zaruma project, ecuador technical report - Dynasty Metals & Mining
zaruma project, ecuador technical report - Dynasty Metals & Mining
zaruma project, ecuador technical report - Dynasty Metals & Mining
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ZARUMA PROJECT, ECUADOR<br />
TECHNICAL REPORT<br />
PREPARED FOR<br />
DYNASTY METALS & MINING Inc.<br />
BY<br />
Miroslav Kalinaj<br />
Consulting Geologist<br />
22 October 2004
TABLE OF CONTENTS<br />
1.0 SUMMARY<br />
2.0 INTRODUCTION AND TERMS OF REFERENCE<br />
2.1 General<br />
2.2 Terms and Definitions<br />
2.3 Units<br />
2.4 Terms of Reference<br />
3.0 DISCLAIMER<br />
4.0 PROPERTY DESCRIPTION AND LOCATION<br />
4.1 Location and Access<br />
4.2 Project Ownership<br />
4.3 Land Tenure<br />
4.4 Permitting<br />
4.5 Environmental Permitting<br />
4.6 Environmental Liabilities<br />
5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES,<br />
INFRASTRUCTURE and PHYSIOGRAPHY<br />
5.1 Location<br />
5.2 Access<br />
5.3 Climate and Physiography<br />
5.4 Local Resources<br />
6.0 HISTORY<br />
7.0 GEOLOGICAL SETTING<br />
7.1 Regional Geological Setting<br />
7.2 Zaruma Project Geological Setting<br />
7.2.1 Geological Setting<br />
- 2 -
7.2.2 Structural Setting<br />
7.2.3 Alteration<br />
7.2.4 Mineralisation<br />
7.2.5 Mineral Assemblage Studies<br />
8.0 GOLD AND SILVER DISTRIBUTION<br />
9.0 EXPLORATION<br />
9.1 Exploration History<br />
9.2 Sample Preparation, Assaying and Security<br />
9.3 Data Verification<br />
10.0 MINERAL RESOURCES<br />
10.1 Historic Resource Estimations<br />
10.2 Definitions and Parameters<br />
10.3 Methodology of Mineral Resource Calculation<br />
11.0 MINERAL RESOURCE ESTIMATES<br />
11.1 Available Data<br />
11.2 Unit Conversions<br />
11.3 Data Statistics<br />
11.4 Summary of Mineral Resources<br />
12.0 OTHER RELEVANT DATA AND INFORMATION<br />
13.0 CONCLUSIONS AND RECOMMENDATIONS<br />
14.0 REFERENCES<br />
15.0 APPENDICIES<br />
16.0 DATE<br />
- 3 -
LIST OF TABLES<br />
Table 1 List of Agreements reached between <strong>Dynasty</strong> <strong>Metals</strong> & <strong>Mining</strong> Corporation and<br />
remaining small-scale operating mines.<br />
Table 2 List of Concessions owned, optioned and/or controlled by <strong>Dynasty</strong> <strong>Metals</strong> & <strong>Mining</strong><br />
Corporation<br />
Table 3 Zaruma Project Land Tenure<br />
Table 4 Gold / Silver ratios, Zaruma – Portovelo District<br />
Table 5 Elements assayed by IAMGOLD and detection limits for ICP method applied for<br />
The Zaruma Project sample analyses.<br />
Table 6 Mineral Resources Contained in Zaruma Project Area at 22 October 2004. Mineral<br />
Resources calculated from SADCO Data.<br />
Table 7 Mineral Resources Contained in Zaruma Project Area at 22 October 2004. Mineral<br />
Resources calculated and added from IAMGOLD, TVX GOLD Corp., MINERA<br />
AUSTRALIANA and DYNASTY METALS AND MINING CORP. Data<br />
Table 8 Mineral Resources Contained in Portovelo area at 22 October 2004. Mineral<br />
Resource calculated from SADCO data.<br />
Table 9 Total Mineral Resources Contained in Zaruma Project including the Portovelo Area.<br />
- 4 -
LIST OF FIGURES<br />
Fig. 1 The Zaruma Project Location Map.<br />
Fig. 2 Land tenements owned or controlled by <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corporation<br />
Fig. 3 IAMGOLD ground and underground survey control point locations<br />
Fig. 4 Small scale cyanide-process plant, channel system for gravity extraction and final hand<br />
panning.<br />
Fig. 5 View of the old SADCO vertical shaft in Portovelo<br />
Fig. 6 Simplified Geological Map of Ecuador<br />
Fig. 7 Regional Geological Map of the Zaruma – Portovelo District<br />
Fig. 8 Schematic cross-section showing a model for the development of the Portovelo Unit<br />
Volcanics associated with normal faulting<br />
Fig. 9 The Zaruma Project Geological Map<br />
Fig. 10 Northwest striking thrusts control the en-echelon set formations and sigmoidal<br />
geometry of the veins.<br />
Fig. 11 Alteration mineral zonation within the Project area.<br />
Fig. 12 Minable vein width up to 6m, Jane Vein, Zaruma<br />
