San Simón Project
The San Simón project is located 450 km north of Santa Cruz, Bolivia and 20 km from the border between Bolivia and Brazil. The project lies in the same belt of rocks that hosts the 1.6 million ounce São Francisco gold deposit, owned by Yamana Gold in Brazil. The San Simón Plateau has been mined for gold since it was first discovered in the mid 18th Century by Jesuit monks who called the plateau 'Cerro del Oro' (Gold Plateau). During its most active period in the 1990's an estimated 75,000 ounces of gold was mined from the area. Access to the Plateau is two hours by air (450 km) from Santa Cruz to Colombia Crest Gold's two airstrips near the Company's field camp on the San Simón Project. Road access is 20 to 36 hours from Santa Cruz.
Since 1995, Colombia Crest Gold has discovered four areas of known gold mineralization at San Simón:
Doña Amelia zone
Marco Maria zone and
Doña Angela zone
Over the past two years, the Company has concentrated on district-wide evaluation and compilation of data from the 16 years of exploration at San Simón. Additionally, based on historic data compiled by the Company, the technical team recommended that Colombia Crest focus on two zones: Doña Amelia zone and Paititi-Buriti trend.
Today, Colombia Crest Gold, through its subsidiary Eaglecrest Exploration Bolivia S. A., holds 100% title to 10 concessions covering 52.5 km2 on the San Simón Plateau. Over the past two years, the company has reduced its holdings from 300 square kilometres to 52.5. The reduction will reduce future holding costs and enable the Company to focus exploration on the areas that are known to have significant gold mineralization or are considered to have good exploration potential.
Doña Amelia Zone
Most of the gold mined historically at San Simón was in the Mina Vieja-Trinidad veins within the Doña Amelia zone. Gold mineralization in the Doña Amelia zone is concentrated in shoots or dilation zones preferentially aligned down-dip along the principal thrust fault.
Gold mineralization is associated with quartz veins, hematite and green sericite; drilling has indicated quartz veins up to 15.9 metres thick. Fine and coarse gold, free and associated with a "mineralized envelope" around the thrust faults which includes hematite, both pervasive and disseminated after arsenopyrite, sericite and silica flooding. This alteration is now included in core logs as a guide to finding more gold. Gold is found in fractures and in sites that were previously arsenopyrite but are now hematite, thus there was an association of gold to arsenopyrite during the mineralizing event.
Eaglecrest first optioned a portion of the San Simón area in March of 1994. Extensive rock and soil sampling, trenching and geophysical studies were carried out through 1996. The company drilled 22 holes - highlights include:
7 meters of 20 grams per tonne gold from hole 1 at Trinidad
5.1 metres of 9.45 grams/tonne gold from hole 2
13.2 metres of 5.16 grams/tonne gold from hole 11
7.9 meters of 8.16 grams/tonne gold from hole 12.
Exploration work from 1996 to 2002 focused mainly on the Paititi zone as discussed below.
In 2003, work began again on the Doña Amelia zone and between 2003 and mid-2008 Colombia Crest had drilled 326 holes to a maximum depth of 760 meters, totaling more than 77,000 meters of drilling. This work defined the Doña Amelia Zone along a 4.2 kilometre strike length with gold in quartz veins up to 15.9 meters thick.
Until 2007, much of the drilling in the Doña Amelia zone was done on a spacing of 100 meters. In 2007, new management recognized that wide-spaced drilling would not adequately delineate mineralization or support resource estimates. The first 3D drill hole Geosoft model, completed in early 2007, demonstrated that gold in the Doña Amelia Zone is located in high-grade vertical gold shoots and pockets concentrated along a the south-dipping, near-vertical, thrust fault zone. After modeling, drilling maintained a nominal spacing of 25 meters and was focused on the newly identified L463 high-grade gold shoot. At this spacing, Colombia Crest Gold drilled 17,997 metres in 80 holes in an effort to delineate gold mineralization in the L463 gold shoot, which is one of at least eight recognized gold shoots in the Doña Amelia Zone at San Simón. One-third of these drill holes returned high-grade intercepts with over 10 grams per tonne gold.
Along with the change in drill spacing, the geologic team embarked to re-log all holes drilled prior to 2007. The new logging identified over 25 zones with mineralization that hadn't been sampled. The new logging and closer-spaced holes enabled the Company to contract SRK for a resource calculation at Doña Amelia.
