AMENDED NI 43-101 TECHNICAL REPORT
ON THE
KILOMETRE 26 PROPERTY
OMINECA MINING DIVISION, B.C.
WITH RECOMMENDATIONS FOR CONTINUING EXPLORATION
Latitude 54°51’16 »
Longitude 124°44’ 40 »
NTS 388,000E, 6,080,000N
(NAD 83)
(Center of Property)
On behalf of
Oro Andes Resource Corp.
by
Christopher H. Cherrywell, B.S., CPG
and
Richard C. Capps, PhD, CPG; RPG
20 October 2011
1
TABLE OF CONTENTS
PAGE
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
14.0
15.0
16.0
17.0
18.0
19.0
20.0
21.0
22.0
SUMMARY
INTRODUCTION
RELIANCE ON OTHER EXPERTS
PROPERTY DESCRIPTION AND LOCATION
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES,
INFRASTRUCTURE AND PHYSIOGRAPHY
HISTORY
GEOLOGICAL SETTING AND MINERALIZATION
7.1.0 REGIONAL GEOLOGY
7.2.0 PROPERTY GEOLOGY
7.3.0 MINERALIZATION
7.3.1 GOLD
7.3.2 NICKEL
DEPOSIT TYPES
8.1.0 OPHIOLITE GOLD MODEL
8.2.0 MCLAUGHLIN MINE MODEL
8.3.0 AWARUITE NICKEL
6.4.0 PINCHI MERCURY MINE MERCURY
8.5.0 SNOWBIRD GOLD DEPOSIT
8.6.0 INDATA GOLD MINERALIZATION
EXPLORATION
DRILLING
SAMPLE PREPARATION, ANALYSIS AND SECURITY
DATA VERIFICATION
MINERAL PROCESSING AND METALLURGICAL TESTING
MINERAL RESOURCE ESTIMATES
ADJACENT PROPERTIES
OTHER RELEVANT DATA AND INFORMATION
INTERPRETATION AND CONCLUSION
RECOMMENDATIONS
REFERENCES
DATE AND SIGNATURE PAGE
CERTIFICATE OF AUTHOR
CERTIFICATE OF AUTHOR
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LIST OF FIGURES
Figure 1
LOCATION MAP
Figure 2
CLAIM MAP
Figure 3
GENERALIZED GEOLOGIC MAP OF THE
KILOMETRE 26 AREA
Figure 4
GENERALIZED GEOLOGY,
AND GROUND MAGNETIC DATA
Figure 5
PROPOSED DRILL HOLES, GENERALIZED GEOLOGY,
AND GROUND MAGNETIC DATA
9
10
11
12
13
Figure 6.
MAP SHOWING ANOMALOUS NICKEL AND GOLD.
21
Figure 7.
TOTAL FIELD MAGNETICS SURVEY.
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LIST OF TABLES
Table 1
MINERAL CLAIMS OF THE KILOMETRE 26 PROPERTY
Table 2
SUMMARY OF 2010 GEOCHEMISTRY FROM
KILOMETERE 26 SERPENTINITES
Table 3
PROPOSED BUDGET
7
19
25
3
1.0
SUMMARY
The Kilometre 26 Project is located at and around the kilometer 26 road marker on the Leo
Creek forestry road approximately 50 kilometers northwest of the community of Fort St. James
in central British Columbia (Figure 1). The original claims comprising the Kilometre 26 claim
group were staked in 2008. The purpose of this technical report is to support the proposed
acquisition of the full 100% of the Kilometre 26 Project from Eastfield. The proposed mineral
claim purchase agreement stipulates the termination of the existing option agreement of 28
September 2009 and the issuance of 20,000,000 shares of OroAndes from treasury for the
acquisition of the full 100% of the project with no reservations including no retained NSR to
Eastfield.
Approximately $625,000 has been spent on the project to date. Eastfield completed an initial
rock sampling program in 2009 while OroAndes completed more extensive programs consisting
of grid establishment, rock and soil geochemical surveying and ground based induced
polarization and magnetometer surveying in 2010 and 2011.
The Kilometre 26 property consists of twenty-two claims (Figure 2; Table 1) totaling 9,819
hectares (24,253 acres). The entire claim area occurs within a gentle to undulating landscape all
of which occurs on government land. The predominate target of interest on the Kilometre 26
property is ophiolite hosted disseminated nickel. Motherlode style (ophiolite gold) mineralization
constitutes a secondary objective.
