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The following are selected excerpts from the June 19, 2000
Howe Chile Limitada report on the Alto de Lipangue and Los
Dos Marias 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. 0029
Howe Chile Limitada
(A.C.A Howe International Limited South American Office)
La Serena, Chile
Robert Cinits, P.Geo.
June 19, 2000
TABLE
OF CONTENTS
SUMMARY
1.0
INTRODUCTION
- General
- Terms of Reference
- Scope, Sources of
Information, and Disclaimer
- Units and Currency
2.0
LOCATION, ACCESS AND PROPERTY DESCRIPTION
2.1
Location and Access
2.2 Geography and Climate
2.3 Property Description and Current Status
2.4 Acquisition & Maintenance of Mineral Rights
in Chile
3.0
CHILE
3.0 CHILE
3.1 Introduction
3.2 Geography
3.3 Climate, Vegetation and Drainage
3.4 Demography
3.5 Business Investment Climate in Chile
3.6 Mineral Resources of Chile
3.6.1 Gold and Copper Production in Chile
4.0
GEOLOGICAL SETTING
4.1 Tectonic
Setting of Central and Northern Chile
5.0
HISTORY
5.0 HISTORY
5.1 Lipangue Property History and Previous Exploration
Work
5.2 Las Dos Marias Property History Previous Exploration
Work
5.3 Medinah Exploration Program - Lipangue
5.3.1 Phase I Reconnaissance Over the Lipangue (and
Dos Marias)
6.0
PROPERTY GEOLOGY AND MINERALIZATION
6.0 PROPERTY
GEOLOGY AND MINERALIZATION
6.1 Lipangue Property Geology
6.1.1 Lipangue Property Mineralization
6.1.1.1 Lipangue Breccia
6.1.1.2 Quartz Vein Mineralization
6.1.1.3 Howe Verification Sampling
6.2 Las Dos Marias Property Geology
6.2.1 Las Dos Marias Property Mineralization
6.2.1.1 Shear Zone Hosted Gold Mineralization
6.2.1.2 Manto Style Copper Mineralization
6.2.1.3 Howe Verification Sampling
7.0
CONCLUSIONS AND RECOMMENDATIONS
7.0 CONCLUSIONS
AND RECOMMENDATIONS
7.1 Conclusions
7.2 Recommendations
7.2.1 Lipangue Property
7.2.2 Las Dos Marias Property
8.0
PROPOSED BUDGET
8.0 PROPOSED
BUDGET
8.1 Lipangue Property
8.2 Las Dos Marias Property
SOURCES
OF INFORMATION
CERTIFICATE
SUMMARY
At the
request of Mr. Gregory Chapin, 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 a wholly owned subsidiary of Howe International Consulting
Ltd, and 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 Gold-Copper-Silver,
and Dos Marias Gold+/-Copper Properties. The properties are
located in the Metropolitan Region of Chile, approximately
30 kilometres northwest of Santiago.
Howe
was retained by Medinah on March 28, 2000 with the terms of
reference for this assignment consisting of the preparation
of a qualifying geological report complying with Canadian
reporting guidelines as set out in proposed National Instrument
43-101 (scheduled to replace National Policy 2A), covering
the mineral potential of the Lipangue and Las Dos Marias Properties.
This report will update and replace a previously prepared
Howe report (Geological Report on the Lipangue and Las Dos
Marias Gold-Copper Properties, Howe Chile Limitada Report
#0025, August 2, 1999). It is Howes understanding that
this report is required by Medinah in support of a financing
with the NASDAQ-OTC Stock Exchange.
The Lipangue
Property consists of a total of 5 claims (3 mensuras and 2
manifestacions) 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,
through their wholly owned Chilean subsidiary Medinah Mining
Chile, and were acquired by Medinah through a purchase agreement
with the previous owner, Juan Jose Quijano ("Quijano"),
which became effective on April 23, 1999. Medinah has recently
purchased a pre-existing royalty commitment from Quijano for
preferred shares of Medinah and retains the right to re-purchase
50% of these shares for future financings.
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 pipe.
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.
