San Felix Project

Summary

San Felix comprises an acquired area of 2,435 ha located within the Province of Limari, IV Region of Coquimbo, Chile, and 150 km by road from the international port of Coquimbo. The road is paved until the village of Pichascas (25 km from Ovalle) and from there, the project can be reached by a secondary road for a distance of 70 km, bypassing the village of Rio Hurtado.

It consists of 24 individual concessions all under the ownership of Mr. Félix Gallardo. The area is located within the pre-Cordillera and is characterized by very abrupt relief, deep ravines and debris slopes. The altitude varies between 2,500 and 3,960 m.a.s.l.

The location of the mining district within which San Felix resides is known asEl Indio Gold Belt; a mineral rich region spanning the border between Chile and Argentina that contains world-class gold, silver and copper deposits. The three principal mines located close to San Felix are El Indio, Carmen de Andacollo and Los Mantos de Punitaqui.

Local Geology

The area comprises the Los Elquinos Formation of the Upper Cretaceous, which dominantly consist of effusive volcanic rocks. The volcanics are frequently intruded by pyroxene-biotite monzodiorites; hornblende-biotite granites and granodiorites; monzogranites; diorites; gabbros and rhyolitic-dacitic porphyries of Paleocene-Eocene age (63-38 Ma). The intrusives are commonly associated with Cu-Ag-(Au) mineralization.

The area is structurally controlled by the regional fault that is Rio Hurtado. It has a N-S trend which is reflected in the general trend of the parallel-sub parallel structures. The mineralized structures have a sigmoidal form, of up to 2m width. A secondary E-NE and E-W system associated with local faults and feeders exhibits favorable features for the emplacement of mineralization; infilling open spaces and zones of weakness.

Mineralization

The mineralized structures within the San Felix area are associated with local faults infilled with hydrothermal quartz and mineralization of secondary Ag, Cu and Au, Pb, Zn. These epithermal-mesothermal structures were formed in part by the ascent of hydrothermal solutions; by the reactivation of hydrothermal activity caused by the intrusion of an andesitic-rhyolitic porphyry (Ag-Cu (Au)); and the subsequent emplacement of a granitic intrusive body, which emerges as an apex at the base of the caldera.

Alteration

Regionally, the primary alteration type is observed to be that of moderate intensity chlorite-hematite. The hematite is noted to increase towards the north where the presence of magnetite is more consistent both within the lavas and the breccias. In the central northern sector, the alteration types noted are silica-epidote, with a presence of hydrothermal quartz in narrow, crossing, stockwork type veins. There is also a significant increase in the magnetite content within the host rock.

Rock Sampling

Surface rock samples were taken during three separate field campaigns, with a total of 32 grab, channel and panel chip samples. The best results include grades of 9% Cu, 1,360 g/t Ag and 3.1g/t Au. 19 samples brought back results of >1% Cu, of which 16 contain >200 g/t Ag, and 4 contain >0.5g/t Au.

Magnetometry

In March 2012, Argali Geofisicos began an 85 linear km magnetometric survey (N-S). The consistent and extensive magnetic anomaly in the north is evidently a response of the silica-magnetic aureole of the andesitic porphyry. This is associated with the intrusive granite and could correspond to an extension of such a body trending NE towards the depression of the Hurtado River. The magnetic anomaly found in the south is dominantly composed of medium-level readings where various magnetic highs stand out in the form of spots. A large part of the mineralized structure cuts across these magnetic highs.

Initial Interpretations and Conclusions

There are several manifestations of epi-mesothermal mineralization and numerous artisanal workings can be found within the project
The projectcomprises a series of manifestations of a sub-volcanic porphyry-type geological environment. Mineralization resembles a porphyry in the interior of the caldera. It borders a breccia pipe with structures rich in Cu-Ag-Au(sulphides and oxides) with silica-epidote-magnetite alteration. Based on the interpretation of assay results and by correlating the associated set of elements we can identify 3 different mineral occurrences:
A porphyry with important Ba-Ni-Cr-Fe-Sc and V content, all with a mesothermalparageneticexpression
A breccia pipe with important Ag-Cu (Au) and Mo grades associated with Fe-Mn sulphides
A low-temperature epithermal mineralization encountered within veins and structures,regionally associated with Ag, Cu, Pb, Zn with anomalous Mo content, associated with As, Sb, Ca and Fe; related to the presence of siderite within the structures

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