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The following are selected excerpts from the Howe Chile Limitada report on the Los Dos
Marias and Alto de Lipangue gold/copper properties.
The complete report is available for viewing at the corporate offices of
Medinah Mining, Inc.

GEOLOGICAL REPORT ON THE
LIPANGUE AND LAS DOS MARIAS GOLD-COPPER PROPERTIES
METROPOLITAN REGION, CHILE
FOR
MEDINAH MINING INC.
Report No. 0025
Howe Chile Limitada
(A.C.A Howe International Limited South American Office)
La Serena, Chile
Robert Cinits, P.Geo.
August 2, 1999
SUMMARY
The Lipangue Property
Las Dos Marias
Property
2.1
LOCATION AND ACCESS
2.4
ACQUISITION AND MAINTENANCE OF MINERAL RIGHTS IN CHILE
5.1
LIPANGUE PROPERTY - PREVIOUS EXPLORATION WORK
5.2
LAS DOS MARIAS PROPERTY - PREVIOUS EXPLORATION WORK
5.3
MEDINAH EXPLORATION PROGRAM
6.0
PROPERTY GEOLOGY AND MINERALIZATION
6.1
LIPANGUE PROPERTY GEOLOGY
6.1.1
LIPANGUE PROPERTY MINERALIZATION
6.2
LAS DOS MARIAS PROPERTY GEOLOGY
6.2.1
LAS DOS MARIAS PROPERTY MINERALIZATION
7.1
CONCLUSIONS
7.2
RECOMMENDATIONS
8.1
LIPANGUE PROPOSED BUDGET
8.2
DOS MARIAS PROPOSED BUDGET
SUMMARY
At the request of Mr. Larry Regis, President of Medinah Mining Inc.
("Medinah"), a public New York company (NASDAQ OTC) with offices located
at 148 South Main Street, Lake Elsinore, CA, 92530, U.S.A, Howe Chile Limitada
("Howe"), which is part of the A.C.A Howe International Limited group of
companies was retained to review the exploration and mining activities completed to date
over the Lipangue and Las Dos Marias ("Dos Marias) Gold +/- Copper-Silver Properties.
The properties are located in the Metropolitan Region of Chile, approximately 30
kilometres northwest of Santiago.
Howe was retained by Medinah in June, 1999 with the terms of reference
for this assignment consisting of a qualifying geological report complying with reporting
guidelines as set out in proposed National Instrument 43-101 (scheduled to replace
National Policy 2A), and covering the mineral potential of the Lipangue and Dos Marias
Properties. It is Howes understanding that this report is required by Medinah as
part of a 15c211 filing with the NASDAQ Stock Exchange.
The Lipangue Property consists of a total of 5 claims (3 mensuras and 2
pedimentos) covering 1,363 hectares. The Dos Marias property consists of one
"mensura" (mining claim), which covers a total of roughly 130 hectares. Both the
Lipangue and Dos Marias properties are currently held 100% by Medinah and were acquired by
Medinah through a purchase agreement with the previous owner, Juan Jose Quijano
("Quijano"), which became effective in April, 1999. Quijano retains a 20% NPI to
a maximum of US$5 million.
The project area is located in central Chile, approximately 30
kilometres northwest of Santiago in the coast range mountains at an elevation of
approximately 2,000 metres. The properties can be easily reached from Santiago along a
paved highway to the town of Lampa and then along approximately 13 kilometres of 4 wheel
drive roads which climb to an elevation of about 2,000 metres to the Altos de Lipangue
plateau. The Lipangue property covers the majority of the plateau, while the Dos Marias
Property is located on its western slopes. Dirt roads pass through the middle of
both property areas, and from here most other parts of the properties can be reached in a
truck or by foot along dirt roads and trails.
The nearest city with any reasonable infrastructure is Santiago,
however the most basic exploration supplies can be purchased in Lampa, approximately 1
hour driving time from the property. Deep water ports exist in the cities of Valparaiso
and San Antonio on the Pacific coast, approximately 65 and 70 kilometres direct distance
northwest, and southwest of the property, respectively. Electrical power, sufficient only
for local town use, and telephone services currently exist in the town of Lampa, however a
major power grid runs just west of Lampa. Telephone service in Chile is excellent, most of
it being connected to a fiber optic network while the cellular network covers most major
cities and has reception from the Lipangue Property and higher elevations of the Dos
Marias Property.
The Andean region of Chile attained the status of a major gold province
as a result of gold exploration successes started in the late 1970s and continuing
since then. The majority of the new discoveries are of epithermal, or porphyry type,
however pluton related vein and metasomatic related discoveries were also made. A large
portion of the deposits are related to porphyry systems as high sulphidation
mineralization above, or low sulphidation and contact metasomatic mineralization around,
the porphyry-type mineralization. Most of the exploration over the past 20 years or so has
focused in the high cordillera where infrastructure is almost non-existent and harsh
winter and high elevation conditions prevail. Very little exploration was concentrated in
the lower elevation coast range mountains and as such, prospects such as Lipangue and Dos
Marias remain largely unexplored.
The Lipangue and Dos Marias Properties are located on the "Altos
de Lipangue" which is a relatively flat, northeast elongate plateau covering an area
approximately four kilometres long and one to two kilometres wide. The plateau, and its
western flanks (which includes the Dos Marias Property), are underlain by a volcanic
sequence, intercalated with continental and marine sediments which are intruded by Upper
Cretaceous aged granitic rocks of the central batholith. The area surrounding the
properties is host to several diverse types of metallic mineralization such as vein,
stratiform, stockwork/breccia, skarn, and shear zone hosted copper/gold/silver
mineralization which occur in a variety of geological environments.
The area surrounding the Lipangue and Dos Marias properties has been
exploited since Spanish conquistador times both for the alluvial gold and the oxidized
portions of the high grade quartz veins. Evidence of hand cobbed placer activity can be
seen in many locations over both properties. Although several "pirquineiro
style" mining operations started in the area about the turn of the century, the first
well documented mining activities were in the Fortuna de Lampa mine, just east of the
Lipangue property which was active over an approximately 30 year period between the early
1940s and the late 1960s. During this time the property saw intermittent,
small scale, mining activity on a narrow vein style gold deposit which reportedly produced
almost 2,000 tonnes of vein style mineralization grading 63.9 grams gold/tonne, 51.2 grams
silver/tonne, and 0.2% copper.
The Dos Marias Property is host to numerous old adits, shafts, and pits
which are located along the Quebrada Durazno and surrounding hillsides in the vicinity of
the old Dos Marias Mine. The workings on the west side of the creek are the oldest and
most extensive and appear to have been exploiting gold rich quartz veins and pyritic zones
within a shear zone. The timing of this work is unknown, but early diggings and gold
placer operations further north down the creek, may date back hundreds of years, possibly
to Spanish colonial times. No data regarding these mining activities were made available
to Medinah and it is unknown as to the amount of gold (+/-copper?) mined and processed,
the average grade, or the extent of the workings. More recent adits have been excavated
into the hillside on the east side of the creek following several copper +/-gold
mineralized manto horizons. Based on the limited amount of dumps, it appears that this
material may have been hand cobbed and hauled to a plant for milling. Similar to the other
workings, no data documenting this previous mining activity was forwarded to Medinah.
The first documented exploration program over the Lipangue Property,
that Howe is aware of, was completed by Shell (La Division Metales de Shell Chile S.A.) in
1985 as part of a reconnaissance regional exploration program over the Altos de Lipangue
plateau. Shells project covered a northeast elongate area of about 7 to 8 kilometres
by 2 kilometres wide and included ground presently covered by Medinahs Lipangue and
Dos Marias Properties. The most positive results were returned from a very limited mapping
and sampling program over the Lipangue Property where they outlined what they believed to
be a roughly east northeast elongate area of subcropping hydrothermal breccia. Even though
at the end of their limited program this breccia remained for all intent and purpose,
unexplored and had unknown strike and depth potential, they still believed that it
represented an excellent precious and base metal target that could host a significant
resource.