NI 43-101 Resource Estimate
Using the compiled drill hole data from the model above, SRK completed a gold resource calculation for one gold shoot in the Doña Amelia Zone. On December 14, 2010 the Company announced that SRK Canada ("SRK") completed a National Instrument 43-101 resource estimate on the L463 Gold Shoot in the Doña Amelia Zone, San Simón Project, Bolivia. The capped Indicated Mineral Resources show 262,300 tonnes grading 5.15 grams per tonne gold and the capped Inferred Mineral Resources show 251,800 tonnes grading 5.46 grams per tonne gold classified, at a 3 grams per tonne cut-off.
The 2007 drill program at a nominal spacing of 25 metres focused in the L463 Gold Shoot enabled in-house modeling by Eaglecrest in 2008 and the preparation by SRK, of the resource estimate presented above. Based on this new resource model, SRK recommends that future exploration drill holes maintain a nominal spacing of 25-metres and should concentrate in areas where the strike or dip of the structures change abruptly as such changes may represent dilation zones favourable for gold deposition.
At current gold prices and on the basis of the work done to date, selective vein mining could be economic and further drilling would likely delineate additional shoots and gold resources in the Doña Amelia zone.
Underground Bulk Sampling
From 2005 to 2007 Eaglecrest conducted underground bulk sampling of the Trinidad vein by driving a decline and extending drifts, sublevels and raises into the L484 and L463 shoots. The Company commissioned a 150-tonne per day crushing, milling and flotation gold recovery plant in the Manganeso area to process bulk samples from underground sampling program on an advance-by-advance or batch basis. The mill has a nominal capacity of 150 tonnes per day, but bulk sample output was generally on the order of 40 tonnes per day. The flotation concentrates were shipped to Santa Cruz and then exported to Mexico for smelting by Peñoles.
The company produced and shipped almost 1,200 ounces of gold and the last batches of bulk sample run through the mill in late 2007 averaged five grams per tonne gold and had an average gold recovery of 88%. The simple process of crushing and milling, then floating the gold to a concentrate has demonstrated a simple, productive metallurgy for the gold-bearing rocks in the Trinidad area. The mineralization is oxide and is probably quite amenable to cyanide leaching.
Outside of the Trinidad-Mina Vieja area gold mineralization has been found and developed in two other main areas; namely at the Paititi and Buriti pits. Gold is associated with a stockwork/sheeted quartz vein system intruding the El Colorado quartzites. The greatest density of veining located to date lies in the Paititi pit. The Buriti pit hosts similar veining though over smaller dimensions, with a lower vein density. Gold is most commonly associated with the dominant quartz vein set that strikes northeast and dips moderately to the northwest, where it is cut by a nearly vertical dipping fracture set comprised of iron oxide minerals, chiefly specularite. Gold is found to be free and coarse-grained, along this secondary fracture system and also in vugs post arsenopyrite, associated with a spongy-looking black oxide mineral.
The highest gold assays received from previous surface samples collected in the Paititi pit, circa 1994-1996, returned gold grades in the 20-25 gram/tonne range and resulted in a preliminary diamond drilling program in 1996. The 1996 diamond drilling completed at Paititi, consisted of 10 holes totaling approximately 1,076 metres. These holes were drilled a various angles over a 250 metre strike length within the pit. The drilling was initially intended to test a vertically dipping vein system and was later modified to test a possible stratabound vein set within a particular quartzite horizon. Some of the better results include the following holes:
EEL96-005, 1.42 grams/tonne gold over 23.4 metres including 2.39 grams/tonne gold over 11.3 metres;
EEL96-007, 1.80 grams/tonne gold over 32.0 metres;
And EEL96-009, 1.20 grams/tonne gold over 25.6 metres including 2.10 grams/tonne gold over 10.7 metres.
The 1999 exploration program focused on gaining an understanding of; the structural controls on the mineralization, resolution of the sampling difficulties and reproducibility of results, soil sampling and test pitting, VLF-EM geophysical surveys, bulk sampling and diamond drilling. The soil sampling and test pitting program successfully outlined a zone of anomalies associated with an Induced Polarization (IP) geophysical anomaly. The VLF-Electromagnetic survey revealed a conductor that is coincident with the IP chargeability low on the Paititi-Buriti trend.
The drilling completed in 1999 comprised 21 HQ-sized holes totaling 2,366.42 metres over a strike length of 1,140 metres. Virtually all of the holes intersected the favourable Paititi-style mineralization with the exception of holes ESS-99-05 to ESS-99-08, which were drilled on the South Shear Zone. The best results received from the 1999 drilling campaign include:
12.0 metres grading 6.55 grams/tonne from ESS-99-12;
and, 4.63 metres grading 16.26 grams/tonne from hole ESS-99-17.
