TECHNICAL REPORT on the CHACALA PROPERTY DURANGO

TECHNICAL REPORT on the
CHACALA PROPERTY
DURANGO STATE, MEXICO
for
PARLANE RESOURCE CORP.
UTM Location, (Nad 27, Mexico, Zone 13):
323500E
2745000N
David Gunning, P.Eng.
Piotr Lutynski, P.Eng.
December 23,2009
TABLE OF CONTENTS
Table of Contents
i
Summary
1
Introduction
4
Reliance on Other Experts ................................................................................•..........................................5
Property Description and Location ............................................................................•................................ 5
Accessibility, Climate, Local Resources, Infrastructure and Physiography
9
History
11
Geological Setting
13
Deposit Types .........................................•......•........................................................................•......................15
Mineralization
17
Exploration
18
Drilling
27
Sampling Method and Approach ...............................................................•.................................................27
Sample' Preparation, Analyses and Security
28
Data Verification
29
Adjacent Properties .,........................................•...........................................................................................30
Mineral Processing and Metallurgical Testing
30
Mineral Resource and Mineral Reserve Estimates
30
Other Relevant Data and Information
30
Interpretation and Conclusions
30
Recommendations
33
Cost Estimate
34
References
35
Certificates of Qualifications
37
ii
LIST OF ILLUSTRATIONS
Figure 1
Chacala Property - Location Map
6
Figure 2
Chacala Property - Tenure Map
8
Figure 3
Chacala Property - Access Map
10
Figure 4
Sierra Madre Occidental and Regional Mines and Projects
13
Figure 5
Chacala Geology
14
Figure 6
Epithermal Vein Model- Buchanan, 1981
16
Figure 7a
Chacala Project - Candelaria Target
20
Figure 7b
Chacala Project - San Juan - EI Oro Target
23
Figure 7c
Chacala Project - Otatal Target
25
Figure 7d
Chacala Project - Nortena Target
26
LIST OF TABLES
Table 1
Chacala Property - Tenure List
Table 2a
Rock Samples Collected by Detector Exploraciones from the Otatal, San Juan ­
EI Oro, and Nortena Targets
7
19
Table 2b
Rock Samples Collected by Detector Exploraciones from the Candelaria Trenches .. 22
Table 3
Rock Samples Collected by the Authors from the Candelaria Target
22
Table 4
Rock Samples Collected by the Authors from the San Juan - EI Oro Targets
24
Table 5
Rock Samples Collected by the Authors from the Otatal Target
25
Table 6
Rock Samples Collected by the Authors from the Nortena Target
27
Table 7
Data Verification Table
30
LIST OF APPENDICES
Appendix 1
Mineral Title Opinion
39
1
SUMMARY
Parlane Resource Corp. (the "Company") announced in a news release dated November 5,2009 that it had
entered into an option agreement with Minera Zeppy, SA de C.V. (Zeppy) to acquire an interest in the
Chacala silver-gold property.
The Chacala property is located in Durango State, approximately 142 km by road from the city of Culiacan
(Figure 1 and 3). It consists of a block of mostly contiguous exploration and exploitation concessions located
around the village of Chacala and referred to in this report as the Chacala property. The Chacala property
consists of thirteen mineral concessions totalling 11,453 ha: Mina del Otatal, Ampliaci6n del Otatal, L1uvia de
Oro, Los Chapotes, Los Chapotes Fracc.2, Candelaria, Valeria, Melisa, Los Chacalotes, Los Chacalotes
Fracc. 2, Los Chacalotes Fracc. 3, San Marcos, and Carolina.
On the Chacala property the mineral rights (to the different parts of the property) belong to Exploraciones
Mineral del Tambor, SA de C.V., Manuel Beltran Meza, Eduardo Alfonso Navaro Contreras, Jose Augustin
Garcia Garcia, and Eduardo Alfonso Navaro Contreras (Table 1). The closest expiry date for any of the
Chacala mineral claims is December 18, 2041.
All the above mentioned mineral property owners are represented by Minera Zeppy, SA de C.V. (Zeppy) and
Jose Augustin Garcia Garcia who entered into an option agreement with Parlane Resource Corp.
The surface rights to the Chacala property belong to the local owners. The mineral claim holders obtained
verbal permission from the individual property owners to access and conduct exploration activity on their land.
To conduct future exploration work there has to be an official agreement with local property owners and a
water use permit should be acquired prior to drilling.
The Chacala property is located in the metallogenic Au-Ag belt of the NW Sierra Madre Occidental known for
hosting deposits like Dolores, Mulatos, Moris, Topia, La Cienega, Basis, Santa Matia del Oro, Guadelupe de
los Reyes, Rosario (Plomosa mine), San Dimas, and Toyalita.
The property is underlain by a metamorphic Jurassic (?) basement rock consisting of flysch type meta­
sandstones and -mudstones overlain by the Triassic andesite (Lower Volcanic Series) and rhyolite (Upper
Volcanic Series) volcanic sequences of Sierra Madre Occidental and subsequently overlain by younger
Tertiary volcanics and alluvia. Cretaceous granodiorites and andesite dikes have intruded the above
mentioned volcaniclastic complex.
Mineralization on the Chacala property is principally structurally controlled and mainly hosted in intrusive rocks
and less commonly in andesite volcanics and metasediments. It is possible that in some locations
2
mineralization could form mantos and disseminated ore bodies. The majority of structures on the Chacala
property have NW-SE or NE-SW trend.
Detector Exploraciones S.A de C. V. has performed exploration work on the Chacala property on behalf of
Zeppy during 2009. Detector Exploraciones identified four distinct exploration targets: Candelaria, San Juan ­
EI Oro, Otatal, and Nortefia, All the above mentioned target areas were mapped and field geological
observations were compared and merged with available regional geological data. Rock chip samples were
collected across the structures of the main identified showings and sent for analysis. Only the Candelaria
structure was explored in detail with a total of 270 meters of trench being excavated using a small back hoe.
A total of 158 mandays were spent on the trenching, mapping, rock sampling, and prospecting. In total of 235
samples were collected from the property by Detector Exploraciones of which 80 have been assayed
(Table 2a and Table 2b). Minera Zeppy reports that in addition to $80,000 which was spent acquiring
additional claims, some $160,000 was spent on geological work, with a further $40,000 in expenditures on
road maintenance and another $20,000 on geological consulting.
To date, four distinct exploration targets have been identified: Candelaria, San Juan - EI Oro, Otatal, and
Nortefia. Mineralization on the Chacala property appears to be principally structurally controlled, and rock
samples collected by the authors from the identified targets revealed the presence of significant silver-gold
mineralization. Silver and gold mineralization is commonly associated with the presence of strongly anomalous
As, Pb, Zn, and Cu.
Since 1991 the Chacala property has been explored by various groups including Luismin, Pefioles, Kobex,
Saddlerock, Hochschild, Kinross, and Minera Mexicana Sombrerete. It appears that no systematic exploration
has occurred on the property and none of the targets have been drill tested.
Candelaria Target
The Candelaria target is over 800m long, has azimuth 040 degrees, and dips approximately 80 degrees to the
SE. Only 100m of the total strike length of this target was mined and explored from 4 mining levels located
approximately 22m below each other (Candelaria mine) to a depth of less than 80m and through a total of
approximately 430m of underground workings. Recent trenching by Detector Exploraciones across
approximately 700m of the southwestern extension of the La Candelaria vein indicated that the target zone is
forming over 15m wide zone with several sub-parallel veins locally up to 2m wide.
The most anomalous assay result obtained by the authors at Candelaria was 1.7m grading 1.7 glt gold and 46
glt silver. Silver and gold mineralization in Candelaria is associated with the presence of white quartz,
tourmaline, and the mineralized structure is hosted in a granodiorite intrusion.
3
San Juan and EI Oro Targets
The EI Oro and San Juan targets are probably controlled by two different structures cross cutting at low angle
but the combined length of EI Oro and San Juan structures can be presently estimated at approximately
300m. The trend of the San Juan structure is 325/44NE, and the EI Oro structure appears to trend at
270/40NE. Although these vein attitudes are similar the mineralization seen in the assay results from the two
locations is quite different. The trace of the structures was not followed up by the authors.
The San Juan structure has a reported limited historical production of silver and gold extracted from 4 mining
levels, the mining activity was reportedly suspended in the early 1990's. At the EI Oro, there is the
appearance of horizontal tension veins sub-parallel to the main EI Oro vein hosted in fragmental rocks andlor
breccias. In these locations there is the potential for greater mining thicknesses. All samples collected by the
authors from the San Juan and EI Oro targets returned highly anomalous assay results. The most significant
sample from San Juan target is 0.8m grading 68.95 glt gold and 140 glt silver, and from the EI Oro target
0.8m with 1.33 glt gold, 557 glt silver, 6.8 % zinc, and 11.1% lead.
Otatal Target
The Otatal target forms a prominent outcrop consisting of an up to 8m wide siliceous structure, hosted in a
granodiorite intrusion. The Otatal structure was traced by the authors for approximately 60m. The structure
trends at 014/80E and the strength of silicification suggests a much larger, regional extent of the EI Otatal
structural target. One 8-m deep shaft is the only indication of past mining activity.
The most anomalous assay result obtained by the authors at Otatal is 0.7m grading 4.26 glt gold, 131 glt
silver. and 2.5% lead. A hilly topography and mineralization resistant to weathering make Otatal a relatively
easy target for exploration.
Norteiia Target
The Norteiia mineralization appears to be controlled by structures cross cutting conglomerates and breccias. It
is possible that the mineralized structures cross cut the clastic (or brecciated) host rock and form a
disseminated low-grade mineralization or mantos. Lack of underbush in some upper parts of the Norteiia
target indicates possible presence of disseminated sulphides in rock. This observation supports the possible
existence of disseminated sulphide mineralization on this target.
Recommendations
A two phase exploration program is recommended to quickly evaluate the property. The targets include
structurally controlled quartz veins, stockworks, and breccias with Ag-Au mineralization often with elevated Cu­
Pb-Zn-As as well as disseminated Au-Ag mineralization in a host rock. The Phase 1 program should include
building access roads, preparation of orthophoto and digital topographic maps, geological mapping,
4
geochemical sampling, trenching, petrographic and fluid inclusion studies, ground magnetic and IP-resistivity
surveys (possibly NSAMT). The work is estimated to cost approximately US$260,000.
Contingent on the success of Phase I, a Phase II exploration program is recommended which would include
2,000 metres of diamond drilling. Drill targets tested in Phase II would have been developed in Phase I, the
total cost of which is estimated at US$820,000 including a 20% contingency due to the difficult access. The
total estimate for the two phases of exploration is $1.08 million.
INTRODUCTION
At the request of Robert Eadie, President of Parlane Resource Corp., the authors visited the property between
September 11 and 15, 2009 accompanied by Hector Duran Garcia and Victor Manuel Luna Castillo, both of
Detector Exploraciones SA de C.V. representing Minera Zeppy, SA de C.v. The most recent work done on
the property was during 2009 by Detector Exploraciones who conducted mapping, rock sampling, and
prospecting programs over the entire property and trenching of the Candelaria structure for Minera Zeppy.
On September 11, 2009 the authors examined the surface sampling of trenches from the Candelaria vein
system. On September 13, 2009 the authors walked out and sampled the El Oro - San Juan vein systems. On
September 14,2009 the authors visited and sampled the Otatal structural target, and on September 15 the
Norteiia area. This report describes the exploration history and geology of the Chacala property and makes
recommendations for further work. This report has been prepared to support the acquisition of the property
and will also be used to support required filing with any Canadian regulatory authorities.
The material found in this technical report is based on the property examination conducted by the authors and
a compilation of Detector Exploraciones 2009 report, program updates, consultant reports, and corporate
press releases available for review. There were no limitations put on the authors in preparation of this report.
The authors have relied on the data contained in this report, namely Detector Exploraciones SA de C.V.
technical report dated July 2009 (Informe de La Primera Etapa de Los Trabajos Realizados en el Proyecto
"Chacala, Mpio. Tamazula, estado de Durango. Por: Detector Exploraciones SA de C.V., Junio 2009).
Therefore, in writing this technical paper the authors have relied on the truth and accuracy of the sources
presented to them which are listed in the Reference section of this report but have also performed checks
against historical data in order to provide verification of the data.
The data for this December 23,2009 Chacala property technical report are principally contained in the
following report and maps:
Informe de La Primera Etapa de Los Trabajos Realizados en el Proyecto "Chacala.
Mpio. Tamazula, estado de Durango
Por: Detector Exploraciones SA de C. V., Junio 2009
5
All references to currency in this report are in US dollars. All units in this report are metric unless otherwise
stated. Standard abbreviations for elements of the Periodic Table and metric units are used.
RELIANCE ON OTHER EXPERTS
The authors have not reviewed the land tenure or the legal status or ownership of the properties or underlying
option or joint venture agreements except where disclosed in publicly disseminated news releases. Title to the
Chacala property has been reviewed by management of Parlane Resource Corp. who have provided the
authors with a title opinion which is located in Appendix 1, and take responsibility for its accuracy. The results
and opinions expressed in this report are based on the field observations of the authors, and the geological
and technical data listed in the References. The authors have studied the information provided by Detector
Exploraciones SA de C.V. and believe the information to be reliable, but the authors have not made an in­
depth independent investigation to verify its accuracy and completeness.
The opinions, conclusions and recommendations presented in this report are conditional upon the accuracy
and completeness of the information supplied by Detector Exploraciones SA de C.V. and the understanding
that no information has been withheld that would materially affect the conclusions and recommendations
stated. The authors reserve the right, but will not be obliged, to revise this report if additional information
becomes known to the authors subsequent to the date of this report.
PROPERTY DESCRIPTION AND LOCATION
The Chacala property is located in Durango State, approximately 91 km E of the city of Culiacan(located in
neighbouring Sinaloa State), in the Municipality of Tamazula (Figure 1 and 3). The UTM coordinates for the
centre of the Chacala property are 323500E & 2745000N(Nad 27 for Mexico, zone 13), Map sheet G13-C54
Chacala.
