LTH zinc Crypto Zinc Project
In May of 2005, the Company signed an agreement to purchase a 100% interest in the advanced Crypto zinc project from EuroZinc Mining Corporation in exchange for 1.5 million shares and $25,000 in cash. The 2,876 acre property is located in Utah about 100 miles southwest of Salt Lake City and is easily accessable by road.
Utah has a long history of mining. In 2003, it ranked ninth in the USA for non-fuel mineral production, of which base and precious metals accounted for almost US$1.3 billion in value. Several mining projects are in development and the improved metals market in the last couple of years has also led to a substantial increase in mineral exploration in the state, with uranium, base metals, gold and iron being the main commodities of interest. Crypto’s US location is particularly advantageous in that it will give the project full exposure to US dollar denominated commodity prices. With the decline of the US dollar and strengthening foreign currencies, metal production in many other countries has seen little or no benefit from rising metals prices.
Regional Metallogeny
The Crypto deposit is a carbonate replacement deposit (CRD), similar in character to the world class Bingham, Park City, Tintic and other CRD districts elsewhere in Utah whose historic production at today's metal prices would have values ranging from US$1-6 billion. The property includes the historic Fish Springs Mining District which, from the late 19th century through the mid-1970’s, recorded small scale production of high grade silver-lead ore averaging 125 ounces of silver per ton from veins and oxidized replacement deposits.
History of Work and Property Geology
Modern exploration commenced in 1953 when Kennecott identified a very large magnetic anomaly in the course of an airborne survey being carried out in a regional search for porphyry copper deposits. Beginning in 1961, Utah International drilled the property for its iron (magnetite) deposits, subsequently discovering significant zinc mineralization on which they focussed their attention until exiting in 1985. In the early 1990’s, Cyprus Minerals optioned the property and drilled a number of additional holes, mainly to test the known zones at depth. In all, 68 holes totalling about 88,400 feet have been drilled on the property.
Zinc mineralization at Crypto consists of coarse-grained sphalerite in a number of replacement deposits and magnetite-bearing skarns in a moderately dipping sequence of Ordovician to Silurian carbonates where they have been cut by a quartz monzonite intrusive. The intrusive appears to be a cupola extending upwards from a larger body at depth and is probably Tertiary in age. A zone of copper enrichment with values ranging from 0.2-0.4% is roughly coincident with zinc mineralization. Marbleization of the surrounding carbonate rocks is extensive. Mineralization is generally oxidized to a depth of about 250 metres, sphalerite having been converted to zincite, smithsonite, hemimorphite and hydrozincite.
At deeper levels, several significant intervals of molybdenite mineralization have been intersected in drilling and molybdenite is commonly found along fractures and shears in other holes, suggesting interesting potential for a buried porphyry molybdenum deposit related to the intrusive system. In fact, the general distribution of mineralization on the Crypto property shows zoning similar to that in typical porphyry systems, with an inner zone of molybdenum-rich mineralization grading outwards to zinc, then lead, silver and manganese with increasing distance from the intrusive.
Numerous workings of the historic Fish Springs District are developed on high grade silver-lead replacement deposits controlled by structures east of the known zinc deposit. The single largest mine was the Utah Mine, which produced about 13,000 tons at an average grade of about 128 ounces silver per ton (4,389 gpt) and 44% lead. The district total is recorded at about 20,300 tons at a similar grade.
Historical Resource Estimate
In 1993, Cyprus used the cross-sectional method to estimate a “geological in-situ reserve” on the property, dividing mineralization into an upper, near surface oxide zone and lower sulphide zone situated at a depth of 300-500 metres.
Tonnes % Zn contained lb Zn
Oxide Zinc 2,800,000 7.00 431,984,000
Sulphide Zinc 5,400,000 8.68 1,033,058,880
This historical estimate was made prior to the implementation of NI43-101 standards, does not conform to those standards and should not be relied on as being indicative of a resource or a reserve with demonstrated economic viability. However, Cyprus’ estimate was independently reviewed in 1993 by Roscoe Postle Associates Inc. (“RP”) who found their methodology to be consistent with industry practice at the time. Based both on RP’s independent review and Cyprus’ status as a senior mining company, the Cyprus estimate is believed by the Company to be relevant and a reliable indication of the mineral potential of the property.
An increasing number of investment banks and dealers are calling for an improving and sustained market in zinc over the next few years and its current price has already increased to the US$1.40 per pound range. The following table shows possible US dollar gross metal values (GMV) and per tonne GMV's for a deposit of similar size and grade based on a range of zinc prices. While it should not be taken as representing actual value as no reserve has been established on the property yet, it clearly demonstrates the economic potential of a deposit such as Crypto.
Zn price (US$) $0.90 $1.10 $1.30 $1.50
GMV/t GMV GMV/t GMV GMV/t GMV GMV/t GMV
oxide 139 388,785,600 170 475,182,400 201 561,579,200 231 647,976,000
sulphide 172 929,752,992 210 1,136,364,768 249 1,342,976,544 287 1,549,588,320
Exploration Potential
In their review of Cyprus' resource estimate, Roscoe Postle confirmed Cyprus' observation that since a number of the sulphide zones were open along strike and/or down dip, there is good potential to expand mineralization by in-fill and step-out diamond drilling. The figure to the right shows a view of a recently completed three dimensional model of all the drilling carried out on the property. Zn mineralization is modelled in pink and the red arrows show the directions in which the lower sulphide zone could be expanded by additional drilling.
Numerous long intercepts of high grade zinc mineralization in the sulphide zone show potential for substantial mining widths at significant grade.
Drill Hole From To Metres % Zn
CCC-1 392.0 408.0 16.0 13.09
CC-12 426.6 461.1 34.5 10.69
CC-12 399.0 407.5 8.5 17.66
CCC-6 471.9 496.5 24.6 10.62
CC-24 323.6 346.2 22.6 7.34
CCC-13 541.0 558.4 17.4 10.12
CC-27 177.4 201.6 24.2 10.40
Based on available information, the Company believes that there is excellent potential for expanding the currently defined sulphide zone into an economically viable zinc deposit suited to underground mining.
Since the remainder of the property has not been explored to any significant degree, an additional exploration objective will be to follow up on several of the outlying drill holes in which a number of mineralized intercepts were encountered. A deep, 3 metre wide interval in one of these holes drilled about 600 metres to the east of the main zone graded 3.5% Cu, 7.65% Zn, 0.10% Mo and 21.8 gpt Ag, suggesting a strong possibility that either known mineralization is much more extensive than previously thought or that other and separate zinc ± copper ± silver-rich CRD zones are present on the property.
Finally, Roscoe Postle noted that Utah International reported significant potential for additional silver-rich mineralization at depth in the Utah Mine based on their underground mapping and sampling in the 1970's and 1980's.
Exploration Objectives and Proposed Work Program
expand the deeper sulphide zinc zone with drilling
explore for other zinc ± lead ± silver ± copper-bearing replacement deposits associated with as yet unknown intrusives elsewhere on the property
investigate the possibility that numerous molybdenite-bearing drill intercepts encountered to date are related to a significant buried porphyry molybdenum deposit
test extensions to historically mined, high grade silver-lead deposits
The Company has recently completed a program of work including 1,028 line-kilometres of high resolution, helicopter-borne magnetic surveying at a line spacing of 100 metres, approximately 25 kilometres of pole-dipole IP on lines spaced 200 metres apart in a survey centred on the main Crypto mineralization and 1:8,000 scale colour aerial photography over the general property area. The results of this work will be used to update the geological model of the property and generate specific drill targets.
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