The
Phase III work program 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
Phase IV work program, the most recent phase of exploration,
took place between August 1999 and April, 2000 and consisted
of fill-in grid lines that were covered by an second IP/resistivity
survey, geological mapping, and 1,181 metres of diamond
drilling in 5 holes, all designed to further outline the
Lipangue breccia. By the end of this most recent phase of
exploration work, Medinah had outlined the surface extent
of the breccia which occurs as an east-west elongate, ovoid
shaped body that outcrops in trenches over an area measuring
roughly 150 to 200 metres (east-west) and up to 100 metres
wide. The drilling has traced the breccia 100 metres along
strike and 250 metres down its apparent dip to the south,
where it has continually averaged between 50 and 75 metres
in thickness.
Surface
exposures of the breccia are heavily oxidized and consist
of rounded to subangular clasts of intensely altered granodiorite,
cemented by a matrix 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 it steeply plunges
to the east southeast and consists of rounded and sub-angular
clast and matrix supported fragments of altered granodiorite
(varying amounts of fine disseminated and coarse "earthy"
chlorite, along with sericite, silica, clay +/-pyrophyllite
and alunite?). The fragments are set in a matrix of finer
grained fragments and flour, along with coarse crystalline
vuggy quartz, 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 and the most intense sulphide mineralization
usually occurs near the hanging wall contact.
Even
though the two drilling programs by Medinah have been completed
over a fairly restricted area, with all of the 12 holes
occurring within a 350 metres radius of each other, nine
of these holes have intersected significant thickness of
variably altered and mineralized breccia. These nine holes
that intersected the breccia have been drilled on 4, north-south
oriented, irregular spaced sections (separated by 25 to
50 metres) which cover a 100 metre east-west distance. Two
of the early holes from the first drill program were collared
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) indicates that
an eastward plunging polarized body continues another 400
metres east of the known surface extent of the breccia,
and that the top of the breccia could be as deep as 120
metres by this point. The breccia may have a strong east
to east northeast structural control, and therefore could
evolve into a narrower breccia-dike or brecciated fault
much further to the east.
The
5 drill holes along section E crossed the breccia at its
widest point where it continually averaged between 50 and
75 metres in width, and was traced down a 60º south
apparent dip for about 250 metres where it remains open
at depth.
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:
Drill
hole L99-03
 |
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
|
Drill
hole L99-05
 |
0.23 grams gold/tonne,
1.35 grams silver/tonne, and 0.07 % copper across 40
metres and,
|
 |
0.47 grams gold/tonne,
2.11 grams silver/tonne, and 0.10% copper across 24
metres
|
Drill
hole L99-06
 |
0.60 grams gold/tonne,
13.7 grams silver/tonne, and 0.39% copper across 154
metres
|
Drill
hole L99-07
 |
0.49 grams gold/tonne,
9.68 grams silver/tonne, and 0.31% copper across 124
metres
|
Drill
hole L99-08
 |
3.83 grams gold/tonne,
27.2 grams silver/tonne, and 0.40 % copper across 56
metres (which includes several higher grade sections
including 3 metres grading 15.61 grams gold/tonne, 99.56
grams silver/tonne, and 0.90 % copper, and 9 metres
grading 14.76 grams gold/tonne, 56.9 grams silver/tonne,
and 1.01 % copper
|
Drill
hole L00-09
 |
5.93 grams gold/tonne,
23.6 grams silver/tonne, and 0.81% copper across 6 metres,
|
Drill
hole L00-11
 |
0.23 grams gold/tonne,
3.47 grams silver/tonne, and 0.17 % copper across 12
metres
and,
|
 |
0.22 grams gold/tonne,
0.66 grams silver/tonne, and 0.06 % copper across 9
metres
|
Drill
hole L00-12
 |
0.33 grams gold/tonne,
3.06 grams silver/tonne, and 0.07 % copper across 11
metres
and,
|
 |
0.56 grams gold/tonne,
2.33 grams silver/tonne, and 0.14 % copper across 28
metres
|
An
approximately 20 metre wide zone of higher grade mineralization
occurs at, or close to the hanging wall contact with the
granodiorite on most sections. Section E, having the most
drill hole information has traced the high grade zone from
just below the oxidation level to a depth of 225 metres
down the apparent dip of the breccia. This same high grade
zone also appears on sections E+25*, and E+50. Significant
weighted averages across this zone include:
SECTION
E
Drill
hole L99-03
 |
2.59 grams gold/tonne,
