Pilunani Grouping

The Pilunani Project


Property Description and Location:

The Pilunani Project consists of 18 mining concessions covering an area totalling 14,100 hectares located in the district of Putina, department of Puno, south-eastern Peru.

Accessibility, Climate, Local Resources, Infrastructure and Physiography:

The property is accessible via paved and gravel roads over a distance of 155 km from the city of Juliaca going through the villages of Azangaro and Picotani, the latest being located at the eastern outer limit of the property. Short flight connects on daily basis the city Juliaca to Lima.

The Pilunani Project lies at an elevation between 4,200 and 4,600 m above sea level. The terrain is of moderate relief, ranging from hilly to flat. The slopes in the Pilunani area are typically covered with small brush and grasses which constituted natural pasture. Climatically, the region is characterized by dry and cold temperatures between May to October while from November to April, the climate is warmer with frequent rain and or snow falls. Water and manpower are readily available at the project site. Power would have to come from the national grid passing some 20 km to the north of the property. Equipment and contractors for completing project exploration and development can be acquired out of Juliaca and Arequipa.

Economically, the southern Peru area is characterized as rustic and rural with an economy largely dominated by alpaca / lama / sheep / cow farming representing the main source of revenues for local inhabitants. Crops are restricted to potatoes and some cereals.

History:

The property has a long history of exploration and hosts near-surface replacement-type zinc-lead+/-silver mineralization. Most of the previous exploration work has been completed on the Pilunani concession which covered less than 10% of the total superficies of the project. The project was explored by Banco Minero del Peru and other government agencies from 1972 to 1996. South American Goldfields owned the property up to y-2000 and carried out a surface exploration program including the completion of five 100-metre long trenches spaced 25 metres apart and a 1-square-kilometre soil grid with samples at 25-metre stations. Overall, 800 rock and soil samples were taken during that exploration program. Grab samples returned several Pb-Zn values greater than 5% with maximums of 16% Pb and 22% Zn. The trenches returned important zinc anomalies yielding values up to 19%/1 m and a 120 m wide zone with almost consistent 1-10% Zn values including 10.94% Zn/24 m. The soil survey outlined four broad Pb-Zn anomalies characterised by Zn values reaching up to 4000 ppm.

Geological setting:

The Pilunani Project is located within a sequence of continental to marine, carbonate and clastic sedimentary rocks that have been intruded by a-diatreme breccias which is likely the source of the hydrothermal fluids responsible for the numerous Zn-Pb-Ag showings abounding in the Pilunani area. Small scale Pb-Zn-Ag mining operations in the district include Mina Marcía, Mina Nilda, Mina Nicaragua, Mina Cecilia, Mina Princesa, Mina Esperanza de Potoni, Mina Jaime and Minas Sosa- Porvenir which is now known as Mina Pilunani, the main subject of the 2008 NI 43-101 report.

At the property scale, two main geological domains have been mapped. In the central and north-western part of the property outcrops a well-stratified, shallow-marine carbonate-clastic sedimentary sequence. In contrast, the south-eastern part of the property is characterized by a-red-coloured breccias interpreted to be a diatreme. The rock fragments of this poorly-sorted, clasts supported, polymictic breccias are sub-angular to sub-rounded, range in size from <1 cm to up to 1 meter, and are largely composed of limestone.

Mineralization:

The mineralisation observed at the Pilunani concession and within the area is consistent with the stratabound "manto"-style Zn-Pb+/-Ag ore deposit model, which is also termed polymetallic carbonate replacement. These deposits are interpreted as high-temperature vein/stockwork/replacement systems associated with large-scale diatreme emplacement. Hydrothermal activity was focused along a NW-striking corridor of contractional faulting along the original western margin of the Picotani Plateau.

The ore ranges from massive to vuggy and highly porous and, sulphide-cemented breccias are relatively common. The main Pb-Zn mineralised zone at the Pilunani concession is structurally controlled; the ores replacing some permeable, reactive limestones beds and filling zones of increasing permeability represented by abundant hydrothermal breccias. The high-grade mineralisation occurs as 0.6-1.5 metre thick concordant tabular bodies consisting of a mixture of limonite / goethite / hematite with subordinate Pb and Zn sulphides (galena-sphalerite) and carbonates, oxides and hydroxides (zincite-anglesite-pyrolusite-smithsonite). The zone of strongly brecciated limestone, directly adjacent to the trust fault, is also conspicuously mineralised. In addition to the main mineralised zone, some mineralised showings have been mapped as far as 800 m away from the main ore zone. They consist of limonite-altered galena-sphalerite-marcasite ± carbonate-barite-quartz veinlets and disseminations hosted by the Copacabana limestone and the Tarma siltstones.

SAE-Solex Exploration:

Southern Andes (formerly Solex Resources) staked the property in 2004 and completed some surface mapping and geochemical sampling (70 pits and 6 trenches) which confirmed the presence of the Pb-Zn mineralisation delineated by SAG in 1999. This sampling program identified four geochemically anomalous zones with Pb-Zn values <1% within a 1 km2 area. Maximum pit sampling values were 12.05% Pb and 15.4% Zn. This program was followed by a ground magnetic survey in April 2004.

Solex undertook two drilling campaigns on the property: in 2006, a-10 holes program probed the lateral and depth extent of the Zn-Pb mineralisation of the old mine and in 2007, a-8 holes program tested the Pb-Zn mineralisation surrounding the main mineralised zone. The drilling programs revealed that the most significative mineralisation is structurally controlled with intervals reaching lengths of up to 25 m with an average of 11.5 m. Mineralisation occurs as pale-coloured sphalerite and galena with subordinate smithsonite, zincite, anglesite and pyrolusite; the highest Zn-Pb grades correspond to intervals of sulphide-cemented limestone breccias. Silver values of rich Zn-Pb ores are low, generally around 3-15 ppm.

Most of the mineralised intervals have been cut close to surface where only remnants of primary sulphides have been observed. The best results of the 2006 program were obtained in hole PIL-06-01 which returned 5.6% Pb and 6.4% Zn over 20.2 m from surface to 20.2 m and in hole PIL-06-10 which returned 9.30 m at 5.68% Pb and 3.93% Zn from 34.65 to 43.95 m. The second drilling program tested the Pb-Zn vein type mineralisation system crosscutting the conglomerate and sediments. The best mineralised intercept of the 2007 program comes from ddh PIL 07-18 which yielded a 20 m wide zone of base metals dissemination and veinlets at the top of the hole with combined Zn-Pb values of 3%.

In 2007-2008, ExploAndes on behalf of Solex, completed a regional geological mapping over 14 of the 18 mining concessions of the Pilunani Project, some detail mapping and sampling, relogging of the 18 holes drilled in 2006 and 2007. This program confirmed the presence of a sub-surface, laterally extensive horizon of high-grade, "manto-type" zinc-lead mineralization which remains open laterally and at depth.

Pilunani claim map

Pilunani geological map

Sampling at high grade structure at Pilunani

Diatreme Breccias

Core From Drill Hole PIL-6: 3.5 g/t Ag, 1.56% Pb, 4.50% Zn/3.10 m