The Kilometre 26 property covers the juncture of two geologic terranes. Most of the property
(from near the eastern boundary through to the western boundary) is underlain by Paleozoic
Cache Creek Group rocks which are oceanic in origin while the extreme eastern region of the
claims is underlain by Mesozoic rocks of the Quesnel Terrane which are predominantly island
arc in derivation (Monger, 1977; Schiarizza, and MacIntyre, 1999). The suture which marks this
boundary is the Pinchi Fault Zone, which in the region of the claims is predominantly northsouth in orientation (Figure 3).
Cache Creek Group rocks in the vicinity of the Kilometre 26 property are dominated by
ultramafic serpentinites, basalt and limestone. These rocks are interpreted to form a collage
which resulted from a series of accretions and obductions of oceanic rock (directed west to east)
extending tens of kilometers in the east west direction and several times this in the north south
direction. It is the mantle derived (now serpentinized) ultramafic units which are of interest for
nickel mineralization. It is believed that these units, which replicate in at least two distinct areas,
were thrust up and over (obducted) shallower oceanic sediments.
Takla Group (Quesnel Terrane) rocks which occupy the eastern region of the claim group are
predominantly volcanic rocks.
The suture separating Cache Creek Rocks from Takla rocks corresponds to the Pinchi Fault
Zone. This fault zone which occurs as series of north south anastomizing splays several
kilometers wide extends for several hundreds of miles with a north south orientation. It is a long
lived fault zone thought to have been active from Paleozoic time to recent time and is the locus
of currently active hot spring activity (notably Tchentlo Hot Springs located 60 kilometers north
of the property). Two former producing mercury mines, the Pinchi Mine and the Bralorne-Takla
Mine occur within the fault zone.
Ophiolite derived ultramafic rocks occurring at the Kilometre 26 Property are prospective for
nickel mineralization. Although the readers is cautioned that this mineralization my not be the
same as at Kilometre 26, similar rocks at the Decar Project, 30 kilometers to the west, owned by
First Point Minerals Corp. and under option to Cliffs Natural Resources Inc of Cleveland Ohio
4
are currently being actively explored for nickel. At the Decar Project ultramafic ophiolitic rocks
host awaruite, an iron nickel alloy that is being explored as a potential new source of non sulphide nickel.
Nickel mineralized boulders were first sampled at Kilometre 26 in 2009 and traced to two source
bedrock areas in 2010. One of the bedrock source areas was sampled in 2010 at six sites with
total nickel values varying from 0.15% to 0.23%. Non silicate nickel for these samples varies
from 0.03% to 0.14% and averages 0.10% nickel. Three of the samples have greater than 60% of
the nickel in a non silicate form (up to 0.14% non silicate nickel.
The first identification of the awaruite nickel alloy was reported in a petrographic study by P.C.
Le Couteur in a report dated 13 January 2011. One sample of 11 submitted contained the target
nickel alloy, awaruite as numerous awaruite grains that range from less than 0.01 mm to about
0.15 mm. The grains were anhedral and fairly evenly disseminated throughout the rock; some
had simple blocky or rounded shapes while others had complex outlines.
These observations may not be directly applicable to mineralization at the Kilometer 26 property,
but historically, gold mineralization was largely unrecognized within the Pinchi Fault Zone until
Cominco Ltd. discovered a mineralized boulder on what is now the Kilometre 26 property in
1983. The boulder, which was analyzed repeatedly, averaged 8.1 g/tonne gold. The style of
gold mineralization in the Cominco boulder (associated with listwanite alteration) is similar to
gold mineralization at Snowbird gold deposit located 38 kilometers to the south on the south
shore of Stuart Lake (Omineca Gold Ltd.) and at Eastfield Resources Ltd.’s Indata property
located 70 kilometers to the northwest, where gold mineralization was discovered in 1987 (there
is no assurance that mineralization similar to mineralization occurring on either the Snowbird or
Indata properties exists or will be found on the Kilometre 26 property).
The preponderance of work at Kilometre 26 was completed in 2010 and 2011. Sixty-two
kilometers of grid has been cut and surveyed utilizing induced polarization and magnetometer
techniques (Figure 4). Twelve hundred (1200) soil samples (600 still at the lab) and one hundred
and forty-eight rock samples have been collected and analyzed. In 2011 work commenced the
third week of May and resulted in the discovery of new areas of nickel mineralized serpentinite
rubble. A strong north-south oriented magnetic feature-thought to be serpentinite has been
defined over a strike length of four and a half kilometers (41/2 Km) corresponding to a
pronounced airborne geophysical anomaly expressed on a 2009 government survey.
Exploration expenditures completed between January 1, 2011 and August 15, 2011 total
$285,285 (included in above total spent to date). An exploration permit to complete twelve holes
at Kilometre 26 was issued in August 2011 and all required reclamation bonding is completed.