20.84 grams silver/tonne, and 0.85 % copper across 29
metres
|
Drill
hole L99-06
 |
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
|
Drill
hole L99-07
 |
1.26 grams gold/tonne,
18.11 grams silver/tonne, and 0.49 % copper across 28
metres
|
Drill
hole L99-08
 |
6.49 grams gold/tonne,
10.07 grams silver/tonne, and 0.63 % copper across 32
metres
|
SECTION
E+25
Drill
hole L99-05
 |
7.92 grams gold/tonne,
23.42 grams silver/tonne, and 0.86 % copper across 10
metres*
|
SECTION
E+50
Drill
hole L99-12
 |
2.23 grams gold/tonne,
16.16 grams silver/tonne, and 0.55 % copper across 25
metres
|
*In
hole L99-05, the high grade zone was hosted in a zone of
intensely "chloritized and magnetite-rich granodiorite"
in the hanging wall of the breccia. The location of this
zone correlates with the high grade zones on sections E
and E+50 and indicates that this may be a continuous mineralized
sheet, however more drilling will be required in this area
to the actual geometry of the high grade zone.
The
western boundary of the breccia has been roughly defined
by drill holes P00-09 and 10, on Section DE+50 as an undulating
contact that roughly follows the southeast dipping andesite-granodiorite
contact. Hole P00-09 just clipped the western edge of the
breccia, intersecting a narrow, but high grade interval
that yielded 5.93 grams gold/tonne, 23.6 grams silver/tonne,
and 0.81% copper across 6 metres. Hole P00-10, which was
drilled about 60 metres up the projected apparent dip of
the breccia, missed it, probably drilling just west of its
contact. However, a strong IP anomaly returned from the
recent survey indicates that the breccia could occur below
(and possibly widen), and to the west of hole P00-09, at
about 200 metres depth. More drilling will be needed to
accurately determine the western extent of the breccia.
The
breccia remains completely open to the east, and down plunge.
Even though to date 9 holes have intersected 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.
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, and should
be considered a lower priority target. 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 are usually very narrow, but 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
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, and the main exploration target
on the property has been a 340º to 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.
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. Both holes yielded positive results
and warranted a follow-up drill program.
Phase
IV, the most recent phase of exploration, took place between
September 22, 1999 and March 29, 2000 and consisted of gridding,
geological mapping, and a CSAMT geophysical survey, and
3 additional diamond drill holes.
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 skarnified
limestone units with the volcanic unit are host to several
disseminated to massive copper skarn replacement lenses
which were lightly exploited in the past.
The
shear zone 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,
collected by Howe in 1999 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
|
The
strongest, and best mineralized portions of the shear zone
appear to be hosted in the eastern, or foot wall portions,
and the intensity and gold grades appear to drop in the
hanging wall sections. Even though 5 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
two drill programs yielded several anomalous weighted averaged
values including:
DM99-01
 |
6.48 grams gold/tonne
across 2 metres ( between 11 and 13 metres)
|
 |
0.64 grams gold/tonne
across 6 metres (between 23.5 and 29.5 metres)
|
 |
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)
|
 |
0.48 grams gold/tonne
across 10 metres (between 70 and 80 metres)
|
 |
0.36 grams gold/tonne
across 23 metre (between 150 and 173 metres)
|
DM00-03
 |
0.80 grams gold/tonne
across 10 metres (between 177 and 187 metres)
|
 |
1.49 grams gold/tonne
across 3 metres (between 178 and 181 metres)
|
DM00-04
 |
1.81 grams gold/tonne
across 1 metre (between 57 and 58 metres)
|
 |
0.30 grams gold/tonne
across 6 metres (between 67 and 73 metres)
|
 |
0.35 grams gold/tonne
across 6 metres (between 79 and 85 metres)
|
 |
0.39 grams gold/tonne
across 8 metres (between 93 and 101 metres)
|
 |
0.52 grams gold/tonne
across 13 metres (between 128 and 141 metres)
|
 |
0.41 grams gold/tonne
across 4 metres (between 164 and 168 metres)
|
DM00-05
(and 5a)
 |
0.73 grams gold/tonne
across 4 metres (between 127 and 131 metres)
|
 |
0.48 grams gold/tonne
across 9 metres (between 160 and 169 metres)
|
The
two 1999 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 footwall 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.
