips. Many structures are located in the edges of the dome, although others can be found in the center cutting the dome, with values up to 100 ppm silver. High dump values were also taken with results of 118, 160, 311 and 768 ppm in silver. This area is considered as an important prospective area due to the number of old workings present. Weak increase of silica and pyrite in the bottom parts of the dacite dome are important in this area. Further deep holes should be drilled here to test for possible increases in the grade of mineralization with depth and for the presence of a possible mineralized porphyry copper/ copper-gold deposit at depth. 34 Geophysical Characteristics Geophysical surveys consisting of ground magnetics, induced polarization, and resistivity were completed in 2005. These surveys define an area of sulfide mineralization underlying the geochemical anomaly, interpreted to contain >5% sulfides) (Bear Creek Annual Report 2006). The IP response suggests that vertical continuity is good and that the mineralization is open to the south, where strongly anomalous silver was found in outcrops at the limits of the sampling grid. Three chargeability anomalies are outlined by the induced polarization-resistivity survey (Fig. 7). The chargeability responses range from weak (7mV/V) to strong (20mV/V) with respect to the background. The chargeability response increases from surface to depth, suggesting differences through leaching (VDG del Peru SAC, 2005). A hole (SA-6) drilled in the area of one of the strongest induced polarization targets (Fig. 8) found 5% pyrite as disseminated grains and veinlets of pyrite + weak secondary magnetite veinlets at 140 m. No direct evidence of a porphyry deposit was observed. 35 Soil Samples Soil samples were collected in two phases in 2006 and 2007. Samples were collected on a grid of 50 by 50 m. Both phases of sampling were conducted only at Anomaly B. The first phase was done in the south-southwestern to southern part of Anomaly B in a 1000 m x 1250 m area, and the second phase was in the northern part in an area of 750 m x 500 m (Fig. 12). Bear Creek got good values (e.g., 12 ppm silver in soil sample # 51136) in a few areas that are coincident with buried structures, the presence of which has been confirmed by drilling (e.g., structures in new holes SA-44, SA-44A). 36 Geologic Interpretations and Discussion Structural interpretation Many ore deposits are localized by major thoroughgoing structures that may display variable activity histories, especially if the structural setting provides dilational sites for the enhanced flow of hydrothermal fluid (Corbett, 1994; Corbett and Leach, 1998). Santa Ana is a structurally controlled ore deposit. Veins at Santa Ana formed during an episode of extension, as interpreted from the presence of normal faults and the great thickness of some open-space filling veins and related extension fractures. In the southern part of Anomaly B, a prospect-scale jog occurs where north-south striking structures change in orientation southward to northeasterly striking structures. A second jog occurs further to the south, where there is a transition from northeasterly striking structures to north-northeasterly striking structures at Anomaly C (800 m south of Anomaly B; see Fig. 2). Such a variation within mineralized fractures would be consistent with a component of dextral strike-slip movement that might facilitate the development of ore shoots within flexures (Corbett, 2007) (Fig. 22), which is consistent with good Ag grades in drill holes SA-3, SA-4, SA-12, and SA-15. Normal fault movement parallel to bedding in volcanic rocks is interpreted to be due to a collapse of the lava flows on the western margin (Corbett, 2007; possible border of a diatreme?), where there are hydrothermal breccias (e.g., SA-38, SA-38A, SA-2A; Photo 19A). Alternatively, bedding-parallel flow could have been promoted by bedding 37 plane shear due to a component of uplift or doming within the north-south structural corridor (east side of Anomaly B), although no evidence has been found to support such uplift. The hydrothermal breccias are characterized by slab-like breccia clasts, which are typical of environments characterized by collapse Corbett, 2007; Corbett and Leach, 1998). A common character in most holes at the southern part is the low-angle (15-25°) between the millimeter- to centimeter-scale structures and the 60-70° inclination of the drill holes. This sheeted character shows a dilatant character (Photo 23) due to the normal bedding movement, and these sites localize polymetallic sulfides, carbonate minerals, and high-grade silver values (Fig. 23A). The east-west striking structures present in the area divide the north-south trending structures into blocks. Mineralized structures exploit the east-west shears and north-northeast trending splay faults, which may be indicative of a component of sinistral strike-slip movement on the east-west structures in the area of the Spanish mine workings (Corbett, 2007) (Fig. 22). Paragenesis From the study of drill core and thin sections, hydrothermal minerals are interpreted to have been deposited in the following sequence: hematite – pyrite – sphalerite-argentite-galena and carbonates. Four different stages can be inferred. Stage I: Intrusive dome, dikes, tectonic breccias are interpreted to have formed above the magma chamber, which may have increased the permeability of the rocks for future flow of mineralized fluids. Fluidized breccias with a milled matrix (Fig. 19B) and 38 possibly intrusion-related hydrothermal breccias (Fig. 19A) that