ni 43-101 technical report on the resource estimate on the el tajo

NI 43-101 TECHNICAL REPORT
ON THE
RESOURCE ESTIMATE ON THE
EL TAJO ZONE,
COYOTE PROJECT
MUNICIPALITIES OF CUAUTLA & AYUTLA
STATE OF JALISCO,
MEXICO
Prepared For:
ARGENTUM SILVER CORP.
570 Granville Street – Suite 1200
Vancouver, BC Canada
V6C 3P1
Prepared By:
Duncan Studd, M.Sc., P.Geo., GeoVector Management Inc.
Joseph Campbell, B.Sc., P.Geo., GeoVector Management Inc.
November 22, 2013
Report to: Argentum Resources Corp.
Technical Report on the:
RESOURCE ESTIMATE ON THE
EL TAJO ZONE,
COYOTE PROJECT
MUNICIPALITIES OF CUAUTLA & AYUTLA
STATE OF JALISCO,
MEXICO
EFFECTIVE DATE: NOVEMBER 22nd, 2013
Prepared by
“Original document signed by
Duncan Studd, M.Sc., P.Geo.”
Duncan Studd, M.Sc., P.Geo.
Reviewed by
“Original document signed by
Joseph Campbell, B.Sc., P.Geo.”
Joseph Campbell, B.Sc., P.Geo.
Authorized by
“Original document signed by
Joseph Campbell, B.Sc., P.Geo.”
Joseph Campbell, B.Sc., P.Geo.
ii
TABLE OF CONTENTS
PAGE
TABLE OF CONTENTS .................................................................................................. iii
LIST OF FIGURES ..........................................................................................................iv
LIST OF TABLES ............................................................................................................ v
1 SUMMARY ............................................................................................................... 1
1.1 Property Description and Location ..................................................................... 1
1.2 Ownership .......................................................................................................... 1
1.3 History ................................................................................................................ 1
1.4 Recent Exploration ............................................................................................. 2
1.5 Geology and Mineralization ................................................................................ 2
1.6 Mineral Resource Estimation ............................................................................. 2
1.7 Conclusions........................................................................................................ 3
1.8 Recommendations ............................................................................................. 3
2 INTRODUCTION ...................................................................................................... 3
2.1 Sources of Information ....................................................................................... 3
2.2 Personal Inspection ............................................................................................ 4
3 RELIANCE ON OTHER EXPERTS .......................................................................... 4
4 PROPERTY DESCRIPTION AND LOCATION ......................................................... 5
4.1 Property Location ............................................................................................... 5
4.2 Property Description ........................................................................................... 6
4.3 Other property interests ................................................................................... 10
4.4 Environmental Liabilities .................................................................................. 10
4.5 Permits for exploration ..................................................................................... 10
5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND
PHYSIOGRAPHY.......................................................................................................... 10
5.1 Accessibility...................................................................................................... 10
5.2 Climate ............................................................................................................. 10
5.3 Local Resources and Infrastructure ................................................................. 10
5.4 Physiography ................................................................................................... 11
6 HISTORY ................................................................................................................ 11
7 GEOLOGICAL SETTING AND MINERALIZATION ................................................ 14
7.1 Regional Geology ............................................................................................. 14
7.2 Property Geology ............................................................................................. 15
7.3 Mineralization ................................................................................................... 19
8 DEPOSIT TYPES ................................................................................................... 20
9 EXPLORATION ...................................................................................................... 20
10
DRILLING ............................................................................................................ 27
11
SAMPLE PREPARATION, ANALYSES AND SECURITY ................................... 39
12
DATA VERIFICATION ......................................................................................... 41
13
MINERAL PROCESSING AND METALLURGICAL TESTING ............................ 42
14
MINERAL RESOURCE ESTIMATE .................................................................... 42
14.1
Drill File Preparation ..................................................................................... 43
14.2
Resource Modelling and Wireframing ........................................................... 46
14.3
Composites ................................................................................................... 47
14.4
Grade Capping ............................................................................................. 47
14.5
Specific Gravity ............................................................................................. 47
iii
14.6
Block Model .................................................................................................. 48
14.7
Grade Interpolation ....................................................................................... 50
14.8
Model Validation ........................................................................................... 50
14.9
Resource Classification ................................................................................ 55
14.10 Resource Reporting ...................................................................................... 55
14.11 Disclosure ..................................................................................................... 57
15
MINERAL RESERVE ESTIMATES ..................................................................... 57
16
MINING METHODS............................................................................................. 57
17
RECOVERY METHODS ..................................................................................... 57
18
PROJECT INFRASTRUCTURE .......................................................................... 57
19
MARKET STUDIES AND CONTRACTS ............................................................. 57
20
ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY
IMPACT......................................................................................................................... 57
21
CAPITAL AND OPERATING COSTS.................................................................. 57
22
ECONOMIC ANALYSIS ...................................................................................... 57
23
ADJACENT PROPERTIES ................................................................................. 57
24
OTHER RELEVANT DATA AND INFORMATION ............................................... 58
25
INTERPRETATION AND CONCLUSIONS ......................................................... 58
26
RECOMMENDATIONS ....................................................................................... 58
27
REFERENCES .................................................................................................... 60
LIST OF FIGURES
Figure 1. Coyote Project Location .................................................................................. 5
Figure 2. Coyote Project Location Detail ........................................................................ 6
Figure 3. Coyote Project Concessions ........................................................................... 7
Figure 4. Coyote Project Surface Land Ownership ......................................................... 8
Figure 5. Typical Access Roads, Topography, and Vegetation .................................... 11
Figure 6. Typical Open Stope Working; Open Stope with Inaccessible Workings along a
Portion of the El Tajo Vein ............................................................................................. 12
Figure 7. Plan Map of Mine Workings on the Coyote Project ....................................... 13
Figure 8. Regional Geology (Servicio Geologico Mexicano, 1999) .............................. 15
Figure 9. Project Geology, from Surface Mapping by Argentum Geologists. ............... 17
Figure 10. Coyote Project Stratigraphic Column, Provided by Argentum Geologists ... 18
Figure 11. Structures and Veins on the Coyote Project................................................ 19
Figure 12. Typical Banded, Vuggy Quartz Vein Textures at Coyote. ........................... 21
Figure 13. Surface Rock Chip Samples taken by Argentum on the Coyote Project
(Robinson, 2013) ........................................................................................................... 22
Figure 14. Trench Samples taken by Argentum on the Coyote Project. (Robinson,
2013) ............................................................................................................................. 23
Figure 15. Samples taken by Argentum in Historic Workings on the Coyote Project.
(Robinson, 2013) ........................................................................................................... 24
Figure 16. Magnetic Survey of the Coyote Project (after Lambert, 2011)..................... 25
Figure 17. IP Survey Vertical Section 24700N (Lambert, 2011) ................................... 26
Figure 18. Drill Hole Locations (Robinson, 2013) ......................................................... 29
Figure 19. El Tajo Zone Drill Holes (Modified after Robinson, 2013) ........................... 34
iv
Figure 20. Longitudinal Section of the El Tajo Zone (Robinson, 2013) ........................ 35
Figure 21. Section 2012-1 and 2012-31, El Tajo Zone. ................................................ 36
Figure 22. Section 2012-3 and 2012-26, El Tajo Zone. ................................................ 37
Figure 23. Section 2012-4, 2012-32, and 2012-42, El Tajo Zone. ................................ 38
Figure 24. Clockwise from upper left: Core cutting and logging facility; Core
photography; Sealed rice sacks with samples; Core logging ........................................ 41
Figure 25. Isometric View looking North (shown by green axis) showing the Drill Hole
Distribution, with Topography for the El Tajo Zone. ...................................................... 45
Figure 26. Isometric View looking North (shown by green axis) showing the El Tajo
Zone Stockwork (blue) and Vein (red) Resource Models, and Drill Hole Locations. ..... 46
Figure 27. Isometric View looking North (shown by green axis) shows the El Tajo Zone
Vein Shell (red), Search Ellipse (dark blue), Block Model Extents (blue box), and Drill
Holes. ............................................................................................................................ 49
Figure 28. Isometric Views looking Northwest (the green box axis points North)
showing the El Tajo Zone Stockwork (above) and Vein (below) Resource Blocks. ....... 51
Figure 29. Vertical sections looking north and stepping south to north show the El Tajo
Zone resource blocks and drill holes. Composite drill assays are shown by colourcoded histogram along hole traces. A) section 2225475N, B) section 2225575N. ....... 52
Figure 30. Plan View Section at 2090 m elevation, showing El Tajo DDH Traces, Assay
Values, and Interpolated Block Grades. ........................................................................ 54
LIST OF TABLES
Table 1. Coyote Project Concessions ............................................................................ 7
Table 2. Argentum Commitments for 100% Acquisition ................................................. 9
Table 3. Drill Hole Summary ........................................................................................ 27
Table 4. Drill Holes Completed in Mineralized Zones ................................................... 28
Table 5. Reflex Drill Hole Survey Summary ................................................................. 30
Table 6. Drill Hole Interval Sample Result Summary.................................................... 32
Table 7. Rock sample locations ................................................................................... 39
Table 8. Standards and Blanks Used for the Coyote Project ....................................... 40
Table 9. Check Samples taken by Geovector, and their Argentum Equivalents. ......... 42
Table 10. Summary of all Drill Hole Assay Data from the Drill Database. .................... 44
Table 11. Summary of all Assay Data used in the El Tajo Zone Resource Estimate. .. 44
Table 12. Specific Gravity Sample Origins and Results. .............................................. 48
Table 13. El Tajo Zone Resource Block Model Geometry............................................ 48
Table 14. A Range of Inferred Resource Estimates for the Vein and Stockwork
Domains in the El Tajo Zone. ........................................................................................ 56
Table 15. A Range of Inferred Resource Estimates for the El Tajo Zone. The Resource
for the El Tajo Zone is Reported at a Silver Cut-off Grade of 70 g/t (red)...................... 56
Table 16. Estimated Budget for Recommended Work on the Coyote Project. ............. 59
v
1
SUMMARY
1.1 Property Description and Location
The Coyote property (“the Property”) lies approximately 145 kilometres southeast of the
capital city of Guadalajara, and 90 kilometres southeast of Puerto Vallarta within the
state of Jalisco. The Property is located within the municipalities of Cuautla and Ayutla.
Coyote is centered at approximately 538800E and 2225665N (UTM Zone 13N, WGS84
Datum). It is within the Instituto Nacional de Estadistica Geografica e Informatica (INEGI
– the government agency responsible for geographical statistics and mapping) 1:50,000
quadrangle F13-D52.
1.2 Ownership
The Coyote project consists of five contiguous concessions totalling 1053 hectares. In
April of 2011, Argentum entered into an option agreement to acquire 100% of Soltoro
Ltd.’s Coyote Project as well as the Victoria Project under one consolidated agreement.
Argentum’s agreement required paying CDN$255,000 in total cash payments, issuing
an aggregate 5,000,000 common shares of Argentum and spending a total of CDN$1.1
million on exploration over two years. Argentum exercised the option in 2012. Soltoro
retains a 3% NSR interest in each project; 1% can be purchased for US$1.5 million to a
maximum of 2% for each project. Based on records provided to the authors all
obligations to Soltoro have been satisfied and 100% ownership and any underlying
agreements have been transferred to Argentum.
There is no distinction made between mining and exploration concessions under
Mexican law. All concessions have a duration of 50 years from the date that they are
issued.
Surface rights within the project area are held by the Ejido Chilacayote and two private
ranches owned by one family. The Ejido and private land owner each control
approximately 50% of the project area. Argentum has permission from both surface
owners to conduct exploration activities including construction of roads and trenches as
well as drilling programs.
