The Palos Verdes Property

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The Palos Verdes Property

Current Technical Report

An independent technical report dated October 4, 2019, and amended as at June 16, 2020 titled, “Geology and Exploration of the Palos Verdes Property” was prepared for the Company a Qualified Person under NI 43-101. The Technical Report has been filed and is available for review on the SEDAR database www.sedar.com.

 

Project Description

Location

The Palos Verdes Property is located in the southern part of the State of Sinaloa in northwestern Mexico, approximately 65 kilometers NE of Mazatlán, Sinaloa, in the Municipality of Concordia. The Palos Verdes Property or Property comprises the Palos Verdes concession that covers 22.7707 hectares.

The figures below show the location of the Palos Verdes Property in relation to geographic points in the state of Sinaloa.

 

The Palos Verdes Property location in Sinaloa State, northwestern Mexico.
The Palos Verdes Property is located in west central Sinaloa, about 50 km northeast of Mazatlán.

 

Oblique aerial view from Google Earth showing the region surrounding the Palos Verdes Property, shown in red. The Palos Verdes Property is located at the slopes of the Sierra Madre Occidental near the transition to the coastal plain. Some other mineral deposits in the Rosario district are shown in the upper right corner of the image. Mazatlán is located on the coast in the left foreground of the image.

 

Mineral Concessions and Agreements

On May 7, 2019, the Company entered into an Option Agreement with ProDeMin. Pursuant to the terms of the ProDeMin Option Agreement, ProDeMin grants the Company an option to earn up to 75% of the rights to the Palos Verdes concession that makes up the Palos Verdes Property covering 22.7707 hectares and constitutes ProDeMin’s interest acquired from private individuals. ProDeMin acquired 75% of the rights to the concession under two agreements. The First Agreement consisted of the right to acquire 50% of the rights to the Palos Verdes Property by completing a minimum 400 metre diamond drill program. The drill program was completed in May 2018, and each of the two the property owners assigned 25% of the concession to ProDeMin. This agreement has been registered with the Public Mining Registry and the 50% interest is shown in the online database of the Mining Directorate. Under the Second Agreement, ProDeMin has acquired an additional 25% interest in the Palos Verdes Property from one of the two original owners, Ernesto Guzman, by agreeing to make staged payments totalling 240,000 US dollars over a 42-month period. Application for the registration of the second agreement with the Public Mining Registry has been made, but final registry is pending.

 

The Palos Verdes Property consists of the Palos Verdes concession, shown in yellow, near the village of Santa Lucia. The concession is surrounded by other concessions controlled by third parties. The new and old highways between Mazatlán and Durango cross the Palos Verdes Property.

 

Panorama of the Palos Verdes Property.
View of the Palos Verdes Property, looking southwest from the old highway in the northwestern portion of the concession.

 

History

The early history of the Palos Verdes Property is not known. The Sinaloa region was inhabited by several Mesoamerican cultures during the pre-Hispanic period. The Mining Districts of Panuco, Copala and Santa Lucia were well-known natives before 1560 due to the high-grade Au-Ag veins and they exploited the richest portions of the veins. In 1565 Capt. Francisco de Ibarra, who founded Durango and Nombre de Dios as Nueva Vizcaya governor, founded the municipality named San Sebastian, now known as Concordia with the purpose to support the mining works of the Panuco-Copala Mining District. Mining activities have continued intermittently for 5 centuries to the present. Even during the Mexican Revolution mining activities remained with 7 mills operating in the region. After Mexican independence the State of Sinaloa was formed, and Villa de San Sebastian was changed to Concordia in 1831.

Concerning the Santa Lucia mining area, where the Palos Verdes Property is located, the old workings are small compared with Panuco and Copala, with historic workings mainly as small digs and adits that were developed to extract Au and Ag ore.

The Panuco-Copala mining district is historically the most important silver producer in Sinaloa with abundant mines and prospects. Currently several small mines produce mineral for a few mills in operation in the region.  Much of the district has been consolidated by Vizsla Resources and their drill program is underway.