may border a possible diatreme (Ríos, 2007 ) also may have influenced ground preparation. These ground preparation features are coincident with the district-scale, weak to moderate intensity of propylitic alteration in the area. Stage II: Barite, low-temperature quartz and specular hematite are interpreted to have formed prior to the main economic mineralization event but after tectonic brecciation. Specular hematite can be difficult to distinguish from galena when it is finegrained. Hematite has a red streak (Fig. 19E), whereas boxwork after galena leaves a crimson red color (Fig. 19D). Stage III: This is the main stage of deposition of ore minerals in the area, as economic minerals overgrow barite and quartz. Pyrite, chalcopyrite, sphalerite, argentite, galena are interpreted to be deposited in this stage. Hydrothermal activity may also have promoted chlorite-pyrite-illite(?) envelopes on some of the main veins and breccias. Hydrothermal-tectonic breccias formed in this stage. Stage IV: Carbonates and amethystine quartz were deposited at the end of the hydrothermal system. Carbonate developed in the upper portion of the hydrothermal system perhaps from bicarbonate waters, and the mixing of these waters with rising ore fluids may have promoted precious metal deposition (Corbett and Leach, 1998). This could be an important control for silver mineralization at Santa Ana. 39 Geochemical environment The mineralogy of the silicates and sulfides at Santa Ana record the near-neutral pH and intermediate-sulfidation state of the ore-forming solution. Local gold anomalies (e.g., 0.097 ppm Au in DDH SA-6, 120m) are spatially associated with specular hematite and may also occur at deeper levels in the hydrothermal system, where hairline magnetite veins are present at the southern part of Anomaly B, the site of the highest IP anomaly in the area. Fluid inclusion data for epithermal silver-polymetallic vein deposits exhibit a wide range of salinities (1-20 wt % NaCl equiv), although fluid inclusion data are not available for Santa Ana. Fluids of moderate to high salinity are capable of transporting significant quantities of silver and base metals (e.g., Seward and Barnes, 1997). The epithermal deposits that have fluids of moderate to high salinities are either rich in base metals or contain precious metals with subordinate amounts of base metals, such as Fresnillo, Durango, Real de Guadalupe, Guerrero, and La Guitarra, Mexico (Simmons, 1991; Albinson et al., 2001). The high salinities in fluid inclusions could be interpreted to be derived from either a magmatic source or interaction with evaporites. Much of the Altiplano of southern Peru, including Santa Ana, is underlain by the Puno Group. The Puno Group locally contains evaporites, so fluids with elevated salinities could have been generated at Santa Ana because of interaction of ore fluids with evaporites. 40 Inference about fluid sources and causes of ore deposition Mixing between fluids of different compositions can be a viable mechanism of precious metal precipitation, as supported by some fluid inclusion data, extensive isotopic data, and numerical simulations (e.g., Robinson and Norman, 1984; Mancano and Campbell, 1995; Hayba, 1997). Ore fluids in epithermal deposits may contain a significant magmatic fluid component; for example, ore fluids in bonanza parts of the Comstock Lode appear to have had a significant (30-75%) magmatic component (Taylor, 1973; Vikre, 1989; Simmons, 1995). Santa Ana is interpreted to have a significant magmatic component also because of the presence of hydrothermal magnetite veins, hypogene (specular) hematite (typical of deeper parts in polymetallic vein systems), and illite-pyrite alteration (Corbett, 2007). Ore minerals may have been precipitated at Santa Ana by dilution and cooling and, to a lesser extent, from changes in oxidation state and pH (Simmons et al., 2005). Dilational zones are interpreted to have acted as sites for mixing of ore fluids with bicarbonate waters because of its high grade and mineralogy (base metals-argentite with carbonates; Photo 17, 18, 19, and 24). The quartz-poor character in Santa Ana may be due of a suppression of precipitation of SiO2 during cooling as a consequence of fluid mixing during ore deposition (M. Barton, pers commun., 2008). 41 Classification and distinctive characteristics of Santa Ana Many classification systems exist for classifying precious metal deposits, including by the sulfidation state of the contained minerals (Simmons et al., 2005). The term sulfidation is used in ore petrology to describe the stabilities of sulfur-bearing minerals in terms of sulfur fugacity (e.g., Barton and Skinner, 1979; Hedenquist et al., 1994; Einaudi et al., 2003), and some authors use a three-fold classification of deposits into low-, intermediate-, and high-sulfidation deposits (e.g., Sillitoe and Hedenquist, 2003; Simmons et al., 2005). Santa Ana is here classified as intermediate sulfidation epithermal silver polymetallic deposit. Intermediate sulfidation state minerals present at Santa Ana are pyrite, chalcopyrite, Fe-poor sphalerite, hematite-pyrite, magnetite-pyrite (Table 1). Other examples of intermediate-sulfidation deposits (e.g.,) include Arcata, Peru (Candiotti et al., 1990); San Cristóbal, Bolivia (Buchanan, 2000); the Comstock Lode (Vikre, 1989) and Tonopah (Nolan, 1935; Bonham and Garside, 1979) in Nevada; Creede, Colorado (Barton et al., 1977); and Pachuca-Real del Monte (Dreier, 2005), Fresnillo (Simmons et al., 1988), and Tayoltita, Mexico (Smith et al., 1982). Santa Ana is notable for its relatively quartz-poor character. Santa Ana also has similarities with the carbonate – base metal Au-Ag deposits of the southwestern Pacific rim (Corbett and Leach, 1998), such as Kelian, Indonesia (van Leeuwen et al., 1990). 