The Lipangue Property
The Lipangue Property is underlain by a generally north striking,
east dipping volcano-sedimentary sequence of rocks which corresponds with the Ocoa and
Purehue Members of the Veta Negro Formation, and which, to the east, is intruded by
Cretaceous aged granodiorite of the central batholith. The contact zone with the
granodiorite runs roughly north-south through the central portion the property, between
the Lo Amarillo and Cerro Negro knolls and is host to the recently discovered Lipangue
gold-copper +/-silver breccia.
The Lipangue Property was first obtained by Medinah in 1998, and after
the initial Phase I review by their consulting geologist Gordon House it was highly
recommended as a potential target for polymetallic breccia style mineralization.
Medinahs second phase of exploration, which took place between September 13th
and October 8th, 1998 consisted of gridding, geological mapping, and an
IP/resistivity survey which further outlined the surface extent of the breccia target and
defined several geophysical targets that would be drill tested during the next phase.
Phase III occurred between February 8th and April 18th,
1999 and consisted of 1,652 metres of diamond drilling in 7 separate holes. Individual
holes ranged in depth between 70 and 348 metres and were all targeted to intercept the
Lipangue gold-copper (+/-silver) mineralized hydrothermal breccia. The results indicate
that on surface the breccia occurs as an east-west elongate, ovoid shaped body that
outcrops in trenches over an area measuring roughly 150 metres (east-west) and up to 100
metres wide.
Surface exposures of the breccia are heavily oxidized and consist of
rounded to subangular clasts of intensely altered granodiorite, cemented by a matix of
crystalline quartz and limonite and iron-oxides. Limited sampling of previously excavated
trenches indicates that the oxidized portions of the breccia are heavily leached and are
only weakly anomalous in gold, copper, and silver.
The drilling indicates that the oxidation level varies between 25 and
50 metres in depth, below which the breccia consists of rounded and sub-angular clast and
matrix supported fragments of altered granodiorite (chlorite, sericite, silica,
+/-pyrophyllite, clay, and alunite?) set in a matrix of coarse crystalline vuggy quartz,
mineralized mainly with 1 to 15% coarse anhedral blebs of pyrite, chalcopyrite, and in
places chalcocite (replacing chalcopyrite), sphalerite, and galena. Fine disseminated
pyrite (trace to 5%), and lesser amounts of chalcopyrite are common throughout the
granodiorite fragments. Late quartz veinlets, generally less than a centimetre in width,
cut the breccia in places, and are mineralized with pyrite, chalcopyrite, and at times
chalcocite, sphalerite and galena. Although the breccia is almost continually mineralized
across its width, the intensity of both alteration and sulphide mineralization is
variable.
The recent drilling by Medinah was completed over a very restricted
area and five of the seven Medinah drill holes intersected significant thickness of
variably altered and mineralized breccia. The five holes that intersected the breccia were
all drilled within 140 metres of each other and were roughly aligned on two north-south
sections, spaced 25 metres apart (Line E, and Line E+25). The two other Medinah holes,
were drilled approximately 120 and 220 metres further to the east in an attempt to trace
the breccia along strike in that direction, but failed to intersect it. The IP/resistivity
survey (completed by Geodatos on behalf of Medinah in 1998) clearly indicates that an
eastward plunging polarized body exists at least 400 metres past line E, the top of which
could be as deep as 120 metres, by Line G. The breccia may have a strong east to east
northeast structural control, and therefore could evolve into a much narrower breccia-dike
or brecciated fault to the east, striking between the collar locations of the two eastern
holes. This could explain why both of the two eastern holes failed to intersect the
mineralization.
The drill holes along section E crossed the breccia at its widest point
where it continually averaged between 75 to 90 metres in true width, and was traced down a
60º south dip for about 200 metres. The section 25 metres east of E, intersected
the breccia at about 200 metres vertical (250 metres down dip) however its true width has
been reduced to about 40 metres at this point.
Geochemical analysis completed by Acme Analytical on the Medinah drill
hole samples indicate that the breccia below the oxidation level, is anomalously
mineralized over most of its entire width, with significant weighted averages of gold,
silver, and copper as shown below:
 | 1.72 grams gold/tonne, 10.07 grams silver/tonne, and 0.40% copper across 84 metres and;
0.37 grams gold/tonne, 2.88 grams silver/tonne, and 0.04% copper across 36 metres both
from hole L99-03
|
 | 2.59 grams gold/tonne, 20.84 grams silver/tonne, and 0.85 % copper across 29 metres from
hole L99-03
|
 | 1.6 grams gold/tonne, 34.45 grams silver/tonne, and 0.66 % copper across 8 metres and;
1.39 grams gold/tonne, 44.16 grams silver/tonne, and 1.25 % copper across 19 metres from
hole L99-06
|
 | 1.26 grams gold/tonne, 18.11 grams silver/tonne, and 0.49 % copper across 28 metres from
hole L99-07 |
In hole L99-05, between 103 and 113 metres, a zone of intensely
"chloritized and magnetite-rich granodiorite" was intersected hosted within the
hanging wall granodiorite, well above the contact with the breccia. This interval yielded
7.92 grams gold/tonne, 23.42 grams silver/tonne and 0.86% copper across 10 metres,
including the final 3 metres which returned a weighted average of 20.02 grams gold/tonne,
56.06 grams silver/tonne and 2.24% copper.
The Lipangue breccia remains open in all directions, but could be
reduced to a much narrower breccia-dike as it plunges to the east. The western extent as
yet remains open, however it could steeply plunge in this direction following the contact
with porphyritic volcanics mapped on surface by Medinah. Even though five holes were
drilled into the breccia, its geometry and structural control(s) are still poorly
understood. Typical of hydrothermal breccias, the down plunge extent could be very deep
and possibly overlie a larger porphyry style mineralized system at depth.
Additional isolated small outcrops of breccia occur along the southern
edge of the area mapped by Medinah. These exposures are completely surrounded by rubble
and overburden and the actual size could be larger. In addition, they occur beyond the
southern extent of the recent IP/resistivity survey and as such remain untested targets
In addition to breccia style mineralization, the Lipangue property also
hosts several narrow (0.10 to 0.50 metres wide), variably oriented, auriferous quartz
veins. Most of these are hosted within the granodiorite in the eastern two thirds of the
plateau and were mined or explored by "pirquineiro" style operations over the
past century. This style of target has not yet been explored by Medinah at Lipangue, but
based on the known mineralization at the nearby Fortuna Property, which occurs just east
of Lipangue (on land currently held by Cerro Dorado Inc.), these veins can be very high
grade, and often can average above 50 grams gold/tonne. Typically they consist of a
gangue, which is primarily quartz and some sericite, mineralized with pyrite-arsenopyrite
+/-sphalerite-chalcopyrite-galena-hematite-tetrahedrite and gold.
Las Dos Marias
Property
Similar to the Lipangue Property, Dos Marias was first obtained by
Medinah in 1998 and after the initial Phase I review by their consulting geologist Gordon
House, it was recommended as a potential target for shear zone hosted gold mineralization
and stratabound skarn replacement copper mineralization. Medinahs second phase of
exploration, which took place between September 8th and October 16th,
1998 consisted of gridding, geological mapping, and an IP/resistivity survey which further
outlined the surface extent of the shear zone and defined several geophysical targets.
Phase III occurred between February 8th and April 18th,
1999 and consisted of a very small, two hole diamond drilling program which totaled
approximately 456 metres of drilling. The two vertical holes were about 156 and 301 metres
in depth, respectively and were both collared to test the shear zone style of
mineralization several hundred metres south of the old workings.
The Dos Marias Property occurs on the northwest slope of the Altos de
Lipangue plateau and is underlain by a generally north striking, east dipping sequence of
volcanic and volcanoclastic rocks with intercalated marine and continental sedimentary
rocks which correspond with the Lo Prado Formation. The main structural feature on the
property is a 350º striking, 70º west dipping, 50 to 100 metre wide auriferous shear
zone which trends through the middle of the property. Regional geology maps show an
extensive area of hydrothermal alteration, centered on the shear and which extends south
from the middle of the property, about 2 kilometres to the granodiorite contact.
