Princesa Grouping

The Princesa Project


Technical Report

Maps

Property Description and Location:

The Princesa Project is located approximately 1,000 km southeast of Lima, the capital of Peru, within the administrative department of Puno. It consists of 8 mining concessions covering an area totalling 5,400 hectares.

Accessibility, Climate, Local Resources, Infrastructure and Physiography:

Access roads include the Transoceanic Highway which connects Brazil to the Pacific Ocean and a series of well maintained paved and dirt roads which connect Crucero, the closest village from the property, to Juliaca, one of the most important midsized cities of the southern part of Peru. Travel time is estimated to 3 hours. Juliaca offers all services including a regional airport that services the Lima-Juliaca route. Power would come from the national electrical grid passing some 20 km to the north. The Cullco River crosses the eastern part of the property providing water all year round. Local manpower is available nearby but is not trained for modern exploration and mining techniques. Qualified personnel, heavy equipment and contractors for completing project exploration and development are available out of Juliaca.

The Princesa Project overlooks the Cullco River valley, along the south eastern part of the Peruvian Cordillera. The morphology of the region is dominated by the Peruvian altiplano sitting approximately at an altitude of 4,200 metres above sea level. The altiplano is surrounded by gently sloping, poorly vegetated mountains and moderate incised valleys where elevations range from 4,275 to 4,500 masi, the lowest topographic point corresponding to the Cullco River located at the eastern part of the property. The slopes of the mountains are naturally covered by small brush and grass which constitute natural pasture for live-stock farming.

The region is characterized by a dry and cold season occurring between May to October where temperatures below 0˚C are registered at night, while from November to April, the climate is warmer with frequent rain and/or snow falls.

History:

Limited information is available in the public files of the Ministry of Energy and Mines of Peru. In 1960, South American Goldfields ('SAG') completed some mapping, sampling and approximately 500 metres of tunnels. SAG identified three mineralized structures names Princesa, Melchorita and Norka characterized by silver values greater than 5 oz/t. In 1965, Robillard presented a Resource Mineral Estimate standing at 8,000 tonnes grading 4 oz/t Ag and 7% Pb. In 1974, Prieto wrote that the Princesa Vein hosted reserves standing at 27,920 tonnes grading 4.6 oz/t Ag, 5.2% Pb and 2.88% Zn. None of these resource estimates meet the NI 43-101 standards and, they should be considered only as historical resources.

Geological Setting:

Regionally, the rocks surrounding the property are part of the eastern cordillera geological region of Peru which is mainly comprised of rocks ranging from the Paleozoic to Tertiary age including recent sediments. To the west of the property, a major inverse north-south trending fault put in contact some Paleozoic rocks (Ambo, Tarma and Copacabana Groups) with Cretaceous sedimentary rocks. To its north, the Cretaceous sedimentary sequences are truncated by NE trending faults. A major east-west trending anticline has been mapped to the south of the project.

SAE-Solex Exploration: In 2004, Buscore International, on behalf of Southern Andes, carried out a preliminary geological assessment of the Princesa Project revealing the presence of five base metals (Ag-Pb-Zn) mineralized veins emplaced in fault zones hosted by clastic sedimentary rocks and breccias. The report indicates that the Princesa Vein is the main mineralized structure having being traced over a minimum strike length of 1,500 metres. Additional base metals mineralization also occurs within the limestone and conglomerate. Several high grade assay results with maximum values standing at 542 g/t Ag, 6.2% Pb and 1.99% Zn were obtained during this program.

In 2006, Buscore-Southern Andes completed some complementary mapping and geochemical sampling which yielded several significant silver-lead-zinc values including some spectacular silver values such as 1500 g/t Ag. 66 samples were taken from old tunnels, trenches and pits excavated on different mineralized structures. Tunnel West returned an average of 36.6 g/t Ag, 1.09% Pb and 0.9% Zn over a distance of 34 metres while Tunnel North returned 40.4 g/t Ag, 0.62% Pb and 0.94% Zn over a distance of 12 metres. They drilled eleven holes totalling 787.4 metres (DDH# PRIN-01 to PRIN-11) on the Princesa and the V2 veins which yielded assay results reaching up to 754.3 g/t Ag, 6% Pb and 4% Zn.

In 2006-07, JVX was mandated by Buscore/Southern Andes to complete some HLEM, VLF, magnetic and induced polarization surveys. The IP survey shows a very good correlation between the chargeability anomaly and the Princesa Vein; this correlation is due to the high oxide-sulphide content of this mineralized structure. The IP anomaly underlying the Princesa Vein is still open laterally. The survey also delineated second order anomalies that remained to be tested. The geophysical program was followed by a drilling program consisting of 53 holes (DDH# PRIN-12 to 64) totalling 6,101.6 metres that tested various targets and in particular the Princesa Vein. Some high grade mineralized intervals with individual values up to 1268.5 g/t Ag, 14% Pb and 6% Zn were intersected. All diamond drill holes are available for consultation at Solex's warehouse in Juliaca.

