The Santiago gold project is situated about 150 km to the north of the city of Durango (population 450,000), 34 km ENE of the small town of Santiago Papasquiaro (population 28,000) and 26 km north of the village of Nuevo Ideal (see Fig. 1-3 below). The prospect area can be reached from Durango by 158 km of paved road until the village of Santa Teresa; from here the access continues in easterly direction on 27 km of dirt road in good conditions until the small village El Encinal. In the last 22 km from El Encinal to the mine the dirt road climbs up into the mountains, this road is partly in really bad conditions, but can be passed without problems with a cross-country vehicle. The total required driving time from Durango to the mine is about four hours.

The project is situated in the mountain range “Sierra San Francisco” (see Fig 2 & 3).

Abandoned historic mines and numerous smaller Au prospects occur throughout the entire mountain range at altitudes between 2000 and 3100 m above sea level. The famous historic “Promontorio” mining camp, located 7 km north of the Santiago project, was one of the most important Mexican silver and gold producer between 1880 and 1946. Pine and oak trees dominate the vegetation in this region. The rain season is from about June to October. Most of the Au occurrences in the project area are found along the “La Perla” creek. Within the property this stream has running water only during the month July to January; however further east at lower elevation there is water all year round. The nearest settlements are the small villages of La Campana and El Salvador, both are located about 7.5 km in bee-line to the SW of the Santiago project. Electricity is available in both villages. Between the village El Salvador and the project exists an only 12 km long dirt road, which is currently not accessible for vehicles. Rehabilitation of this road would shorten the time of access by about 45 minutes. Regional Geology: The Sierra San Francisco mountain range is dominated by two distinct volcanic sequences (see Fig. 4). The older sequence constitutes the host rock for epithermal Au-Ag and base metal mineralization and is also denominated as “Lower Volcanic Sequence”. At its base this sequence (age roughly between 25 and 50 Ma) is composed mainly of andesitic and dacitic flows and tuff. These are overlain by a several hundred meter thick succession of rhyodacitic ignimbrite with minor intercalated andesite. There occur several sites with plugs, domes and dikes of rhyodacite. Some of these volcanic centers might be related to Au-Ag mineralization, however further field-work is required. A small outcrop of fine-grained diorite of unknown age is located 5 km SE of the project area, it is host to another Au vein system (La Fortuna). Following the mineralizing event (probably around 30 Ma ago) locally the “old conglomerate” (up to 40 m thick) and the Upper Volcanic Sequence were deposited on a steep erosional paleo-surface. The Upper Volcanic Sequence comprises pumice-rich rhyolitic tuff, ignimbrite and locally flow domes and flows of lava and obsidian. Tin mineralization with associated topaz occurs especially in and around rhyolite domes. In Fig 4 is shown also a structural interpretation for the entire region. Most of the shown faults developed already before the mineralizing epithermal event, and many of them were reactivated during and after mineralization. Faults with considerable post-mineral vertical displacement are found on the SW and NE margin of the uplifted Sierra San Francisco block (Western Range & Eastern Range faults). A major regional, ENE-WSW trending fault, the Bella Vista fault, passes through the project area. Structural field investigation demonstrated an E-W extensional stress during the mineralizing episode, followed by a mainly post-mineral N-S extensional event. Interpretation of Landsat multispectral images indicate dextral (right lateral) movement along the Bella Vista fault zone which is in accordance with the detected E-W extensional event. Several smaller fractures and faults parallel to the Bella Vista fault exhibit weak (although mainly barren) quartz-stockwork zones demonstrating that this fault system was active during the episode of epithermal mineralization. All principal Au-Ag veins are associated to NW-SE trending faults. The Promontorio Ag-Au veins are related to the faults Promontorio E and Promontorio W. Further mineralized veins have been mapped along the same fault system further toward the southeast. Also in the Santiago project area several NW-SE trending faults have been detected from satellite imagery. Nevertheless quartz veins with Au-Ag mineralization are not restricted to the NW-SE fault trend; there occur also (shorter) veins along SW-NE and N-S faults. Along about E-W trending