 

View of the Panuco-Copala district showing concessions of Vizsla Resources and the Palos Verdes

 

Palos Verdes Exploration History

Various companies as well as the previous owners of the Palos Verdes Property have performed limited sampling at the Palos Verdes Property in the past.  ProDeMin compiled a sample database with 61 samples taken by previous workders at the project with values of as much as 4.15 g/t Au and 732.7 g/t Ag. Some of the samples were taken outside the Palos Verdes Property. At some time in the past, reportedly near the end of the 1900s, a 70- meter-long tunnel was driven along the vein from near the bottom of the Palos Verdes arroyo. The owners of the concession leased the Palos Verdes Property to a small miner prior to the initial agreement with ProDeMin, but limited work was completed.

 

Geological Setting and Mineralization

District Geology

A thick sequence of volcanic rocks overlies Precambrian and Paleozoic basement rocks in the region. The lowermost volcanic unit, termed the Lower Volcanic Group of Late Mesozoic to Early Cenozoic age (McDowell and Clabaugh, 1979), is composed mainly of flows and tuffs of andesitic composition. The Lower Volcanic Group hosts numerous mineral deposits in the area and along the Sierra Madre Occidental. Some outcrops of this sequence host mineralized veins in the Copala-Panuco-Santa Lucia Mining District.

Rocks of the Upper Volcanic Group unconformably overlie the Lower Volcanic Group. The rocks are of Early to Middle Tertiary age and have been divided into three main units: Older, Intermediate and Upper Ignimbrite Units. Interbedded with these units are purple to reddish andesitic flows. The younger ignimbritic sequence consists of a thick package of breccia and rhyolitic to andesitic tuffs. Alteration observed in these units is mainly argillic due to weathering. In some places the Upper Volcanic Group is intruded by rhyolitic porphyry domes.

In the Upper Tertiary (Pliocene), sandstone and polymictic conglomerate filled basins that originated during extension in the region.

Regionally two main intrusive events are recognized. The older, of granodioritic to granitic composition (56.6 +/- 0.7 My) is associated with the La Costa Batholith of Laramide age. Intrusive rocks of similar composition, but Oligocene in age, locally intruded the Upper Volcanic Group. The second intrusive event consists of younger andesitic to rhyolitic porphyry and domes formed in the Upper Volcanic Group.

The main tectonic event in the region is the Laramide orogeny of late Cretaceous to early Tertiary age related to volcanism and intrusive activity in the region.

 

Government geologic map of the area around the Palos Verdes Property. Dark purple colours are Precambrian and Paleozoic basement rocks. Volcanic rocks are in shades of brown, with older andesitic rocks in orange-brown and younger rhyolitic tuffs light colored with a pattern and rhyolite ignimbrites in pink. Granodioritic intrusive rocks are in red. The location of the Palos Verdes Property is indicated by the yellow star. Geology from Mexican Geological Survey, 1:50,000 Copala sheet (SGM, 1999).

 

Regional structures are characterized by fault systems with northwest and northeast strikes. The northwest fault system is probably related to extensional tectonism related to the opening of the Gulf of California.

Mineralization in the region consists of low sulfidation epithermal and polymetallic veins that are part of the Sierra Madre Occidental precious-metal province. The Santa Lucia mining region is part of the Copala-Panuco district that has been an important silver producer for several hundred years from many mines and prospects.

 

Epithermal Precious Metal belt, Northern Mexico. Distribution and ages of epithermal precious metal deposits in Mexico with the location of the Palos Verdes Property. After Camprubi and Albinson (2005).

 

Geology of the Palos Verdes Property

The volcanic rocks in the area of the Palos Verdes Property are not well studied. In general, andesitic volcanic rocks consisting of flows and flow breccia underlie most of the Palos Verdes Property and are overlain by felsic tuffs in the northeastern portion.

Andesite is the main rock type that crops out at the Palos Verdes Property. It corresponds to the Lower Volcanic Group and is the main host for mineralized structures in the Mining District and the Palos Verdes Property. The andesite is gray to greenish in color, and aphanitic to porphyritic in texture with plagioclase phenocrysts. Flow breccia and local agglomeratic textures are commonly observed. Wide variations in lithology are observed in the core, but the rocks have not been mapped in sufficient detail to identify specific units within the andesitic package on the surface.

