tango_2015

MINERA CAMARGO S.A. de C.V.

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EXPLORATION RESULTS OF THE “TANGO” PORPHYRY SYSTEM, EL ROSARIO MINING DISTRICT, SINALOA, MEXICO; 105º45’ WEST AND

23º12’ NORTH

Quartz with unidirectional solidification texture (UST; pointed down) and euhedral molybdenum crystals at quartz‐crystal terminations, Tango 2 concession, Rosario, Sinaloa.

Saturday, June 25, 2016

By

M. Robinson, M.A.Sc., P.Eng. Lic. # 23559, APEGBC Minera Camargo S.A. de C.V.

E‐mail: [email protected]


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TABLE OF CONTENTS

TABLE OF CONTENTS ........................................................................................................................... 2

LIST OF FIGURES .................................................................................................................................. 4

LIST OF TABLES .................................................................................................................................... 8

1.0 SUMMARY....................................................................................................................................... 9

2.0 INTRODUCTION AND TERMS OF REFERENCE ................................................................................. 10

3.0 PROPERTY DESCRIPTION AND LOCATION ..................................................................................... 10

3.1 MINERAL TITLE .............................................................................................................................................. 10

3.2 AGREEMENT .................................................................................................................................................. 13

3.3 SURFACE RIGHTS ............................................................................................................................................ 13

3.4 OPERATING PERMIT ........................................................................................................................................ 14

3.5 WATER RIGHTS .............................................................................................................................................. 15

4.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ................ 17

5.0 HISTORY ....................................................................................................................................... 18

6.0 GEOLOGICAL SETTING ...................................................................................................................21

6.1 REGIONAL GEOLOGY ....................................................................................................................................... 21

6.2 GEOLOGY OF THE TANGO PROPERTY (FIG. 6.4) ...................................................................................................... 23

6.2.1 BASALTIC ANDESITE ...................................................................................................................................................... 25

6.2.2 FELDSPAR‐MEGACRYSTIC DIABASE .................................................................................................................................. 25

6.2.3 DACITIC VOLCANICLASTIC ROCKS ..................................................................................................................................... 26

6.2.4 CONGLOMERATE AND SANDSTONE ................................................................................................................................. 26

6.2.5 ANDESITE .................................................................................................................................................................... 26

6.2.6 QUARTZ‐FELDSPAR PHYRIC RHYOLITE IGNIMBRITE ............................................................................................................ 26

6.2.7 QUARTZ‐FELDSPAR PHYRIC RHYOLITE TUFF ..................................................................................................................... 26

6.2.8 GRANODIORITE PORPHYRY ............................................................................................................................................ 26

6.2.9 SYENITE PORPHYRY ...................................................................................................................................................... 27

6.2.10 APHYRIC FLOW‐BANDED RHYOLITE ............................................................................................................................... 27

6.2.11 QUARTZ PORPHYRITIC RHYOLITE .................................................................................................................................. 27

6.2.12 APLITE ...................................................................................................................................................................... 27

6.2.13 QUARTZ‐FELDSPAR‐BIOTITE‐HORNBLENDE PORPHYRITIC FELSIC ROCKS (LAMPROPHYRES??) ................................................. 27


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6.2.14 MAGNETIC DIORITE DIKES ............................................................................................................................................ 27

7.0 DEPOSIT TYPES—PORPHYRY SYSTEMS .......................................................................................... 31

7.1 PORPHYRY SYSTEMS IN MEXICO ......................................................................................................................... 31

7.2 GENERAL CHARACTERISTICS OF PORPHYRY SYSTEMS .............................................................................................. 33

8.0 MINERALIZATION ......................................................................................................................... 36

8.1 PORPHYRY MO SYSTEM ................................................................................................................................... 36

8.2. QUARTZ VEINS WITH GOLD AND OTHER BASE METALS ............................................................................................. 41

8.2.1 SAN AGUSTIN .............................................................................................................................................................. 41

8.2.2 LA COCO ..................................................................................................................................................................... 44

8.2.2.1 La Cocolmeca ......................................................................................................................................................... 44

4.2.2.2 La Gloria, Palodismo, Copalquin, La Vibora et al. .................................................................................................... 45

9.0 EXPLORATION .............................................................................................................................. 48

9.1 REGIONAL STREAM SEDIMENT GEOCHEMICAL SURVEY ............................................................................................. 48

9.2 SOIL GEOCHEMICAL SURVEY .............................................................................................................................. 50

9.3 ROCK GEOCHEMICAL SURVEY AND ALTERATION STUDY ............................................................................................. 52

9.4 METAL ZONING .............................................................................................................................................. 56

10.0 REVERSE CIRCULATION (RC) DRILLING .......................................................................................... 57

11.0 SAMPLING METHOD AND APPROACH .......................................................................................... 59

11.1 STREAM SEDIMENT SAMPLES ........................................................................................................................... 59

11.2 SOIL SAMPLES .............................................................................................................................................. 59

11.3 SURFACE ROCK AND UNDERGROUND MINE SAMPLES .............................................................................................60

11.4 DRY RC DRILLING .........................................................................................................................................60

11.5 WET RC DRILLING .........................................................................................................................................60

12.0 SAMPLE PREPARATION, ANALYSIS AND SECURITY ...................................................................... 60

12.1 STREAM SEDIMENT AND SOIL SAMPLES ...............................................................................................................60

12.2 SURFACE ROCK AND UNDERGROUND MINE SAMPLES ............................................................................................. 61

12.3 RC DRILL CUTTINGS ...................................................................................................................................... 61

12.4 X‐RAY FLUORESCENCE AND SWIR SPECTROSCOPY (PORX DATA) ............................................................................. 61

13.0 DATA VERIFICATION .................................................................................................................... 62


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13.1 SURFACE GEOCHEMISTRY ................................................................................................................................ 62

13.2 RC DRILL HOLE ASSAYS ................................................................................................................................. 62

13.3 NITON PORTABLE XRF (RC CHIPS AND PORX SURFACE DATA) ................................................................................. 63

14.0 ADJACENT AND INTERNAL PROPERTIES ...................................................................................... 64

14.1 TATEMALE .................................................................................................................................................. 64

14.2 TATEMALES ................................................................................................................................................ 64

14.3 TECOMATE ................................................................................................................................................. 64

15.0 MINERAL PROCESSING AND METALLURGICAL TESTING ............................................................... 65

16.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES ........................................................... 65

17.0 OTHER RELEVANT DATA AND INFORMATION .............................................................................. 65

18.0 INTERPRETATION AND CONCLUSIONS ........................................................................................ 66

19.0 RECOMMENDATIONS .................................................................................................................. 67

19.1 TOPOGRAPHIC MAPPING AND DIGITAL ELEVATION MODEL ........................................................................................ 67

19.2 HELICOPTER AIRBORNE MAGNETIC AND RADIOMETRIC SURVEY ................................................................................ 67

19.3 GEOLOGICAL MAPPING, PETROGRAPHY, GEOCHEMISTRY AND ALTERATION MAPPING ...................................................... 67

19.4 DIAMOND CORE DRILLING .............................................................................................................................. 68

19.5 BUDGET ..................................................................................................................................................... 68

REFERENCES ...................................................................................................................................... 69

CERTIFICATE OF AUTHOR .................................................................................................................... 72

LIST OF FIGURES Fig. 3.1 Map showing the location of the Tango Property and several base and precious metal mines and mineral occurrences. ...................................................................................................................................................................... 12

Fig. 3.2 Map showing the location of the Tango Property (1:50 000 topographic map sheets F13A47 and 48; INEGI). GREY areas = third‐party concessions, PURPLE lines = Ejido Boundary (surface land rights belong to the Ejidos of La Rastra and Picachos, and Comunidad Santa Maria), PICKS = underground gold mines, GREEN circles= drill hole collar locations (TAN1 to TAN 14), BROWN lines are country roads. ..................................................................................................................... 13

Fig. 3.3 Decision Diagram from SEMARNAT. ..................................................................................................................... 15

Fig. 3.4 Drainages sampled by IAAMB, coloured according to pH. TAN = Zinc values in mg/L. PALE BLUE DOTS = water sample locations 1 to 5, BLUE = Tango Property, NAVY DOTS = permitted drill hole locations. ......................................... 17

Fig. 6.1 Major geologic and physiographic provinces of Mexico. TMVB = Trans Mexican Volcanic Belt, M = Motagua fault, HATCH = Grabens. ............................................................................................................................................................. 22

Fig. 6.2 Tectonstratigrahic terrane map of Mexico, after Coney and Campa (1987). ........................................................... 22


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Fig. 6.3 Regional geological map of the Rosario mining district. Geology is from the Servicio Geologico Mexicano’s electronic database (2002 mapping) with the author’s updates from Ferrari et al., 2013. PURPLE LINES=faults. ............... 23

Fig. 6.4 Geology of the Tango Property. GREY lines = faults, RED lines = gold‐bearing quartz veins/faults, GREY DIAGONAL HATCH = third‐party concessions, BLUE SYMBOLS = Bedding orientation with dip. ...................................... 24

Fig. 6.5 Geological Legend for Fig. 6.4 ............................................................................................................................... 25

Fig. 6.6 Monomict amygdaloidal basaltic agglomerate (427498 E, 2566624 N). ................................................................. 28

Fig. 6.7 Microphotograph of amydaloidal, basalt (hole TAN8, 121.38‐122.4 m, sample 28236). Amygdules are rimmed with chlorite and filled with epidote ........................................................................................................................................... 28

Fig. 6.8 Xenolith of aphyric basalt in feldspar megacrystic diabase. Cocolmeca area, 428737E, 2567181N (whole rock analysis 15983) ................................................................................................................................................................... 28

Fig. 6.9 Microphotograph of feldspar megacrystic diabase (Hole TAN8, 107.1‐108.12; sample 28222). .............................. 28

Fig. 6.10 Dacitic ignimbrite with lithic fragments of basalt and feldspar megacrystic diabase (Unit 11BF; 428014E, 2568183N). ........................................................................................................................................................................ 28

Fig. 6.11 Conglomerate with cobbles of mafic volcanic rocks (429766 E, 2564724 N). ......................................................... 28

Fig. 6.12 Medium bedded, vertically dipping, volcanic wacke (428361 E, 2566003N). ......................................................... 29

Fig. 6.13 Andesite (424093 E, 2565603 N). .......................................................................................................................... 29

Fig. 6.14 Rhyolite Breccia (Unit 10BFX; 429544E, 2566132N). ............................................................................................ 29

Fig. 6.15 Hornblende‐quartz‐feldspar phyric rhyolitic ignimbrite lapilli‐tuff with lithic fragments of andesite (Unit 10BFX; 430779 E, 2566457 N). Rock shows eutaxitic texture, a texture typical of welded ignimbrites. ........................................... 29

Fig. 6.16 Rhyolite tuff‐breccia (Unit 10BFX; 431212E, 2566222N). ...................................................................................... 29

Fig. 6.17 Accretionary rhyolite lapilli‐tuff (Unit 10BF; 429764E, 2566536N). ....................................................................... 29

Fig. 6.18 Hornblende and feldspar porphyritic granodiorite cross‐cut by a quartz‐chalcopyrite veinlet with biotite selvedges (426422 E, 2567599 N). Minor green brochantite occurs as a weathering product of chalcopyrite. .................................... 30

Fig. 6.19 Photomicrograph of hornblende phenocryst in hornblende and feldspar porphyritic granodiorite (sample 19131, 425802 E, 2568706 N). ....................................................................................................................................................... 30

Fig. 6.20 Flow‐banded aphyric rhyolite (Unit 10A; 429875E, 2565756N). ............................................................................ 30

Fig. 6.21 Quartz porphyritic rhyolite (Unit 10B; 428498E, 2565655N). ................................................................................ 30

Fig. 6.22 Syenite Porphyry (425514 E, 2565003 N).............................................................................................................. 30

Fig. 6.23 Tourmaline matrix breccia with aplitic and syenitic fragments. ............................................................................ 30

Fig. 6.24 Quartz‐feldspar‐biotite‐hornblende porphyritic felsic dike with xenoliths of aphyric basaltic andesite cross‐cutting syenite porphyry in the Arroyo El Placer south of Sitios de Picacho (425 645E, 2565281N). .................................... 31

Fig. 6.25 Black magnetic diorite dike (428059 E, 2568284 N). Many of these follow the same structures as felsic dikes pictured in Fig. 6.24. .......................................................................................................................................................... 31

Fig. 7.1 Porphyry Systems of Mexico (N=77; BLACK DOTS). Twelve tracts of land with characteristics permissive for porphyry deposits were identified as part of the USGS probabilistic mineral resource assessment of undiscovered resources in porphyry copper deposits in Mexico (Hammarstom et al., 2010). For tracts that contain identified resources, the ratios of undiscovered to identified copper resources indicate that: (i) Jurassic‐Early Cretaceous tracts MX‐J1 and MX‐J2 contain fewer estimated undiscovered copper resources (ratios <1) than identified resources; (ii) Laramide tract MX‐L1 may contain significantly more copper than has been identified; (iii) Laramide tract MX‐L2, the tract that contains most of the known deposits in Mexico, including the world class deposits at Cananea and La Caridad, may contain about as much copper, molybdenum, and silver in un‐discovered deposits and more gold than has been identified; (iv) Tertiary tracts MX‐T1 and MX‐T2, where no porphyry copper deposits are known, may contain undiscovered deposits; (v) Tertiary tract MX‐T3 may contain about three times more copper than has been identified; and (vi) permissive tracts with no known deposits


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(MX‐J3, MX‐J5, MX‐L3, MX‐T1, MX‐T2) contain approximately 30 percent of the total estimated undiscovered copper resources (Hammarstom et al., 2010). ............................................................................................................................... 32

Fig. 7.2 USGS stream sediment geochemistry model (Hammerstrom et al, 2010). There is a high probability that an economic porphyry system underlies the Tango concessions (“X” on map). ....................................................................... 33

Fig. 7.3 Architecture of a porphyry system showing a centrally located porphyry deposit in a multiphase porphyry stock and its immediate host rocks (from Sillitoe, 2010) and related mineral deposit types. .............................................................. 35

Fig. 7.4. Generalized alteration‐mineralization zoning pattern for porphyry systems (from Sillitoe, 2010). ......................... 35

Fig. 7.5 Schematic diagram showing the tectonic settings of porphyry deposits (Sinclair, 2007), and dominant metal assemblage in each setting. ............................................................................................................................................... 35

Fig.7.6 Schematic diagram showing essential features of a developing porphyry system. Fluid separation from degassing magma occurs near the top of the magma column, forming pockets of magmatic hydrothermal fluid in which comb‐quartz layers grow inward from intrusion margins. Mineralized vein and fracture stockworks form when the fluid pressure exceeds lithostatic pressure and tensile strength of the surrounding rocks (from Sinclair, 2007). ..................................................... 35

Fig. 8.1 Voroni polygons of 941 rock samples colored according to dominant alteration mineral assemblage (defined in Table 9.4). Where phyllic alteration overprints potassic alteration, the polygon is coded as potassic‐phyllic. Tourmaline is an important mineral in potassic‐phyllic and advanced argillic mineral assemblages because formation of tourmaline generates abundant acid (Reaction 6, Table 9.5), which is absorbed by feldspar in the rock to form muscovite and/or clay (dickite or kaolinite) ........................................................................................................................................................... 37

Fig. 8.3 Cross‐Section showing planned drill holes. The shape of the felsic intrusive complex and alteration shells is speculative. Drill testing is planned to better define the geometry of this system.............................................................. 39

Fig. 8.4 Unidirectional solidification texture (UST), 426246 E, 2569634 N, 549 m elev. Quartz crystallized from rocky substrate towards the hammer. The dark mineral intergrown with the quartz terminations is coarsely crystalline molybdenite. Crystallization of UST’s occurs when lithostatic pressure exceeds volatile pressure, but does reflect minor pressure changes across cotectic boundaries in the quartz‐feldspar stability field. ............................................................. 39

Fig. 8.5 Unidirectional solidification texture (UST), 426251 E, 2569637 N, 549 m elev. The crystallization direction is down, and the UST layers dip gently easterly. .............................................................................................................................. 39

Fig. 8.6 Author of this report standing under gently east‐dipping quartz‐molybdenum UST layers (25 m NE of Fig. 8.3). The bright yellow oxide is ferrimolibdite. Uppermost person is crouched on a UST layer. ........................................................ 40

Fig. 8.7 Close‐up of rocks from the cliff of Fig. 8.4 showing coarsely crystalline molybdenite and quartz. ........................... 40

Fig. 8.8 Sheeted quartz veins in pervasively metasomatized country rocks (possibly sediments or andesitic rocks of Late Eocene age; 426304E, 2569454N, 520 m elev). These rocks are strongly magnetic (abundant magnetite) with values of up to 220 SI units recorded from this zone. Sheeted quartz veins occur where lithostatic and volatile pressure were sub‐equal, and the implies the presence of a buried intrusion with UST’s below. ................................................................................ 40

Fig 8.9 Tourmaline matrix breccia (Unit 20ABX; 425924 E, 2569193 N, 520 m elev). Sample 24050 contains 128 ppm Mo and 103 ppm Cu (XRF). Angular phyllic‐altered aplite fragments in a black quartz‐tourmaline matrix with disseminated pyrite and minor chalcopyrite. Breccias form when volatile pressure exceeds lithostatic pressure. Also see Fig. 6.21. ........ 40

Fig. 8.10 Pervasive potassic‐phyllic alteration. Sample 32449 (427178 E, 2569473 N, 638 m elev) contains anomalous, but sub‐economic metal values of 26 ppm Mo, 299 ppm Pb, 190 ppm Zn and 104 ppm Cu (XRF). Mafics are completely replaced by schorl (tourmaline) and feldspar is altered to muscovite. This sample could be about 100 m above a potential ore zone. ............................................................................................................................................................................ 40

Fig. 8.11 K‐feldspar‐altered xenolithic granodiorite cross‐cut by quartz veins (215º/82º NW) bearing molybdenite (427289 E, 2568680 N, 503 m elev). A select sample of the quartz veins contains 160 ppm Ag, 1.2% Mo, 2744 ppm Bi, 4366 ppm Pb, and 174 ppm Cu (sample 25702; XRF). ................................................................................................................................ 40

Fig. 8.12 Quartz‐tourmaline‐sulfide veinlets with biotite selvedges oriented 218º/77º NW. Supergene oxides of copper in this sample include azurite and brochantite. Sample 12CGV183T contains 2355 ppm Cu, 27.2 ppm Ag, 17 ppm W and 49 ppb Au across 2 m. ............................................................................................................................................................. 41


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Fig. 8.13 Phyllic vein of coarsely crystalline cockscomb quartz and muscovite hosted in feldspar megacrystic diabase. Sample 25788 contains 112 ppm Ag, 13 ppm Mo, 186 ppm Bi, 6229 ppm Pb, 3472 ppm Zn and 5069 ppm Cu across 3 m (XRF). ................................................................................................................................................................................ 41

Fig. 8.14 Map of San Agustin. RED = quartz veins, GREEN = open cut mines, BROWN DASHED = small adits, BLACK = main adit at 638 m elevation. BLUE = planned drill holes. .......................................................................................................... 42

Fig. 8.15 Cross‐section of San Agustin showing old workings and sample locations ........................................................... 43

Fig. 8.16 Historic stope at San Agustin. A grab sample of the dump carries values of 682 g/t Ag and 18.14 g/t Au (sample 19140). ............................................................................................................................................................................... 44

Fig. 8.17 Drift about 7 meters below and a few meters southwest from the point in Fig. 8.16 along the San Agustin Vein. A chip‐channel sample across the back of the stope contains 174 ppm Ag, 1.6% Zn, 2759 ppm Pb and 590 ppm Cu across 0.8 m (sample 19140; XRF; no gold assay available). Alteration is mainly black chlorite (Zn‐chlorite?) ..................................... 44

Fig. 8.18. “El Carrito”. Historic draw point for ore, 670 m elevation. .................................................................................... 44

Fig. 8.19 San Agustin Portal, 638 m elevation..................................................................................................................... 44

Fig. 8.20 Plan view of “La Coco” area showing geology, gold geochemistry and planned drill holes. .................................. 46

Fig. 8.21 Cross‐Section of La Gloria showing planned drill hole PDH12. The vein is stoped about 30 m below the 950 m level, and PDH 12 is planned to test under the estimated position of the old stope. ........................................................... 47

Fig. 8.22 View of the Cocolmeca Fault Scarp, looking southwesterly from the trail to Infierno. Mine workings follow northwesterly trending faults exposed at the base of this scarp. ........................................................................................ 48

Fig. 8.23 Gavilan prospect, Cocolmeca Vein, parallel to base of fault scarp. Sample 19825 contains 1.37 g/t Au, 20 g/t Ag, 0.36% Cu, 0.2% Pb, 0.54% Zn and 5.3% Fe across 2 m. Textures in the vein include chlorite rosettes (perhaps after stilpnomelane??) and comb quartz intergrown with weathered sulfide. Kinross opined that Gavilan was not an epithermal vein, but a polymetallic vein. The alteration assemblage is probably propylitic after potassic. ........................................... 48

Fig. 8.24. View of the Fault Scarp from the trail to La Gloria. The NW trending structures coming through the hill are La Gloria and Carmen‐Palodismo. .......................................................................................................................................... 48

Fig. 8.25 La Gloria Stope, 950 m elevation, looking southerly. ........................................................................................... 48