Fig. 13 Banded textures with symmetric geometry. Cristina Vein, Zaruma<br />
Fig. 14 Banded, laminated, hydrothermal breccia and drusy textures. Cristina Vein, Zaruma.<br />
Fig. 15 Mineralisation Zonation in the Zaruma – Portovelo <strong>Mining</strong> District<br />
Fig. 16 Gold Distribution in the Zaruma – Portovelo <strong>Mining</strong> District<br />
Fig. 17 Longitudinal Section along Sesmo Vein showing gold and polymetalic mineralisation<br />
Fig. 18 Early stage gold intergrowth with dark-grey chlorite. Jane Vein, Zaruma.<br />
Fig. 19 Late stage coarse and partially crystallised gold (shown by arrow) in association with<br />
calcite and quartz. Abundancia Vein, Portovelo area.<br />
Fig. 20 Gold / Silver Ratio Variations – Cristina Vein<br />
Fig. 21 IAMGOLD Drilling Programme and Zaruma Project Tenements.<br />
Fig. 22 KH – 1 standard behaviour, IAMGOLD database<br />
Fig. 23 OX-4 standard behaviour, IAMGOLD database<br />
Fig. 24 OX-8 standard behaviour, IAMGOLD database.<br />
Fig. 25 Longitudinal Section of the Jane Vein, Zaruma. Mineral Resource calculation based on<br />
2245 underground channel samples<br />
- 5 -
Fig. 26 High grade RM-11 drill hole intersection in <strong>project</strong>ion of ore shoot on Tamayo Vein.<br />
Fig. 27 Gold distribution log/probability plot and summary statistics.<br />
Fig. 28 Silver distribution log/probability plot and summary statistics.<br />
Fig. 29 Lead distribution log/probability plot and summary statistics.<br />
Fig. 30 Zinc distribution log/probability plot and summary statistics.<br />
Fig. 31 Copper distribution log/probability plot and summary statistics.<br />
Fig. 32 Triplot analysis of Au-Pb-Zn showing very poor correlation of Au with Pb-Zn<br />
Fig. 33 Triplot analysis of Ag-Pb-Zn showing slightly better correlation of Ag with Pb-Zn in<br />
comparison with Au<br />
Fig. 34 Underground channel sampling assay result correlations (IAMGOLD data base)<br />
Fig. 35 Longitudinal profile of the Abundancia Vein. Colour shaded plot of gold distribution is<br />
Based on 15,542 sample data points<br />
Fig. 36 Longitudinal profile of the Cristina Vein. Colour shaded plot of gold distribution is based<br />
on 9,501 sample data points<br />
Fig. 37 Surface Rock Geochemistry colour shaded plot with individual sample locations<br />
(1,413 samples) and a plot of the traces of the veins and major thrusts<br />
Fig. 38 Zaruma Project Soil Sampling Programme - Gold distribution colour shaded plot<br />
APPENDICES<br />
Appendix A ……. Certificate of Author M. Kalinaj<br />
Appendix B ……. Letter of Agreement between Minera Australiana S.A. and IAMGOLD<br />
Corporation (the “IAMGOLD Agreement”)<br />
Appendix C ……. Assignment Agreement between Minera Australiana S.A. and Elipe S.A. and<br />
<strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corporation<br />
Appendix D …….. <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Press Release on July 7, 2004<br />
“<strong>Dynasty</strong> Advances its Zaruma Gold Project”<br />
- 6 -
1.0 SUMMARY<br />
The Zaruma Property is located within the well-known Portovelo-Zaruma District of southwest<br />
Ecuador approximately 160 km south of Guayaquil, Ecuador’s main seaport, and 55 km<br />
southeast of the city of Machala. The Zaruma-Portovelo gold mining camp has been worked<br />
since at least the Incan period, and is estimated to have produced five million ounces of gold<br />
and more than 20 million ounces of silver during the past one hundred years. The vein district<br />
extends over a strike distance of approximately 16 km and has a width of up to 4 km. The most<br />
important gold producer in the camp was the South American Development Company<br />
(“SADCO”) which produced 3.5 million oz of gold and 12 million oz of silver from 1904 to 1950.<br />
<strong>Mining</strong> in the former SADCO area has continued since that date with one Ecuadorian company<br />
and other smaller groups estimated to have produced a further 1.5 million oz of gold.<br />
Following 45 years of small-scale mining a limited exploration programme was carried out by<br />
TVX Gold Inc. during 1995. The programme was focused on district exploration and mining<br />
