Chabuca Geology Report

Ruby Trust
Mining Group
Chabuca Mine
Chabuca
Reserve
Study
Chabuca Reserves
There are five mountain groups that are gold-bearing.
During past years, the mining methods, very primitive, have involved rainwater pouring down the
mountain faces, and thereby loosening the gold embedded therein. This rainwater containing gold,
magnetite, sand, etc. washed down a primitive sluice system involving rocks set on end. These
rocks trapped the heavier gold and magnetite and the remainder went on downstream.
The rocks were removed periodically and the
concentrated gold was removed along with the
magnetite.
This material was then processed by hand in gold pans
and the gold removed by hand, using a system of
drying, then blowing, or in some cases, mercury
amalgamation.
In the amalgamation process, the mercury is
thoroughly mixed with the gold concentrate. The
mercury captures the gold, and nothing else. The
mercury and gold mixture is then heated, the mercury
evaporates, and the gold remains.
While our sophisticated mine is under construction,
we will continue to use the rock sluice system in
place, with about 800 ft. of rock sluices. However, we
will not process the concentrated material removed
from the rocks by hand, but instead will use a
sophisticated gold recovery system shown on the
following page.
We will always continue to use the rock sluice system, and during the rainy season, later October
through April, we will be able to recover considerable quantities of gold.
Mountain Zones
Geological Study
In Peru, as in most of Latin America, Europe and Africa, geological studies are done under the
guidelines of the Geological Society of South Africa standards. (GSSA) allows for a more realistic
and liberal interpretation of the reserves.
For example, under the GSSA guidelines, there are five levels of reserve determination. The first
two are in use everywhere:
Proven Reserves
Probable Reserves
Under GSSA, the third level of reserve determination is
Possible Reserves
This allows for calculations and interpolations of sampling. For example, there are two mines on
the same vein, one is above the other. Both mines have approximately the same values. The
proven/probable reserves calculations can only be taken from in mine sampling, even in-mine core
drilling. Possible reserves takes into account the value of the area between the two levels what
hasn’t been sampled, but is obviously close to the average of the two existing mines.
The fourth level of mine reserve calculations are:
Measured Reserves.
For example, there is a mountain. The dimensions of the mountain can be determined. Sampling
can be done on the surface and sub-surface, but not core drilling. The samples taken will give an
average value per ton of the areas sampled. Now taking the length of the mountain, the width of the
mountain and the height of the mountain, divided by two and multiplied by the value of the samples
will give you the measured reserves. It follows this formula:
L = Length, W = Width, H = Height, S = Sample value (average)
L x W x H ÷ 2 x S = Measured Reserves
The final and fifth calculation are
Inferred Reserves
In a word, this is the opinion of the geologist concerning the reserve potential. It is his “Gut
Feeling” about what the real potential of the mine could be. This value is “Inferred” from the
measured reserves, and could extend below the surface of the existing ground (in the case of an open
pit operation) because that has not been measured. It might also be the new level of an underground
mine below the existing level. None of this is proven, or even measured, but is rather a logical
assumption.
How About Chabuca?
In the case of Chabuca, it is an existing mining operation. The gold taken from the primitive sluice
system, and the samples taken of those concentrates, are surely proven. It is happening right now,
today and every day.
Also, the sampling done on the five mountains of alluvial gold, basically surface sampling, would
give additional proven reserves.
Based on that, the Probable reserves would take into consideration the fact that the five mountains
are actually an old river bed, and the gold was originally a placer deposit over three million years
ago. Placer (river) gold is richer the deeper it is. Hence, the Probable reserves can be determined
from the surface sampling and extending into the mountain to a depth of 5 meters or so.
For purposes of this study, the bulk of the reserve calculations are Measured Reserves. We were
able to determine the size of the five mountains. The sampling done was extensive, although
superficial, and using the formula above, we were able to determine the “measured” reserve value
of this mine.
On the following pages we are considering the five mountains individually. While we are talking
about “five” mountains, actually they are all connected, and all part of the same ancient river. When
the Andes Mountains here formed, in the terciary geological period (over 3 million years ago), the
ancient rivers were raised up, and today are in a line. The first page following is the mountainous
zones.
