Covadonga is an area of low relief with poor exposure and is underlain predominantly by felsic lithic tuffs and volcaniclastic sediments that rest unconformably on faulted blocks of older mafic volcanic units. Sparse outcrops within the hydrothermal corridor return samples with small amounts of gold and significant amounts of mercury from breccias and small veins encased in broader zones of clay (argillic) alteration thought to represent zones of steam heated alteration associated with very high level parts of a deeper, 1.5 km long structurally-controlled epithermal system.
Prior exploration at Covadonga by RenGold focused on a 2 sq. km area in the northwestern part of the property block using surface rock chip sampling and mapping to define an altered and weakly mineralized zone. This zone subsequently explored with 9 exploration trenches totalling 1,127 m in length, 8 of which were spaced at irregular 50 to 200 m intervals along a 600 m long segment of the corridor. The trenches reveal multiple zones of broad alteration, up to 25 m wide, enclosing veining and brecciation not visible at the surface. Weakly anomalous gold values, together with anomalous amounts of mercury-arsenic-antimony, were returned from samples within most of these zones.
Regional mapping and satellite imagery suggest the Meridiano property lies in the western part of a 8-10 km wide caldera, and the westernmost part of this feature is thought to be the site of 2.5 km wide circular diatreme complex. Andesitic to felsic tuffs in a 4 sq. km area are cut by gold-bearing hydrothermal breccias filling N to NW trending fractures and faults. Virtually all samples of these breccias contain small to significant amounts of gold, arsenic and antimony, but very little silver or base metals, suggesting that the mineralization in this area is preserved at a high level of erosion.
Prior exploration at Meridiano by RenGold focused on a 4 sq. km area in the northern part of the property block. RenGold collected 403 rock chip samples, carried out 65 line-km of magnetic and 32.5 line-km of gradient array IP ground surveys, and completed 32 drill holes totalling 4,698 m in two reverse circulation campaigns and one diamond core twin-hole campaign. The drill holes were collared within a 1 sq. km area in the northwestern-most part of the property. Most of the holes intersected one to several thin intervals of weak mineralization, and 10 holes intersected at least 0.34 g/t Au over true widths ranging from 1.5 to 13.5 m.
Recommendations of the Report
According to Mr. Klohn. the results of exploration carried out on the two projects to date suggest that the principal target areas on each project represent high-level parts of potential gold-mineralized epithermal systems at depth. The mineralized diatreme model suggested for Meridiano is supported by surface sampling, mapping, geophysical surveys, and by drilling. The area encompassed by mineral showings, both at surface and depth, is sufficiently large to warrant further exploration, and the possibility of finding similar sizable new targets in nearby outlying areas is good. At Covadonga, surface exploration results suggest potential for several types of interesting targets of significant size, including possible disperse, low-grade large tonnage deposits in addition to more typical Deseado Massif discrete vein systems.
Both projects deserve further exploration, specifically a first-phase program consisting of ground work designed to define or re-define the known target areas. The object of this work will be to establish targeting priorities before planning or launching a future second-phase program consisting of further drilling at Meridiano and new drilling at Covadonga. To this end, Mr. Klohn recommends first-phase exploration programs totalling US$291,000 for the two projects. A US$150,000 program consisting of additional ground geophysical surveys, field mapping, systematic shallow augur hole/float sampling, and limited trenching is suggested for Meridiano, and a US$141,000 program consisting of ground geophysical surveys, more field mapping, systematic augur hole/float sampling, and additional trenching is suggested for Covadonga.
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