potential estimation, re-sampling of underground workings and surface sampling with a purpose<br />
of SADCO´s historic assay data verification, underground mapping and deposit modelling.<br />
Following TVX Gold Inc. retreat from Ecuador an aggressive gold exploration programme was<br />
conducted by IAMGOLD during the period 1999 to 2003 in the search for vein-hosted gold-silver<br />
and polymetalic mineralisation. The programme consisted of district scale geological mapping,<br />
evaluation of old mine workings, wide sampling and re-sampling of old workings, detail<br />
underground surveying and geological mapping, and 39 surface and underground diamond<br />
drillholes, totalling 15,357.44 m. A valuable IAMGOLD data package on the Concessions has<br />
also been acquired by <strong>Dynasty</strong>.<br />
The property covers a total area of 8,846.07 Ha (88.4607 km2) of which 8,175 Ha (81.75 km2)<br />
was initially acquired by Minera Australiana in an agreement (the “IAMGOLD Agreement”) with<br />
IAMGOLD Ecuador S.A. (“IAMGOLD”) in August 2003 (Appendix B). Minera Australiana, an<br />
Ecuadorian company in which Rob Washer, the President of <strong>Dynasty</strong> is the controlling<br />
shareholder, has assigned all of its rights in the IAMGOLD Agreement to <strong>Dynasty</strong> <strong>Metals</strong> and<br />
<strong>Mining</strong> Corporation, a Vancouver-based company for no additional consideration, other than the<br />
reimbursement of its transaction costs (Appendix C). Under the IAMGOLD Agreement, the<br />
Concessions are subject to a 3% NSR royalty in favour of IAMGOLD. <strong>Dynasty</strong> will have no other<br />
obligations with respect to the property, provided that any of the concessions which are part of<br />
the property it may subsequently determine to release must be offered to IAMGOLD.<br />
- 7 -
Additionally, <strong>Dynasty</strong> <strong>Metals</strong> & <strong>Mining</strong> Corporation successfully negotiated agreements with<br />
remaining local small-scale operators and concession holders within the Project area. Terms<br />
and conditions of agreements are listed in Table 1.<br />
2.0 INTRODUCTION AND TERMS OF REFERENCE<br />
2.1 General<br />
In February 2004 Miroslav Kalinaj as an Independent Qualified Person was required by <strong>Dynasty</strong><br />
<strong>Metals</strong> & <strong>Mining</strong> Inc. to write a <strong>technical</strong> <strong>report</strong> conforming to National Instrument 43-101 for the<br />
Zaruma Project in southern Ecuador.<br />
Subsequently Miroslav Kalinaj reviewed resource estimation for the Zaruma Project and on July<br />
2004 carried out revision of historic geochemical data and update of existing Company’s<br />
databases with assay results from ongoing sampling and re-sampling programmes including<br />
sampling and laboratory quality control charts.<br />
This <strong>report</strong> conforms to National Instrument 43-101 (Standards of Disclosure for Mineral<br />
Projects) and Companion Policy Form 43-101CP to National Instrument 43-101 Standards of<br />
Disclosure for Mineral Projects. The author reviewed Company’s <strong>report</strong>s and the independent<br />
<strong>technical</strong> <strong>report</strong>s and other available independent data, studies, <strong>report</strong>s, published scientific<br />
papers and press releases which are listed in Section 14.0. Author, Miroslav Kalinaj visited the<br />
Zaruma Project area between 4 th -8 th February 2004.<br />
.<br />
2.2 Terms and Definitions<br />
Company refers to <strong>Dynasty</strong> <strong>Metals</strong> & <strong>Mining</strong> Corporation, IAMGOLD refers to IAMGOLD<br />
Ecuador S.A., and Zaruma Project refers to <strong>Dynasty</strong> <strong>Metals</strong> & <strong>Mining</strong> Corporation owned,<br />
controlled and/or optioned tenements covering areas in vicinity of cities of Zaruma and<br />
Portovelo. Concessions refers to area within which <strong>Dynasty</strong> <strong>Metals</strong> & <strong>Mining</strong> Corporation owns<br />
and/or control exploration and mining rights, DDH means diamond drilled hole, NAA means<br />