One of the alluvial zones exposed.
All five zones are considered individually on the
following pages.
Five Reserves Zones
There are five mountain groups that are gold-bearing.
Reserve Zone 1
Reserve Zone 2
Reserve Zone 3
Reserve Zone 4
Reserve Zone 5
The Reserve Zone that covers the entire Chabuca Mine is approximately 5,200 meters in length,
with an average width of 1,200 meters. The depth, from the top of the mountains to the valley floor
is 170 meters. The area covered would be 6,240,000 square meters.. The depth of 170 meters would
then create a block zone of 1,060,800,000 cubic meters. Considering the slope from ground level
upward to a mine crest would be roughly one half the volume, the final volume is:
530,400,000 cubic meters of gold bearing material.
This figure, using the formula in the diagram to the right, the actual volume in cubic meters would
be
530,400,000 m3
The next step is to convert cubic meters into tons metric. In converting material to tons metric, that
can vary widely from 1.4 to 2.8, depending on the weight and specific gravity of the material. The
mountains in the Chabuca alluvial gold areas are mostly rock, sands, some magnetite, very little
earths. Thus the conservative figure of 1.8 was selected, while the actual conversion would be
closer to 2.3 – 2.4. Thus the tons metric volume would approximate:
954,720,000 Tons Metric
The average richness of samples taken at random, although high-grade concentrate samples are not
considered.: The average value of those samples would be
1.0139 ounces of gold per ton metric.
That amount, times the metric tons would give us an Inferred Reserve of 967,990,608 ounces
of gold in the Chabuca Mine.
Using the Geologic Society of South Africa (GSSA) standards,.
PROVEN, PROBABLE, POSSIBLE, MEASURED, INFERRED, this reserve would fall into the
categories of INFERRED. The gold zones have not been drilled and therefore, the other categories
are not permitted.
The total value of the reserves would therefore be over a trillion dollars.
As indicated above there are five smaller zones contained within the property. These are called
Mountain Zones and are individually examined below.
It should be noted that while the lowest classification, Inferred Reserves, is being used for the total
mine reserves, actually the interior of the mountains is fully exposed (see photos) and samples taken
would be indicative of the gold content of each mountain examined. Therefore, a classification of
PROBABLE can reasonably be used for the Mountain zones.
Mountainous Zone One
This zone was at the upper end of the mountainous zone, and this is where the open pit mining
operation will begin shortly after mountain zone 3 has commenced. It will be reasonably close to
the plant site.
There is a slight overburden of soil and vegetation that must be first removed. In the jungle, the soil
is always very thin, as is the case here. Over a long period of time the natural rainfall has leached
gold from this mountain, and this gold has been recovered from the stream at the bottom of this
mountain.
The top of the mountain is at a level of 2,000 meters above sea level (6,200 ft), yet it is still tropical
and considered the edge of the jungle.
The length of the zone is 485 meters. The height of the mountain is 280 meters. The width of this
zone, determined from topographic maps, is 660 meters. Thus the area of this zone is 485 x 280 x
660, which equals 89,628,000 cubic meters. Half of that is 44,814,000 cubic meters.
The sampling average was 0.62 ounces of gold per cubic meter, or the gold value of this mountain
is approximately 27,784,680 ounces of gold.
Mountainous Zone Two
This mountainous zone is just below Zone 1. The overburden is about the same thickness, and that
would be removed prior to beginning the open pit mining operation. Zones one and two will both
be mined at the same time.
Actually this entire mountain is gold-bearing, and while only a part has been naturally eroded, the
entire mountain is gold bearing material.
The stream at the bottom is where the naturally eroded gold is deposited in a series of primitive but
effective rock sluices. Both zones 1 and 2 feed this stream.
The dimensions of the mountain, where visible, are length 715 meters, width 642 meters and the
height is 316 meters. The volume of this mountain thus is 715 x 642 x 316, or 145,053,480 cubic
meters. Cut in half it would be 72,526,740 cubic meters.
The gold value as determined by sampling is 0.47 ounces per cu. Mt., giving this mountain a value
of 34,087,568 ounces of gold.
The photo above was taken at great distance, and a person would show as a tiny black dot near the
stream.