A $534,000 exploration program, to continue to explore for economic mineralization on the
Kilometre 26 property is recommended. It is proposed that work be directed at drill targets,
located on the present gridded area and that additional gridding be established to pursue extend
geophysical and geochemical surveys to the west of the existing grid (Figure 5). Proposed work
includes additional soil sampling, induced polarization, prospecting and geologic mapping,
excavator trenching, and drilling.
5
2.0
INTRODUCTION
The authors, Christopher H. Cherrywell and Richard C. Capps, have been commissioned by
OroAndes to prepare a NI 43-101 compliant report on the KM 26 property located in north
central British Columbia. Christopher H. Cherrywell and Richard C. Capps, the authors, are
“Qualified Persons” and are “Independent Qualified Persons” by definition of the Standards for
Disclosure for Mineral Projects (NI 43-101, Section 1.5). The authors were independent of both
Issuer, Vendor and Property prior to commencing this report, during completion, of the report
and are currently independent of the Kilometer 26 project. Christopher H. Cherrywell is a
registered geologist with the AIPG and Richard C. Capps is a registered geologist with the SME.
The purpose of this technical report is to support the proposed acquisition of the full 100% of the
Kilometre 26 Project from Eastfield. The proposed mineral claim purchase agreement stipulates
the termination of the existing option agreement of 28 September 2009 and the issuance of
20,000,000 shares of OroAndes from treasury for the acquisition of the full 100% of the project
with no reservations including no retained NSR to Eastfield.
Mr. Cherrywell visited the Kilometre 26 property first on July 7, 2010, 27 and 28 October, 2010,
accompanied by J.W. Morton, P.Geo. who has supervised and conducted much of the prior
exploration on the Kilometre 26 property, and reviewed 2011 exploration on October 3rd and 4th
2011.
Sources for information in this report draw heavily on company reports held by OroAndes and
by assessment work reports on file with the British Columbia Ministry of Energy and Mines (the
“Ministry of Energy”).
3.0
RELIANCE ON OTHER EXPERTS
The authors have not drawn on any report, opinion or statement of regarding legal,
environmental, political or other factors during the preparation of this report except those that are
referenced herein.
4.0
PROPERTY DESCRIPTION AND LOCATION
The Kilometre 26 Mineral Property is located in the Omineca Mining Division, consists of 22
map staked claims covering 9.819 hectares, and is centered at 54 degrees, 51 minutes, and 16
seconds North latitude and 124 degrees, 44 minutes, and 40 seconds West Longitude
approximately 50 kilometers north of the community of Fort St. James, BC . These claims are
all recorded in the name of Eastfield Resources. The author has checked the status of these
claims on the British Columbia Government Mineral Titles Online website and have verified that
the claims are valid and in good standing. The holding of mineral claims in British Columbia do
not entitle the holder to surface rights. The claim boundaries are shown in Figure 2 which has
been downloaded from the British Columbia Mineral Titles Online website. The physical
location of claim boundaries is no longer required or relevant to map staked claims in British
Columbia which have their boundaries defined in GIS format. All of the known zones of
mineralization are located within the boundaries of the Kilometre 26 Property claims. All
relevant permits are in place in order that proposed work programmes may be carried out. The
authors are unaware of any environmental or other liabilities to which the Kilometre 26 property
may be subject.
The initial claims were staked by Eastfield Resources Ltd. in 2008.
6
Table 1. Kilometre 26 Claim Status. All claims are located in the Omineca Mining Division.
Claim Name
Record #
Km 26
Km 26 A
Km 26 (B)
Km 26 ©
Km 26 D
Km 26 (D)
Km 26 (D)
Km 26 (E)
Km 26 (F)
Km 26 (G)
Km 26 (H)
Km 17
Km 16
Kilometre 26 I
Km J
Km 26-K
Km 26-L
Km 26 M
N
Km 26-O
Km 26-P
Km 26-Q
Total
596283
597290
597796
597970
599927
637783
649203
707057
753322
753402
753422
811482
811762
842953
842955
842963
842968
842969
843012
843342
843343
843344
Area
(Hectares)
466
466
447
465
466
465
466
373
447
354
447
466
317
466
466
466
466
465
466
466
466
447
9.819
Expiry Date
18-Dec-2012
10-Jan-2012
19-Jan-2012
25-Jan-2012
24-Feb-2012
21-Sep-2012
08-Oct-2012
24-Feb-2012
20-Apr-2012
20-Apr-2012
20-Apr-2012
09-Jul-2012
09-Jul-2012
Jan 13, 2012
Jan 13, 2012
Jan 13, 2012
Jan 13, 2012
Jan 13, 2012
Jan 14, 2012
Jan 17, 2012
Jan 17, 2012
Jan 17, 2012
OroAndes intends to acquire 100% of the Kilometre 26 Project from Eastfield. The proposed
mineral claim purchase agreement stipulates the termination of the existing option agreement of
28 September 2009 and the issuance of 20,000,000 shares of OroAndes from treasury for the
acquisition of the full 100% of the project with no reservations including no retained NSR to
Eastfield (this purchase would replace a 2008 option negotiated with Eastfield to earn a 60%
interest). No additional factors are known by the authors that would affect access, title, or the
right or ability of OroAndes to perform work on the Kilometer 26 property.
