OTC/BB : MINE
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goldeneagle-mine.com
SUMMARY GEOLOGICAL REPORT
ON THE
GOLD DEPOSITS AT CANGALLI, BOLIVIA
1. INTRODUCTION
Early in December of 1996, Golden Eagle International, Inc. ("Golden Eagle"), a mining company located in Denver, Colorado, contracted the author's professional services as a mining engineer and geophysicist, to carry out the following tasks relative to the gold deposits at CANGALLI, Bolivia: Review the geological literature and studies regarding the region, the Tipuani Mining District, and the local area surrounding Cangalli; conduct field studies of the local geology; conduct a sufficiently-in-depth sampling program to verify the mineral resources and reserves on the claims owned by the Unidas Cangalli Gold Mining Cooperative, but which are controlled under contract by Golden Eagle's Bolivian subsidiary; recommend appropriate mining methods to be employed; and finally, verify Golden Eagle's rights to legally mine the claims under study. Even though the Cangalli area was well-known to the author, a 10 day field study was carried out in mid-December of l996. An additional 21 day period during the end of December, l996, and the beginning of January, l997, was dedicated to a review of the information gathered in the field, and of the literature available in the libraries of Geobol, Bolivia's geological survey; the Ministry of Mines; FONEM, the Bolivian National Exploration Fund; and UMSA, the National University of San Andres. A full report of the field, laboratory, research and office work performed will be finished by January 28, 1997. However, Dr. Terry C. Turner, Golden Eagle's attorney and legal representative in Bolivia requested this Summary Geological Report to be able to inform Golden Eagle's Board of Directors and Shareholders of the Final Report's essential findings.
2. LOCATION
Figure 1 (See, Attachment 1) shows the Tipuani Mining District's location, about 100 kilometers N-NE of the city of La Paz in a straight line. However, the road into the District is about 270 kilometers long. The District covers close to 60 square kilometers over the middle and lower Tipuani River. It can be reached by road, road and river, or small airplane (to within 40 kilometers). The Cangalli gold deposits, and the claims controlled by the Golden Eagle's subsidiary (See, Attachment 1, Figure 2: Claims Map), are found approximately in the middle of this District.
3. GEOGRAPHY
The village of Cangalli is at about 1,500 meters of altitude above sea level. The area lies at the foothills of the Oriental Cordillera range of the Andes, in the narrow Tipuani River Valley (See, Attachment 1, Figures 1,2 and 3, & Attachment 4, Photos 1,2 and 3). The current course of the Tipuani River is steep, especially its upper and middle parts. It carries nearly 16 to 18 cubic meters per second at its lowest level, during the dry season of May to September. It runs E-NE. The climate is sub-tropical to tropical, warm and humid. The vegetation increases , again, from sub-tropical to tropical with the decrease in elevation.
4. HISTORY
The Tipuani gold deposits, and in particular those found at Cangalli, Bolivia, have been worked since pre-Inca times, for well over 1,000 years. The Tipuani Mining District is a well known gold district. It has produced many tons of the precious metal through its mining by the Incas, Spaniards, and later on by Bolivian and foreign individuals and companies. These companies include the Aramayo Company, South American Placers, Inc., and the many mining cooperatives organized since the 1950's all over the District.
5. GEOLOGY
5.1. There is rather large NW-SE regional trough, 200 kilometers long by 30 kilometers wide between the Ortho-andean and Para-andean ranges of the Cordillera Real range, which is a northern section of the Oriental Cordillera range (See, Attachment 1, Figures 3, 4 and 5). This depression has been formed by igneous intrusions and epurogenic movements during the early Jurassic (Hercinic diastrophy) and Miocene periods. With its related tilting of the sediments uplifting their eastern part, together with their strong folding and longitudinal and transverse faulting, it produced a graben structure. During the late Miocene to Pliocene this narrow depression, with Devonic and Ordovicic slates, phyllites and schists at its bottom, was filled up by the products of the weathering and erosion of the uplifted parts of the Cordillera.
In this way, the gold-bearing Cangalli Conglomerates were formed. The Lower Member, or Blue Cangalli, was hard and well cemented. (See, Attachment 4, Photo 4.) The Upper Member, or Red Cangalli, had a total thickness varying from 100 to 500 meters. (See, Attachment 4, Photos 1 through 7, & 11.) Together they filled the paleochannel of the Tipuani River and its tributaries, forming the subsequent paleoplain. This was eroded by the same Tipuani River to form its present course and valley. (See, Attachment 1, Figures 5 and 6.)
5.2. The schematic sequence referred to above, gave rise to the two main types of deposits of the Tipuani District:
5.2.1. The paystreaks at the bottom, and at various other levels in the Cangalli Conglomerate Formation: that is, in the paleochannel and its remnants as terraces. (See, Attachment 4, Photo 11.)
5.2.2. The present Tipuani River alluvials: beaches, banks, low terraces, and gravels at the sides and bottom of the river. (See, Attachment 4,
Photo 1.) These deposits have been high-graded during the last decades.