Fig. 9.1 Map of molybdenum geochemistry in stream sediment samples. .......................................................................... 49

Fig. 9.2 Map of copper geochemistry in stream sediment samples. .................................................................................... 49

Fig. 9.3 Map of gold geochemistry in stream sediment samples. ........................................................................................ 50

Fig. 9.4 Map of silver geochemistry in stream sediment samples. ...................................................................................... 50

Fig. 9.5 Map of lead geochemistry in stream sediment samples. ........................................................................................ 50

Fig. 9.6 Map of zinc geochemistry in stream sediment samples. ........................................................................................ 50

Fig. 9.7 Map of molybdenum geochemistry in soil. The soil data clearly outline the porphyry Mo‐prospect north of the “Tahona” (Pórfido del Cuervo). ......................................................................................................................................... 51

Fig. 9.8 Map of copper geochemistry in soil. ...................................................................................................................... 51

Fig. 9.9 Map of gold geochemistry in soil. Gold is anomalous in soils above veins that trend northeast (San Agustin‐Gavilan) and northwest (La Flauta‐Mina del Chivo). ........................................................................................................... 51

Fig. 9.10 Map of silver geochemistry in soil. There is a moderate but consistent northwest trending silver‐in‐soil anomaly between San Agustin and Los Yegaros that is not co‐incident with anomalous gold. ......................................................... 51

Fig. 9.11 Map of lead geochemistry in soil samples. Lead occurs as galena in veins, and substitutes for potassium in K‐feldspar and illite clay. ....................................................................................................................................................... 52

Fig. 9.12 Map of zinc geochemistry in soil samples. Zinc occurs in sphalerite in veins, as well as chlorite in vein selvedges, and/or smectite clay........................................................................................................................................................... 52


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Fig. 9.13 Molybdenum geochemistry of rock samples using the Niton XRF (938 samples; shaded Voronoi polygons) and laboratory assaying (1355 samples, point data). Rock assays for molybdenum are consistently high in the Pórfido del Cuervo prospect north of the tahona. ................................................................................................................................ 53

Fig. 9.14 Copper geochemistry of rock samples using the Niton XRF (938 samples, shaded Voroni polygons) and laboratory assaying for gold and copper (1355 samples, point data). Copper geochemistry in rock samples from Pórfido El Cuervo north of the Tahona is subdued. ......................................................................................................................................... 54

Fig. 9.15 Voroni polygons of the metal ratio Mo/(Mo+Zn). Areas with high zinc values compared to Mo are pale grey, and mainly occur in the vein prospects between San Agustin and La Flauta. The metal ratio clearly defines Pórfido del Cuervo north of the Tahona with a larger, more consistent, footprint than that defined by Mo alone (Fig. 9.13). It also implies there may be significant porphyry Mo‐potential west of San Agustin where much of the prospective ground is covered by overburden (area with no rock samples) ............................................................................................................................ 56

Fig. 9.16 Voroni polygons of the metal ratio Cu/(Cu+Zn). Areas with high zinc values compared to Cu are pale grey, and mainly occur in the peripheral vein prospects between San Agustin and La Flauta. This metal ratio is highest near the pueblo of Picachos (northern boundary between Tango and Tango 2) and west of San Agustin. Note that it is subdued underlying the Mo‐prospect Pórfido el Cuervo. This is consistent with the observation that most primary Mo‐porphyry systems contain only minor amounts of other metals. ....................................................................................................... 57

Fig.10.1. D6N Caterpillar tractor used for drill access ......................................................................................................... 59

Fig.10.2 Layne Drilling’s tire‐mounted “buggy style” reverse circulation drill working on Hole TAN 11 ............................... 59

Fig. 12.1 Plot of copper analyses for ACME versus copper analyses for SGS. Correlation between the results is 0.995. For lead and zinc, the correlations are almost 1 as well ............................................................................................................. 63

Fig. 12.2 Plot of gold analyses for ACME versus gold analyses for SGS. Correlation between the results is 0.95. One analysis from ACME (805 ppb) appears to contain half of the gold of the SGS analysis (1560 ppb Au) ................................ 63

Fig. 12.3 Plot of copper analyses for XRF values from unprepared RC chips versus copper analyses for prepared SGS pulps. Correlation between the results is 0.85. ............................................................................................................................. 64

Fig. 12.4 Plot of zinc analyses for XRF values from unprepared RC chips versus zinc analyses for prepared SGS pulps. Correlation between the results is 0.95. ............................................................................................................................. 64

LIST OF TABLES Table 3.1. Forecast of estimated Mining Duties (in Mexican Pesos) for the Tango mining concessions. Based on rates published in December of 2015. ......................................................................................................................................... 11

Table 3.2. Forecast of minimum investment requirements (in Mexican Pesos) for the Tango mining concessions. Based on rates published in December of 2015. ................................................................................................................................ 11

Table 3.3 Results of water sample analyses (Martinez‐Ramirez, 2015). ............................................................................... 16

Table 9.1 Summary distribution statistics for 205 stream sediment samples from the Tango Property, Sinaloa, Mexico. These are the principal elements of economic interest on this Property. ............................................................................ 49

Table 9.2 Summary distribution statistics for 2161 soil samples from the Tango Property, Sinaloa, Mexico. ...................... 50

Table 9.3 Summary distribution statistics for 938 rock samples from the Tango Property, Sinaloa, Mexico. Pulps from these rocks were measured using a Niton GOLDD hand‐portable XRF gun. ................................................................................ 52

Table 9.4 Mineral assemblages observed on the Tango Property and interpretation summary .......................................... 55

Table 9.5 Possible reactions that could explain observed mineral assemblages on the Tango Property. Iron‐rich end members annite and chamosite are used to represent biotite and chlorite ......................................................................... 55

Table 10.1 Principal results from 2008 reverse circulation drill holes. .................................................................................. 58

Table 12.1 Types of rock samples used to evaluate mineral occurrences on the Tango Property. ....................................... 60

Table 14. 1 Results from Los Hundidos, Tecomate Project, Chesapeake Gold Corp. Sections are 100 meters apart. .......... 64

Table 19.1 Budget Summary to complete the Recommendations. ..................................................................................... 68


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1.0 SUMMARY The 3954.1 Ha Tango Property, owned 100% by Minera Camargo, S.A. de C.V., overlaps a significant porphyry system centered in Southern Sinaloa State, Mexico, near geographic co‐ordinates 105º45’W and 23º12’ N (1:50 000 map sheets F13A47 and F13A48). Mining concessions that define the Property were acquired by staking between 2003 and 2012 over the former “Viva Zapata” Mineral Reserve, a project that was staked and explored by the Servicio Geologico Mexicano in the 1980’s (Bon‐Aguilar, 1987 and Rodriguez‐Rodriguez et al., 1984). Geographically, the Property overlaps part of the western foothills of the Sierra Madre Occidental, one of the world’s largest silicic igneous provinces (Aranda‐Gomez et al., 2003). Regional geochemical work by the SGM at the turn of the millennium highlighted the Reserve as one of the largest contiguous anomalies for gold and base metals in southern Sinaloa and Northern Nayarit.

In an agreement dated 25 August 2014, Rose Petroleum PLC acquired an option from Minera Camargo to earn up to 75% of the Property by spending US$5 million over five years developing the porphyry target (base metals). Regardless of the status of the base metal exploration, Camargo earns a 50:50 profit split on gold/silver production from any precious metal mines developed by Rose within the property. During the earn‐in period, Rose assumes the costs of complying with Mining Law (obligations specified in Tables 3.1 and 3.2). If Rose decides not to earn‐in on the Project, these obligations revert back to Camargo for all concessions not put into production by Rose. In 2015, the investment requirement was met mainly by Minera Camargo, although Rose did pay the Mining Duties.

Of the three volcanic sequences on the Property, two have recognized potential for porphyry systems. The oldest sequence (Tract L‐2) includes rocks of the Laramide continental arc that is known to host 15 of the 21 known economic porphyry systems in Mexico, including Cananea. The youngest sequence includes rocks of the Tertiary extensional arc (Tract T‐2) that contains no known porphyry systems, but does contain several known polymetallic prospects that might represent upper or adjacent parts of porphyry systems (Hammarstom et al., 2010). As a group, these rocks are more silicic and more potassic than the Laramide rocks. It is the author’s opinion that Tract T‐2 is highly prospective for porphyry molybdenum deposits due to its evolved nature, and that the deposit type may have been largely overlooked by previous workers focused on silver and gold‐rich veins. Specifically, unless historic assaying included molybdenum, porphyry molybdenum deposits in most of tract T‐2 were probably overlooked. Hammarstom et al. (2010) assigned the Tango prospect to Tract L2 in their Table 2. However, recent radiometric age dates by Ferrari et al. (2013) imply that most plutons on the Property are early to mid‐Miocene in age, therefore Tango should be assigned to Tract T2.

Geologic mapping of the Property indicates that rocks of Tract L‐2 mainly outcrop in the southwestern 25 % of the Property, with rocks of Tract T‐2 overlapping the rest of the Property. At this time, the data implies that Tract L‐2 on the Property consists of: (i) basaltic andesite intruded by (ii) feldspar megacrystic diabase and overlain by (iii) intermediate volcaniclastic rocks, including some ignimbrite. All of these rocks were eroded for most of the Eocene, and red‐bed deposits of conglomerate and sandstone define this hiatus. Starting in the Oligocene, volcanism initiated again with at least 100 m of basaltic andesite overlain by and intercalated with massive to thickly bedded proximal rhyolitic ignimbrite deposits overlain by finer, more thinly bedded, ash‐fall tuffs. These rocks are intruded first by Miocene granodiorite, then by a felsic plutonic complex that includes: (i) massive quartz‐porphyritic rhyolite cryptic domes with (ii) marginal flow‐banded rhyolite, (iii) syenite porphyry, (iv) aplite and (v) felsic porphyritic dikes. Late Miocene magnetic mafic dikes cross cull all geological units, and occur in older faults.

Pórfido del Cuervo, a porphyry molybdenum prospect in the northern part of the Tango‐2 concession, appears to be related to Miocene felsic plutonic activity in Tract T‐2. However, most of the rocks that outcrop in the area are strongly altered, and detailed mapping, diamond drilling and analytical work will be required to clearly define the geological environment of Mo‐mineralization.

Alteration mapping of the porphyry system indicates that potassic alteration is co‐incident with development of unidirectional solidification texture (UST) of quartz‐aplite and molybdenite. Structural measurements of the UST’s imply the cupola related to Pórfido el Cuervo may be tilted easterly, and phyllic alteration adjacent to and overlying potassic alteration is best developed east of the known UST zones.

A prominent northeasterly trending scarp between San Agustin and El Pino is a major regional fault that juxtaposes Oligocene rhyolite to the southeast against older mafic rocks to the northwest. This fault appears cross‐cut by younger northwest trending faults into numerous segments, including San Agustin, Los Yegaros, Los Tejones and La Colcomeca,


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among others. Both directions of faulting contain gold‐rich mineralization with potential as underground mineable precious metal deposits.

In 2008, some of the quartz veins were tested by reverse circulation (RC) drilling. However, gold values were lower than expected based on surface sampling, and base metal values were higher. Overall, the best result was from Hole TAN10 with 1% Cu, 5% Cu, 0.7% Zn, 80 g/t Ag and 0.1 g/t Au across 2 m (estimated true width of 1.5 m). At the time the drilling was done, there was no direct knowledge of the porphyry system centered north of Sitios de Picacho.

Further work is warranted to develop the potential of the Project. Specifically, San Agustin is a target for near‐term development as a gold‐silver resource, and Pórfido del Cuervo has the potential to be a major source of molybdenum in Mexico. Some additional studies are recommended, including geological, topographic and geophysical mapping. However, the bulk of the planned work is diamond core drilling of Pórfido del Cuervo, San Agustin, and other gold‐rich veins. Overall, a budget of 1.4 million USD is proposed (Table 19.1).

2.0 INTRODUCTION AND TERMS OF REFERENCE This report was prepared by M. Robinson of Minera Camargo S.A. de C.V. (“Camargo”) to document and interpret the results of exploration work completed on the Tango Property. The author has been directly involved with most of the field operations on the Property between 2003 and 2015. Sources of data include:

Reports and maps by the Servicio Geologico Mexicano (Bon‐Aguilar, 1987 and Rodriguez‐Rodriguez et al., 1984)

A geological map (Ortega, 2007).

Fire‐assay and ICP multi‐element geochemical data for 205 stream sediment samples, 2161 soil samples and 1330 surface rock samples.

Fire‐assay and ICP multi‐element geochemical and short‐wave infra‐red (SWIR) mineral identification data for 1711 samples in 1747.18 meters of reverse‐circulation drilling in 14 holes.

XRF analyses and SWIR mineral identification data for 960 surface rock samples.

XRF analyses and SWIR mineral identification data for 7 rock samples collected by the author from Climax, a Mo porphyry deposit in Colorado, USA.

Whole Rock lithogeochemical data for 21 rock samples.

3.0 PROPERTY DESCRIPTION AND LOCATION

3.1 Mineral Title

The Property is centered in Southern Sinaloa State, Mexico, in the Municipio of Rosario near geographic co‐ordinates 105º45’W and 23º12’ N (1:50 000 map sheets F13A47 and F13A48). The Property consists of four mining concessions. The concessions are located using a cement monument near the San Agustin surface workings that has been located by a legal mine surveyor (perito minero) in UTM co‐ordinates, NAD27 datum. All mining monuments must have minimum dimensions of 0.6*0.6*1.0 meters, show the name of the concession, the surface area in the concession application, the office where the concession is registered, and the file number. The concession boundaries are located using polar co‐ordinates relative to the monument, and are not marked or surveyed in the field.

All of the concessions remain valid for 50 years from the date of title as long as bi‐annual mining duties are paid in July and January of every year (Table 3.1), and minimum annual investment requirements are met (Table 3.2). After 50 years, the concession owner may apply for a second 50 year term. Investments made in excess of the annual minimum may be carried forward into the following year. Expenditures that meet the investment requirements are (Ley Minera, 1992):

I. Direct mining works, such as ditches, wells, slashes, tunnels and all others that contribute to geological knowledge of the mining claim or the mining reserves;

II. Drilling; III. Topographic, photogrammetric and geodesic surveys; IV. Geological, geophysical and geochemical surveys; V. Physical‐chemical analysis; VI. Metallurgical experimentation tests; VII. Development and rehabilitation of mining works; VIII. Acquisition, lease and maintenance of drilling equipment and development of mining works;


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IX. Acquisition, lease and maintenance of equipment for physical‐chemical laboratories and metallurgical research;

X. Acquisition, lease and maintenance of work vehicles and for personnel transportation; XI. Works and equipment used for job safety and the prevention of pollution or restoration of the environment; XII. Facilities for warehouses, offices, workshops, camp sites, dwellings and services to workers; XIII. Acquisition, lease, construction and maintenance of works and equipment related to access roads, generation

and conduction of electric energy, extraction, conduction and storage of water and infrastructure in general; XIV. Acquisition, lease and maintenance of equipment for mining, hauling and general services in the mine, and XV. Acquisition, lease, installation and maintenance of equipment for beneficiation operations and tailings dams.

Table 3.1. Forecast of estimated Mining Duties (in Mexican Pesos) for the Tango mining concessions. Based on rates published in December of 2015.

Name Title No.

Title Date Expiry Date

Surface area (Ha)

2nd2016 1st2017 2nd2017 1st2018 2nd2018

Tango 243874 22‐abr‐03 21‐abr‐53 1966.0633 $ 281,796 $ 281,796 $ 281,796 $ 281,796 $ 281,796

Tango2 236081 06‐jul‐05 05‐jul‐55 1918 $ 274,907 $ 274,907 $ 274,907 $ 274,907 $ 274,907

Tango3 230844 25‐oct‐07 24‐oct‐57 50 $ 4,072 $ 7,167 $ 7,167 $ 7,167 $ 7,167

Tango5 241049 21‐nov‐12 20‐nov‐62 20 $ 405 $ 405 $ 405 $ 815 $ 815

TOTAL 3954.0633 $ 561,180 $ 564,274 $ 564,274 $ 564,684 $ 564,684

Table 3.2. Forecast of minimum investment requirements (in Mexican Pesos) for the Tango mining concessions. Based on rates published in December of 2015.

Name Title No. 2016 2017 2018 2019 2020

Tango 243874 $2,295,122 $2,295,122 $2,295,122 $2,295,122 $2,295,122

Tango‐2 236081 $2,239,192 $2,239,192 $2,239,192 $2,239,192 $2,239,192

Tango‐3 230844 $7,880 $7,880 $7,880 $7,880 $7,880

Tango‐5 241049 $1,272 $1,757 $1,757 $1,781 $1,781

$4,543,466 $4,543,951 $4,543,951 $4,543,974 $4,543,974


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Fig. 3.1 Map showing the location of the Tango Property and several base and precious metal mines and mineral occurrences.


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Fig. 3.2 Map showing the location of the Tango Property (1:50 000 topographic map sheets F13A47 and 48; INEGI). GREY areas = third‐party concessions, PURPLE lines = Ejido Boundary (surface land rights belong to the Ejidos of La Rastra and Picachos, and Comunidad Santa Maria), PICKS = underground gold mines, GREEN circles= drill hole collar locations (TAN1 to TAN 14), BROWN lines are country roads.

3.2 Agreement

In an agreement dated 25 August 2014, Rose Petroleum PLC acquired an option from Minera Camargo to earn up to 75% of the Property by spending US$5 million over five years developing the porphyry target (base metals). Regardless of the status of the base metal exploration, Camargo earns a 50:50 profit split on gold/silver production from any precious metal mines developed by Rose within the property. During the earn‐in period, Rose assumes the costs of complying with Mining Law (obligations specified in Tables 3.1 and 3.2). If Rose decides not to earn‐in on the Project, these obligations revert back to Camargo for all concessions not put into production by Rose. In 2015, the investment requirement was met mainly by Minera Camargo, although Rose did pay the Mining Duties and some permitting costs. Further, although the agreement with Rose stipulates that the agreement is to be registered in the Registro Publico de Mineria, and Camargo reminded Rose in writing that this work had to be done, Rose decided not to register the agreement.

3.3 Surface Rights

Surface rights to the land underlying the Tango concessions are owned by the Ejido “Sitios de Picacho”, Ejido “La Rastra” and Comunidad “Santa Maria”. Ejidos and Comunidades are rural farming and ranching communities. Decisions regarding Ejido or Comunal land, including those allowing mining investment on their property, are usually made at monthly meetings. The law does give priority to mining concession owners, and they have the right to obtain the expropriation, temporary occupancy or creation of land easement needed to carry out exploration and exploitation work, as well as for the deposit of rock dumps, tailings and slag (Ley Minera, 1992). Minera Camargo registered the location of 2891 Ha of its mining concessions in the Ejido of Picachos 12 June 2015 with the Registro Agrario Nacional (Clave Registral 2501402310811971R). In this document, dated 28 December 2014, the Ejido has authorized: (i) Minera Camargo to


14

conduct exploration and exploitation activities on its land, including land use changes (Cambio Uso de Suelo) where required to advance mining activities, and (ii) its elected representatives to negotiate land rental or sale agreements with Minera Camargo as required to install mining works.

3.4 Operating Permit

Exploration and mining activities in Mexico are regulated by the General Law of Ecological Equilibrium and Environmental Protection (Ley General de Equilibrio Ecologico y Proteccion al Ambiente, or LGEEPA and the Regulations; REIA). The laws are applied by the Secretaria del Medio Ambiente y Recursos Naturales (SEMARNAT), and enforced by the environmental protection agency (Procuraduria Federal de Proteccion al Ambiente; PROFEPA). Most exploration activities, including mapping, geochemical sampling, geophysical surveys, trenching, drilling and other rock exposure activities that are not in Federally Protected areas (Areas Naturales Protegidas; ANP’s) do not require any permits (Art. 5, REIA of LGEEPA). If they are in an ANP, an Environmental Impact Statement (Manifiesto de Impacto Ambiental or MIA) is required. Underground and surface mining activities that do not exceed a defined threshold for surface disturbance are regulated under Norma Oficial Mexicana NOM‐120‐ECOL‐2011. In this case, the applicant must submit and obtain approval of an Informe Preventivo which describes the exploration activities and the accompanying environmental mitigation and restoration procedures. Nonetheless, SEMARNAT reserves the right to analyse the Informe Preventivo, and request the MIA in‐lieu (Item 1, paragraph 4 of NOM‐120).

If planned work requires any clearing of natural vegetation in forested areas, then a Land Use Change authorization (Cambio de Uso de Suelos, CUS) is required. Forests are regulated by the General Law of Sustainable Forest Development and its Regulations (Ley General de Desarrollo Forestal Sustentable; LGDFS), and applied by SEMARNAT. Enforcement is handled by PROFEPA. A Cambio Uso de Suelo will not be considered in a burned area, unless that area has recuperated for 20 years. A Land Use Change application is granted if the proposed activity generates more value than the current use of the land, and negative environmental impacts are mitigated. To change the land use, a Technical Justification Study (Estudio Tecnico Justificativo [ETJ]) is required. The Study must show that: (i) biodiversity is not compromised, (ii) soil erosion is not provoked, (iii) water quality is maintained, (iv) natural water capture in the basin where the Project is located is not reduced. The ETJ describes in detail: (i) the areas to be cleared and the types of vegetation affected, (ii) steps taken to rescue/relocate endangered species, (iii) steps taken to prevent erosion, (iv) steps taken to protect water quality and quantity. Issuing the Land Use Change is a process whereby SEMARNAT reads the ETJ in the first 15 days of filing, and asks for any additional information required in the next 15 days. Once all the information is available, a technical inspection is scheduled to check the facts of the ETJ. If the facts check out, then the amount of Environmental Compensation is determined (Art. 118 LGDFS), and the deposit of funds must be made within 15 days of receiving the information. Once the deposit is made, the Cambio Uso de Suelo is issued in 10 more days. A Cambio Uso de Suelo for Mining and Mineral Exploration has to be prepared by a qualified Environmental Engineer and/or Biologist.