42 Comparison of Santa Ana with other epithermal polymetallic vein deposits Pachuca-Real del Monte, Hidalgo, México: Pachuca is an underground mine that has been active since 1550 (Geyne et al., 1963; Dreier, 1976, 1982, 2005). This deposit is hosted in calc-alkaline volcanic and hypabyssal rocks ranging in composition from basaltic andesite to rhyolite. Alteration is characterized by the presence of quartz, epidote, chlorite, adularia, albite, calcite, and pyrite, but quartz, adularia, and pyrite occur as alteration envelopes around the veins. Orebodies are contained in a series of east-west, northwest-southeast and north-south trending, fault-hosted veins. Productive ore zones occur where there are changes in vein strike and dip (Simmons et al., 2005). The veins range in width from 0.5 to 5 m, although vein-filling fractures can span zones up to 35 m wide. Quartz, chalcopyrite, galena, and sphalerite are the common vein minerals. Silver occurs mainly in acanthite. Fluid inclusion homogenization temperatures range from 210° to 305° C, with salinities of 0 to 6 wt percent NaCl equivalent. Santa Ana shows similar structural control and a mixing environment between magmatic water and bicarbonate waters at similar depths in the system. Adularia was not seen in Santa Ana but low-temperature quartz suggests the influence of meteoric waters or boiling in the deposit. Peripheral zones of Butte, Montana, USA: Peripheral zones of Butte show a similar mineralogy to Santa Ana (McClave, 2007). The presence of quartz, rhodochrosite, carbonates, sphalerite, pyrite with silver minerals in open-space filling veins are shared 43 by both deposits, implying that a porphyry copper deposit could be located possible below the volcanic dome at Santa Ana. Laykakota, Peru: Laykakota, located in Puno, was an important mine in the 1600’s. Mineralization is hosted by andesitic lavas of the Tacaza Group and occurs in parallel, northeast-striking veins that dip to the east (INGEMMET, 1993). Veins are between 1.5 and 5 m wide.. The ore minerals are galena, sphalerite, chalcopyrite, and pyrite with barite and manganese. This deposit is significant for its relative proximity to Santa Ana. 44 Resource Estimation Assembly of drilling and geologic data Fifty-five drill holes were used in the construction of a 3-D solid (Fig. 13, 14). The total length of these drill holes is 9928 m. A database was constructed that contains all the relevant data for each hole, such as drill hole locations and orientations, as well as assays of each analyzed interval. The solid was constructed on the basis of silver values, because silver is the most important metal economically in the deposit (Tables 3, 4, 5, and 6). The dip angles of the mineralized structures were also taken into consideration. Defining 3-D solid Vertical sections and horizontal plans were made every 5 m using MineSight® software. Both sets of slices were combined for construction of the 3-D solid. The shape of the interpreted mineralized volume took into account the strike and dip of the structures, constraints from field geology, the grades of the drill hole, and my interpretation of grade continuity (Fig. 15). Two codes were used to differentiate mineralized material from waste. Grades were interpolated only inside the volume of the solid that defined the limit of mineralized material. Geostatistical analysis Conventional statistics and geostatistics were used to analyze silver assays from holes drilled at the Santa Ana deposit. Using a cut-off grade of 18.50, the arithmetic mean grade is 27.3 g/t. A variogram analysis for the deposit was done for silver to determine 45 the spatial continuity of the mineralization in the zones and to determine the parameters for the grade interpolation of the block model. It was determined the variogram 3-D considering horizontal grade of 30º and vertical grade of 22.5º. The variograms were modeled using a single structure spherical model. The histogram shows that the average grade is 27.3 g/t (Fig 16). Grade interpolation and resource estimate The 3-D block model is based on the shape of the 3-D solid and geostatistical analysis of the data. The 3-D block model for mineral resource estimation was built with blocks of 10 x 10 x 10 m (Fig. 17, 18). The block model was interpolated using the kriging method. The ellipsoidal search parameters for the interpolation process were 100 (major) x 40 (minor) x 90 m (vertical). Mineral resources, in order of decreasing level of confidence, are assigned to the measured, indicated, and inferred categories (e.g., JORC, 2004). Because this model of Santa Ana is based on only 55 drill holes that are widely spaced, this estimate is considered a to represent a combination of the indicated and inferred resources. Future drilling and geologic logging will provide new geologic insights and additional assay data, which will eventually permit a better estimate of mineral resources in the future. The total indicated and inferred resources from all zones in the deposit at a cut-off grade of 18.50 g/t are 47.71 million tonnes of mineralized material grading 27.3 g/t of Ag, totaling 41.9 million ounces of contained Ag. Additional drilling and economic inputs are required before an ore reserve can be obtained. 