Structure

Structurally there are two main trends, northeasterly and north to northwesterly, the northeasterly system being the most common, although numerous mineralized structures are emplaced in the northerly to northwesterly trending system. The main structural feature at the Palos Verdes Property is a northeast trending vein system, the Palos Verdes Vein, hosting much of the known mineralization at the Palos Verdes Property. The vein crops out along about 700 meter strike length and is discontinuous at the surface. This northeast trending structural zone is cut by a north-northwesterly trending fault interpreted due to clay alteration and an apparent offset of the Palos Verdes vein. North-northwesterly striking veins are locally observed, and this structural orientation is important in several mines in the region providing an interesting exploration target.

Alteration and Mineralization

Propylitic alteration with chlorite, epidote and pyrite, is the most widespread alteration on the Palos Verdes Property, affecting the andesite in a regional sense. Argillic alteration is observed in fault zones with the presence of kaolinite and gouge. Strong silicification and bleaching of the rock is restricted to zones near quartz veins, hydrothermal breccia and quartz stockworks. Mineralized structures occur as veins, stockworks, and hydrothermal breccias filling fractures or faults with preferred orientations striking northeasterly and northwesterly. The northeast system is the main mineralized trend and is the orientation of the Palos Verdes vein. The width of the vein is generally 0.20 to 5.0 meters, but sometimes up to 10.0 meters. The mineralized structure outcrops along 650 to 750 meters on the Palos Verdes Property.

The Palos Verdes Vein consists of banded quartz vein material and hydrothermal breccia and is multistage with milky quartz, light gray quartz and sulfide rich material. Breccia fragments consist mostly of angular fragments of strongly silicified andesite. The structure has N60°E strike and dips to the southeast at 78 to 82°, although vein flexures and a possible sigmoid structure are observed. Economic minerals consist of argentiferous galena, possible electrum, gold, sphalerite, chalcopyrite and pyrite. The vein is well exposed in the Palos Verdes adit, an approximately 75 meter long working with a shallow winze about halfway along the tunnel. Sampling carried out at the surface and old workings yield as much as 2 g/ton Au and 116 g/ton Ag in surface exposures and 6.7 g/ton Au and 544 g/ton Ag in old workings. The wall rocks to the main structure commonly host veinlets and stockworks. Sulfide rich bands or discrete veins locally cut the main quartz vein and are locally included as fragments in more massive quartz. Local bladed textures presumably of quartz after tabular calcite are observed.

 

Geologic map of the area of the Palos Verdes Property from ProDeMin study. The concession that makes up the Palos Verdes Property is indicated by the red outline.

 

Photo of andesitic rocks.
View of andesitic rocks hosting sulfide-rich vein near the portal of the Palos Verdes adit.
The andesite is dark farther from the structure but becomes bleached adjacent to it.

 

Photo of the Palos Verdes Vein. Photo of sample the Palos Verdes vein exposed in the road cut of the old highway.

 

Geologic map of the Palos Verdes adit.
Geologic map of the Palos Verdes adit, from Velo and Torres (2018).

 

Samples of the Palos Verdes vein showing multistage textures

 

 

Exploration

ProDeMin completed the most exploration to date as part of its due diligence and earn-in agreement for a 50% interest in the Palos Verdes Property. This section describes the exploration performed by ProDeMin under the supervision of Dr. Craig Gibson, CPG, a Qualified Person under NI 43-101. Dr. Gibson is a director, president, and CEO of the Company.

 

Geochemical Sampling

ProDeMin collected 41 samples at the project. Three samples were taken as part of a due diligence review of the Palos Verdes Property, and an additional 38 samples were taken as part of the geologic mapping program to define drill targets (Velo and Torres, 2017). Table 5 lists the samples with locations and descriptions, and Fig. 19 shows the locations of the samples taken by ProDeMin. The rock samples are all chip-channel samples across mineralized structures, as well as selected samples of mineralized coarse rejects and pulps from previously analyzed core. Sampling was completed with a rock hammer by breaking off chips of rock, with the continuity of sampling moderately continuous in the direction of sampling perpendicular to the principal structure. The sample widths shown in the table are the lengths of the sample and approximate the true width of the mineralization. The rock sampling completed was for the purpose of confirming the presence of mineralization as previously reported and thus was not systematic. About 400 meters of strike length on the vein system was samples, and a few samples were taken on other structures. Channel samples are taken to be a nearly continuous strip of rock sampled between two points with the length based on geology, while chip channels are similar but not as continuous. Chip samples are taken by taking fragments over an area of interest and not all material is sampled. Three samples, 465821, 465828 and 465829, were taken on concessions adjacent to the property to test the main Palos Verdes structure along strike (first two samples listed) and to test a separate vein for reference.

