La Juanita Project

The La Juanita project is located in the East part of the Deseado Massif, at 65 km to the north of the Tres Cerros locality, along national road 3, and at about 30 km north of the Don Nicolas Au-Ag mine. The mineral rights are secured by four mining properties that cover an area of 3350 ha.

The project is dominated by markedly different lithologies. In the western sector (west of road 3), Jurassic igneous rocks dominate; those include granitoids from the La Leona Formation and volcanic rocks from the Chon Aike Formation (ignimbrites and rhyolitic domes), as well as several volcanic dikes of andesitic composition. In the eastern sector, sandstones of the La Golondrina and La Juanita Formations (Permic), and a few granitoids (Jurassic) are the dominant rocks. In addition, large part of the eastern sector, is covered by relatively thin gravel plains.

Fomicruz has focused the exploration efforts in the eastern sector of the project, where several quartz veins were detected. The two largest veins, named Vein 1 and Vein 2, are hosted by permic rocks of the La Juanita and La Golondrina Formations, and are composed of white massive quartz and gray fine-grained silica. Vein 1 is oriented with an azimuth of 80º, and dips to the NNW; it is about 300 m long and up to 3.5 m wide; this vein includes scarce sulfides, predominantly pyrite and chalcopyrite, but also arsenopyrite and galena. Vein 2 shows a general orientation of 110º, it is almost 500 m long (discontinuous at surface) and reaches 0.4 m wide; locally, this vein includes abundant pyrite and probably arsenopyrite, and it shows boxwork with limonites and jarosite. Both veins show anomalous concentrations of gold.

The exploratory work executed by Fomicruz included geological mapping, rock and lag geochemical surveys, magnetometry, rock sampling for determination of alteration minerals, and drilling of eight diamond boreholes.

At surface, Vein 1 showed gold concentrations of up to 0.32 g/t, while Vein 2 showed Au concentrations of up to 2.59 g/t. The concentrations of Ag are anomalous, slightly above 20 g/t. The lag geochemical survey, consisted of a pilot test over an area of 400 by 500 m, including outcrops of Vein 2. Results from this test helped to infer the optimal separation of samples, the best indicator elements, and other parameters that should be considered if carrying out a wider survey to discover other veins like Vein 2.

The magnetometric survey covered and area of approximately 8.5 km2 in the eastern part of the project. A preliminary evaluation of the collected magnetic data seems to indicate that the areas of veins with altered host rocks may be inferred from some products of processing the magnetic data; however, that still have to be better interpreted. Magnetometry is a potentially useful method of exploration for the project, because 35 to 40 % of the eastern sector is covered by young sediments, and thus, this geophysical method may reveal the locations of veins masked by the sediments.

In 2014, eight diamond boreholes (555 m) were drilled in the La Juanita project, to test the continuity of the veins at depth as well as their dip and dip direction, and to determine the contents of elements in comparison to those at surface.

Five boreholes were drilled in Vein 1 (371 m) and three in Vein 2 (184 m), showing that Vein 1 is continuous up to at least 50 m of vertical depth, and its estimated vein dip is 56º NNW, while Vein 2 is continuous up to at least 25 m of vertical depth and its dip varies from 50º to 70º NNE, depending on the investigated portion of the vein. The veins thickness at the investigated depths are similar than at surface; and in both veins, the maximum concentrations of Au are higher at depth than at surface (0.57 vs 0.32 g/t Au in vein 1, and 3.93 vs 2.59 g/t Au in vein 2).

Fomicruz’s geologists think that the eastern sector of the project shows potential for discovery of more mineralized rocks at depth in the known veins, as well as for discovery of new veins, that may be covered and masked by the young gravel plains. In addition, the western sector, which is almost unexplored by the Company, conveys potential for discovery of mineralized rocks in rhyolitic volcanic domes and breccias.