46 Other Economic Inputs Infrastructure Infrastructure in Santa Ana is optimal because of the location of the property. The deposit is close to a paved highway and to Desaguadero (a medium to large city for the Altiplano). Water for a potential future mining operation can be taken from a large river (Limancota) located 10 km north of the project. A power line needs to be constructed from Santa Ana to an electrical sub-station located ~40 km away, which is connected to the national grid. Construction will be relatively easy because the area has moderate topography, typical of relief throughout this part of the Altiplano. Mining At this moment Santa Ana is viewed potentially as an open pit operation. Highgrade veins at depth may be amenable to underground mining, concurrent with or after open pit mining. Future drilling will clarify this issue. Metallurgy Two phases of metallurgical leach tests have been done to see if the material from Santa Ana is amenable to conventional cyanide leach recovery. The first phase tested ten samples (representing both high- and low-grade material) form different parts of five different core drill holes. The samples were crushed to 70% passing 2mm. Three tests were made from these samples. The first tests were performed by the ALS-Chemex laboratory in Lima and were cyanide-soluble shake tests. The tests show that 55.5% leachable silver can be recovered (see results in Table 7). The 47 second tests were made in the Plenge metallurgical test laboratory in Lima and were longer term, bottle roll tests performed on finely ground material. Results from the test showed 85% recovery of silver of (see results in Table 8). Finally, the third tests were made at McClelland Laboratories, Inc., in Sparks, Nevada, in which bottle roll tests were performed on the un-ground course reject material. The average recovery of silver was 71% (see results in Table 9). Results from the three laboratories are summarized in Fig. 24. The second phase of metallurgical testing was initiated with the objective of evaluating samples in conventional heap leaching with and without pulp agglomeration. The average silver recovery was 64.6%, achieved for the conventional column tests, although in a conventional, commercial heap leach situation, the overall long-term silver recovery should exceed 70% according to McClelland Laboratories. Ongoing metallurgical optimization tests will be needed to establish the most economic crush size for the heap leach. Standard flotation of lead and zinc will also be checked by future metallurgical testing. Economic Potential An impressive resource has already been defined at Santa Ana, even though the solid model was based on only 55 drill holes (as on May 31, 2007). The degree of continuity of mineralization at Santa Ana may be an issue, which further drilling will address. The metallurgical behavior of the material, based on heap leach tests performed to date, also are encouraging. Hence further exploration of Santa Ana is certainly warranted. 48 Conclusions Santa Ana is a recent discovery of silver-polymetallic mineralization in the Peruvian Andes. The Ag-Zn-Pb mineralization occurs in vein-breccias and open space fillings related to extensional zones hosted by andesites of the Tacaza Group. Veins contain sphalerite, galena, pyrite, minor chalcopyrite, and argentite and a late mixed (MgCa) carbonate and are thus of intermediate sulfidation in character. Most Ag occurs as argentite that overgrows sphalerite. Mineralization is spatially associated with propylitic alteration (chlorite, pyrite) which was cut by veins that have chlorite-pyriteillite(?) (sericite?) envelopes. The deposit is notable because the veins are relatively quartz-poor, and adularia has not been observed. High silver values in drill core occur where carbonates and chalcedony occur with base metals. Silver may have been deposited in an environment where CO2-bearing magmatic waters mixed with meteoric waters. Supergene processes in Santa Ana affect the upper 80 m of the deposit, which is responsible for the possible presence of argentojarosite and may have contributed to making the deposit more amenable to heap leaching. There may be a spatial association with a porphyry system at depth, as is inferred for some intermediate deposits. Quartz-poor character of Santa Ana makes this intermediate epithermal deposit unusual in its style and should be taken in consideration in future subdivisions in epithermal deposit types. The lack of adularia, although rare in this deposit type, is not unique to Santa Ana because some deposits in Philippines and Papua New Guinea contain sericite rather than adularia, indicating higher temperatures and limited boiling which could be the result of greater depth of formation. An estimate 49 of the resource that was based on the first 55, widely separated drill holes contained 41 million ounces of silver in 47 million tonnes of mineralized material with an average grade of 27.3 g/t Ag. There is good potential to increase the size of the resource with further drilling, and certain key, non-resource economic inputs (such as infrastructure, metallurgical performance, and amenability to open-pit mining) appear to be favorable. 