neutron activation analytical method, and ICP means Inductively coupled plasma analytical<br />
method.<br />
Terms “Inferred Mineral Resource” and “Indicated Mineral Resource” refers to part of Mineral<br />
Resource as defined by “CIM Standards on Mineral Resources and Reserves Definitions and<br />
Guidelines” prepared by The CIM Standing Committee On Reserve Definitions adopted by CIM<br />
Council on August 20, 2000 and published by Canadian Institute of <strong>Mining</strong> Metallurgy and<br />
Petroleum.<br />
- 8 -
Author refers to Independent Qualified Person Miroslav Kalinaj.<br />
2.3 Units<br />
All weight units are metric tones (t) and grams/tone (g/t) or parts per million (ppm) or parts per<br />
billion (ppb) for precious metal grades. As a referential unit is used Troy ounce (oz) however, all<br />
original data which used Troy ounce as a weight unit have been recalculated to metric units<br />
applying conversion factor 1oz = 31.1 grams. All units are metric kilometer (km), square<br />
kilometer (km 2 ), meter (m) square meter (m 2 ) and hectare (Ha) for distance and area<br />
calculations. All monetary values are in United States dollars ($ US) as stated.<br />
2.4 Terms of Reference<br />
The terms of reference were for the author, Miroslav Kalinaj, to write an updated <strong>technical</strong> <strong>report</strong><br />
and to include a mineral resource estimate as an Independent Qualified person.<br />
3.0 DISCLAIMER<br />
This Technical <strong>report</strong> was prepared by Miroslav Kalinaj an Independent Qualified person<br />
contracted by <strong>Dynasty</strong> <strong>Metals</strong> & <strong>Mining</strong> Corp. on February 2004 and authored by Independent<br />
Qualified Person Miroslav Kalinaj on July 23, 2004.<br />
The <strong>report</strong> is based in part on <strong>report</strong>s prepared by IAMGOLD Corporation, historic data and<br />
<strong>report</strong>s of South American Development Company (“SADCO”), Ecuamining S.A. and TVX Gold<br />
Corp. Many of these <strong>report</strong>s were written prior to implementation of the standards in National<br />
Instrument 43-101, however, they were written by professionals and are considered accurate.<br />
The author was previously involved with the current property while conducting underground<br />
geological mapping for TVX Gold Corp. during May 1995 – March, 1996 in the Zaruma Project,<br />
Muluncay and Minas Nuevas areas. The author is fully independent of <strong>Dynasty</strong> <strong>Metals</strong> and<br />
<strong>Mining</strong> Corporation, and has no direct or indirect interest in the properties covered, or the<br />
company referenced, in this <strong>report</strong>. <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corporation has been informed<br />
by the author, that he had previously been employed to conduct geological mapping of areas<br />
which are currently the Company property.<br />
The author has not personally reviewed the registered ownership, nor actual option agreements,<br />
covering the property and claims of <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong>, known as Zaruma Project. The<br />
reader is therefore cautioned that the ownership has not been verified by the author.<br />
- 9 -
4.0 PROPERTY DESCRIPTION AND LOCATION<br />
4.1 Location and Access<br />
The Zaruma Project is located in the cantons of Zaruma and Portovelo, Province of El Oro,<br />
southern Ecuador. The centre of the <strong>project</strong> area is located on 654,500 East and 9,592,000<br />
North (UTM PSAD-56, zone 17S) or longitude 79° 36’ 31” West and latitude 3° 41’ 20” South<br />
(Provisional South American 1956 <strong>project</strong>ion). The Zaruma Project location is shown in Figure 1.<br />
4.2 Project Ownership<br />
MANTA<br />
GUAYAQUIL<br />
MACHALA<br />
Expl oi ted vei ns<br />
M apped vei ns<br />
Underground w orkings<br />
ZARUMA<br />
ZARUMA<br />
Port ovel o m i ne syst em<br />
by l evel s<br />
MACARA<br />
CHONE<br />
I AM G O LD dr i l l i ng<br />
DY N AS T Y c on c es s i o n s<br />
ESMERALDAS<br />
LOJA<br />
ZAMORA<br />
QUITO<br />
RIOBAMBA<br />
CUENCA<br />
Figure 1.<br />
The Zaruma Project Location Map.<br />