Based
on the results of these two holes it was decided to test
the full width of the shear zone, with holes DM00-03, 04,
and 05 drilling from the west to the east and intersecting
the high grade zones, below the two earlier holes. The results
of the second drilling programs were disappointing, especially
since the high grade gold zone intersected in hole DM99-02
could not be traced to depth. The drilling did confirm that
the shear zone has a significant width of 150 metres, and
that 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. Gold grades are only weakly
anomalous across the shear zone and localized in a few zones
with weakly anomalous values.
The
5 holes completed to date over Dos Marias have not been
successful in locating a wide, low grade, bulk mineable
gold target that Medinah was hoping for, and it now appears
that the property is much more structurally complicated
that originally believed. Recent geological mapping by House
substantiates the complex structure where numerous new faults
and shears have been located at oblique angles to the main
shearing direction. The mapping also determined that many
of the auriferous structures in the northern portion of
the shear zone are aligned along a 50º orientation, and
not subparallel to the trend of the main shear zone as originally
believed. This could imply that the drilling may have been
oriented subparallel to, therefore missing a significant
portion of, the main gold bearing structures at Dos Marias.
This oblique angle is not uncommon in shear zone related
deposits worldwide as the principal gold accumulation can
often be found in several structural sites, including: obliquely
oriented tension gash type veins; zones of bifurcation within,
or splays off of, the main shear; or at points where the
main shear is intersected by oblique angled faults, etc.
The area should be carefully re-mapped in detail with a
strong emphasis placed upon the structural relationship
between gold mineralization and the shear zone, prior to
commencing further drill programs.
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 two visits 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. Howe also visited the core storage facilities in both
Santiago and Lampa where several representative intervals
of core from both properties, through both mineralized and
barren sections, were reviewed by Howe. Several quarter core
samples were collected by Howe which repeat intervals that
were previously split and analysed by Medinah. In total, 30
confirmation type samples were collected from the two properties
(18 from Lipangue and 12 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 property contains the Lipangue polymetallic breccia
pipe which represents an excellent target to host underground,
bulk mineable, gold-copper-silver mineralization. This target
remains open to the east and down plunge, and could become
much larger in extent as Medinah traces it in these directions.
The breccia is still in the earliest stages of drill definition
and Medinah believes that with a minimal exploration program
the potential size of this target can be substantially increased.
Other parts of the Lipangue Property have only been reviewed
on a preliminary basis, or not at all, and these should be
further explored, since the potential exists for additional
breccia style mineralization. Howe concurs with this target
objective.
The
Dos Marias Property, hosts an early stage, grass roots shear
zone hosted gold prospect and stratabound or manto replacement
skarn copper mineralization. Recent drilling into the shear
zone hosted gold target has returned mixed results, however
a new geological map by Medinah indicates that structure of
the property is much more complex that originally believed
and that the main gold bearing structures may actually be
oriented in oblique to the main shear zone, which is subparallel
to the direction of the recent drilling. The property hosts
areas of strong pervasive alteration, and indications of numerous
old mining operations and based on this Medinah believes that
it warrants an re-evaluation of the gold potential. The manto
replacement copper skarn mineralization remains untested.
Medinahs
land position is secure in both properties, 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, results driven program be conducted
in order to further assess the large tonnage, bulk mineable,
breccia hosted gold-copper-silver potential over the Lipangue
Property. The total cost for Phases I (US$482,900)
and II (US$800,250) is approximately US$1,300,000.