50 References Albinson, T., Norman, D.I., Cole, D.R., and Chomiak, B., 2001, Controls on formation of low-sulfidation epithermal deposits in Mexico: Constraints from fluid inclusion and stable isotope data, in Albinson, T., and Nelson, C. E., eds., New mines and discoveries in Mexico and Central America: Society of Economic Geologists Special Publication 8, p. 1-32. Barton, P.B., Jr., and Skinner, B.J., 1979, Sulfide mineral stabilities, in Barnes, H. L., ed., Geochemistry of hydrothermal ore deposits, 2nd Edition: New York, John Wiley and Sons, p. 278-403. Barton, P.B., Jr., Bethke, P.M., and Roedder, E., 1977, Environment of ore deposition in the Creede mining district, San Juan Mountains, Colorado: Part III. Progress toward interpretation of the chemistry of the ore-forming fluid for the OH vein: Economic Geology, v. 72, p. 1-24. Bear Creek Mining Corporation, 2008. Retrieved March 20, 2008, Web site: http://www.bearcreekmining.com Candiotti de los Ríos, H., Noble, D.C., and McKee, E.H., 1990, Geologic setting and epithermal silver veins of the Arcata district, southern Perú: Economic Geology, v. 85, p. 1473-1490. Corbett, G.J., 2007a, Comments on the controls to mineralization at the Santa Ana project, Perú: Unpublished report to Bear Creek Mining Corporation. Corbett, G.J., 2007b, Comments on the controls to mineralization at the Santa Ana project, Perú: Unpublished report to Bear Creek Mining Corporation. 51 Corbett, G.J., 2007c, Low sulphidation epithermal Au-Ag: Exploration implications of varying styles: Unpublished paper. Corbett, G.J., and Leach, T.M., 1997, Southwest Pacific Gold-Copper Systems: Structure, Alteration and Mineralization: Short Course Manual, p. 135-156. 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Einaudi, M.T., Hedenquist, J.W., and Inan, E.E., 2003, Sulfidation state of fluids in active hydrothermal systems: Transitions from porphyry to epithermal environments: Economic Geology Special Publication 10, p. 285-313. Gagliuffi Espinoza, P.M., 2007, Estudio microscópico de doce (12) muestras de rocas procedentes del Proyecto Santa Ana: Unpublished report to Bear Creek Mining. 52 Gemmell, J.B., 2006, Low- and intermediate-sulfidation epithermal deposits: Centre for Ore Deposit Research, University of Tasmania, p. 57-63. Gemmell, J.B., 2006, Exploration implications of hydrothermal alteration associated with epithermal Au-Ag deposits: Centre for Ore Deposit Research, University of Tasmania, p. 1-4. Gibson, P.C., Noble, D.C., and Larson, L.T., 1990, Multistage evolution of the Calera epithermal Ag-Au vein system, Orcopampa district, southern Peru: First results: Economic Geology, v. 85, p. 1504-1519. Geyne, A.R., Fries, C., Jr., Segerstrom, K., Black, R.F., and Wilson, I.F., 1963, Geology and mineral deposits of the Pachuca-Real del Monte district, State of Hidalgo, Mexico: Consejo de Recursos Naturales No Renovables Publication 5E, 203 p. Graybeal, F.T., Smith, D.M., Jr., and Vikre, P.G., 1986, The geology of silver deposits, in Wolf, K.H., ed., Handbook of strata-bound and stratiform ore deposits, v.14, p. 1184. Hayba, D.O., 1997, Environment of ore deposition in the Creede mining district, San Juan Mountains, Colorado: Part V. Epithermal mineralization from fluid mixing in the OH vein: Economic Geology, v. 92, p. 29-44. Hedenquist, J.W., Matsuhisa, Y., Izawa, E., White, N.C., Giggenbach, W.F., and Oaki, M., 1994, Geology, geochemistry, and origin of high sulfidation Cu-Au mineralization in the Nansatsu district, Japan: Economic Geology, v. 89, p. 1-30. 53 Herail G., Baby P., Blanco J., Bonhomme M., Soler P., 1996, The Tupiza, Nazareno and Estarca basins (Bolivia): strike-slips faulting and related basins in the Cenozoic evolution of the southern branch of the Bolivian orocline: Tectonophysics 259:201-12. Horton B., 1996, Sequence of Late Oligocene-Miocene fold-thrust deformation and development of piggyback basins in the Eastern Cordillera, southern Bolivia: Int. Symp. Andean Geodyn., 3rd, Saint-Malo, France, ORSTOM, p. 383-86. Instituto Geológico, Minero y Metalúrgico, 1993, Geología de la Cordillera Occidental y Altiplano al Oeste del Lago Titicaca – Sur del Perú: INGEMMET, Boletín 42, p. 72-127 Instituto Geológico, Minero y Metalúrgico, 1995, Geología del Perú: Lima, INGEMMET. Primera Edición, p. 20-43. John, D.A., 2001, Miocene and early Pliocene epithermal gold-silver deposits in the northern Great Basin, western United States: Characteristics, distribution, and relationship to magmatism: Economic Geology, v. 96, p. 1827-1853. JORC, 2004, Australasian Code for Reporting of Mineral Resources and Ore Reserves (The JORC Code), 2004 Edition, The Joint Committee of the Australasian Institute of Mining and Metallurgy: Australian Institute of Mining and Metallurgy, Australian Institute of Geoscientists, and Minerals Council of Australia, 20 p. Kamilli, R.J. and Ohmoto, H., 1977. Paragenesis, zoning, fluid inclusion and isotopic studies of the Finlandia vein, Colqui district, central Peru: Economic Geology, v. 72, p. 950, 982. 54 Lewis, R., 1956, The geology and ore deposits of the Quiruvilca district, Perú: Economic Geology, v. 51, p. 41-63. Lindgren, W., 1922, A suggestion for the terminology of certain mineral deposits, Economic Geology, v. 17, p. 292-294. Lindgren, W., 1933, Mineral deposits: New York, McGraw-Hill, 930 p. Mancano, D. P., and Campbell, A. R., 1995, Microthermometry of enargite-hosted fluid inclusions from the Lepanto, Philippines, high-sulfidation Cu-Au deposit: Geochimica et Cosmochimica Acta, v. 59, p. 3909-3916. McClave, M.A., 2007, Property report for the Santa Ana project for Bear Creek Mining Corp.: Unpublished report to Bear Creek Mining. Noble, D.C., and McKee, E.H., 1999, The Miocene metallogenic belt of central and northern Peru: Society of Economic Geologists Special Publication 7, p. 155-193. Noble, D.C., and Vidal, C.E., 1994, Gold in Peru: Society of Economic Geologists Newsletter 17, no. 1, p. 7-13. Noble, D.C., Eyzauirre, V.R., and McKee, E.H., 1989, precious-metal mineralization of Cenozoic age in the Central Andes of Peru: Circum-Pacific Council for Energy and Mineral ResourcesvEarth Science Series, v. 11, p. 207-212. Nolan, T. B., 1935, Underground geology of the Tonopah mining district, Nevada, Nevada University Bulletin, v. 29, no. 5, 49 p. Petersen, U., Mayta, O., Gamarra, L., Vidal, C.E., and Sabastizagal, A., 2004, Uchucchacua: A major silver producer in South America: Economic Geology Special Publication 11, p. 243-257. Ríos, C.C., 2007, Santa Ana drilling: Unpublished memorandum to Bear Creek Mining. 