The property totals 8,846.07 hectares (88.4607 km 2 ) and is 100% controlled by <strong>Dynasty</strong> <strong>Metals</strong><br />
& <strong>Mining</strong> Corporation and includes an area of 8,175 hectares (81.75 km 2 ) that has been initially<br />
acquired by Minera Australiana in an agreement with IAMGOLD Ecuador S.A. in August 2003<br />
(Appendix B, the IAMGOLD Agreement”). Minera Australiana, an Ecuadorian company in which<br />
Rob Washer, the President of <strong>Dynasty</strong> is the controlling shareholder, has assigned all of its<br />
- 10 -<br />
IBARRA<br />
E C U A D O R<br />
ZARUMA PROJECT
ights in the IAMGOLD Agreement to <strong>Dynasty</strong>, for no additional consideration, other than the<br />
reimbursement of its transaction costs (Appendix C). Under the IAMGOLD Agreement, the<br />
Concessions are subject to a 3% NSR royalty in favour of IAMGOLD. <strong>Dynasty</strong> will have no other<br />
obligations with respect to the property, provided that any of the concessions which become part<br />
of the property it may subsequently determine to release must be offered to IAMGOLD<br />
(Appendix B). A valuable IAMGOLD data package on the Concessions has also been acquired<br />
by <strong>Dynasty</strong>.<br />
Additionally, <strong>Dynasty</strong> <strong>Metals</strong> & <strong>Mining</strong> Corporation successfully negotiated agreements with<br />
remaining local small-scale operators and concession holders within the Project area. Terms<br />
and conditions of agreements are listed in Table 1.<br />
Title to mineral properties involves certain inherent risks due to the difficulties of determining the<br />
validity of certain claims as well as the potential for problems arising from the frequently<br />
ambiguous conveyancing history characteristic of many properties. The Company has<br />
investigated title to all of its mineral properties and, to the best of its knowledge, title to all of its<br />
properties is in good standing.<br />
- 11 -
Table 1<br />
List of Agreements reached between <strong>Dynasty</strong> <strong>Metals</strong> & <strong>Mining</strong> Corporation and remaining smallscale<br />
operating mines.<br />
Concession<br />
Number<br />
33, 32<br />
35<br />
Current Concession Holder Agreement reached<br />
Galo Romoleroux<br />
Galo Ortiz Penafiel and<br />
others<br />
34 La Ponderosa Society,<br />
36,37,38,39<br />
and 40<br />
41<br />
Jose Valerezo Rivera<br />
Segundo Loaisa Dias<br />
2% NSR up to US$1,000,000 on commencement of<br />
exploitation<br />
December 2004 – US$50,000 (3)<br />
June 2005 – US$150,000<br />
(the title holder retains exploration and exploitation rights<br />
from 710m a.s.l. to surface)<br />
2% NSR (the title holder retains exploration and exploitation<br />
rights from 1.103m a.s.l. to surface)<br />
US$5,000 upon transfer of rights from IAMGOLD to Minera<br />
Australiana (1)<br />
September 30, 2003 – US$5,000 (1)<br />
March 26, 2004 – US$15,000 (2)<br />
Additionally: US$65,000 at production indication + 2% NPI<br />
(the title holder retains exploration and exploitation rights<br />
from 710m a.s.l. to surface)<br />
US$5,000 upon transfer of rights from IAMGOLD to Minera (1)<br />
April 1, 2004, – US$5,000 (2)<br />
August 21, 2004 – US$13,000 (the title holder retains<br />
exploration and exploitation rights from 620 m.a.s.l. to<br />
surface)<br />
(1) Payment was made by Minera Australiana and reimbursed by the <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corp.<br />
(2) Payment was made by <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corp.<br />
(3) Payment to be effectuated by <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corp.<br />
4.3 Land Tenure<br />
The Zaruma Project area comprises 41 concessions totalling 8,846.07 hectares from which all<br />
concessions are defined within graticular system using UTM PSAD 56 (Provisional South<br />
American 1956) <strong>project</strong>ion as defined by Ecuadorian Government regulations. The list of<br />
concessions owned and/or controlled by the Company is listed in Table 2. and shown in Fig.2.<br />