6
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Figure 1. Chacala Property - Location Map
The Chacala property consists of a block of mostly contiguous exploration and exploitation concessions
located around the village of Chacala and referred to in this report as the Chacala property. The Chacala
property consists of thirteen mineral concessions totalling 11,453 ha (Table 1).
In Mexico, the location of a concession is determined by the location of a single claim monument, with all
corners being located based on surveyed distances and bearings from that monument. These distances and
bearings must be determined and verified by a licensed surveyor. The monument may be placed outside of
the claim boundaries. Although the perimeter lines may not have been partially or entirely surveyed, the
method of locating the claim corners constitutes a legal survey.
A summary of the claim tenure information is located in Table 1. Title to the Chacala property claims has been
reviewed and verified by the management of Parlane Resource Corp. and a legal title opinion is located in
Appendix 1. The claims that comprise the Chacala property are shown in Figure 2. The closest expiry date for
any of the Chacala mineral claims is December 18,2041.
7
Table 1 - Chacala Property - Tenure List
Mineral Claim
Mina del otatal
AmpHaclOn del otalal
LJuyja de Oro
TiDeNumber
Expirv Date
193002
December18,2041
194367
December29, 2041
222624
July 29, 2054
LosChapotes
los Chapotes Frace. 2
232603
232604
candelaria
227598
228969
232192
~alefia
Melisa
Los Chacalotes
LosChacarotes Frace. 2
LosChacalotes Frace. 3
SanMarcos
Carolina
233059
233060
233061
232196
232902
Exploration
Explonation
Annual Fee 1
Explotiltion
Exploration
September25,2058
September25.2058
July 17, 2056
June25, 2057
July 3, 2058
December4,2058
December4,2058
December4, 2058
JUly3, 2058
November3, 2058
Total
Explolalion
Explolalion
AreaftJa
100.0000
900.0000
168.4084
Explotalion
895.5649
43.9092
Explolalion
Explolalion
ExplOlalion
Explolation
300.0000
100.0000
240.0000
7830A392
Explolation
Explolation
Explolalion
435.0721
142.9137
237.8263
Explolalion
USS26,OOO
69.2613
11453.3951
Owner
Exploraciones MinerasdelTambor,S.A.de C.V. ("EMT")
Explorac;ones MlnerasdelTambor,SA de C.V. C'EMr)
ManuelCoronel Beltran
ManuelBeltranMeza(50%)and EduardoAlfonsoNevarreConlreras(60'11»
Manuel Beltran Meza (50%) and Eduardo Alfonso Navarro Contreras (50%)
Manuet Bertran Meza(50%) and Eduardo AlfonsoNavarroContreras (SO'%)
ManuelBellJiin Meza
ManuelBellJiin Meza
AgustinGareia Garcia
Jose AgustinGarcia Garcia
Jose AgustinGarcia Garcia
ManuelBellJiin Meza
Eduardo AlfonsoNavarroContreras
Jose
Note: 1 - Fees are due to the government twice a year, in January and in July. The "Annual Fee" column is
the sum of both payments in US dollars. Fees are based on the number of hectares comprising the
concession and the date of issue of the concession title, and are accrued in Mexican Pesos, which in the table
above have been converted to US dollars at the exchange rate of 13.00 pesos per US dollar. The total fees for
2009 rise to approximately US$26,000.
There are no surface rights associated with the Chacala property, small parcels of surface rights belong to
individual local owners. The mineral claim holders obtained verbal permission from the individual property
owners to access and conduct exploration activity on their land. To conduct future exploration work there has
to be an official agreement with local property owners and a water use permit should be acquired prior to
drilling.
,On the Chacala property four distinct mineralized zones have been identified: Candelaria, San Juan - EI Oro,
Otatal, and Nortefia, The Candelaria, Jan Juan - EI Oro mineralized zones are located in the central-eastern
side of the property, the Otatal mineralized zone is located in the north-western side of the property and
Nortefia mineralizd zone is located in the south-western side of the property. None of the mineralized zones on
the Chacala property have a verified resources or reserves that would meet 43-101 standards. In all four
zones (Candelaria, San Juan - EI Oro, Otatal, and Nortena) several historical workings have been identified.
The most extensive are located in the Candelaria and San Jose and EI Oro target areas.
Due to limited historical exploration data available, it is impossible to predict if the mineralized zones, specially
the Otatal and Nortefia, extend beyond the Chacala property boundary.
No waste deposits, or tailing ponds have been identified on the property. At San Juan an underground train
rails indicate the use of the mechanical equipment at this mine.
8
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Figure 2. Chacala Property - Tenure Map
To conduct future exploration work there has to be an official agreement with local property owners and a
water use permit should be acquired prior to drilling. Neither of these permits are expected to be onerous to
obtain.
In a news release dated November 5,2009, Parlane Resource Corp. (the "Company") announced that it had
entered into an option agreement with Minera Zeppy, SA de C.V. (Zeppy) and Jose Augustin Garcia Garcia
to acquire an interest in the Chacala gold-silver property.
.
9
Under the terms of the option agreements, the Company can earn 90% right and interest in the Chacala
property by paying; (i) to ZEPPY a total of US$1,250,000.00 (one million two hundred and fifty thousand
dollars 00/100 currency of the United States of America), plus the required 15% Mexican Value Added Tax
(IVA)and (ii) to Garcia US$250,000. In addition to the cash payments Parlane will issue a total of 3,320,000
(three million twenty thousand) common shares of Parlane ("Parlane Shares"). The cash payments and
Parlane Shares are scheduled to be issued on or before 18 months after completing the regulatory
requirements of the transaction ("Closing").
In addition to the cash payments and share issuance, Parlane must incur in US$10,000,000 to fully earn their
interest in the Mining Concessions.
ZEPPY shall retain a 3% fully assignable NSR royalty on each of 4 exploration projects. Parlane or its Mexican
subsidiaries shall have the option, within the first 5 years of the option agreement, to purchase up to 2
percentage points of the NSR royalty for each of the exploration projects by paying the amount of
$US1 ,000,000 for each 1 percentage point of each of the exploration projects. Subsequent to the first five
years of the option agreement, the NSR buyout will increase to $US1,500,000 for each percentage point of
each of the exploration projects. There is no royalty on the L1uvia de Oro concession
Minera Zeppy, SA de C.V. and its subsidiary companies have warranted that the claims:
•
are validly issued in the names of Exploraciones Mineras del Tambor, SA de C.V., Manuel
Coronel Beltran, Manuel Beltran Meza, Jose Agustin Garcia Garcia, and Eduardo Alfonso
Navarro Contreras.
•
are in good standing;
•
have no outstanding work orders or legal actions pending;
•
are properly located and recorded;
•
are not subject to any litigation that Minera Zeppy, SA de C.V. are aware of;
•
are free and clear of all liens and encumbrances.
•
have no known environmental liabilities that Minera Zeppy, SA de C.V.are aware of.
Title to the concessions constituting the Chacala property has been reviewed by management of Parlane
Resource Corp. who take responsibility for its accuracy (Appendix 1).
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY
Access to the Chacala property from Culiacan City is via paved Highway driving northeast to the town of
Chapotan (via Tamazula, approximately a 2-hour drive). From this point a gravel road leads southeast to the
village of Chacala located approximately in the centre of the concession (approximately a 2-hour drive). A
straight-line distance between Culiacan and Chacala is approximately 65 km. The total distance by road is
approximately 142 km, of which approximately 112 km is paved and approximately 30 km is gravel road. The
total travel time from Culiacan to the village of Chacala is approximately 4 hours.
10
....---_...._.•..;.... II
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M
Town
Main Paved Road
SecondaryPavedRoad
Gravel Road
Airport
D
Chacala Project.
Figure 3. Chacala Property - Access Map
The Chacala property lies on the western side of Sierra Madre Occidental. It is limited to the east by the
Uplands with Basin and Range provinces and to the west is bounded by the Buried Range province. In the
Durango area the basins have elevations of 1900m to 2100m, and the higher peaks rise to 3000m. The
climate is generally dry with sporadic, often violent rainstorms in the hot summer months. The average
precipitation in the property area is about 600 mm mainly between May and October. The winter months are
cool and dry; snow is rare but night-time temperatures approaching the freezing mark are common in the
higher elevations. Yearly average temperatures are about 25 degrees Celsius. Grasses, small trees and
shrubs along with several varieties of cacti make up most of the vegetation on the steep hillsides, and larger
trees are found near springs and streams.
The Chacala property area is not densely populated and mostly undeveloped. Both the quality of
infrastructure and population density increases towards the city of Tamazula and Culiacan. There is 11OV
electrical power in the village of Chacala serviced by a commercial electrical grid, however industrial service
might need additional grid infrastructure. Any of the materials and supplies required to support exploration
and mining activities are available in Culiacan, Tamazula and Durango City. Labour needed to support
exploration and mining activities can be available locally but skilled labour would probably need to be sourced
in Culiacan, Tamazula or Durango. Public telephone service is available in the town of Chacala and apparently
there is an Internet access in a local Chacala school (not verified by the authors).
No environmental reports were provided for the property presumably due to the early stage of exploration of
the property. The property has ample land suitable for the construction of any proposed mine or mill
structures and facilities, including tailings storage or waste disposal areas and heap leach pads. Surface rights
are owned primarily by Manuel Beltran Meza and several small property owners. Permission for access to
mineral concessions for exploration and possible development must be negotiated with the surface property
owners which is normally not a problem in Mexico. The writers had casual encounters with various property
owners during their visit and the property owners appear amenable to exploration and development at this
time, but no formal negotiations have been initiated (verbal information).
Some of the small streams on the property carry sufficient water for mining operations at the time of the site
visit during the rainy season. These streams are much smaller at the end of the dry season however some of
them are reported to run all year and there should be the opportunity to drill wells to provide additional water.
There are no water rights associated with the property at this time.
HISTORY
For the last 80 years most of the mines in the Chacala district have been inactive. Exceptions are EI Cobre
and El Porvenir mines (located on a different concession not currently a part of the Chacala property) which
have seen limited production and the San Juan mine which operated briefly but ceased production in
approximately 1990 (personal communication with Mr. Manuel Beltran Meza). The CRM Durango reports that
in total roughly 150,000 tonnes were produced from these mines.
Since 1991 the Chacala property has been explored by various groups including Luismin, Peiioles, Kobex,
Saddlerock, Hochschild, Kinross, and Minera Mexicana Sombrerete. Although most of these groups appear to
have performed only cursory prospecting programs, the authors have located some reports which detail more
extensive sampling programs along some of the known structures.
Mining in the early 1900's at the Candelaria mine extracted roughly 100m of the total strike length of this vein
from 4 mining levels located approximately 22m below each other (Candelaria mine) to a total depth of less
than 80m with approximately 430m of underground workings. Based on the historical mine level plans and
sections, it is assumed that the vein had an azimuth of 040 degrees and a dip approximately 65-70 degrees to
the NE. A crude estimate of production based on long section area and thickness at the mine entrance is that
50,000 tonnes were mined, no reliable reports of the grade of mineralization has been found by the authors.
The Candelaria structure has been explored in the past by Minera Mexicana Sombrerete SA de C.V. and
Peiioles. Samples collected by Minera Mexicana Sombrerete SA de C.v. ranged from 0.1 to 6.2 glt Au and
19.1 to 81.7 glt Ag and Peiioles sam pies (7 sam pies) ranged from 0.12 to 109 glt Au and 4.7 to 395 glt Ag
(information is based on partial report by Minera Mexicana Sombrerete).
The San Juan mine was in sporadic production of gold and silver until the early 1990's (personal
)
communication with the property owner Mr. Manuel Beltran Meza). San Juan mine information is based on
mine plans included in an undated partial report by Minera Mexicana Sombrerete. The vertical section in the
San Juan report shows 4 mining levels with roughly 400 meters of total length and indicates the presence of
unmined mineralized blocks and proposes limits to the economic mineralization. The total vertical depth of
12
this mine is approximately 60 metres but the workings were not accessible during the site visit and
consequently the authors are unable to verify the accuracy of this plan however the location of the shafts and
adit seem to be correct.
The EI Oro Mine is assumed to have been worked coincident with the San Juan mine, it has some
underground development and an unknown historical production. At the present time only the first few meters
of the mine are accessible. Based on conversations with local people the El Oro mine has two levels of
approximately 300m in total length. The presence of railway tracks disappearing under rock rubble are
presumed to indicate the entrance to the lowest level of the EI Oro mine upon a significant waste rock dump.
The authors have not located any readable mine plans for the El Oro structure.
The Otatal target has one shallow (approximately 8m deep verbal information from Mr. Manuel Beltran Meza)
flooded shaft located at the base of the main showing, a partial report provided by the property owner indicates
that numerous samples were taken across the structure over 500 meters reported by H.L. King P. Eng. of
Kobex in 1997. In general the samples carry gold, silver and base metal values. Many of the samples contain
more than 1.5 glt Au with 40-120 glt Ag over thicknesses of 3 to 20 meters. The best samples reported are 11
glt Au and 134 glt over 2m near the short shaft and 3.1 glt Au and 63 glt Ag over 4.6 meters. The worst
sample shown on the plan is 0.75 glt Au and 22 glt Ag at the very north of the exposure but the authors can
not be certain that other lower values were not also omitted.
Additional work on the Otatal target has been performed by Perioles and Hochschild. Perioles collected 28
samples with one sample returning 17.6 glt Au and 200 glt Ag and the rest less than 1.86 glt Au and 108 glt
Ag. Hochschild collected 27 samples with assay value ranging from detection limit to 2.37 glt Au and detection
limit to 70 glt Ag. Although the exact date of sampling by Perioles and Hochschild at the Otatal target is
unknown, it appears to have been done in the last few years. The map contained in the Minera Mexicana
Sombrerete (not dated) report shows the rough location of the samples collected by Perioles and Hochschild
all of which seem to have been collected from a very small area near the main Otatal showing (information
based on the map in the undated Minera Mexicana Sombrerete report). The results obtained by all historical
samples appear to be relatively similar.
