Loma Larga – Geology and Mineralization

Geology

Ecuador consists of five distinct physiographic provinces, which broadly coincide with the subdivision of the Ecuadorian crust into several terranes. The terranes, which were formed during the separation of the Central and South American plates, were accreted onto the Amazon Craton from the Late Jurassic to Eocene eras. Most of the terranes extend for several hundreds of km in a north-northeast direction and are only a few tens of kilometers (“km”) wide. They are separated by deep north-northeast trending faults.

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The Loma Larga property (“the Property”) lies in the southern part of the Chaucha continental terrane, in the Western Cordilleran physiographic province. The Chaucha terrane is defined by the northeast trending fault systems of Bulubulu on the northwest side and the Girón fault system on the southeast side. These fault zones are interpreted to have been active during the entire evolution of the basin. During each reactivation phase, fault movements influenced the location of some intrusive and subvolcanic bodies while some acted as channels for the mineralizing hydrothermal fluids.

Locally, the Property, located between two major faults, the Gañarin and Girón faults, and is dominantly underlain by the Upper Miocene Quimsacocha Formation, which is comprised of alternating andesitic tuffs and lavas, as well as late felsic domes, collapse-related breccias, and diatreme deposits. The north-south trending Rio Falso fault, which appears to be a conjugate fault linking the Gañarin and Giron faults, is the locus for the alteration and mineralizing fluids. A collapsed caldera structure, four km in diameter, lies along the Gañarin fault and 400 m west of the main Loma Larga mineralization. The caldera is cut by a multi-phase diatreme.

The formations are essentially flat lying and usually do not crop out on the Property. The outcrops that are exposed form a radial pattern around the caldera and gently dip away from it to the south and east. Diamond drilling typically collars into porphyritic andesite flows and subsequently intersects lapilli and breccia tuffs, ash and crystal tuffs, and a dacite porphyry dyke.

Mineralization and Alteration

The high sulphidation epithermal gold-copper-silver mineralization in the Loma Larga deposit occurs at lithological contacts between the andesitic lavas and tuffs and reaches greater thickness in the tuffs. Mineralization is associated with a north-northeast striking structural feature and is hosted by coarse-grained tuffs or at lithological contacts between flows and tuffs. The alteration system on the Property covers an area approximately 8 km north-south by up to 6 km east-west, and was likely introduced along structural zones. Alteration is typical of high sulphidation systems, characterized by multi-phase injections of hydrothermal fluids that were subject to structural and stratigraphic controls. This event includes an early alteration phase caused by a strong inflow of volatile, acidic fluids which cooled progressively and were neutralized by their reaction with country rock, leading to the formation of silicified layers surrounded laterally by alteration halos (kaolinite, illite, dickite, pyrophyllite, alunite, etc.). The sulphides and gangue minerals associated with the gold mineralization were deposited by late fluids inside the silicified bodies.

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Mineralized zones are characterized by multiple brecciation and open-space filling events and sulphides such as pyrite, enargite, covellite, chalcopyrite and luzonite or, at lower sulphidation states, tennantite and tetrahedrite. The deposit is a flat lying, north-south striking, cigar shaped body, which has a strike length of approximately 1,600 m north-south by 120 m to 400 m east-west and up to 60 m thick beginning approximately 120 m below surface.

Gold mineralization is found, for the most part, in one of the following mineralogical assemblages: (a) vuggy silica plus fine grained pyrite and enargite; (b) massive pyrite, including a brilliant arsenical pyrite; (c) vuggy silica with grey silica banding, sulphide space-filling and banded pyrite.