The geology in the area mapped by Medinah, consists of a central, north
striking, 30º east dipping volcanic sequence which is both overlain and underlain by
units of hornblende and feldspar porphyritic to massive andesite. The volcanic sequence
consists of ash flow and ash fall deposits and variably skarnified, interbedded limey
sedimentary horizons which in the southern parts of the property have been intruded by a
50 to 75 metre wide granodiorite dike. The volcanic unit is host to several disseminated
to massive copper skarn replacement lenses which were lightly exploited in the past.
The shear roughly follows the base of Quebrada Durazno, and within the
property boundaries can be traced over a strike length of about 700 metres (traced through
surface outcrops, diamond drill holes, and extrapolated along strike through
IP/resistivity results). The dip of the shear zone cross-cuts the gently east dipping host
lithology, which is predominantly siliceous and pyritic ash tuff and tuff of the volcanic
sequence, and the underlying porphyritic andesites. Mineralization occurs as fine
disseminated pyrite and quartz-sulphide (pyrite+/-arsenopyrite?)
+/-carbonate-chlorite-pyrophyllite stringers 2 to 5 centimetres wide, and spaced 15-25
centimetres apart.
On surface the shear zone is best exposed in the area of old workings
(the Las Dos Marias Mine) in the central portion of the claim, however also in several
drill road cuts, and in outcrops in the creek bed, west of the drill holes. The surface
mineralization consists of strongly sheared (north northwest striking and steeply west
dipping), and silicified tuff and porphyritic andesite with 1 to 20 % disseminated pyrite
which is cut by several quartz-pyrite veinlets up to 2 centimetres wide and oriented
subparallel to the shearing direction. Two independent surface channel chip samples,
recently collected by Howe across select surface exposures of the vein at the old workings
and near the collar location of DM99-01 yielded:
 | 3.82 grams gold/tonne across 1.5 metres and;
|
 | 1.39 grams gold/tonne across 2.5 metres |
Although the shear zone reportedly has a width of 50 to 100 metres, it
is not continually mineralized across this entire width and varies from intensely sheared
and pyritized sections, to very lightly fractured and weakly altered portions with minor
sulphide mineralization. The strongest, and best mineralized portions of the shear zone
appear to be hosted in the eastern, or hanging wall portions, and the intensity and gold
grades appear to drop in the footwall sections. Since only 2 drill holes have been drilled
into the zone, the structural and/or lithological controls and the geometry of the
mineralized zones within the shear have yet to be determined. Results of Medinahs
recent two hole drill program yielded several anomalous weighted averaged values
including:
DM99-01
 | 6.48 grams gold/tonne across 2 metres ( between 11 and 13 metres) and; |
 | 0.64 grams gold/tonne across 6 metres (between 23.5 and 29.5 metres) and; |
 | 0.50 grams gold/tonne across 53 metre (between 50 and 103 metres) |
DM99-02
 | 2.44 grams gold/tonne across 5 metres (between 37 and 42 metres); |
 | 91.99 grams gold/tonne across 2 metres (between 68 and 70 metres) and; |
 | 0.48 grams gold/tonne across 10 metres (between 70 and 80 metres) and; |
 | 0.36 grams gold/tonne across 23 metre (between 150 and 173 metres) |
Both of these holes were drilled vertically to intersect the southern
extension of the shear zone in the vicinity of a granodiorite dike, however once drilled,
the location of these holes was found to be collared in the shear zone, therefore missing
the hanging wall and possibly the strongest mineralized portion of the auriferous
structure.
A narrow, but very high grade auriferous fault/breccia gouge zone
hosted within the main shear zone, consisting of clay-carbonate-sericite alteration and 1
to 5 % disseminated pyrite and traces of molybdenum and chalcocite, was intersected in
hole DM99-02 between approximately 66 and 73 metres. Although core in this interval was
extremely broken and recovery was well below normal levels, the analytical results of two
consecutive, one metre samples taken by Medinah, between 68 and 70 metres, yielded 61.77
and 122.2 grams gold/tonne. A quarter core repeat sample by Howe of the second sample,
between 69 and 70 metres, returned a spectacular value of 455.02 grams gold/tonne across
one metre. The extremely high grade and varying results yielded from the Medinah and Howe
analyses reflects the probable nuggety nature of the gold mineralization in this fault
zone and perhaps in other portions of the shear zone.
The other main mineralized target at Dos Marias is stratabound or
"manto" replacement skarn copper mineralization which is hosted in a series of
north striking, east dipping limey tuff and sedimentary horizons ("mantos") on
the east side of the creek. Very little follow up work has been completed over this target
however recent mapping by Medinah in an adit ("the manto adit") on the east side
of the creek, has revealed that the individual mantos are not more than a few metres in
thickness, but are vertically "stacked" throughout the stratigraphic sequence,
the true thickness of which has yet to be determined. Mineralization consists of
disseminated and semi-massive to massive pyrite and chalcopyrite lenses, however many of
the exposures are well oxidized and consist of various copper oxides, limonite, and iron
oxides, mixed with pyrite and chalcopyrite. It is uncertain if low grade copper values
occur in the lightly skarnified units between the mantos.
A 1.5 metre channel chip sample taken by Howe in the manto adit across
an interbedded sequence of partially oxidized skarnified limey sediments and siliceous
volcanics with minor amounts of copper oxide mineralization and traces of fine
disseminated pyrite and chalcocite, yielded 1.96% copper. Based on this analytical result
and the occurrence of additional subparallel manto horizons, Howe recommends that portions
of this tunnel be systematically sampled to test the grade of the other manto horizons and
the surrounding weakly skarnified sediments/volcanics to see if a wide, potentially bulk
mineable copper resource exists here.
Surface mapping several hundred metres along strike to the south of
this adit has located rubble of epidote-diopside skarnified limey sediments mineralized
with irregular shaped blebs of pyrite and/or chalcopyrite and it is thought that this
rubble is similar to the manto style copper skarn mineralization which is exposed in the
adit suggesting that additional pods of this mineralization will occur both along strike
and stacked vertically throughout the volcanic/sedimentary sequence.
During Howes recent visit to the Lipangue and Dos Marias
Properties, time was spent reviewing the surface geology, the style and extent of
mineralization, drill hole locations, and the extent of previous workings. Independent
samples were taken from both surface and underground exposures of the mineralized zones
and later, visits were made by Howe to the core storage facility in Santiago where several
representative intervals of core from both properties, through both mineralized and barren
sections, were quickly reviewed by Howe. Several quarter core samples were collected by
Howe which repeat intervals that were previously split and analysed by Medinah. In total,
19 confirmation type samples were collected from the two properties (10 from Lipangue and
9 from Dos Marias). The gold analytical results obtained from the Howe sampling at both
properties were in the same general range of values of those reported by Medinah, but
often upwards of several grams higher or lower. Similarly, silver and copper values at
Lipangue were generally in the same range, but at times several grams, or tenths of a
percent, higher or lower, respectively. Silver and copper results at Dos Marias were
generally low and considered insignificant. Although this difference can be attributed to
a nuggety effect for the gold, the blebby and inconsistent nature of the breccia style
mineralization could in effect give quite variable assay results for all of the elements,
even from two halves of a split core. During future drill programs, Medinah should
consider using a larger diameter core to get a more representative sample.
Howe feels confident that the analytical values reported by Medinah
from their recent drilling campaigns over both the Lipangue and Dos Marias Properties give
a general representation of the values that can be expected from these prospects. Future
drill programs should be preceded by early stage mineralogical testing to determine the
general characteristics of the gold grains in the mineralized domains which will assist in
determining the optimum sampling scheme for future exploration programs. In addition, a
full quality assurance program should be adapted by Medinah for all future exploration
programs to minimize unavoidable sample assay errors which are introduced by the acts of
sample collection, sample preparation and assaying
Medinahs Lipangue and Dos Marias Properties represent excellent
targets to host large tonnage, bulk mineable gold and/or copper (+/- silver)
mineralization at relatively shallow depths, and these targets remains open in most
directions and could be larger in extent than currently exposed. All of the targets have
only been tested on an preliminary basis and Medinah believes that with a minimal
exploration program the potential size of these prospects can be substantially increased.
Other parts of the Medinah land position have also only been reviewed on a preliminary
basis, or not at all, and these should be further explored, since the potential exists for
additional mineralization. Howe concurs with this target objective.