The principal work completed in 2000 included additional diamond drilling, trenching and bulk sampling. A 3-dimensional model was constructed based on drill hole information for all holes, past and present. Based on favourable results from the work in 1999 and 2000, the Company decided to proceed with an underground exploration program. The underground development, which consists of a 2.8m by 2.8m decline, began in late 2000 and continued until June, 2001 when the underground work prematurely halted due to flooding.
A trenching program was initiated partway through the year 2000 to compliment previous trenching programs and to provide additional sources of bulk sample material. The trenching was completed at selected locations over approximately a two kilometres length, in Paititi pit, as well to the east and west. The trenching program was successful in determining the principal fault contact boundaries and helped to define a long but narrow zone of argillic alteration extending approximately 20-40 metres south of the north fault boundary.
The drilling completed in 2000 comprised 21 HQ-sized holes totaling 2,115.14 metres on various targets. The majority of the holes were collared to further define the high-grade mineralization intersected by drill holes ESS-99-12 and ESS-99-17, in the 1999 drilling campaign. This mineralization, known as the 12/17 zone, is the target of the underground decline. The other purpose of the 2000 drill program was to complete a line of holes directly over the proposed decline, to test for possible zones of mineralization and to determine the properties of the rock for the suitability of the decline.
The drilling program was successful in tracing the higher-grade 12/17 drill intercepted zone of mineralization both to the east and west. Visible gold occurrences were noted in all the holes that intersected this structure, however, assay results continued to indicate a highly erratic gold distribution, with large variation in results between fire assay and metallic screen assays from the same samples. The difficulty in obtaining consistently reproducible results continues to support the need to obtain larger sized samples.
The small size of drill core as well as the presence of coarse gold prevents the company from accurately determining the grade of the deposit by drilling. Therefore, the Company commenced the underground work to enable the collection of large enough underground bulk samples in order to define the grade of the deposit at depth.
The Company also completed an extensive surface bulk sampling program that has clearly demonstrated that samples of at least 750kg are required to determine the grade of the coarse grained gold in the Paititi deposit by reducing the nugget effect that can strongly affect smaller sized samples. Bulk sampling continued throughout most of 2000 testing targets at Paititi pit and surrounding area, as well as some testing of the conglomerate targets. A total of 87 samples from all target areas were collected and concentrated on-site. Final analysis of these samples was done in Canada, under the supervision of Gary Hawthorn, mineral process engineer, who is retained by Eaglecrest to monitor analytical and quality control procedures.
Eaglecrest awarded the contract for the underground development to AMTRAC Ltda. of La Paz and development of the exploration decline commenced in early November, 2000. A total of 550.89 meters of straight advance made up of 341 blast rounds were completed. The program was 60 meters west of its primary target of the 12/17 drill intercepts where, as previously reported, diamond drill holes ESS-99-12 and ESS-99-17 returned assays of 18 meters grading 4.47g/t Au, 12 meters grading 6.55g/t Au and 49.4 meters grading 1.90g/t Au (including 21.23 meters of 4.18g/t Au), respectively.
At the start of the underground program, geological theories anticipated that the underground development would intersect the mineralized vein systems revealed by the drilling and provide comparative data on analytical results from drilling versus underground. However, geology encountered underground has provided a new model not identified from surface work. Sulphide bearing, subvertical feeder veins not recognized in drill core have been mapped during underground development. Also associated with these feeders are intense flat-lying veining sheets as seen in lesser intensity on surface and early underground development. The vein intensity is strongest proximal to the subvertical feeder and becomes more sheeted and less intense away from the source vein. Paititi-type veins can be found throughout the tunnel from one vein per two metres increasing to approximately eight veins per metre.
The program was halted on June 20, 2001 when the decline penetrated an underground water source; the resultant water flow exceeded the pumping capacity of the on-site pumps. The underground decline flooded until newer, high capacity pumps were installed. Unfortunately, the delay and expenses related to controlling the water program combined with poor stock market conditions prevented the Company from reaching the 12/17 zone and contributed to the inability of the Company to raise sufficient funds to complete the planned underground program.
In 2001, Kilborn Engineering created the first geologic model for the Paititi zone, which showed potential for a near-surface gold resource. At the same time, 197 tonnes of bulk samples were collected from the surface with an average gold grade of 1.64 grams per tonne. The preliminary model demonstrated Paititi's potential for an open-pit gold resource. Based on the drill and surface sampling information, the Company began building a geologic model for the Paititi zone in 2009. The new model also suggests potential for an open-pit style gold resource at Paititi.
Early in 2002 artisanal miners excavated a showing, known locally as the Sï�½o Francisco Zone, approximately 150 meters south of the portal of the development tunnel. No work had been completed in the zone since the 2nd Eaglecrest management team left in 2002.