The property has not been legally surveyed, however 465 points with precision better than 0.1m<br />
have been surveyed by IAMGOLD employing differential GPS instruments including mine<br />
entrances, starting and ending points of major trenches, drilling platforms and collars which can<br />
be considered and used as appropriate geographical control points. Additionally, 2126 points<br />
with precision equal or better than 0.1m have been surveyed by IAMGOLD in underground as<br />
shown on Fig. 3.<br />
- 12 -
Table 2<br />
List of Concessions owned, optioned and/or controlled by <strong>Dynasty</strong> <strong>Metals</strong> & <strong>Mining</strong> Corporation<br />
No. Concession Name Code Area (Ha) Property Registration date<br />
1 ROMA 300216 661.92 6-Ago-01<br />
2 P. BAJO 189 9.00 6-Ago-01<br />
3 AGUILA DE ORO 3059 10.00 10-Jul-01<br />
4 ANA MICHELLE 300445 20.00 01-Dec-01<br />
5 ARCAPAMBA 2 300273 15.00 1-Oct-01<br />
6 BETHZABETH 300350 1280.00 16-Aug-01<br />
7 EL BOSQUE 300392 24.30 9-Jul-01<br />
8 EL REGALO’FRANK 300587 102.00 1-Oct-01<br />
9 EL RETAZO 300366 46.85 1-Oct-01<br />
10 EL RETAZO 3 300391 32.25 1-Oct-01<br />
11 EL SALVADOR X-3 5012 15.00 24-Oct-01<br />
12 EL TABLÓN 300861 42.00 2-Sep-02<br />
13 EL TABLÓN 1 300862 8.00 22-Oct-02<br />
14 IAM ZARUMA 300477 2.50 9-Jul-01<br />
15 LA DURA 300101 129.55 9-Jul-01<br />
16 LA ENVIDIA 300630 1346.00 2-Oct-01<br />
17 LOMA RICA 1 300559 19.58 1-Oct-01<br />
18 LORO 300604 9.60 1-Oct-01<br />
19 LOS CIPRECES 300302 2394.00 5-Oct-01<br />
20 LOS LAURELES 2 300558 100.00 24-Oct-01<br />
21 MARA 1 300529 45.00 22-Oct-01<br />
22 MARA 8 300537 5.00 22-Oct-01<br />
23 NICOLE 300444 8.48 16-May-03<br />
24 RESUC 4 300579 3.50 22-Oct-01<br />
25 RUTH 300580 2.00 1-Oct-01<br />
26 SAICHUMA 1 300274 466.00 25-Sep-01<br />
27 SAN ANTONIO DE PADUA 300210 67.00 10-Jul-01<br />
28 SINSAO 300393 20.44 1-Oct-01<br />
29 SOLEMARÍA 300545 23.81 18-Apr-02<br />
30 SUCA 300519 3.80 22-Oct-01<br />
31 SUCA 4 300523 1.00 30-Oct-01<br />
32 ZUDOS 1 5200 323.47 9-Jul-01<br />
33 MACHAY 300320 1273.00 1-Oct-01<br />
34 LILLY RAI 473 7.76 24-Oct-01<br />
35 EL SOROCHE UNIFICADO 506 32.80 10-Jul-01<br />
36 NUEVA ESPERANZA 152 5.00 9-Jul-01<br />
37 NUEVA ESPERANZA 2 300085 42.00 10-Jul-01<br />
38 NUEVA ESPERANZA 3 300089 30.00 9-Jul-01<br />
39 NUEVA ESPERANZA 4 300086 135.66 9-Jul-01<br />
40 NUEVA ESPERANZA 6 300195 77.80 9-Jul-01<br />
41 SAN JOSÉ 2 385 5.00 9-Jul-01<br />
TOTAL<br />
LEGEND<br />
8846.07<br />
Concession transferred to Company from Elipe S.A.<br />
Concessions ransferred to Company from IAMGOLD<br />
Concessions transferred to Company from third parts with options payments already paid<br />
Concessions transferred to Company from third parts with options payments pending<br />
- 13 -
9600000<br />
9595000<br />
9590000<br />
650000<br />
33<br />
Fig.2<br />
Land tenements owned or controlled by <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corporation<br />
Colour legend identical as in Table 2, dark grey polygons represents areas of exclusion.<br />
- 14 -<br />
37<br />
38<br />
35<br />
36<br />
34<br />
41<br />
1<br />
2<br />
40<br />
655000<br />
39<br />
W<br />
N<br />
S<br />
E
Table 3. Zaruma Project Land Tenure<br />
Concession<br />
Name<br />
- 15 -<br />
Easting<br />
UTM<br />
PSAD56<br />
Northing<br />
UTM PSAD<br />
56<br />
Code Area Ha Authorisation Registration Expiry date Concession<br />
date<br />
date<br />
Limits<br />
initial point 654,535 9,591,878<br />
point 1 654,735 9,591,878<br />
AGUILA DE<br />
ORO<br />
3059 10.00 09 July, 2001<br />
10 July,<br />
2001<br />
10 July,<br />
2031<br />
point 2<br />
point 3<br />
654,735 9,591,978<br />
654,935 9,591,978<br />
point 4 654,935 9,591,678<br />
point 5 654,535 9,591,678<br />
initial point 653,600 9,590,100<br />
ANA MICHELLE 300445<br />
20.00<br />
06 November<br />
2001<br />
01 Dec,<br />
2001<br />
01 Dec,<br />
2031<br />
point 1<br />
point 2<br />
653,600 9,590,500<br />
654,100 9,590,500<br />
point 3 654,100 9,590,100<br />
ARCAPAMBA 2 300273<br />
15.00<br />
12<br />
September<br />
2001<br />
01 October<br />
2001<br />
01 October<br />
2031<br />
initial point<br />
point 1<br />
point 2<br />