Medinahs land position is secure, in that it covers the strike
and down dip extent of all of their defined mineralized zones and leaves sufficient ground
to define new targets along strike or on other parts of the property.
Howe recommends that a two phase program be conducted in order to
assess the gold and/or copper-silver potential over both the Lipangue and Dos Marias
Properties. Phase I would consist of a program of surface gridding, geological mapping and
sampling, magnetic and/or resistivity/IP surveys, and approximately 3,400 metres of
diamond drilling on Lipangue and 2,700 metres on Dos Marias. By the end of this phase new
target zones will be generated which will then be further evaluated during Phase II.
Phase II would consist of approximately 5,500 metres of fill-in diamond
drilling at Lipangue and 5,000 metres at Dos Marias over the respective target mineralized
zones with the objective being to outline a measured and indicated resource.
The approximate budgets required to carry out the recommended two phase, results driven
exploration programs at Lipangue and Dos Marias is approximately US$1,370,000 and
US$1,160,000, respectively.
2.1 LOCATION AND ACCESS
The Lipangue and Las Dos Marias Properties are located approximately 30
kilometres northwest of Santiago in the coastal range mountains (see Figures 1.1 and 2.1). The approximate UTM coordinates of the center of
the Lipangue Property is 315500 E, 6314000N and the Dos Marias Property is 312000E,
6313500N.
The project area is best accessed from Santiago, the capital city of
Chile. From here one drives northwest about 25 kilometres to the town of Lampa. One must
then travel north approximately 6 kilometres along a well maintained gravel road (route
G-16) which parallels the base of the coast mountains until the Hacienda Mercedes at
Chicauma. After entering through a steel gate, with a guard house, on the west side of the
road, one drives an additional 6 kilometres along a 4 wheel drive road which rapidly gains
elevation up a bumpy gravel and boulder filled open valley to an elevation of
approximately 550 metres. At this point the valley abruptly ends and the road continues up
a "cuesta" (a series of about 19 switch backs) which climb up a steep slope for
approximately 7 kilometres. At the top of the cuesta, the northeast corner of the rolling
Alto de Lipangue plateau is reached at an elevation of about 1,950 metres. The eastern
edge of the Lipangue property is crossed just a few hundred metres west of the crest of
the mountain and the La Fortuna de Lampa Mine (see Figure
2.2).
To reach the Dos Marias property one must continue west southwest
across the Altos de Lipangue plateau and the Lipangue property and then drop in elevation
about 500 metres down the west slope of the plateau. The drive from Lampa to the Lipangue
Property takes approximately 1 hour to complete, while the drive to Dos Marias takes an
additional 15 minutes to complete. The road passes through the central portions of both
properties and other parts must be reached by travelling off-road in a 4 wheel drive truck
or by foot.
A second, more southerly access road leaves the "Hacienda
Lipangue" south of Lampa on route G-16 and reaches the plateau near the south and
west boundaries of the Lipangue Property and the eastern edge of the Dos Marias property
however this road needs upgrading and for the moment all travel must be done along the
more northerly route.
A 400 metre long, E-W oriented dirt air strip straddles the eastern
boundary of the Lo Amarillo claim of the Lipangue Property (see Figure 2.2). Although it is not maintained, it appears
to be in relatively good shape and with minimal care small planes could easily land there
now.
The small town of Lampa is able to supply only the most basic needs
(food, fuel, hardware, etc.) for very early stages of exploration, and more advanced
projects must be serviced from Santiago. Electrical power, sufficient only for local town
use currently exists in the village of Lampa, however a major power grid runs just west of
the town. Telephone service in Chile is excellent, most of it being connected to a fibre
optic network while the cellular network covers most major cities and has reception from
most parts of the Lipangue Property and higher elevations on the Dos Marias Property.
Deep water ports exists at Valparaiso and San Antonio on the Pacific
coast, approximately 65 kilometres northwest and 70 kilometres southeast of the property,
respectively (see Figure 2.1).
2.4
ACQUISITION AND MAINTENANCE OF MINERAL RIGHTS IN CHILE
Chiles current mining policy is based on legal provisions that
were enacted as part of the 1980 constitution. These were established to stimulate the
development of mining and to guarantee the property rights of both local and foreign
investors. According to the law, the state owns all mining resources, but exploration and
exploitation of these resources by private parties is permitted through mining
concessions, which are granted by the courts. The concessions have both rights and
obligations as defined by a Constitutional Organic Law (enacted in 1982). Concessions can
be mortgaged or transferred and the holder has full ownership rights and is entitled to
confiscate the rights of way for exploration and exploitation. In addition, the concession
holder has the right to defend his ownership against state and third parties. An
exploration concession is obtained by a claims filing and includes all minerals that may
exist in its area. Exploration mining rights in Chile are acquired in the following
stages:
- Pedimento
: A pedimento is an initial exploration claim whose position is well
defined by NS-EW UTM coordinates. The minimum size of a pedimento is 100 hectares and the
maximum is 5,000 hectares with a maximum length-to-width ratio of 5:1. The duration is for
a maximum period of 2 years, however at the end of this period it can be reduced in size
by 50% and renewed for an additional 2 years. If the yearly claim taxes are not paid on a
pedimento, then the claim can remain in good standing by paying double the annual claim
tax the following year. Pedimentos are allowed to overlap with pre-existing ones, however
the underlying one always takes precedent, providing the claim holder doesnt let the
claim lapse due to lack of payments, filing errors, etc.
- Manifestacion
: Before a Pedimento expires, or at any stage during its two year life,
it is converted to a Manifestacion which lasts for 220 days.
- Mensura
: Prior to the expiration of a manifestacion, the claim is surveyed by a
government licensed surveyor. Once surveyed and the application is accepted by the
government, the claim becomes a mensura ("patented claim")
At each of the 3 main stages of the claim acquisition process, several
steps are required (inscription payments, notarization, tax payments, "patente"
payment, lawyers fees, publication of the extract, etc) before the application is finally
accepted by the court. A full description of the process is documented in Chiles
mining code.
If accepted by the court the claim is published in the official mining
bulletin (published weekly). At the manifestacion and mensura stages a process for
opposition from conflicting claims is allowed. Most companies in Chile retain a "land
man" to review the weekly mining bulletins and ensure that their land position in
Chile is kept secure.
In 1997, an environmental law was introduced in Chile (Decree No. 30)
which states that any exploration or mining project must present an Environmental Impact
Study or an Environmental Impact Declaration to the CONAMA, the environmental authority
for approval. This application process must be initiated prior to starting the project and
can take up to several months for approval.
5.0 PREVIOUS WORK
The area surrounding the Lipangue and Dos Marias properties has been
exploited since Spanish conquistador times both for the alluvial gold and the oxidized
portions of the high grade quartz veins. Evidence of hand cobbed placer activity can be
seen in many locations over both properties.
5.1
LIPANGUE PROPERTY - PREVIOUS EXPLORATION WORK
It is believed that portions of the Lipangue breccia may have actually
been worked by the early indigenous people and Spanish colonialists as several
"lavaderos" or crushing and washing areas can be found near the outcrops and
trenches. In addition, an extensive area of breccia float and quartz crystals in the same
area could be interpreted as old tailings piles from the processing areas (House 1999a).
Although several "pirquineiro style" mining operations started in the area about
the turn of the century, the first well documented mining activities were in the Fortuna
de Lampa mine, just east of the Lipangue property boundary (see Figure 2.2). This mine was active over an approximately
30 year period between the early 1940s and the late 1960s, during which time
the property saw intermittent, small scale, mining activity on a narrow vein style gold
deposit. The Fortuna Mine reportedly produced almost 2,000 tonnes of vein style
mineralization grading 63.9 grams gold/tonne, 51.2 grams silver/tonne, and 0.2% copper.
The first documented exploration program over the Lipangue Property,
that Howe is aware of, was completed by Shell (La Division Metales de Shell Chile S.A.) in
1985 as part of a regional exploration program over the Altos de Lipangue plateau.
Shells project covered a northeast elongate area of about 7 to 8 kilometres by 2
kilometres wide and included ground presently covered by Medinahs Lipangue and Dos
Marias Properties, as well as the nearby Fortuna Property (now held by Cerro Dorado Inc.),
and the Fenix, San Manuel, and Juan Jose claims. Shell had optioned all of the ground from
Quijano, the owner at that time.