In late 2014, SEMARNAT decided that any Mining or Mineral Exploration work requiring a CUS also required a MIA. This policy was decided upon after a spill of sulfuric acid from Buenavista del Cobre occurred in the Rio Sonora in August of 2014 and caused an environmental emergency that affected the water supply of more than 20 000 people in 7 municipios (Fig 3.3).

The Tango project is not included within any specially protected, Federally designated, ecological zones (ANP’s). It covers both tropical dry forest, and oak (encino) forest. Minera Camargo has selected drilling sites and a route to them that do not require removal of mature trees or cactus, therefore it is not required to obtain any permits from SEMARNAT (Art. 5, REIA, 31 Oct 2014). Nonetheless, it has filed an “Aviso de Inico de Exploraciones” locating the drill sites and the routes and equipment to be used with SEMARNAT 20 Oct 2015, and received a reply accepting the Aviso 4 November 2015 Oficio SG/145/2.1.1/1005/15/2145.

Although mineral exploration activities are mainly exempt from the requirement to file with SEMARNAT, most publicly traded mining and exploration companies voluntarily file an “Informe Preventivo” for activities that involve surface disturbance. This practice has evolved because the Informe Preventivo specifically outlines the environmental protection measures to be used when executing an exploration program that includes roadbuilding, drilling and trenching. This path is also recommended in the “Guia para conocer lo principales tramites y permisos ambientales en las diferentes etapas del proceso minero”, published in 2014. However, because of the new policy requiring a MIA in areas where a Cambio Uso de Suelo is required, the IP is now of limited use. Specifically, SEMARNAT in Sinaloa has not approved any IP’s for exploration drilling programs in 2015.

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16

As of 2013, taxes are payable to the Federal Government using the Declar@gua system to obtain both (i) water extraction rights, and (ii) discharge rights. Once the extraction/discharge concessions are obtained, taxes are payable every 3 months for every cubic meter extracted and every cubic meter discharged. Tax rates are lowered if the discharged water quality is equal to or better than those specified in Norma Oficial Mexicana NOM‐127‐SSA1‐1994.

On 22 Sept 2015 Minera Camargo applied for a water concession under application number SIN‐0‐0922‐22‐09‐15 for 2 pumping stations in the Arroyo Picachos near the areas recommended for drill‐testing in Sections 8 and 19. The application is for 4095 m3 per year for industrial purposes for 5 years. Taxes for water extraction are 1.611 pesos per meter3. If Minera Camargo installs a meter on the pump, and registers its meter with CONAGUA, it will only be charged for the water extracted. Alternatively, it will be required to pay for the full 4095 m3 per year for 5 years.

29 September 2015 Minera Camargo hired Industrias y Analisis Ambientales, S.C. to complete a baseline water quality survey of several creeks on the Property as shown in Fig.3.4 (Martinez‐Ramirez, 2015). Parameters measured include temperature, pH, floating material, dissolved oxygen, total dissolved solids and several metals. All of the samples contain values for dissolved metals either below detection, or within acceptable limits defined by NOM‐001‐SEMARNAT‐1996. In particular, values for mercury, an element that has been introduced into the environment by gambusinos, are below detection in all water samples. Finally, an elevated zinc result of 2.04 mg/L occurs in the creek draining Pórfido del Cuervo.

Table 3.3 Results of water sample analyses (Martinez‐Ramirez, 2015).

X 425369 425248 426509 427131 426079Y 2564807 2568204 2567052 2567602 2566124

Parametro Unidades La Puerta-5 El Aval-3 La Presa-2 1 4Temperatura oC 29 29 28 27 27

pH Unidades de pH 5.74 6.89 7.45 5.63 7.09Materia Flotante Sin unidades Ausente Ausente Ausente Ausente Ausente

Arsénico mg/L < 0.0010 < 0.0010 < 0.0010 < 0.0010 < 0.0010Cadmio mg/L <0.0500 <0.0500 <0.0500 <0.0500 <0.0500Cobre mg/L < 0.1000 < 0.1000 < 0.1000 < 0.1000 < 0.1000

Mercurio mg/L < 0.0010 < 0.0010 < 0.0010 < 0.0010 < 0.0010Niquel (mg(L) mg/L < 0.1500 < 0.1500 < 0.1500 < 0.1500 < 0.1500Plomo (mg(L) mg/L 0.3309 < 0.3000 < 0.3000 < 0.3000 0.3000

Cromo total (mg(L) mg/L < 0.1000 < 0.1000 < 0.1000 < 0.1000 < 0.1000Zinc (mg(L) mg/L 0.4666 2.0483 0.5801 0.3859 0.3974

Fierro (mg(L) mg/L 0.1551 < 0.1500 < 0.1500 < 0.1500 < 0.1500Oxígeno Disuelto (mg(L) mg/L 6.5500 7.9500 7.6900 7.6900 7.9800

Sólidos disueltos totales (mg(L) mg/L 212.0000 174.0000 244.0000 228.0000 162.0000

Ubicación UTM de los sitios de muestreo WGS 84 Datum 13


17

Fig. 3.4 Drainages sampled by IAAMB, coloured according to pH. TAN = Zinc values in mg/L. PALE BLUE DOTS = water sample locations 1 to 5, BLUE = Tango Property, NAVY DOTS = some drill hole locations.

4.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND

PHYSIOGRAPHY Access to the property is via a paved road between Rosario and Cacalotán, then by country road to the village of Los Sitios del Picacho. From there, there are several old mine roads that lead to the larger mine workings. Camp is currently located at the San Agustin mine portal.

Elevations range from 300 meters in the pueblo of Los Sitios de Picacho to 1300 meters at the top of Cerro San Cristobál. At lower elevations (below 500 meters), the vegetation is mainly “selva baja caducifolia”, which is characterized mainly by trees less than 15 meters tall. Typical plant species include tepemezquite, ebano, tepehuaje, huanacaxtle, berraco, amapa, apomo, cedro, nacario and garabato. At higher elevations, the temperatures are cooler, and vegetation is characterized as “bosque templado” (temperate forest). Plants typical of the higher areas are encino, madroño, chicle, palo cuate, arrancillo, vainillo, maguey and guasima. Animals in the Project area include squirrels, rabbits, coyotes, rats, foxes, deer, bats, tejónes, guacamayas, rattlesnakes and iguanas. Larger species such as bears and wolves are now extinct.

Cattle ranching and seasonal subsistence farming are the main economic activities in the region. Plots of land to be used for farming are logged and burned, and they are productive for about 4 years before the thin soil erodes down the steep slopes, and new areas must be cleared. Some of the local people work small placer gold operations in the rainy season.


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The rainy season is from July to September, with intermittent winter storms. Temperatures range from near‐freezing at higher elevations in the winter, to more than 40ºC in the valleys in summer. Camargo has operated on the Property year‐round.

The closest major city is the port of Mazatlán in southern Sinaloa, and the nearest industrial city is Tepic, Nayarit. Mining and geological personnel are active at several operations in the western Sierra Madre. The nearest power lines are located in Cacalotán, 17 kilometers southwest of the Property. The nearest permanent stream is Arroyo El Habal in the northwest part of the Property. Milling operations are located in Concordia, Sinaloa (Verde brothers), Acaponeta, Nayarit (Vane Minerals) and Huajicori, Nayarit (Gainey Capital).

On 19 January 2015, Minera Camargo signed an Agreement with the Ejido to (i) pay an annual rental of $6000 pesos for its current campsite near the San Agustin Mine Portal, and (ii) a variable rental of $2500 pesos per new exploration drill pad per year. There is also a clause stipulating that once a mineable mineral reserve is located, and its Environmental Impact Statement (MIA) prepared, Minera Camargo will negotiate in good faith with the Ejido to ensure that they receive a reasonable payment from mining activities on their land. The Agreement is renewable every 5 years, as long as Minera Camargo maintains its Obligations to the Ejido under the Agreement. On 21 December 2015, the original of this agreement was registered with the Registro Agrario Nacional.

5.0 HISTORY Over one hundred historic workings occur on the Tango Property. Some of these include larger tunnels and stopes such as San Agustin, La Botica and La Flauta as well as several smaller workings and pits. Small tahonas (mule operated rock mills) occur at numerous locations, mainly on the El Placer veins between La Chorrera and Tatemales.

1983: The Consejo de Recursos Minerales (now the Servicio Geologico Mexicano or SGM) staked the “Viva Zapata” concession over a total surface area of 31,705 Ha on behalf of the Mexican Government. Existing claims internal to “Viva Zapata” included Nuestra Señora de La Candelaria, Los Placeres, La Norteñita, San Antoñio, San Agustin, La Chorrera, El Rodeo and La Soriana. The existing Properties overlapped most of the known mine workings, including Tatemales, La Gloria, El Inclán, San Antoñio, San Agustin and El Placer. Effectively, the District was tied up between 1980 and 1999 when the Government started to release lands due to non‐payment of mining duties during a prolonged period of depressed metal prices. Most of the internal Properties are now held by Minera Camargo on the “Tango” concessions, with the exception of “Tatemale”, acquired by Exploraciones Mineras Parreña, a subsidiary of Fresñillo PLC (LSE: FRES), in a lottery 23 March 2013.

1984: The SGM mounted a significant exploration campaign led by at least four geologists. Their mandate was to sample and document the known workings both on the “Viva Zapata” concession and on the internally held Properties (Rodriguez et al., 1984). The best results were obtained from the internal Properties. La Gloria returned values of 54 g/t Au and 20 g/t Ag across 0.1 m (AVG 2 channel samples), San Agustin 8 g/t Au and 41 g/t Ag across 1.1 m (AVG 15 channel samples), and Los Tajitos 7.6 g/t Au and 54 g/t Ag across 0.9 m (AVG 15 channel samples). Regionally, the SGM found 30 alteration zones outside the core area, and several silver‐rich mineral showings in the areas of La Campana and Guasimal (outside the “Tango” Property).

1987: The SGM sent a geologist to sample the Tatemales workings on the Nuestra Señora de la Candelaria Property (Bon Aguilar, 1987). Seven underground chip‐channel samples, between 0.2 and 1.02 meters wide, yielded average results of 1.82 g/t Au and 39 g/t Ag across 0.6 meters.

Mid to late 1990’s: A group of Americans drove a tunnel underneath the old San Agustin mine. The historic mine reportedly had 6 levels over an 80 m vertical interval connected by a vertical shaft from surface. They drove a 200 m long tunnel from surface into the vein underneath these old workings with the intention of putting the mine into production, but drove into the old stope. In 1997, they sold the mine to Thunderbird Projects, who agreed to acquire 100% of the shares of Minas Picacho S.A. de C.V. for: (i) the reimbursement of U.S. $560 000 of exploration expenses, (ii) make underlying payments to the vendors of U.S. $1 300 000, and (iii) issue 5,000,000 shares at a deemed value of $0.24 per share (Thunderbird Projects news release, 18 June 1997)”. Systematic underground sampling of the San Agustin Mine by Thunderbird Projects suggested the vein has an average grade of 81.22 g/t Au and 73.36 g/t Ag across 1.2m (1997 News Release). The San Agustin Mine is now held by Minera Camargo on the Tango and Tango 3 concessions.

Between 1995 and 1998: Esperanza del Oro was active on the Profeta Property, a group of 3 claims overlapping the northern half of what is now the “Tango” concession. They completed a preliminary prospecting, soil sampling and hand trenching program in several phases over a 3 year period. Most of the work was done between Mina La Gloria, Mina Tres


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Hermanos and Rancho Cocolmeca. Esperanza del Oro was funded by MIM of Australia, but accounting problems and poor metal markets resulted in closure of the Project. Work completed in that time included prospecting, soil sampling and some channel sampling across selected outcrops. Fifty percent of the soil samples contained anomalous gold concentrations of 9 ppb or more, with a maximum value of 1509 ppb Au. Silver, As, Bi, Cd, Cu, Pb and Zn values were also markedly anomalous.

2000: the SGM completed regional geological mapping and stream sediment geochemical sampling of the El Salto map sheet. The Tango concessions overlap part of a polymetallic anomaly for gold, copper, lead, zinc and other metals.

Early 2003: Camargo’s prospector Jose Vargas Gaytán completed traverses of El Placer, La Cocolmeca and San Agustin. He observed several active gambusino and small placer operations, and took 11 rock samples, mainly from mine dumps. The average result of these samples was 6.3 g/t Au, 75.2 g/t Ag, 0.9% Cu, 0.2% Pb and 0.4% Zn (AVG of samples 6352‐6456). The best result was a dump sample of quartz‐sulfide matrix breccia next to the monument of the San Agustin mine, which returned values of 19.1 g/t Au, 682 g/t Ag, 0.9% Zn, 0.6% Pb and 0.07% Cu (sample 6352). A review of the land tenure showed that several claims over key prospects had lapsed, and Camargo staked the 3573.6 Ha Tango concession on behalf of Minera Tango S.A. de C.V. At that time, Minera Tango was 50% owned by Minera Camargo, and 50% owned by Tango Mineral Resources.

Late 2003: RNC Gold did a reverse takeover of Tango Mineral Resources. RNC required a public vehicle to finance development of its Central American gold mines.

Mid 2004: RNC Gold (RNC‐TSX) joint‐ventured the exploration projects of Minera Tango to Northwest Mineral Ventures (TSX‐V: NWT) after purchasing 25% of the stock of Minera Tango from Minera Camargo for 30 000 RNC shares. According to the Option Agreement, NWT had the right to earn 50% of the Picachos Property in Durango and the Tango Property in Sinaloa by investing $1.5 million CAD in exploration prior to 31 December 2006. They also had to generate a feasibility study for the production of a minimum of 25 000 ounces of gold per year (NWT news release dated 16 July, 2004).

Fall 2004: 10 stream sediment samples and 502 soil samples were collected from a northeasterly oriented survey grid were completed. Underground mapping and sampling (202 rock chip‐channel samples) of several adits and tunnels was also done. All but one of the stream sediment samples contained more than 110 ppb Au, and the best result was 6473 ppb Au from a creek draining the Copalquin veins. The average result of the 502 soil samples was 197 ppb Au, 0.9 ppm Ag, 115 ppm Cu, 321 ppm Pb, and 599 ppm Zn. Samples with more than 50 ppb Au defined an area 1.5 kilometers long and 300 to 700 meters wide that remained open in all directions. The best overall results from rock sampling were:

LA GLORIA OPEN STOPE: 21.09 g/t Au, 6 g/t Ag, 0.4% Cu, 0.5% Zn and 0.8% Pb across 0.8 m (sample 15659).

MINA DE RHYOLITE: 2.7 g/t Au, 4 g/t Ag, 0.03% Cu, 0.2% Zn and 0.2% Pb across 3.7 m (AVG of samples 15616 and 15617).

URREA #5: 6.6 g/t Au, 7 g/t Ag, 0.4% Cu, 0.17% Pb and 0.4% Zn across 0.6 m (sample 15626).

URREA #3: 11.8 g/t Au, 6 g/t Ag, 0.06% Cu, 0.23% Pb and 0.07% Zn across 0.8 m (sample 15988).

CARMEN: 53.8 g/t Au, 134 g/t Ag, 0.06% Cu, 3.5% Pb and 0.07% Zn (sample 15990).

LOS TAJOS: 21.9 g/t Au, 99 g/t Ag, 0.7% Cu, 9.3% Pb, 2.0% Zn across 0.5 m (sample 15926).

GARABATO: 6.6 g/t Au, 356 g/t Ag, 50 ppm Cu, 0.2% Pb and 0.01% Zn across 0.5 m (sample 15 523).

January of 2005: The 13833.3 Ha Tango‐2 concession was staked on a strong copper anomaly defined by SGM stream sediment samples that occurred north of the epithermal veins.

May of 2005: NWT dropped their option on the Tango Property.

January 2006: RNC Gold did a detailed stream sediment survey of the entire 17407 Ha Property. The survey clearly highlighted an area about 9 km long by 6 km wide in the central part of the Property that is co‐incident with the known mineral occurrences. The best result was 6841 ppb Au from a creek draining the center of the 2004 soil grid area.

February 2006: Yamana Gold (YRI: TSX) merged with RNC Gold (YRI News Release dated 17 February 2006).

August 2006: Yamana Gold bought 25% of Minera Camargo’s shares of Minera Tango for 10 000 shares of YRI and 250 000 shares of Seafield Resources (TSX‐V: SFF).

December 2006: Seafield Resources purchased Minera Tango from Yamana Gold for $1.35 million CAD (News Release dated 4 January 2007) for the purpose of using Minera Tango to Operate additional Property at La Silla, an epithermal gold prospect north of Mazatlán owned by Minera Meridian Minerales S de RL de CV. Seafield started a program of geological


20

mapping and prospecting on the Tango concessions in mid‐December after Minera Meridian Minerales S de RL de CV advised Seafield that their option on La Silla had expired.

January 2007: Minera Tango applied for the old San Agustin concession (now Tango‐3). Seafield Resources completed additional rock sampling of the Cocolmeca Vein, and extended the soil geochemical survey to the northeast and southwest of Cocolmeca to cover El Placer and San Agustin, respectively. The average result of 55 rock chip‐channel samples cut across the Cocolmeca Vein was 4.2 g/t Au, 37 g/t Ag, 0.7% Cu, 0.3% Pb and 0.5% Zn across 1.5 m, including 44.09 g/t Au, 47 g/t Ag, 0.4% Cu, 0.2% Pb and 0.7% Zn across 0.8m from Mina San Antoñio (sample 19856). At Mina del Cobre, results of 0.2% Cu, 3.2 g/t Ag, 691 ppm Pb and 670 ppm Zn across 18 meters were obtained from chip‐channel samples across the bottom of a hand‐dug trench (samples 20423‐20428). The most interesting anomaly generated by the new soil survey was the northern part of the El Placer Vein where 15 soil samples containing more than 1000 ppb Au define an area 150 meters wide and 600 meters long.

February 2008: Seafield Resources completed 1747 meters of reverse circulation drilling in 14 holes to test selected zones on the Cocolmeca, El Cobre and El Placer veins. La Cocolmeca vein was tested with 5 holes (Tan 1,3,4,5, and 6) over a strike length of 450 meters between the Gavilan, San Antonio and Guayabo prospects. All of the drill holes except possibly TAN6 intercepted the vein, which is characterized by clear gemmy quartz, oxidized copper minerals, chalcopyrite and sphalerite. The best overall result was 19 g/t Ag and 0.6% Cu across 2.04 meters in Hole TAN 4 between 123.42 and 125.46 meters. The most interesting gold result was 0.55 g/t Au across 3.06 meters in Hole Tan 5 between 89.76 and 92.82 meters. Holes TAN9 and TAN10 successfully intercepted one of the main sulfide‐bearing structures in the vicinity of the “El Cobre” mine workings. Mineralization occurs in coarsely crystalline comb quartz and consists of coarsely crystalline pyrite, galena, sphalerite and chalcopyrite. The best result was 2.04 meters of 80 g/t Ag, 5.0% Pb, 0.74% Zn and 1.0% Cu between 89.76 and 91.8 meters in Hole TAN10. At El Placer, the best gold result is 1.56 g/t Au, 0.23% Zn and 0.06% Pb across 1.02 meters between 4.08 and 5.1 meters in Hole TAN12. This is within a wider zone of 0.34 g/t Au, 0.1% Pb and 0.3% Zn across 6.12 meters from surface. Further down hole, there is a zone of 0.3% Pb, 0.9% Zn and 0.3% Cu across 7.14 m between 26.52 m and 33.66 m. There are no sulfides, so it is likely that the base metal values are in smectite clays. While the drilling method selected was not expected to provide quantitative information regarding the width and grade of any veins, gold assay results in the drill holes were still lower than expected based on the surface sampling.

Late 2008: Seafield Resources did a campaign of grid‐based rock sampling of the porphyry target north of the veins, and limited prospecting of El Placer. More than 700 rock samples were collected and put into storage.

June 2009: Hedenquist Consulting did a tour of the southern Sinaloa and Northern Nayarit (Hedenquist, 2009). The tour covered the Tango Property, as well as several concessions staked by Minera Camargo on behalf of Marlin Gold Mining Ltd. (formerly Oro Gold Resources).

July 2009: Seafield Resources returned the Tango concessions to Minera Camargo. Seafield declared bankruptcy in 2014 after drill testing a gold‐bearing porphyry system in Columbia.

September 2009: Aurion Resources (TSX‐V: AU) optioned the Tango concessions from Minera Camargo for $315 000 USD cash, 300 000 common shares of Aurion and by incurring $1.1 million USD in Exploration expenditures prior to 31 July 2013. Minera Camargo retained a 2.5% NSR on the Property, and the right to do Work on behalf of Aurion. However, Aurion failed to meet several of the terms of the agreement and it was terminated.