To the best of my knowledge and to the extent known, the author knows of no significant factors
or risks that may affect access, title, or the right or ability to perform work on the Kilometre 26
Property.
5.0
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES,
INFRASTRUCTUREAND PHYSIOGRAPHY
The Kilometre 26 property is located 50 kilometers to the northwest of Fort St. James, British
Columbia (see Figure 1), within the Omineca Mining Division (Latitude 54°51’16 », Longitude
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124°44’ 40 »; NTS 388,000E, 6,080,000N ; NAD1983). Access to the property is from Fort St.
James via the paved Tachie Road and then the all weather gravel Leo Creek Forestry Road. This
road was built to Ministry of Forests logging road standards and provides good access for trucks
and heavy machinery such as drill rigs and bulldozers. Smaller haul and tote roads have been
constructed from the main road to other areas of the property. Away from the roads access is on
foot only except for a few areas where helicopter-landing sites have been prepared.
The 1983 Cominco boulder is located at the 26 kilometre mark on the Leo Creek Road.
Topography of Kilometre 26 is flat to undulating with elevations varying from 760 meters (2500
feet) to 880 meters (2900 feet). Vegetation is predominantly Lodgepole pine, spruce and minor
Douglas fir. Extensive areas of flat swampy meadow and extensive areas of clearcut logged
forest exist.
The climate for this area is typical of central British Columbia with warm to hot summers and
cool to cold winters. Permanent snow, up to 1.5 meters depth, typically covers the ground from
the first part of November until mid April. Logging activities persist year round excepting
breakup when ground frost melts and road restrictions are invoked to protect the road system.
The BC Hydro power grid passes through the claim group along the edge of the Lee Creek road,
the main property access road. The relatively flat to rolling nature of the landscape would offer
numerous options for the construction of surface facilities and tailings impoundment sites and
numerous sources of water are readily available.
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Figure 1. Location map of the Kilometre 26 area as of 20 October 2011 (Morton 2910b).
9
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Figure 3. Generalized geology of the Kilometre 26 area (Morton, 2010a).
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Figure 4. Generalized geology, and ground magnetics data (Laird and Ambrose, 2011).
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Figure 5. Proposed drill holes, generalized geology, and ground magnetics data (Laird and
Ambrose, 2011).
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6.0
HISTORY
In 1983, Cominco Ltd. conducted a targeted geochemical and prospecting program north of its
Pinchi mercury mine along the postulated trace of the Pinchi Fault targeting gold mineralization
related to the fault. The program was under the direction of Ian Patterson and was successful in
discovering a large mineralized boulder at the 26 kilometer mark of the Leo Creek Forestry
Road. The boulder which was described as being composed of quartz-ankerite-magnesite and
mariposite (listwanite style alteration) was sampled several times and repeatedly graded
approximately eight grams gold per tonne.
The Kilometre 26 property was drilled in 1986 by Ross Beaty’s Equinox Resources Ltd. who
optioned the property from Cominco. A total of 734 meters was drilled in 21 reverse circulation
holes and 14 of these holes encountered bedrock. While no significant gold or arsenic results
were obtained, several holes encountered ultramafic rock confirming the location of the Pinchi
Fault which had been interpreted geologically based on a change from Palaeozoic (Cache Creek
Group) outcrop on the west side to Mesozoic (Takla Group) outcrop approximately 400 meters
distant on the east side. In 2009, Eastfield noticed the claims had lapsed and staked them. In
2010, when nickel was discovered on the Kilometre 26 property the claims were expanded. In
2011, Awaruite, a nickel-iron alloy was discovered and is now the focus of exploration.