The Shell property review was completed by Alejandro Faunes
("Faunes") over a 5 day period using 1:25,000 topography maps and 1:10,000 air
photos as a mapping base. During the study a total of 56 rock chip and/or grab samples and
5 soil samples were collected from various parts of the project area. Soil samples were
collected from pits dug to a depth of 30-50 centimetres. All samples were sent to Geolab,
presumably in Santiago, were they were analysed for gold by 100 gram fire assay and for
copper, silver, lead, zinc, molybdenum, arsenic, and antimony by atomic absorption (Note:
only the locations of the 10 samples collected from the Lipangue Property were documented
on a sketch style map and no analytical certificates documenting preparation techniques or
sample descriptions were included in the report reviewed by Howe).
In the area of the Lipangue Property Faunes identified a topographical
depression which was covered with limonitic and silica rich regolith soil. Initial soil
and/or rock sampling (10 samples) yielded anomalous values of gold (trace to 2.61 ppm),
copper (9 to 376 ppm), silver (trace to 5.9 ppm), molybdenum (2 to 17 ppm), along with
minor zinc and lead anomalies over an area covering about 300 metres (east-west) by 70
metres. Further investigation uncovered a roughly east northeast elongate area with
subcrops and boulder rubble of intensely oxidized hydrothermal breccia consisting of
fragments of heavily altered granodiorite, cemented with quartz and limonitized sulphides.
Faunes suggested that even though this breccia remained for all intent and purpose,
unexplored and had unknown strike and depth potential, it represented an excellent
precious and base metal target that could host a significant resource. Based on its
elongated shape, Faunes suggested that it has a strong northeast trending structural
control. Additional sampling south of the breccia along the southeast edge of the plateau
yielded additional anomalies of gold, copper and silver, but the values and locations of
these samples were not documented in the report reviewed by Howe.
At the end of his report Faunes concluded that the area surrounding the
Altos de Lipangue Plateau was host to a several under explored vein, manto, breccia, and
disseminated style targets that are predominantly mineralized with gold-silver-copper.
Many of these targets are structurally controlled by a series of northeast, northwest, and
east-west faults and/or shear zones. Faunes recommended that following work program be
initiated:
 | a program of mapping and sampling at a scale of 1:10,000 using an orthophoto map base;
as part of this work program, systematic stream sediment samples should be collected from
the main drainages in the area |
 | a program of systematic trenching and mapping to locate the main vein trends; the
accessible underground working should also be mapped and sampled |
 | a systematic geochemical sampling grid should be constructed over the Lipangue breccia;
samples should be gathered from pits or shallow plugger style holes; based on these
results a series of trenches should be excavated over the zone to determine its surface
extent. |
 | any targets from the above work program that yield positive results should be further
explored by underground drifting and bulk samples collected for metallurgical testing. |
(Faunes, 1986)
It is not known if Shell completed any further exploration on any of
these targets.
Shortly after Shell presumably dropped the option on the Lipangue
property, the previous owner, Quijano completed a program of bulldozer trenches in an
attempt to trace the surface extent of the breccia and search for new high grade "La
Fortuna" style auriferous quartz veins. At least 15 trenches ranging in length
between approximately 20 and 100 metres were completed over the plateau and extending
northeast towards the La Fortuna Mine (a small portion of those completed over the
Lipangue Property were later mapped by Medinah and are shown on Figures 5.1 and 5.5 in section 5.3.2 and on Plate 5.2).
It is unknown if these trenches were ever detail mapped or systematically sampled by
Quijano. About the same time, Quijano attempted to drill a small diameter diamond drill
hole close to the present location of Trench #3 (see Figure 5.5). Recent mapping by
Medinah in this trench indicates that the hole was collared in hydrothermally altered
granodiorite. Quijano experienced difficulties with the drilling and was only able to
complete the hole to a depth of 37 metres, however a piece of core from this hole reviewed
by House showed altered, sub-rounded granodiorite fragments up to 20 centimetres across
surrounded by quartz crystals in a matrix of pyrite and chalcopyrite (House, 1998d). It is
unknown if any logging or analysis was completed on the core.
Evidence of a second, reverse circulation drill hole exists, near the
northwest end of Trench #1 (see Figure 5.5). Piles of the drill chips among small shards
of the long decomposed plastic sample bags can be seen on surface close to the collar of
the large diameter reverse circulation hole. It is uncertain who completed this drilling,
or when, and whether any drill logs or analytical data documenting the results are still
in existence.
5.2
LAS DOS MARIAS PROPERTY - PREVIOUS EXPLORATION WORK
Numerous old adits, shafts, and pits are located along the Quebrada
Durazno and surrounding hillsides in the vicinity of the old Dos Marias Mine (see Figure
5.6 in Section 5.3.4 and Plate 5.3). The workings on the west side of the creek are the
oldest and most extensive and appear to have had their own mill site and tailings disposal
site. The timing of this work is unknown, but early diggings and gold placer operations
further north down the creek, may date back hundreds of years, possibly to Spanish
colonial times. No data regarding these mining activities were made available to Medinah
and it is unknown as to the amount of gold (+/-copper?) mined and processed, the average
grade, or the extent of the workings. More recent adits have been excavated into the
hillside on the east side of the creek following several copper +/-gold mineralized manto
horizons (see Plate 5.4). Based on the limited amount of dumps, it appears that this
material may have been hand cobbed and hauled to a plant for milling. Similar to the other
workings, no data documenting this previous mining activity was forwarded to Medinah.
The first documented exploration program over the Dos Marias Property,
that Howe is aware of, was completed by Shell (La Division Metales de Shell Chile S.A.) in
1985 as part of a regional exploration program over the Altos de Lipangue plateau (see
Section 5.1). Although Shells project covered a large regional area and concentrated
mainly on the area of the Lipangue and Fortuna Gold Properties, a short visit was made to
the Dos Marias Property by their geologist, Faunes, during which time he completed a very
early stage reconnaissance review of the property. Several copper-silver +/- gold
mineralized massive, and disseminated sulphide manto horizons, each about 1 or 2 metres in
thickness were mapped and sampled, however the results of the analysis were not included
in the report reviewed by Howe. Faunes noted that the several separate mineralized
horizons occurred hosted in interbedded volcanic, sandstone, and limestone horizons of the
Prado Formation. On the steep slopes west of the Quebrada Durazno and in front of the Dos
Marias Mine main shaft, Faunes mapped an area of intensely argillized and limonitized
rock, which probably corresponds with the area of workings on the west side of the creek.
Previous sampling by Quijano in the shafts around this zone had reportedly yielded values
of 30 and 4.2 grams gold/tonne. (Note: no maps or analytical certificates documenting the
locations of these samples, or sampling and analytical methods were attached to the report
reviewed by Howe).
It is unknown if Shell completed any further work on this property,
however several reverse circulation drill holes were located by Medinah at the Dos Marias
property during their recent mapping program. These holes may have been drilled at the
same time, and by the same company, that drilled the reverse circulation hole found at
Lipangue (see section 5.1). Collars from 5 large diameter, vertical holes were located by
Medinah at the following locations:
 | station 450, just south of line 4 (at the portal to the adit) |
 | station 1050, between lines 3 and 4, |
 | station 600, on line 5 |
 | station 350, between lines 4 and 5 (at the collapsed glory hole above the declined
shaft) |
 | station 425, between lines 4 and 5 |
Similar to the drill hole at Lipangue, Medinah has no data documenting
the results of these holes (final depths, analytical results, geological logs, etc).
5.3
MEDINAH EXPLORATION PROGRAM
5.3.1 PHASE I Lipangue and Dos Marias
The first phase of exploration over the Lipangue and Dos Marias
Properties by Medinah took place in July 1998 during which time they had optioned a total
of 1178 mining claims throughout Chile from Quijano. The majority of these claims were
located within a 75 kilometre radius of Santiago and collectively, were part of
Medinahs "Santiago Project". The claims were grouped into 10 individual
hard rock mining properties (463 claims) and 2 placer properties (437 claims) and included
the Lipangue and Dos Marias Properties. Medinah retained the services of Gordon House
("House"), a consulting geologist from Vancouver, to complete a preliminary
review and prioritize the properties for further exploration.