1.3 History
The district has moderate historical production and exploration beginning in colonial
periods. Over 100 mine workings have been mapped within the project area. Production
levels are unknown, but were limited due to underground water conditions. An unknown
company processed high grade dump material in the 1980’s. Portions of the district
were explored by Minera Lluvia de Oro, S.A. de C.V. in 1999. They drilled 20 RC holes
totalling 1981 metres within the La Valenciana claim (in the southern end of the current
project area). The authors did not have access to these assays. Soltoro began exploring
the property in 2007, with programs including geologic mapping and rock chip sampling.
1.4 Recent Exploration
Argentum’s exploration activities included geologic mapping and rock chip sampling.
Many of the historic workings were rehabilitated, mapped, and sampled. Argentum
completed 42 diamond drill holes of HQ-sized core totalling 4,843.2 metres. This drilling
was divided into two phases. Phase 1 consisted of 25 holes drilled between January
and March 2012. Phase 2 consisted of 17 holes drilled during September and October
of 2012. The drilling programs tested portions of four vein systems, but with a focus on
the El Tajo zone with 25 holes. Drilling on the La Florida, Bocancha, and La Colorada
zones returned mixed results. Drilling on the El Tajo zone reported encouraging results,
demonstrating a good continuity of mineralization over a tested strike length of
approximately 500 metres.
1.5 Geology and Mineralization
The project lies within the east-west oriented Trans-Mexican Volcanic Belt geologic
province. Host rocks within the project area are andesitic tuffs and flows, dated by the
Servicio Geológico Mexicano (SGM) as upper Cretaceous. These rocks are overlain
outside the project area by rhyolitic pyroclasitcs, which range in age from upper
Cretaceous to Paleocene. A small unaltered diorite intrusive outcrop has been mapped
intruding andesite in the eastern portion of the project. An andesite porphyry has been
observed several kilometres west of the project. There is no current indication of a
relationship between mineralization and these intrusives.
The Coyote project encompasses the majority of the historic San Miguel de la Sierra
mining district. Coyote is an early stage exploration project that contains dozens of
epithermal low sulphidation vein systems and stockwork zones with strong silver values
and significant credits in gold, lead and zinc. Most of the veins lie within seven
structurally controlled belts that are defined over an area of approximately 1.5 x 2.6
kilometres. Exposed surface mineralization is at a high level in the epithermal system,
and contains classic epithermal quartz textures. Individual vein strike lengths have been
mapped up to nearly 1 kilometre. Vein widths typically range from 1 to 5 metres, with
veins striking in a northerly direction and generally dipping steeply to the west. Several
zones of quartz stockworks and silica replacement have been mapped, with widths
exceeding 35 metres.
1.6 Mineral Resource Estimation
Drilling and exploration work on the El Tajo Zone on the Property has been compiled
and used to generate a NI 43-101 compliant resource estimate. Geological and block
modelling in Gemcom GEMS 6.5 software was based on 664 assays from 25 diamond
drill holes and 121 assays from continuous chip samples on surface and underground in
historical workings. The resource estimate produced from this calculation is an Inferred
Resource of 582,826 tonnes at a cut-off grade of 70 g/t Ag, with a total of 3.88 Moz of
Ag Equivalent at a grade of 209 g/t, including 3.60 Moz Ag at a grade of 192 g/t and
5,053 Oz Au at a grade of 0.27 g/t.
1.7 Conclusions
The Coyote project encompasses most of a significant historic mining district having
dozens of low sulphidation epithermal vein systems occurring in Cretaceous volcanic
rocks. The veins locally have strong silver values and significant credits in gold, lead
and zinc. The Inferred mineral resource is 3.88 Moz Ag Equivalent at a 70 g/t Ag cut-off,
but the resource is open along strike and down dip.
1.8 Recommendations
The authors recommend a third phase of drilling focusing on the El Tajo zone with the
objective of expanding the Inferred 43-101 resource and upgrading some of the
resource to indicated status. The drilling program should be designed to further test El
Tajo along strike and at depth. Additional exploration is warranted on the other zones of
mineralization within the project. The San Rafael zone remains undrilled. San Rafael
has been mapped on surface and from underground workings over a strike length of
~600 metres, with encouraging geochemistry. The southern portion of the La Florida
trend is also promising and has not been drill-tested.
2
INTRODUCTION
At the request of Mr. Warren McIntyre, President and CEO of Argentum Silver Corp.
(Argentum), GeoVector Management Inc. (GeoVector) was retained to prepare a NI 43101 Resource Estimate and Technical Report (the Report) on the Coyote Project. The
Report is prepared according to the standards dictated by NI 43-101 and Form 43-101F
(Standards of Discloser for Mineral Projects). Duncan Studd, M.Sc., P.Geo., and
Joseph Campbell, B.Sc., P.Geo, are the authors and qualified persons (QP) for this
report. Argentum is a public company listed on the TSX Venture exchange, with its
head office in Vancouver, Canada. The Company has a wholly owned Mexican
subsidiary Plata de Argentum, S.A. de C.V.
2.1 Sources of Information
This report is based on information known and acquired by Argentum's field office and
exploration personnel, which has been provided to and reviewed by GeoVector.
The World Geodetic System 1984 (WGS84) co-ordinate system is used in this report.
The system uses six-digit metric eastings and seven-digit metric northings (similar to the
NAD83 system in common use in Canada). The Property is located in the 13N Zone of
the WGS84 system. Most monetary figures in this report are reported in Canadian
dollars, some in American dollars. At time of writing the Canadian dollar was worth 0.97
American Dollars and 12.72 Mexican Pesos.
2.2 Personal Inspection
D. Studd, P.Geo., conducted a visit to the Coyote Project from September 2nd to 4th,
2013, and is satisfied that the collection of data by Argentum personnel meets industry
standards for reliability and accuracy.
3
RELIANCE ON OTHER EXPERTS
Duncan Studd (P.Geo.) is responsible for the preparation of all sections of the Report.
Joseph Campbell (P.Geo.) is responsible for sections 12 and 14 of the Report. The
information, conclusions and opinions contained herein are based on:
•
Information available to the authors at the time of preparation of this report,
•
Data, reports and other information supplied by Argentum and its
representatives.
•
Observations by the author following the visit to the Project site and on-site
inspection of drill core
Supervision of the first phase of drilling was overseen by J.R. Robinson, C.P.G.
(Certified Professional Geologist, American Institute of Professional Geologists).
Supervision of the second phase of drilling was overseen by Paul Cowley, P.Geo., the
Company's Senior Geological Consultant and Advisor, and a Qualified Person under NI
43-101. Database management of geological and assay data and the implementation
and evaluation of QA/QC protocols were overseen by Juan Lopez, General Manager for
Plata de Argentum S.A. de C.V.
Sections of this report, including chapters 1-12, 23, and 25, and the tables and figures
contained therein, are amended from the Technical Report for the Coyote Project,
Jalisco State, Mexico, for Argentum Silver Corp., by J.R. Robinson (dated July 12, 2013
and available at www.sedar.com).
Government reports and maps referenced herein were prepared by a person(s) holding
post-secondary geology or related university degrees and the information in those
reports and maps is assumed to be accurate. Assessment reports and other technical
reports written by other geologists are also assumed to be accurate based on review by
the authors. Further technical information was obtained from sources cited in Section
27.
GeoVector did not conduct a legal due diligence review of the ownership of the
properties discussed in this report; such a review is beyond the scope of this report.
4
PROPERTY DESCRIPTION AND LOCATION
4.1 Property Location
The Property is located within the municipalities of Cuautla and Ayutla, within the state
of Jalisco (Figures 1 and 2). The Property is centered at approximately 538800E and
2225665mN (UTM Zone 13N, WGS84 Datum). It is within the Instituto Nacional de
Estadistica Geografica e Informatica (INEGI – the government agency responsible for
geographical statistics and mapping) 1:50,000 quadrangle F13-D52.
Figure 1. Coyote Project Location
Figure 2.
2. Coyote Project Location Detail
4.2 Property Description
The Coyote project consists of five contiguous concessions totaling 1053 hectares
(Figure 3).
3). One of the concessions is wholly owned by Argentum
Argentum,, and the other four are
controlled by option agreements between Argentum and the underlying concessionaire
(Table 1).
Figure 3.
3. Coyote Project Concessions
Table 1.. Coyote Project Concessions
Concession
Title
Exp. Núm.
N
(File
Number)
El Tajo
216365
045/15337
El Tajo lll Fracc l
226878
045/15723
El Tajo lll Fracc ll
226879
045/15723
La Valenciana
185386
321.1/3-141
321.1/3
Xela
231222
045/16512
Total
Expiration
Date
May 7,
2052
Mar 16,
2056
Mar 16,
2056
13 Dec,
2039
Jan 24,
2058
Hectares
Owner
163.17
Armando Ibarra Amaya
12.51
Armando Ibarra
a Amaya
12.75
Armando Ibarra Amaya
12.00
Armando Ibarra Amaya
852.75
Plata de Argentum, S.A. de C.V.
1053.17
Under Mexican mining law, the country retains ownership of all mineral deposits, and
grants concessions to private companies for exploration and exploitation. These
concessions have duration of fifty years, and apply to both exploration and exploit
exploitation
ation
activities. Mining concession holders are required to submit periodic reports on mining
and exploration activity, water use, and environmental impact
impact.. Annual concession
maintenance fees are due to the government, based on concession surface area. The
Mexican government does not, at present, retain an underlying royalty on extracted
minerals. (Baker & MacKenzie, 2011)
Surface rights within the project area are held by the Ejido Chilacayote and two private
properties owned by the same owner known as El Parnaso Ranch and Santa Barbara
Ranch (Figure 4). The Ejido and the Ranch Owner each control approximately 50% of
the project area’s surface rights. An Ejido in Mexico is a community association granted
control of land by the government for agricultural purposes. All Ejido land is controlled
by the local Ejido council, but the land may also be granted to individual members of the
Ejido for personal use. Argentum has written agreements with both the Ejido and the
owner of the private ranch land granting permission to conduct exploration activities,
road building and rehabilitation, and drilling. The authors have been provided with and
have reviewed copies of mining concession titles and the agreements with the surface
rights-holders. Author D. Studd identified and verified the claim marker for the El Tajo
concession during his visit to the project.
Figure 4. Coyote Project Surface Land Ownership
In April of 2011, Argentum entered into an option agreement to acquire 100% of
Soltoro’s Coyote project as well as the Victoria project (which is another silver
exploration property approximately 50km from Coyote) under one consolidated
agreement. Argentum’s agreement required paying CDN$255,000 in total cash
payments, issuing an aggregate 5,000,000 common shares of Argentum and spending
a total of CDN$1.1 million on exploration over two years. Argentum exercised the option
in 2012. Soltoro retains a 3% NSR interest in each project; 1% can be purchased for
US$1.5 million to a maximum of 2% for each project. Argentum is obligated to take over
payments with underlying concessionaires under pre-existing agreement with Soltoro
(Table 2). There is also an underlying 2% NSR due to the concession owners, which
can be purchased by Argentum for $400,000 (+16% Impuesta de Valor Agregado – IVA
– value added tax) for each 1%.