The Norteria target has several underground workings and small"taunas" (small grinding basins) in the
stream beds but there is no information available regarding production from this area and none of the
workings were accessible during the site visit, as our guides were unaware of them. Significant exploration of
this area was conducted by Luismin (date of Luismin activity is unknown to the authors and the information
was provided subsequent to the site visit in a partial report written by Minera Mexicana Sombrerete). Luismin
identified two principal targets in the Norteria area; the first target is a 500m long La Guadalupana-La Platosa
structure, and the second target represents disseminated mineralization within an area 160m by 250m. One of
the maps indicates a soil (rock) sampling grid that covers an area of approximately 300m by 500m. These two
13
targets were not visited by the authors. Mineralization indicated in the report acknowledges presence of gold,
silver, lead and zinc as well as mercury and arsenic.
GEOLOGICAL SETTING
The Chacala property is located in the province of Sierra Madre Occidental and in a subprovince of Gran
Meseta and Canones Duranguenses (Figure 4).
Regional geology is underlined by Jurassic basement rocks overlain by andesitic Triassic andesitic
volcaniclastic and dacitic volcanic sequences subsequently overlain by younger Tertiary rock formations. The
above mentioned rock units were intruded by the Cretaceous granodiorite and andesite intrusions (Figure 5).
Figure 4. Sierra Madre Occidental and Regional Mines and Projects
The metasedimentary and volcaniclastic complex of Sierra Madre Occidental has been intruded by
Cretaceous granodiorites and andesite dikes. The 'basin and range' topography reflects a series of N to NW
trending regional linear grabens bounded by normal faults along the range fronts. Block faulting down the
steep slopes of the Sierra is also a common phenomenon in the region.
14
The oldest exposed rocks at the Chacala property are metamorphic basement rock (Jurassic-?) consisting of
flysch type meta-sandstones and -mudstones. The metasedimentary basement rocks are overlain by the
Triassic andesitic volcaniclastics belonging to the Lower Volcanic Series (volcanico superior) subsequently
overlain by the rhyolithic Upper Volcanic Series (volcanico superior). The younger Tertiary volcanics and
alluvia overlie all the above mentioned rock units. The metasedimentary and volcaniclastic complex of Sierra
Madre Occidental has been intruded by Cretaceous granodiorites and andesite dikes (Figure 5).
Geology - Chacala Project
Legend
I_WlOoIw
II ==o.tnc,
mIA
CRETACICO
JNllllIllOIl
==:;.""'"
II~
JlJRAsICO
I!lV'Fl:1UOll
II=-­
o
2.5km
1"-'.
-e-;
(").
(").
. . . . ..
-
_
.
GeologyMap is based on: 'Carta Geologico - Minera Chacala. G13 C54" by servicio Geologico Mexicano'and mapping done by OetectorExploraciones SA de C.Y
Figure 5. Chacala Geology
The sequence of rhyolite ignimbrites, breccias and tuffs belonging to the Upper Volcanic Series, normally
found overlying the andesite sequences of Lower Volcanic Series, is not exposed well in the Chacala area.
The Upper Volcanic Series is probably present at the Otatal target.
At Candelaria mineralized structures are hosted in a granodiorite intrusion. At Otatal the main mineralized
structure is hosted at the contact (?) of granodiorite intrusion and metasediment. At EI Oro the host rock for
15
mineralized structures is a brecciated volcaniclastic and at San Juan probably a vesicular flow. The Norteiia
project is underlain by metasediments mainly represented by fine-grained black siltstone interbedded or
possibly overlain by a conglomerate. The conglomerate can be divided into two types. One type of
conglomerate contains white rhyolitic subrounded fragments up to 10cm in diameter and fragments of black
metasediment within metasedimentary sandy matrix. The second type of conglomerate is lacking rhyolitic
fragments. The presence of rhyolitic fragments can indicate that this rock unit could be on top of the
stratigraphical sequence and could represent the first volcanic activity after the clastic sedimentary period.
Bedding measured in the upper part of the property was 120/84S indicating that at least in some parts of the
property bedding is almost vertical. In the top part of the visited area, presence of quartzite and breccias with
quartzite fragments have been identified by the authors.
DEPOSIT TYPES
The Chacala property is considered to be a silver-gold epithermal vein target. Low sulphidation vein systems
are commonly characterised by their low sulphide contents, quartz-adularia-sericite alteration mineralogy, and
lack of extensive wall-rock alteration. The classic idealised model for these systems, as proposed by
Buchanan (1981), incorporates a system of sub-vertical veins that passes upwards into a mushroom-shaped
sub-horizontal "silica cap" at or near the paleosurface (Figure 6). Deep in the system, the veins have relatively
low precious metal to base metal ratios, but this ratio increases higher in the system to the point where base
metal sulphides and pyrite are often present in only minor amounts. In some cases, such as the famous
Comstock Lode in Nevada, the veins contain high grade or "bonanza" sections with elevated silver or silver­
gold grades. The highest levels in the system, including the "silica cap", commonly have anomalous mercury,
arsenic and antimony geochemistry with low precious and base metal values.
The geology and style of mineralization at Chacala are similar to those of other silver producing districts in the
western Americas. Mexico is home to many silver-gold districts that are discussed in the "Adjacent
Properties" section of this report and is second to only Peru in world silver production. The following
discussion is intended to provide examples of mining districts that have geology and mineralization that are
similar in general style to those at the Chacala property. There is no intention to draw direct comparisons
between Chacala and any other mining districts or properties. The authors have been unable to verify the
below mentioned information and this information is not necessarily indicative of the mineralization on the
Chacala property that is the subject of this technical report.
16
100
Empey (CIa,,)
Rare gold
usually in
pyrite
100
I
/
/
/
.., •••••••• ::.
200
\
AD
300
250
sao
(M)
~
~
r~·:
\~ ~
400
IlB'I1I
.:.:::.:.;
/
\?=:::.:
/
l:· . .:
200
I
T('C)
I
I
I
/
GO
ld in PYril.
Ag-sulfosaltS
[
=
1
r~"='
1
Zeolltes. Calcile
Clays (Agale)
\
CRYSTALLINE CARIlONATE(± agate± parallelbladed± molds)
Cakile
II i
LATIlCEBLADED + BLADED CARBONATE(± agate ± amelhy~)
CH
1
MASSIVE OIALCEDONIC (± lattice bladed ± moss::tagalc)
Quartz
CalciIe
Pyri,.
MOSS + OIALCEDONlC> CRYSTAlLINE (± Ia";", bladed
± sulf"" bands ± moss adularia)
I
{~~ 1; !f~"
PRECIOUS METAL
JNm<VAL
-"
{
(IW; FI)
~~
~
CC
CRYSTALLINE>MOSS + CHALCEDONIC(±.-lle adularia
± sulfidebands.t diS3eminaled suJrlde~)
Pyri,.
x\~m_,_.~~.~~._
I
/
1--­
I
I
~ CRYSTAlllNE QUARlZ + CARBONATE(crustilorm)
ScaJc model(or zoningof lU.turcs,. aheration. ore and gangue mint;raIogyin I typical boiliag zone epithennal vein. BasedCD Iht mode!of
Buchanan(1981) wilh ItmpCI1ture ref1cc:ting the level for boiling under hydrostatic; conditions of .. nuid containing 2.84~ NaCl. Alteration
zones PR = prop)'litic;5J"'"Silica;AD = Adularia;ILL = Dlite;SER = Sericite; CEL == Cdadonite; AL =Alunite-kaolinite p)'riIe. Sec Buc:banan
(198) fordctails.Qapitaileuc:rs in teJtrutt columnrefer 10 ~uper UII1CS; CH ""OJakcdonic; CC = Crustifonn·CoJloform; X = Crysta1line.
Figure 6. Epithermal Vein Model - Buchanan, 1981
In Mexico, the Topia, Guadalupe y Calvo and Tayoltita districts have numerous mineralized veins hosted in the
older volcanic rocks underlying the rhyolitic Sierra Madre Occidental ignimbrite "cap". Guadalupe y Calvo is
somewhat unusual, with a low silver to gold ratio of 20:1. The veins in this district have produced more than
two million tons of ore. Topia is a classic polymetallic fissure vein district. It has a rich production history with
recorded production since 1950 of 1.3 million tonnes of ore, yielding 15.4 million ounces of silver with roughly
18,500 ounces of gold. Combined lead and zinc grades at Topia are almost 8%. The authors have been
unable to verify the above mentioned information and this information is not necessarily indicative of the
mineralization on the Chacala property that is the subject of this technical report.
The Tayoltita mine in the San Dimas district, located approximately 170 km east of the Chacala property, has
a historic silver to gold ratio of about 80 t0100:1 and production of roughly 30 million tons from over 80 veins.
The three deposits in the San Dimas district (Tayoltita, Santa Rita and San Antonio) are high grade, low
sulphidation, and silver-gold-epithermal vein deposits characterized by adularia-sericitic alteration. The proven
and probable mineral reserves at San Dimas district three operating mines (Tayoltita, Santa Rita and San
Antonio) are reported to be approximately 3.25 million tonnes at 421 glt Ag. The total inferred mineral
resources at the three mines, diluted, are reported to be approximately 17.27 million tonnes at an estimated
grade of 321 glt Ag (Silver Wheaton Corp. 2009 News Release). The authors have been unable to verify the
above mentioned information and this information is not necessarily indicative of the mineralization on the
Chacala property that is the subject of this technical report.
The Fresnillo silver mining district in Zacatecas State contains many high-silver vein deposits. One of the
larger, classic veins of this camp is the Santo Nino vein. This mineralized vein is not well exposed at surface;
17
instead, at surface there is a small stockwork of small veins and veinlets that may define the vein at depth.
The Santo Nino vein was discovered by drilling at a depth of 300m below the surface and has now been
traced for 2.5 km in length and 500m in depth with a vein width of 0.1-4.0 m. (average 2.5 m). The initial
discovery hole in 1975 intersected 1,087 gft silver, 1.62 gft gold 0.4% lead and 0.7% zinc over a true width of
3.0 m. This vein has become the largest silver producer in the Fresnillo camp, 1988 reserves of 1.2 million
tonnes 769gft silver, 0.56gft gold, 0.99% zinc, 0.50% lead and 0.03% copper (Gemmel et ai, 1988). The
authors have been unable to verify the above mentioned information and this information is not necessarily
indicative of the mineralization on the Chacala property that is the subject of this technical report.
There are three prominent silver-gold districts in the central Andes of southern Peru, namely Cailloma,
Orcopampa and Arcata. Erickson and Cunningham describe these deposits as adularia-sericite-type, silver­
rich, polymetallic, and base-metal veins. The silver to gold ratio in these deposits is generally more than 300:1
and production from the three districts has averaged about 500 gft silver. As at Chacala, the mineralization
occurs in fissure-filling veins along subparallel faults cutting intrusives as well as andesitic flows, breccias, and
pyroclastics and clastic rock units as well as intrusives. Each of these districts has multiple veins in areas of
10-15 square km with individual veins generally less than two meters in thickness but up to three kilometres in
length. Mineralization is reported to occur over a vertical interval of 300-450 metres. The combined historic
production and reported current reserves of these three Peruvian districts is estimated to range between 8 and
9 million tonnes, at grades of 400 ppm Ag and 1.3 to 3 ppm Au (Erickson and Cunningham, 1993). The
authors have been unable to verify the above mentioned information and this information is not necessarily
indicative of the mineralization on the Chacala property that is the subject of this technical report.
MINERALIZATION
Mineralization on the Chacala property is principally structurally controlled and mainly hosted in intrusive rocks
and less commonly in andesite volcanics and metasediments. The majority of structures in the Chacala area
trend NW and NE. It is possible that in some locations (e. g. Norteria) mineralization could also form mantos
and disseminated ore bodies.
Four distinct mineralized targets have been identified on the Chacala property: Candelaria, San Juan - EI Oro,
Otatal, and Nortefia
At the Candelaria mineralization was traced for over 700m and is associated with the presence of quartz­
tourmaline veins locally containing pyrite and copper oxides. Mineralized structures are hosted in a
granodiorite intrusion that appears to be unmineralized.
The mineralized target zone is over 15m wide with several sub-parallel veins locally up to 2m wide but the
majority of the veins are less than 1m wide. The trend of the Candelaria structure measured at the entrance to
18
the Candelaria is estimated at 040/82 NE but the authors observed that the dip of the structure could also be
to the west.
At the San Juan target mineralization is not well visible and is contained in a manganese (?) rich horizon.
Mineralization at San Juan appears to be structurally controlled and the structural trend has an attitude of
325/44NE. At the EI Oro target visible mineralization consists of pyrite and galena hosted in brecciated host
rock. The main EI Oro structure is very similar to the San Juan structure where mineralization is hosted in a
black manganese (?) rich horizon with pyrite and galena rich lenses. EI Oro structure appears to trend at
270/40NE. The combined length of EI Oro and San Juan structures can be presently estimated at
approximately 300m.
At the Otatal target quartz rich structure can rich 8m in width and was traced by the authors for approximately
60m .. Visible mineralization contains locally pyrite and traces of malachite. The structure trends at 014/80E
and the strength of silicification suggests a much larger, regional extent of the Otatal structural target.
The Nortefia mineralization is hosted in conglomerate, breccias (?), and metasediments. At the the Nortena
target two types of mineralization have been identified. The first type represents a structurally controlled
mineralization also confirmed through several small underground developments (not accessible) located along
the structurally controlled targets. The second type is a disseminated oxidized sulphide mineralization exposed
as a gossan in the upper parts of the property. The possible disseminated nature of the Nortefia target could
cover area over 0.5 by 0.5 km.
EXPLORATION
Detector Exploraciones performed the most recent exploration work on the Chacala property during 2009.
During this time several targets were tested mainly by trenching, mapping, rock sampling, and prospecting to
determine the validity of historical reports from the various showinqs, Detector Exploraciones crew consisting
of 2 to 4 geologsts and field assistants identified four distinct exploration targets: Candelaria, San Juan - EI
Oro, Otatal, and Nortefia, All the above mentioned target areas were mapped and field geological
observations were compared and merged with available regional geological maps. Geologists identified the
main showings and took rock chip samples across the structures for analysis. Only the Candelaria structure
was explored in detail with a total of 270 meters of trench being excavated using a small back hoe. From the
Candelaria target a total of 63 samples were collected by Detector Exploraciones and sent to ALS-Chemex
laboratory for analysis (Table 2b). From the EI Oro target 6 rock chip samples, from the San Juan target 2 chip
and 1 grab samples, from the Otatal target 4 chip samples, and from the Nortefia target 1 chip and 3 grab
samples were collected by Detector Exploraciones and sent to ALS-Chemex laboratory for analysis (Table
2a).