55 Robinson, R. W., and Norman, D. I., 1984, Mineralogy and fluid inclusion study of the southern Amethyst vein system, Creede mining district, Colorado: Economic Geology, v. 79, p. 439-447. Seward, T. M., and Barnes, H. L., 1997, Metal transport by hydrothermal ore fluids, in Barnes, H. L., ed., Geochemistry of hydrothermal ore deposits, 3rd Edition: New York, John Wiley and Sons, p. 435-486. Sillitoe, R.H., and Hedenquist, J.W., 2003, Linkages between volcanotectonic settings, ore-fluid compositions, and epithermal precious metal deposits: Economic Geology Special Publication 10, p. 315-343. Sillitoe, R.H., 2004, Musings on future exploration targets and strategies in the Andes: Economic Geology Special Publication 11, p. 1-14. Simmons, S. F., 1991, Hydrologic implications of alteration and fluid inclusion studies in the Fresnillo district, Mexico: Evidence for a brine reservoir and a descending water table during the formation of hydrothermal Ag-Pb-Zn orebodies: Economic Geology, v. 86, p. 1579-1601. Simmons, S. F., 1995, Magmatic contributions to low-sulfidation epithermal deposits, in Thompson, J. F. H., ed., Magmas, fluids, and ore deposits: Mineralogical Association of Canada Short Course, v. 23, p. 455-477. Simmons, S. F., Gemmell, J. B., and Sawkins, F. J., 1988, The Santo Niño silver-leadzinc vein, Fresnillo district, Zacatecas, Mexico: Part II. Physical and chemical nature of ore-forming solutions: Economic Geology, v. 83, p. 1619-1641. 56 Simmons, S.F., White, N.C., and John, D.A., 2005, Geological characteristics of epithermal precious and base metal deposits: Economic Geology 100th Anniversary Volume, p. 485-522. Smith, D. M., Jr., Albinson, T., and Sawkins, F. J., 1982, Geologic and fluid inclusion studies of the Tayoltita silver-gold vein deposit, Durango, Mexico: Economic Geology, v. 77, p. 1120-1145. Taylor, H.P., Jr., 1973, O18/O16 evidence for meteoric hydrothermal alteration and ore deposition in the Tonopah, Comstock lode, and Goldfield mining districts, Nevada: Economic Geology, v. 68, p. 747-764. van Leeuwen, T.M., Leach, T.M., Hawke, A.A., and Hawke, M.M., 1990, The Kelian disseminated gold deposit, East Kalimantan, Indonesia: Journal of Geochemical Exploration, v. 35, p. 1-61. VGD del Peru, 2005, Geophysical report on induced polarization and magnetic surveys, Santa Ana Project. Unpublishd report to Bear Creek Mining. Vikre, P.G., 1989, Fluid-mineral relations in the Comstock lode: Economic Geology, v. 84, p. 1574-1613. 57 Figure Captions Fig. 1. Location map of the Santa Ana deposit. Map shows location within Puno Province, southeastern Perú (Bear Creek Mining Corporation, 2008). Fig. 2. Location map of Anomaly A and Anomaly B. Upper green square encloses Anomaly A; below it is Anomaly B. The area now considered a new anomaly, Anomaly C, is 800 m south of Anomaly B (Bear Creek unpublished data, 2005). Fig.3. Photographs of old workings. Top photograph shows southern part of Anomaly B, with dumps visible in the distance. Bottom photograph shows close up of old workings (Photos by C. Ríos, R. Tonconi). Fig. 4. Geologic map of Anomaly B. Area mapped at a scale of 1:2500 (Bear Creek Mining Corporation, 2008). Fig. 5. Detailed geological map of eastern side of Anomaly B (Bear Creek unpublished data, 2005). Geology, with a focus on structural measurements in the vicinity of the East Breccia, was mapped at a scale 1:1000. Fig. 6. Photographs of trenches at Anomaly B. Top and bottom photographs show trenches in southern and northern parts of Anomaly B, respectively (Photos by R. Tonconi). 58 Fig. 7. Interpretation of 3D induced polarization and resistivity survey. Plan view (VALDOR GEOFISICA, unpublished data, 2005). Fig. 8. Interpretation of 3D induced polarization and resistivity section. Section is along Line 7400 in Anomaly B (VALDOR GEOFISICA, unpublished data, 2005). Fig. 9. Photographs of representative drill core box. View shows two boxes of core totaling 6.40 m in length (Photo by C. Ríos). Fig. 10. Photomicrographs of lavas. Phenocrysts of plagioclase are altered to illitesericite, and ferromagnesian phenocrysts are altered to chlorite, constituting a propylitic type of alteration. Calcite may be associated with chlorite, possibly originating from the alteration of ferromagnesian minerals. All the minerals are enclosed in a microgranular to microcrystalline matrix composed of plagioclase, quartz, and chlorite. (Photos by P. Gagliuffi). Fig. 11. Photomicrographs of opaque mineralogy. A. Drill hole SA-03 (80.60m), hematite (hm) being replaced by sphalerite (ef), chalcopyrite (cp) can be observed as little grains between the gangue minerals (GGs) and the sphalerite. B. Drill hole SA-03 (80.60m), galena (gn) replacing sphalerite. C. Drill hole SA-03 (80.60m), galena and sphalerite replacing anhedral crystals of hematite. D. Drill hole SA-11 (6.60m), veinlet of sphalerite that is partially replaced by galena. E. Drill hole SA-17 (66.45m), proustite 59 associated with argentite replacing sphalerite, with galena replacing all minerals. F. Drill hole SA-05 (38.40m), sphalerite replacing hematite. Right side: hematite filling holes in the gangue (Photos by P. Gagliuffi). Fig. 12. Location map of soil samples, Anomaly B (Bear Creek unpublished data, 2007). Fig.13. Projection of drill holes to plan view, MineSight Software (Figure by C. Ríos, E. Gutierrez). Yellow color: 20g/t Ag average. Green Color: 20-40g/t Ag. Red Color: more than 40g/t Ag. Fig. 14. Projection of drill holes to section view, MineSight Software (Figure by C. Ríos, E. Gutierrez).Yellow color: 20g/t Ag average. Green Color: 20-40g/t Ag. Red Color: more than 40g/t Ag. Fig. 15. Solid shape from different views, MineSight Software. A. Looking north, 3D view. B. Looking west, 3D view. C. N-S, Plan view (Figure by C. Ríos, E. Gutierrez). Yellow color: 20g/t Ag average. Green Color: 20-40g/t Ag. Red Color: more than 40g/t Ag. Fig. 16. Histogram of Ag assay values (Figure by C. Ríos, E. Gutierrez). Fig. 17. 