Table 2. Argentum Commitments for 100% Acquisition
Date
Description
US $ (+IVA)
Non refundable
payment
Canadian $
(note 1)
Shares
NSR
35,000
Status
Completed
4/25/2011
Closing payment
100,000
1,500,000
Completed
4/25/2012
120,000
3,500,000
Completed
4/25/2013
1st Year payment
1st year
exploration
commitment
2nd year
exploration
commitment
12/10/2011
advance
"royalties" Coyote
40,000
Completed
12/10/2012
advance
"royalties" Coyote
25,000
Completed
12/10/2013
advance
"royalties" Coyote
25,000
12/10/2014
advance
"royalties" Coyote
25,000
12/10/2015
advance
"royalties" Coyote
25,000
12/10/2016
advance
"royalties" Coyote
30,000
12/10/2017
advance
"royalties" Coyote
30,000
4/25/2012
TOTAL
350,000
Completed
750,000
Completed
NSR Argentum to
Soltoro (note 2)
3%
Underlying
Royalties (note 3)
2%
200,000
1,355,000
5,000,000
5%
note 1: Mexican Value Added Tax (Impuesta de Valor Agregado, or IVA) of 16% to be included if agreement
registered at Mexico Dir. De Minas
note 2: up to 2% can be bought for $1.5M / 1% for each property - Victoria & Coyote)
note 3: Soltoro has underlying option to buy-out NSR at rate of US $400,000 + IVA for each 1%
4.3 Other property interests
To the knowledge of the authors, upon review of provided text of agreements between
Argentum and Soltoro, the concession owner, the Ejido, and the ranch owner, there are
no underlying interests, back-in rights, payments, or other agreements on the Property
further to those listed above.
4.4 Environmental Liabilities
There are mine workings and waste rock dumps within the project area. However, due
to the historical nature of the workings and dumps, the authors are given to understand
that the Property is not subject to any liabilities due to previous mining activities that
may impact future development of the Property.
4.5 Permits for exploration
To the authors’ knowledge, Argentum currently holds all necessary permits that are
required to conduct exploration on the Property. Under Mexican mining law, no permits
are necessary for basic exploration activity. However, environmental review is
necessary for all advanced exploration work, including water use for drilling. Argentum
has provided the authors with documents from the Secretaría del Medio Ambiente y
Recursos Naturales indicating government approval of their activities to date.
5
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND
PHYSIOGRAPHY
5.1 Accessibility
The Coyote Project lies approximately 145 km southeast of the city of Guadalajara, and
90 km southeast of Puerto Vallarta in the State of Jalisco. Access is via paved roads
from either city, and roughly equidistant for an approximate four hour driving time from
either Puerto Vallarta or Guadalajara. Total road distance from Guadalajara is 190 km,
with 160 km of paved highway and the last 30 km of dirt road in good condition.
5.2 Climate
The climate is typical of moderately high altitude sierra. There is a heavy rainy season
that extends from July through September. October brings occasional Pacific-born
tropical depressions and rare hurricanes. Daytime temperature highs typically range
from about 15°C in the winter up to 30°C just before the commencement of the rainy
season. Winter evenings can reach below 0°C. Snow is very rare, but has been
recorded.
5.3 Local Resources and Infrastructure
El Chilacayote is the local town nearest to the project, and has an estimated 400
residents. The local economy is primarily based on farming and cattle. Argentum is
offering part time employment to locals on an as-needed basis for exploration work.
Basic supplies are available within El Chilacayote. The much larger town of Ayutla is
approximately 51 km from the project; it has hotels, supermarkets and hardware stores.
The Ayutla airstrip is the closest to the project.
Within the project area there are numerous dirt roads currently in fair to good condition.
These roads were constructed for mine access, ranching, and the timber industry
(Figure 5). A government power line supplies electricity to the local towns. Argentum is
renting a house within the town of El Chilacayote for accommodation and use as a field
office.
5.4 Physiography
Topography consists of broad hills with relatively flat tops and moderate to steep sides,
with elevations ranging from ~1800 – 2220 metres above sea level. There is abundant
flat land near mineralized zones that could easily support a very large scale mining
operation. Groundwater is available. Vegetation consists of long-needle pine and oak
trees (Figure 5). The area has undergone selective harvesting of old growth pine trees.
Open meadows are commonly used for cattle grazing and farming.
Figure 5. Typical Access Roads, Topography, and Vegetation (Robinson, 2013)
6 HISTORY
The Coyote project encompasses the majority of the historic San Miguel de la Sierra
mining district. Mining activities are poorly recorded, but likely commenced during
colonial times. Mining production was limited and restricted to near surface due to
encountering ground water, and not having any natural drainage or pumping methods
during those times. There have been numerous periods of development and
exploitation; however, the authors did not review any documentation on these activities.
An unknown company or individual processed some of the high grade dumps within the
last 20 years. There are over 100 mine workings within the project area, including
shafts, adits, open stopes, large pits and small prospects. All adits (aside from those reopened by Argentum) are caved at the portals and currently inaccessible. Most open
stopes are deep and dangerous to enter. There are semi-continuous open stopes over
hundreds of metres of strike length along some vein systems (Figures 6 and 7). There
are ruins of a flotation mill near the El Tajo vein system; however, all that remains are
foundation walls.
Figure 6. Typical Open Stope Working; Open Stope with Inaccessible Workings along a
Portion of the El Tajo Vein (Robinson, 2013)
Figure 7. Plan Map of Mine Workings on the Coyote Project
The general area was geologically mapped by the Consejo de Recursos Minerales
(CRM) in the 1970’s – 1980’s (Reyes et al., 1984). Their work also included mapping of
mine workings and limited rock chip sampling. The authors have examined reports from
the CRM on mines in the general area. In 2006 CRM completed 1:50,000 quadrangle
programs including geologic mapping, stream sediment sampling and airborne
magnetic surveys (SGM, 2006).
Portions of the district were explored by Minera Lluvia de Oro, S.A. de C.V. in 1999.
The authors are in possession of a summary report, written in Spanish and translated to
English. Lluvia de Oro drilled 20 RC holes totaling 1981 metres within the La Valencia
claim (southern end of the project area). The authors did not have access to this drilling
data.
In July of 2007 Soltoro staked the 852.75 hectare Xela concession (Fig. 3). Soltoro’s
exploration programs included geologic mapping and rock chip sampling. Argentum is in
possession of descriptions, coordinates and assay results for 225 rock chip Soltoro
samples. Assay certificates from these samples are dated 2007 and 2008. In May of
2008, Soltoro entered into an option to purchase 100% of the El Tajo (including fraction
claims) and La Valenciana concessions.
7
GEOLOGICAL SETTING AND MINERALIZATION
7.1 Regional Geology
The project lies within the east-west oriented Trans-Mexican Volcanic Belt (TMVB)
geologic province, named for the Tertiary to Quaternary volcanoes trending east-west
over more than 1000 km from the Atlantic Ocean to the Pacific Ocean. Although the
primary composition is basalt, the TMVB is locally bi-modal, with some rhyolite and
ignimbrite centers (Ferrarri et al., 2012). Much of the province is covered by these
younger volcanics (Figure 8).
The TMVB is superimposed over a Cretaceous volcanic arc, containing a bimodal
volcanic series of andesite, dacite and rhyolite volcanics. The age spans dated by the
CRM range from ~110 m.y. to 86 m.y., with andesite generally the older volcanic unit.
Paleocene rhyolite volcanic pyroclastics and ignimbrite are observed in the northeast
portion of the 1:50,000 quadrangle.
The eastern fringes of the Puerto Vallarta granodiorite batholith are mapped ~10 km
west of the project area. These intrusive rocks are dated ~ 88 m.y. and are considered
coeval with the andesitic sequence of the volcanic arc (SGM, 1999). There is no
suspected relationship of the granodiorite with the epithermal mineralization in the
project. Paleocene sub-volcanic hornblende-rich andesite porphyry has been observed
immediately west of the project area.
The structural regional geology is complex. There is a closely spaced NW fault set
resulting from Late Cretaceous compression, with common left-lateral strike slip
displacement. These faults were reactivated during Tertiary extensional tectonic
deformation resulting in normal displacement. The project area also contains younger
N-NE and N-NW steeply west dipping faults which commonly control vein mineralization
(SGM, 2006).
Figure 8.
8. Regional Geology (Servicio Geologico Mexi
Mexicano,
cano, 1999)
7.2 Property Geology
The dominant rocks within the project area are andesite tuff and agglomerate ((Tiv)
dated by the Servicio Geologico Mexicano as being upper Cretaceous to Tertiary,
ranging from ~85 – 115 m.y.. (SGM, 1999).
1999). The volcanics are cor
correlated
related with the Lower
Volcanic Complex of the Sierra Madre Occidental. Figures 9 and 10
0 are a map of
surface geology and a stratigraphic column for the Coyote Project, respectively.
The only intrusives identified to date within the project are several sm
small
all outcrops of diorite
(Tid) intruding andesite flows in the NE portion of the project. The iintrusive
ntrusive is unaltered
and has not affected the andesite. The diorite is assumed to be related to the Cretaceous
Puerto Vallarta granodiorite batholith.
Rhyolite to dacite ignimbrite is mapped in the southeast portion of the project, (Tsv R).
This unit hosts vein mineralization at the San Rafael zone.
The structural attitude of the volcanic stratigraphy is rarely measurable, but where
evident is close to horizontal. Younger rhyolitic pyroclastics have not been identified on
the Property, but are known to be present in the region (SGM, 1999).
Figure 9. Project Geology, from Surface Mapping by Argentum Geologists.
Figure 10. Coyote Project Stratigraphic Column,
Column, Provided by Argentum Geologists
There is significant structural deformation within the project area. Numerous structural
patterns have been mapped on the ground, as well as interpreted from satellite imagery
and orthophotos (Figure 11). The primary fault sets are W-NW striking. These are high
angle, with generally left-lateral strike slip displacement. The W-NW faults are
interpreted as the oldest structural set relating to Late Cretaceous compression. These
faults were reactivated during Tertiary extensional tectonic deformation, with normal
displacement. Younger N-NE and N-NW steeply west dipping faults are common within
the project, and typically control vein mineralization.
Figure 11. Structures and Veins on the Coyote Project (modified from Robinson, 2013)
7.3 Mineralization
Coyote contains numerous silver-gold veins (Figure 12) and stockwork occurrences,
most of which occur within seven structurally controlled belts. The seven defined belts
of mineralization occur over an area of approximately 1.5 x 2.6 kilometres (Figures 9
and 11). Vein widths typically range from 1 to > 5 metres, with measured strike lengths
up to nearly one kilometre. Stockwork zones have been mapped over widths exceeding
35 metres.
Silver-gold-lead-zinc mineralization occurs within epithermal quartz veins and
stockworks controlled by pre-existing faults acting as conduits for hydrothermal
solutions. No obvious differences in the style or content of mineralization have been
observed within the seven defined belts.
The El Tajo zone has been defined by surface and underground mapping as well as
drilling over a strike length of approximately 600 metres. The zone consists of a central
vein, commonly paralleled by other subsidiary veins and enveloped by stockwork
mineralization. The central vein typically is 1 to 5 metres in true thickness. The common
occurrence of banded quartz is taken as evidence of boiling of hydrothermal fluids. The
color of the quartz varies from white to occasionally purple amethyst. Higher silver
grades are commonly, but not always, associated with visible galena and black
sphalerite. Gold is generally low grade, and typically less than 0.5 g/t. Stockwork zones
are composed of thin, generally <3 cm wide quartz veinlets of random orientation.
No mineralogical tests have been performed to date on any core or rock samples. The
nature of the silver mineralization has not yet been determined, but is assumed to be
primarily argentite.
8 DEPOSIT TYPES
Mineralization consists of veins and stockwork deposits containing typical epithermal
quartz textures including chalcedonic / amorphous, vuggy, banded and saccharoidal.