In 2007-2008, Southern Andes contracted ExploAndes completed the last exploration program that has been done on the property. The program consisted of:

  • Generation of a base map covering 220 hectares at a scale of 1:1000.

  • Survey of the 64 drill holes drilled in 2006 and 2007.

  • Geological mapping and geochemical sampling (263 samples) at a scale of 1:1000.

  • Detailed re-logging and re-sampling of 16 drill holes.

  • Generation of 16 cross sections and a longitudinal section for the Princesa Vein.

Mineralization:

The polymetallic mineralization at Princesa occurs as vein/stockwork/replacement type and is hosted by sandstone and conglomerate of the Huancané Formation, limestone and diatreme breccias. The mineralization is structurally controlled and seems to be restricted to the hanging wall of the fault zones. The Princesa Vein is the most important mineralized structure having been traced over a minimum strike length totalling 1,500 metres, up to 150 metres of vertical extent and with thicknesses reaching up to 20 metres in breccias zones. At least three parallel mineralized structures, named V2, V1a and V1b have been mapped within 200 metres of the Princesa Vein; they are interpreted as split veins and show the same mineralogical assemblage as the Princesa Vein with lesser sulphides content.

On surface, the mineralization appears as a gossan constituted of limonite-goethite-zincite-silica-barite-pyrite-marcasite-galena-sphalerite and blue black manganese oxide. Barite occurs as tabular crystals in beds, voids and forms a locally bladed crustiform fine grained groundmass. Common mineralization textures include rosette, botroidal, banded, colloform and crustiform. Galena occurs as disseminations, veins and veinlets and is closely associated with zones of intense silicification and abundant marcasite. Fine grained pyrite forms locally crude banding with marcasite and les abundant brown coloured sphalerite. Smithsonite occurred also in filling voids.

Drilling:

Since 2006, Southern Andes drilled 64 holes totalling 6,889 metres testing the lateral and depth extension of the Princesa Vein; 48 holes tested Princesa vein and the extensions of the V1a and V1b veins, 7 holes tested the extensions of the V2 Vein and, 9 holes were completed on other targets. In 2008, 16 holes were re-logged in order to characterize the geometry and description of the mineralized zones cutting the Princesa Vein (15 holes) and V2 Vein (1 hole). This relogging program allowed Southern Andes to complete some data verification assays. Of note, 14 holes were drilled along a 1 kilometre-long section of the Princesa Vein located to the west of a N-NE trending fault mapped in the centre of the studied area (DDH PRIN-17-18, 56-59, 50-53, 57, 47-48, 61-62, 54-55 and 58). Eight of these 14 holes yielded some spectacular grades such as: 609.71 g/t Ag, 2.43% Pb and 0.96 % Zn over 9 metres in hole PRIN-53 and, 189.76 g/t Ag, 5.47% Pb and 1.92% Zn over 12 metres in hole PRIN-61.

The most significative conclusion is that the Princesa Vein is a 10 metre thick structurally controlled, steeply (60°) N-NE dipping Ag-Pb-Zn mineralized zone that shows good lateral and depth continuity over a minimum strike length of 1,500 metres, which is open along strike and at depth where the deepest hole mineralized intersection stands at 150 metres vertical.

Mineral Resource and Mineral Reserves

According to the standards for classifying Reserves and Resources set by the Canadian Institute of Mining and Metallurgy and the definitions as defined by NI 43-101 rules, the mineralization discovered at Princesa can be classified as an Inferred Mineral Resources. The text reads as follows: ''An Inferred Mineral Resource is part of a Mineral Resource for which quantity and grade can be estimated on the basis of geological evidence, limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes". The following parameters have been used to estimate the resources of the Princesa vein.

  • Zone of influence of each hole; half distance between holes

  • Minimum thickness; 1.2 metre

  • Grades; No assays were cut

  • Specific gravity; 2.75 t/m3

  • Cut-off grade; not applied due to the extreme variation of silver grades.

  • Polygonal method; this method was used after having prepared a longitudinal section.

Based on 24 drilled, irregularly spaced intercepts, it has been estimated that the Princesa Vein hosts an Inferred Mineral Resource totalling 4.6 million tonnes grading 90.88 g/t Ag, 1.66% Pb and 1.69% Zn.

Project location and claim map

Geological map

Ag-Pb-Zn mineralization in Hole PRIN-61

Alain Vachon, VP Exploration, standing near the entry of an old tunnel at Princesa.