Late 2009‐mid 2010: Minera Camargo analyzed the 2008 batch of Seafield rock samples using a Terraspec SWIR spectrometer, Niton GOLDD XRF, Meiji binocular microscope with camera and Kappa magnetic susceptibility meter. The results were plotted, and anomalies in the porphyry target were followed up by additional sampling and analytical work between February and May. In this period, Minera Camargo reduced the size of the Tango‐2 concession to 1918 Ha. Camargo also initiated metallurgical testing of stream gravels and rocks from some of the higher grade veins.

July 2010: Minera Camargo and KG Minera Mexico, a subsidiary of Kinross Gold Corp, signed a confidentiality agreement regarding the technical data of the Tango concessions. The first field inspection was completed 4 to 6 August of 2010. A second field inspection planned for 5 to 7 of September 2010 was initiated but did not complete due to high water levels in the river crossing at Cacalotan. A review of the data was completed in the office instead. A third inspection was completed 21‐22 Oct 2010. During the due diligence process, KG Minera Mexico acquired the “Habal” concession surrounding the Tango Project concessions.

January of 2012: Windstorm Resources completed a field inspection between 4 and 7 January of 2012. In a memo dated 12 January 2012, geologist Carl Verley recommended that Windstorm acquire the Tango 2 concession and complete soil grids


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and IP surveys over the porphyry targets prior to drilling. However, due to difficult market conditions, Windstorm was merged with Blue Sky Resources in July of 2012.

November of 2012: Hudbay Minerals (HBM) signed a confidentiality agreement regarding the technical data of the Tango concessions. In March of 2013, a non‐binding letter of intent (LOI) outlining the terms of a potential Option on the Property was signed. In the 60 day period following signature of the LOI, HBM completed a due‐diligence grid of 400 soil samples on lines spaced 400 m apart with a sample spacing of 50 m. They also analyzed 72 rock samples. Shortly after completing the work, they closed down exploration in Mexico and Columbia. In mid‐March, Camargo applied to reduce the size of the core Tango concession.

May of 2013: About 1300 tonnes was taken from the north drawpoint in the San Agustin Vein (638 m elevation) and sent to the SDA mill of Minerales Vane, S.A. de C.V. The rock was milled and a concentrate was produced using flotation techniques. Minerales Vane did not provide information regarding the reagents used. An electronic report provided by the metallurgist suggested that the dry weight of the material was 1100 tonnes with a head grade of 6.25 g/t Au. Recovery of Au was about 75% (5221 g total), and recovery of silver was 27% (13600 g total).

October of 2013: The author of this Report joined an SEG field trip to Colorado to review the Henderson, Climax and Leadville mines. Seven samples were collected from Climax (a large porphyry Mo mine), and they were analyzed according to the procedures of Section 12.4.

May of 2014: Minerales Vane withdrew about 1500 tonnes of gold bearing rock from the San Agustin drawpoint and sent it to the SDA mill in Acaponeta. In an electronic communication dated 25 June 2014 the metallurgist reported that 1502.7 tonnes were milled, 8.56 tonnes of concentrate were produced, and 162.44 tonnes of gambusino tailings were moved from the mine to the SDA mill. They also blasted three rounds from the south face (2.5 m mining width) at the end of their mucking program. The average assay values of these three rounds were 15.8 g/t Au and 63 g/t Ag across a mining width of 2.5 m. Vane Minerals reported a head grade of 4.35 g/t Au and 47 g/t Ag for all material, a concentrate grade of 577 g/t Au and 1171 g/t Ag for 8.56 tonnes of concentrate and a tailings grade of 0.78 g/t Au and 24 g/t Ag. No information on reagents used or grinding time/size etc. was provided.

August of 2014: Rose Petroleum (the owner of Minerales Vane S.A . de C.V.) and Minera Camargo signed a Joint Venture Agreement to develop the Tango Property.

2015: Rose Petroleum designed an exploration drilling campaign and completed permitting activities.

6.0 GEOLOGICAL SETTING

6.1 Regional Geology

Southern Sinaloa State overlaps the western Mexican Basin and Range and the Sierra Madre Occidental (SMO), one of the largest silicic volcanic fields in the world (Fig. 6.1). The SMO is a volcanic belt built upon the western margin of several tectonostratigraphic terranes of varying age and provenance that were accreted to the North American and Middle American‐Amazon cratons (Fig. 6.2). Basement rocks below the SMO on Tango Property belong to the Mesozoic Guerrero Composite Terrane that consists of three distinctive tectonostratigraphic assemblages: (i) a Triassic–Early Jurassic accretionary complex in the basement; (ii) a Jurassic to earliest submarine Cretaceous extensional volcanic arc, and (iii) an Early Cretaceous submarine extensional volcanic arc (Centeno‐Garcia et. al, 2011). During the Laramide orogeny (Santonian to Middle Eocene) the rocks of the Guerrero Composite Terrane were accreted to western North America by subduction of the Farallon plate beneath the North American Craton, and a compressional continental volcanic arc assemblage (mainly andesite and related plutons) was constructed through and above the older rocks.

Beginning in Late Eocene time, as active subduction ceased, the slab collapsed through the asthenosphere, and steepened due to slab rollback. Subduction‐induced compression gave way to extensional tectonics. Red‐bed conglomerate and sandstone with mafic volcanics at the Eocene‐Oligocene boundary mark the tectonic change. Post‐subduction magmatism retreated westward back towards the Pacific margin (Ferrari et. al, 2005). Huge volumes of ignimbrites (>3.0 x 105 km3) were erupted in the Sierra Madre Occidental during the Oligocene and Early Miocene (~38 to 15 Ma), forming a large silicic, primarily alkali‐calcic, igneous province prior to the opening of the Gulf of California around 12 to 15 Ma (Ferrari et al, 2005).

M

F

F

MINERA CAMA

Fig. 6.1 Major geolo

Fig. 6.2 Tectonstrat

ARGO S.A. de

ogic and physiogra

tigrahic terrane ma

e C.V.

aphic provinces of M

ap of Mexico, after

Mexico. TMVB = Tr

r Coney and Campa

Trans Mexican Volc

a (1987).

canic Belt, M = Mottagua fault, HATCCH = Grabens.

22


23

Fig. 6.3 Regional geological map of the Rosario mining district. Geology is from the Servicio Geologico Mexicano’s electronic database (2002 mapping) with the author’s updates from Ferrari et al., 2013. PURPLE LINES=faults.

6.2 Geology of the Tango Property (Fig. 6.4)

The first property‐scale geological map was produced by Felipe Ortega in 2007. Since then, a total of 2544 geological observations have been collected by different workers. The author of this Report compiled the observations into a single database, then plotted these points on a map. From the map, Voroni polygons were drawn around each observation point and colored according to lithology. Geological boundaries were then drawn by hand, taking into account structures such as faults and dikes, and probable thickness of geological units. The resulting compilation map is in Fig. 6.4.

The Tango Property overlaps three volcano‐plutonic complexes: (i) Paleocene to Eocene mafic to intermediate volcanic and intrusive rocks related to the Laramide Orogeny [Unit TpaA on Government Maps], (ii) Late Eocene conglomerates and sandstones [Unit TeVs], and (iii) Oligocene andesite [ToA] overlain by rhyolite ignimbrite [ToBvR‐Ig] and ash‐fall tuff [ToIg]. In the Miocene, Oligocene rocks are intruded by: (i) hornblende granodiorite porphyry, (ii) syenite porphyry, (iii) flow‐banded rhyolite domes and dikes, (iv) porphyritic rhyolite (v) aplite, and (vi) felsic porphyry dikes. All rocks are cross‐cut by magnetic mafic dikes of probable Late Miocene age. No radiometric age dating has been done on the Property, however Ferrari et al. (2013) indicate that the hornblende granodiorite intrusion is Early Miocene on their Fig. 8. The nearest age date is 21.4 Ma from a similar pluton 10 km southwest of the Property near Matatan. Twenty one whole‐rock analyses are available from the Property, and these were used to help constrain the geological map.

The major structural element of the Tango Property is a northeast trending fault (Cocolmeca Fault) that down‐drops rhyolite ignimbrite to the southeast against older mafic rocks to the northwest.


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No bedding orientations were measured in the Laramide volcanic rocks. Bedding in the overlying sandstone and conglomerate [Unit TeVs] is 120˚/44˚ SW in redbeds in the southwestern part of the Tango 2 concession. Close to the Cocolmeca Fault, bedding measurements are easterly to northeasterly, with dips as steep as vertical or subvertical to the southeast, probably reflecting (ductile ??) rotation of bedding into the Cocolmeca fault zone. In these areas, the sediments tend to be green rather than red, reflecting alteration to chlorite, smectite, and sometimes other clay minerals close to areas of fault‐parallel quartz‐veining. In the northeastern part of the Property, bedding of Unit TeVs is oriented northwest, and dips moderately northeast.

The Cocolmeca Fault is cross‐cut and displaced by numerous younger faults. Most of these trend northwesterly, easterly or northerly. Dikes and gold‐bearing quartz veins occur in all fault sets.

Fig. 6.4 Geology of the Tango Property. GREY lines = faults, RED lines = gold‐bearing quartz veins/faults, GREY DIAGONAL HATCH = third‐party concessions, BLUE SYMBOLS = Bedding orientation with dip.


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Fig. 6.5 Geological Legend for Fig. 6.4

6.2.1 BASALTIC ANDESITE

Aphyric to weakly augite phyric basaltic andesite flows and agglomerates are widespread in the south‐central part of the Property, mainly between Mina San Agustin and Camp La Coco (Figs 6.4, 6.6 and 6.7). The bottom of this unit is not exposed on the Property, so the true thickness is not known, but is thought to be about 800 meters thick. In the vicinity of the granodiorite pluton these basalts are locally affected by quartz‐chlorite‐magnetite metasomatism that might be related to porphyry mineralization. Where they host gold‐bearing veins, the basalts are altered to smectite and chlorite, and range from medium to pale green in color. Aphyric basaltic rocks were intercepted in Holes TAN5 (97.92 to 105.06 meters) and TAN8 (120.36 to 138.76 meters). The San Agustin gold‐quartz‐calcite vein is hosted in basaltic andesite, in or near a major fault against rhyolite ignimbrite.

6.2.2 FELDSPAR‐MEGACRYSTIC DIABASE

Feldspar megacrystic diabase mainly outcrops over an 800 m long by 500 m wide area north and west of Rancho Cocolmeca, and in a smaller area northeast of Mina San Agustin. These rocks contain about 45% subhedral feldspar crystals 5‐30 mm long in a dark grey‐green, aphanitic, magnetic matrix (Fig. 6.9). Locally, this unit contains xenoliths of weakly‐phyric basaltic andesite (Fig. 6.8). Most drill hole intercepts of this Unit occur in Holes TAN5 to TAN8. Unit 11B


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hosts a significant quartz‐chalcopyrite vein about 1.1 kilometer northeast of the San Agustin mine, as well as Mina La Aguila, a base‐metal rich vein about 320 meters north of Camp La Coco. Geochemical data for two hand samples taken west of Camp La Coco are similar with average values of 52% SiO2, 17% Al2O3, 9% Fe2O3, 4.6% MgO, 5.5% CaO, 3.6% Na2O, 3.0% K2o, 1.1% TiO2, 0.2% MnO and 0.023% Cr2O3.

6.2.3 DACITIC VOLCANICLASTIC ROCKS

Dacitic volcaniclastic rocks occur in the northern part of the Tango and Tango‐2 concessions. Rocks consist of feldspar phyric andesitic breccias and tuffs that range from massive to medium bedded. As well as dacite clasts, they contain lithic clasts of the underlying basalt and diabase (Fig. 6.10). The volcaniclastics are inter‐digitated with, and/or overlie the basaltic rocks. The true thickness of this unit is thought to be about 100 m thick. Like the basalts, dacitic volcaniclastic rocks are metasomatized to quartz‐chlorite‐magnetite assemblages where they are intruded by plutonic rocks.

6.2.4 CONGLOMERATE AND SANDSTONE

An angular unconformity occurs between the mafic to intermediate volcanic and plutonic rocks, and the Oligocene rhyolitic ignimbrite pile. The unconformity is defined by about 150 m of conglomerate (Fig. 6.13) and red‐bed sandstone (Fig. 6.14).

6.2.5 ANDESITE

About 100 m of andesite flows are intercalated with rhyolite ignimbrite above the unconformity (Fig. 6.15). A lithogeochemical sample of andesite from this unit contains 60% SiO2, 17% Al2O3, 5.9% Fe2O3, 2.3% MgO, 3.9% CaO, 3.9% Na2O, 2.8% K2o and 0.75% TiO2. In the northern part of the Tango‐2 concession, this unit is intruded by aplitic plutons, and metasomatized to quartz and magnetite with significant molybdenum values. Andesite flows are also exposed in La Gloria adit and between La Botica and La Flauta.

6.2.6 QUARTZ‐FELDSPAR PHYRIC RHYOLITE IGNIMBRITE

Quartz‐feldspar phyric rhyolite ignimbrite outcrops mainly in the southeastern part of the Tango concession. The rocks are generally white to pink and are characterized by 3 to 10% quartz‐feldspar phenocrysts up to 10 mm across, 5 to 15% feldspar phenocrysts up to 7 mm long and minor biotite and hornblende phenocrysts. Facies variations within Unit 10BFX are complex, as would be expected in a felsic volcanic pile. Chaotic rhyolite breccias (Fig. 6.16) occur at the base of the pile, and consist of large, angular blocks and boulders of rhyolite, often cemented with gemmy cockscomb quartz on the margins of the fragments. Ignimbrite, or welded lapilli tuff with characteristic eutaxitic texture occurs above the breccias, and contains 5‐20 exotic fragments of the underlying rock units (Figs. 6.17, 6.18). Bedding is not usually apparent in this unit. Overall, this unit is estimated to be about 800 m thick, although considerable thickness variations can occur, and depend mainly on the distance from the eruptive center (not known at this time).

6.2.7 QUARTZ‐FELDSPAR PHYRIC RHYOLITE TUFF

Above the ignimbrites, there is a thick section of medium to thinly bedded air‐fall tuff, sometimes with characteristic accretionary lapilli (Fig. 6.19). North of the Property, this unit appears to be about 500 m thick, but it may be thinner with distance from the eruptive center. Bedding orientations are usually measurable in this Unit.

6.2.8 GRANODIORITE PORPHYRY

Granodiorite porphyry mainly underlies most of the Tango‐2 concession and the northwestern part of Tango, but may also occur in faults as dikes up to 30 meters thick (Holes TAN 10 and 11). Unmetasomatized rocks are characterized by about 40% euhedral plagioclase phenocrysts up to 10 mm long and 10 to 15% euhedral hornblende crystals up to 12 mm long in a finely crystalline matrix of hornblende and plagioclase with quartz (Fig. 6.18 and 6.19). A lithogeochemical analysis of an unaltered sample 1.5 km north of Picachos contains 70% SiO2, 14.7% Al2O3, 3.3% Fe2O3, 1.3% MgO, 2.3% CaO, 2.9% Na2O, 3.8% K2o and 0.4% TiO2. Contacts of the intrusion with the country rocks are chaotic with abundant xenoliths of mafic rocks. Granodiorite is affected extensively by hydrothermal alteration, and hosts (i) porphyry‐style mineralization in zones of potassic alteration, and (ii) zones of Ag‐Au mineralization in argillic altered structural zones. Ferrari et al. (2013) indicate that this intrusion is Early Miocene on their Fig. 8, but no age dates have been obtained from this pluton.


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6.2.9 SYENITE PORPHYRY

Syenite porphyry occurs mainly in the southeastern portion of the Tango 2 concession, and as smaller apophyses that intrude through the mafic volcanic pile. Rocks are characterized by 10‐20% quartz phenocrysts up to 5 mm across in a pink matrix of alkali feldspar (Fig.6.22). The syenites locally host quartz‐tourmaline‐magnetite breccia zones with Cu‐Mo‐Ag‐Au values. The average lithogeochemical anaysis of two samples mineralized with magnetite and copper of Unit 30 is 58% SiO2, 16% Al2O3, 12.5% Fe2O3 (reflecting hydrothermal magnetite), 0.6% MgO, 1.1% CaO, 2.3% Na2O, 5% K2o and 0.3% TiO2

6.2.10 APHYRIC FLOW‐BANDED RHYOLITE

Aphyric flow‐banded rhyolite mainly occurs in dikes less than a 1 meter wide or in larger subvolcanic domes. These rocks are weakly quartz porphyritic, white to pale pink, and characterized by spectacular flow‐banding (Fig. 6.20). Flow‐banded rhyolite was intercepted in Hole TAN7 (52.02 to 87.72 m) and Hole TAN8 (138.72 to 166.26 meters). A lithogeochemical sample of the surface outcrop of this rhyolite contains 79% SiO2, 10% Al2O3, 2% Fe2O3, 0.2% MgO, 0.1% CaO, 0.2% Na2O, 6.3% K2o and 0.1% TiO2. Unit 10A hosts gold‐rich jasper veinlets at the Adit in Rhyolite, and east of Mina Don Salva.

6.2.11 QUARTZ PORPHYRITIC RHYOLITE

Quartz porphyritic rhyolite is characterized by 1‐5% quartz phenocrysts 1‐5 mm across, and feldspar, although probably present, is not always obvious in altered rocks. A lithogeochemical sample quartz porphyritic rhyolite breccia from the production area of Mina La Gloria contains 73% SiO2, 13% Al2O3, 2% Fe2O3, 0.6% MgO, 1.1% CaO, 1.2% Na2O, 7.4% K2o and 0.25% TiO2. Quartz porphyritic rhyolite is probably mainly intrusive, with breccia development in near‐surface areas and in fault zones (Fig. 6.21).

6.2.12 APLITE

Aplite occurs as dikes and subvolcanic apophyses in the northern part of the Tango 2 concession. Spherulites, a devitrification texture of volcanic glass, have been observed in aplite at three location where they are commonly replaced by tourmaline rosettes. Tourmaline‐magnetite matrix breccias with andesite, aplite and syenite porphyry fragments occur in locations marginal to aplite or syenite bodies where they intrude Late Eocene volcano‐sedimentary rocks (Fig. 6.23). Rock samples from the aplite can be anomalous for Mo, but the main porphyry Mo potential is expected to be in the country rocks marginal to the aplite plutons, particularly where the UST’s are present. A lithogeochemical sample of a fresh aplite dike hosted in granodiorite contains 78% SiO2, 12% Al2O3, 1.2% Fe2O3, 0.2% MgO, 0.5% CaO, 2% Na2O, 6% K2o and 0.1% TiO2.

6.2.13 QUARTZ‐FELDSPAR‐BIOTITE‐HORNBLENDE PORPHYRITIC FELSIC ROCKS (LAMPROPHYRES??)

Quartz‐feldspar‐biotite‐hornblende porphyritic felsic rocks are strongly porphyritic, and contain 5 to 10% quartz phenocrysts 3 to 7 mm across, 15‐25% feldspar phenocrysts 3‐20 mm long, and up to 5 % hornblende and biotite phenocrysts (Fig. 6.24) in a beige‐pink, aphanitic matrix. No lithogeochemical analyses are available, but limited XRF data imply the rocks might be ultrapotassic, and based on the presence of both igneous hornblende and biotite, the rocks might belong to the “Lamprophyre” clan of rocks. These rocks mainly occur in dikes a few meters across, and contain subangular xenoliths of mafic rocks. The margins of the dikes can be chilled and flow‐banded.

6.2.14 MAGNETIC DIORITE DIKES

Magnetic diorite dikes are dark green to black and usually less than 5 meters thick, but can be as large as 50 meters thick, and commonly occur in all fault orientations. Many faults that were already intruded by felsic dikes are intruded by mafic dikes as well. The diorites are composed of needle‐like crystals of plagioclase and hornblende, both less than 2‐4 mm long, and can contain up to 10% disseminated magnetite in the rock matrix (Fig. 6.25). Many of the gold‐rich veins on the northwesterly trending El Placer system are intruded by these magnetic mafic dikes.


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Fig. 6.6 Monomict amygdaloidal basaltic agglomerate (427498 E, 2566624 N).

Fig. 6.7 Microphotograph of amydaloidal, basalt (hole TAN8, 121.38‐122.4 m, sample 28236). Amygdules are rimmed with

chlorite and filled with epidote.

Fig. 6.8 Xenolith of aphyric basalt in feldspar megacrystic diabase.

Cocolmeca area, 428737E, 2567181N (whole rock analysis 15983). Fig. 6.9 Microphotograph of feldspar megacrystic diabase (Hole TAN8, 107.1‐108.12; sample 28222).

Fig. 6.10 Dacitic ignimbrite with lithic fragments of basalt and feldspar megacrystic diabase (428014E, 2568183N).

Fig. 6.11 Conglomerate with cobbles of mafic volcanic rocks (429766 E, 2564724 N).


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Fig. 6.12 Medium bedded, vertically dipping, volcanic wacke (428361 E, 2566003N).

Fig. 6.13 Andesite (424093 E, 2565603 N).

Fig. 6.14 Rhyolite Breccia (Unit 10BFX; 429544E, 2566132N). Fig. 6.15 Hornblende‐quartz‐feldspar phyric rhyolitic ignimbrite lapilli‐tuff with lithic fragments of andesite (Unit 10BFX; 430779 E, 2566457 N). Rock shows eutaxitic texture, a texture typical of welded ignimbrites.