Banded quartz textures indicate being within the boiling zone (Camprubi and Albinson,
2007). There is evidence for multiple events of silica. Although no mineralogical testing
has been done to date, suspected alteration products would be adularia, kaolinite and
montmorillonite. Propylitic alteration has not been observed. Alteration halos distal to
the veins are generally minimal. Typically, higher grade zones or "ore shoots" occur in
deflections of the vein systems either along strike or down dip.
Deposit types are classified as low-sulphidation epithermal veins and stockworks with
alteration assemblages including quartz and clay minerals (Camprubi and Albinson,
2007). Deposits are formed at relatively shallow depths (<1km), and relatively near
paleo-surface. Typically these systems have hydrothermal fluids flowing in the range of
100 to 300 degrees C. (Simmons and Brown, 2000)
9 EXPLORATION
Work conducted by Argentum has consisted of geologic mapping and rock chip
sampling. Two phases of drilling have been completed as discussed in subsequent
sections. Underground historic mine workings were reopened where possible, and
mapped and sampled. Surface magnetic and IP/Resistivity surveys were conducted by
Geofisica TMC S.A. de C.V. Drill hole collars and numerous survey points were
established by Total Station GPS methods. (Robinson, 2013)
Figure 12. Typical Banded, Vuggy Quartz Vein Textures at Coyote. (Robinson, 2013)
Mapping
Geologic mapping has been nearly completed over a ~2.5 km N-S by 2.0 km N-S
portion of the central area of the Property. Mapping has largely been conducted on
1:1000 scale base maps, and has included geology, mineralization, mine workings,
roads and drainages (Figure 9). As well, structural interpretation has been done from
orthophotos and satellite imagery. Argentum established 123 survey points in the field
by contracting a professional surveyor using a transmitting and receiving GPS unit, with
X-Y-Z accuracy indicated at <5 cm. Transmission was done from a government
established control point. Detail mapping is done radiating out from those points by
brunton and tape. Regional mapping is done by handheld GPS units. Accuracy in
general is +/- 4 metres. (Robinson, 2013).
Surface Rock Chip Sampling
Within the seven belts of mineralization, 493 rock chip samples have been taken to date
(Figure 13). The majority of the samples are continuous rock chip samples, with sample
widths ranging from 0.3 metres to 10 metres.
Figure 13.
13. Surface Rock Chip
hip Samples
amples taken
aken by Argentum on the Coyote Project
(Robinson,
inson, 2013)
Trench Sampling
Argentum excavated numerous trenches by hand as well as mechanical methods
(Figure 14).
1 . The trenches were situated along the mineralized stru
structures
ctures and oriented
as close as possible to perpendicular to the strike of the veins. A total of 437 continuous
rock chip samples were taken from the trenches.
Figure 14.
14. Trench Samples
Samples taken by Argentum on the Coyote Project
Project.. (Robinson, 2013)
Underground Mine Mapping and Sampling
Argentum hired professional contract
contract miners to open historic mine workings w
where
feasible. The mine workings and geology were mapped by Argentum. Argentum took
196 rock chip samples from within the underground workings (Figure 1
15)..
Figure 15.
15 Samples taken by Argentum in Historic W
Workings
orkings on the Coyote Project.
(Robinson, 2013)
Geophysics
Ground geophysical surveys consisting of Total Field magnetometer and high
high-power
power
Time-Domain
Domain Induced Polarization (I.P. / Resistivity) were contracted by Geofisica TMC
S.A.. de C.V.
C.
in 2011. Geofisica ran sixteen 1,100 met
metrre E-W
W lines across the
Bocancha, La Florida, and El Tajo zones on the P
Property.. Dipole separation was 100
metres which in theory should be able to detect large volumes of metallic sulphide
mineralization
mineralization to depths of 175-250
175 250 metres. A summary report by Gerard Lambert
Geosciences concluded that the magnetic environment is “quiet” and that two possible
zones of slightly increased I.P. effect might have been detected (Lambert, 2011)
2011).. The
authors
s do not see any correlation of I.P. / Resistivity “anomalies” with known veins or
structures (Figure 17).
1
The authors do not see any correlation between the Total Field
magnetic
etic survey (Figure 16)
1 ) and known veins or structures.
Figure 16.
16 Magnetic Survey
Survey of the Coyote Project (after Lambert
Lambert, 2011)
Figure 17. IP Survey Vertical Section 24700N (Lambert, 2011)
Table 3. Drill Hole Summary
HOLE_ID
Zone
E_WGS84
N_WGS84
2012-1
El Tajo
538967.40
2225579.50
2012-2
El Tajo
538941.62
2225489.13
2012-3
El Tajo
538941.89
2012-4
El Tajo
2012-5
El Tajo
2012-6
AZ
Dip
Start Date
End Date
2152.90
100
-60
2126.59
100
-65
109.3
28-Jan-12
30-Jan-12
109.0
31-Jan-12
2225412.55
2108.98
100
1-Feb-12
-55
92.3
2-Feb-12
3-Feb-12
538954.31
2225366.96
2099.17
538922.82
2225289.34
2111.99
100
-60
72.5
4-Feb-12
4-Feb-12
100
-60
87.9
5-Feb-12
El Tajo
538890.07
2225237.21
6-Feb-12
2130.37
100
-60
127.4
8-Feb-12
13-Feb-12
2012-7
El Tajo
538890.41
2012-8
La Florida
538723.09
2225168.73
2136.52
100
-60
115.4
13-Feb-12
15-Feb-12
2225134.87
2156.76
255
-50
142.8
16-Feb-12
18-Feb-12
2012-9
La Florida
538578.82
2225225.96
2159.41
75
-50
112.3
19-Feb-12
20-Feb-12
2012-10
2012-11
El Tajo
538868.06
2225123.06
2144.90
100
-60
133.8
21-Feb-12
22-Feb-12
La Florida
538681.79
2225255.15
2171.94
255
-45
76.3
23-Feb-12
24-Feb-12
2012-12
La Florida
538626.95
2225162.88
2148.85
75
-45
61.0
24-Feb-12
25-Feb-12
2012-13
La Florida
538551.86
2225286.33
2171.88
75
-50
115.9
25-Feb-12
26-Feb-12
2012-14
La Florida
538545.69
2225385.08
2185.75
75
-50
97.6
27-Feb-12
28.Feb-12
2012-15
Bocancha
538245.68
2225412.30
2180.64
120
-50
85.4
28-Feb-12
1-Mar-12
2012-16
Bocancha
538181.16
2225319.49
2175.50
120
-50
106.8
1-Mar-12
10-Mar-12
2012-17
La Colorada
539028.65
2226399.67
2210.30
75
-50
115.9
2-Mar-12
4-Mar-12
2012-18
La Colorada
539024.16
2226351.83
2213.87
75
-50
146.4
4-Mar-12
6-Mar-12
2012-19
La Florida
538513.92
2225466.84
2193.29
75
-60
109.8
7-Mar-12
8-Mar-12
2012-20
Bocancha
538234.98
2225219.81
2193.24
300
-60
119.0
10-Mar-12
13-Mar-12
2012-21
Bocancha
538188.27
2225170.33
2211.85
120
-50
100.7
13-Mar-12
14-Mar-12
2012-22
El Tajo
538941.94
2225442.75
2119.76
100
-65
109.8
15-Mar-12
16-Mar-12
2012-23
El Tajo
538963.75
2225531.90
2143.56
100
-65
107.9
16-Mar-12
17-Mar-12
2012-24
El Tajo
538970.93
2225625.43
2162.32
100
-65
125.1
17-Mar-12
22-Mar-12
2012-25
La Colorada
539160.50
2226192.41
2149.89
75
-55
109.8
22-Mar-12
24-Mar-12
2012-26
El Tajo
538933.40
2225416.16
2109.51
100
-65
118.6
12-Sep-12
14-Sep-12
2012-27
El Tajo
538921.39
2225446.79
2118.24
100
-60
124.3
14-Sep-12
16-Sep-12
2012-28
El Tajo
538964.07
2225484.57
2125.83
100
-65
85.4
16-Sep-12
17-Sep-12
2012-29
El Tajo
538936.56
2225462.37
2123.05
100
-65
131.2
18-Sep-12
19-Sep-12
2012-30
El Tajo
538949.00
2225536.33
2140.39
100
-70
140.3
19-Sep-12
20-Sep-12
2012-31
El Tajo
538935.29
2225588.27
2151.38
100
-65
158.6
21-Sep-12
22-Sep-12
2012-32
El Tajo
538929.13
2225375.42
2097.63
100
-65
139.6
22-Sep-12
23-Sep-12
2012-33
El Tajo
538927.73
2225396.16
2102.32
100
-70
103.7
24-Sep-12
24-Sep-12
2012-34
El Tajo
538901.36
2225437.14
2112.93
100
-70
146.5
25-Sep-12
26-Sep-12
2012-35
El Tajo
538940.58
2225506.30
2128.33
100
-70
129.6
26-Sep-12
27-Sep-12
2012-36
El Tajo
538851.16
2225176.36
2147.71
100
-60
147.0
27-Sep-12
8-Oct-12
2012-37
La Colorada
539028.57
2226402.96
2210.17
75
-65
154.6
29-Sep-12
1-Oct-12
2012-38
La Colorada
538984.39
2226537.08
2210.50
75
-60
87.5
1-Oct-12
2-Oct-12
2012-39
La Colorada
538953.21
2226587.51
2215.70
75
-60
87.6
3-Oct-12
4-Oct-12
2012-40
El Tajo
538884.91
2225205.53
2132.36
100
-70
134.2
5-Oct-12
6-Oct-12
2012-41
El Tajo
538888.24
2225240.39
2130.13
85
-70
137.3
6-Oct-12
7-Oct-12
2012-42
El Tajo
538926.91
2225374.03
2097.52
135
-65
127.1
7-Oct-12
8-Oct-12
TOTAL
Elev (m)
Depth (m)
4,843.2
10 DRILLING
Argentum has completed two phases of diamond drilling totaling 4843.2 metres of HQsized core within the Coyote Property. The first phase consisted of 25 holes totaling
2690.1 metres from January 2012 - March 2012. The second phase of drilling consisted
of 17 holes totaling 2153.1 metres from September 2012 - October 2012. Table 3
summarizes this drilling, and the collars and traces are shown in Figure 18.
The 42 diamond drill holes tested portions of four different vein zones, focusing on the
El Tajo zone. The number of drill holes on each zone is tabulated in Table 4.
Table 4. Drill Holes Completed in Mineralized Zones
Zone
El Tajo
# Holes
25
La Florida
7
Bocancha
4
La Colorada
Total
6
42
Down Hole Survey Methodology
The drilling contractor for both phases of drilling was Major Drilling de Mexico, S.A. de
C.V., using a UDR 200 rig. Drill core was primarily HQ. Down-hole REFLEX surveys
were performed with an EZ-Track on most drill holes. Survey depths were variable, but
included 70 metres, vein intersections and at the hole bottom (Table 5). Azimuth values
reported by the instrument have had 7.5° added to correct for magnetic declination.
Figure 18.