Howe
also recommends that a two phase, results driven program be
conducted in order to assess the vein style, and shear zone
hosted gold mineralization and copper skarn replacement mineralization
over the Dos Marias Property. The total cost for Phase
I (US$89,760) and II (US$169,400) is approximately US$260,000.
1.0
INTRODUCTION
1.1
GENERAL
At the
request of Mr. Gregory Chapin, 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"),
was retained to review the recent phase of exploration completed
to date over the Lipangue and Las Dos Marias ("Dos Marias")
Gold-Copper Properties. The two properties are located within
two kilometres of each other, within the Metropolitan Region
of Chile, approximately 30 kilometres northwest of Santiago.
The Lipangue
Property consists of 5 individual mining claims which together
cover an area of 1,363 hectares. The Las Dos Marias property
consists of 1 mining claim which covers approximately 130
hectares. Both are held 100% by Medinah, through their wholly
owned Chilean subsidiary Medinah Mining Chile.
1.2
TERMS OF REFERENCE
Howe
was retained by Medinah on March 28, 2000 with the terms of
reference for this assignment consisting of the preparation
of a qualifying geological report complying with Canadian
reporting guidelines as set out in proposed National Instrument
43-101 (scheduled to replace National Policy 2A), covering
the mineral potential of the Lipangue and Las Dos Marias Properties.
This report will update and replace a previously prepared
Howe report (Geological Report on the Lipangue and Las Dos
Marias Gold-Copper Properties, Howe Chile Limitada Report
#0025, August 2, 1999). It is Howes understanding that
this report is required by Medinah in support of a financing
with the NASDAQ-OTC Stock Exchange.
Howe
Chile is a wholly owned subsidiary of Howe International Consulting
Limited and part of the A.C.A Howe International Limited group
of companies which offer geological, geophysical, and mining
consulting services to the international mining industry,
including geological, evaluation and valuation reports on
mineral properties. The firm was incorporated in the Province
of Ontario, Canada in 1966 and has continuously operated under
a "Certificate of Authorization" to practice as
Professional Engineers (Ontario) since 1970. The firms
services are provided through offices in Toronto, Canada,
Denver, USA, London, England, and La Serena, Chile. Howes
La Serena office was opened in 1996. Howe is not an insider,
associate or affiliate of Medinah.
The geological
report on the Lipangue and Las Dos Marias Properties was prepared
by Robert Cinits, P.Geo. currently acting as the General Manager
of Howe Chile Limitada. Mr. Cinits has more than 15 years
experience in the mining industry, and has most recently worked
on projects in Chile, Peru, Argentina, Brazil, Colombia, Ecuador,
Honduras, and Costa Rica. Mr. Cinits has prepared numerous
qualifying reports and valuations for various Canadian, American,
and British stock exchanges.
1.3
SCOPE, SOURCES OF INFORMATION AND DISCLAIMER
In preparing
this report, Howe relied on geological reports and maps, miscellaneous
technical papers, published government reports and historical
documents listed in the "Selected References" section
at the conclusion of this report, public information and Howes
experience. In addition, on April 7, 2000 Mr. Cinits visited
both the Lipangue and Las Dos Marias Properties. During this
period the drill sites of each of the recently completed diamond
drill holes were visited. Between April 7 and 8, 2000 Howe
remained at the Medinah field office in Lampa where diamond
drill core from the recent drill programs over the Lipangue
and Las Dos Marias Properties are stored. Representative sections
of several of the drill holes from each property were reviewed
and independent confirmation samples taken. This visit was
complimented by background knowledge gained during an earlier
trip to the site and to Medinahs core storage facility
in Santiago by Mr. Cinits between June 16 and 17, 1999 and
on July 14, 1999 (see Cinits, 1999).
Howe
has only reviewed the land tenure in a preliminary fashion
and has not independently verified the legal status or ownership
of the properties or underlying option agreements.
The results
and opinions expressed in this report are based on Howes
field observations and the geotechnical data listed in the
"Sources of Information". While Howe has carefully
reviewed all of the information provided by Medinah as listed
in the sources of information, and believe they are reliable,
Howe has not conducted an in-depth independent investigation
to verify its accuracy and completeness.