19
A total of 20 mandays were spent on the trenching program and 138 mandays were spent mapping and
prospecting. In total, 235 samples were collected from the property by Detector Exploraciones of which 80
have been assayed.
Minera Zeppy reports that in addition to $80,000 which was spent acquiring additional claims, some $160,000
was spent on geological work, with a further $40,000 in expenditures on road maintenance and another
$20,000 on geological consulting. The partial break down of the geological work conducted by Detector
Exploraciones since June of 2009 is shown in the following table.
Work done
MappinQ, trenchinq, prospecting, rock sarnplinq
Truck rental
Back hoe trenohlnq
Assays
Total
$/day
500
125
500
37
DayS
158
164
14
80
Total
79,000
20,500
7,000
2,960
109,460
Since 1991 the Chacala property has been explored by various groups including Luismin, Pefioles, Kobex,
Saddlerock, Hochschild, Kinross, and Minera Mexicana Sombrerete. Only partial reporting of the results from
previous work have been located to date and this information is summarized in the History section of this
report.
Based on Detector Exploraciones work, four distinct exploration targets have been identified: Candelaria, San
Juan - EI Oro, Otatal, and Nortefia. Rock samples collected by the authors from the identified targets revealed
the presence of significant silver-gold mineralization. Silver and gold mineralization is commonly associated
with the presence of strongly anomalous As, Pb, Zn, and Cu (Table 2a, 2b).
Table 2a. Rock Samples collected by Detector Exploraciones from the Otatal, San Juan - EI Oro, and
Nortena Targets
sample No.
CLR015
CLR017
CLR019
CHII008
OROOOl
OR0002
CLR026
SJNool
SJN002
NORool
NOROO2
NOROO3
NOR004
OlA004
OlA005
OTA006
OTA007
E N0<I27z13 Mex
325706
324574
324574
324221
324611
324611
324644
324860
324860
317050
317005
317148
317148
312880
312880
312880
312850
N Nad27z13l1ax
2745671
2746873
2746873
27466Q3
2746676
2746676
2746845
2746519
2746519
2742400
2742400
274226Q
274226Q
2749930
2749930
2749930
2749930
Ag[ppm]
7.4
As [ppm]
1500
0.60
1.415
0.181
0.099
1.10
0.878
>100
0.60
0.10
0.80
4.64
0.943
33.9
0.149
0.327
0.029
0.Q75
0.15
278
1.6
113
2.4
34
1
2.8
521
50
1040
1565
1570
50
0.276
0.399
3.5
23.8
20.8
2.28
105
location
Sample width [rIl]
AulPpm]
SOro
8 Oro
8 Oro
ElOra
ElOra
8 Oro
San Juan
SanJuan
San Juan
Nortena
Nortel\a
Nortel\a
Nortefta
Olalel
Ololal
Olalal
Olatal
1.00
0.096
3.30
1.00
NA
0.80
Greb
Grab
Grob
4.00
2.70
1.80
1.70
1.375
22.9
1.4
0.6
2550
Cu [ppm]
206
8500
273
55
1270
Pb[ppm]
131
2800
>10000
74
266
55
653
27
274
24
365
1245
260
253
63
84
87
2400
63
8
163
7
25
51
86
303
122
579
329
243
90
236
339
1255
>10000
2040
33
>10000
>10000
Sb[ppm]
Zn [ppm]
18
246
11
64
>10000
4340
48
>10000
5
43
40
<2
<2
3
19
3
2
6
<2
>10000
9
117
364
108
140
40
286
70
134
56
7
6
275
110
Candelaria Target
The Candelaria vein is over 800m long, has azimuth 040 degrees, and dips approximately 80 degrees to the
SE. The Candelaria mine covers only 100m of the total strike length of this vein with access on 4 levels
located approximately 22m below each other to a depth of less than 80m and through a total of approximately
20
430m of underground workings. Recent trenching by Detector Exploraciones along 100m of the southwestern
strike extension of the La Candelaria vein has exposed a target zone consisting of a 15m wide zone with
several sub-parallel veins locally up to 2m wide.
The southwestern extension of the Candelaria vein has no known underground development and there are no
signs of mining activity.
To confirm geological observations and sampling reported by Detector Exploraciones the authors visited the
main entrance to the Candelaria mine and trench 1, 2, 3, and 16. Sample intervals and sample numbers
collected by Detector Exploraciones at Candelaria were well marked in the field with paint and sample
numbers were visible (Table 2b).
•
•
•
•
•
•
,
•
•
:
•
•
•
•
•
•
•
•
.:.
•
•
•
•
>
•
•
~:.
•
•
•
•
•
•
•
•
.:
;":'
..,
•
•
•
•
•
•
.:.
•
•
•
. .. : ... +.:s.-......
•
:
.
w' z .
.
'
.
.
27.4MQO.mN ...
'.
2T'H-?QO·rN
. .
.
:
.
: :'
:
.
'
C07V01
'C07V02
C07V03
C07V04
. ~.,:::
·..:r
:
'.
7.4'ilttO.\l.mt{ .•.. C.1.1V02..
·
.
• ..
:.'·: ..~.98V
'.'
.
.. '.'.
~'9'
:
:X·······:·········:·
.~
.:
C1:1V01
;-.,-~~
:C10V08
:
~.12V01
:
C1GVa.5.~
: .. : .. '~6l'
· .. ~
· C16V04.······./
'2
IR01..'.• ...•
cf(jVl~R7
C16V~
.
Q}7':
IR 012.'4·
C1.6V?;it~
J:
8;4;372
.....:. ~ .....
.
o
100m
C10V05
Legend
. C10V04:" .....
. C10V03
C03V07 Samples collected b)'
C10V02
IR001 Detector Exploraciones
C1oV01
SA de C.V.
:...,...
":
C16V01*
·
·\.. :
;
)R' 005 "&":l:
>........1' . . 0··1.·
.'
....
,R 0.06
,..-:"
C09V01....... .....
: "&"'J~
C11V04:
R 01~····
~:
>
. C11V03 :.....
......
&":l'
.!
· .; -;­
.
.... "'IR:O~/'
C~7V05
: C09V04
C~~~~~3
..'
,.,7•
84369
"&
~
g
Pl·
'795
7~
:
.~
:
C13V02.g
C13VO'1'
:
/ .t:t
;
.
Samples collected by
the Authors
c:=J Candelaria
Figure 7a. Chacala Project - Candelaria Target
mineralized trend
21
To verify previously reported assay values the authors collected one sample from the entrance of the
Candelaria mine and one sample from each trench 2,3 and 16 (the most southern exposure of the vein).
Sample IR001 collected by Detector Exploraciones at the entrance to the Candelaria was re-sampled by the
authors (sample 84369). On the same wall, there was also another sample number HM50484 visible from
previous unknown samplers. It is possible that the previous visiting project sampling crew was representing
Hochschild Mining. The most anomalous assay result obtained by the authors at Candelaria was 1.7m
grading 1.7 g/t gold and 46 g/t silver.
The Candelaria structure is hosted in argilically altered and iron-oxidized granodiorite. Silver and gold
mineralization in La Candelaria is associated with the presence of white quartz and tourmaline with locally
seen malachite stains.
Some of the exposed structures in trenches could are up to 2 m in width, but the majority of the veins are less
than 1m wide. The trend of the Candelaria structure measured at the entrance to the Candelaria mine, in
trenches and calculated from the mining plans provided to the authors by Detector Exploraciones is estimated
at 040/82 NE. In one location (trench, sample 84370) the authors observed that the dip of the structure was to
the west.
22
Table 2b. Rock Samples collected by Detector Exploraciones from the Candelaria Trenches
Sample No.
C01V01
COW02
C01V03
COW04
C02V01
C02V02
C02V03
C02V04
C02V05
C03V01
C03V02
C03V03
C03V04
C03V05
C03V06
C03V07
C04V01
C04V02
COlV01
COlV02
COlV03
COlV04
C07V05
C08V01
C09V01
C09V02
C09V03
C09V04
C10V01
C10V02
C10V03
C10V04
C10V05
C10V06
C10V07
C10V08
C11V01
C1W02
C1W03
C11V04
C12V01
C13V01
C13V02
C13V03
C13V04
C13V05
C13V06
C16V01
C16V02
C16V03
C16V04
C16V05
IR001
IROO4
IR005
IR006
IR007
IR008
IR010
IR012
IR014
IR019
IGUA01
E Nad27z13 Mex
323998
324000
324000
324000
323964
323962
323957
323956
323956
323918
323914
323914
323913
323912
323908
323906
323821
323836
323773
323775
323775
323778
323784
323724
323705
323704
323704
323699
323663
323662
323662
323661
323659
323659
323657
323657
323619
323618
323612
323611
323544
323509
323509
323509
323509
323509
323509
323445
323427
323439
323453
323491
324020
323781
323805
323867
323936
323914
323505
323443
323647
323989
323983
N Nad27z13 Mex
2744392
2744390
2744390
2744389
2744348
2744350
2744355
2744356
2744357
2744299
2744302
2744302
2744303
2744303
2744306
2744308
2744222
2744209
2744153
2744151
2744150
2744146
2744137
2744104
2744078
2744078
2744079
2744084
2744014
2744015
2744015
2744016
2744018
2744019
2744020
2744020
2743964
2743965
2743968
2743969
2743909
2743871
2743872
2743873
2743874
2743874
2743875
2743748
2743827
2743856
2743864
2743891
2744426
2744166
2744163
2744226
2744304
2744286
2743848
2743866
2744038
2744392
2744374
Location
Trench C01
Trench C01
Trench C01
Trench C01
Trench CO2
Trench CO2
Trench CO2
Trench C02
Trench CO2
Trench C03
Trench C03
Trench C03
TrenchC03
Trench C03
Trench C03
Trench C03
Trench C04
Trench C04
Trench C07
Trench C07
Trench C07
Trench C07
Trench C07
Trench C08
Trench C09
Trench C09
Trench C09
Trench C09
Trench C10
Trench C10
Trench C10
Trench C10
Trench C10
Trench C10
Trench C10
Trench C10
Trench C11
Trench Cll
Trench C11
Trench Cl1
Trench C12
Trench C13
Trench C13
Trench C13
Trench C13
Trench C13
Trench C13
Trench C16
Trench C16
Trench C16
Trench C16
Trench C16
Candelaria Adil
Candelaria
candelaria
Candelaria
Candelaria
Candelaria
Candelaria
candelaria
Candelaria
Candelaria
Candelaria
Sample width [m)
0.30
0.30
0.30
0.70
1040
DAD
0040
0.45
0.28
5.00
0.35
0.80
0.11
0.10
0.15
1.60
1.50
1.40
0.60
0.20
0.30
0.30
1.00
0.30
0.85
1.15
0.70
0.50
1.20
1.25
0.55
2.65
1.07
1.48
1.40
0.45
0.30
0.30
0.50
0.30
0.40
1.20
0.30
0.14
0045
0.75
0.65
0.10
0.60
0.80
1.00
1.30
1.70
0045
2.50
5.00
1.70
3.00
0.85
0.80
0.80
0.40
0.50
Au [ppm)
0.148
12.100
0.329
0.650
0.343
0.173
0.365
0.035
0.042
0.029
0.460
0.032
0.018
0.053
0.024
1.590
0.016
0.037
0.038
0.010
0.005
0.068
0.839
1.505
0.011
0.033
0.077
0.012
0.154
0.026
0.045
0.026
0.075
0.064
0.016
0.007
0.056
0.007
0.014
0.188
0.174
0.175
0.014
0.010
0.056
0.005
0.355
8.130
0.065
0.516
0.162
0.057
9.65
0.047
0.538
0.481
0.348
0.541
0.017
0.015
1.68
1.17
2.32
Ag[ppm]
0.600
43.900
1.80
14.50
11.70
26.50
16.10
1040
3.00
13.60
19.40
0.90
1.20
1.60
1.10
24.70
0.50
4.90
2.90
3.20
0.20
1.00
129.00
52.30
0.40
0.90
1.50
< 0.2
<0.2
<0.2
<0.2
<0.2
0.50
<0,2
<0.2
<0.2
<0.02
0.60
2.10
2.30
3.90
0.70
0.70
2.00
4.60
1.20
44.60
520.00
1.50
63.10
12.90
5.10
76.9
2.4
48.6
48.3
97
20.7
1.4
4.4
163
40.4
21.6
As [ppm)
1415
> 10000
2790
> 10000
4160
2040
> 10000
1060
1290
6400
> 10000
1035
937
1770
> 10000
> 10000
2280
6500
1475
226
170
180
> 10000
> 10000
854
1100
4660
1890
4320
625
3300
614
1500
1470
847
1330
1890
222
378
4180
> 10000
1970
1250
848
4260
1340
> 10000
> 10000
1200
> 10000
5390
4970
>10000
0.0895
>10000
>10000
>10000
>10000
0.275
0.0397
>10000
>10000
>10000
Cu(ppm]
379
2850
3690
1150
730
1530
657
159
280
295
10BO
613
672
228
371
948
586
272
672
205
117
34
850
702
85
166
129
336
570
172
897
187
108
207
176
291
299
62
751
1670
778
491
588
590
1930
563
1800
9400
94
3830
323
225
1780
760
929
722
1020
265
478
329
2840
1960
1070
Pb (ppm)
73
51
13
35
128
177
550
54
65
179
42
18
49
49
164
104
79
131
94
183
49
79
573
1220
114
37
82
140
74
49
118
41
470
56
45
75
103
25
53
696
83
145
143
34
145
14
140
2130
12
2580
162
74
3050
127
2400
2270
1310
159
24
360
2980
42
481
Sb(ppm)
12
95
9
48
16
13
20
25
15
69
44
4
11
9
14
31
9
93
19
9
7
5
45
244
6
5
14
35
34
5
37
9
28
22
39
55
15
<2
7
165
50
15
5
4
15
3
27
365
2
163
9
7
2790
31
231
188
862
411
13
9
1735
55
130
Zn [ppm]
40
80
102
24
64
122
40
87
44
22
14
117
180
58
162
15
26
219
102
118
67
18
21
59
31
46
27
113
112
70
133
70
37
116
144
312
176
115
158
98
100
315
189
125
210
120
170
32
105
1430
1130
118
164
267
110
48
28
15
25
1965
464
23
177
Table 3. Rock Samples Collected by the Authors from the Candelaria Target
Sample No.