Houses field review took place over a 12 day period during which
time each of the 10 properties were reconnaissance mapped and sampled. The visit to the
Lipangue Property confirmed the existence of a what House mapped as a hydrothermal
diatreme breccia consisting of rounded and altered clasts of volcanic tuff and
granodiorite cemented by a matix of crystalline quartz and sulphide minerals. House noted
abundant Cu-oxide mineralization in the breccia rubble and estimated that the breccia
could extend over an area of 450 metres by 150 metres, but this could not be confirmed due
to poor outcrop exposure, and many of the previously excavated trenches being covered by
slumped material. (House, 1998a).
House took two grab samples at Lipangue; one of the breccia, and a
second of the volcanic wall rock. Both samples were submitted for analytical analysis at
ITS- Bondar Clegg Laboratories in La Serena, Chile where they were analysed for gold by 30
gram fire assay and silver, copper, lead, zinc, and molybdenum by ICP, and mercury by cold
vapour AA. The assay results for the breccia and the wall rock yielded weakly anomalous
values of 58 and 61 ppb gold/tonne, and 170 and 127 ppm copper/tonne, respectively; and
insignificant or weakly anomalous values for the other elements analysed.
House recommended that the Lipangue breccia be further evaluated by
geological mapping and geochemical soil sampling to outline its surface dimensions,
followed by an I.P. geophysical survey to determine the depth and extent of
mineralization. Any resulting anomalies should then be tested by approximately 2,000
metres of diamond drilling. House also recommended that the access road be upgraded so
that drills and support vehicles could easily reach the summit of the plateau. The
approximate cost for this next phase of exploration was estimated to be US$287,500.
The visit to the Dos Marias Property by House outlined a series of east
dipping, stratiform copper +/- gold mineralized horizons on the east side of north
trending Quebrada Durazno, which had been intermittently mined in the past at several
different stratigraphic horizons. Based on the limited extent of the workings House
suggested that these may be purely exploration tunnels and that the majority of the
previous mining activity actually took place on the west side of the creek. These
"western" workings appeared to be much older and were reportedly mined by the
Spanish for gold several hundred years ago. A declined shaft which follows a 48 degree,
west dipping, pyritic mineralized horizon, was apparently the main access point for the
mining operations. Significant sized dumps and tailings piles were noted by House in the
vicinity of this shaft, however no maps or production records exist which document the
extent of the workings, or the amount or grades of the material mined (see Plate 5.3 and
5.4). According to House, an attempt by the property vendor (Quijano) to dewater the shaft
about 10 years prior to Houses visit was abandoned after the water level was only
lowered by 35 meters. Two samples gathered by Quijano in the shaft during the dewatering
program reportedly yielded 2.8 and 34 grams gold per tonne (Note: the sampling and
analytical method was not documented).
House concluded that the mineralization in the eastern portion of Dos
Marias, is related to stratiform replacement horizons that may be related to the intrusion
of the Lipangue Breccia zone, 2,000 metres to the east. Copper and minor gold
mineralization occurred along favourable, gently east dipping, volcanic and/or sedimentary
host lithologies. The mineralization along the western part of the claim, in comparison,
is west dipping, and may be structurally related to a north trending fault/shear zone
which roughly follows the orientation of the creek (House 1998a).
House recommended that the Dos Marias properties be further explored by
geological mapping and rock and/or soil sampling with the main objective being to outline
the mineralized horizons on both sides of the creek and to determine any structural
controls. House also suggested that during the mapping an emphasis should be placed on
determining the relationship, if any exists, between the replacement manto style
mineralization at Dos Marias and the intrusive hydrothermal breccia at Lipangue. Based on
the results of this work, House recommended that additional ground should be acquired
between the two properties. In addition, gridding and an IP/resistivity survey should be
completed over both sides of the creek covering any geochemical soil anomalies obtained
from the soil survey. Finally, approximately 1,600 metres of diamond drilling was
recommended to test any resulting geophysical anomalies. The approximate cost for this
next phase of exploration was estimated to be US$234,000 (House, 1998a).
House also recommended that some of the other properties that were
under option as part of the Santiago Project be further explored, however Howe is not
aware of the results of these other exploration programs, nor whether they remain part of
Medinahs Chilean property position.
In August of 1998, House submitted another report to Medinah which
detailed the possible relationship between the Lipangue Breccia and the Dos Marias
mineralization. House suggests that the Lipangue breccia could represent the top of a late
stage, mineralized intrusive event with a larger, copper-molybdenum-gold porphyry system
occurring at depth. This presumed porphyry, or the lower parts of the breccia could have
been the driving force that supplied the mineralized hydrothermal fluids that percolated
through selective favourable volcanic and sedimentary horizons and deposited copper and
gold mineralization at Dos Marias (House, 1998b). House hoped to further substantiate this
concept during the next phase of exploration.
5.3.2 LIPANGUE - PHASE II
The second phase of exploration at Lipangue was completed by
Medinah between September 13, and October 8, 1998. The program was coordinated by House
and during this time Howe Chile was retained to have a geologist on site to assist in the
completion of the program. The exploration program consisted of the following:
 | a surveyed grid was established by the geophysical contractor, Geodatos (based out of
Santiago); the grid consisted of 9 north-south oriented, 1,200 metre long lines, spaced
200 metres apart, with individual stations on each line spaced 100 metres apart (see Figure 5.1)
|
 | an IP/resistivity survey was completed by Geodatos over the gridded area using a
dipole-dipole configuration; the survey covered a total of 16.8 line kilometres with
dipole length of 100 metres along the lines, and N spacing of 1 to 6 dipoles giving an
effective depth of exploration of approximately 200 metres; pseudosections of the
resistivity, raw phase and decoupled phase were presented in the report, and in addition
the results were inverted to give depth sections using Interpex software (RESIX 2DI).
(Note: the individual pseudo sections have not been reproduced by Howe for this report,
but are well documented in Geodatos, 1998, and in House, 1998d).
|
 | a portion of the previously excavated bulldozer trenches were deepened by a bulldozer
and geologically mapped; only one sample was collected by Medinah near trench #3 which
yielded 0.12 grams gold/tonne and 67 ppm copper (see Figure
5.1); three of the mapped trenches were reproduced by House in his report (see Figures
5.2 to 5.4).
|
 | the gridded area was geologically mapped at a scale of 1:5,000 (see Figure 5.1) |
The results of the 1998 mapping program indicated that the breccia
occurs at the north-south oriented contact zone between propylitically altered massive
lavas of the Veta Negro Formation and granodiorite of the central batholith. The breccia
outcrops in a topographic depression on the plateau which is covered by a thin
(approximately 1 metre) layer of regolith, composed of limonitic soil and oxidized breccia
fragments. The surface extent of breccia float material was originally thought to roughly
represent the outline of the underlying breccia (covering an area of approximately 600
metres (east-west) by 300 metres), however based on the recent mapping the true surface
extent of the breccia is actually much smaller, extending over an area of about 200 metres
(east-west) by 150 metres.
In February 1999, the IP/resistivity data collected and processed by
Geodatos was reviewed by a second geophysical consulting firm in Santiago (PGW S.A.). The
results of their review corresponded with those obtained from Geodatos. The results of the
geophysical survey indicated three main areas of anomalies:
 | the first anomalous area is located over 3 consecutive lines, E, F, and G between
stations 600 S and 800S and likely corresponds with surface and subsurface eastward
continuation of the Lipangue breccia. On line E the modeling shows that the top of the
anomaly is at 50 metres depth (however mapping shows a good correlation with the surface
outcrop of the breccia at this point). The Line F anomaly was also modeled indicating the
top of the anomaly also occurs at 50 metres, while on Line G the depth was about 120
metres. This indicates that the breccia likely continues east of its mapped outcrop
extent, but it plunges below the outcropping granodiorite east of Line E, and becomes
progressively deeper to the east. If the breccia continues past Line H with the same steep
plunge, the depth of penetration of the IP survey would have been insufficient to detect
it on this line.
|
 | the second anomaly occurs on Line A between 600S and 800S and modeling indicates that
the top of the anomaly occurs at a depth of about 50 to 100 metres. Surface geology in
this area was mapped as massive propylitically altered andesite with varying amounts of
disseminated magnetite.
|
 | the third anomaly occurs on Line I between 600S and 1000S. Modeling indicates a rather
flat lying broad anomaly that could correlate with units recently mapped by Medinah which
consist of disseminated magnetite and/or sulphides in propylitically altered granodiorite. |
(Ugade, 1998)
At the conclusion of his report, House states that based on the results
of the IP/resistivity survey, a polarized body (which likely corresponds with the
subsurface east extension of the Lipangue breccia) can be traced over a strike length of
more than 400 metres (between Lines E and G), and across a width of at least 200 metres.