18. Drill Hole Locations (Robinson, 2013)
Table 5. Reflex Drill Hole Survey Summary
Hole_ID
2012-1
Depth (m)
81
Azimuth
98
Dip
-60.7
2012-2
109
101.7
-65.9
2012-3
92.3
102.1
-53.2
2012-8
121.4
261.3
-51.2
2012-10
133.8
102.8
-59.6
2012-11
76.3
256.5
-45.3
2012-12
61
74.6
-44.4
2012-13
115.9
76.2
-50
2012-14
97.6
73.3
-48.5
2012-15
82.4
118.1
-50.1
2012-16
106.8
123.3
-49.5
2012-17
115.9
79.6
-49.8
2012-18
146.4
78.1
-48.2
2012-19
109.8
76.2
-60.3
2012-20
119
304.7
-60.1
2012-21
100.7
127.6
-51.4
2012-22
109.8
96.1
-63
2012-23
107.9
105.6
-64.6
2012-24
125.1
104.3
-64.6
2012-25
109.8
69.4
-55.7
2012-26
70
97.5
-65.1
2012-26
118.6
97.7
-65.1
2012-27
70
100.1
-60.8
2012-27
124.3
100.8
-60.1
2012-28
85.4
98.1
-65.5
2012-29
70
101
-64.6
2012-29
131.2
103
-63.7
2012-30
70
102.8
-68.3
2012-30
140.3
104.3
-67.6
2012-31
70
89.9
-64.3
2012-31
158.6
104
-62.7
2012-32
70
101.7
-63.3
2012-32
139.6
104
-63.3
2012-33
70
99
-71.4
2012-33
103.7
98.3
-70.9
2012-34
70
100.6
-70.3
2012-34
146.5
102.9
-71
2012-35
70
100.6
-70.6
2012-35
129.6
101.9
-70.5
2012-37
70
74.3
-66
2012-37
154.6
74.8
-65.7
2012-38
41
73
-59.6
2012-39
41
73.8
-61.6
2012-39
87.6
73
-61.7
Hole_ID
Depth (m)
Azimuth
Dip
2012-40
70
81.5
-70.7
2012-40
134.2
83.3
-70.5
2012-41
70
86
-70.1
2012-41
135.3
86.3
-69.3
2012-42
70
137.9
-64.4
2012-42
127.1
139.4
-64.2
Collar Survey Methodology
Argentum contracted a licensed surveyor to survey x-y-z coordinates for all drill collars
using a total station GPS. The datum used is WGS84.
Drill Core Protocols
Core logging on drill holes was done to industry standards by Argentum staff geologists,
supervised by a Q.P., collecting all down-hole data. All information was recorded on
hand written logs and transferred to Excel spreadsheets. Lithologic logs included:
• Lithology identification and contacts
• Description of geology
• Alteration
• Structure
• Core recovery
• Rock Quality Designation (RQD)
Argentum staff maintains a folder of photographs for each drill hole, including:
• Photos of proposed drill site prior to pad and access construction
• Photos during the pad and access construction
• Photos while drilling
• Photos of the drill site after drill hole completed
• Photos of core in core boxes
• Photos of the drill collar and concrete marker with hole plugged
• Photos of the settling ponds
Assays
Assays were performed on visually altered and mineralized core, with intervals
summarized in Table 6.
Table 6. Drill Hole Interval Sample Result Summary
Hole ID
2012-1
Zone
El Tajo
From
(m)
To
(m)
Interval
(m)
Silver
(g/t)
75.70
81.80
6.10
127.8
81.80
84.85
3.05
workings
84.85
86.80
1.95
Gold
(g/t)
Pb
%
Zn
%
0.21
0.1
0.1
58.0
0.03
0.0
0.1
2012-2
El Tajo
97.00
99.80
2.80
180.4
1.00
2.9
5.9
2012-3
El Tajo
68.00
73.50
4.70
1377.4
0.52
0.6
1.0
70.00
72.00
2.00
2745.0
0.83
1.3
2.1
72.00
72.80
0.80
workings
72.80
75.00
2.20
300.0
0.17
0.1
0.1
and
includes
and
2012-4
El Tajo
47.60
50.60
3.00
311.8
0.60
0.2
0.4
2012-5
El Tajo
72.00
76.40
4.40
43.4
0.25
0.7
1.0
2012-6
El Tajo
100.80
101.80
1.00
143.0
0.31
0.6
2.0
2012-7
El Tajo
13.60
16.10
2.50
403.0
0.19
0.2
0.1
El Tajo
76.60
79.00
2.40
900.0
0.45
0.3
1.0
76.60
77.80
1.20
1645.0
0.65
0.2
1.4
0.79
0.6
1.0
includes
2012-8
La Florida
NSV
2012-9
La Florida
17.20
17.80
0.60
39.1
2012-10
El Tajo
106.00
107.00
1.00
142.0
0.33
0.2
0.6
2012-11
La Florida
59.30
60.80
1.50
88.7
0.06
0.2
0.1
2012-12
La Florida
45.50
47.20
1.70
185.0
0.14
0.1
0.1
2012-13
La Florida
107.50
108.80
1.00
33.2
0.02
0.5
1.4
2012-14
La Florida
44.60
45.80
1.20
65.5
0.17
0.3
0.2
66.40
68.70
2.30
418.7
0.18
14.8
5.8
67.55
68.70
1.15
760.0
0.17
>20.00
7.9
and
includes
2012-15
Bocancha
NSV
2012-16
Bocancha
NSV
2012-17
La Colorada
36.75
38.60
1.85
45.0
0.04
0.4
0.2
and
94.00
104.00
10.00
117.4
0.06
0.1
0.1
includes
95.00
96.00
1.00
166.0
0.07
0.0
0.0
101.00
104.00
3.00
278.6
0.14
0.2
0.2
44.00
45.00
1.00
155.0
0.11
includes
2012-18
La Colorada
2012-19
La Florida
NSV
2012-20
Bocancha
51.90
53.00
1.10
269.0
0.06
0.4
0.4
67.50
70.50
3.00
51.4
0.05
0.2
0.2
23.80
1.00
424.0
0.21
0.4
0.1
and
2012-21
Bocancha
2012-22
El Tajo
22.80
87.00
89.80
2.80
266.4
0.59
0.3
1.3
El Tajo
72.00
72.60
0.60
303.0
0.66
0.1
0.1
84.50
89.70
5.20
437.6
0.18
0.4
0.3
86.80
88.80
2.00
898.5
0.16
0.4
0.5
and
2012-23
and
includes
NSV
2012-24
El Tajo
NSV
2012-25
La Colorada
90.00
90.70
0.70
120.0
0.09
0.3
0.3
2017-26
El Tajo
50.05
51.00
0.95
796.0
0.28
0.6
0.2
Hole ID
Zone
and
2017-27
El Tajo
and
2017-28
El Tajo
and
includes
2017-29
El Tajo
From
(m)
To
(m)
Interval
(m)
Silver
(g/t)
Gold
(g/t)
Pb
%
Zn
%
83.80
85.10
1.30
97.2
0.43
0.3
0.3
51.55
53.05
1.50
32.5
0.05
0.1
0.2
104.50
107.50
3.00
506.4
0.19
0.4
0.7
50.50
53.50
3.00
71.8
0.02
0.0
0.1
64.30
75.30
11.00
288.0
0.23
0.2
0.2
69.30
75.30
6.00
497.7
0.33
0.3
0.3
28.75
29.60
0.85
1151.0
0.15
0.2
0.1
0.0
and
70.50
72.00
1.50
96.0
0.09
0.0
and
93.55
93-95
0.40
135.0
0.08
0.2
0.3
and
96.65
100.30
3.65
328.1
0.55
0.6
1.3
2017-30
El Tajo
121.60
126.00
4.40
170.2
0.36
0.7
0.4
2017-31
El Tajo
145.00
145.85
0.85
160.1
0.05
0.1
0.1
149.20
151.85
2.05
44.1
0.83
0.1
0.4
21.40
22.40
1.00
67.5
0.85
0.0
0.2
75.40
78.20
2.80
152.9
0.60
0.4
0.6
59.70
61.05
1.35
15.5
0.17
0.0
0.1
91.60
93.60
2.00
137.9
1.39
0.6
1.9
15.00
15.35
0.35
491.0
0.89
0.2
0.3
132.25
133.75
1.50
37.8
0.41
0.4
0.9
120.40
122.95
2.55
200.2
0.44
0.6
1.4
and
2017-32
El Tajo
and
2017-33
El Tajo
and
2017-34
El Tajo
and
2017-35
El Tajo
2017-36
El Tajo
71.70
73.65
1.95
853.7
0.31
0.2
0.5
and
135.80
137.10
1.30
41.9
0.17
0.2
0.4
and
144.00
147.70
3.70
179.4
0.05
0.1
0.2
2017-37
106.90
107.20
0.30
57.3
0.00
0.0
0.1
and
El Tajo
116.70
117.40
0.70
63.8
0.03
0.1
0.3
and
130.95
131.35
0.40
85.1
0.01
0.0
0.2
2017-38
El Tajo
56.45
60.85
4.40
65.5
0.04
0.1
0.1
2017-39
El Tajo
36.70
37.10
0.40
28.3
0.06
0.4
0.2
58.00
60.10
2.10
29.8
0.03
0.0
0.0
111.30
112.30
1.00
21.9
0.09
0.4
0.3
114.65
115.65
1.00
85.0
0.45
0.1
0.1
and
2017-40
El Tajo
and
2017-41
El Tajo
117.00
118.20
1.20
30.9
0.06
0.0
0.1
2017-42
El Tajo
85.50
88.40
2.90
449.3
1.44
1.3
1.6
Note: True widths are estimated to be roughly 70% of drill intercept length
El Tajo Zone
El Tajo is the principal target defined to date, demonstrating a good continuity of
mineralization over a tested strike length of approximately 500 metres with 25 drill holes
(Figures 19 and 20). Representative drill sections through the zone are presented in
Figures 21, 22, and 23.
Figure 19.
19 El Tajo
jo Zone Drill Holes
H
(Modified
Modified after Robinson, 2013
2013)
Figure 20. Longitudinal Section of the El Tajo Zone (Robinson, 2013)
Figure 21.. Section 2012-1
2012 1 and 2012
2012-31,
31, El Tajo Zone
Zone.
Figure 22.. Section
Section 2012-3
2012 3 and 2012
2012-26,
26, El Tajo Zone
Zone.
Figure 23. Section 2012-4,
2012 2012-32,
2012 , and 2012
2012-42,, El Tajo Zone
Zone.
11 SAMPLE PREPARATION, ANALYSES AND SECURITY
Rock Samples
Most samples are continuous chip samples, either from surface outcrop, trenches or
from historic mine workings (Table 7). Samples are taken perpendicular to strike of the
veins when possible. The average sample size is 2.4 kg. Several grab samples have
also been taken. In wide areas of exposed mineralization, continuous samples are
taken to give an average grade over width. Sample intervals were painted in the field,
with the sample number and a “T” to indicate the start and finish of each sample.
Samples are placed in standard plastic bags with an inserted sample number tag, and
closed with a plastic pull tie. Descriptions are recorded in the field, and then transferred
to an Excel sheet. This data is imported into GIS. Most samples are photographed.
Table 7. Rock sample locations
Location
Surface Rock Samples
Trench Samples
Underground Mine Samples
Total
Samples
493
437
196
1126
Diamond Drill Samples
Drill core is placed in standard reinforced plastic boxes. Core sampling is done following
logging procedures at the Company's rented housing in Chilacayote with a diamond wet
saw. One half of the core is placed into a labeled plastic bag, along with a sample tag.
The other half of the core is correctly returned to the core box, where intervals are
marked matching the sample. The drill core logging and sampling process and location
are shown in Figure 24.
Preparation and Analyses
Rock and drill sample analysis was completed by ALS CHEMEX ("Chemex"). Chemex
implements a quality laboratory compliant with International Standards Organization.
Sample preparation is done at their office in Guadalajara, Mexico with assays
performed in British Columbia, Canada. Analytical procedures include a 33 element
ICP-AES analysis (ME-ICP61m) and a 50 g FA AA finish for gold (AA-24). Silver assays
exceeding 100 g/t are re-assayed by HCL leach with an ICP-AES or AAS finish (OG62).