Fig. 6.16 Rhyolite tuff‐breccia (Unit 10BFX; 431212E, 2566222N). Fig. 6.17 Accretionary rhyolite lapilli‐tuff (Unit 10BF; 429764E, 2566536N).

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30


31

Fig. 6.24 Quartz‐feldspar‐biotite‐hornblende porphyritic felsic dike with xenoliths of aphyric basaltic andesite cross‐cutting syenite porphyry in the Arroyo El Placer south of Sitios de Picacho (425 645E, 2565281N).

Fig. 6.25 Black magnetic diorite dike (428059 E, 2568284 N). Many of these follow the same structures as felsic dikes pictured in Fig. 6.24.

7.0 DEPOSIT TYPES—PORPHYRY SYSTEMS Porphyry systems are localized in time and space within the evolution of magmatic arcs along convergent plate margins where subduction of oceanic crust and arc‐type magmatism generates hydrous, oxidized upper crustal granitoids genetically related to ores. Some porphyry copper deposits formed in postsubduction magmatic settings in both extensional and compressional environments. Magmas formed in postsubduction settings tend to be mildly alkaline (high‐K ± Na calc‐alkaline) to strongly alkaline in composition. Porphyry systems have formed throughout most of Earth’s history, but because they generally form at less than 5 km depth in the upper crust in tectonically unstable convergent plate margins that are prone to erosion, more than 90 percent of known deposits are Cenozoic or Mesozoic in age.

7.1 Porphyry Systems in Mexico

There are 21 known porphyry deposits of known economic significance and 56 known porphyry prospects in some of twelve prospective land tracts in Mexico (Fig. 7.1; Hammarstrom et. al, 2010). The porphyry systems occur in: (i) middle Jurassic and Early Cretaceous island arcs [tracts MXJ1 to J4], (ii) the Laramide continental arc [tracts MX‐L1 to L3], and (iii) the Tertiary extensional arc [tracts MX‐T1 to T4]. The oldest known porphyry copper deposit in Mexico, the mid‐Jurassic El Arco deposit, in the central part of the Baja Peninsula, formed in an island arc setting as part of the Alisitos volcanic arc (Fig. 6.2). The youngest known porphyry copper prospects, all south of the Trans‐Mexican Volcanic Belt (TMVB, Fig. 6.2), are related to post‐Laramide volcanic‐arc activity associated with subduction of the Cocos plate centered southeast of Acapulco, Guerrero. A USGS probabilistic mineral resource assessment of undiscovered metal resources in porphyry copper deposits implies that there are at least 39 economic porphyry systems left to be found in Mexico (Hammarstom et al., 2010), most likely in the permissive tracts shown in Fig. 7.1.

The Tango Property overlaps: (i) rocks of the Laramide continental arc (tract MX‐L2), (ii) red‐bed sedimentary rocks related to a hiatus in volcanic activity [Government map unit TeVs], and (iii) rocks of the Tertiary extensional arc (tract MX‐T2).

Tract MX‐L2 contains 15 of the 21 known economic porphyry systems, including Cananea (7140 Mt of 0.42% Cu, 80 ppm Mo, 580 ppb Ag and 12 ppb Au in 2008). Tract MX‐L2 includes Late Cretaceous to Paleocene (Laramide) intrusive and volcano‐sedimentary rocks along the northwest‐trending Cordilleran magmatic belt subparallel to the Pacific coast of Mexico. The 2,800 km long tract contains abundant Laramide (90 to 45 Ma) igneous centers that are roughly coeval with associated volcanic rocks and are largely calc‐alkaline and intermediate in composition, along with lesser amounts of felsic rocks. The age of mineralization within many of the porphyry systems is constrained between about 61 and 50 Ma (Barra et al., 2005). Hornblende bearing quartz diorites and granodiorites are the most abundant intrusive rocks; lesser granite, diorite, monzonite, quartz monzonite, and subvolcanic porphyritic dacite are also reported. Andesite and minor dacite are the primary coeval volcanic rocks in the tract (Barton et al., 1995).

Tract MX‐T2 contains no known porphyry systems, but does contain several polymetallic prospects that might represent upper or adjacent parts of porphyry systems (Hammarstom et al., 2010). The tract includes Oligocene to Miocene granitic


32

to intermediate‐composition plutons and associated volcanic rocks dispersed across northern Mexico (Fig. 7.1). The belt overlaps in age with the initiation of basin‐and‐range style extension, but pre‐dates the opening of the Gulf of California. The relationship of these rocks to subduction on the Pacific margin is unclear (Ferrari and others, 2007), but their tectonic setting and their dispersed broad regional distribution during a narrow time interval represent the continuation of igneous activity in the broad crustal area previously heated by Laramide subduction magmatic‐arc activity, reactivated by extension and crustal thinning. This unusual tectonic setting produced oxidized (magnetite series) and reduced (ilmenite series) mafic and intermediate‐composition magmas with an arc‐like chemical signature over a wide area far removed from the subduction trench. Plutonic rocks that crop out within the tract include numerous small bodies of granodiorite‐diorite (some porphyritic), granite‐granodiorite, and quartz monzonite (some porphyritic) of Oligocene to Miocene age. The chemistry of these rocks ranges from calc‐alkalic to alkali‐calcic (Ferrari et al., 2005). As a group, these rocks are more silicic and more potassic than the Laramide rocks (Hammarstom et al., 2010).

Hammarstom et al. (2010) assigned the Tango prospect to Tract L2 in their Table 2. However, recent radiometric age dates by Ferrari et al. (2013) imply that most plutons on the Property are early to mid‐Miocene in age, and the author of this report assigns Tango to Tract T2.

Fig. 7.1 Porphyry Systems of Mexico (N=77; BLACK DOTS). Twelve tracts of land with characteristics permissive for porphyry deposits were identified as part of the USGS probabilistic mineral resource assessment of undiscovered resources in porphyry copper deposits in Mexico (Hammarstom et al., 2010). For tracts that contain identified resources, the ratios of undiscovered to identified copper resources indicate that: (i) Jurassic‐Early Cretaceous tracts MX‐J1 and MX‐J2 contain fewer estimated undiscovered copper resources (ratios <1) than identified resources; (ii) Laramide tract MX‐L1 may contain significantly more copper than has been identified; (iii) Laramide tract MX‐L2, the tract that contains most of the known deposits in Mexico, including the world class deposits at Cananea and La Caridad, may contain about as much copper, molybdenum, and silver in un‐discovered deposits and more gold than has been identified; (iv) Tertiary tracts MX‐T1 and MX‐T2, where no porphyry copper deposits are known, may contain undiscovered deposits; (v) Tertiary tract MX‐T3 may contain


33

about three times more copper than has been identified; and (vi) permissive tracts with no known deposits (MX‐J3, MX‐J5, MX‐L3, MX‐T1, MX‐T2) contain approximately 30 percent of the total estimated undiscovered copper resources (Hammarstom et al., 2010).

Fig. 7.2 USGS stream sediment geochemistry model (Hammerstrom et al, 2010). There is a high probability that an economic porphyry system underlies the Tango concessions (“X” on map).

7.2 General Characteristics of Porphyry Systems

Porphyry systems are defined as large volumes (10 to more than 100 km3) of hydrothermally altered rock centered on one or more intrusive stocks that may also contain skarn, carbonate‐replacement, sediment‐hosted and overlying high sulfidation epithermal base and precious metal mineralization or adjacent polymetallic veins (Fig. 7.3; Sillitoe, 2010). The principal economic parts of porphyry systems typically take the form of an inverted cup above their causative intrusions. Level plans of the economic portion of porphyry systems typically show radial mineral and metal zoning from (i) a silicic core, (ii) a potassic ore‐zone of quartz, K‐spar, magnetite and biotite with economic grades of Cu +/‐ Mo and other metals, (iii) a phyllic alteration halo dominated by pyrite, sericite and muscovite, and (iv) distal propylitic alteration with chlorite. The diameter of the silicic through the phyllic zones range from a few hundred meters (e.g. Henderson, Colorado, Bajo de la Alumbrera in Argentina) to 5 or 6 kilometers across (e.g. Butte, Montana). Bingham Canyon, Utah, and Climax, Colorado, are both about 1.5 km in diameter (Seedorff et al. 2005, Shannon et al., 2006). The vertical extent of the economic mineralization rarely exceeds 1500 m.

Porphyry systems share the following characteristics (Sillitoe, 2010):

The main economic hypogene ore minerals include chalcopyrite, bornite, molybdenite, hubnerite, wolfram, sphalerite, galena, native Au and electrum. Associated minerals include pyrite and magnetite.

Principal metals mined in porphyry systems are copper and molybdenum. Associated economic metals include gold, silver, tungsten, tin and sometimes platinum group elements.


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Alteration includes alkali‐dominated assemblages (potassic, sodic, sodic‐calcic), acid assemblages (argillic, sericitic), and propylitic alteration. Alteration zoning can be highly variable, but acidic alteration is typically distal and shallow, and where it is found in the center of a deposit, it is late relative to alkali alteration assemblages.

Advanced argillic alteration preferentially occurs in rocks with a low acid‐buffering capacity such as rhyolite tuffs. It is less common in mafic rocks as these tend to neutralize acidic solutions.

Porphyry systems are localized by deep, crustal‐scale faults which allow for rapid ascent of magmas and generation of a hydrothermal fluid.

They are spatially associated with porphyritic intrusions with an aplitic groundmass that range from dioritic to granitic.

The ore zones of hypogene porphyry systems occur at paleo‐depths ranging from 1 to 5 kilometers.

Porphyry deposits can be overlain by extensive lithocaps that may have an area of up to 100 km2 on surface. The vertical distance between the lithocap and potassic alteration related to the porphyry copper deposit ranges from 500 to 1000 meters. The lithocap itself might be as thick as 1000 meters, and might be enriched in As, Mo, Te and Bi.

Below the lithocap, there may be a supergene enrichment blanket of chalcocite in copper‐rich porphyry systems.

Porphyry systems are classified according to the dominant ore metal. This is usually a function of the rock‐type of the causative intrusions, which is a function of tectonic setting (Fig. 7.5). Specifically, intrusive rocks associated with porphyry Cu‐Au and porphyry Au deposits tend to be low‐silica (45‐65 wt.% SiO2), mafic and relatively primitive in composition, ranging from calc‐alkaline dioritic and granodioritic plutons to alkalic monzonitic rocks. Porphyry Cu and Cu‐Mo deposits are associated with intermediate to felsic, calc‐alkaline intrusive rocks that range from granodiorite to granite in composition (60‐72 wt.% SiO2). Porphyry deposits of Mo (Climax‐type), W‐Mo, W, and Sn, in comparison, are typically associated with felsic, high silica (72‐77 wt.% SiO2) and, in many cases, strongly differentiated granitic plutons (Sinclair 2007). Felsic intrusive rocks that are closely associated with some porphyry deposits are characterized by distinct textural features such as unidirectional solidification textures (UST’s; Kirwin, 2006; Fig. 7.6). UST’s consist of prismatic quartz crystals oriented perpendicular to the walls of a crystallizing magma chamber interlayered with bands of aplite. The formation of UST’s is considered to be a result of pulsating pressure changes across co‐tectic boundaries in the quartz‐feldpsar stability field (Kirwin, 2005). UST layers generally range from less than one millimetre to several centimetres or more in thickness. They occur in the apical or marginal part of an intrusive stock. Stocks with abundant comb‐quartz layers, therefore, represent conduits for large volumes of degassed magmatic‐hydrothermal fluids that are capable of producing large porphyry orebodies (Sinclair, 2007). At primary molybdenum mines such as Climax and Henderson, the UST’s mark the boundaries between different intrusive events, and they are the product of a Mo deposition event (Personal Notes: SEG Field Trip to Henderson 24 October 2013). At Henderson, at least 22 intrusive events have been identified by mine geologists. Of these, at least 3 contain economic Mo mineralization.

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35

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8.0 MINERALIZATION

8.1 Porphyry Mo System

The primary target of economic interest on the Property is a porphyry molybdenum system apparently centered on the “Tahona” of Figs. 8.1 and 8.2. This is a new discovery in Mexico, and has been named by the author of this Report “Pórfido del Cuervo”. Country rocks hosting Mo‐rich mineralization include Eocene to Oligocene sedimentary and volcanic rocks and Miocene granodiorite (Fig. 8.2). Small apohyses of syenite porphyry and aplite that cross‐cut the granodiorite are abundant in the main Mo‐anomaly area, and these stocks and apophyses are probably genetically related to the porphyry Mo system.

A continuous Mo‐in‐soil anomaly more than 25oom long and 1000 m wide centered on the “Tahona” defines the principal exploration target for an economic porphyry Mo system. The central portion of this anomaly is defined by unidirectional solidification texture (UST’s) in quartz with coarsely crystalline molybdenite (Figs 8.4 to 8.7). The UST’s occur as a result of pulsating pressure changes across co‐tectic boundaries in the quartz‐feldspar stability field as overpressured (lithostatic pressure >> volatile pressure) volatiles concentrate in a cupola (Kirwin, 2005). Subsequent release of over‐pressuring due to hydraulic fracturing of wall rocks results in formation of sheeted veins such as those observed in Fig. 8.8. Catastrophic failure of the wallrocks locally occurs, and is preserved in the field as tourmaline‐matrix breccias (Figs. 8.9 and 6.23). The breccias can contain fragments of aplite, syenite, country rocks or even UST fragments. The UST’s and breccias occur in the potassic alteration zone of the porphyry system, along with the highest Mo grades. Above and peripheral to the potassic zone, phyllic alteration dominated by illite, tourmaline and muscovite with lower Mo values occurs. Fig 8.1 shows that phyllic alteration occurs mainly east of the tahona, and implies that the Mo porphyry may be tilted easterly.

A cross‐section through the porphyry system is in Fig. 8.3. The presence of a significant aplitic intrusion(s) at depth is implied by the zoned potassic, phyllic and argillic alteration exposed on surface (Figs. 8.1 and 8.3), and apophyses of felsic intrusive rocks on surface (Fig. 8.2). In a typical Mo‐system, the potassic (ore) zone might be on the order of 100‐200 m thick, and surface data from the Tango Property are consistent with this possibility. Thicknesses of the phyllic zone are probably similar, but sub‐ore grade and the argillic zone might be smaller at 100 m thick with anomalous, but probably uneconomic Mo values.


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Fig. 8.1 Voroni polygons of 941 rock samples colored according to dominant alteration mineral assemblage (defined in Table 9.4). Where phyllic alteration overprints potassic alteration, the polygon is coded as potassic‐phyllic. Tourmaline is an important mineral in potassic‐phyllic and advanced argillic mineral assemblages because formation of tourmaline generates abundant acid (Reaction 6, Table 9.5), which is absorbed by feldspar in the rock to form muscovite and/or clay (dickite or kaolinite). RED=veins. BLACK TRIANGLES = tourmaline breccia (e.g. Fig. 6.21). Historic mining for gold occurred in the southeastern portion of the Property, and is associated mainly with argillic and subpropylitic assemblages.


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Fig. 8.2 Geological map centered on the Tahona of Fig. 8.1 showing planned drill holes and cross‐section location. See Fig. 6.4 for Geological legend.


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Fig. 8.3 Cross‐Section showing planned drill holes. The shape of the felsic intrusive complex and alteration shells is speculative. Drill testing is planned to better define the geometry of this system.

Fig. 8.4 Unidirectional solidification texture (UST), 426246 E, 2569634 N, 549 m elev. Quartz crystallized from rocky substrate towards the hammer. The dark mineral intergrown with the quartz terminations is coarsely crystalline molybdenite. Crystallization of UST’s occurs when lithostatic pressure exceeds volatile pressure, but does reflect minor pressure changes across cotectic boundaries in the quartz‐feldspar stability field.

Fig. 8.5 Unidirectional solidification texture (UST), 426251 E, 2569637 N, 549 m elev. The crystallization direction is down, and the UST layers dip gently easterly.


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Fig. 8.6 Author of this report standing under gently east‐dipping quartz‐molybdenum UST layers (25 m NE of Fig. 8.3). The bright yellow oxide is ferrimolibdite. Uppermost person is crouched on a UST layer.

Fig. 8.7 Close‐up of rocks from the cliff of Fig. 8.4 showing coarsely crystalline molybdenite and quartz.

Fig. 8.8 Sheeted quartz veins in pervasively metasomatized country rocks (possibly sediments or andesitic rocks of Late Eocene age; 426304E, 2569454N, 520 m elev). These rocks are strongly magnetic (abundant magnetite) with values of up to 220 SI units recorded from this zone. Sheeted quartz veins occur where lithostatic and volatile pressure were sub‐equal, and the implies the presence of a buried intrusion with UST’s below.

Fig 8.9 Tourmaline matrix breccia (Unit 20ABX; 425924 E, 2569193 N, 520 m elev). Sample 24050 contains 128 ppm Mo and 103 ppm Cu (XRF). Angular phyllic‐altered aplite fragments in a black quartz‐tourmaline matrix with disseminated pyrite and minor chalcopyrite. Breccias form when volatile pressure exceeds lithostatic pressure. Also see Fig. 6.21.

Fig. 8.10 Pervasive potassic‐phyllic alteration. Sample 32449 (427178 E, 2569473 N, 638 m elev) contains anomalous, but sub‐economic metal values of 26 ppm Mo, 299 ppm Pb, 190 ppm Zn and 104 ppm Cu (XRF). Mafics are completely replaced by schorl (tourmaline) and feldspar is altered to muscovite. This sample could be about 100 m above a potential ore zone.

Fig. 8.11 K‐feldspar‐altered xenolithic granodiorite cross‐cut by quartz veins (215º/82º NW) bearing molybdenite (427289 E, 2568680 N, 503 m elev). A select sample of the quartz veins contains 160 ppm Ag, 1.2% Mo, 2744 ppm Bi, 4366 ppm Pb, and 174 ppm Cu (sample 25702; XRF).


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Fig. 8.12 Quartz‐tourmaline‐sulfide veinlets with biotite selvedges oriented 218º/77º NW. Supergene oxides of copper in this sample include azurite and brochantite. Sample 12CGV183T contains 2355 ppm Cu, 27.2 ppm Ag, 17 ppm W and 49 ppb Au across 2 m.

Fig. 8.13 Phyllic vein of coarsely crystalline cockscomb quartz and muscovite hosted in feldspar megacrystic diabase. Sample 25788 contains 112 ppm Ag, 13 ppm Mo, 186 ppm Bi, 6229 ppm Pb, 3472 ppm Zn and 5069 ppm Cu across 3 m (XRF).

8.2. Quartz veins with gold and other base metals

8.2.1 SAN AGUSTIN

San Agustin is a gold‐rich quartz‐calcite‐sulfide vein located about 2 km southeast of Sitio de Picacho between 640 m and 720 m elevation. On surface, the vein is marked by several small prospects and open cut mines over a strike‐length of 350 m (Fig. 8.15). At Mina Don Genardo, the vein is expressed as a steeply dipping cleavage zone with values of 1.9 g/t Au, 82 g/t Ag, >1% Pb and >1% Zn across 2.5 m (sample 17940). The alteration zone is poorly exposed on the ridge south of Don Genardo where values of 0.3 g/t Au and 22 g/t Ag were sampled across 1 meter (sample MX258). South of MX258, the vein is mined out by series of open cuts. There are no in‐situ samples from this area as exposure of the vein is poor. Near the claim post, there is a small stope, and a sample cut across the vein there yielded results of 174 ppm Ag, 1.6% Zn, 2759 ppm Pb and 590 ppm Cu across 0.8 m (XRF; sample 19140; no gold assay available; Fig. 8.17).

In the 1990’s, Minas de Picacho S.A. de C.V. drove a 177 meter long tunnel 3 m high by 3 m wide under the historic workings at the 638 meter elevation (Fig. 8.19). The tunnel intercepted the historic stopes right under the surface cuts. In 2010, Minera Camargo pumped the water out of the old stopes. The average result of 3 chip‐channel samples across the San Agustin Vein at the 640 m elevation is 15.4 g/t Au and 70 g/t Ag across 0.8 m (samples 25816‐25818). Fifteen meters below the level of the adit, a fourth chip channel sample yielded results of 36.8 g/t Au and > 100 g/t Ag across 0.8 m (sample MX285). At 45 m depth, sample 73715 yielded a result of 185 g/t Au and 61 g/t Ag across 1 m. Overall, the historically stoped area has dimensions of about 100 m long, 80 m high and a meter wide, implying historic production on the order of 20,000 tonnes.

The San Agustin Vein is oriented 200º/85º WNW, and is hosted in brecciated, smectite‐altered mafic volcanic rocks that are faulted against steep rhyolite cliffs. The breccia matrix is a mix of rock flour and earthy hematite that is intruded by a less‐altered (young), magnetic mafic dike. Mineralization in the fault breccia consists of grey chalcedonic quartz, white to black calcite, honey to green sphalerite, minor chalcopyrite, galena and pyrite. Vein selvedges contain kaolinite, dickite and black (Zn?) chlorite.


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Fig. 8.14 Map of San Agustin. RED = quartz veins, GREEN = open cut mines, BROWN DASHED = small adits, BLACK = main adit at 638 m elevation. BLUE = planned drill holes.


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Fig. 8.15 Cross‐section of San Agustin showing old workings and sample locations.