 

Drilling

ProDeMin completed a diamond drilling program in May, 2018. Five holes for a total of 457.1 meters of HQ core were drilled as part of the agreement to earn 50% of the rights to the Palos Verdes Property.  Drill hole information is shown in Table 6 and drill hole locations are shown in Fig. 20. Drill holes were logged and sampled by ProDeMin geologists according to procedures outlined in an internal company manual (Gibson, 2018). Drill core was handled using industry standard practices. The core was picked up at the drill rig once or twice a day during the 24 hour per day drill operation. The core was subsequently measured for recoveries and RQD determinations, and then logged and samples were marked on the core and core boxes. Recoveries were generally greater than 95%. The intervals sampled were selected based on the presence of veining and focused on the Palos Verdes vein intercepts, and not all of the core was sampled. Core was cut into two equal halves using a diamond saw blade, with half of the core being double bagged for transport to the laboratory, and half of the core remaining in the core boxes. Samples remained in the custody of ProDeMin until delivered to the lab in Durango, and the core has been stored in facilities controlled by ProDeMin.

 

Results of ProDeMin Exploration Program

The exploration program undertaken by ProDeMin was successful in delineating the Palos Verdes vein system. Rock samples along the vein outcrops and in underground workings yielded interesting precious and base metal values in several areas. Based on the results of the mapping and sampling program, ProDeMin decided to continue the exploration with a drill campaign that would allow it to earn 50% of the rights to the Palos Verdes Property.

 

Sample Data for ProDeMin Exploration Program, Palos Verdes Property:

 

Geologic Maps:

 

Assay Values for ProDeMin Samples from Palos Verdes

Assay Values for ProDeMin Samples from Palos Verdes

 

ProDeMin completed a diamond drilling program in May 2018.  Five holes for a total of 457.1 meters of HQ core were drilled as part of the agreement to earn 50% of the rights to the Property.  Drill hole information is and summary assay data for the mineralized intervals in each hole are shown in the tables below, and these intervals are shown on the cross sections.  All holes were mineralized in the interval at the intersection with the Palos Verdes vein.  True widths are less than the intercept and are estimated in the table; however, more data on possible fluctuations in the strike and dip of the veins are needed to obtain a more accurate true width. A longitudinal projection of the drill hole intercepts shows the portion of the vein where future exploration will be directed to explore for a possible ore shoot.  The sections with drill holes PV-1 and PV-2, section A, and PV-3 and PV-4, section B, are closer together than originally planned due to problems with moving the drill rig during the drill program. Nevertheless, the intercepts indicate that there is potential for developing a mineralized shoot along the vein system with more drilling.

 

Drill hole data for ProDeMin drill program, Palos Verdes Property

Drill hole data for ProDeMin drill program, Palos Verdes Property

 

The multistage nature of the Palos Verdes vein is evident in the drill results. Sulfide-rich vein intervals are generally higher in grade than intervals with less sulfide content and more quartz (Figs. 36, 37). Wider intercepts of lower grade mineralization generally surround the higher grade intervals.

 

Assay values for ProDeMin drill hole intercepts from Palos Verdes Property

Assay values for ProDeMin drill hole intercepts from Palos Verdes Property

 

 

A longitudinal projection of the drill hole intercepts shows the portion of the vein where future exploration will be directed to explore for a possible ore shoot.  The sections with drill holes PV-1 and PV-2, section A, and PV-3 and PV-4, section B, are closer together than originally planned due to problems with moving the drill rig during the drill program. Nevertheless, the intercepts indicate that there is potential for developing a mineralized shoot along the vein system with more drilling.

 

Longitudinal projection of the Palos Verdes vein with ProDeMin drill holes projected to a vertical section, showing intercepts and area of possible ore shoot.

Longitudinal projection of the Palos Verdes vein with ProDeMin drill holes projected to a vertical section, showing intercepts and area of possible ore shoot.

 

The mineralization is associated with sulfide rich zones within quartz vein breccia with multiple stages of mineralization visible.

Photos from the 2020 Palos Verdes drill program. Drill holes PV-O6 to PV-09 presented