Geological mapping in the trenches above the east to southeast plunging breccia have
uncovered phyllic altered granodiorite with relict pyrite clasts, which may be
representative of wall rock alteration on the margins of the breccia. House recommended
that a program of diamond drilling be initiated, testing the full 400 metre strike
extension of the breccia with 6 drill holes, each to a minimum depth of 250 meters, and at
least one to be drilled to a depth of about 400 metres. In addition, House recommended
that at least one hole be drilled on Line A at station 700S to determine if the IP anomaly
is a result of silicification and magnetite, or sulphide mineralization. Similarly, the
anomaly on Line I at station 500S should also be drill tested. The approximate cost for
this program was estimated to be US$440,000
5.3.3 LIPANGUE PHASE III
The third phase of exploration at Lipangue took place between
February 8 and April 18, 1999 and consisted of a diamond drill program to test the
anomalies outlined by the IP/resistivity survey completed during Phase II. The drill
program consisted of the following:
 | widening and general rehabilitation of the Lampa to Lipangue access road.
|
 | a total of 1,652 metres of diamond drilling in 7 drill holes which ranged in depth
between approximately 70 and 348 metres (see Table 5.1); all drilling was completed by
PerfoAndes S.A. from Chile using a Boyles 56 drill rig and holes were collared vertically
(except for one hole at 60º) with HQ diameter core which was reduced to NQ at
depths ranging between approximately 18 and 86 metres; none of the final collar
coordinates were surveyed and down hole deviation tests were not completed; at the end of
each hole, PVC tubing was left in the collar and a cement block placed around it as a
permanent marker (see Plate 5.5 and Figure 5.5); based
on the core reviewed by Howe, the core recovery generally appeared very good, however
percent recovery logs were not included in the logs; all logs prepared by Medinah are
included in Appendix II.
|
 | a total of 907 half core samples, each 1 metre in length were taken from mineralized
sections of the core using a "hammer and wheel" style core splitter; samples
were collected by a trained student assistant, but under the supervision of House; once
labeled and bagged the samples were under the control of House at all times, until about a
shipment was ready (50 to 100 samples) and then these were taken directly by Medinah to
the laboratory for analysis; the remaining unsplit and halved core is stored in a secure
locked storage facility in Santiago (see Plate 5.6);
all samples were analysed at ACME Analytical Laboratories S.A. ("ACME") in
Santiago for gold by 30 gram fire assay and copper by AAS. The pulps were then shipped
directly by ACME to their associated laboratory in Vancouver, Canada where they were
further analysed for 30 elements by ICP method; as part of their in-house quality
assurance program, ACME reported the results of their own blank, standard, and duplicate
samples on the assay certificates (a full list of the ACME assay certificates were
included as Appendix III in House, 1999a, and therefore have not been reproduced by Howe,
however a list of the certificate numbers included in his report is shown in Appendix IV
of this report); approximate general ranges of the gold, silver, and copper values
returned from the recent drilling program shown on Table 5.2 and a table showing the
significant drilling weighted average analytical results is shown on Table 5.3. |
Note: According to new guidelines set out by the TSE Mining Standards
Task Force Final Report, January 1999, a stringent quality control program is essential
for compiling reliable exploration data, especially during drilling programs. Sample
preparation and quality control procedures should be well
organized to monitor the accuracy and precision of analytical results, to detect possible
sample contamination, and to add confidence to future resource estimates. In addition to
the laboratories in-house quality assurance program, each sample batch sent to a
laboratory should include: sample duplicates (1 in 20 samples), assay duplicates (at least
1 per batch), multi-element standards (at least 1 per batch), and blank standards (at
least 1 per batch). In addition inter-laboratory preparation and analytical checks should
be completed through the sampling phase of the drill program. Also, during the core
logging process all core should be photographed prior to cutting and the geological
logging should be preceded by geotechnical logging (percent recovery, RQD, fractures,
etc.). In addition, to assist in future resource estimates, specific gravity measurements
should be taken at representative intervals along the length of the hole.
Table 5.1: Lipangue Diamond Drill Holes - 1999
Drill Hole |
Approx. Elevation (m) |
Approximate
UTM Location of Collars |
|
Azimuth |
Dip |
Depth (m) |
Samples
Numbers
(total #) |
| |
|
Easting |
Northing |
|
|
|
|
L99-01 |
2,005 |
315085 |
6314063 |
---- |
-90º |
70.00 |
332151-332178
(28) |
L99-02 |
2,005 |
315292 |
6314057 |
---- |
-90º |
250.30 |
332179-332218
(40) |
L99-03 |
2,000 |
315070 |
6313922 |
---- |
-90º |
297.50 |
332219-332423
(205) |
L99-04 |
2,005 |
315192 |
6314019 |
180º |
-60º |
210.70 |
332425-332538
(114) |
L99-05 |
2,000 |
315095 |
6313922 |
---- |
-90º |
348.35 |
332541-332650,
346950-347020 (182) |
L99-06 |
2,000 |
315070 |
6313957 |
---- |
-90º |
293.30 |
347021-347149,
346300-346367 (197) |
L99-07 |
2,003 |
315070 |
6313982 |
---- |
-90º |
181.85 |
347632-347772
(141) |
TOTAL |
|
|
|
|
|
1652 m |
907 samples |
Table 5.2: Lipangue Property General Range of Gold, Silver,
and Copper Values Returned from the Diamond Drilling Program:
Sample Location in Drill Hole |
Gold (g/t) |
Silver (g/t) |
Copper (%) |
Total Range of Values |
0.01 33.67 |
0.10 103.4 |
0.001 3.71 |
Approximate Average Range of Values in
"Low Grade Breccia" |
0.10 0.60 |
1.0 7.0 |
0.02 0.20 |
Approximate Average Range of Values in
"High Grade Breccia" |
1.0 4.0 |
10.0 50.0 |
0.50 1.0 |
Approximate Average Range of Values in
Granodiorite |
0.01 0.05 |
0.10 1.0 |
0.001 0.03 |
Table 5.3: Lipangue Property - Significant Diamond Drilling Analytical
Results
DDH |
Depth (m) |
Weighted Averages |
| |
From |
To |
Interval |
Au (g/t) |
Ag (g/t) |
Cu (%) |
L99-01 |
no |
significant |
results |
---- |
---- |
---- |
L99-02 |
110 |
124 |
15 |
0.18 |
1.98 |
0.18 |
L99-03 |
92
incl. 92
and 155
187 |
176
121
158
223 |
84
29
3
36 |
1.72
2.59
12.86
0.37 |
10.07
20.84
19.3
2.88 |
0.40
0.85
0.89
0.04 |
L99-04 |
no |
significant |
results |
---- |
---- |
---- |
L99-05 |
103
incl. 110
130
206
264 |
113
113
131
246
288 |
10
3
1
40
24 |
7.92
20.02
33.67
0.23
0.47 |
23.42
56.06
5.5
1.35
2.11 |
0.86
2.24
0.13
0.07
0.10 |
L99-06 |
40
incl. 40
and 62 |
194
48
81 |
154
8
19 |
0.60
1.6
1.39 |
13.7
34.45
44.16 |
0.39
0.66
1.25 |
L99-07 |
19
incl. 54
and 112
and 135 |
143
82
124
143 |
124
28
12
9 |
0.49
1.26
0.36
0.87 |
9.68
18.11
14.81
31.36 |
0.31
0.49
0.56
1.45 |
5.3.4 PHASE II - LAS DOS MARIAS
The second phase of exploration at Dos Marias was completed by
Medinah between September 8 and October 16, 1998. The program was coordinated by House and
Howe Chile was retained to have a geologist on site during this period to assist in the
completion of the program. The exploration program consisted of the following:
 | a surveyed grid was established by the geophysical contractor, Geodatos (based out of
Santiago); the grid consisted of 6 east-west oriented, 1,000 metre long lines (lines 3 to
8), spaced 200 metres apart, with individual stations on each line spaced 100 metres apart
(see Figure 5.6)
|
 | an IP/resistivity survey was completed by Geodatos over the gridded area using a
dipole-dipole configuration; the survey covered a total of 6 line kilometres with dipole
length of 100 metres along the lines, and N spacing of 1 to 6 dipoles giving an effective
depth of exploration of approximately 200 metres; pseudosections of the resistivity, raw
phase and decoupled phase were presented in the report, and in addition the results were
inverted to give depth sections using Interpex software (RESIX 2DI); (Note: the individual
pseudo sections have not been reproduced by Howe for this report, but are well documented
in Geodatos, 1998, and in House, 1998c).