The Tipuani District deposits are syngenetic, with grades varying from a few grams, to several ounces of gold per cubic meter. At the Tujojahuira shaft sunk by the Aramayo Company in 1944, the United Nations survey team later verified that a lens was encountered on the Ordovicic bedrock of 1.2 square meters with gold content of 112 kilograms of gold per cubic meter. Gold in these paystreaks occurs as scales, small particles and nuggets. (See, Attachment 4, Photos 21, 22 and 23.)
6. MINING AND METALLURGY
The mining and metallurgy of gold in the Cangalli area has been mostly rudimentary since its beginnings to the present. Only the largest particles have been recovered--mainly those larger than 1 mm. However, the recovery has been disastrous: from 20% to 50% at most.
The traditional mining methods which have been used have employed small shafts sunk to bedrock, and adits crawling along bedrock, to high-grade the deposits. These methods have been incredibly inefficient as well as dangerous for the miners. They have also ruined most of the worked deposits, removing the high-grade and leaving lower-grade, but still feasibly recoverable material on-site.
The Unidas Cangalli Gold Mining Cooperative had sunk a safer and more professional shaft due to the guidance of the mining engineers and geologists that they had hired initially. Golden Eagle's subsidiary received interior mine workings which were conceptually well constructed, but which had not been adequately maintained due to the Cooperative's financial difficulties. Golden Eagle's subsidiary has carried out major rehabilitation of the shaft and adit structures, and has over 1,600 meters of interior mine workings. I would estimate that the value of those workings is in excess of $US3 million, and may be closer to $us5 million. (See, Attachment 5, Plans 1,2 and 3.)
My recommendations in my final report will include open-pit mining techniques to increase tonnages of gold-bearing material processed, as well as the use of milling of head ore to liberate the contained gold from the over-sized fraction, and expose the gold in the under-sized fraction. (See, Attachment 2, Mineral Sampling Results.) The recommended recovery techniques will include a gravity circuit, as well as an agitated vat cyanide leach circuit.
7. SAMPLING
Due to time limitations, and the desire to verify a perceived geological trend in the surface manifestation of the paleochannel, a systematic sampling at the road cuts every 100 to 200 meters, (See, Attachment 4, Photo 7.) and at more exposed sites, such as the pits at Chaco and San Juan (See, Attachment 4, Photos 5 and 6). In addition, we extensively sampled underground at the Cangalli Shaft.
Each sample weighed approximately 1 Kg and was separately panned. The fine tailings were saved together and sampled for the laboratory. (See, Attachment 4, Photo 20.)
A sample of quartzite, and another of rounded hard iron oxide, were also taken at random as "grab samples" and sent as they were to the chemical laboratory.
A total of 107 samples were taken in the field and assayed by Inspectorate Laboratories, a well-respected international assaying lab. (See, Attachment 3, Lab Assay Results.)
8. RESULTS
8.1. The results are shown on the laboratory certificates, (See, Attachment 3, Lab Assay Results), and the 16 tables accompanying this report. (See, Attachment 2, Mineral Sampling Results.) Column 3 of those mineral sampling results shows the gold grades in grams per cubic meter, separated in groups for the different sectors of the claims under the Company's subsidiary's control. These values were calculated in the usual way--from pan concentrate grades and their weights--together with the weights of the field samples. A figure of 1.8 was used for the specific gravity of these field weights.
The average gold grades for each sector vary from a minimum of approximately .100 g/m3 to approximately 6 g/m3, with an overall average of 1.499 g/m3. This grade is certainly good enough for massive types of mining, an open-pit techniques are highly recommended.
8.2. Up to this point standard methods were used to establish the grades resulting from the sampling program. However, a striking fact showed up in the sampling: the batea (conical pan) fine tailings (the under-sized fraction) assayed with an average gold grade of 27.068 g/m3, meaning that this is by far the richest fraction in the Cangalli deposits. Obviously, from ancient times through to the present mining operations, this fraction has always been ignored and discarded. A similar phenomenon happens with the rock samples (the over-sized fraction) -- with an average assay of 5.657 grams per cubic meter -- of course also traditionally being discarded.
From the over-sized fraction, or rock samples, I have calculated a conservative grade of 2.419 g/m3 for the pan gross tailings. The results from the assays of the over and under-sized fraction, plus those for the pan concentrates previously calculated, are combined for the total average gold grades shown on the tables' column 4 (See, Attachment 2, Mineral Sampling Results). These total results run from an approximate low of 10 g/m3 to a high of 19 g/m3 with an average of 14.049 g/m3, which is very high for these types of gold deposits. It is my opinion that this may even increase once better sampling can be carried out on the over-sized fraction.
In formulating a mine plan for the near-term, the first thing that becomes apparent is that these deposits can and must be worked by open-pit mining methods. The recovery of the "microscopic" gold has to be accomplished by agitated vat cyanide leaching techniques. I believe that very significant and far-reaching discoveries will be made in the remainder of the Cangalli gold deposits specifically, and the balance of the Tipuani River Basin deposits in general, as a result of this concept.
9. RESOURCES
The qualitative and quantitative knowledge regarding the Cangalli gold deposits is sufficient to satisfy the standards and requirements of the worldwide mining industry relative to definitions of Resources and Reserves. For evaluating and quantifying those Resources established in this report, the author has used the following definitions:
Resource.