point 3<br />
653,000 9,600,000<br />
653,500 9,600,000<br />
653,500 9,599,700<br />
653,000 9,599,700<br />
initial point 649,000 9,603,000<br />
point 1 649,000 9,600,000<br />
point 2 646,000 9,600,000<br />
BETHZABETH 300350<br />
1,280.00<br />
06 August<br />
2001<br />
16 August<br />
2001<br />
16 August<br />
2031<br />
point 3<br />
point 4<br />
646,000 9,604,000<br />
649,000 9,604,000<br />
point 5 649,000 9,604,600<br />
point 6 649,500 9,604,600<br />
point 7 649,500 9,603,000<br />
initial point 656,700 9,597,000<br />
EL BOSQUE 300392<br />
24.30<br />
04 April 2002 09 July 2001<br />
09 July<br />
2031<br />
point 1<br />
point 2<br />
656,700 9,595,500<br />
656,538 9,595,500<br />
point 3 656,538 9,597,000<br />
EL REGALO<br />
FRANK<br />
300587<br />
102.00<br />
18<br />
September<br />
2001<br />
01 October<br />
2001<br />
01 October<br />
2031<br />
initial point<br />
point 1<br />
point 2<br />
point 3<br />
656,700 9,598,000<br />
657,000 9,598,000<br />
657,000 9,594,600<br />
656,700 9,594,600<br />
initial point 656,700 9,597,000<br />
point 1 656,538 9,597,000<br />
point 2 656,538 9,597,223<br />
EL RETAZO 300366<br />
46.85<br />
04 April 2002<br />
01 October<br />
2001<br />
01 October<br />
2031<br />
point 3<br />
point 4<br />
655,500 9,597,223<br />
655,500 9,597,500<br />
point 5 656,500 9,597,500<br />
point 6 656,500 9,598,000<br />
point 7 656,700 9,598,000<br />
initial point 653,700 9,597,500<br />
point 1 654,000 9,597,500<br />
point 2 654,000 9,597,223<br />
EL RETAZO 3 300391<br />
32.25<br />
18 September<br />
2001<br />
01 October<br />
2001<br />
01 October<br />
2031<br />
point 3<br />
point 4<br />
653,238 9,597,223<br />
653,238 9,595,823<br />
point 5 653,100 9,595,823<br />
point 6 653,100 9,597,300<br />
point 7 653,700 9,597,300<br />
initial point 649,500 9,599,800<br />
EL SALVADOR<br />
X-3<br />
5012<br />
15.00<br />
17 October<br />
2001<br />
24 October<br />
2001<br />
24 October<br />
2031<br />
point 1<br />
point 2<br />
649,500 9,599,700<br />
648,000 9,599,700<br />
point 3 648,000 9,599,800<br />
EL TABLON 300861<br />
42.00<br />
21 August<br />
2002<br />
02<br />
September<br />
2002<br />
02<br />
September<br />
2032<br />
initial point<br />
point 1<br />
point 2<br />
point 3<br />
656,000 9,588,000<br />
656,000 9,588,600<br />
656,700 9,588,600<br />
656,700 9,588,000<br />
initial point 655,250 9,589,000<br />
EL TABLON 1 300862<br />
8.00<br />
14 October<br />
2002<br />
22 October<br />
2002<br />
22 October<br />
2032<br />
point 1<br />
point 2<br />
655,450 9,589,000<br />
655,450 9,588,600<br />
point 3 655,250 9,588,600
Table # 3 continuation<br />
Concession<br />
Name<br />
Code<br />
IAM ZARUMA 300477<br />
LA DURA 300101<br />
LA ENVIDIA 300630<br />
LOMA RICA 1 300559<br />
LOS CIPRECES 300302<br />
Area<br />
Ha<br />
2.50<br />
129.55<br />
1,346.00<br />
19.58<br />
2,394.00<br />
Authorisation<br />
date<br />
05 July 2001<br />
10 July 1998<br />
18 September<br />
2001<br />
18 September<br />
2001<br />
04 April 2002<br />
Registration<br />
date<br />
09 July<br />
2001<br />
09 July<br />
2001<br />
02 October<br />
2001<br />
01 October<br />
2001<br />
05 October<br />
2001<br />
- 16 -<br />
Easting<br />
UTM<br />
PSAD56<br />
Northing UTM<br />
PSAD 56<br />
Expiry date Concession<br />
Limits<br />
initial point 655,400 9,589,500<br />
09 July point 1 655,450 9,589,500<br />
2001 point 2 655,450 9,589,000<br />
point 3 655,400 9,589,000<br />
initial point 654,000 9,597,500<br />
point 1 655,500 9,597,500<br />
point 2 655,500 9,597,223<br />
09 July point 3 655,538 9,597,223<br />
2031 point 4 655,538 9,596,423<br />
point 5 654,438 9,596,423<br />
point 6 654,438 9,597,223<br />
point 7 654,000 9,597,223<br />
initial point 652,700 9,585,400<br />
point 1 652,700 9,589,000<br />
02 October point 2 655,000 9,589,000<br />
2031 point 3 655,000 9,588,000<br />
point 4 657,000 9,588,000<br />
point 5 657,000 9,585,400<br />
initial point 654,600 9,591,225<br />
point 1 654,800 9,591,225<br />
point 2 654,800 9,591,450<br />
point 3 655,000 9,591,450<br />
01 October point 4 655,000 9,590,907<br />
2031 point 5 654,900 9,590,907<br />