Mountainous Zone Three
This is the richest of the mountainous zones. This deposit has been leaching during rainfall into the
stream below. This is the same stream as above, but is larger due to additional water coming from
several small streamlets which feed the river.
This mountain, the richest and also closest to the plant site will be the first place the mining will
begin. The small building in the foreground will be the site of the alluvial processing plant. Using
a conveyor system, this mountain will provide the initial material to be processed in the plant.
As you can see, the deposit actually extends across the stream. At one time this ancient river was
very large. No immediate attempt will be made to mine the deposit on the plant side of the river,
it has not been examined and samples have not been taken.
The length of the mountain is approximately 560 meters. The height of the mountain is 420 meters,
and the width, determined from topographical maps is 710 meters. It is a large deposit.
560 x 420 x 710 meters = 166,992,000 cubic meters. Divided by 2 the mountain volume is
83,496,000 cubic meters.
The gold value from this mountain is 1.23 ounces per cu. mt. giving the reserves of this mountain
102,700,080 ounces of gold.
Mountainous Zone Four
This mountain zone is below and down from the other three zones. It will be eventually mined, after
the zones 1, 2 and 3 have been mined to the ground level.
This zone is also smaller than the first three, but also rich in alluvial gold. The material is finer, less
large rocks to remove before processing, and would be easily mined. It is considerably downstream
from the first three zones. It is also richer than zones 1 and 2.
The length of the zone is 270 meters. The width is 214 meters and the height is 316 meters. The
zone would have 270 x 214 x 316 meters = 18,258,480 cubic meters divided by 2 = 9,129,240 cubic
meters of alluvial deposit.
The gold values for this mountain is 1.16 ounces of gold per cubic meter, or 10,589,918 ounces of
gold.
Further, it is not on the main stream and the little stream at the base feeds the primitive rock sluice
below the rock sluice system employed by the feed from zones 1, 2 and 3.
Mountainous Zone Five
This mountain zone is also small. It is below the other zones and would not be mined for several
years. An attempt has been made to develop a primitive rock sluice system, and can be seen in the
foreground.
As can be seen, the material on the mountain face is heavily laden with rock, and the rock sluice that
was started is constructed from rock from the mountain face. The mountain face is to the left, and
to the right is reasonable flat land that has not been explored.
It is, however, very rich and the gold sampling done averaged 1.67 ounces of gold per cubic meter.
That is probably why the primitive sluice was constructed so far from the mining camp.
The dimensions of the deposit are length 358 meters, width 269 meters and the height is 153 meters.
This makes a total volume of 14,734,206 cubic meters. Divided by 2 equals 7,367,103 cubic meters.
This times the values of 1.67 ounces of gold per CM equals 12,303,062 ounces of gold.
Very rich, but distant.
Summary of the Gold Mountain Zones
Each cubic meter of mined material would weigh 0.425 metric tons. The gold value is 1.03 ounces
per metric ton.
To summarize, the five zones have the following cubic meters and PROBABLE gold reserves in
ounces as shown.
Mountain Zone
1
2
3
4
5
Totals
Volume, Cubic
Meters
44,814,000
72,526,740
83,496,000
9,129,240
7,367,103
217,333,083
Weight, Tons
Metric
80,665,200
130,548,132
150,292,800
16,432,632
12,303,062
391,199,549
Gold Value in
Ounces
27,784,680
34,087,568
102,700,080
10,589,918
12,303,062
187,465,308
The plan is to initially process 10,000 tons daily. This would mean 300,000 tons monthly, and
3,600,000 tons annually.
This means that the life of the mine would be 25.83 years. The plant size and the processing would
be doubled in three years, making the mine life somewhere around 13 years.
The Actual mining operation plans that 10,000 metric tons per day will be processed. Removing
the large stones, and pre-concentrating the mined material after the large rocks (2” and up) are
removed, the plant will actually process about 1,500 tons of concentrate daily. The average gold
value is 1.03 ounces per ton of this pre-concentrated material. This means that 1,545 ounces of gold
will be recovered daily. This will have a daily value of (as of August 3, 2009, $955 per ounce)
$1,475,475.00..
The annual recovery would be (360 days)
$531,171,000.00
Geologist Certification