7.0
GEOLOGICAL SETTING AND MINERALIZATION
7.1.0
Regional Geology
The Pinchi Fault Zone is one of the pre-eminent structural features in central British Columbia
and is a major structural feature that separates distinct geological terranes. This fault zone
separates the predominantly Paleozoic aged Cache Creek Group rocks to the west and the
predominantly Mesozoic aged Takla Group rocks to the east (part of the Quesnel Terrane). It
extends in a north-south orientation for more than 450 kilometers (fifteen kilometers on the
Kilometre 26 property) and through its long life has acted as a thrust and a normal fault. Current
hot spring activity on the Pinchi Fault at Tchentlo Lake, located 50 kilometers to the north of the
property, confirms that its activity has persisted to recent times and continues. Metamorphic
grade of rocks in proximity to the fault zone often assumes blueschist grade (high pressure-low
temperature) much as is the case along the Melones Fault Zone (the Motherlode) in California.
7.2.0
Property Geology
Geologic mapping is currently is progress and no compiled geologic map is available. The
western about two-thirds of the Kilometre 26 property is underlain by rocks of the Paleozoic
aged Cache Creek Group. The Cache Creek Terrane in British Columbia represents a Paleozoic
ocean in which the full sequence of pelagic sediments/chert, limestone and some ultramafic rock
represents an accretionary assemblage while some of the ultramafic bodies (the mantle
derivatives) are ophiolites. In summary, ophiolites are suites of mafic and ultramafic rocks
generated in a mantle slab beneath oceanic crust. Under certain plate boundary conditions, slabs
of oceanic crust detach (with mantle derived mafic and ultramafic components-“ophiolites”) and
override (obduct) continental margins which may already be overridden by parts of the
accretionary assemblage. The combined assemblage of oceanic crust and its underlying mantle
rocks are considered the accretionary assemblage as they collide intact and accrete themselves to
a pre-existing continental margin whereas the slabs of mafic and ultamafic rocks derive their
positioning from a tectonic phenomenon (obduction) and are considered the ophiolite
14
assemblage. Until recently these mafic and ultramafic bodies in the Cache Creek Group were
interpreted to be intrusive into oceanic crust but are now interpreted to be in fault contact with
the crust. Both the accretionary and ophiolitic assemblage rocks are well represented on the
Kilometre 26 property.
The Quesnel Terrane, to which the Takla Group is part, is a northwest-southeast trending
Mesozoic remnant of a west facing volcanic arc. It constitutes the continental margin to which
the Cache Creek Group was both accreted and obducted. Takla Group rocks occupy the extreme
eastern side of the Kilometre 26 property (about one-third of the property).
Lithologies identified in outcrop at Kilometre 26 include Cache Creek Group gabbro,
serpentinite and limestone and Takla Group mudstone and mafic volcanic tuff.
7.3.0
Mineralization
7.3.1
Gold
The gold mineralization first identified at Kilometre 26 (Cominco Boulder) in 1983 is similar to
gold mineralization at the Snowbird Gold Deposit and the Indata property (Morton, 2009).
Collectively the evidence indicates that the Pinchi Fault has considerable gold potential that has
remained unknown because of almost complete till coverage.
Gold mineralization was largely unknown within the Pinchi Fault System until Cominco’s
discovery of the mineralized boulder in 1983. It can be surmised that the Cominco boulder was
not in place but most likely is derived from a nearby source within the Pinchi Fault Zone. The
boulder, which was analyzed repeatedly, averaged 8.1 g/t gold and was associated with highly
anomalous concentrations of arsenic. The mineralization in the boulder indicates listwanite type
alteration which is predictable in an environment of obducted ophiolitic mafic and ultramafic
rocks. Although results are early stage at the present Kilometre 26 property two rock samples
collected in 2010 are worth commentary: sample 14-16-9, described as a green (possible
mariposite) magnetic serpentitinite, returned an analysis of 1275 ppm Ni and 0.25 g/t gold.
Sample 4-16-9, described as 1204 ppm Ni, 34 ppb Au and (of interest) 312 ppm arsenic. Both of
these samples are subcrop/outcrop occurring within 500 meters of the reported site of the
Cominco boulder.
7.3.2
Nickel
Nickel mineralization in serpentinized ultramafic rocks believed to be of ophiolitic origin has
been discovered at Kilometre 26. The mineralization is exposed in subcrop in an area measuring
300 meters by 300 meters and is open on all sides (see Figure 3; Preliminary Geology Map) .
Two other mineralized areas distanced as much as 2.2 kilometers west from bedrock mineralized
nickel bearing serpentinite have also been discovered. All the mineralized samples are similar in
their association with elevated cobalt and chromium and their magnesium content which varies
from 7.2% to 18.5% (indicative of serpentinization). The samples all have very low sulfur and
negligible to undetectable mercury.