Base metals (lead, zinc and copper) exceeding 10,000 ppm (1%) are re-assayed with
results provided in percent (OG-62).
Quality Assurance Protocols
Argentum has implemented a quality assurance program that includes insertion of
certified reference material including blanks and standards into the drill sample stream.
Standards and blanks were purchased from WCM Minerals in Burnaby, B.C. The two
drill phases used five standards (including two blanks) purchased from WCM (Table 8).
Of 1297 total drill samples, 109 (8.4%) were certified reference material. Of the 109
insertions, 68 were standards and 41 were blanks.
Argentum implemented an industry standard "pass / fail" system of comparing Chemex
assays versus WCM certificates, with a “fail” being an assay value more than two
standard deviations from the expected value. The authors are unaware of any
problems, with the exception that the standard PM1140 was too high a grade to be
realistically used.
Table 8. Standards and Blanks Used for the Coyote Project
Standard
PM 1140
WCM Ag g/t
WCM Au g/t
Ag ≤2SD
Ag >2SD
Ag
Pass
Au ≤2SD
Au >2SD
Au
Pass
1658
N/A
16
0
100%
N/A
N/A
N/A
PM 927
40
2.95
35
0
100%
34
1
97.1%
PM1133
757
N/A
15
2
88.2%
N/A
N/A
N/A
BL115
<.3
<.01
16
1
94.1%
17
0
100%
BL117
<.3
<.01
24
0
100%
23
1
95%
Security
Samples are stored in sealed “costales” (rice sacks) within a locked facility at the
Company's house in Chilacayote. The samples are delivered by the Company directly to
the Chemex preparation lab in Guadalajara.
Conclusions
It is the opinion of the authors that the sampling protocols, analytical and quality
assurance procedures, and security measures used by Argentum at the Coyote project
meet industry standards. Standard PM 1140 is considered to be too high a silver grade
to be practical. The certified silver value of this standard is 1658 g/t, requiring two reassays by Chemex. The provided sample size of the standard was generally too small
to allow for assays exceeding 1500 g/t Ag.
Figure 24. Clockwise from upper left: Core cutting and logging facility; Core
photography; Sealed rice sacks with samples; Core logging
12 DATA VERIFICATION
The author D. Studd, M.Sc., P.Geo., visited the Property in September, 2013.
Verification conducted during and after the site visit included:
• Establishing that mapping and rock chip sampling were to industry standards
• Industry standard data base management and using ArcMap GIS software
• Confirmation of drill hole collar locations
• Review of geological and geotechnical logging
• Review of core storage, core splitting, core sampling, sample shipment and
analytical packages
• Review of topographic and elevation control
• Verification of down hole survey techniques and records
• Evaluation of the quality assurance program
• Verification of control samples (standards and blanks)
• Chemex laboratory check assay program
• Verification of pass / fail analysis of standards and blanks
• Collection of rock samples to verify reported assay results (Table 9)
Table 9. Check Samples taken by Geovector, and their Argentum Equivalents.
GeoVector Au
Sample
ppm
GR05451
GR05452
GR05453
GR05454
GR05455
0.063
0.063
0.211
0.152
0.061
Argentum Ag
Sample
ppm
Ag
ppm
49
22
273
299
198
37501
37511
37512
37513
48752
155
75
83
278
190
There is a fair degree of variability in the assay values between those taken by
Argentum and by GeoVector. This is not unexpected, as the samples were chip
samples, and mostly from the stockwork zone on the El Tajo vein, both of which factors
are not conducive to repeatability of exact grades. Samples GR05451-GR05453 were
taken in the stockwork zone, and samples GR05454-GR05455 were taken in the high
grade veining zone. GR05452-GR05454 represent a continuous 3.2 metre swath from
the stockwork zone into the high grade zone. GR05451 was taken in the northern
portion of the El Tajo zone, GR05452-GR05454 were taken in the central portion of the
El Tajo zone, and GR05455 was taken to the south of the El Tajo zone, near where it
meets the La Florida zone.
While the check sample values do not correspond exactly with those obtained in
Argentum’s original samples, they do confirm that mineralization in the El Tajo zone and
on the Coyote project is of the tenor indicated by Argentum’s work. GeoVector notes
that the samples taken across high-grade vein material were very similar to Argentum’s
results, and that across the continuous section of samples (GR05452-GR05454) the
assay value obtained by GeoVector actually exceeds that obtained by Argentum.
13 MINERAL PROCESSING AND METALLURGICAL TESTING
No metallurgical testing has been undertaken on the Coyote Project.
14 MINERAL RESOURCE ESTIMATE
The resource estimate presented below represents the first NI 43-101 compliant
Inferred Resource estimate for the El Tajo Zone on Argentum's Coyote Project. The
resource estimates were commissioned by Argentum and completed by GeoVector on
the Property in 2013, the results of which are reported in a news release issued on
November 21, 2013 (filed on SEDAR). At a cut-off grade of 70 g/t Ag, GeoVector
reports an Inferred Resource of 582,826 tonnes, with a total of 3.88 Moz of Ag
Equivalent at a grade of 209 g/t, including 3.60 Moz Ag at a grade of 192 g/t and 5,053
Oz Au at a grade of 0.27 g/t. To complete the Inferred Resource Calculation GeoVector
assessed drill, trench, and underground sampling data taken in 2011 and 2012 by
Argentum.
The Inferred mineral resource was estimated by Duncan Studd, M.Sc., P. Geo., and
Joseph Campbell, B.Sc., P.Geo., of GeoVector. Mr. Studd and Mr. Campbell are
independent Qualified Persons as defined by NI 43-101. The reporting of the resource
complies with all disclosure requirements for mineral resources set out in the NI 43-101
Standards of Disclosure for Mineral Projects. The classification of the El Tajo Zone
mineral resource is consistent with CIM Definition Standards for Mineral Resources and
Mineral Reserves (2010). There are no mineral reserves estimated for the Property at
this time.
Inverse distance squared interpolation restricted to mineralized domains was used to
estimate silver and gold into the resource block model. Inferred mineral resources are
reported in summary tables in Section 14.9 below.
14.1 Drill File Preparation
The El Tajo Zone mineral resource estimate is based on 25 drill holes totalling 3013.35
metres, with 664 assays (0.25 up to 2.5 metres in length); 87 surface continuous chip
samples (0.3 up to 5.0 metres in length); and 34 underground continuous chip samples
(0.8 up to 2.0 metres in length). Holes were drilled by Major Drilling and logged and
sampled by Argentum; chip samples were collected by Argentum. The 25 drill holes are
spaced 25 to 50 metres apart, with one or two holes per section (Figure 25). The drill
holes tested the El Tajo Zone mineralization down to a vertical depth of 100 metres
below surface. In order to complete the resource estimates, GeoVector was provided
with a drill hole database which included collar locations, hole orientations, and assay
data, and a database of continuous chip samples including 3D locations and assay
data.
The database was checked for errors. The assay database was checked for sample
overlaps and gapping in intervals. The database was checked for typographical errors in
assay values and supporting information on source of assay values was examined.
Generally the database was in good shape and was accepted by GeoVector as is.
Verifications were also carried out on hole and sample locations and topography
information.
A summary of a statistical analysis of assays from El Tajo Zone is presented in Tables
10 and 11. The statistical analysis of the assay data was completed in Gemcom GEMS
6.5.1 software.
Table 10. Summary of all Drill Hole Assay Data from the Drill Database.
Variable
Number of samples
Average Sample Length (m)
Total Length of Assay
Samples (m)
Minimum value
Maximum value
Mean
Median
Variance
Standard Deviation
Coefficient of variation
99 Percentile
Ag (g/t)
664
1.21
Au (g/t)
664
1.21
804.6
804.6
0.15
3780
61.11
3.4
54527.97
233.51
3.82
938
0.002
5.12
0.11
0.012
0.12
0.35
3.23
1.20
Table 11. Summary of all Assay Data used in the El Tajo Zone Resource Estimate.
Variable
Number of samples
Minimum value
Maximum value
Mean
Median
Variance
Standard Deviation
Coefficient of variation
99 Percentile
Vein
Au (g/t) Ag (g/t)
Ag (g/t)
165
0.05
3780.00
14.035
0.05
10158.18
100.79
7.18
349.19
Stockwork
Au (g/t)
456
0.001
2.23
0.026
0.0025
0.01
0.11
4.52
0.54
0.05
421.00
11.61
2.62
1682.73
41.02
3.53
225.5
0.001
1.65
0.047
0.008
0.019
0.140
2.988
0.597
Figure 25.
25 Isometric View looking North (shown by green axis) showing the D
Drill Hole
Distribution
istribution,, with Topography
Topography for the El Tajo Zone
Zone.
14.2 Resource Modelling and Wireframing
Mineralization in the El Tajo Zone
e is contained in quartz veins hosted in intermediate
tuffs and agglomerates. The high grade silver is confined to quartz veins which are
surrounded by low grade stockwork zones.
zones. The Vein and Stockwork zones have been
modelled as separate domains to better control distribution of grade in the resource
model.
Wireframe models were built in Gemcom GEMS 6.5 softwa
software,
re, using drill hole and
continuous-chip
continuous chip sample assay data from surface, trenches, and underground workings,
projected onto sections cut perpendicular
perpendicular to the vein trend and spaced 25 metres apart.
Drill intercepts that failed to meet a grade criteria of 20 g/t Ag over 4 metres were not
included in the domains. The domains were extended to surface, and an average of 25
metres along strike and down dip from drill intercepts. Vein and Stockwork zones were
interpreted on each section, and these zones were tied together to generate three
threedimensional shells for each domain (Figure 26).
26
Topographic data generated from 20m contours from the Mexic
Mexican
an Instituto Nacional de
Estadistica Geografica e Informatica (INEGI) proved to be too coarse to be accurate for
modelling purposes. A second topographic surface was generated in Gemcom by
interpolation from drill collar locations, surface continuous chip sample locations,
surveyed to <5cm accuracy for Argentum and provided to the author
authors.. The Vein and
Stockwork domain shells were clipped to this topographic surface.
Figure 26.
26 Isometric View
View looking North (shown by green axis
axis)) showing
howing the El Tajo Zone
Stockwork (blue) and Vein (red)
(red) Resource M
Models,
s, and Drill Hole L
Locations.
ocations.
14.3 Composites
The drill hole assay sample database available for the El Tajo Zone resource totalled
664 samples representing 804.6 metres of drilling (Table 10). The average width of drill
hole samples is 1.21 metres, within a range of 0.25 metres up to 2.5 metres. Of the
total assay population, 79% were between 0.5 and 1.5 metres, 8% were below 0.5
metres, and 13% were above 1.5 metres. 1.0 metre composites were used for the
resource estimate.
Composites for drill holes were generated starting from the collar of each hole and
totalled 3031. Composites created in un-sampled areas – typically outside the borders
of the Vein and Stockwork domains- were assigned a gold grade value of 0.001 g/t.
The assay sample database available for the surface and underground continuous chip
samples totalled 111 samples, representing 147.95 metres of continuous chip sampling.
The samples varied from 0.3 to 5.0m in length. Compositing was not applied.
The combined database of drill assay composites and continuous chip sample assays
was intersected with the Vein and Stockwork domains (Table 11). 165 composites and
assays occurred within the Vein domain, and were used to interpolate grade into the
block model. 456 composites and assays occurred within the Stockwork domain, and
were used to interpolate grade into the block model.
14.4 Grade Capping
For the El Tajo Zone resource estimates, the composites were domained into
mineralization and waste based on whether they intersected the resource domains.