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Fig. 8.16 Historic stope at San Agustin. A grab sample of the dump carries values of 682 g/t Ag and 18.14 g/t Au (sample 19140).

Fig. 8.17 Drift about 7 meters below and a few meters southwest from the point in Fig. 8.16 along the San Agustin Vein. A chip‐channel sample across the back of the stope contains 174 ppm Ag, 1.6% Zn, 2759 ppm Pb and 590 ppm Cu across 0.8 m (sample 19140; XRF; no gold assay available). Alteration is mainly black chlorite (Zn‐chlorite?)

Fig. 8.18. “El Carrito”. Historic draw point for ore, 670 m elevation. Fig. 8.19 San Agustin Portal, 638 m elevation.

8.2.2 LA COCO

La Coco refers to the area above Camp La Coco between historic drill holes TAN 1 and Tan 8, and the Carmen Prospects at the top of the hill (SE corner of Fig. 8.20, about 200 m south of La Gloria). The major geological feature of this area is a northeast trending fault scarp that down‐drops Oligocene rhyolite ignimbrite to the southeast against mainly Paleocene‐Eocene mafic rocks to the northwest. The older rocks are intruded by an apophysis about 150 m in diameter of Miocene granodiorite. Marginal to this apophysis, there is a tourmaline matrix breccia hosted in feldspar megacrystic diorite. Some of the breccia fragments are aplitic, implying the presence of felsic intrusions at depth. The breccia matrix is tourmaline, comb quartz, coarsely crystalline pyrite and very minor chlcopyrite. Unlike at Porfido del Cuervo, this tourmaline breccia does not host molybdenum mineralization at surface.

8.2.2.1 LA COCOLMECA

The fault‐scarp controls the position of the copper‐rich Cocolmeca Vein, the main target of Seafield Resources’ historic RC drilling campaign in 2008. Results of that work are summarized in Table 10.1. The Cocolmeca Vein has been followed almost continuously for 1650 meters from Guayabo through to San Antonio, Gavilan and Gavilan North (northeast of Fig.8.20). The Cocolmeca Vein consists of comb quartz with chlorite rosettes (after stilpnomelane??) intergrown with chalcocite and chalcopyrite. The average result of 55 chip‐channel samples cut across surface exposures and shallow underground workings is 4.2 g/t Au, 37 g/t Ag, 0.7% Cu, 0.3% Pb and 0.5% Zn across about 1.3 meters. This includes a result of 44.09 g/t Au, 47 g/t Ag, 0.4% Cu, 0.2% Pb, 0.7% Zn and 6.7% Fe across the San Antonio working (sample 19856), and 347 g/t Ag, 5.2% Cu and 18.6% Fe across 0.7 m at the Guayabo working (sample 15953).


45

La Cocolmeca Vein was tested with 5 RC holes (TAN 1,3,4,5, and 6) over a strike length of 450 meters between the Gavilan, San Antonio and Guayabo prospects. The vein is hosted mainly in mafic volcanic rocks that are intruded by feldspar porphyritic to megacrystic diorite. All of the drill holes except possibly TAN6 intercepted the vein, which is characterized by clear gemmy quartz, chalcocite, chrysocolla, chalcopyrite and sphalerite. The best overall result was 19 g/t Ag and 5570 ppm Cu across 2.04 meters in Hole TAN4 between 123.42 and 125.46 meters. The most interesting gold result was 0.55 g/t Au across 3.06 meters in Hole TAN5.

4.2.2.2 LA GLORIA, PALODISMO, COPALQUIN, LA VIBORA ET AL.

La Gloria, Palodismo, Copalquin and La Vibora are four of many northwest trending veins exposed on the northwest face of Cocolmeca fault scarp. Of these, La Gloria was developed by historic operators, and the others are prospects indicated by small workings and surface rock sampling.

Mina La Gloria is a 103 m long easterly trending tracked tunnel about 2 m high and 2 m wide at 950 m elevation that cross‐cuts a NW trending zone of gold‐rich mineralization hosted in rhyolite breccia. The open stope is probably at least 150 m long, and breaks through to surface at a location called Infierno 60 to 130 m above the 950 m level. The lower levels are flooded. Based on these estimates, at least 34,000 tonnes of rock has been mined out of La Gloria, making it the largest historic prospect on the Tango Property.

Minera Camargo channel sampled the cross‐cut at 3 m intervals, and the stope was sampled where practical. From the entrance, the tunnel intersects about 69 m of propylitic altered amygdaloidal mafic flows and flow‐breccias that are probably intercalated with the surrounding Oligocene rhyolite ignimbrite. The alteration is subpropylitic, and consists of pervasive chlorite with 5‐15% NNW trending veinlets of calcite with minor hematite. Overall, 24 3 m chip channel samples across this basalt contain average values of 1434 ppm Zn, 791 ppm Pb, 74 ppm Cu, 59 ppb Au, 2% Mg and 4.4 % Fe. About 71 m from the entrance, there is a major NW trending fault that juxtaposes the mafic rocks against quartz‐porphyritic rhyolite breccia. The tunnel was driven through about 30 m of this material with average values of 2101 ppm Zn, 771 ppm Pb, 168 ppm Cu, 138 ppb Au, 0.6% Mg and 1.6% Fe from 10 samples before intersecting a NNW trending shear zone dipping 75˚ WNW that carries higher grade gold values. The stope is aligned along this shear zone, but there does not appear to be a discrete quartz vein that the miners were following. Rather, the structural zone is characterized by 10‐20% red chalcedonic quartz hematite veinlets that contain minor bright green zinc‐copper oxides and hematite stain. The best assay was sample 15659, which contains 21.1 g/t Au and 6 g/t Ag across 0.8m. The weighted average value for all samples from the stope is 9.4 g/t Au across 0.8 m. The stope exposures did not allow for a sample into the footwall.

Palodismo is located about 65 m northwest of the Gloria cross‐cut at 920 m elevation. It is a shear zone oriented 327˚/78˚ NE hosted in mafic volcanic rocks. Sample 19691 returned values of 27.6 g/t Au across 1.3 m. However, it appears to be directly on‐strike with the Carmen prospects 340‐400 m to the southwest on the top of the hill at 1200 m elevation (structure pictured in Fig. 8.24). Seven rock chip‐channel samples collected from the Carmen prospects yield average values of 22.8 g/t Au, 1.9% Pb and 1.2% Zn across an average width of 0.9 m.

Copalquin is a set of cryptocrystalline to comb quartz veins and veinlets hosted in ignimbrite with pervasive propylitic (quartz‐epidote) alteration that trends northwesterly and dip 70‐80˚ northeasterly across a zone about 40 m wide. There are at least seven minor surface workings on these structures. The average values of 18 chip‐channel samples across the structures are 19 g/t Ag, 1.6 g/t Au, 0.7% Zn, 0.3% Pb and 583 ppm Cu across an average width of 0.8 m. The best gold value is 5.1 g/t Au across 0.5 m in Mina Copalquin. Systematic chip‐channel sampling at 3 m intervals below the workings implies average metal concentrations of 3311 ppm Zn, 1259 ppm Pb, 148 ppm Cu and 45 ppb Au across 120 m in the host rock.

La Vibora is a second set of northwesterly trending, steeply dipping cryptocrystalline veins and veinlets hosted in propylitic altered ignimbrite that outcrop over a zone about 100 m wide. The average values of 33 chip channel samples across individual structures in this zone is 3.2 g/t Au, 4.2 g/t Ag, 0.9% Zn, 0.2% Pb and 0.15% Cu across an average width of 1 m. The best gold value is 13.5 g/t Au across 0.5 m.


46

Fig. 8.20 Plan view of “La Coco” area showing geology, gold geochemistry and planned drill holes.


47

Fig. 8.21 Cross‐Section of La Gloria showing planned drill hole PDH12. The vein is stoped about 30 m below the 950 m level, and PDH 12 is planned to test under the estimated position of the old stope.


48

Fig. 8.22 View of the Cocolmeca Fault Scarp, looking southwesterly from the trail to Infierno. Mine workings follow northwesterly trending faults exposed at the base of this scarp.

Fig. 8.23 Gavilan prospect, Cocolmeca Vein, parallel to base of fault scarp. Sample 19825 contains 1.37 g/t Au, 20 g/t Ag, 0.36% Cu, 0.2% Pb, 0.54% Zn and 5.3% Fe across 2 m. Textures in the vein include chlorite rosettes (perhaps after stilpnomelane??) and comb quartz intergrown with weathered sulfide. Kinross opined that Gavilan was not an epithermal vein, but a polymetallic vein. The alteration assemblage is probably propylitic after potassic.

Fig. 8.24. View of the Fault Scarp from the trail to La Gloria. The NW trending structures coming through the hill are La Gloria and Carmen‐Palodismo.

Fig. 8.25 La Gloria Stope, 950 m elevation, looking southerly.

9.0 EXPLORATION

9.1 Regional stream sediment geochemical survey

In January of 2006, Minera Camargo completed a detailed stream sediment survey (205 samples) over the entire Property. Drainage basins sampled range from 7 Ha to about 160 Ha in size, with most basins on the order of 50 Ha. Samples were collected according to the procedures outlined in Section 11.1, and analyzed according the methods of Section 12.1. Of the 205 samples collected, 21 samples contain more than 500 ppb Au, and 52 samples (25%) contain more than 22 ppb Au. Values for Cu, Mo, Pb and Zn were also markedly anomalous, particularly in creeks draining the veins, but silver values were subdued.

The author of this Report analyzed the distributions of Mo, Cu, Pb, Zn, Ag and Au. Ordinary distribution statistics are summarized in Table 9.1. The data for each element were then plotted as histograms, box‐and‐whisker plots, stem‐and‐leaf plots and probability plots. Each plot was interpreted, and thresholds for non‐anomalous (background), probably anomalous, and anomalous metal concentrations were determined (also summarized in Table 9.1). Maps of the drainage basins and geochemical results are in Figs. 9.1 to 9.6.


49

Table 9.1 Summary distribution statistics for 205 stream sediment samples from the Tango Property, Sinaloa, Mexico. These are the principal elements of economic interest on this Property.

Mo (ppm) Cu (ppm) Pb (ppm) Zn (ppm) Ag (ppm) Au (ppb)

Maximum 21 653 4298 6773 6 6841

Arithmetic Mean 1 42 171 244 0 279

Standard Deviation 3 94 554 682 1 1010

50th 1 18 20 75 0 2

75th 1 31 67 175 0 23

90th 2 69 343 392 1 544

98th 10 457 2038 2262 2 5142

Probably not anomalous 0 to 1.5 0 to 34 0 to 48 0 to 104 0 to 0.6 0 to 22

Probably anomalous 1.5 to 5 34 to 95 48 to 131 104 to 245 0.6 to 1 22 to 62

Anomalous 5 to 10 95 to 146 131 to 597 245 to 820 1 to 3 62 to 192

Markedly Anomalous 10 to 21 146 to 653 597 to 4298 820 to 6773 3 to 6 192 to 6841

Fig. 9.1 Map of molybdenum geochemistry in stream sediment samples. Fig. 9.2 Map of copper geochemistry in stream sediment samples.


50

Fig. 9.3 Map of gold geochemistry in stream sediment samples. Fig. 9.4 Map of silver geochemistry in stream sediment samples.

Fig. 9.5 Map of lead geochemistry in stream sediment samples. Fig. 9.6 Map of zinc geochemistry in stream sediment samples.

9.2 Soil geochemical survey

A total of 2161 B‐horizon soil samples were collected from 68 line kilometers of survey grid centered on San Agustin, Cocolmeca, El Placer and the northern part of the Tango‐2 concession. Sample spacing was either 25 or 50 m (slope‐corrected) and lines are 100 to 400 m apart. Collectively, about 1400 ha (about 35%) of the Property has been covered by the soil geochemical survey grids. Most overburden on the Property is residual soil from weathering of rock, although in steeper areas some colluvium and talus is present. Obvious stream gravels were avoided in this survey. In general, the overburden is 0.5 to 3 meters thick, and characterized by a thin organic layer a few centimeters thick underlain by a brown to red‐brown B‐horizon soil layer a few 10's of centimeters thick. The soil grades downward into weathered rock.

Samples were collected according to the procedures outlined in Section 11.2, and analyzed according the methods of Section 12.1. Summary distribution statistics for Mo, Cu, Pb, Zn, Ag and Au are in Table 9.2. The data for each element were then plotted as histograms, box‐and‐whisker plots, stem‐and‐leaf plots and probability plots. Each plot was interpreted, and thresholds for probably non‐anomalous (background), probably anomalous, anomalous, markedly anomalous and economic metal concentrations were determined (also summarized in Table 9.2). Voroni polygons were drawn around each sample site, and the area included by the polygon colored according to thresholds defined in Table 9.2 (Figs. 9.7 to 9.12).

Table 9.2 Summary distribution statistics for 2161 soil samples from the Tango Property, Sinaloa, Mexico.


Maximum 456 3,407 >10,000 >10,000 >100 24,549

Arithmetic Mean 3 76 191 331 1 138


50th 0 34 46 113 0 7

75th 1 70 122 238 1 22

90th 3 142 333 660 1 135

95th 7 216 738 1415 2 368

98th 23 458 1,583 2642 4 1,533

Probably not Anomalous 0 to 1.5 0 to 70 0 to 46 0 to 113 0 to 1.5 0 to 22

Probably Anomalous 1.5 to 7 70 to 216 46 to 333 113 to 660 1.5 to 5 22 to 52




51


Extremely Anomalous 75 to 456 1000 to 3407 1583 to >10000 2642 to >10000 50 to >100 368 to 24549

Fig. 9.7 Map of molybdenum geochemistry in soil. The soil data clearly outline the porphyry Mo‐prospect north of the “Tahona” (Pórfido del Cuervo).

Fig. 9.8 Map of copper geochemistry in soil.

Fig. 9.9 Map of gold geochemistry in soil. Gold is anomalous in soils above veins that trend northeast (San Agustin‐Gavilan) and northwest (La Flauta‐Mina del Chivo).

Fig. 9.10 Map of silver geochemistry in soil. There is a moderate but consistent northwest trending silver‐in‐soil anomaly between San Agustin and Los Yegaros that is not co‐incident with anomalous gold.


52

Fig. 9.11 Map of lead geochemistry in soil samples. Lead occurs as galena in veins, and substitutes for potassium in K‐feldspar and illite clay.

Fig. 9.12 Map of zinc geochemistry in soil samples. Zinc occurs in sphalerite in veins, as well as chlorite in vein selvedges, and/or smectite clay.

9.3 Rock geochemical survey and alteration study

A total of 938 in‐situ rock samples were collected from: (i) a 100 meter by 100 meter survey grid centered on the porphyry system, and (ii) mine workings on the El Placer Vein system. Collectively, about 1350 Ha (about 33%) of the Property has been covered by this survey. Samples were collected according to the procedures outlined in Section 11.3, and analyzed with a TerraSPEC SWIR spectrometer, Niton GOLDD portable XRF assayer, and Kappa magnetic susceptibility meter according the methods of Section 12.3. Summary distribution statistics for Mo, Cu, Pb, Zn, Ag and magnetic susceptibility are in Table 9.3., and thresholds for non‐anomalous (background), probably anomalous, anomalous and markedly anomalous metal concentrations and magnetic susceptibility measurements were determined. Prior to completing this survey, 1355 rock samples were collected and analysed using conventional assaying techniques outlined in Sections 11.3 and 12.2. Anomalous thresholds for these rocks are the same as those determined for the grid samples.

Table 9.3 Summary distribution statistics for 938 rock samples from the Tango Property, Sinaloa, Mexico. Pulps from these rocks were measured using a Niton GOLDD hand‐portable XRF gun.

Mo (ppm) Cu (ppm) Pb (ppm) Zn (ppm) Ag (ppm) Mag Sus (SI units)

Maximum 81956 36575 373114 210429 2500 220

Arithmetic Mean 546 1208 1882 4223 28 3


50th >5 162 80 183 >5 0

75th 27 800 484 636 >5 2

90th 117 2773 3207 4835 79 8

98th 1915 14119 15760 56574 181 25

Probably Not Anomalous 0 to 50 0 to 500 0 to 500 0 to 500 0 to 20 0 to 2

Probably Anomalous 50 to 200 500 to 1000 500 to 5000 500 to 5000 20 to 122 2 to 5




53

Fig. 9.13 Molybdenum geochemistry of rock samples using the Niton XRF (938 samples; shaded Voronoi polygons) and laboratory assaying (1355 samples, point data). Rock assays for molybdenum are consistently high in the Pórfido del Cuervo prospect north of the tahona.


54

Fig. 9.14 Copper geochemistry of rock samples using the Niton XRF (938 samples, shaded Voroni polygons) and laboratory assaying for gold and copper (1355 samples, point data). Copper geochemistry in rock samples from Pórfido El Cuervo north of the Tahona is subdued.

Reflectance spectroscopy is a technique that uses the energy in the Short Wave Infra‐Red (1.0‐2.5 microns) wavelength region of the electromagnetic spectrum to identify and analyse minerals (Hauff, 2005). The technique is especially useful for finely crystalline minerals that cannot easily be identified by visual inspection or even more sophisticated techniques such as X‐ray diffraction. Alteration mineral maps can be compared to models of known deposits to estimate the position of the sample in a hydrothermal system, and the depth of drill targets can be estimated. After inspecting the mineral determinations, it was decided to classify the mineral assemblages according to the criteria of Table 9.4. Mineral assemblages were plotted as shown in Fig. 8.1. Important findings of the SWIR survey are:

1. Of 938 rock samples analyzed, all but 24 were altered. 2. The survey defines an area of at least 1350 Ha that remains open in most directions. 3. Potassic, calcic and propylitic alteration assemblages are most important in the lower parts of the Picachos and

Habal drainage basins between 300 and 550 m elevation. 4. Potassic‐phyllic, phyllic and advanced argillic alteration occurs mainly between 450 and 700 m elevation. Black

matrix tourmaline breccias occur mainly in the northern part of the concession, and form part of the potassic‐phyllic assemblage. These breccias occur in close proximity to comb quartz (UST layers) with coarsely crystalline molybdenite. These textures mark the magmatic‐hydrothermal transition, the place where economic porphyry deposits occur.

5. Advanced argillic alteration (mainly dickite) occurs in gold‐rich veins such as San Agustin‐Don Genardo and La Flauta South. Locally, potassic minerals such as apatite and possibly stilpnomelane can be important in these structures.


55

6. Argillic and sub‐propylitic alteration assemblages occur in rocks that host gold bearing veins at higher elevations (700‐1200 m).

Table 9.4 Mineral assemblages observed on the Tango Property and interpretation summary.

Mineral Assemblage Interpretation*

Potassic: Quartz, K‐feldspar, Biotite, Chalcopyrite, Magnetite, Wolframite, Molybdenite

Formed by cooling of magmatic‐hydrothermal fluids. Alkali exchange with rock and near‐neutral fluid at temperatures hotter than 400ºC (Reactions 1 to 5,Table 9.5). The bulk effect of potassium metasomatism is to add iron and potassium to the rock, and remove calcium and sodium.

Calcic: Actinolite, scapolite, quartz, magnetite, titanite, chlorite, epidote, andradite, calcite

Formed by heating of hydrothermal fluid (360‐480ºC). The principal hydrothermal reactions involve the replacement of K‐feldspar by oligoclase and of biotite by actinolite or chlorite. Copper is removed.

Potassic Gold Veins: Stilpnomelane, Quartz, Chalcocite, Specularite, Apatite**

Most published temperatures of formation for hydrothermal apatite are higher than 375ºC and stilpnomelane forms at temperatures higher than 400ºC.

Potassic‐Phyllic: Tourmaline, Muscovite, Pyrite Potassic metasomatism with a boron‐rich fluid. Formation of tourmaline generates abundant acid (Reaction 6,Table 9.5), which is absorbed by feldspar in the rock to form muscovite or advanced argillic alteration minerals.

Phyllic: Muscovite, Pyrite Alkali exchange with rock and near‐neutral to moderately acidic fluid at temperatures higher than 300ºC (reactions 7 to 10; Table 9.5). Hydrolysis of biotite or potassium feldspar results in a net loss of potassium, whereas hydrolysis of albite or chlorite results in a net gain of potassium.

Advanced Argillic: Dickite, Kaolinite, Jarosite, Pyrophyllite Alkali stripping of rock with strongly acidic fluid at temperatures lower than 250ºC (reaction 11; Table 9.5).

Argillic: Kaolinite, Illite These minerals form from moderately acid fluids <250ºC.

Propylitic: Chlorite, Epidote (piedmontite). Epidote forms at temperatures higher than 200ºC.

Sub‐propylitic: Smectite, Illite, Chlorite, Calcite. Volatile addition (mainly CO2 and H2O) to the rock at temperatures less than 200ºC.

*Based on Hauff (2005) and Hedenquist and White (2005). ** The occurrence of stilpnomelane and apatite in epithermal gold veins is unusual, and this alteration type is specific to this Report.

Table 9.5 Possible reactions that could explain observed mineral assemblages on the Tango Property. Iron‐rich end members annite and chamosite are used to

represent biotite and chlorite.