The first identification of the awaruite nickel alloy was reported in a petrographic study by P.C.
Le Couteur in a report dated 13 January 2011. One sample of 11 submitted contained the target
nickel alloy, awaruite as numerous awaruite grains that range from less than 0.01 mm to about
0.15 mm. The grains were anhedral and fairly evenly disseminated throughout the rock; some
had simple blocky or rounded shapes while others had complex outlines. A second study of five
specimens contained pentlandite but no awaruite (McLeod, JA, 2011).
15
Recent work completed in July 2011 at Kilometre 26 has discovered a new area of
mineralization consisting of numerous mineralized boulders and subcrops of serpentinite
approximately 400 meters east of the nearest mineralization known before the current program.
This discovery was made evaluating soil responses from the 2010 program. Three centers of
mineralized serpentinite have now been identified.
Figure 6; Anomalous Soil Nickel and Soil Gold, indicates that while anomalous nickel values are
sporadic because of overburden depth, several clusters occur. One cluster occurring on lines
8400N, 8800N and 9200N to the west of a ground magnetic feature may indicate an
undiscovered area of nickel mineralization further to the west (ice direction is assumed to be
from west to east and these responses appear to be unrelated to this magnetic feature see Figure
6; Total Field Magnetics).
8.0
DEPOSIT TYPES
The information in this section compares mineralization in areas that are outside the Kilometre
26 property and the authors have not independently verified the information and therefore these
comparisons may not be indicative of mineralization on the Kilometre 26 property.
8.1.0
Ophiolite Gold Model
The thrust faults that constitute the bounding faults to obducted mafic and ultrmafic rock can
provide important hydraulic conduits for precious metal bearing fluids (Nixon and Hammack,
1991). Examples of ophiolite related gold deposits include parts of the Motherlode region in
California (particularly the Allegany District mines and the Idaho-Maryland mine at Grass
Valley, the Bralorne-Pioneer Mine in British Columbia, several prospects in the Atlin District
British Columbia and the Snowbird deposit located near Fort St. James in central British
Columbia 38 kilometers south of Kilometre 26 (Ash, C.H., 2001 ). The mines at Grass Valley
California collectively produced approximately 10 million ounces of gold while the Bralorne
Mine in British Columbia produced more then 4 million ounces each being respectively the
largest gold producer in the State of California and the Province of British Columbia.
In the ophiolite gold model the full range of the ophiolite assemblage forms the host rock for
gold mineralization with the most competent units; argillite, basalt, and gabbro hosting the most
continuous veins. Veins may also extend into adjacent competent felsic plutons that are intrusive
into the package. The least favourable location for gold veins is the serpentinite where the veins
often feather out. This having been said serpentinites are a critical component to the localization
of gold mineralization. At the Bralorne Mine in British Columbia some of the most extensive and
richest ore shoots end against serpentinite bodies. An example of these shoots is provided by
Cairnes in 1937 who writes “the west-end shoot rakes approximately with the intersection of the
vein fissure and the serpentinite and extends back for several hundred feet from this intersection.
This is a high-grade shoot and has provided exceptionally rich pockets. In a stope from 8-level,
two tons alone produced 9,685 ounces of gold (±5,000 ounces per ton). Another pocket yielded
400 pounds gold from 900 pounds of ore (±10,000 ounces per ton).” A similar relationship
where gold bearing veins develop exceptionally rich pockets at the contact with serpentinite is
described for the Alleghany District in the Motherlode region of California.
Deep crustal faults with extensive carbonate alteration are clearly indicated by the presence of
listwanite altered ultramafic rocks. Although gold-quartz veins are not generally hosted by the
listwanite, the richest gold veins are almost always found in shoots close to the ultramafic rocks,
16
usually within competent tectonic blocks of plutonic to hypabbysal crust in faulted contact with
the listwanitic altered ultramafic rock. A definitive spatial and temporal relationship to high level
felsic intrusive rocks is also either defined or suggested. Alteration progresses from serpentinite
to a rock consisting of Fe/Mg carbonate (magnesite) and talc to a rock consisting of magnesite,
quartz and green chrome mica (mariposite). Quartz veins (if present) are often located on the
edge or slightly beyond the most intense alteration, often occurring with carbonate minerals and
mariposite. It is this later carbonate stage that brings in most of the gold, particularly in sections
of the vein where deformation is most intense. Associated elements besides gold included
arsenic, antimony and mercury.