84369
84370
84371
84372
E Nad27z13 Me••
324016
323965
323920
323444
N Nad27z13 Mex,
2744421
2744353
2744301
2743850
Target
Candelaria
Candelaria
Candelaria
Candelaria
Sample width m
1.7
0.5
3.0
0.8
Au (ppm]
1.614
0.078
0.034
0.Q36
Ag (ppm]
46.4
23.6
39.6
9.6
As (ppm
9,153.7
1.381.8
6,611.9
28,300.0
Cu [ppm]
1,466
1,338
231
365
Pb [ppm]
396
109
435
816
Sb[ppm]
1116.9
7.3
476.6
94.7
Zn(ppm]
26
175
18
2,666
Beyond the presently known trace of the structure, to the SW and NE (past historical mining workings) the
Candelaria structure disappears; it could be cut off or is covered by overburden and alluvia.
23
The results from surface samples collected by the authors from Candelaria are presented in Table 3,
and assay results from surface trench samples collected by Detector Exploraciones are presented in
Table2b.
San Juan and EI Oro Targets
The EI Oro and San Juan targets are located near each other and although at first glance seem to be one
structure it is more likely that they are two different structures cross cutting at a low angle. The trace of the
structures was not followed up by the authors and there is no proof that the two mines/structures connect. The
trend of the San Juan structure is 325/44NE, and the EI Oro structure appears to trend at 270/40NE. The
combined length of EI Oro and San Juan structures can be presently estimated at approximately 300m.
The San Juan structure appears to be hosted in a vesicular flow, and there was no visible sulphide
mineralization observed. The prospective "horizon"/structure is contained in a black (manganese rich?) host
rock. The San Juan mine was in production until the 1990s (personal communication with the property owner
Mr. Manuel Beltran Meza) and gold and silver were extracted from 4 mining levels.
The EI Oro mine is hosted in volcaniclastics and breccias. The main EI Oro structure is similar to the San Juan
structure, and the authors did not observe any visible sulphides. At the EI Oro, there is the appearance of
horizontal tension veins sub-parallel to the main EI Oro vein hosted in fragmental rocks and/or breccias. In
these locations there is the potential for greater mining thicknesses. These lenses and veins have a black
matrix, are locally iron-oxidized, and contain pyrite, as well as local lenses of galena.
EI Oro and San Juan Mines· Geology and Sample Location
Legend
Alluvium
III
conglomo_1
Rh,.olI16_...
~,~'
An....""B_
PolymlctJc
Uetaa,ndatone
=-'
.
Gt~nod~
Argillc. Alteration
Iron O..ldotion
..
,
F..t.
Interred Fault
Mln.allzed Structure
.~
. Mine
AditfT~"ch
...
.
_ _~lCOm
Figure 7b. Chacala Project - San Juan - EI Oro Targets
~:
I
..
24
All samples collected by the authors from the San Juan and EI Oro targets returned highly anomalous assay
results. The results from surface samples collected by the authors are presented in Table 4. The most
significant sample from San Juan target is 0.8m grading 68.95 glt gold and 140 glt silver, and from the EI Oro
target 0.8m at 1.33 glt gold, 557 glt silver, 6.8 % zinc, and 11.1% lead (Figure 7b).
Table 4. Rock Samples Collected by the Authors from the San Juan - EI Oro Targets
Sample No.
84378
84379
84380
84381
E Nad27z13 Mex.
324864
324859
324616
324614
N Nad27z13 Mex.
2746518
2746519
2746661
2746662
Target
San Juan
San Juan
EIOro
EIOro
Sample width [m)
0.8
0.8
1.1
0.8
Au [ppm)
68.950
13.965
0.950
1.330
Ag[ppm)
140.0
59.1
377.0
557.0
As [ppm)
433.4
125.9
181.5
321.0
Cu [ppm)
74
122
1,729
3,744
Pb[ppm)
282
246
16,900
112,600
Sb [ppm)
2.4
1.3
55.1
249.3
Zn (ppm)
153
129
43,500
68,300
Otatal Target
The Otatal project is located approximately a 2-hour drive from the village of Chacala, and it takes additionally
at least one hour by foot trail to reach the main Otatal showing. The first hour of the gravel road (from Chalaca
to Mr. Manuel Beltran Meza's rancho) is quite good, and the second half of the access road to the point where
the foot trail starts (from the rancho) follows the creek and would be not accessible during rainy seasons. An
abundance of large boulders in the creek makes this section of the road rugged. This road leads to the paved
road, but the authors never checked it out. From the road, a narrow foot trail leads to the main Otatal showing.
The Otatal target forms prominent outcrop consisting of an up to 8m wide siliceous structure exposed in three
locations. The Otatal structure is hosted in a granodiorite intrusion or on the contact between granodiorite
intrusion and metasediment and was traced by the authors for approximately 60m. The structure trends at
014/80E and the strength of silicification suggests a much larger, regional extent of the Otatal structural target.
One 8m deep shaft (personal communication with the property owner Mr. Manuel Beltran Meza) is the only
indication of past mining activity.
The main structure (or the lower part of the structure) is strongly siliceous with minor intervals of clay altered
intrusive. Siliceous sections contain visible pyrite and locally chalcopyrite, and azurite (samples 84343 and
84345). The upper part of this structure (or a hanging wall) is strongly silicified and has up to 50% quartz
stockwork, strong iron-oxidation, disseminated pyrite «5%) and vugginess after leached sulphides (samples
84342 and 84344).
The results from surface samples collected by the authors are presented in Table 5. The most anomalous
assay result obtained through by the authors at Otatal is 0.7m grading 4.26 glt gold, 131 glt silver, and 2.5%
lead (Figure 7c).
25
Otatal • Geology and Sample Location
Legend
.==-.. . TERCIARIO
p~o
j:~
... uamr~
. . .ItA.
.~
......
.-..
..
..-.
-­
CRIITACICO
L"lPE1lIO:a
.~­
~
JURAslco
litlPEIUOR
.~~.
ROCAS iGNEAS
INTRUSI\'AS
o
Geology Map is basr<l en: "Carta Geologico - Miner. enacola. 813 C54- by 5enIicio Geoillgico Mexica""' ami mapping done
ty Detector
100m
Expi<lracicne.~ SA de C.V.
Figure 7c. Chacala Project - Otatal Target
Table 5. Rock Samples Collected by the Authors from the Otatal Target
Sample No. E Nad27z13 Mex. N Nad27z13 Mex.
84382
312873
2749931
84383
312882
2749940
84384
312876
2749940
84385
312874
2749929
Target
Otatal
Otatal
atatal
Otatal
Sample width lm]
2.7
5.0
0.7
1.7
Au [ppm)
1.099
0.227
4.260
0.451
Ag [ppm!
31.8
29.2
131.0
45.8
As [ppm!
533.2
314.4
143.0
302.6
Cu [ppm!
514
3,313
726
130
Pb [ppm)
838
346
24,600
1,706
Sb[ppm)
10.3
4.0
17.8
5.7
Zn !ppm)
183
526
322
481
A hilly topography and lack of deep overburden make Otatal a relatively easy target for exploration.
Nortefia Target
The Nortefia target is reached by a 2 hour drive from Chacala followed by a one hour walk in order to see the
central-known showing with historical underground development.
26
Norteiia - Geology and Sample Location
Geology Map is based on: 'Carta Geologico -lJinera Chacala. G13 C54- by
5ervicio Ge~lcg!co Mexicano" and mapping done by Detector Explorac1ones SA De CV.
Figure 7d. Chacala Project - Nortefia Target
The Nortefia project is underlined by metasediments mainly represented by fine-grained black siltstone
interbedded or possibly overlain by a conglomerate. The conglomerate can be divided into two types. One type
of conglomerate contains white rhyolitic subrounded fragments up to 10cm in diameter and fragments of black
metasediment within metasedimentary sandy matrix. The second type of conglomerate is lacking rhyolitic
fragments. The presence of rhyolitic fragments can indicate that this rock unit could be on top of the
stratigraphical sequence and could represent the first volcanic activity after the clastic sedimentary period.
Bedding measured in the upper part of the property was 120/848 indicating that at least in some parts of the
property bedding is almost vertical. In the top part of the visited area, presence of quartzite and breccias with
quartzite fragments have been identified by the authors.
Mineralization observed on the Nortefia target appears to be controlled by structures cross cutting
conglomerates and breccias. It is possible that the mineralized structures cross cut the clastic (or brecciated)
27
host rock and form a disseminated low-grade mineralization or mantos. Lack of underbush and gossans in
some upper parts of the Norteria target indicates possible presence of disseminated sulphides in rock. This
observation supports the possible existence of disseminated sulphide mineralization on this target.
The authors collected four rock samples from this property but the assay results are insignificant with only
slightly anomalous gold up to 46 ppb and silver up to 5.5 g/t (Table 6). No reports of the historical underground
workings of the Nortefia area were available to the authors however the existence of these workings suggests
that sufficient mineralization must have been present to warrant these efforts.
Table 6. Rock Samples Collected by the Authors from the Nortena Target
Sample No.
84386
84387
84388
84389
E Nad21z13 Mex.
311311
317360
317366
317378
N Nad21z13 Mex.
2142280
2742209
2742191
2742011
Target
Sample[m]
grab
La Nortella
La Nortena
50
2
La Nortena
La Nortena
100
Au [ppm]
0.001
0.004
0.012
0.046
Ag(ppm]
0.40
5.50
1.60
1.00
As [ppm]
19.7
67.2
157.7
444.2
Cu (ppm]
9.6
76.4
60.3
101.0
Pb(ppm]
74.1
11.7
13.5
286.8
Sb (ppm]
0.7
2.2
2.8
6.1
Zn (ppm]
20
52
9
77
No reports of the historical underground workings of the Nortefia area were available to the authors however
the existence of these workings suggests that sufficient mineralization must have been present to warrant
these efforts.
DRILLING
None of the targets on the Chacala property have been drill tested.
SAMPLING METHOD AND APPROACH
Detector Exploraciones utilized past historic data to focus their prospecting of the various showings. Samples
were located using GPS and sample numbers and sample intervals were marked with paint in the field. Most
of the samples were chip/channel samples collected across the structures.
The Chacala property covers an area of approximately 10 by 10km area, and only four target areas were
sampled by Detector Exploraciones. Almost all of the samples collected by Detector Exploraciones and the
authors were continuous chip samples that intended to test a true width of the target structure. Samples were
collected with a hammer and a chisel not with a rock saw that would allow collecting a more proper channel
sample. In the author's opinion collected samples by Detctor Exploraciones and the authors were
representative of the sampled interval. Indications of samples collected by Detectores Exploraciones were
often well visible confirming continuity of their chip sampling procedure.
The Candelaria, Otatal, and San Juan-EI Oro targets are structurally controlled whereas at the Nortefia target
mineralization is both structurally controlled and possibly of a disseminated nature. Structurally controlled
targets identified on the Chacala property are relatively narrow, usually <1m in width, and only at the Otatal
target the structure could reach up to 8m in width. Possible disseminated nature of the Nortefia target that
could cover area over 0.5 by 0.5 km requires more wide spread sampling possibly on a grid basis. The
28
structurally controlled targets are represented by quartz (Otatal, Norteiia), quartz-tourmaline (Candelaria), fault
zones (San Juan-EI Oro, Norteiia) hosted in an intrusive or volcaniclastic/breccia type hostrock. The higher
grade intervals (e.g. EI Oro, Otatal) often contain visible mineralization (galena, pyrite, en-oxides) but the
intention of the author's sampling was to collect representative samples not high grades.
The Candelaria structure has received a systematic approach to exploration where trenches were excavated
across the structure using a small back hoe rented in Tamazula. In most cases the authors observed that
samples were located where stated however not all samples appear to be true thickness and are not always
described properly. Samples collected at the Candelaria target covered almost 700m strike length of this
target with average less than 100m interval between sampled trenches.
At the Otatal target Detector Exploraciones and the authors sampled two outcrops located approximately 60m
apart from each other and all samples were collected across the structure. At the San Juan and EI Oro
targets Detector Exploraciones and the authors collected samples restricted only to the main mineralized
structures located at the entrance to the underground workings and sampling covered less than 10m ot the
structural trend.
At Norteiia samples collected by Detector Exploraciones and the authors were randomly spaces over
approximately 150 by 150m area. With the potential of disseminated mineralization at this target, future work
should include a more wide spread sampling.
The authors observed the personnel and the techniques used at the Chacala project by Detector
Exploraciones. In general for an early stage exploration project the procedures were adequate to initially test
the various prospects. Some improvements could be made in supervision and training of the samplers as it
was observed that although care was taken to representatively sample vein structures often the interstitial host
rock was not adequately represented.
SAMPLE PREPARATION, ANALYSIS AND SECURITY
Samples collected by Detector Exploraciones were all bagged and tagged in the field where collected and then
stored in a locked house in Chacala prior to shipment to the ALS-Chemex preparation laboratory in
Guadalajara. There was no on-site sample preparation done. The samples were sent in their original form to
the laboratory. In the ALS-Chemex preparation laboratory rock samples were dried, crushed and sieved, and
pulps were shipped to Vancouver. In Canada the samples were analyzed using ME-ICP41 and AA-Au23.
Initially, samples were not reanalysed for overlimits, but after the authors' suggestion, all samples that assayed
Au, Ag above the detection limits were re-submitted for additional re-assaying for overlimits. Detector
Exploraciones did not add internal standards, blanks or duplicates to samples shipped to the ALS-Chemex
laboratory.
29
The ALS-Chemex laboratory is a certified laboratory by Standards Council of Canada Associated Laboratories
(ALS-Chemex ISO 9001:2000 certification).