3-D Block model, plan view (Figure by C. Ríos, E. Gutierrez). Yellow color: 20g/t Ag average. Green Color: 20-40g/t Ag. Red Color: more than 40g/t Ag. 60 Fig. 18. 3-D Block model, section view (Figure by C. Ríos, E. Gutierrez). Yellow color: 20g/t Ag average. Green Color: 20-40g/t Ag. Red Color: more than 40g/t Ag. Fig. 19. Photographs of drill core. A. Hydrothermal breccia with intense illite-pyrite alteration, SA-38A, 11.2m. B. Pyrite-bearing fluidized breccia dyke, SA-6, 138.7m. C. Typical polymetallic Ag mineralization characterized by early quartz overprinted by galena and light green sphalerite with later carbonate gangue, SA-15, 97.9m. D. Crimson hematite developed from weathering of galena, SA-15A, 115.5m. E. Banded quartzbarite-sulfide-carbonate vein with argentite within the carbonate vein portion, SA-2A, 75.7m. F. Chlorite shear with interlayered barite, SA-36A, 123m (G. Corbett, unpublished report, 2007). Fig. 20. Stratigraphic column, Puno (INGEMMET, 1993). Fig. 21. Surface photographs, A. Anomaly B, left side (dark color): East Breccia, right upper part: post mineral Barroso tuff. B. Anomaly A, right center: QFP dome (Photos by C. Ríos). Fig. 22. Sketch of geological relationships including dilational splays. (G. Corbett, unpublished report, 2007). 61 Fig. 23. A. Conceptual geological model for Santa Ana. Figure illustrates the creation of dilatancy within the pre-existing sheeted fractures where ore fluids (orange) have mixed with bicarbonate waters to promote Ag deposition (red). Lower Ag grade mineralization (orange) occurs in the absence of the fluid mixing environment. B. Dilational zone with galena-sphalerite and later carbonate in drill core SA-29, 114.4m. Fig. 24. Comparison of three phases of metallurgical test results (M. McClave, unpublished report, 2007). 62 Ríos, Figure 1, Location map of Santa Ana. 63 Ríos, Figure 2, Location map of Anomaly A and Anomaly B. 64 Ríos, Figure 3, Photographs of old workings, southern part of Anomaly B. 65 Ríos, Figure 4, Geologic map of Anomaly B. 66 Ríos, Figure 5, Detailed geological map of East Breccia. 67 Ríos, Figure 6, Photographs of trenches at Anomaly B. 68 Ríos, Figure 7, Interpretation of 3D induced polarization and resistivity survey. 69 Ríos, Figure 8, Interpretation of 3D induced polarization and resistivity section. 70 Ríos, Figure 9, Representative photograph of drill core. 71 Ríos, Figure 10, Photomicrographs of lavas. . 72 Ríos, Figure 11, Photomicrographs of opaque mineralogy. A B C D E F 73 Ríos, Figure 12, Location of soil samples, Anomaly B, scale 1:2500 74 Ríos, Figure 13, Projection of drill holes to plan view, MineSight® Software. 75 Ríos, Figure 14, Projection of drill holes to section view, MineSight® Software. 76 Ríos, Figure 15, 3-D Solid shape from different views, MineSight® Software. A B C 77 Ríos, Figure 16, Histogram of Ag assay values. . 78 Ríos, Figure 17, 3-D Block model, plan view. 79 Ríos, Figure 18, 3-D Block model, section view. 80 Ríos, Figure 19, Photographs of drill cores, Anomaly B. A B C D E F 81 Ríos, Figure 20, Stratigraphic column, Puno. 82 Ríos, Figure 21, Surface photographs. A B 83 Ríos, Figure 22, Sketch of geological relationships including dilational splays. 84 Ríos, Figure 23, Conceptual geological model for Santa Ana. A B 85 Ríos, Figure 24, Comparison of three phases of metallurgical test results. 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 1 2 3 4 5 Recovery McClelland - Calced Heads 86 6 7 Recovery ALS 8 9 Recovery Plenge 10 Table 1. Diagnostic Minerals and Textures of Various States of pH, Sulfidation and Oxidation State. Used to Distinguish Epithermal Ore-Forming Environments (Giggenbach, 1997, Einaudi et al., 2003) (the use of hyphens between minerals indicate an equilibrium assemblage for which all phases need to be present) Acid pH Neutral pH Alunite, kaolinite (dickite), pyrophyllite Quartz-adularia ± illite, calcite residual, vuggyquartz High sulfidation Intermediate sulfidation Low sulfidation Pyrite-enargite, ± luzonite, covellite- Tennantite, tetrahedrite, hematite- Arsenopyrite-loellingite-pyrrhotite, digenite, famatinite, orpiment pyrite-magnetite, pyrite, chalcopyrite, pyrrhotite, Fe-rich sphalerite-pyrite Fe-poor sphalerite-pyrite Oxidized Reduced Alunite, hematite-magnetite Magnetite-pyrite-pyrrhotite, choritepyrite. 87 Table 2. Resource Estimate Determined with MineSight Software (50 drill holes) Category Indicated and Inferred Mtonnes Silver (g/t) 47.7 27.3 Based on 18.50 g/t cut-of grade, 70% Ag recovery. 