Examples of exceptionally high grade ophiolite related gold pockets (not run of mine but local
high-grade) include:
1.) Bralorne Mine, BC; - 9,685 ounces of gold from 2 tons rock in a high grade stope on 8 level
(±5,000 oz/ton)
2.) Snowbird Property, BC; - 8,509.46 g/t Au (248 oz/ton gold) from 15 centimeter quartz vein in
drill core.
3.) Oriental Mine, Allegany District, California; - 5 to 10 meter long ore shoots that routinely
averaged ±100 ounces per ton gold (3,500 grams per tonne gold).
8.2.0
McLaughlin Mine Model
The Stony Creek Fault, also in California, is another major terrane bounding structure which
separates the Coast Range Ophiolite sequence (largely serpentinite) from the Great Valley
sequence and is also comparable to the Pinchi Fault. In 1978 Homestake mining discovered the
Mclaughlin deposit at a then mined out mercury mine. Gold at Mclaughlin is associated with
siliceous mercury mineralized sinter which contains minor hydrocarbon. A total resource of 24.3
million tonnes grading 4.49 g/t gold was defined and the deposit has since been mined out
(Sherlock, Ross L., 1995). Hot spring tuffa currently being discharged from the active hot spring
at Tchentlo Lake, on the Pinchi Fault 50 kilometers north of Kilometre 26, was sampled in the
1980’s and found to contain 36,000 ppb mercury. The combination of the comparable setting of
the Stony Creek Fault to the Pinchi Fault and the association of hot spring activity with mercury
mineralization and the occurrence of mercury along the Pinchi Fault Zone supports this
comparison. The most significant mercury occurrence occurring within the Pinchi Fault Zone is
the Pinchi Lake Mercury Mine located 18 kilometers to the south of the Kilometre 26 Property.
This mine, owned by Teck Corporation (formerly Cominco Ltd.), was discovered in 1937 and
was in production from 1940 to 1944 and again from 1968 to 1975.
8.3.0
Awaruite Nickel
Ophiolites have recently become recognized as potentially hosting an as of yet untapped source
of nickel; namely in the alloy awaruite. First Point Minerals Corp. (“First Point”) and Cliffs
Natural Resources Inc. (“Cliffs”), a major iron ore company based in Cleveland, Ohio, are
exploring the Decar project located on the south slope of Mount Sydney Williams approximately
80 kilometers northwest of Fort St. James, BC. At Decar ultramafic ophiolite rocks host
awaruite, a highly magnetic and dense nickel-iron alloy that is being explored as a potential new
source of non sulphide nickel. Rock samples at the main area of interest at Decar vary from
0.13% to 0.24% nickel alloy with the mean being closer to 0.13%. The composition of the alloy
averages ±75% nickel with the remainder being iron and minor cobalt and copper. What creates
the attractiveness of awaruite is that it would be amenable for direct usage in stainless steel
production without requiring further processing. Awarurite’s physical properties; high magnetic
susceptibility, high density and extreme malleably offer a number of avenues to pursue in
17
developing a process for economic recovery. The Decar property is located approximately 30
kilometers west of Kilometre 26.
8.4.0
Pinchi Mercury Mine Mercury
Mineralization at the Pinchi Mine is hosted in limestone breccias and in quartz-ankeritemariposite schist cut by one of the main breaks of the fault which in the area of the mine assumes
a character of a series of anastomizing splays. In the vicinity of the mercury orebodies limestone
is dolomitized and silicified. Cache Creek age greywacke, outcropping on the south shore of
Pinchi Lake opposite the mine, contains minor hydrocarbon.
8.5.0
Snowbird Gold Deposit
The Snowbird gold deposit, currently owned by Omineca Gold Ltd., is located on the Sowchea
Thrust Fault forty kilometers to the southeast of the Pinchi Lake Mercury Mine. Mineralization
at the Snowbird deposit located on the south shore of Stuart Lake has witnessed minor
production with a small amount of ore grading approximately 9.0% antimony and 8.0 g/t gold.
Mineralization at Snowbird is typically hosted in listwanite (“mariposite” rock). Drilling
completed in 1986 included a spectacular 15 cm quartz vein which graded 8,509.41 g/t gold
(248.16 oz per ton) from within a 5 foot (1.5 meter) interval that graded 788.58 g/t gold (23.0 oz
per ton).