All nineteen samples collected by the authors during the September 11-15, 2009 visit were kept in their
possession and were personally delivered to the ACME Laboratory located at 852 East Hastings Street in
Vancouver. There was no on-site sample preparation done. In the ACME Laboratory samples were dried, and
then each sample was crushed to >70% minus 10 mesh (2mm), a 250 g split was pulverized to 95% passing
150 mesh. Samples collected by authors were analyzed using 36 element ICP-MS (Group 1DX2 method).
Sample splits of 0.5 g were leached in hot (95 degrees) Aqua Regia. A larger split of 15 g was separated for
gold analysis. Samples that contained assay values above the detection limits for specific elements were
reanalysed for that element.
The authors did not apply internal QAlQC programs for samples shipped to the ACME Laboratory. The
authors only reviewed the assay results of the duplicate, standard and blank samples provided by the ACME
laboratory, and the authors were satisfied with the results. The authors were also reasonably satisfied with the
assay results obtained from the sample intervals re-sampled by the authors which were initially sampled by
Detector Exploraciones (see Data Verification).
The ACME Laboratory is a certified laboratory by Standards Council of Canada Associated Laboratories (150­
9001-2008 certification) and WHO cGMP (Current Good Manufacturing Practice).
For the future work on the Chacala property it is recommended that Parlane would include gold/silver
standards for insertion amongst the samples submitted to the lab. In addition blank samples should be
submitted to check the lab for sample preparation contamination.
DATA VERIFICATION
The sample location data was obtained using handheld GPS by Detector Exploraciones SA de C.V and was
verified in the field by the authors. In some cases greater detail is needed to identify individual samples within
small areas. The authors collected 4 samples to check the accuracy of the Detector work at the Candelaria
trenches, the results of which are tabulated below.
The results show that both arsenic and gold values are somewhat erratic. This could be explained by either
gold nugget effect or irregular mineralization in the veins as well as slightly different sampling methods but in
any case the check sampling has indicated anomalous to economic results in all areas of interest.
30
Table 7. Data Verification Table
Sample No.
IR 001
84369
C02V02
84370
C03V01
84371
IR 012
84372
Target
La Candelaria
La Candelaria
Trench CO2
Trench CO2
Trench C03
Trench C03
Trench C12
Trench C12
Sample Width [m]
1.7
1.7
0.5
0.5
3.0
3.0
0.8
0.8
Au [ppm]
9.650
1.614
0.173
0.078
0.029
0.034
0.015
0.036
Ag [ppm]
76.9
46.4
26.5
23.6
13.6
39.6
4.4
9.6
As [ppm]
>10000
9153.7
2040.0
1381.8
6400.0
6611.9
397.0
28300.0
Cu [ppm]
178
1466
1530
1338
295
231
329
365
Pb [ppm]
305
396
177
109
179
435
36
816
Sb [ppm]
1116.9
13.0
7.3
69.0
476.6
94.7
Zn [ppm]
164
26
122
175
22
18
1965
2666
No QAlQC program is in place for the project and it is recommended that Parlane purchase some gold/silver
standards for insertion amongst the samples submitted to the lab. In addition blank samples should be
submitted to check the lab for sample preparation contamination.
ADJACENT PROPERTIES
The most significant is the El Cobre/EI Porvenir mines located in the surrounded block of claims not included
in the Zeppy group. According to an anonymous published government project proposal the El Cobre/EI
Porvenir prospect has similar grade to the San Juan vein. There are other showings in the area are EI Cobre
Viejo, Santa Rita, Agua Zarca, La Divisa, La Toronja, La Cabrer'ia, La Reyna and EI Mantito.
The Nuestra Senora deposit near the town of Cosala is rouqhly 60 km south of the project and Scorpio Mining
Corp. is advancing the mine to production. The Nuestra Senora deposit is a silver, zinc, lead, and copper
carbonate replacement style mineralization.
MINERAL PROCESSING AND METALLURGICAL TESTING
The has been no reports of mineral processing presented to the authors and there is no milling equipment
present on the property however there is evidence of crude grinding and gravity concentration techniques
used in the streams.
MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES
There are no compliant resource estimates for any of the Chacala showings.
OTHER RELEVANT DATA AND INFORMATION
The authors are not aware of any other data relevant to this report.
INTERPRETATION AND CONCLUSIONS
The Chacala property is large in area with numerous historic showings. The isolated location appears to have
resulted in little systematic exploration having been done on it however, since 1991 the Chacala property has
been visited by numerous groups including Luismin, Perioles, Kobex, Saddlerock, Hochschild, Kinross, Minera
Mexicana Sombrerete and most recently Detector Exploraciones. The authors have obtained anomalous to
economic sample results from all of the known showings all of which warrant some follow up exploration.
31
Trenching of the Candelaria vein has resulted in delineation of mostly narrow quartz-tourmaline veins along a
700 meter strike length. Although Detector Exploraciones has reported two narrow samples with over 12 and
8 grams per tonne gold, and 43 and 520 grams per tonne silver from 0.3 and 0.1 meter veins, the best result
that the authors received was 1.6 glt Au and 46 glt Ag over 1.7 meters. Resampling done by the authors of
the same sample interval at the entrance to the Candelaria mine return significant difference in gold content
9.65 glt (sample collected by Detector Exploraciones) versus 1.61 glt (sample collected by the authors). The
author's sample was collected over the same sample width as the Detector Exploraciones sample and the
difference in gold content can be attributed to the gold nugget effect or irregular mineralization in the veins.
Further sampling is warranted to determine the continuity of the grade in these locations.
The San Juan and EI Oro structures lie in close proximity to one another and both structures have returned
economic gold and silver values. The best results obtained by the authors form San Juan were 68.95 glt Au,
140 glt Ag and 13.9 glt Au, 59 glt Ag, both samples were collected across 0.8 meter wide structure. These
assay results are very much similar to the assay results obtained by Detector Exploraciones of 33.9 glt Au and
113 glt Ag over the same sample width. Also, the assay results obtained from samples collected from the EI
Oro structure by the authors and Detector Exploraciones are similar. The best results obtained by the authors
are 1.33 glt Au, 557 glt Ag over 0.8 sample width and by Detector Exploraciones are 4.64 glt Au, 278 glt Ag.
The authors did not have sufficient time on the property to discern if these two occurrences possibly connect.
In either event mineralogically these structures seem related but the trace of the veins was not followed up by
the authors. The EI Oro - San Juan vein trace is covered by thin overburden and additional trenching is
warranted to follow it up, this target like Candelaria has good access.
The Otatal structure can be easily seen on surface for approximately 60m, but the width and strength of this
silicious structure lead the authors to postulate that the structure continues much further and possibly has a
regional extent. The structure is strongly siliceous and contains visible pyrite and copper mineralization. The
Otatal showlnq is located near the top of a steep mountain side, the extensions of this structure should be
located down the hill closer to the road access. Rock chip sample assay results obtained by the authors and
Detector Exploraciones are reasonably similar and indicate presence of gold ranging between between 0.23 to
4.26 glt and silver raging between 29.2 to 131 glt over sample widths 0.7 to 5.0m. Presently sampled
structural interval only evaluated a small portion of a probably much longer structural trend. Also, a strongly
siliceous nature of the vein could require a use of the rock saw to properly collect samples.
At the Norteiia target the most interesting result come from the composite grab sample collected over 50m by
the authors. Sample assayed 5.5g/t Ag and 4ppb Au indicating possibility of existence of the disseminated
mineralization. The Norteiia target has not been adequately tested or understood by the authors or Detector
Exploraciones to form any conclusions, so further prospecting should be done to better define this area.
32
Quality assurance and control of sampling procedures, data management and sample analysis were all
somewhat deficient in the work on the property conducted by Detector Exploraciones.
In summary, based on the following criteria, the known mineralization on the Chacala property may be the
expression of several hydrothermal systems (pulses) producing a series of closely-spaced, sub-parallel
mineralized structures related to a regional northwest trending fault zone as well as northeastern cross cutting
structural zones.
Important geological aspects include:
•
the existing silver-gold (copper-Iead-zinc-arsenic) mineralization identified and sampled by Detector
Exploraciones and the authors;
•
the length of the vein systems and the existence of several NE and NW trending vein systems
(Candelaria, EI Oro, San Juan, Otatal, Norteiia), breccia system (EI Oro, Norteiia), and possibly
disseminated mineralization (Norteiia);
•
the presence of northeast striking mineralized faults crossing the main northwestern regional trend
(e.g. Candelaria)
Further work is recommended.
33
RECOMMENDATIONS
A two phase program is recommended to quickly evaluate the potential of the Chacala property.
A Phase I exploration program is recommended to explore all targets on the Chacala property, specifically the
Candelaria, San Jose - EI Oro, and Otatal vein systems. This program will include compilation of previous
exploration data and the preparation of orthophoto and digital topographic maps, geological mapping,
geochemical and rock sampling, trenching, road repairs and geophysical surveys with an estimated budget of
$US of 260,000. Phase 1 work at the Candelaria vein system should focus on the better grade samples and
increase the trench density in the best areas to determine if ore shoots may be present. The San Jose and EI
Oro structural trend warrants more detailed chip sampling at systematic spacing within the workings and also
between workings along strike, brushing out the San Juan road may provide drill access for parts of this
target. Geochemistry will help follow the Otatal vein as well as the others but systematic sampling along the
vein where it is known will determine the worth of this showing. The Phase I exploration program should
assess the mineral potential of the Norteria target while locating drill targets for Phase 2.
Most of the mineralized structures on the Chacala property are underexplored. In valley bottoms they are
covered by overburden or alluvia, and in areas elevated they were never properly explored through trenching
or modern geochemical and geophysical exploration techniques.
The recommended geophysical program is a combined magnetic, IP and resistivity surveys (possibly NSAMT
survey) that should cover all target areas. The geophysical lines should be run at a normal angle to the trace
of the structural targets, and the depth penetration should be approximately 300m in order to obtain data from
the surface weathering and oxidation zones to fresh unweathered rock. The line separations, station
spacings, dipole separation, and type of array should be determined in consultation with a licensed
geophysicist.
Diamond drill targets should include the strike, dip, and depth extensions of the exposed veins or structural
trends. Care should be taken to try to understand potential ore shoots within the vein structures prior to drilling.
Chargeability anomalies associated with known veins, structural or disseminated targets or their inferred
extensions should be considered high priority drill targets. Tabular or linear zones of chargeability with NE or
NW strikes in covered areas should also be considered for drill testing.
All subsequent programs conducted on the Chacala property need QAlQC procedures in place which will
include the insertion of standards and blanks into the sample stream in addition to 3rd party duplicates.
Costs for Phase I of exploration are estimated at US$260,000.
34
Contingent on the successful completion of Phase I, a Phase II exploration program consisting primarily of
2,000 meter of diamond drilling target areas defined in Phase I. The Phase II program as proposed will include
follow up geology, geochemistry and sampling in addition to the drilling and is estimated to cost US$820,000.
Dated at Vancouver, Canada, this 23rd day of December, 2009.
"lslDavid Gunning"
David Gunning, P. Eng.
"Is/Piotr Lutvnski"
Piotr Lutynski, P. Eng.
35
COST ESTIMATES
Phase I
Cost (US$)
Orthophoto preparation
$10,000
Senior Geologist, 20 days @ $700/day
$14,000
Junior Geologist, 40 days@ $200/day
$8,000
Samplers and helpers, 80 mandays @ $30/day
$2,400
Vehicles 2 months @ $5,000/month including fuel
$10,000
Assays, 1000 samples @ $40/sample
$40,000
Support, office, flight Costs
$20,000
Induced Polarization, Resistivity and Magnetometer Surveys
$85,000
Trenching
$20,000
Road building
$20,000
Report
$10,000
Subtotal
$239,400
Contingency @ 8.6%
$20,600
TOTAL:
$260,000
Phase II
Cost (US$)
Senior Geologist, 50 days @ $700/day
$35,000
Junior Geologist, 100 days@ $200/day
$20,000
Samplers and helpers, 300 mandays @ $30/day
$9,000
Vehicles 4 months @ $5,000/month including fuel
$20,000
Assays, 2000 samples @ $40/sample
$80,000
Support, office, flight Costs
$40,000
Diamond Drilling 2,000 meters @ $200/meter
$400,000
Road building
$50,000
Report
$30,000
Subtotal
$684,000
Contingency@ 20%
$136,000
TOTAL:
$820,000
36
REFERENCES
BUCHANAN, L.J.
1981: Precious Metal Deposits Associated with Volcanic Environments in the Southwest in "Relations of
Tectonics to Ore Deposits in the Southern Cordillera" by W. Dickenson and W. Payne, Volume XIX, pp. 237­
262.
CARREON N.
2008: Proyecto Districto Chacala. Chacala, Dgo. Perioles
CAVEY, G., and GUNNING, D.R
2003: Summary Report on the Topia Project, Municipality of Topia, Durango State, Mexico for Great Panther
Resources Limited, OreQuest Consultants Ltd., Nov 20,2003.
CAVEY,G.R
1999: Summary Report on the Nieves Property, Zacatecas, Mexico for Quaterra Resources Inc. OreQuest
Consultants Ltd., Jan 6, 1999.
CLARK, K.F.
1986: Summary of the lithology, tectonic framework and metallic deposits in Sierra Madre Occidental, North­
western Mexico.
CLARK, K.F. AND MELENDEZ, LUIS R
1991: Gold and Silver Deposits in Mexico
CONSEJO DE RECURSOS MINERALES (CRM)
1993: Monografia Geologico - Minera del Estado de Durango, Report M-10e.
DE CSERNA, Z.
1989: An outline of the geology of Mexico, in Bally, A.W., and Palmer, A.R eds. The Geology of North
America - An overview: Boulder, Colorado, Geological Society of America, The Geology of North America, vA
ERICKSEN, G.E. AND CUNNINGHAM, C.G.
1993: Epithermal Precious-Metal Deposits Hosted by the Neogene and Quaternary Volcanic Complex in the
Central Andes. GAC Special Paper 40, Mineral Deposit Modelling, pp 419-431.
KING L.D.
1997: Untitled partial report on Otatal. For Kobex
LOUCKS, ROBERT R, LEMISH, JOHN AND DAMON, PAUL E.