|
 | the adit into the manto style mineralization on the east side of the creek (see Plate
5.4) was mapped at a scale of approximately 1:500 using chain and compass method (raises
were not mapped due to unsafe conditions; no systematic sampling was completed as part of
the mapping, however two grab samples collected from a 27 centimetre wide "manto
horizon" and 20 to 30 centimetre wide underlying unit of magnetite rich siliceous
tuff, at the northeast corner of the mapped workings (see Figure 5.7), yielded 0.01grams
gold/tonne and 0.53% copper, and 0.12 grams gold/tonne and 0.33% copper, respectively
(House, 1999b).
|
 | the gridded area was geologically mapped at a scale of 1:10,000 (see Figure 5.6)
|
 | almost no surface sampling was completed as part of this exploration phase, however a
sample taken over an approximately 20 metre interval over one of the tailings pile in
front of the main adit, yielded 5.39 grams gold/tonne (Note: it is not stated if this is a
continuous channel sample, or a composite grab). |
(House, 1998c)
The results of the 1998 mapping program indicated that the property is
much more structurally and mineralogically complicated than originally thought. Two
distinct styles of gold and/or copper mineralization have been identified by Medinah at
Dos Marias:
- Shear zone hosted gold: this type of mineralization occurs in a 340º to 350º striking,
65º to 75º west dipping, 50 to 100 metre wide shear zone which can be traced over a
strike length of about 700 metres (traced through surface outcrops and extrapolated along
strike through IP/resistivity results). The strike of the shear roughly follows the base
of the Quebrada Durazno (see Figure 5.6). The dip of the shear zone cross-cuts the host
lithology, which dip gently east. Mineralization occurs as fine disseminated pyrite and
quartz-sulphide (pyrite-arsenopyrite) stringers, 2 to 5 centimetres wide, and spaced 15-25
centimetres apart, which is mainly hosted in siliceous and pyritic ash tuff and tuff, but
also in the underlying porphyritic andesite flows. The shear has been intruded by a
granodiorite dike at the southern end of the property which may have introduced, or
re-mobilized and enriched some of the gold mineralization. The shear zone remains open
both to the north and south (House, 1998c).
- Manto style copper mineralization: this type of mineralization consists of a series of
stratrabound, generally north striking, east dipping manto horizons, hosted within the
tuff horizons on the east side of the creek. The individual mantos are not more than a few
metres in thickness, but are vertically "stacked" throughout the stratigraphic
sequence. Mineralization consists of semi-massive to massive pyrite and chalcopyrite,
however many of the exposures are well oxidized and consist of varying copper oxides,
limonite, and iron oxides (House, 1998c).
In February 1999, the IP/resistivity data collected and processed by
Geodatos was reviewed by a second geophysical consulting firm in Santiago (PGW S.A.). The
results of their review roughly corresponded with the conclusions obtained from Geodatos.
The results of the geophysical survey indicated that the units on the west side of the
survey area are highly resistive and likely correlate with the porphyritic andesite unit
mapped by Medinah. The volcanic sequence in the middle of the survey area had a medium to
low resistive response. Several anomalous areas were uncovered during the survey:
 | the main anomalous area consists of polarized bodies located on all 6 lines between
stations 400 and 600. The report states that the anomaly occurs in the medium to low
resistive unit (volcanic sequence) at the contact with the highly resistive unit
(porphyritic andesite). The anomaly is best defined on lines 6 to 8, but here it may be
related to the granodiorite intrusive. Modeling indicates that the top of the anomaly is
shallow (less than 40 metres depth) on each of the sections.
|
 | a second anomaly occurs on Line 5 between stations 300 and 500. This anomaly occurs at a
very shallow depth and modeling shows it to have an east dip, similar to the manto style
mineralization which occurs in the area. |
(Ugalde, 1998)
At the conclusion of his report, House states that the granodiorite
dike may be related to both the manto style and shear zone hosted mineralization, however
the this relationship was not yet clearly defined. In addition, uncertainty remained
concerning the relationship between the three main stratigraphic sequences mapped on the
property (House,1998c).
House recommended that a program of diamond drilling be initiated,
testing the IP/resistivity anomalies obtained over the manto style, and shear zone hosted
gold mineralization. House suggested that 3 drill holes, located near Station 600 on lines
4 and 5, should be drilled to depths of at least 200 metres to intersect the full sequence
of manto mineralization. In addition, House recommended that at least two drill holes be
collared to intersect the shear zone and possibly the granodiorite dike at depth, on Line
4 about station 300. These holes should be drilled to a depth of at least 150 metres.
Finally, the intersection of the granodiorite dike and the shear zone between Lines 5 and
6, at stations 400 to 500, should be tested with at least 3 drill holes, each to a minimum
depth of about 200 metres. The approximate cost for this program, which included road
upgrading was estimated to be US$278,000
5.3.5 LAS DOS MARIAS - PHASE III
The third phase of exploration at Dos Marias took place between
March 30 and April 11, 1999 and consisted of a diamond drill program to test the anomalies
outlined by the IP/resistivity survey completed during Phase II (even though House
recommended that Medinah complete a drill program with at least 8 diamond drill holes, a
much smaller program was completed, presumably for budget reasons). The drill program
consisted of the following:
 | widening and general rehabilitation of the Lampa to Dos Marias access road.
|
 | a total of approximately 456 metres of diamond drilling in 2 drill holes which were
155.55 and 300.7 metres in depth, respectively (see Table 5.4 and Figures 5.6 and 5.8);
all drilling was completed by PerfoAndes S.A. from Chile using a Boyles 56 drill rig and
holes were collared vertically with HQ diameter core which was reduced to NQ at depths of
approximately 57 and 66 metres, respectively; none of the final collar coordinates were
surveyed and down hole deviation tests were not completed; at the end of each hole, PVC
tubing was left in the collar and a cement block placed around it
|
 | as a permanent marker (see Plate 5.7 ); based on the core reviewed by Howe, the core
recovery generally appeared very good (except in a few restricted areas of intense
faulting), however percent recovery logs were not included in the logs; all Medinah drill
logs are included in Appendix III of this report
|
 | a total of 314 half core samples, each 1 metre in length were taken from mineralized
sections of the core using a "hammer and wheel" style core splitter; samples
were collected by a trained student assistant, but under the supervision of House; once
labeled and bagged the samples were under the control of House at all times, until a
shipment was ready (about 50 to 100 samples) and then these were taken by Medinah directly
to the laboratory for analysis; the remaining unsplit and halved core is stored in a
secure locked storage facility in Santiago (see Plate 5.6);
all samples were analysed at ACME Analytical Laboratories S.A. ("ACME") in
Santiago for gold by 30 gram fire assay and copper by AAS. The pulps were then shipped
directly by ACME to their associated laboratory in Vancouver, Canada where they were
further analysed for 30 elements by ICP method; as part of their in-house quality
assurance program, ACME reported the results of their own blank, standard, and duplicate
samples on the assay certificates (a full list of the ACME assay certificates were
included as Appendix III in House, 1999b, and therefore have not been reproduced by Howe,
however a list of the certificate numbers included in Houses report are shown in
Appendix IV of this report); approximate general | |