8.6.0
Indata Gold Mineralization
A probable splay to the Pinchi Fault exists on the Indata property 65 kilometers to the north of
the Kilometre 26 Property. In 1987 Eastfield Resources Ltd. discovered significant gold
mineralization at Indata Lake. Much like the Snowbird deposit and Cominco boulder,
mineralization at Indata was associated with significant amounts of arsenic and antimony and
proximity to serpentinized ultramafic rocks. Mineralizaton drilled at Indata has included 24 drill
intercepts where the average vein intercept is 1.5 meters wide with an average grade of 8.41
g/tonne gold and 52.43 g/tonne silver. This average includes one very high result of 4.0 meters
grading 47.26 g/t gold and 2.00 g/t silver. Alteration encountered in drill holes at Indata includes
talc magnesite which is often the less altered precursor to (“mariposite” rock) hosting
mineralization in the California Motherlode belt.
9.0
EXPLORATION
In 2009 26 kilometers of grid were established and cut, 30 rock samples collected and analyzed,
and 212 soil samples collected and analyzed (Figure 6). A summary of significant results from
2010 sampling is shown in Table 2.
A summary of Exploration completed at the Kilometre 26 property in 2010 includes 26
kilometers of induced polarization, 10 kilometers of additional grid established and cutting, 48
rock samples collected and analyzed and 329 soil samples (this report) out of 619 collected and
analyzed (Morton, 2010a; 2010b).
In 2011 ninety-seven rock representative samples were collected and analyzed of which twenty
returned analysis ranging between 0.19 % and 0.25 % Nickel. The geophysical survey,
(approximately 36 line kilometers) has extended the strike length of the strong magnetic anomaly
(believed to be serpentinite) to more than 4.5 kilometers (Figure 7). This anomaly is thought to
be the source of much of if not all of the nickel mineralized rubble that has been located on the
property immediately to the east of this geophysical feature over a north – south distance of
several kilometers. A separate magnetic feature is indicated several kilometers further to the west
18
which likewise appears to have a dispersion train of mineralized serpentinite. Approximately 600
soil samples were collected and are currently being analyzed.
Soil and silt samples were collected in Kraft paper bags and tied shut with flagging tape. The soil
samples were taken from holes dug with a tree planting shovel or mattock from approximately
30 to 40 cm depth. On the Kilometre 26 Property soil samples were generally collected at 25
meters intervals along east-west lines that were generally 100 meters apart. The gridded area
measures approximately 8 by 5 kilometers.
Rock samples were bagged in heavy plastic bags and closed with a wire or plastic tie and sample
numbers are written on the outside of the bag. Often a duplicate sample was taken so that it can
be referred to at a later time for description under better conditions, or for referral after analytical
results are received
An airborne geophysical survey, flown for the British Columbia government (Geoscience BC)
and published January, 2009, shows a strong magnetic anomaly indicated on the Quest West
helicopter-borne magnetic and electromagnetic survey. The magnetic anomaly is circular in
feature and is more than five kilometers in diameter, suggesting a large ultramafic body.
The portion of the property currently explored was prepared by having a cut grid established on
it. The grid (± 65 line kilometres) was established on 400 metre centres and covers an area of
approximately 6 kilometres by 4 kilometers. Soil sampling has been completed (some analysis
still pending at the date of this report) on generally 25 metre centres. Geophysical measurements
(both induced polarization readings and magnetometer readings have been at 25 metre station
spacing along the grid lines. Prospecting and geological mapping have been constrained by grid
access. The area of the grid is continuously heavily forested with coniferous forest and cut grids
are necessary for meaningful prospecting efforts. Consequently it is expected that tightening the
grid spacing would result in the identification of additional areas of nickel mineralization
although the current knowledge form first pass efforts are considered adequate to complete an
initial drill test of geophysical targets (particularly those with high total field magnetic response).
Sample
6-7-6
9-7-6
1-7-7
02-16-9
03-16-9
04-16-9
07-16-7
10-16-9
11-16-9
12-16-9
13-16-9
14-16-9
16-16-9
1-27-10
2-27-10
7-27-10
5-28-10
6-28-10
Type
Rubble
Rubble
Rubble
Rubble
Rubble
Rubble
Rubble
Outcrop
Subcrop
Outcrop
Subcrop
Subcrop
Subcrop
Subcrop
Subcrop
Rubble
Rubble
Rubble
Ni
PPM
2181
1850
2305
873
752
1204
1931
1962
2338
2143
1585
1274
2260
2102
1730
1612
1589
858
Co
PPM
101
99
120
62
39
75
97
85
86
86
88
71
109
98
84
79
78
50
Cr
PPM
712
875
1323
867
568
955
759
1260
757
625
949
957
392
1070
775
916
1158
1764
Mg
%
18.5
17.9
17.0
11.2
8.8
12.0
13.4
15.1
11.7
11.5
11.0
11.0
12.8
13.3
10.6
12.9
13.0
7.2
S
%