1988: Polymetallic Epithermal Fissure Vein Mineralization, Topia, Durango, Mexico: Part I. District Geology,
Geochronology, Hydrothermal Alteration, and Vein Mineralogy. Bulletin of Economic Geology, vol. 83 pp.
1499-1528.
Loucks, Robert R and Petersen, Ulrich
1988: Polymetallic Epithermal Fissure Vein Mineralization, Topia, Durango, Mexico: Part II. Silver Mineral
Chemistry and High Resolution Patterns of Chemical Zoning in Veins. Bulletin of Economic Geology vol. 83
pp.1529-1559.
LUNA CASTILLO V. et al
2009: Informe de La Primera Etapa de Los Trabajos Realizados en el Proyecto "Chacala., Mpio. Tamazula,
estado de Durango. Detector Exploraciones SA de C.V.
TORRES SANCHEZ JAIME
2007: Proyecto Chacala. Tamazula, Durango. Minera Mexicana Sombrerete SA de C.V.
TORRES SANCHEZ JAIME
2009: Proyecto La Candelaria. Tamazula Durango, Mexico. Minera Mexicana Sombrerete SA de C.V.
TORRES SANCHEZ JAIME
(Not dated): Informe Proyecto Otatal
(No author)
2008: Reporte de Actividades Geologicoas de la Estructura El Otatal, Chacala-Tamazula, Dgo. Mexico.
(No author)
2007: Partial report addressing airborn magnetic survey conducted by the Mexican government and work
done by Luismin in the Chacala district. Minera Mexicana Sombrerete SA de C.V.
New ReleaseslWebsites/Corporate filings
2009: November 5, 2009, PARLANE RESOURCE CORP.
2009: Silver Wheaton - Record Silver Reserve and Resource Levels Achieved at Luismin
2003: Admiral Bar Resources, Alamos Gold, Francisco Gold, Gammon Lake Resources, Minefinders
ORKO SILVER CORPORATION.
2003: News Release Dec 1, 2003.
37
2004: News Release June 21, 2004.
Medina Araujo, G. Tarcilo
1995: Informe Geologico de Resultados de la Exploracion Con Obra Directa y Barrenacion de Diamante
Realizados en los Anos de 1981-1982 en el Proyecto "La Preciosa", Panuco De Coronado, Durango. Internal
Report for Industrias LUISMIN, SA de C.v.
LUTYNSKI, P.
2003: Mineral Exploration in The Uruachi Area, Sierra Madre Occidental, Chihuahua, Mexico.
LUTYNSKI, P.
2003: Mineral Potential of Las Bolas - Los Hilos Property in the Uruachi Area. Sierra Madre Occidental,
Chihuahua, Mexico.
LUTYNSKI, P.
2007: Summary of exploration work done by Golden Goliath and proposed Phase I exploration program on
the Corona property in Sierra Madre Occidental. State of Chihuahua, Mexico.
LUTYNSKI, P.
2008: EI Oro project. Phase I Mineral Exploration in EI Oro - Talpujahua area, State of Mexico and
Michoacan, Mexico.
1994: A Canadian Perspective of Exploring in Mexico, from a presentation given by the Mineral Deposit
Research Unit (MDRU) on "The Metallogeny of Mexico", April 18 -19,1994.
SIVERTZ, G., GUNNING, D. and CAVEY, G.R
2004: Summary Report on the La Parrilla Mine Project, Durango State, Mexico for
First Majestic Resource Corp. OreQuest Consultants Ltd.
SEDLOCK, R L., ORTEGA-GUTIERREZ, F., AND SPEED, RC.
1993: Tectonostratigraphic Terranes and Tectonic Evolution of Mexico, GSA Paper 278.
SPRING, Vand MACFARLANE G.R
2002: A Technical Review Of Tayoltita, Santa Rita, San Antonio, La Guitarra and San Martin Operating
Silver and Gold Mines in Mexico for Wheaton River Minerals Ltd., Watts, Griffis and McOuat Limited, Original
April 25, 2002 Revised June 5, 2002 Amended August 12, 2002
WEBSITES
2009: Goldcorp, Wheaton River Minerals Ltd., Luismin SA de C.V., Hecla Mining Company, Avino Silver and
Gold Mines Ltd., Scorpio Mining Corp. all visited September-October, 2009.
38
CERTIFICATE OF QUALIFICATIONS
I, Piotr Lutynski, of 5285 Sherbrooke Street, Vancouver, BC, hereby certify:
1. I hold a M.Sc. degree in Geological Science granted by the University of Mining and Metallurgy in Krakow,
Poland in 1980.
2. I am presently self-employed as a consulting geologist.
3. I have been a registered member in good standing of the Association of Professional Engineers and
Geoscientists of British Columbia since 1992.
4. I am a professional geologist and have practised my profession on a full time basis in Canada, Mexico,
Jamaica, Honduras, Nicaragua, Peru, Bolivia, Chile, Argentina, Sweden, and Poland since 1978.
5. I have read the definitions of "Qualified Person" set out in NI 43-101 and certify that by reason of my
education, affiliation with a professional association (as defined in NI 43-101) and past relevant work
experience, I fulfil the requirements to be a "Qualified Person" for the purposes of NI 43-101.
6. I am responsible for preparation of all sections of this report utilizing data summarized in the References
section of this report.
7. I visited the Chacala property from September 11th to 15th, 2009 and I have had no prior involvement with
the Chacala property that is the subject of the technical report.
8. This certificate applies to the report titled "Technical Report on the Chacala Property, Durango, Mexico"
dated December 23,2009.
9. I have not had and do not expect to have any direct involvement with Parlane Resource Corp. nor with any
of Parlane's subsidiary companies located in Canada or elsewhere in the world.
10. To the best of my knowledge, information and belief, this technical report contains all the scientific and
technical information that is required to be disclosed to make this technical report not misleading.
11. I am independent of Parlane Resource Corp and any of their subsidiary companies applying all the tests in
Section 1.4 of NI 43-101.
12. I have read N143-101 and N143-101F1 and the technical report has been prepared in compliance with
that instrument and form.
13. I consent to the use of this report for the purpose of complying with the requirements set out in N143-101
to support the listing requirements of Parlane Resource Corp including the acquisition of the Chacala
project and to be submitted to SEDAR for electronic filing.
"/s/Piotr Lutvnski"
Piotr Lutynski, P. Eng.
DATED at Vancouver, Canada, this 23rdday of December 2009.
39
CERTIFICATE OF QUALIFICATIONS
I, David R. Gunning, of 20356 42A Avenue, Langley British Columbia, hereby certify:
1. I am a graduate of the University of British Columbia (1983) and hold a BASc. degree in Mining and
Mineral Process Engineering (mining option).
2. I am presently self-employed as a consulting mining engineer.
3. I have been employed in my profession by various mining companies since graduation, and self employed
as a consultant since 1996.
4. I am a member of the Association of Professional Engineers and Geoscientists of British Columbia, and
have been registered since 1989.
5. I have read the definitions of "Qualified Person" set out in NI 43-101 and certify that by reason of my
education, affiliation with a professional association (as defined in NI 43-101) and past relevant work
experience, I fulfil the requirements to be a "Qualified Person" for the purposes of NI 43-101.
6. I am responsible for preparation of all sections of this report utilizing data summarized in the References
section of this report.
7. I visited the Chacala property between September 11th-15th, 2009 and I have had no prior involvement
with the Chacala property that is the subject of the technical report.
8. This certificate applies to the report titled" Technical Report on the Chacala Property, Durango, Mexico"
dated December 23,2009.
I have not had and do not expect to have any direct involvement with the Parlane Resource Corp. nor with any
of Parlane's subsidiary companies located in Canada or elsewhere in the world.To the best of my knowledge,
information and belief, this technical report contains all the scientific and technical information that is required
to be disclosed to make this technical report not misleading.
I am independent of Parlane Resource Corp. applying all the tests in Section 1.4 of NI43-101.
I have read NI 43-101 and NI 43-101 F1 and the technical report has been prepared in compliance with that
instrument and form.
I consent to the use of this report for the purpose of complying with the requirements set out in NI 43-101 to
support the listing requirements of Parlane Resource Corp. including the acquisition of the Chacala property
and to be submitted to SEDAR for electronic filing.
"/s/David R. Gunning"
David R. Gunning P.Eng.
DATED at Vancouver, British Columbia, this 23rd day of December, 2009.
40
APPENDIX 1
MINERAL TITLE OPINION
RB
Abogados
Mining Concessions
Tille Report
Mexico, City, November 18, 2009
Parlane Resource Corp.
Attention: Mr, Robert Eadie
Suite 750, 580 Hornby street
Box #113
Vancouver, British Columbia
Canada V6C 3B6
MINING CONCESSIONS
LEGAL TITLE REPORT
This report was prepared according to the information obtained from the Public Registry of
Mines (uPRMn) which is an agency from the Mexican Mining Bureau ("MMS n); information
provided by the officers of said MMB and information provided by Mr. Garcia. This Title
Opinion is provided at the request of Parlane Resource Corp and may be submitted to the
relevant regulatory authorities. The results of the due diligence conducted by this Firm are
the following:
LIST OF THE MINING CONCESSIONS
Chacala Prolect
Candelaria
Manuel Beltran
Meza (50%) and
Eduardo Alfonso
Navarro Contreras
300.0000
227.598
July 18,
2006 to
July 17.
2056.
100.0000
193.062
December Tamazula,
19, 1991 to Durango
December
900.0000
194,367
December Tamazula,
30, 1991 to Durango
December
Tamazula,
Durango
50%
Mina del Otatal
Ampliaci6n del
Otatal
Melisa
Exploraciones
Mineras del
Tambor, S.A. de
c.v. uEMT"
EMT
Manuel Beltran
18,2041.
240.0000
232.192
29,2041.
Jul 4.
Tamazula,
1
RB
Abogados
MiningConcessions
TiUe Report
Meza
2008 to
July 3,
2058.
June 26,
2007 to
June 25,
2057.
July 4,
2008 to
July 3,
2058.
September
26,2008to
September
25,2058.
Durango
Valeria
Manuel Beltran
Meza
100.0000
229,869
San Marcos
Manuel Beltran
Meza
237.8263
232,196
Los Chapotes
Manuel Beltran
Meza (50%) and
Eduardo Alfonso
Navarro Contreras
(50%)
Manuel Beltran
Meza (50%) and
Eduardo Alfonso
Navarro Contreras
(50%)
Eduardo Alfonso
Navarro Contreras
885.5649
232,603
43.9092
232,604
September Tamazula,
26,2008to Durango
September
25,2058.
69.2613
232,902
Los Chacalotes Jose Agustin
Garcia Garcia
7,830.4392
233,059
Los Chacalotes Jose Agustin
Frace. 2
Garcia Garcia
435.0721
233,060
Los Chacalotes Jose Agustin
Garcia Garcia
Frace. 3
142.9137
233,061
L1uvia de Oro
222,624
222,624
November
4,2008to
November
3,2058.
December
5,2008to
December
4,2058.
December
5,2008to
December
4,2058.
December
5,2008to
December
4,2058.
July 30,
2004 to
July 29,
2054
Los Chapotes
Frace. 2
Carolina
Manuel Coronel
Beltran
Tamazula,
Durango
Tamazula,
Durango
Tamazula,
Durango
Tamazula,
Durango
Tamazula,
Durango
Tamazula,
Durango
Tamazula,
Durango
Cosala,
Sinaloa
2
RB
Abogados
MiningConcessions
Title Report
RELEVANT INFORMATION OF THE CONCESSION TITLES
Title Number:
227,598
Original Holder:
Manuel Beltran Meza
Eduardo Alfonso Navarro Contreras
Manuel Beltran Meza
Eduardo Alfonso Navarro Contreras
Actual Holder:
50%
50%
50%
50%
Name of the lot:
·See note 8.
Candelaria
Surface (hectares):
300.0000
Location of the lot (municipality):
Tamazula, Durango
Term of existence:
July 18, 2006 to July 172056
Mining Public Registry data:
Book - Mining Concessions
Volume-358
Page -69
Number-138
Mining taxes:
Payments from years 2006 to. 2009 are
reflected as paid in full at the MMB, except
second semester of 2007; first and second
semester of 2008 and first and second
semester of 2009; the amounts owed are
the following:
Second semester 2007
First semester 2008
Second semester 2008
First semester 2009
Second semester 2009
MEX$
MEX$
MEX$
MEX$
MEX$
1,941.00
1,815.00
1,680.00
2,500.00
2,315.00
Mining works-evidencing reports:
·See note 1.
Liens or Agreements:
There are no liens or Agreements reflected
at the PRM records.
·See note 8.
3
RB
Abogados
Mining Concessions
Title Report
Title Number:
193,062
Original Holder:
Manuel Beltran Meza
Actual Holder:
EMT
Name of the lot:
·See note 3.
Mina del Otatal
Surface (hectares):
100.0000
Location of the lot (municipality):
Tarnazula, Durango
Term of existence:
December 19, 1991 to December 18 2041
Mining Public Registry data:
Book - Mining Concessions
Volume-264
Page -146
Number-582
Mining taxes:
Payments from years 1998 to 2009 are
reflected as paid in full at the MMB. except
first and second semester of 2007; first
semester of 2008 and first and second
semester of 2009; the amounts owed are
the following:
First semester 2007 . MEX$
Second semester 2007 MEX$
MEX$
First semester 2008
MEX$
First semester 2009
Second semester 2009 MEX$
15,431.00
14,331.00
4.00
12,195.00
11,285.00
Mining works evidencing reports:
·See note 1.
Liens or Agreements:
Assignment Agreement entered into, by and
between Manuel Beltran Meza and EMT
registered under:
Book: 129
Volume: 4
Number: 207
Page: 171
Dated: November 4, 1996
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Mining C
Tille
Rep~~ceSSions
I·See note 3.
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Mining Concessions
TIlle Report
Title Number:
194,367
Original Holder:
Manuel Beltran Meza
Actual Holder:
EMT
Name of the lot:
·See note 3.