faults usually there developed no significant mineralization (because parallel to extensional stress), however along E-W faults occurred strong lateral movement causing increased dilation at intersecting NW-SE, N-S and SW-NE faults, the sites with greatest vein width and highest grades are here located. Best exploration potential forAu-Ag mineralization is given in areas where major WNE-ENE or major E-W faults intersect with important NW-SE trending faults. Both, the historic Promontorio mining camp but also the Santiago Project represent such a favourable tectonic environment. Local Geology: Host rock for all Au-Ag bearing quartz veins within the property is a porphyritic rhyodacite ignimbrite from the Lower Volcanic Sequence (and rhyodacite dome complex at Cerro El Madronio, just to the southwest of the principal vein, within the Bella Vista concession). The post-mineral rock units belong to the “Upper Volcanic Sequence” and consist at its base of an up to 40 m thick conglomerate unit at the erosional unconformity to the Lower Volcanic Sequence; it is overlain by rhyolitic rocks including pumiceous tuffs, ignimbrites and minor lava flows (see Fig 5, 6, 7). Within the property gold mineralization is found in several quartz veins at altitudes between 2600 and 2900 m (Fig 6, 7). The principal “Bella Vista Vein” is about 1200 m long and 0.15 to 2.0 m wide, vein width in the ore shoots averages approximately 0.80 m. The “Bella Vista Vein” strikes NW-SE and dips with 55° to 80º (in average 60°) to the SW. In the past small-scale miners (Gambusinos) exploited the Au-ore from a number of workings. The recovery process consisted in milling the ore in stone mills (tahoanas) and consequent amalgamation or cyanuration. The most extensive historic workings (Tascate mine) in the Bella Vista vein are found at its northern termination in the La Soledad claim (a 8 ha third party concession); here exist still about 2500 tons of mine dump with considerable Au grades (sample B-1). A great portion of the old mine is still accessible. Drifts and stopes appear over a length of 200 m and a vertical extend of 60 m. Up to three parallel veins had been worked at the Tascate mine. Due to the average dip of 60° to the SW the portion of the Bella Vista vein occupied at surface by a third party mining concession (La Soledad) will fall at an elevation below 2500 m (about 150 m below the level of La Perla creek) entirely into the Santiago project properties (here Krone claim). A couple of years ago it was still possible to find very nice hand specimens of vein quartz material with native gold in the mine dump. In the La Soledad claim the Bella Vista Vein ends at an intersecting east-west fault. Along this pre-mineral fault took place considerable lateral movement, causing more intense dilatation of this portion of the Bella Vista vein (here up to three parallel veins). A northward continuation of the Bella Vista vein hasn’t yet been found. Satellite image interpretation indicate the existence of a continuation with an E-offset, the vein however would be concealed under post-mineral rhyolite cover. Other shorter ore shoots were exploited in a smaller scale in the middle segment of the Bella Vista Vein (in the Bella Vista mine) and an extremely rich, but short ore shoot was exploited in another vein, the San Jose vein (third party concession) to a depth of over 100 m. At this depth however the SE dipping vein passes into the Bella Vista concession. There exist still ruins from a rather large mining camp to the east of the claimed area along the La Perla creek. The miners used vapour driven pumps to keep the workings dry. From oral information it is known that the milled ore from the San Jose vein was treated in large wooden tanks with cyanide. Mining at the San Jose mine took place around 1930. Ore shoots in the Bella Vista vein are tectonically controlled by changes in dip and strike, but occur also at vein and fault intersections. The tectonic stress during Au-Ag mineralisation was dominated by E-W extension. Barren quartz was deposited in a late hydrothermal stage under N-S extension. Favourable are steeper dips and strike inflections from the general NW-SE trend to a NNW-SSE direction. The southern vein segment is partly hidden below a cover of 5 to 15 m deep colluvium (gravel and boulders). Here structural geologic observations indicate two vein inflection zones with NNW-SSE strike; suggesting two blind ore shoots. The location of proven and predicted ore shoots is shown in the map below. Another recently discovered vein (Tascate vein) runs parallel to the SW of the Bella Vista Vein at a distance of 300 m. No workings have been observed in this vein. One grab sample (B-14) returned an encouraging value of 3.5 g/t Au. Other veins on the property strike over shorter