Ollachea Gold Project

Geology

The central area of interest is a 2 km long zone in which local artisanal miners have been producing limited quantities of gold for some time.  In preparation for the exploratory diamond drilling program, efforts initially concentrated on the completion of detailed geological mapping and some 1,623 m of geochemical trench/channel sampling over difficult terrain. 

Intensely foliated and weakly convoluted, compact, black shale sedimentary packages of the Ordovician–aged Sandía Formation play host to the quartz vein/ veinlet-hosted auriferous mineralization.  Interstratified sub-parallel and tensional shearing is evident and clearly affects the continuity of gold-bearing veins and “mantos” (bedding-parallel suites of narrow quartz veins, veinlets and structures), imparting in places an intense foliation to the metamorphosed shale horizons.  Low-angle east-west trending faults play an important control; on a local scale, intra-bed faulting sub-parallel to the principal low angle faults is observed to control emplacement of the quartz-sulphide mineralization in quartz veining and shear zones; tight crenulation-like features probably represent an additional foci of mineralization.

Surface and underground geological mapping, geochemistry and surface ground magnetic results confirmed that mineralised veins and veinlets (generally 2-10 cm wide, but occurring up to 1 m thick) are controlled by the above-mentioned system of northerly dipping, east-west orientated thrust faults.  Mineralized “mantos” are associated with interbedded “shear” horizons, wherein surface trenching has identified up to 50 irregular and discontinuous narrow quartz veinlets over widths of 10 m; aligned sub-parallel to stratification and/or foliation trends.

The intensity of hydrothermal alteration is weak.  Alteration is mostly observed as extremely narrow borders or haloes to quartz veins/veinlets; and sometimes as minor alteration mineral inclusions within quartz.  Low intensity silicification of the host slates is suggested where intense quartz vein/veinlet formation has occurred, since in these areas the slates are generally observed to be harder than in other areas.  Chlorite is frequently observed, but not always.  It is presented as micro-veinlets within quartz veins/veinlets, narrow borders to mineralized structures and as replacement of pyrite, sporadically together with a possible very minor sericitic component.  Weakly disseminated pyrite-chlorite is sometimes observed along footwall or hanging wall contacts of mineralized structures.

In an attempt to understand the demeanour of gold mineralization in the Ollachea system, composite geochemical samples have been collected from surface in systematic fashion across mineralized areas, as well as on a selective basis from narrow mineralized structures. 

Gold mineralization is found to be characterised by a close association of coarse to very fine free gold in erratic and discontinuous narrow quartz veinlets, in close association with primary sulphides pyrite > arsenopyrite >= pyrrhotite > chalcopyrite and a weak galena presence.  Sulphides associated with the quartz veinlets occur as disseminations (some as semi-aligned tiny blebs) and sometimes as very narrow, crenulated micro-veinlets.  A refractory gold presence has not yet been investigated.  In the areas located between narrow mineralised veins and veinlets, a low gold tenor is identified.  Oyaechea 3 is characterized by the presence of near surface primary sulphide mineralization amid limited, shallow, oxide mineralization. 

There is an apparent association between gold mineralization and the presence of the magnetic mineral pyrrhotite.  Processing of a 24 line-km geophysical ground magnetic survey has established 2 important east-west trending magnetically anomalous areas; partially coincident with a moderate to weak, 600 m long x 165 m wide, surface gold anomaly identified by trench/channel sampling.

Ground Magnetic Anomalies 

 
A combination of lithology, structure, low intensity hydrothermal alteration and a presence of interstratified quartz veins/veinlets within layered shear zones have been interpreted as the principal controls on gold mineralization at Ollachea.

Drill Results

Gold assay results were reported in late November 2008 from the nine holes in the initial widely spaced scout drilling program.  Eight holes encountered significant gold grades over extended widths.  The five holes in the central zone, spaced over a strike length of 400m (east to west), included 70m at 2.00g/t (DDH08-05), 122m at 2.95g/t (DDH08-01), 126m at 2.30g/t (DDH08-04), 102m at 1.83g/t (DDH08-02) and 94m at 3.02g/t (DDH08-22).  Within these broad zones were better grade intersections including 31m at 6.04g/t in hole DDH08-22 and 44m at 4.28g/t in DDH08-04.  A more detailed tabulation of results for all nine holes is included below.  Geological plans and sections as well as full assay logs can be found on the Company website, www.minera-irl.com. 