1 Ca2Fe5(Si7Al2O22)(OH)2 (hornblende) + 2K++ Fe

++ + 4H2O 2KFe3(AlSi3O10)(OH)2 (Annite) + H4SiO4 + 2Ca

+++ 2H

+

2 NaAlSi3O8 (albite) + K+ KAlSi3O8 (orthoclase) + Na

+

3 CaAl2Si2O8 (anorthite) + 2K+ + 4H4SiO4 2KAlSi3O8 (orthoclase) + Ca

++ + 8H2O

4 6FeS(pyrrhotite) + 4H2O Fe3O4 (magnetite) +3FeS2 (pyrite) + 4H2

5 Fe+++2H2S+ Cu

++ CuFeS2 (chalcopyrite) + 4H

+

6 Fe3O4 (magnetite) + 6NaAlSi3O8 (albite) + 3H3BO3 + 18H2O +7H++ 2e

‐ NaFe3Al6(BO3)3Si6O18(OH)4 (tourmaline) + 5Na

+ 12H4SiO4

7 2KFe3(AlSi3O10)(OH)2 (annite) + 4H+ + 6H2O Fe5Si3Al2O10(OH)8 (chamosite) + 2K

+ + Fe

++ + 3H4SiO4

8 3Fe5Si3Al2O10(OH)8 (chamosite) + 2K++ 28H

+ 2KAl3Si3O10(OH)2 (muscovite) + 3H4SiO4 + 15 Fe

++

9 NaAlSi3O8 (albite) + K+ + 2H

+ KAl3Si3O10(OH)2 (muscovite) + 6SiO2 + 3 Na

+

10 3KAlSi3O8 (orthoclase) + 2H+ KAl3Si3O10(OH)2 (muscovite) + 2K

+ + 6SiO2

11 NaAlSi3O8 (albite) + 6H2O + 2H

+ Al2Si2O5(OH)4 (kaolinite or dickite) + 2Na

+ + 4SiO2

12 3NaAlSi3O8 (albite) + 2Ca++ + 13H2O Ca2Al3Si3O12(OH) (zoisite) + 6H4SiO4 + 3Na

++ H

+

13 2NaAlSi3O8 (albite) + 4H2O+ 1.6H+ Na0.3Al2Si4O10(OH)2•n(H2O) (montmorillonite) + 2H4SiO4 + 1.6Na

+

14 Ca2Fe5(Si7Al2O22)(OH)2 (hornblende) + 4H2O + 2CO2 Fe5Si3Al2O10(OH)8 (chamosite) + 4SiO2 + 2CaCO3+ 2H+++ 2e

‐


56

9.4 Metal Zoning

Porphyry systems are zoned from copper and/or molybdenum rich mineralization in the center to peripheral zinc, lead and precious metal‐rich mineralization. To show metal zoning on the Tango Property, geochemical data from stream sediments, soils and rocks (both assay and XRF) was compiled into one worksheet, and ratios of concentration data for base metals Mo, Cu, and Zn were calculated. These elements were selected as they are well‐measured across all datasets. Mo and Cu are “central” elements, whereas Zn is “peripheral”. Lead was not used as the best indicator of “peripheral” mineralization as it can occur in K‐feldspar (a “central” alteration mineral), and in clays derived from alteration of feldspars. Precious metals were excluded as the Niton XRF does not reliably measure values below concentrations of 10 ppm. Maps of Mo/(Mo+Zn) and Cu/(Cu+Zn) are in Figs. 9.15 and 9.16. Zoning of Mo compared to Zn shows a well‐defined Mo‐rich anomaly related to Pórfido El Cuervo north of Tahona on the map. Copper relative to zinc is highest in a northeast‐trending zone between tahona and San Agustin that is not co‐incident with the strongest Mo geochemistry. Finally, although absolute copper values in vein samples are generally very high, zinc concentrations are much higher, so “vein” type mineralization that is distinct from “porphyry” type mineralization can be differentiated based on the Cu/(Cu+Zn) ratio (low in peripheral veins, high in porphyry veins).

Fig. 9.15 Voroni polygons of the metal ratio Mo/(Mo+Zn). Areas with high zinc values compared to Mo are pale grey, and mainly occur in the vein prospects between San Agustin and La Flauta. The metal ratio clearly defines Pórfido del Cuervo north of the Tahona with a larger, more consistent, footprint than that defined by Mo alone (Fig. 9.13). It also implies there may be significant porphyry Mo‐potential west of San Agustin where much of the prospective ground is

covered by overburden (area with no rock samples).


57

Fig. 9.16 Voroni polygons of the metal ratio Cu/(Cu+Zn). Areas with high zinc values compared to Cu are pale grey, and mainly occur in the peripheral vein prospects between San Agustin and La Flauta. This metal ratio is highest near the pueblo of Picachos (northern boundary between Tango and Tango 2) and west of San Agustin. Note that it is subdued underlying the Mo‐prospect Pórfido el Cuervo. This is consistent with the observation that most primary Mo‐porphyry systems contain only minor amounts of other metals.

10.0 REVERSE CIRCULATION (RC) DRILLING A D6N tractor was mobilized to the Property 22 December 2007. By 15 January, the 36.2 kilometer long section of road between Cacalotan and Camp La Coco was repaired and upgraded. At Camp Salva, sites were prepared for additional buildings, and the tractor started work on the access roads and drill pads 18 January 2008. A total of 1.4 kilometers of old mine roads were upgraded to provide access to targets at San Antonio, Guayabo and the Adit in Rhyolite. To the east, about 4.7 kilometers of new roads were constructed to provide access to El Cobre, Salva and El Placer. At Camp Salva, plywood cabins were constructed for the kitchen, office and bunk space, and a cement tank was built for water storage. Camp construction was mostly complete by 3 February 2008. All drilling was conducted, utilizing a “Buggy‐type” reverse circulation drill rig contracted from Layne de Mexico in Hermosillo, Sonora. Drilling was done with one shift per day, ranging in length from 10.0 to 14 hours. The drill arrived at the first site about mid‐day 7 February, 2008, and drilling operations continued through to 12 February when a mechanical breakdown occurred. Following repairs, drilling resumed 16 February through to 26 February. About 85% of the drilling was conducted dry, with only air circulation. Water injection was utilized where ground conditions or the abundance of groundwater mandated the change (mainly Holes 2, and 11). Drilling rates were about 110 meters per day. A crew of 5 people were on the drill site to manage the overall sample collection effort. When the holes were completed, they were capped with a 1 meter by 1 meter cement plug, and the collar information was inscribed into the cement. Drilling results are summarized in Table 10.1.


58

Table 10.1 Principal results from 2008 reverse circulation drill holes.

HOLE_ID FROM TO Interval Copper_ppm Lead_ppm Zinc_ppm Silver_ppm Gold_ppb ALTERATION_ASSEM

TAN1 113.14 115.18 3.06 2640 203 389 10 42 Propylitic

TAN2 6.12 11.22 5.1 22.34 102.6 1698.4 0 17 Sub‐Propylitic

TAN2 29.58 30.6 1.02 18.2 19 1550 0 0 NONE

TAN2 36.72 37.74 1.02 72.8 59 1680 0 31 NONE

TAN2 188.7 200.94 12.24 49.1 75.91 1231.33 0 11 Propylitic

TAN2 205.02 210.12 5.1 21.76 47 984.4 0 0 Propylitic

TAN2 225.42 238.68 13.26 11 37 902 0 34 Propylitic


TAN3 74.46 80.58 6.12 47.8 542.8 2828.3 0 6 Propylitic

TAN3 83.64 87.72 4.08 3541.75 312.25 656 5.3 137 Propylitic

TAN3 87.72 98.94 11.22 70.12 47.72 1162.73 0 30 Propylitic

TAN4 123.42 125.46 2.04 5570 603 145 19 28 Propylitic

TAN4 135.66 144.84 9.18 176.52 198.66 1106.56 0 40 Propylitic

TAN5 79.56 80.58 1.02 242 310 1460 0 0 Propylitic

TAN5 87.72 89.76 2.04 240 710 1500 0 0 Sub‐Propylitic

TAN5 89.76 92.82 3.06 530 270 794 3 546 Propylitic

TAN5 104.04 106.09 2.04 33.6 678 1385 0 18 Sub‐Propylitic


TAN6 45.9 47.94 2.04 495 20.5 51.55 0 22 NONE

TAN6 114.24 135.66 21.42 166 503.7 2202 3.19 10 Sub‐Propylitic

TAN7 44.88 52.02 7.14 37.98 956.14 1494.43 0 10 Propylitic

TAN7 74.46 75.48 1.02 726 484 3690 0 0 Propylitic

TAN8 129.54 133.62 4.08 248.25 763.75 1246 0 9 Propylitic

TAN8 145.86 150.96 5.1 182 639.2 2427 0 7 Propylitic

TAN8 159.12 163.2 4.08 222.7 39.75 894 0 40 Argillic

TAN9 2.04 3.06 1.02 537 159 534 0 12 Argillic

TAN9 7.14 8.16 1.02 448 20 126 0 0 Propylitic


TAN9 59.16 60.18 1.02 495 38 83.2 0 0 Sub‐Propylitic


TAN12 0 6.12 6.12 66 1017 3218 0 342 Sub‐Propylitic

TAN12 6.12 22.44 16.32 15.66 229 909 0 9 Sub‐Propylitic







59

Fig.10.1. D6N Caterpillar tractor used for drill access. Fig.10.2 Layne Drilling’s tire‐mounted “buggy style” reverse

circulation drill working on Hole TAN 11.

11.0 SAMPLING METHOD AND APPROACH

11.1 Stream sediment Samples

Particulate gold from eroding mineral deposits can be readily transported and concentrated in a stream environment. To increase contrast in the stream sediment sample database, samples were collected from poorly sorted material in gravel‐rich sandbars where heavy gold particles are likely to drop out of suspension. Well‐sorted sand deposits were avoided. Approximately pre‐determined sample sites along first and second order drainages were selected from the map, and a co‐ordinate list generated at the office. The sites were located in the field using a Garmin 76CS hand held GPS and 1:50000 scale topographic map. At each sample site, the crew scanned the creek bed for suitable gravel bars, and material was collected from different microsites in the gravel deposits using a rock pick and shovel to loosen the unsorted gravels. The samples were sieved in the field to remove rock fragments, and 1‐ 2 kg of material were collected in a Tyvek sand sample bag and sealed with a numbered tag. To avoid contamination: (i) sediment from each site was passed through the sieve before preparing the sample, (ii) sampling crews were instructed not to wear metal jewelry, (iii) sample bags were securely tied off at the sample site, and (iv) samples were routinely bagged for shipping to the lab at the end of the day in rice sacks, and the sacks sealed off. Stream sediment and soil samples were never bagged with rock samples to avoid cross‐contamination between sample types.

11.2 Soil Samples

On the Tango Property, B‐horizon residual and colluvial soil samples were collected using variably oriented survey grids. Tight‐chained and slope‐corrected lines were cut bearing 90º using a Silva sighting compass and pre‐determined GPS waypoints plotted on topographic base map for survey control. The (slope‐corrected) map distance between samples was 25 m, and a 100 or 200 meter line spacing was used. A metal tag with the WGS 84 UTM co‐ordinates and sample number was nailed to a nearby tree, and a pink flag hung over the sample site. A stake was used only if no trees were nearby.

Samples were collected by cleaning the organics off the sample site, then digging a small pit with a shovel to a depth of 20‐30 cm into the B‐horizon. The samplers were trained how to identify the B horizon, and instructed not wear any metal jewelry to avoid sample contamination. About 1 kg of material was collected from the bottom of the sample pit and put in a Kraft soil sample envelope or Tyvek bag with a numbered tag. Samples were sieved with a plastic sieve to remove coarse rock fragments greater than 2 mm across. Some simple observations such as the color of the soil, proximity to bedrock and presence or absence of mineralization were noted. If paper soil envelopes were used, these were sealed again in plastic bags to avoid breakage and contamination.

The author has walked over parts of the grid, and verified that the samples are located correctly, and that appropriate material was sampled.


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11.3 Surface Rock and Underground Mine Samples

Several types of rock samples were used in the evaluation of the Tango Property. These are listed in Table 12.1. For all types of samples, about 2 kilograms of rock chips were collected in a double‐bagged plastic sample bag with a numbered tag.

Table 12.1 Types of rock samples used to evaluate mineral occurrences on the Tango Property.

SAMPLE TYPE DESCRIPTION AND COLLECTION METHOD

Grab Samples A sample taken from an outcrop, but not oriented across a structure, and not necessarily representative.

Float Samples A rock sample from loose material, usually stream boulders or colluvium.

Dump Samples Material collected from a mine dump. These are not usually representative.

Chip Samples Oriented samples taken across a width by chipping pieces of rock approximately every 10 cm.

Chip‐Channel Samples (Preferred method)

Oriented samples cut across a representative part of a mineralized structure using a sledgehammer and chisel to form a continuous channel. Most channel samples were cut only after the working face had been cleared of soil and debris, and the oxidized material removed using a hammer if at all possible. After cleaning, 5‐20 kg of material was collected on a large rice bag laid under the working face. This material was then crushed to a medium gravel size between two rock hammers, and homogenized by rolling the gravel in the rice bag. From the homogenized sample, about 2 kg of rock, and ½ kg of fines were put into a doubled plastic sample bag and sealed with a plastic tie.

11.4 Dry RC Drilling

Drill samples were routinely collected at 1.02 meter intervals. 100% of the dry samples were sent through the cyclone and collected in a Jones splitter. The sample was then split in half or quartered. Part of the sample was bagged in a plastic bag, analysed with the Niton XRF, and stored in camp. The other part was bagged in a cloth bag, then re‐sealed in a second plastic bag for shipment to the lab.

The information from RC drilling (wet or dry) is qualitative for the following reasons:

1. A set sample length is used, so the boundaries of the mineralization are not known precisely. On the Tango Property, the drill target was veins, so a fairly narrow sample width was used.

2. The cuttings are lifted to surface using air or some other drilling fluid. When coarse gold is present, the circulation of the fluid can cause it to settle to the bottom of the drill hole. Therefore, the gold assays of the cuttings under‐report the amount of gold actually present.

11.5 Wet RC Drilling

Wet samples were routinely collected at 1.02 meter intervals. The entire sample was funneled from the cyclone into a circulating splitter. Pan blocks were placed on alternate openings in the splitter to cut sample size down to approximately a 1/2 split. Water and cuttings were collected in a black plastic bag in a 20 liter pail from one of the splits. The fines were allowed to settle out of the water in the bag, and clear water was siphoned off the sample. From the settled sample, about 1.5 kg of cuttings were collected in a cloth bag and dried off in the sun. Once the sample was dry (about 2 days), X‐ray analysis was performed, and the sample was re‐sealed in a second clear plastic bag for transport to the lab. Material not sent to the lab was sealed in a clear plastic bag and stored in camp. Assays for wet RC drill cuttings are qualitative reasons 1 and 2 as specified in Section 11.4 (above).

It is the author’s opinion that the samples are representative, of good quality, and that the only factor that may have resulted in (negative) sample biases is the drilling method selected for the reasons in Section 11.4.

12.0 SAMPLE PREPARATION, ANALYSIS AND SECURITY

12.1 Stream sediment and soil samples

As stream sediment sampling and soil sampling campaigns were completed in the dry season, it was not necessary to dry the samples. Therefore, these were packaged into rice bags at the end of each day, then trucked to the office in Mazatlán on the regular grocery run from camp about once a week. At the end of each job, the samples were shipped to Acme Laboratories’ preparation facility in Guadalajara via Estrella Blanca. Sample preparation was handled exclusively by ACME,


61

and no Minera Camargo workers had access to the samples after shipping. At the lab, the samples were dried at 60 degrees Celsius, then disintegrated and sieved to ‐80 mesh. The prepared pulps were couriered via DHL Express to ACME Analytical Laboratories Ltd. at 1020 Cordova St. East, Vancouver, B.C. V6A 4A3, Canada. A 15 gram charge from each pulp was dissolved in hot aqua regia and analysed for gold and base metals using combined ICP‐MS methods (Group 1DX). ACME has a quality system compliant with the International Standards Organization (ISO) 9001 Model for Quality Assurance and ISO/IEC 17025 General Requirements for the Competence of Testing and Calibration Laboratories.

12.2 Surface Rock and Underground Mine Samples

Rock samples were packaged into rice bags at the end of each day, then trucked to the office in Mazatlán on the regular grocery run from camp about once a week. At the end of each job, the samples were shipped to Acme Laboratories’ preparation facility in Guadalajara via Estrella Blanca or Transportes Castores. Sample preparation was handled exclusively by ACME, and no Minera Camargo workers had access to the samples during the analysis. There, the samples were dried at 60 degrees Celsius, then split with a riffle splitter. 250 grams of the split sample was pulverized for analysis. Prepared pulps were shipped to Vancouver via DHL. The prepared sample pulp was shipped via DHL to ACME’s Vancouver facility. A 15 gram charge from each pulp was dissolved in hot aqua regia and analysed for gold and base metals using combined ICP‐MS methods (Group 1DX). Over limits for gold and silver were re‐analysed using Group 6 fire assay methods, and over limits for base metals were analysed using ICP‐ES methods.

12.3 RC Drill Cuttings

Reverse circulation drill cuttings were collected at 1.02 meter intervals, and a 1 to 2 kilogram split was prepared using either dry or wet splitting methods at the drill site (Sections 11.4 and 11.5). Blind standard and blank sample pulps were inserted into the sample stream for analytical control. Dry RC sample powders were assayed at the drill with a field portable Niton X‐ray analyser, and values for copper, zinc and lead used to guide on‐site drilling decisions. Wet RC samples were dried first, then analyzed. After XRF analysis, the samples were sealed, packed in rice sacks, and stored in a secure building at camp. At the end of the job, the sample splits packed for assay were delivered via company truck to SGS de Mexico, Calle Alumino y 2da. Selenio Ciudad Industrial, 34208 Durango, Mexico. SGS has a quality system compliant with ISO/IEC 17025 General Requirements for the Competence of Testing and Calibration Laboratories.

At the lab, the sample is dried at 100 +/‐10°C, then crushed to reduce the sample size to 2mm/10 mesh (9 mesh Tyler). The sample is then split via a riffle splitter continuously in order to divide the sample into a 250 g sub‐sample for analysis and the remainder is stored as a reject. Pulverizing is done using pots made of either hardened chrome steel or mild steel material. Crushed material is transferred into a clean pot and the pot is placed into a vibratory mill. Samples are pulverized to 85% passing 75 microns/200 mesh or otherwise specified by the client (code PRP89).

Gold and silver concentrations were determined using a 30 gram fire assay and gravimetric finish (code FAG 323). Crushed and pulverized rock samples are weighed and mixed with flux and fused using lead oxide at 1100°C, followed by cupellation of lead button resulting in a dore bead of gold and silver. In some cases when no dore bead is visible or when there is not enough silver present, the bead is either recupelled with silver and lead foil, in order to allow for gold determination or refused with silver nitrate/silver foil. Beads are weighed by micro balance for total silver and gold and then the silver in the bead is precipitated by acid forming silver chloride. Gold is kept is solution for an AAS determination. The silver is then calculated by difference. Detection limits are 0.005 g/t for Au and 3 g/t for Ag.

Lead, zinc, copper, antimony and arsenic concentration were determined using an aqua regia digest and ICP‐OES scan (code ICP14B). A 0.25 gram sample of prepared pulp is digested using hot HNO3 and HCl. The digested sample solution is aspirated into the inductively coupled plasma Optical Emission Spectrometer (ICP‐OES) where the atoms in the plasma emit light (photons) with characteristic wavelengths for each element. This light is recorded by optical spectrometers and when calibrated against standards the technique provides a quantitative analysis of the original sample. Lower detection limits are 3 ppm for As, 0.5 ppm for Zn, 0.5 ppm for Cu, 2 ppm for Pb and 5 ppm for Sb.

12.4 X‐ray fluorescence and SWIR spectroscopy (PORX data)

In 2008 and 2010, Minera Camargo collected 839 surface rock samples from the porphyry target on the Tango 2 concession, and from the El Placer and San Agustin veins. The samples were transported to the lab in Mazatlán, then laid out in order in a secure area and dried in the sun for at least 24 hours with the bags open.


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1. SWIR spectra were collected from each sample using a Terraspec SWIR spectrometer. Prior to taking any measurements, the instrument was turned on and allowed to run for about 15 minutes to stabilize the operating temperature of the electronics. Then the spectrometer itself was calibrated using a white reference material (“spectrolon”) according to the procedures in the user’s manual. Several spectra were reviewed from each sample prior to recording a representative spectrum for each sample in the database. If different spectra were present, multiple spectra were collected as required.

2. The raw spectra for different wavelength regions were spliced together using the ViewSpecPro software. 3. The spectra were then examined by the author, and the minerals were identified by comparing the sample spectra

to reference spectra. Sometimes there are several different minerals in a sample, and the spectrometer comes with some software that allows the operator to “unmix” the sample curves. In practice, two or three minerals that might result in a sample curve can be resolved.

4. The interpretation was verified independently by inspecting the rocks visually with the Meiji binocular microscope (simultaneously). Some samples were photographed.

5. A sample pulp for XRF analysis was prepared by sieving each rock sample to <2mm, and collecting the powder in a puck with X‐ray film on the bottom. By gently tapping the sample, fine material filtered to the bottom of each puck. The geochemistry of each pulp fine‐fraction was analyzed for 75 seconds using a portable Niton GOLDD XRF gun. Detection limits for XRF analysis are 20 ppm, and the data are considered reliable at twice detection, or >40 ppm.

6. Magnetic susceptibility was measured using a Kappa susceptibility meter. 7. 1711 RC chip samples from the drill holes were scanned using the TerraSPEC SWIR and re‐inspected using the

microscope, but not analyzed with the Niton.

