43-101 2008 Technical Report On The La Fortuna Project, Durango ...

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4.0 GEOLOGICAL SETTING 4.1 REGIONAL GEOLOGY The Property lies within the Altiplano Subprovince of the Sierra Madre Occidental (“SMO”) (Consejo de Recursos Minerales, 1993). The SMO is a regionally extensive Eocene to Miocene volcanic field, which extends southeast from the U.S-Mexico border to Central Mexico. The Altiplano Subprovince is on the east flank the SMO and is comprised of Jurassic to Late Tertiary sedimentary and volcanic rocks. The oldest rocks in the El Castillo region are Late Cretaceous siltstones, sandstones and limestones of the Indidura and Caracol formations (Table 6), which, crop out in the incised stream valleys at El Castillo. These sedimentary rocks commonly occur as small windows in the younger volcanics and further east as prominent northwest-trending ranges. This sedimentary sequence is unconformably overlain by a thick package of Tertiary volcanic rocks, which characterizes the SMO. The package is comprised of an older andesite-dominated series and a younger pyroclastic-dominated rhyolite series. The traditional nomenclature refers to these as the “Serie Volcanica Inferior” (Lower Volcanic Series), and the “Serie Volcanica Superior” (Upper Volcanic Series) respectively. The Lower Series in the SMO reaches a thickness of 1,000 m and is dominated by Paleocene and Eocene andesitic lava and pyroclastic rocks with interbedded volcaniclastic strata. Extensive outcroppings of this andesite unit are located near San Lucas de Ocampo, approximately 20 km southwest of El Castillo. The Lower Series is cut by calc-alkaline intrusives that typically occur as dacite-rhyodacite domes, sills and dykes. These intrusive units are exposed in the road cuts at El Castillo and in a large dome field near the village of San Agustín. The Upper Series unconformably overlies the Lower Series and is up to 1,000 m thick. The Upper Series forms a regionally extensive cap throughout the SMO and is dominated by Oligocene and Early Miocene dacite-rhyolite pyroclastic strata. Precious metal deposits are abundant in the Lower Series, however, the Upper Series is mostly devoid of precious metal mineralization with the exception of the Cienaga Mine, operated by Peñoles, in northwestern Durango. Table 6. General stratigraphy of the El Castillo area. ERA PERIOD EPOCH ROCK TYPE FORMATION Alluvium RECENT QUATERNARY Volcanic agglomerate PLEISTOCENE Basalt Metates PLIOCENE Upper Series TERTIARY MIOCENE Rhyolite, ignimbrites Volcanics OLIGOCENE Rhyolite tuff Upper Series Volcanic EOCENE Andesite, porphyritic with Lower Series hornblende Volcanics CENOZIOC PALEOCENE Andesite Lower Series Volcanic MESOZOIC CRETACEOUS Siltstone, sandstone, limestone Indidura, Caracol The prominent structural trend in the region is northwest and is delineated by northwest-trending basin and range (horst and graben) topography with ranges of both sedimentary and volcanic rocks. The ranges 16
commonly reach elevations of 2,500 m above mean sea level (amsl) and valleys vary from 1,500 m to 1,800 m amsl. Northwest-trending range front faults, such as the Rodeo Fault, are common and east-west trending faults are found locally. The El Castillo Project is regionally associated with the intersection of the Rodeo Fault and a secondary east-west trending fault. The Sierra Madre Occidental is recognized as a gold-copper metallogenic province with potential for porphyry copper-gold mineralization and epithermal gold mineralization related to areas of Tertiary volcanic and subvolcanic intrusive activity. 4.2 PROPERTY GEOLOGY The El Castillo property is underlain by massive to porphyritic andesitic rocks of the Tertiary Lower Series Volcanics. These rocks have been intruded by dacite porphyry sills and dikes. The Lower Series Volcanics are unconformably overlain by felsic ignimbrites of the Upper Series Volcanics and Quaternary to recent rhyolite, conglomerate, and alluvium (Figure 3 and Figure 4). The rocks of the Lower Volcanic Series strike in a northwesterly direction and dip 40 to 75 degrees to the northeast in the immediate vicinity of the El Castillo Project. An orthogonal set of faults has been mapped on the Property; a northwest striking set related to the regional horst and graben basin and range structures and a northeast striking set. Complex offsetting relationships between the two fault sets suggest that they are contemporaneous. 17
Page 1 and 2: TECHNICAL REPORT ON THE EL CASTILLO
Page 3 and 4: SUMMARY Introduction At the request
Page 5 and 6: Castillo Remaining Mineral Resource
Page 7 and 8: Undiluted Reserves at $550 per Ounc
Page 9 and 10: epresent an incremental increase in
Page 11 and 12: TABLE OF CONTENTS 1.0 INTRODUCTION
Page 13 and 14: Table 4. Driving distances from Dur
Page 15 and 16: Castle Gold has accepted that the q
Page 17 and 18: 2.0 PROPERTY DESCRIPTION, LOCATION,
Page 19 and 20: Figure 2. Map showing mining conces
Page 21 and 22: 2.1.2.3 Property Taxes The property
Page 23 and 24: Table 5. Maximum precipitation in a
Page 25: 3.0 HISTORY The El Castillo Project
Page 29 and 30: Figure 4. Cross-section through the
Page 31 and 32: At El Castillo, the presence of cha
Page 33 and 34: Toward the center of the mineralize
Page 35 and 36: 7.0 EXPLORATION In 2006, Castle Gol
Page 37 and 38: 9.0 SAMPLING METHOD AND APPROACH Th
Page 39 and 40: 11.0 DATA VERIFICATION 11.1 INTRODU
Page 41 and 42: Morgain Minerals Inc. El Cairo Gold
Page 43 and 44: 13.0 MINERAL PROCESSING AND METALLU
Page 45 and 46: Table 9. Castle Gold test heap leac
Page 47 and 48: material is relatively consistent a
Page 49 and 50: Plate 6. View of the El Castillo si
Page 51 and 52: 14.2.1 Methods A shift of -500,000
Page 53 and 54: 14.2.4 Pit Optimization Parameters
Page 55 and 56: Undiluted Reserves at $600 per Ounc
Page 57 and 58: Table 13. Comparison of Howe 2003 a
Page 59 and 60: 15.2.2 Change of Land Use The Compa
Page 61 and 62: 16.2.1 Capital and Operating Cost E
Page 63 and 64: Table 15. Operating Cost Summary (U
Page 65 and 66: will be operating the mine indirect
Page 67: Table 17. Sensitivity Analysis - Gr
Page 70 and 71: 16.2.2 Economic Evaluation The Base
Page 72 and 73: Table 23. US$ - Mexican Peso Exchan
Page 74 and 75: • Castle Gold should complete geo
Page 76 and 77:
Panteleyev, A., 1996, Epithermal Au
Page 78 and 79:
9. To the best of my knowledge, inf
Page 80 and 81:
CERTIFICATE OF AUTHOR dated July 31
Page 82 and 83:
Appendix A Pit Optimization Level P
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