A concentration of naturally occurring material in such form and amount that economic extraction of a commodity from the concentration is currently or potentially feasible. Location, grade, quality, and quantity are known or estimated from specific geologic evidence. To reflect varying degrees of geologic certainty, resources can be subdivided into Measured, Indicated and Inferred.
Measured -- Quantity is computed from dimensions revealed in outcrops, trenches, workings, or drill holes. Grade and/or quality are computed from the result of detailed sampling. The sites for inspection, sampling, and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of the resource are well established.
Indicated -- Quantity and grade, and/or quality, are computed from information similar to that used for Measured Resources, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower that for Measured Resources, is high enough to assume geologic continuity between points of observation.
Inferred -- Estimates are based on geologic evidence and assumed continuity in which there is less confidence that for Measured or Indicated Resources. Inferred resources may or may not be supported by samples or measurements but the inference must be supported by reasonable geo-scientific data.
Reserve.
A Reserve is that part of the Resource that meets minimum physical and chemical criteria related to the specified mining and production practices, including those for grade, quality, thickness, depth; and can be reasonably assumed to be economically and legally extracted or produced at the time of the determination. The feasibility of the specified mining and production practices must have been demonstrated or can be reasonably assumed on the basis of tests and measurements.
Proven Reserve -- That part of a Measured Resource that satisfies the conditions to be classified as a Reserve.
Probable Reserve -- That part of an Indicated Resource that satisfies the conditions to be classified as a Reserve.
The resources previously estimated for the claims under the Company's subsidiary's control at Cangalli were calculated with a conservative average grade of .500 g/m3. This calculation, on the basis of the sampling program reported in this report, will have to be increased by approximately 28 times, for an average grade of 14.049 g/m3 of gold. Using the definitions set out above, and the overwhelming evidence of geologic continuity, it is my opinion that the portion of the Cangalli claims that I studied, which would have been in any event less than half of the claims under contract, contain an Indicated Resource of 60,771,704 troy ounces of gold and an Inferred Resource of 111,414,800 troy ounces of gold. While I understand that such numbers are staggering, I cannot change the sampling results; my observations in the field; the huge body of literature and studies which have been produced about this area which support my observations; and the centuries of gold-producing history in the Tipuani Mining District. It becomes apparent that if these resources can be confirmed as reserves, which I believe is just a matter of carrying out a more detailed sampling program and applying currently-used cyanide leaching technology in testing the recoveries, the claims under the control of the Company's subsidiary may produce an exceptional world-class gold deposit.
I also confirmed the fact that Golden Eagle's subsidiary has entered into a Public Contract for the mining and development rights to 2,004 hectares of claims owned by the Unidas Cangalli Gold Mining Cooperative, (See, Attachment 1, Figure 2: Claims Map), which has been protocolized, or publically recorded, in the Bolivian Government's Notary of Mines. The claims which are the subject of the Contract were the target area of this report.
It is my opinion that the gold resources mentioned above can be economically and legally extracted, and that further study will show that open-pit techniques, with initial milling of the head ore, and a combination of gravity and leaching circuits, will result in the feasibility of large portions of the resources being converted to proven reserves in the very near-term.
LaPaz, Bolivia
January 20, 1997
Ing. Guido Paravicini P, M.A. Mining
Engineer-Geophysicist
Attachment 2
MINERAL SAMPLING RESULTS
ING. GUIDO PARAVICINI P., M.A.
MINING ENGINEER & GEOPHYSICIST
JANUARY 20, 1997
Table 1. Cangalli Mine Underground Samples
Gold Grams per
in Field
Cubic Meter
Samples
Remarks
Specific Gravity: 1.8
1.
F. Sample Number
2.
F. Sample Weight, grams 3.
From
Concentrates 4.
From Whole
Samples
-237 Level. Figure
U-1 735 8.499 " "
U-2 931 .137 " "
U-3 848 .259 " "
U-4 1107 6.135 " "
U-5 1245 31.109 " "
U-6 1362 .041 " "
U-7 1460 .097 " "
7688 6.805 19.130 Totals, Averages
U-8 1215 6.342 15.931 -195 Level
8903 6.742 19.078 -237 and -195 Levels
U-9 28420 31.903 Pay Streak in -237 Level
U-10 24500 8.666 " "
U-11 18620 .217 Dump from same pay streak.
U-12
30380
9.875
Tailings from pan refining of sluice concentrates.
U-11' 30380 2.905 Bottom of same pay streak
Note: Samples U-9 to U-11' were taken for additional information purposes only, thus they do not enter into the calculations for sampling results.
Table 2. Run of Mine Samples
Gold Grams per
in Field
Cubic Meter
Samples
Remarks
1.
F. Sample Number
2.
F. Sample Weight, grams 3.
From
Concentrates 4.
From Whole Samples
R-13 1225 .364 Samples taken near
R-14 1588 4.558 shaft's collar
R-15
1137 3.564
R-16 1382 .145
R-17 1421 .119
6753 1.793 14.406 Totals, Averages |