All sample handling of the PORX rocks was done by M. Robinson, the author of this Report.

13.0 DATA VERIFICATION

13.1 Surface geochemistry

Geochemical data from surface samples is very difficult to duplicate, mainly due to the natural variability of geological materials. Causes of variability include: (i) irregular distribution of quartz veining or sulphides, (ii) variable effects of surface weathering, (iii) sample face preparation – removal of organics and oxides, (iv) the ability of the geologist to locate a representative sample, (v) the tools the sampler is using, and (vi) the strength and ability of the sampler to provide a regular cut of the sample. Because it is pretty much impossible to duplicate surface geochemistry, the results are treated as semi‐quantitative. Having said that, maps of both the rock samples and the soil samples show the same anomalies, so the data are considered to reliable and of good quality from a subjective point of view.

13.2 RC Drill Hole Assays

Blind standard pulps and blanks were inserted into the sample stream every 20 samples to check for: (i) analytical precision and accuracy, and (ii) to ensure that there was no contamination between samples. Overall, a total of 59 blank samples were analysed, 53 PM414 standards were analysed, and 4 Pb125 standards were analysed.

Of the 59 blank samples inserted into the SGS sample stream, there was a contamination problem for lead, zinc and copper in batches DUO245, 275 and 276. The average value of uncontaminated blanks is 4 ppm Pb, 38 ppm Zn and 8 ppm Cu, and the average value of 7 blanks in the contaminated work orders in 27 ppm Pb, 152 ppm Zn and 753 ppm Cu. For gold, sample 30361 from work order DUO292 reported a value of 363 ppb Au when the value should have been less than 5 ppb Au. Similarly, sample 28181 from work order DUO5243 reported a value of 21 ppb Au.

The PM 414 standards were used to evaluate the analytical precision and accuracy of the SGS gold assays. The standard has an accepted value of 0.809 g/t Au +/‐.0062 g/t Au. Analytical precision (CVi) is calculated according to:

CVi=100*si/Xi (%)

where si is the standard deviation of element i in the samples analysed and Xi is the sample mean. Overall precision of the SGS analyses of the standard was ‐13%.

Accuracy (Ai) is estimated according to:

Ai=100*(Cri‐Ca

i)/Cri

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63

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14.0 ADJA

14.1 Tatem

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64

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65

Other important results include 51 meters of 1.0 g/t Au and 5 g/t Ag across the Don Lupe structure and 55 meters of 25 g/t Ag across the Las Pilas structure. Both of these zones are sub‐parallel to the Los Hundidos Zone. The author of this report has been unable to verify the information from Tecomate and this information is not necessarily indicative of the mineralization on the Tango Property.

In December of 2009, San Marcos Resources bought the Tecomate Project from Chesapeake Gold Corp. for USD $212,000 and a 1% NSR on the Property and all concessions subsequently acquired by San Marcos Resources in a radius of 5 km from the outer perimeter of the core concession (MDA San Marco Resources 31 May 2012). By 20 January 2012, they had completed 1625 meters of drilling in the Los Hundidos Zone. BDT 11‐12 returned values of 2.6 g/t Au, 15 g/t Ag, 1.1% Zn, 1.1% Pb and 0.4% Cu across 4.0 meters, and BDT11 returned values of 2.1 g/t Au, 14 g/t Ag, 0.7% Zn, 0.5% Pb, and 0.5% Cu across 3.8 m.

15.0 MINERAL PROCESSING AND METALLURGICAL TESTING Not exactly. See 5.0‐History 2013‐2014.

16.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES There are no mineral resource estimates or reserve estimates calculated for the Property.

Planned work is intended to help define the potential of Pórfido El Cuervo to host a significant porphyry molybdenum deposit, and to evaluate the potential for underground mineable gold‐rich vein deposits at San Agustin and La Coco, with a focus on the largest historically mined areas San Agustin and La Gloria.

Specifically, planned drill holes shown on Fig. 8.2 of Pórfido del Cuervo are to test a 600 m long by 400 m wide area. If a potassic zone of 150 m thick is present, then the potential tonnage implied by this initial test area is about 90 million tonnes, with a targeted average grade better than 1000 ppm Mo. On surface, the average value of 63 assayed surface rock‐chip channel samples is 1937 ppm Mo, 100 ppm Cu, 402 ppm Pb, 146 ppm Zn, 11 ppb Au and 3 ppm Ag. Areas with exposed UST’s have much higher Mo grades in excess of 1% Mo.

At San Agustin, the vein is sporadically exposed over a 300 m long strike length between the Tango mojonera and Don Genardo and has been worked between 720 m and 580 m elevation. Underground gold assays are highly variable, and range from 15 g/t Au to more than 180 g/t Au (Fig. 8.15). In 2014, Vane Minerals blasted three rounds from the south face of the main access on the 640 m level at the end of their mucking program. The average assay values of these three rounds were 15.8 g/t Au and 63 g/t Ag across a mining width of 2.5 m. If the 10 holes planned at San Agustin are completed, they will test a block with an area of about 112,600 m2. Using a mining width of 2.5 m and specific gravity of 2.5, the block weighs about 704 000 tonnes. If the previously mined gold grade of 15 g/t persists over the block area, then this round of drilling could outline a resource of about 340 000 ounces of gold.

Compared to San Agustin, La Gloria was a larger historic operation, and limited sampling in the historic stopes shows that similar grades are present. Therefore, at least three, and perhaps four drill holes are planned to start developing a second gold resource under the historic workings. Exploration drilling is also planned at Copalquin and La Vibora.

17.0 OTHER RELEVANT DATA AND INFORMATION 26 June 2014, the Mexican Government announced a Proposal to establish a 201,279 Ha “Area de Proteccion de Flora y Fauna” called “Monte Mojino” covering about half of the Municipio of Rosario, and about half of the Municipio of Concordia in southern Sinaloa State. In a letter dated 25 July, the Ejido of Picachos determined that turning their land into a nature preserve would negatively affect their lifestyle, and requested that the Government withdraw their land from consideration for the park area. Several other Ejidos and landowners filed similar documents, and others filed the “Amparo” lawsuit against the Government, objecting to the sudden and arbitrary re‐definition of their land rights.

In the event that the Government decrees the existence of Monte Mojino in spite of opposition from the landowners, Minera Camargo has requested that its concession area be zoned appropriately as an area of “Aprovechamiento Especial” (Art. 47 BIS IIe, LGEEPA) in a letter dated 18 July 2014. Mining and exploration work may continue in a nature preserve in zones of this type.


66

On 12 June 2015, Minera Camargo registered the location of 2891 Ha of its Mining Concessions in the Ejido of Picachos 12 June 2015 with the Registro Agrario Nacional (Clave Registral 2501402310811971R). This area is now designated by the Ejido for the “exclusive purpose of inspecting, exploring for and exploiting minerals”.

18.0 INTERPRETATION AND CONCLUSIONS Of the three volcanic sequences on the Property, two have recognized potential for porphyry systems. The oldest sequence (Tract L‐2) includes rocks of the Laramide continental arc that is known to host 15 of the 21 known economic porphyry systems in Mexico, including Cananea. The youngest sequence includes rocks of the Tertiary extensional arc (Tract T‐2) that contains no known porphyry systems, but does contain several known polymetallic prospects that might represent upper or adjacent parts of porphyry systems (Hammarstom et al., 2010). As a group, these rocks are more silicic and more potassic than the Laramide rocks. It is the author’s opinion that Tract T‐2 is highly prospective for porphyry molybdenum deposits due to its evolved nature, and that the deposit type may have been largely overlooked by previous workers focused on silver and gold‐rich veins. Specifically, unless historic assaying included molybdenum, porphyry molybdenum deposits in most of tract T‐2 were probably overlooked.

Geologic mapping of the Property indicates that rocks of Tract L‐2 mainly outcrop in the central 25 % of the Property, with rocks of Tract T‐2 overlapping the rest. As historic work was mainly focused on geochemical prospecting rather than geological mapping, further geological mapping to define these relationships is highly recommended (Section 19). At this time, the data implies that Tract L‐2 on the Property consists of: (i) basaltic andesite intruded by (ii) feldspar megacrystic diabase and overlain by (iii) intermediate volcaniclastic rocks, including some ignimbrite. All of these rocks were then eroded for most of the Eocene. Starting in the Oligocene, rocks of Tract T‐2 consist of massive to thickly bedded proximal rhyolitic ignimbrite deposits intercalated with mafic flows that are overlain by finer, more thinly bedded, ash‐fall tuffs. Intrusions most likely related to this event include (i) hornblende granodiorite porphyry, (ii) syenite porphyry, (iii) massive quartz‐porphyritic rhyolite cryptic domes with marginal flow‐banded rhyolite, , (iv) aplite and (v) felsic porphyritic (lamprophyre ??) dikes.

Pórfido del Cuervo, the porphyry molybdenum prospect in the northern part of the Tango‐2 concession, appears to be related to the felsic intrusive complex of Tract T‐2. However, most of the rocks that outcrop in the area are strongly altered, and detailed mapping, diamond drilling and analytical work will be required to clearly define the geological environment of Mo‐mineralization.

Surface alteration mapping of the porphyry system indicates that potassic alteration is co‐incident with development of unidirectional solidification texture (UST) of quartz‐aplite and molybdenite. UST develops in the apical and marginal regions of solidifying felsic magma with quartz‐crystal terminations pointing towards the center of the magma body. The texture develops as a result of pulsating pressure changes across co‐tectic boundaries in the quartz‐feldspar stability field as overpressured (lithostatic pressure >> volatile pressure) volatiles concentrate in a cupola (Kirwin, 2005). Subsequent release of over‐pressuring due to hydraulic fracturing of wall rocks results in formation of sheeted veins (Fig. 8.9.) Catastrophic failure of the wallrocks locally occurs, and is preserved in the field as tourmaline‐matrix breccias. Structural measurements of the UST’s imply the cupola related to Pórfido del Cuervo may be tilted north‐easterly, and phyllic alteration adjacent to and overlying potassic alteration is best developed northeast of the known UST zones on surface.

Fluorite and topaz, two important alteration minerals at Climax and Henderson in Colorado, USA, have not yet been observed at Pórfido del Cuervo. This may change as further mapping, drilling and analytical work is done. Alternatively, fluorine in the system may be incorporated with boron into tourmaline (mainly in the tourmaline matrix breccias). Advanced argillic alteration minerals in the porphyry system on the Property include dickite and kaolinite, and are particularly abundant near tourmaline‐rich areas as the formation of tourmaline releases abundant H+ into the hydrothermal fluid.

The prominent northeasterly trending scarp between San Agustin and El Pino is a major regional fault that juxtaposes Oligocene rhyolite to the southeast against older mafic rocks to the northwest. This fault appears cross‐cut by younger northwest trending faults into numerous segments, including San Agustin, Los Yegaros, Los Tejones and La Colcomeca, among others. Both directions of faulting contain gold‐rich mineralization with potential as underground mineable precious metal deposits.

Historic RC drilling results are non‐quantitative for the reasons specified in Sections 11.4 and 13.2. Drilling did intercept values of potential economic interest for silver and base metals in holes TAN9 and TAN10, collared into the “Cobre” veins. Results from TAN9 were 0.3% Cu. 0.4% Pb, 0.7% Zn and 22 g/t Ag across 2 meters. Results from TAN10 were 1% Cu, 5%


67

Cu, 0.7% Zn, 80 g/t Ag and 0.1 g/t Au across 2 m. The true width of these intercepts is about 1.5 m. Mineralization from El Cobre consists of galena, sphalerite, quartz and chalcopyrite. La Cocolmeca Vein was tested with 5 holes (TAN 1,3,4,5, and 6) over a strike length of 450 meters between the Gavilan, San Antonio and Guayabo prospects. All of the drill holes except possibly TAN6 apparently intercepted the vein, which is characterized by clear comb quartz, chalcocite, chrysocolla, chalcopyrite and sphalerite. The best overall result was 19 g/t Ag and 5570 ppm Cu across 2.04 meters in Hole TAN4 between 123.42 and 125.46 meters, with a true width of about 1.5 meters. The most interesting gold result was 0.55 g/t Au across 3.06 meters (true width about 2 meters) in Hole TAN5.

At the time the RC drilling was done, there was no knowledge of the porphyry system centered north of Sitios de Picacho. Exploration for potential porphyry targets was initiated by Minera Camargo after Seafield Resources abandoned its interest in the Project.

19.0 RECOMMENDATIONS The in‐situ value of a bulk tonnage target such as a polymetallic porphyry deposit is orders of magnitude higher than any individual vein. Specifically, the net present value of an economic porphyry deposit is measured in billions of dollars, whereas the NPV of economic gold veins are measured in tens or hundreds of millions of dollars. However, gold veins are often more attractive to junior mining companies as the lower capital costs involved in building smaller mines can be attractive to them. This Report recommends advancement of all targets to unlock all of the potential value of the Property. Going forward, the author foresees that different business models and possibly different operators are probably required to develop the different styles of targets.

19.1 Topographic mapping and digital elevation model

Publicly available basemaps for this area include 1:50,000 topographic maps for sheets F13A47 and F13A48 as well as 15 m digital elevation data by INEGI. Clear survey errors of 10’s of meters up to 100 m are apparent from ground traverses of this dataset. For drill hole planning, access road planning and some early underground development planning, an improvement to 4 m pixels with new contours is strongly recommended.

19.2 Helicopter Airborne Magnetic and Radiometric Survey

Pórfido El Cuervo is associated with significant magnetite, and a detailed (100 or 200 m line spacing) magnetic survey is warranted to prospect for unusual magnetite concentrations that might represent the potassic cores of porphyry systems, and/or magnetic hornfels in the lithocap above and peripheral to the porphyry system. Such a survey would also be most helpful in finding magnetic dikes that might define gold bearing faults and veins, particularly where these are not exposed on surface. Areas of phyllic alteration or biotite and K‐feldspar rich potassic alteration should define positive radiometric anomalies for potassium. It is recommended that the work is completed over the entire Property using a helicopter (or drone???) as there is considerable relief, and the survey quality would be improved by maintaining a fairly constant distance above the ground. Because inversion of the magnetic data is usually quite useful for modeling intrusive bodies related to porphyry style mineralization, the survey area is a square grid to facilitate the inversion process over the entire Property, and not confined to the exact Property boundary.

19.3 Geological mapping, petrography, geochemistry and alteration mapping

A systematic campaign of detailed geological mapping is clearly warranted. Creek traverses to measure the thickness of lithological units should be completed as the current map is mainly based on estimates from outcrop observations of variable quality, or other reports from adjacent mapsheets. Lowermost mafic units should be checked to see if there is any possibility that some of these might belong to the Cretaceous. Some of the finer grained units in the sediment‐dominant unit between Tracts L‐2 and T‐2 might be continuous enough to use as marker beds to better measure fault displacements, a critical step to locating ore shoots in the vein systems. Further work defining the spatial distribution of felsic intrusions, particularly the syenites and aplites, is clearly required to define which intrusions are most closely related to molybdenum mineralization. Mapping in these areas will also better define where the Mo‐rich UST’s and nearby tourmaline breccias occur. Mapping and identification of dikes is also considered to be critically important as the dikes follow strong faults that control gold‐bearing ore‐shoots.

The field portable laboratory should be set up in camp to provide on site‐geochemical analysis and SWIR spectroscopy as required. Selected samples may warrant further assaying or analytical work. The Budget allows for: (i) quantitative


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assaying, (ii) lithogeochemical analyses to better characterize rock‐types, and (iii) petrographic work on thin and polished thin sections both for geological purposes and as a first step to defining the metallurgy of the deposit(s).

19.4 Diamond Core Drilling

Diamond core drilling is recommended to test shallow portions of both the porphyry and selected vein targets.

To test Pórfido del Cuervo, 2060 meters in 8 holes are planned in two cross‐sections about 450 m apart. Of these, four holes are collaring in the potassic zone near known outcrops of Mo‐rich UST’s (and may not intercept the entire system), one is collared in the phyllic zone with the expectation that the potassic zone will be intercepted in about 100 m, and one hole is collared in the argillic zone with the expectation that the potassic zone starts below 200 m depth. Careful determination of rock types, particularly felsic intrusions will be critical. Orientation of UST’s has to be monitored carefully, and the drilling angle changed if these are too vertical to the hole. Finally, it is not clear that the tourmaline breccias are a direct drill target at this time, but this possibility will be evaluated as the program advances. If the program is 100% successful, it has the potential to deliver up to 97 million tonnes of rock with expected values exceeding 1000 ppm Mo and minor concentrations of other metals. A partial success would be enough information about the architecture of the porphyry system to target a successful follow‐up drill campaign. Specifically, it is expected that the best holes in a Stage 2 program would collar in phyllic or argillic alteration, and cut the entire potassic zone at depth. Alternatively, deeper intrusions may also be associated with Mo‐rich UST zones.

To test San Agustin, 1890 meters of drilling are planned in 10 holes along a 450 m strike length to test up to 125 m below the known workings. Gold values are highly variable, but conservative estimates using an average grade of 15 ppm Au per tonne across 2.5 m suggest this work could outline a resource of about 340 000 ounces of gold. At Siete Tejones, 700 m NE of San Agustin, a potential geological continuation of this zone (28.9 g/t Au and 114 g/t Ag/1m; sample 17873) is to be tested with a single 150 m hole.

Historically, La Gloria was larger, perhaps much larger, than San Agustin. To get a better handle on the width/grade of La Gloria, four holes totaling 650 m are planned, including one hole into Palodismo‐Carmen. Three exploration holes totaling 560 m into nearby targets Copalquin, Vibora and possibly the northern part of La Gloria are also planned.

19.5 Budget

Table 19.1 outlines a summary of the Budget to carry out the Recommendations. To support the diamond drilling program, 5.4 km of new road are required to test Pórfido El Cuervo, 1.1 km are required at San Agustin, and 900 meters are required at La Gloria. Core storage and processing facilities will have to be built on‐site. The Budget also contemplates building on‐site accommodation for the drill crew as commuting to Rosario (> 2 hours under good conditions) is probably not practical. One of the new buildings will house the portable lab and communications gear. The drilling program is expected to take about 4.5 months with one drill rig, allowing for weather and breakdowns. While a second drill rig would improve efficiency, it would be prudent to start with one well‐conditioned machine and a single drill crew so as to not overload the resources of the tiny hamlet of Picachos. In particular, water can get scarce in May and June, and the Budget allows for a water truck in the event that pumping from local water holes is not practical or efficient. Technically, there will be some challenges with abundant hard rock and clay at the porphyry target, and fragile clay‐rich rock in the mineralized zone at San Agustin. In contrast, rock at La Gloria seems quite silcified and competent.

Table 19.1 Budget Summary to complete the Recommendations.

ITEM COST IN USD

Mining Duties for 2016‐2017 $ 88,947

Surface Access Agreement with Ejido (annual portion) $ 3,158

Digital Terrain Model (4 m pixels, contours, orthoimage, use 3 known posts for survey control)

$ 8,300


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Helicopter Airborne Magnetic and Radiometric Survey‐1048 line km @100 m spacing

$ 53,000

Existing Road Repair $ 31,360

Camp Communications $ 5,370

Mapping/Geochem $ 57,919

Access Road and Drill Site Preparation $ 72,196

Camp and Core Storage $ 49,621

HQ‐NQ Core Drilling $ 806,550

Reporting/Geological Modeling $ 36,000

Subtotal $ 1,212,422

Contingency (16%) $ 193,987

TOTAL $ 1,406,409

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CERTIFICATE OF AUTHOR

I Michelle Robinson do hereby certify that:

1. I am a practicing Professional Engineer located in Mazatlan, Sinaloa Mexico. 2. This certificate applies to the technical report titled “EXPLORATION RESULTS OF THE “TANGO” PORPHYRY

SYSTEM, EL ROSARIO MINING DISTRICT, SINALOA, MEXICO; 105º45’ WEST AND 23º12’ NORTH; 105º45’ W AND 23º12’ N” and dated 9 June, 2015.

3. I graduated from the University of British Columbia in 1992 with a B.A.Sc. in Applied Science, and again in 1994 with an M.A.Sc. in Applied Science.

4. I am a practicing Member of the Association of Professional Engineers and Geoscientists of British Columbia (Lic. #23559).

5. I am a Fellow of the Society of Economic Geologists, a core member of the Prospectors and Developers Association, and a member of the Geological Association of America.

6. I have practiced continuously in my profession for 21 years since 1994 on a variety of deposit types and early to advanced stage exploration projects as well as producing mines in Canada and Mexico.

7. I have read the definition of “qualified person” set out in National Instrument 43‐101 and certify that by reason of my education, relevant work experience and affiliation with a professional association, I fulfill the requirements to be a “qualified person”.

8. The duration of my most recent visit to the Property was between 17 and 20 February 2015. 9. I am responsible for the preparation of all sections of this technical report. 10. I have read National Instrument 43‐101 and Form 43‐101‐F1, and the technical report has almost (but not

quite) been prepared in compliance with (the most recent version of) that Instrument and Form. 11. As of 9 June 2015, to the best of my knowledge information and belief, the technical report contains all

scientific and technical information that is required to make the technical report not misleading.

Dated 9 June 2015

_________________________

Michelle Robinson, MASc., P.Eng.

Minera Camargo S.A. de C.V.

tango_2015

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