Ampliaci6n del Otatal
Surface (hectares):
900.0000
Location of the lot (municipality):
Tamazula, Durango
Term of existence:
December 3D, 1991 to December 292041
Mining Public Registry data:
Book - Mining Concessions
Volume-267
Page-113
Number-447
Mining taxes:
Payments from years 1998 to 2009 are
reflected as paid in full at the MMB, except
first and second semester of 2007; first
semester of 2008 and first and second
semester of 2009; the amounts owed are
the following:
First semester 2007 MEX$
Second semester 2007 MEX$
MEX$
First semester 2008
MEX$
First semester 2009
Second semester 2009 MEX$
137,089.00
129,423.00
10,750.00
109,741.00
101,548.00
Mining works evidencing reports:
*See note 1.
Liens or Agreements:
Assignment Agreement entered into, by and
between Manuel Beltran Meza and EMT
registered under:
Book: Mining Concessions
Volume: 264
Number: 582
Page: 146
Dated: November 4, 1996
·See note 3.
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MiningConcessions
Tille Report
Title Number:
232,192
Original Holder:
Manuel Beltran Meza
Actual Holder:
Manuel Beltran Meza
Name of the lot:
*See note 7.
Melisa
Surface (hectares):
240.0000
Location of the lot (municipality):
Tamazula, Durango
Term of existence:
July 4,2008 to July 3 2058
Mining Public Registry data:
Book - Mining Concessions
Volume-371
Page -26
Number-52
Mining taxes:
Second semester of 2008; and first and
second semester of 2009 are not reflected
as paid in full at the MMB; the amounts
owed are the following:
Second semester 2008 MEX$
MEX$
First semester 2009
Second semester 2009 MEX$
1,323.00
1,339.00
1,239.00
Mining works evidencing reports:
*See note 1.
Liens or Agreements:
There are no liens or Agreements reflected
at the PRM records.
*See note 7.
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Title Report
Title Number:
229,869
Original Holder:
Manuel Beltran Meza
Actual Holder:
Manuel Beltran Meza
Name of the lot:
*See note 7.
Valeria
Surface (hectares):
100.0000
Location of the lot (municipality):
Tamazula, Durango
Term of existence:
June 26, 2007 to June 25 2057
Mining Public Registry data:
Book - Mining Concessions
Volume-364
Page -125
Number-249
Mining taxes:
Second semester of 2008; and first and
second semester of 2009 are not reflected
as paid in full at the MMB; the amounts
owed are the following:
Second semester 2008 MEX$
MEX$
First semester 2009
Second semester 2009 MEX$
561.00
885.00
774.00
Mining works eVidencing reports:
*See note 1.
Liens or Agreements:
There are no liens or Agreements reflected
at the PRM records.
*See note 7.
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Title Report
Title Number:
232,196
Original Holder:
Manuel Beltran Meza
Actual Holder:
Manuel Beltran Meza
Name of the lot:
·See note 9.
San Marcos
Surface (hectares):
237.8263
Location of the lot (municipality):
Tamazula, Durango
Tenn of existence:
JUly 4, 2008 to JUly 3 2058
Mining Public Registry data:
Book - Mining Concessions
Volume -371
Page -28
Number-56
Mining taxes:
Second semester of 2008; and first and
second semester of 2009 are not reflected
as paid in full at the MMB; the amounts
owed are the following:
Second semester 2008 MEX$
MEX$
First semester 2009
Second semester 2009 MEX$
1,311.00
1,327.00
1.228.00
Mining works evidencing reports:
·See note 1.
Liens or Agreements:
There are no liens or Agreements reflected
at the PRM records.
"See note 9.
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MiningConcessions
Title Report
Title Number:
232,603
Original Holder:
Manuel Beltran Meza
Eduardo Alfonso Navarro Contreras
Manuel Beltran Meza
Eduardo Alfonso Navarro Contreras
Actual Holder:
50%
50%
50%
50%
Name of the lot:
#oSee note 8.
Los Chapotes
Surface (hectares):
885.5649
Location of the lot (m unicipality):
Tamazula, Durango
Term of existence:
September 26, 2008 to September 25 2058
Mining Public Registry data:
Book - Mining Concessions
Volume-372
Page-52
Number-103
Mining taxes:
Second semester of 2008; and first and
second semester of 2009 are not reflected
as paid in full at the MMB; the amounts
owed are the following:
Second semester 2008 MEX$
MEX$
First semester 2009
Second semester 2009 MEX$
2,534.00
4,933.00
4,567.00
Mining works evidencing reports:
;oSee note 1.
Liens or Agreements:
There are no liens or Agreements reflected
at the PRM records.
*See note 8.
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Mining Concessions
Tille Report
Title Number:
232,604
Original Holder:
Manuel Beltran Meza
Eduardo Alfonso Navarro Contreras
Manuel Beltran Meza
Eduardo Alfonso Navarro Contreras
Actual Holder:
50°A.
50%
50%
50%
Name of the lot:
·See note 8.
Los Chapotes Frace. 2
Surface (hectares):
43,9092
Location of the lot (municipality):
Tamazula, Durango
Term of existence:
September 26, 2008 to September 25 2058
Mining Public Registry data:
Book - Mining Concessions
Volume-372
Page -52
Number-104
Mining taxes:
Second semester of 2008; and first and
second semester of 2009 are not reflected
as paid in full at the MMB; the amounts
owed are the following:
Second semester 2008 MEX$
MEX$
First semester 2009
Second semester 2009 MEX$
128.00
247.00
229.00
Mining works evidencing reports:
'*See note 1.
Liens or Agreements:
There are no liens or Agreements reflected
at the PRM records.
·See note 8.
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Mining Concessions
Title Report
Title Number:
232,902
Original Holder:
Eduardo Alfonso Navarro Contreras
Actual Holder:
Eduardo Alfonso Navarro Contreras
Name of the lot:
·See note 6.
Carolina
Surface (hectares):
69.2613
Location of the lot (municipality):
Tamazula, Durango
Term of existence:
November 4, 2008 to November 3 2058
Mining Public Registry data:
Book - Mining Concessions
Volume-373
Page -21
Number-42
Mining taxes:
Second semester of 2008; and first and
second semester of 2009 are not reflected
as paid in full at the MMB; the amounts
owed are the following:
Second semester 2008 MEX$
MEX$
First semester 2009
Second semester 2009 MEX$
117.00
389.00
360.00
Mining works eVidencing reports:
·See note 1.
Liens or Agreements:
There are no liens or Agreements reflected
at the PRM records.
·See note 6.
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Title Report
Title Number:
233,059
Original Holder:
Jose Agustin Garcia Garcia
Actual Holder:
Jose Agustin Garcia Garcia
Name of the lot:
·See note 5.
Los Chacalotes
Surface (hectares):
7,830.4392
Location of the lot (municipality):
Tamazula, Durango
Term of existence:
December 5, 2008 to December 4 2058
Mining Public Registry data:
Book - Mining Concessions
Volume-373
Page-100
Number-199
Mining taxes:
Second semester of 2008; and first and
second semester of 2009 are not reflected
as paid in full at the MMB; the amounts
owed are the following:
Second semester 2008 MEX$
MEX$
First semester 2009
Second semester 2009 MEX$
5,896.00
43,593.00
40,340.00
Mining works evidencing reports:
·See note 1.
Liens or Agreements:
There are no liens or Agreements reflected
at the PRM records.
·See note 5.
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MiningConcessions
Title Report
Title Number:
233,060
Original Holder:
Jose Agustin Garcia Garcia
Actual Holder:
Jose Agustin Garcia Garcia
Name of the lot:
*See note 5.
Los Chacalotes Frace. 2
Surface (hectares):
435.0721
Location of the lot (municipality):
Tamazula, Durango
Term of existence:
December 5, 2008 to December 4 2058
Mining Public Registry data:
Book - Mining Concessions
Volume-373
Page -100
Number-200
Mining taxes:
Second semester of 2008; and first and
second semester of 2009 are not reflected
as paid in full at the MMB; the amounts
owed are the following:
Second semester 2008 MEX$
MEX$
First semester 2009
Second semester 2009 MEX$
330.00
2,425.00
2,244.00
Mining works evidencing reports:
*See note 1.
liens or Agreements:
There are no liens or Agreements reflected
at the PRM records.
*See note 5.
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Mining Concessions
Tille Report
Title Number:
233.061
Original Holder:
Jose Agustin Garcia Garcia
Actual Holder:
Jose Agustin Garcia Garcia
Name of the lot:
·See note 5.
Los Chacalotes Frace. 3
Surface (hectares):
142.9137
location of the lot (municipality):
Tamazula, Durango
Term of existence:
December 5, 2008 to December 4 2058
Mining Public Registry data:
Book - Mining Concessions
VoJume-373
Page -101
Number-201
Mining taxes:
Second semester of 2008; and first and
second semester of 2009 are not reflected
as paid in full at the MMB; the amounts
owed are the following:
Second semester 2008 MEX$
First semester 2009 MEX$
Second semester 2009 MEX$
111.00
799.00
739.00
Mining works evidencing reports:
·See note 1.
liens or Agreements:
There are no liens or Agreements reflected
at the PRM records.
·See note 5.
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Mining Concessions
ntle Report
Title Number:
222,624
Original Holder:
Manuel Coronel Beltran
Actual Holder:
Manuel Coronel Beltran
Name of the lot:
*See note 4.
L1uvia de Oro
Surface (hectares):
168.4084
Location of the lot (municipality):
Cosala, Sinaloa
Term of existence:
July 4, 2004 to July 3 2054
Mining Public Registry data:
Book - Mining Concessions
Volume-344
Page -102
Number-204
Mining taxes:
First and second semester of 2006; first and
second semester of 2007; first and second
semester of 2008; and first and second
semester of 2009 are not reflected as paid
in full at the MMB; the amounts owed are
the following:
First semester 2006
MEX$
Second semester 2006 MEX$
First semester 2007
MEX$
Second semester 2007 MEX$
MEX$
First semester 2008
Second semester 2008 MEX$
MEX$
First semester 2009
Second semester 2009 MEX$
1,261.00
1,207.00
1,734.00
1,638.00
1,526.00
1,412.00
2,904.00
2,688.00
Mining works evidencing reports:
*See note 1.
Liens or Agreements:
There are no liens or Agreements reflected
at the PRM records.
·See note 4.
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Title Report
NOTES
Note 1. We are not aware if the Mining works evidencing reports were filled properly, to
check the foregoing we recommend requesting from the MMB the issuance of Mining
Obligations Compliance Certificates regarding each of the mining concession.
Note 2. At the time we conducted the due diligence requested the information was not
available at the Mines Bureau data files.
Note 3. We received from Mr. Jose Agustin Garcia Garcia an Assignment Agreement
executed between EMT and Minera Zeppy. S.A. de C.V. ("ZEPPY") by which EMT
assigned to ZEPPY this mining concession. This Agreement has not been registered
before the PRM, however, Mr. Garcia informed us that as soon as this Agreement have
been submitted before the PRM requesting its registering, he will provide us with the
relevant application evidencing the foregoing.
Note 4. We received from Mr. Jose Agustin Garcia Garcia an Assignment Agreement
executed between Mr. Manuel Coronel Beltran and Mr. Garcia by which EMT assigned to
Mr. Garcia this mining concession. This Agreement has not been registered before the
PRM, however. Mr. Garcia informed us that as soon as this Agreement have been
submitted before the PRM requesting its registering, he will provide us with the relevant
application evidencing the foregoing.
Note 5. We received from Mr. Jose Agustin Garcia Garcia an Assignment Agreement
executed between Mr. Garcia and ZEPPY by which Mr. Garcia assigned to ZEPPY this
mining concession. This Agreement has not been registered before the PRM, however,
Mr. Garcia informed us that as soon as this Agreement have been submitted before the
PRM requesting its registering, he will provide us with the relevant application evidencing
the foregoing.
Note 6. We received from Mr. Jose Agustin Garcia Garcia an Assignment Agreement
executed between Mr. Eduardo Alfonso Navarro Contreras and ZEPPY by which Mr.
Navarro assigned to ZEPPY this mining concession. This Agreement has not been
registered before the PRM, however, Mr. Garcia informed us that as soon as this
Agreement have been submitted before the PRM requesting its registering. he will provide
us with the relevant application evidencing the foregoing.
Note 7. We received from Mr. Jose Agustin Garcia Garcia an Assignment Agreement
executed between Mr. Manuel Beltran Meza and ZEPPY by which Mr. Beltran assigned to
~ZEPPY this mining concession. This Agreement has not been registered before the PRM,
(V however. Mr. Garcia informed us that as soon as this Agreement have been submitted
before the PRM requesting its registering, he will provide us with the relevant application
evidencing the foregoing.
Note 8. We received from Mr. Jose Agustin Garcia Garcia an Assignment Agreement
executed between Mr. Manuel Beltran Meza and Mr. Eduardo Alfonso Navarro Contreras
and ZEPPY by which Mr. Beltran and Mr. Navarro assigned to ZEPPY this mining
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MiningConcessions
Title Report
concession. This Agreement has not been registered before the PRM. however, Mr.
Garcia informed us that as soon as this Agreement have been submitted before the PRM
requesting its registering, he will provide us with the relevant application evidencing the
foregoing.
Note 9. We received from Mr. Jose Agustin Garcia Garcia an Assignment Agreement
executed between Mr. Manuel Beltran Meza and ZEPPY by which Mr. Beltran assigned to
ZEPPY this mining concession. This Agreement has not been registered before the PRM.
however, Mr. Garcia informed us that as soon as this Agreement have been submitted
before the PRM requesting its registering, he will provide us with the relevant application
evidencing the foregoing.
Note 10. At the time we conducted this due diligence we did not find royalties registered at
the Public Registry of Mines over the mining concessions described in this Title Report.
CONCLUSIONS
The opinions expressed herein are subject to the qualifications and reservations .set out
below.
a) All the mining concessions above described are valid and existing and in conditions to
conduct exploration and exploitation works by their holders or operators.
b) This opinion is given solely in relation to the laws of Mexico in force at the date of this
opinion. We have not made any investigation of the laws of any jurisdiction other than
Mexico. Accordingly, we express no opinion on any such law and none is to be implied
herein.
b) This opinion is intended solely for the use of the addressees and their permitted
successors and assignees and may not be relied upon by any other person or for any
other purpose, nor quoted from or referred to in any other document without our express
and written consent.
18