Although drilling continues, only very broadly spaced scout drilling has been reported thus far.  The westernmost hole, DDH08-15, approximately 1km along strike from the central zone, intersected 92m grading 1.09g/t including 44m at 1.40g/t.   

The drilling has intersected suites of sheeted quartz-sulphide veins and veinlets which intersect the core-axis at angles of approximately 60-65°. Thus the true widths intersected are approximately 90% of the above-reported mineralized widths.  The reported drill intersections occur down-dip from outcropping structures where local artisanal miners are actively working the near surface mineralization.  


Minera IRL Ollachea Project, Tabulation of initial nine diamond drill hole results

Hole Number, DDH08	1	2	4	5	14	15	18	21	22
Northing	8474585	8474550	8474550	8474606	8474335	8474302	8474310	8474680	8474569
Easting	339523	339279	339415	339582	338472	338380	339497	339844	339354
Inclination - degrees	-60	-70	-65	-60	-60	-55	-60	-70	-65
Azimuth - degrees	N 180º	N 180º	N 180º	N 180º	N 180º	N 180º	N 180º	N 180º	N 180º
Depth of hole - meters	304.9	324.85	195.2	373.5	168.8	253.8	172.45	193.4	301.8
Meters down hole, from	62	86	56	136	42	102	106	174	72
"         "        "       , to	184	188	182	206	68	194	126	178	166
Intersection down hole - meters	122	102	126	70	26	92	20	4	94
Intersection, approximate true - meters	110	92	113	63	23	83	18	4	85
Grade, Au grams/tonne	2.95	1.83	2.3	2	0.68	1.09	0.75	1.16	3.02
Including
Meters down hole, from	62	112	88	136	42	128	118		101
"          "       "      , to	76	154	162	178	48	172	126		132
Intersection down hole - meters	14	42	74	42	6	44	8		31
Intersection, approximate true - meters	13	38	67	38	5	40	7		28
Grade, Au grams/tonne	3.36	3.24	3.3	2.93	1.31	1.4	1.27		6.04
Including
Meters down hole, from	114	144	98	136		164
"          "       "      , to	134	154	142	150		172
Intersection down hole - meters	20	10	44	14		8
Intersection, approximate true - meters	18	9	40	13		7
Grade, Au grams/tonne	10.88	9.56	4.28	5.2		5.08
Plus		Plus
Meters down hole, from		176
"          "       "       , to		188
Intersection down hole - meters		12
Intersection, approximate true - meters		11
Grade, Au grams/tonne		2.55

The following illustrates 2 drill sections.

Regional Exploration (Surrounding properties)

During the build-up to the recent initiation of diamond drilling on the Ollachea Project, Minera IRL geological staff has been conducting exploration reconnaissance activities, including geological mapping, stream sediment sampling and selected geochemical rock chip sampling over surrounding concessions.
A total of 10,299 ha have been reviewed.  Some 242 regional stream sediment samples have been collected and some 97 rock chip samples taken from potentially prospective outcrop.  All samples were analysed for gold by fire assay plus 36 ICP elements.  Processing of the results has identified three gold anomalous areas of intermediate priority.  These anomalies are currently being followed up in the field.
The regional geology consists of gray slate sequences, sometimes carbonaceous, and some narrow sandstone beds interbedded within the slate beds.  Geological mapping has confirmed the presence of generally east-west striking prospective sedimentary sequences (occasionally carbonaceous metamorphosed shales, slates, weakly developed inter-bedded sandstone horizons, etc), often associated with sequences of volcanic flow material and breccias.  Several areas hosting prospective structures and occasionally quartz veins/ veinlets have been sampled.  Intrusive bodies include syenite (batholithic proportions), granodiorite and microdiorite

Summary of Drill Results