Paracatu Project – DNPM 831.883/2016

Location

Our mineral right DNPM 831.883/2016 is located in the municipality of Paracatu, state of Minas Gerais, in Brazil. The city of Paracatu was founded in the early 17th century by pioneers searching for gold and silver. Today, Paracatu is a city with 100,000 inhabitants.

Paracatu is home to the largest gold mine in Brazil, on a deposit named “Morro do Ouro”, owned and operated by Kinross Gold, one of the world’s largest gold producers. This mine annually produces 480,000 ounces of gold. It has the largest gold deposit in Brazil with 16 million ounces of gold (7 million ounces of past production and 9 million ounces in published reserves).

Paracatu is located in the northwest part of the state of Minas Gerais, approximately 300 miles from Belo Horizonte, the capital of the state of Minas Gerais. Paracatu is also located 125 miles from Brasilia, the capital of Brazil. It has a regional airport with flights to these cities and others. The city has all of the infrastructure and labor needed for mining exploration and development.

Size of Mineral Right

Our mineral right DNPM 831.883/2016 has a surface area of 312.66 hectares (approximately 773 acres).

Coordinates

The coordinates of DNPM 831.883/2016 are as follows (using SIRGAS2000):

Latitude Longitude
-17°15’01”463 -46°50’53”207
-17°15’56”063 -46°50’53”207
-17°15’56”063 -46°51’13”542
-17°15’56”560 -46°51’13”542
-17°15’56”560 -46°51’47”557
-17°15’56”065 -46°51’47”557
-17°15’56”034 -46°51’47”557
-17°15’56”034 -46°51’50”753
-17°14’56”524 -46°51’50”753
-17°14’56”524 -46°50’53”207
-17°15’01”463 -46°50’53”207

 

Map

Other Information

There has been extensive gold production in the Paracatu region from alluvial deposits, mainly along a river stream called “Córrego do Ouro” and also known as “Córrego do Rico.” This watercourse that starts near Morro do Ouro mine has, for millions of years, eroded rock and transported gold for the formation of alluvial deposits. Our mineral right DNPM 831.883/2016 is crossed by such watercourse.

In local research, a simple alluvial operation in an area downstream from our mineral right DNPM 831.883/2016 has claimed annual production of 4,000 ounces of gold, although we have not verified such data. Our mineral right DNPM 831.883/2016 is located upstream from such locale, and thus geographically closer to Morro do Ouro mine.

Mineralization in our mineral right DNPM 831.883/2016 is likely to be secondary and gold could potentially be retrieved from the alluvium by modular recovery plants such as the one owned by Jupiter Gold.

Geological Justification

The two reasons as to why this area was selected for exploration are:

a) the presence of the giant “Morro do Ouro” gold deposit only 4 miles upstream along the Córrego do Rico, associated with the detection, using remote sensing, of significant presence of alluvial sediments, possibly mineralized; and

b) historical production reports, by artisanal miners exploring downstream areas, which mention production of up to 4,000 ounces of gold per annum.

Three facts support our belief that the DNPM 831.883/2016 has potential for significant production of alluvial gold:

a) the absence of records indicating that mining has ever occurred there;

b) the position of the area, upstream in relation to these alluvial mining sites and therefore closer to the source of gold; and

c) the presence of alluvial terraces, which indicate that gold may have accumulated there, after erosion of the Morro do Ouro deposit.

Although the geological setting in our mineral right DNPM 831.883/2016 is the same as the setting at the Morro do Ouro deposit (contact zone between the formations Paracatu and Vazante), an initial target is the secondary gold which could potentially be retrieved from the alluvium by centrifuges.

Team

Our geologists Rodrigo Mello and Jose Francescatto, each with more than 30 years of exploration experience, will oversee and supervise the work, contracting local workers and suppliers. The former has direct experience in Paracatu, having worked for AngloAmerican exploring for gold in the vicinity of the Morro do Ouro deposit. Both geologists have visited DNPM 831.883/2016 initiating our exploration studies.

Initial Exploration Plan

Initially, drilling will be done using a Bank drill over a wide spacing grid, with 200 meters separation, in the fluvial plains at the margins of the Córrego do Rico. Samples will be collected at each 1 meter of depth at prospective intervals and sent for analysis (FA-AA) by a commercial laboratory in Belo Horizonte, the capital of the state of Minas Gerais, and a large mining services hub. If the initial results are positive, the grid should be increased to 100 meters of separation, with 50 meters of separation for zones of greater complexity. The drilling will be complemented by a geophysical survey using GPR (Ground Penetration Radar) in order to better define the bedrock of the sediments. Metallurgical tests will complement the work, testing the recovery by centrifuges and other methods.

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