Based on a statistical analysis of the composite database from each resource model
(Table 11), it was decided that a 750 g/t Ag cap was required on the composite
population in the Vein domain, and a 300 g/t Ag cap was required on the composite
population in the Stockwork domain to limit high values. The caps were applied to ten
samples in the Vein domain and four samples in the stockwork domain. Analysis of the
spatial location of these samples and the sample values proximal to them led
GeoVector to believe that the high values were legitimate parts of the population;
however, including these high composite values uncut would have a significant impact
to the overall resource estimate.
14.5 Specific Gravity
Argentum collected 16 samples of drill core from the mineralized zones in holes 2012-1,
2012-2, 2012-3, 2012-4, and 2012-5 (Table 12). These samples ranged from 0.6 to
1.02 kilograms, and were sent to Chemex for specific gravity analysis. Chemex
weighed the samples dry and while suspended in water. The specific gravity is
calculated as equal to the weight of the dry sample divided by the difference between
the dry weight and the weight while suspended in water. The average specific gravity
(weighted by sample mass) of these samples was 2.544 t/m3. This value was used for
the resource model.
14.6 Block Model
Separate block models (with identical dimensions and locations) were created for the
Vein and Stockwork domains (Figure 27) within WGS84 space. Block model dimensions
are listed in Table 13. Block model size was designed to reflect the nature of the
geological model. Since the vein-hosted mineralization is typically less than 10 metres
wide, and in many cases significantly narrower than that, cubic blocks of 2 metres were
used in order to avoid composing the entire mineralization model out of partial blocks.
The model was intersected with the resource models to exclude blocks outside of the
Vein and Stockwork domains.
Table 12. Specific Gravity Sample Origins and Results.
SG
Sample #
DDH
From
To
Length
Description
Specific
Gravity
1
2012-1
73.36
73.56
0.20
Hanging wall stockwork
2
2012-1
77.95
78.11
0.16
Hanging wall stockwork
3
2012-1
79.4
79.6
0.20
Vein zone
4
2012-1
88.05
88.22
0.17
Footwall stockwork
5
2012-1
89.15
89.35
0.20
Footwall, weak stockwork
6
2012-2
95.4
95.65
0.25
Strong veining
7
2012-2
96.73
97
0.27
Strong veining
8
2012-2
99.8
100.05
0.25
Footwall, stockwork
9
2012-3
69.45
69.68
0.23
Vein zone
10
2012-3
70.1
70.27
0.17
Vein zone
11
2012-3
75
75.18
0.18
Vein at footwall
12
2012-4
48.05
48.2
0.15
13
2012-4
44.16
44.4
0.24
Vein
Hanging wall weak
stockwork
14
2012-4
52.8
52.95
0.15
footwall, weak stockwork
15
2012-5
76.3
76.5
0.20
Vein
16
2012-5
76.8
76.94
0.14
Footwall vein
Table 13. El Tajo Zone Resource Block Model Geometry.
Origin (WGS84, Zone13)
Extent
Block Size (m)
Rotation
X
538800
137
2
Y
2225000
347
2
0°
Z
2200
132
2
2.57
2.52
2.57
2.57
2.52
2.4
2.57
2.61
2.43
2.58
2.56
2.43
2.61
2.48
2.65
2.6
Figure 27.
27 Isometric View looking North
N
(shown by green axis) shows the El Tajo Zone
Vein Shell
hell (red), Search Ellipse
Ellipse (dark blue),
blue) Block Model
odel Extents
xtents (blue box)
box), and Drill
rill
Holes.
14.7 Grade Interpolation
The primary aim of the interpolation was to fill all the blocks within the resource domain
models with grade. Grades for Ag and Au were interpolated into the El Tajo Zone Vein
and Stockwork resource blocks by the inverse distance squared (ID2) method using a
minimum of 2 and maximum of 12 composites to generate block grades in the Inferred
category.
The size of the search ellipse, in the X, Y, and Z direction, used to interpolate grade into
the domain models, is based on orientation of the mineralized vein (Figure 27). The
size of the search ellipse was set at 100 x 100 x 15 metres in the X, Y, and Z directions.
The search ellipse was rotated with a principal azimuth of 270°, a principal dip of -70°,
and an intermediate azimuth of 100°.
14.8 Model Validation
The total volume of the blocks in each resource model, at a 0 cut-off grade value,
compared to the volume of each wireframe model was acceptably similar, with the block
volume being 96.3% of the volume of the wireframe model. The size of the search
ellipse and the number of samples used to interpolate grade achieved the desired effect
of filling the resource models and very few blocks had zero grade interpolated into them.
Because ID2 interpolation was used, the sample grades would be expected to show
good correlation with the modelled block grades. Visual checks of block grades of silver
against the composite data used to interpolate grade was conducted in 3D (Figure 28),
on vertical sections (Figure 29), and in plan view (Figure 30). The resource model
showed excellent correlation between block grades and drill intersections. A statistical
comparison of block grades with composite grades was also conducted. The El Tajo
Zone resource model is considered valid.
From maps and sections provided by Argentum, and from direct observation by the
author D. Studd, GeoVector estimates that historic mines and workings have removed
approximately 5% of the volume of the El Tajo Zone model. Consequently, all tonnages
in this resource estimate have had a 5% reduction applied by GeoVector to the model
results before reporting.
Figure 28.
28 Isometric
ric Views looking Northwest
Northwest (the green box axis points North) sshowing
howing
the El Tajo Zone Stockwork (above) and Vein (below) Resource B
Blocks.
locks.
Figure 29.
29 Vertical sections looking north and
and stepping south to north show the El Tajo
Zone resource blocks and drill holes. Composite drill assays are shown by
colour-coded
colour coded histogram along hole traces
traces. A) section 2225475N, B) section
2225575N.
2225575N
(A)
(B)
Figure 30.. Plan View Section at 2090 m elevation, showing El Tajo DDH Traces, Assay
Values, and Interpolated Block Grades.
14.9 Resource Classification
The Mineral Resource estimate is classified in accordance with the CIM Definition
Standards for Mineral Resources and Mineral Reserves (2010). Based on the current
drill sample database, it is considered that there is sufficient drill density and confidence
in the distribution of silver and gold within the resource models to classify El Tajo zone
mineralization as Inferred. Therefore, all material in the Resource estimates is classified
as Inferred.
14.10 Resource Reporting
An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and
grade or quality can be estimated on the basis of geological evidence and limited
sampling and reasonably assumed, but not verified, geological and grade continuity.
The estimate is based on limited information and sampling gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings and
drill holes. (CIM, 2010)
Due to the uncertainty that may be attached to Inferred Mineral Resources, it cannot be
assumed that all or any part of an Inferred Mineral Resource will be upgraded to an
Indicated or Measured Mineral Resource as a result of continued exploration.
Confidence in the estimate is insufficient to allow the meaningful application of technical
and economic parameters or to enable an evaluation of economic viability worthy of
public disclosure. Inferred Mineral Resources must be excluded from estimates forming
the basis of feasibility or other economic studies.
GeoVector has estimated a range of Inferred resources at various Ag cut-off grades for
the El Tajo Zone by domain (Table 14) and in total (Table 15). At a cut-off grade of 70
g/t Ag, the El Tajo zone is estimated to contain an Inferred Resource of 582,826 tonnes,
with a total of 3.88 Moz of Ag Equivalent at a grade of 209 g/t, including 3.60 Moz Ag at
a grade of 192 g/t and 5,053 Oz Au at a grade of 0.27 g/t.
Table 14. A Range of Inferred Resource Estimates for the Vein and Stockwork Domains
in the El Tajo Zone.
Domain
STOCKWORK
VEIN
Cut-off
>150
>130
>110
>90
>70
>50
>30
>15
>0
>150
>130
>110
>90
>70
>50
>30
>15
>0
g/t
g/t
g/t
g/t
g/t
g/t
g/t
g/t
g/t
g/t
g/t
g/t
g/t
g/t
g/t
g/t
g/t
g/t
Tonnage
kt
Ag
g/t
Ag
Moz
Au
g/t
Au
oz
Ag Eq
g/t
Ag Eq
Moz
11.657
17.428
23.880
33.669
50.507
100.122
176.226
336.961
2,028.085
354.446
401.840
436.248
464.433
532.320
602.542
634.970
635.118
635.118
198.41
178.49
162.50
144.40
122.20
90.34
68.55
45.57
12.66
244.96
232.58
223.72
216.21
198.50
182.17
175.19
175.16
175.16
0.074
0.100
0.125
0.156
0.198
0.291
0.388
0.494
0.826
2.792
3.005
3.138
3.229
3.398
3.529
3.577
3.577
3.577
0.53
0.48
0.44
0.40
0.36
0.25
0.18
0.13
0.05
0.28
0.28
0.28
0.28
0.26
0.24
0.24
0.24
0.24
197.754
267.578
336.147
433.819
591.297
819.742
1,028.436
1,392.041
2,962.424
3,187.198
3,616.389
3,922.014
4,145.925
4,461.862
4,723.237
4,887.301
4,887.574
4,887.574
228.38
205.61
187.37
167.17
142.88
104.81
78.86
52.86
15.24
260.84
248.48
239.61
231.98
213.31
196.02
188.79
188.75
188.75
0.09
0.12
0.14
0.18
0.23
0.34
0.45
0.57
0.99
2.97
3.21
3.36
3.46
3.65
3.80
3.85
3.85
3.85
*Ag Eq values calculated using 3-year rolling average prices for Ag and Au of US$30.51/oz and US$1555.39/oz,
respectively. (prices compiled from Index Mundi, 2013)
Table 15. A Range of Inferred Resource Estimates for the El Tajo Zone. The Resource
for the El Tajo Zone is Reported at a Silver Cut-off Grade of 70 g/t (red)
Zone
El Tajo
Cutoff
Tonnage
AG
AG
AU
Au
Ag Eq
Ag Eq
kt
g/t
Moz
g/t
oz
g/t
Moz
>150 g/t
366.10
243.47
2.87
0.29
3384
259.61
3.06
>130 g/t
419.27
230.34
3.11
0.29
3883
246.50
3.32
>110 g/t
460.13
220.55
3.26
0.29
4258
236.70
3.50
498.10
211.36
3.39
0.29
4579
227.41
3.64
582.83 191.89
3.60
0.27
5053
207.02
3.88
>90 g/t
>70 g/t
>50 g/t
702.66
169.09
3.82
0.25
5542
182.85
4.13
>30 g/t
811.20
152.02
3.97
0.23
5915
164.75
4.30
>15 g/t
972.08
130.23
4.07
0.20
6279
141.51
4.42
>0 g/t
2663.20
51.41
4.40
0.09
7850
56.56
4.84
*Ag Eq values calculated using 3-year rolling average prices for Ag and Au of US$30.51/oz and US$1555.39/oz,
respectively. (prices compiled from Index Mundi, 2013)
14.11 Disclosure
GeoVector does not know of any environmental, permitting, legal, title, taxation, socioeconomic, marketing or political issue that could materially affect the Mineral Resource
Estimate. In addition GeoVector does not know of any mining, metallurgical,
infrastructural or other relevant factors that could materially affect the Mineral Resource
estimate.
15 MINERAL RESERVE ESTIMATES
No mineral reserve estimates have been calculated for this project.
16 MINING METHODS
This is beyond the scope of this report.
17 RECOVERY METHODS
This is beyond the scope of this report.
18 PROJECT INFRASTRUCTURE
This is beyond the scope of this report.
19 MARKET STUDIES AND CONTRACTS
This is beyond the scope of this report.
20 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY
IMPACT
This is beyond the scope of this report.
21 CAPITAL AND OPERATING COSTS
This is beyond the scope of this report.