The results
and opinions expressed in this report are conditional upon
the aforementioned geological and legal information being
current, accurate, and complete as of the date of this report,
and that no information has been withheld which would affect
the conclusions made herein. Howe reserves the right, but
will not be obliged to revise our report and conclusions if
additional information becomes known to us subsequent to the
date of this report. Howe does not assume responsibility for
Medinahs actions in distributing this report.
During
the 1999 and 2000 field examinations of the Lipangue and Dos
Marias Properties a number of samples were independently collected
by the author and submitted to ITS (Bondar-Clegg) Laboratories
in La Serena, Chile and ALS-Geolab (Chemex) laboratories Santiago,
Chile. The results of these samples are included in this report.
1.4
UNITS AND CURRENCY
All measurement
units used in this report are metric and currency in US dollars
unless stated otherwise. The currency used in Chile is the
Peso. The exchange rate as of June 4, 2000 is $US 1.00 is
equal to approximately 503 Pesos.
2.0
LOCATION, ACCESS AND PROPERTY DESCRIPTION
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.
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.
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.
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.
2. GEOGRAPHY
AND CLIMATE
The Lipangue
and Dos Marias Properties are situated within a few kilometres
of each other in the coastal range mountains. The Lipangue
Property covers the majority of the Altos de Lipangue Plateau
except for the easternmost edge, which has an average elevation
of almost 2,000 metres. The northeast oriented gently rolling
plateau crosses the central third of the property dropping
steeply off in the northern and southern thirds of the property
down to elevations of 1,500 and 1,200 metres, respectively.
The Dos
Marias Property is located along the western slope of the
plateau where elevations range between 1,150 and 1,550 metres.
The north trending Quebrada Durazno runs through the middle
of the property. Both properties are covered by low shrubs,
cactus, tough grasses, and rare small trees. Local farmers
use the area for summer grazing of cattle, horses and goats.
The property
areas have a Mediterranean type of climate with cool and rainy
winters (April to September) and dry hot summers. The average
temperatures for the hottest (January) and coldest (July)
months at Santiago are 20ºC and 8º C, respectively. The average
annual precipitation at Santiago is approximately 381mm. Snow
is extremely rare around Santiago, however it is known to
occur at the higher elevations of the property area.
2.3
PROPERTY DESCRIPTIONS AND CURRENT STATUS
The Lipangue
Property consists of a total of 5 contiguous claims covering
approximately 1,363 hectares. Of these claims, three are registered
as "mensuras" (mining claims) in the name of Juan
Jose Quijano and together cover a total of approximately 763
hectares; and two are "manifestacions" (application
stage for a mining claim) which were staked by Medinah at
the end of the last drilling phase and which cover an area
of approximately 600 hectares. The property extends roughly
3,000 metres in a north-south direction and 900 metres east-west.
Table
2.1: Lipangue Claims
|
Claim
Type
|
Claim
Name
|
Area
(hectares)
|
|
Mensura
|
Lo
Amarillo 1-72
|
288
|
|
Mensura
|
Millalelfun
1-55
|
275
|
|
Mensura
|
Amparo
1-40
|
200
|
|
Manifestacion
|
Gordon
1-60
|
300
|
|
Manifestacion
|
Gordon
61-120
|
300
|
The Dos
Marias property consists of one "mensura" (mining
claim), which covers a total of roughly 130 hectares, and
is registered in the name of Juan Jose Quijano. This property
extends approximately 1,750 metres in a northwest direction,
and 750 metres northeast-southwest.
Both
the Lipangue and Dos Marias properties are currently held
100% by Medinah, through their wholly owned Chilean subsidiary,
Sociedad Contractual Minera Medinah Mining, Chile ("Medinah
Mining, Chile") and were acquired by Medinah through
a purchase agreement with the previous owner, Juan Jose Quijano
("Quijano"), which became effective on April 23,
1999. Medinah has purchased a pre-existing royalty commitment
from Quijano for preferred shares of Medinah and retains the
right to re-purchase 50% of these shares for future financings.
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 ex |