88 Silver (Million Oz) 41.8 Table 3. Drill holes results, Phase 1. Azimuth (degrees) Inclinatio n (degrees) Total Depth (m) 105 -65 101.00 0 -60 99.50 305 -50 96.00 SA-05 includes 280 -50 99.00 SA-07 includes SA-10 145 -60 100.00 30 -70 80.50 SA-11 172 -65 75.50 Drill Hole # SA-02 includes SA-03 includes and SA-04 From (m) To (m) 0 28 48 50 72 4 22 42 0 0 56 0 22 48 52 34 96 60 80 10 38 52 40 16 66 52 32 72 0 36 12 54 89 Silver (grams Lead per (%) tonne) 52 34.2 nil 6 133.7 nil 48 87.1 0.5 10 199 0.6 8 102.6 1.2 6 112 0.7 16 87.1 0.6 10 43.5 1.3 40 77.8 0.3 16 140 0.3 10 68.4 0.2 52 56 0.5 10 127.5 0.7 24 82.2 0.1 Hole TDs in 72 g/t silver 12 189.7 0.4 18 34.2 0.4 Interval (m) DTH Zinc (%) 0.6 1.3 1.1 0.8 2.6 0.3 0.4 0.8 0.6 0.7 0.4 0.7 0.9 0.3 0.2 0.7 Table 4. Drill holes results, Phase 2. Drill Hole # Azimuth (degrees) Inclinatio n (degrees) Total Depth (m) SA-3A includes and SA-10B includes SA-10C includes SA-12 includes and SA-13 includes and and SA-13A includes 0 -75 106 86 86 0 -70 100 70 -70 152 225 -70 169 SA-15 includes 280 -60 150 SA-15A includes and SA-16 includes and 100 -70 148 303 -70 153 SA-17 270 -60 152 SA-19 123 -60 124 includes From (m) To (m) 48 48 78 24 38 0 76 2 16 42 10 38 58 78 8 8 106 0 34 114 136 4 4 104 6 12 36 72 2 116 2 58 72 106 72 90 62 52 86 80 48 22 48 82 42 60 82 44 20 166 44 40 122 146 128 16 120 114 18 48 76 74 128 40 98 76 90 Interva l (m) DTH 58 24 12 38 14 86 4 46 6 6 72 4 2 4 36 12 60 44 6 8 10 124 12 16 108 6 12 4 72 12 38 40 4 Silver (grams per tonne) 84.2 125.8 91.7 86.1 163.1 38.4 285.0 89.0 172.0 418.0 40.2 131.0 573.0 112.0 35.3 64.3 30.5 37.2 113.3 50.8 56.6 32.0 66.7 82.8 35.0 116.3 88.3 100.0 31.6 55.8 41.0 23.3 88.5 Lead (%) Zinc (%) 0.6 1.0 0.5 0.3 0.4 0.2 1.0 0.4 1.0 0.7 0.2 0.2 0.7 0.1 0.1 0.2 0.1 0.4 1.2 0.2 0.3 0.3 0.2 0.5 0.3 1.0 0.9 0.6 0.3 0.5 0.2 0.2 0.2 1.0 1.0 1.2 0.2 0.2 0.3 1.1 0.3 0.7 0.2 0.2 0.2 0.3 0.3 0.2 0.2 0.2 0.5 1.1 0.3 0.3 0.6 0.4 0.8 0.4 0.6 0.4 0.8 0.7 1.1 0.3 0.4 0.3 Table 5. Drill holes results, Phase 3. Drill Hole # Azimuth (degrees) Inclination (degrees) Total Depth (m) SA-29 includes 270 -50 218 SA-29A includes and SA-29B 90 -45 166 90 -75 173 270 -40 185 280 -40 213 includes and SA-30 includes and includes SA-31 includes and and SA-31A includes SA-32A 100 -60 141 105 -60 156 From (m) To (m) Interval (m) DTH 44 80 150 200 2 24 60 34 66 68 88 18 64 70 86 124 124 112 104 168 206 68 40 66 48 150 72 102 30 94 80 94 152 130 68 24 18 6 66 16 6 14 84 4 14 12 30 10 8 28 6 Silver (grams Lead per (%) tonne) 38.4 0.2 73.2 0.3 218.1 0.5 37.7 2.0 66.4 0.2 119.5 0.4 286.3 0.2 27.0 0.2 35.9 0.2 82.5 0.4 82.4 0.2 59.0 0.2 102.5 0.4 145.2 0.4 153.0 0.6 48.4 0.3 77.0 0.1 62 116 158 4 86 32 98 120 160 94 92 102 36 4 2 90 6 70 81.3 97.0 180.0 24.9 83.7 48.3 91 0.3 0.2 0.6 0.1 0.3 0.5 Zinc (%) 0.6 0.7 0.7 1.0 0.5 1.0 0.1 0.5 0.5 1.0 0.4 0.3 0.8 0.9 1.1 0.6 0.3 0.4 0.2 1.0 0.2 0.3 0.8 Table 6. Drill holes results, Phase 3, continued. Azimuth (degrees) Inclination (degrees) Total Depth (m) 270 -60 257.2 90 -60 257.0 includes SA-35B 180 -60 242.0 includes SA-36 300 -60 204.9 120 -60 210.0 270 -60 210.5 90 -70 215.2 270 -60 161.0 90 -60 224.0 135 -60 200 300 -60 223.0 120 -60 190 Drill Hole # SA-35 includes and and SA-35A includes SA-36A includes SA-37 includes SA-37A includes and and SA-38 includes SA-38A includes SA-38B SA-39 and and SA-39A includes From (m) To (m) Interval (m) DTH 0 82 116 188 44 58 98 130 180 204 0 138 184 14 52 138 146 10 116 46 66 100 42 56 130 178 60 78 34 180 54 90 114 0 104 196 0 66 140 244 94 140 192 50 68 100 162 220 208 100 210 208 34 66 188 158 190 130 48 110 108 194 64 154 182 126 90 216 188 78 106 144 14 164 214 120 72 154 244 12 24 4 6 10 2 32 40 4 100 72 24 20 14 50 12 180 14 2 44 8 152 8 24 4 66 12 182 8 24 16 30 14 60 18 120 6 14 92 Silver (grams per tonne) 29.5 122.5 84.9 90.0 35.3 30.8 78.0 36.4 182.1 1532.0 18.8 37.8 65.0 46.0 39.7 34.2 61.5 17.6 101.6 100.0 32.0 72.8 45.9 140.8 114.2 96.0 51.8 138.0 30.3 164.5 53.8 53.4 90.0 12.6 14.0 17.5 53.4 325.0 51.9 Lead (%) Zinc (%) 0.3 1.0 0.6 0.1 0.2 0.2 0.6 0.2 0.4 2.4 0.2 0.2 0.3 0.2 0.5 0.2 0.1 0.1 0.3 0.6 0.2 0.3 0.4 1.3 0.6 1.0 0.3 0.6 0.3 1.3 0.7 1.0 0.9 0.3 0.1 0.1 0.7 1.2 0.5 0.5 0.9 1.0 0.1 0.3 0.4 0.6 0.3 0.4 2.4 0.5 0.3 0.3 0.3 0.9 0.3 0.2 0.3 0.3 1.5 0.4 0.6 0.8 2.0 1.3 1.4 0.5 0.7 0.5 1.5 1.1 1.8 1.7 0.3 0.1 0.3 1.1 3.1 0.3 Table 7. ALS Shaker Test. Measured Cyanide Soluble Residual Shaker Ag Hole Sample Head Ag (g/t) Ag (g/t) Cyanide (%) Recovery 16 2205 54 32.0 0.22 59.2% 16 2209 172 75.6 0.20 43.9% 3A 58537 238 137.7 0.19 57.9% 3A 58542 78 56.1 0.22 71.9% 13 58775 145 72.7 0.21 50.1% 13 58795 57 16.4 0.10 28.8% 14 58929 161 96.9 0.21 60.2% 14 58942 52 33.0 0.24 63.4% 15 59083 52 31.1 0.21 59.8% 15 59142 114 72.0 0.21 63.2% Average 112.3 62.4 0.20 55.5% . 93 Table 8. Plenge Bottle Roll Test. Sample Grind 2205 2209 58537 58542 58775 58795 58929 58942 59083 59142 57%-200M 52%-200M 51%-200M 60%-200M 49%-200M 56%-200M 54%-200M 49%-200M 52%-200M 46%-200M Average NaCN *Head: Residue: g/t Ag g/t Ag 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 57.4 165.5 226.8 83.9 133.8 71.0 164.9 57.7 52.7 119.9 113.4 8.7 46.8 8.1 12.5 15.1 13.9 31.0 13.5 8.2 4.9 16.3 94 Extraction % 84.9 71.7 96.4 85.1 88.7 80.4 81.2 76.6 84.4 95.9 84.5 Reagents: kg/t NaCN 1.0 1.8 3.8 2.9 1.1 4.8 1.9 2.5 1.2 1.9 2.3 CaO 2.4 2.6 1.8 1.7 2.4 1.7 2.1 1.9 2.6 1.3 2.1 Table 9. McClelland Bottle Roll Test. Calculated SAMPLE Head Ag (g/t) 2205 57.89 2209 156.55 58537 220.08 58542 75.82 58775 123.75 58795 70.94 58929 159.96 58942 61.12 59083 53.14 59142 109.06 Average 108.83 Residue: g/t Ag 15.33 61.33 34.67 17.67 37.67 32.33 49.33 18.33 17.67 13.67 29.80 Extraction % 73.5% 60.8% 84.2% 76.7% 69.6% 54.4% 69.2% 70.0% 66.7% 87.5% 71.3% 95 NaCN Consumption kg/t 0.20 0.98 3.18 2.26 0.37 4.13 1.42 2.00 0.34 1.52 1.64 Lime Consumption kg/t 4.7 6.1 3.7 3.0 5.2 2.1 4.9 3.7 5.9 2.7 4.2