22 ECONOMIC ANALYSIS
This is beyond the scope of this report.
23 ADJACENT PROPERTIES
There are several concessions adjacent to the Coyote project however, to date none
have been field evaluated by Argentum and their legal status is uncertain. There is no
evidence of any exploration activities on any adjacent properties. The Tototlan del Oro
gold mine ~15 km northeast of the Coyote project is reportedly in low scale production
by a small private Mexican company (J. Lopez, Argentum, personal communication,
03/09/2013). Their concessions are not contiguous to the Coyote project. Argentum
has an option on the La Victoria project, which is 40 linear km to the north. The La
Victoria project is centered around historical silver-gold mines on similar epithermal
veins. Soltoro’s El Rayo project lies about 55 linear km to the northeast. A NI 43-101
compliant Resource Estimate on the El Rayo project reports 42.2 Mt at 57.11 g/t Ag for
a total of 77.4 Moz Ag of Measured and Indicated Resources (Agnerian, 2012).
24 OTHER RELEVANT DATA AND INFORMATION
All relevant data and information regarding the Property is included in other sections of
this Technical Report. There is no other relevant data or information available that is
necessary to make the Technical Report understandable and not misleading.
25 INTERPRETATION AND CONCLUSIONS
Coyote is an early stage exploration project. Work completed to date is to industry
standards. The project essentially controls the majority of the historic San Miguel de la
Sierra mining district. The project area contains dozens of epithermal low sulphidation
vein systems and stockwork zones with strong silver values and anomalous gold. Base
metals are relatively low. Individual vein strike lengths have been mapped up to 1
kilometre (La Florida Vein). Vein widths typically range from 1 to 5 metres, with vein
dips generally steeply to the west. Several zones of quartz stockworking and silica
replacement have been mapped, with widths exceeding 35 metres.
Argentum has completed 42 diamond drill holes totaling 4,842.4 metres. The drilling
was divided into two phases. Phase 1 consisted of 25 holes between January and
March 2012. Phase 2 consisted of 17 during September and October of 2012. Drilling
programs completed to date have tested portions of four vein systems, but with a focus
on the El Tajo zone with 25 holes. Drilling on the La Florida, Bocancha and La
Colorada zones returned mixed results, but confirmed the presence of multi-ounce
silver grades. Drilling on the El Tajo zone reported encouraging results, demonstrating
a good continuity of mineralization over a tested strike length of approximately 500
metres.
Access and infrastructure are excellent. All underlying agreements and permits are in
good standing.
Using the results of Argentum’s exploration work and drilling on the El Tajo Zone,
GeoVector has modelled the zone into two domains – high-grade vein and low-grade
stockwork. At a cut-off grade of 70 g/t Ag, an Inferred Resource is reported of 582,826
tonnes, with a total of 3.88 Moz of Ag Equivalent at a grade of 209 g/t, including 3.60
Moz Ag at a grade of 192 g/t and 5,053 Oz Au at a grade of 0.27 g/t.
The authors also believe there is excellent potential for defining economic vein
mineralization at the San Rafael zone, which to date has received no drilling. Depth
potential in all of the zones is untested. Zones such as Florida and Bocancha which had
negative drill results near surface could have potential mineralization at deeper levels.
26 RECOMMENDATIONS
The authors recommend a third phase of drilling focusing on the El Tajo zone with the
objective of expanding the Inferred 43-101 resource and upgrading some of the
resource to Indicated status. The drilling program should be designed to further test El
Tajo along strike and at depth.
Additional exploration is warranted on the other zones of mineralization within the
project. The San Rafael zone remains undrilled. San Rafael has been mapped on
surface and from underground workings over a strike length of ~600 metres, with
encouraging geochemistry. The southern portion of the La Florida trend is also
promising in surface sampling and has not been drill-tested, as is also the case with the
La Valenciana Zone.
There is also a possibility that there are more mineralized zones than those already
identified in outcrop and by historical workings; geochemical soil sampling could be an
effective method of locating those that may sit below the overburden.
Metallurgical testing of mineralized core from the El Tajo Zone is recommended with the
objective of determining the recoverability of Ag and Au from the mineralized rock and
economic value of the deposit.
Table 16 indicates an estimated budget for the work recommended by GeoVector.
Table 16. Estimated Budget for Recommended Work on the Coyote Project.
Component
2,500 metres infill and extension drilling at
$150/metre, El Tajo Zone
4,000 metres exploratory drilling at $150/metre,
San Rafael, La Florida, and La Valenciana
Zones
Soil surveying: 1,000 samples at $50/sample
Metallurgical testing
Sub-Total
Contingency (10%)
TOTAL
Cost
$375,000
$600,000
$50,000
$75,000
$1,100,000
$110,000
$1,210,000
27 REFERENCES
Agnerian, H., 2012. Technical Report on the El Rayo Silver-Gold Project, Jalisco State,
Mexico. Soltoro Ltd. (available at www.sedar.com).
Baker & Mackenzie. 2011; Mining Law in Mexico: An Overview.
(http://www.bakermckenzie.com/files/Publication/beb300ad-c62c-4a78-86703482c4901bfa/Presentation/PublicationAttachment/088cbda7-a0d1-4bf5-ae1035a5f343b534/mm_mexico_mininglawmexico_2011.pdf; accessed 01/10/2013)
Camprubi, A., and Albinson, T., 2007. Epithermal deposits in Mexico – Update of
current knowledge, and an empirical classification. GSA Special Papers 2007, v. 422,
p. 377-415.
Canadian Institute of Mining, Metallurgy, and Petroleum, 2010. CIM Definition
Standards for Mineral Resources and Mineral Reserves.
(http://web.cim.org/UserFiles/File/CIM_DEFINITON_STANDARDS_Nov_2010.pdf;
accessed 01/10/2013)
Cia. Minera Lluvia de Oro, S.A. de C.V., 1999. Sindrome de Piedra Project Potential
Report, Jalisco, Mexico.
Ferrari, L., Orozco-Esquivel, T., Manea, V., Manea, M., 2012. The dynamic history of
the Trans-Mexican Volcanic Belt and the Mexico subduction zone. Tectonophysics,
Volumes 522–523, Pages 122–149.
Index Mundi, 2013. Commodity Prices. (http://www.indexmundi.com/commodities/;
accessed 27/09/2013)
Lambert, G., 2011. Report on Total Field Magnetometer and Time-Domain Induced
Polarization Surveys. Private report for Argentum Silver Corp.
Reyes, J.A.M., Suarez, H.S., Gutierrez, M.O., 1984. Prospeccion Minera en la Reserva
Nacional San Miguel de la Sierra, Comprendida en los Municipios de Ayutla, Cuautla Y
Tomatlan, Estado de Jalisco. For the Consejo de Recursos Minerales.
Robinson, J.R., 2013. Technical Report for the Coyote Project, Jalisco State, Mexico,
for Argentum Silver Corp., (available at www.sedar.com).
Servicio Geologico Mexicano, 1999; Carta Geologico Minera. Puerto Vallarta F13-11.
1:250,000.
Servicio Geologico Mexicano, 2006. Carta Geologico Minera, Ayutla, F13-D82.
1:50,000.
Simmons, S.F., and Browne, P.R.L., 2000. Hydrothermal minerals and precious metals
in the Broadlands-Ohaaki geothermal system; implications for understanding lowsulfidation epithermal environments. Economic Geology, v95, pp.971-999.
QP CERTIFICATE – JOE CAMPBELL
To Accompany the Report titled "Technical Report on the Resource Estimate on the
El Tajo Zone, Coyote Project, Municipalities of Cuautla and Ayutla, Jalisco, Mexico",
dated November 22nd, 2013 (the "Technical Report").
I, Joseph W. Campbell, B. Sc. (H), P. Geo. of 10 Barrhaven Crescent, Nepean, Ontario, hereby
certify that:
1.
I am a consulting geologist with GeoVector Management Inc., 10 Green Street Suite 312
Ottawa, Ontario, Canada K2J 3Z6
2.
I am a graduate of Acadia University having obtained the degree of Bachelor of Science –
Honours in Geology in 1980.
3.
I have been employed as a geologist since May of 1980.
4.
Since 1980 I have performed resource and reserve estimating in several commodities
including extensive experience in gold and silver (epithermal and mesothermal), copper and
copper/gold porphyries, nickel (sulphide and laterite) and uranium deposits.
5.
I am a member of the Association of Professional Geoscientists of Ontario (the “APGO”) and
use the title Professional Geologist (P.Geo.).
6.
I have read the definition of “Qualified Person” set out in National Instrument 43-101 (“NI 43101”) and certify that by reason of my education, affiliation of my professional association
and past relevant work experience, I fulfill the requirements to be a “Qualified Person” for the
purposes of NI 43-101.
7.
I am responsible for Sections 12 and 14 of the Technical Report.
8.
I have no prior involvement with the property that is the subject of the Technical Report.
9.
I am independent of Argentum Silver Corp. as defined by Section 1.5 of NI 43-101.
10.
As of the date of this certificate, to the best of my knowledge, information and belief, the
Technical Report contains all scientific and technical information that is required to be
disclosed to make the Technical Report not misleading.
11.
I have read NI 43-101 and Form 43-101F1 (the “Form”), and the Technical Report has been
prepared in compliance with NI 43-101 and the Form.
12.
Signed and dated this 22nd day of November, 2013 at Ottawa, Ontario.
Joseph W. Campbell, B.Sc. (H), P.Geo.
QP CERTIFICATE – DUNCAN STUDD
To Accompany the Report titled "Technical Report on the Resource Estimate on the
El Tajo Zone, Coyote Project, Municipalities of Cuautla and Ayutla, Jalisco, Mexico",
dated November 22nd, 2013 (the "Technical Report").
I, Duncan Studd, M. Sc., P. Geo. of #507, 1433 Wellington Street West, Ottawa, Ontario, hereby
certify that:
1. I am a consulting geologist with GeoVector Management Inc., 10 Green Street Suite 312
Ottawa, Ontario, Canada K2J 3Z6
2.
I am a graduate of Carleton University having obtained the degree of Bachelor of Science –
Honours in Geology in 2006, and the degree of Masters of Science in Earth Sciences in 2010
3.
I have been employed as a geologist from May of 2006 to September of 2008. I have been
continuously employed as a geologist since September of 2010.
4.
I have been involved in mineral exploration for gold, silver, copper, zinc, nickel, uranium, and
platinum/palladium in Canada, the United States, and overseas at the grass roots to
advanced exploration stage since 2006.
5.
I am a member of the Association of Professional Geoscientists of Ontario (the “APGO”)
(membership #2290) and use the designation P.Geo.
6.
I have read the definition of “Qualified Person” set out in National Instrument 43-101 (“NI 43101”) and certify that by reason of my education, affiliation of my professional association
and past relevant work experience, I fulfill the requirements to be a “Qualified Person” for the
purposes of NI 43-101.
7.
I am responsible for all Sections of the Technical Report.
8.
I have had no prior involvement with the property that is the subject of the Technical Report.
9.
I have personally inspected the Coyote project property and drill core in September, 2013.
10.
I am independent of Argentum Silver Corp. as defined by Section 1.5 of NI 43-101.
11.
As of the date of this certificate, to the best of my knowledge, information and belief, the
Technical Report contains all scientific and technical information that is required to be
disclosed to make the Technical Report not misleading.
12.
I have read NI 43-101 and Form 43-101F1 (the “Form”), and the Technical Report has been
prepared in compliance with NI 43-101 and the Form.
13.
Signed and dated this 22nd day of November, 2013 at Ottawa, Ontario.
Duncan Studd, M. Sc., P.Geo.