distances N-S, NE-SW and E-W. These subsidiary veins often contain small high grade ore shoots (except the E-W veins, which are barren). Interpretations of satellite and air-photo images indicate a NNW continuation of the Tascate Vein, hidden under the cover of the post-mineral Upper Volcanic Sequence (see geologic maps). As discussed above a blind continuation of the Bella Vista Vein about 300 m to the northwest of its abrupt termination in the La Soledad claim is indicated. Most of the area with possible gold veining under the post-mineral rock cover is protected by the Colibri claim. Preliminary Resource Estimation: Usually the old timers didn’t leave any accessible high-grade ore in the worked areas. Generally all exploited zones in the veins represented ore shoots with high Au grade. The remaining pillars and stopes are often of lower Au grade. A rough estimation of the average Au grade of high-grade ore shoots was based on oral information (small scale Au production around 1970 at Bella Vista mine), assay results of mine dump samples and from samples taken in vein outcrops, pillars and stopes. So for example I obtained rather reliable oral information (in 1992) about the ore grade extracted from a 10 m deep shaft in the Bella Vista mine. A group of gambusinos discovered this small ore body 40 years ago, one of those miners told me that they worked one year at this place and that they recovered 0.5 to 1 kg of gold per ton hand selected ore. Assay results of selected vein material from the corresponding mine dump returned 50 to 120 g/ton gold! Samples from accessible vein quartz (surface and mines) range between 1 and 21 g/t Au. I estimated that the exploited ore shoots in the Bella Vista Vein have had average Au grades between 8 and 35 g/t over an average vein width of 80 cm. For the accurate calculation of the resources in the Santiago Project a considerable amount of exploration work will be required (and is highly recommended) including mapping, surface sampling, geophysical surveys and diamond drilling. However I consider the currently available data and geologic information as sufficient to give at least a very rough estimation of the gold potential in this project. The following estimation of “inferred resources” is based only on geological evidence (and assumption of average grades for high grade mineralization) I will only consider the length of known ore shoots in the Bella Vista Vein. Further ore shoots, other veins and the possibly existing NNW continuation of the Tascate and Bella Vista veins increase significantly the total possible Au-Ag potential. All old workings do occur above the level of the “La Perla” creek, that is at an elevation above about 2640 m; no workings exist below this level. The mineralization depth for this calculation is 300 m, this is down to the level of 2340 m. The average vein width is 0.80 m and the rock density is 2.5. The Au grade is subdivided into high grade with an average of 9 g/t Au and in bonanza grade with an average of 20 g/t Au, resources below the cut-off grade of 5g/t Au are not considered. Inferred resource = (46+19+20)x300x0.8x2.5 =51,000 tons With 20 g/t Au = 51,000x20:31.1 = 32,797 oz gold. and Inferred resource = (115+57+50)x300x0.80x2.5 = 133,200 tons With 9 g/t Au = 133,200x9:31.1 = 38,546 oz gold. The inferred total gold resource in known ore shoots in the Bella Vista vein is 71,343 ounces of gold (1 oz = 31.1 g). I consider a 5% loss of gold due to mining and a gold recovery factor of 85% in the ore processing. Therefore the roughly estimated extractable Au resource in known ore shoots from the Bella Vista vein is 0.95x71,343x0.85 = 57,609 ounces gold. At an average future gold price of $ US 800 per ounce the calculated corresponding cash value for the extractable “inferred Au resource” results in over 46 million $ US. Significant additional resources are expected in the two suspected ore shoots in the southern Bella Vista vein and in Pedro’s vein (a North-South trending vein). Further potential for more Au ounces is given in the still unexplored Tascate vein and its indicated continuation to the north under post-mineral cover rocks. Finally the discovery of a blind north continuation of the Bella Vista vein could add even more Au resources. Based on the highly favourable geologic-tectonic framework the entire Santiago Au-Ag vein system (including yet undiscovered veins) appears to posses the potential for the discovery and definition of 0.5 to 1.5 million ounces of gold (to a depth of 600 m).

Contact Info:
Ruthenweg 21
68623 Lampertheim
Germany
Phone:
juvamiru@yahoo.com

Mexican Contact Address:

Mr. Artemio Terrazas
Margaritas 122
Fracc. Jardines
34200 Durango, Dgo.
Phone: (+52) - 618 1294170
terraluc1@hotmail.com

Note that Artemio understands only very little English