As a result of the Company's district-wide evaluation of 2008 and 2009, our geologic team has identified multiple new target zones, one of which appears to be a one kilometre-long eastward extension of the Trinidad Vein (Amelia zone). The large Paititi - Buriti trend was also identified as a priority target area fifty-two holes were drilled in the Paititi area between 1996 and 2000 and Eaglecrest spent $15 million on geologic and engineering studies of this area by 2002 without finishing exploration.
Mapping, sampling and limited trenching have been undertaken in the Paititi - Buriti trend since late 2008. A new zone of significant gold mineralization was discovered near Buriti, located about four kilometres west of Paititi. On January 14, 2009, the Company announced that assay results from 68 surface rock chip samples collected in the Buriti area in November and December 2008 returned gold values from below detection to 16.2 grams gold per tonne. Five of the samples assayed greater than 1.2 grams gold per tonne.
On March 2, 2010 the Company announced that the Buriti and Paititi zones are connected and that mineralization occurs along a total length of approximately seven kilometres. Of 122 new rock chip and channel samples collected near the high-grade surface gold zone at Buriti, 30 had results greater than 1 gram gold per tonne. Assay results varied from below detection to 160 grams gold per tonne.
In addition to the rock chip sampling at Buriti, 10 trenches were dug between the Buriti and Paititi zones in areas with thicker cover or considerable surface disturbance from previous activities. The trenches exposed notable structures with quartz veins or vein stockworks. Gold assay values from trench samples ranged from below detection to 13 grams gold per tonne.
Drill sites in the Paititi-Buriti trend have been located on the basis of the recent work and the compilation and modeling of the prior data. The Company had expected to start a drill program in the quarter ending September 30, 2010 but the drilling again was deferred pending adequate financing. The drill program would have consisted of approximately 1200 metres of core drilling to test the bulk-tonnage low-grade gold mineralization at Paititi. Positive results would enable planning further drilling to enable preparation of a resource estimate for Paititi and to test the secondary target of high-grade vein mineralization in the Buriti area.
Today, a few artisanal miners are active in the Paititi pit and extensive amounts of artisanal mining is done near Buriti for almost four kilometres along trend towards Paititi.
Gold was discovered near San Simón in the 17th century by Jesuit monks, who conducted mining operations in the area called "Mina Vieja" from about 1688 to 1767. On account of the remote location and difficult access, the district was mostly dormant until the mid to late 1970's. Informal mining was then largely confined to the Mina Vieja area and other parts of the Trinidad-Manganeso trend, until the Paititi discovery in the 1990's. The informal miner's village of San Simón is located in the project area. In the last 20 years its population has fluctuated from a low of about 80 persons to be in excess of 1,500 or 2,000 and currently is about 500. The population decreased as the easily recovered gold at Paititi was exhausted and the gold price declined in the late 1990's and early 2000's. The local population has increased since 2007 with the rising gold price and most of the recent informal mining has been in the areas near Paititi where the total number of miners has varied depending on their successes and the gold price.
During the last four years, Eaglecrest has documented the activities and noted their migration from the Aguila 5 concession east of our camp to the much more extensive Paititi-Buriti trend. During their migration and expansion, Eaglecrest has remained in good communications with the various mining groups and with the Bolivian Government to keep all parties informed.
It is this community relations program that led to an agreement with the informal miners in the mid-2000's in the Mina Vieja area when Eaglecrest began their work drilling and going underground, they struck an agreement whereby the miners did not use dynamite or hydraulic machines above Eaglecrest's activities and the miners were asked to work only on selected concessions.
The environmental liabilities attached to the property as a result of these informal miners are unknown. However, the Bolivian Environmental legislation states that neither the concession owner nor the operator would be held responsible for any of these conditions. All drill sites and access roads will be reclaimed by re-contouring and transplanting local vegetative species. The portal of the decline has been permanently closed. There are no plans to reclaim any of the pits and declines operated by the local informal miners as that would result in social conflict with the local miners and reclamation responsibilities do not lie with Eaglecrest.
While San Simón, Bolivia remains an excellent, advanced-stage gold exploration project, Colombia Crest has shifted its focus to aggressively pursue its exploration projects in Colombia.
The San Simón base camp remains intact with security and a skeleton staff on site, including one geologist and a total of 12 employees. The site of our gold processing plant is being rehabilitated and re-vegetated.
Excellent drill targets exist for high-grade, underground-style gold resources along the eastern end of the Doña Amelia zone and on the newly understood Paititi zone, where open-pit style gold mineralization is known to exist from prior drilling. The Company has identified several drill targets along the Paititi-Buriti trend and will pursue business arrangements with other exploration companies for joint venture opportunities to further advance the San Simón project.