point 6 654,900 9,590,707<br />
point 7 654,782 9,590,707<br />
point 8 654,782 9,590,907<br />
point 9 654,600 9,590,907<br />
initial point 649,000 9,603,000<br />
point 1 654,000 9,603,000<br />
point 2 654,000 9,602,000<br />
point 3 656,000 9,602,000<br />
point 4 656,000 9,599,500<br />
point 5 656,500 9,599,500<br />
point 6 656,500 9,597,500<br />
point 7 653,700 9,597,500<br />
point 8 653,700 9,599,700<br />
point 9 653,500 9,599,700<br />
point 10 653,500 9,600,000<br />
point 11 652,500 9,600,000<br />
05 October point 12 652,500 9,601,000<br />
2031 point 13 652,600 9,601,000<br />
point 14 652,600 9,600,700<br />
point 15 653,100 9,600,700<br />
point 16 653,100 9,601,200<br />
point 17 652,500 9,601,200<br />
point 18 652,500 9,601,300<br />
point 19 652,100 9,601,300<br />
point 20 652,100 9,601,100<br />
point 21 652,200 9,601,100<br />
point 22 652,200 9,601,000<br />
point 23 651,100 9,601,000<br />
point 24 651,100 9,600,000<br />
point 25 649,000 9,600,000
Table # 3 continuation<br />
Concession<br />
Name<br />
Authorisation<br />
date<br />
Registration<br />
date<br />
- 17 -<br />
Easting UTM<br />
PSAD56<br />
Northing UTM<br />
PSAD 56<br />
Code Area Ha<br />
Expiry date Concession<br />
Limits<br />
initial point 650,000 9,600,000<br />
point 1 650,000 9,599,700<br />
point 2 649,500 9,599,700<br />
point 3 649,500 9,599,800<br />
LOS LAURELES<br />
2<br />
300558<br />
100.00<br />
23 October<br />
2001<br />
24 October<br />
2001<br />
24 October<br />
2031<br />
point 4<br />
point 5<br />
648,000<br />
648,000<br />
9,599,800<br />
9,599,700<br />
point 6 646,500 9,599,700<br />
point 7 646,500 9,599,800<br />
point 8 646,000 9,599,800<br />
point 9 646,000 9,600,000<br />
initial point 655,240 9,594,000<br />
LORO 300604<br />
9.60<br />
04 April 2002<br />
01 October<br />
2001<br />
01 October<br />
2031<br />
point 1<br />
point 2<br />
655,240<br />
655,000<br />
9,539,600<br />
9,593,600<br />
point 3 655,000 9,594,000<br />
initial point 653,100 9,590,000<br />
MARA 1 300529<br />
45.00<br />
19 October<br />
2001<br />
22 October<br />
2001<br />
22 October<br />
2031<br />
point 1<br />
point 2<br />
653,100<br />
653,400<br />
9,591,500<br />
9,591,500<br />
point 3 653,400 9,590,000<br />
initial point 653,600 9,589,300<br />
point 1 653,600 9,589,000<br />
MARA 8 300537<br />
5.00<br />
19 October<br />
2001<br />
22 October<br />
2001<br />
22 October<br />
2031<br />
point 2<br />
point 3<br />
653,300<br />
653,300<br />
9,589,000<br />
9,589,100<br />
point 4 653,500 9,589,100<br />
point 5 653,500 9,589,300<br />
initial point 655,100 9,591,650<br />
NICOLE 300444<br />
8.48<br />
07 May. 2003 16 May. 2003<br />
16 May.<br />
2033<br />
point 1<br />
point 2<br />
655,100<br />
654,535<br />
9,591,500<br />
9,591,500<br />
point 3 654,535 9,591,650<br />
initial point 654,100 9,589,700<br />
RESUC 4 300579<br />
3.50<br />
19 October<br />
2004<br />
22 October<br />
2001<br />
22 October<br />
2031<br />
point 1<br />
point 2<br />
654,100<br />
654,450<br />
9,589,800<br />
9,589,800<br />
point 3 654,450 9,589,700<br />
initial point 645,000 9,595,000<br />
point 1 645,600 9,595,000<br />
point 2 645,600 9,597,400<br />
SAICHUMA 1 300274<br />
466.00<br />
12 September<br />
2001<br />
25<br />
September<br />
2001<br />
25<br />
September<br />
2031<br />
point 3<br />
point 4<br />
point 5<br />
point 6<br />
645,800<br />
645,800<br />
645,600<br />
645,600<br />
9,597,400<br />
9,598,100<br />
9,598,100<br />
9,599,000<br />
point 7 646,600 9,599,000<br />
point 8 646,600 9,594,500<br />
point 9 645,000 9,594,500<br />
initial point 652,700 9,589,800<br />
point 1 653,600 9,589,800<br />
point 2 653,600 9,589,300<br />
SAN ANTONIO<br />
DE PAUDA<br />
300210<br />
67.00<br />
09 July 2001 10 July 2001<br />
10 July<br />
2001<br />
point 3<br />
point 4<br />
653,500<br />
653,500<br />
9,589,300<br />
9,589,100<br />
point 5 653,300 9,589,100<br />
point 6 653,300 9,589,000<br />
point 7 652,700 9,589,000<br />
initial point 656,700 9,594,000<br />
point 1 656,600 9,594,000<br />
SINSAO 300393<br />
20.44<br />
04 April 2002<br />
01 October<br />
2001<br />
01 October<br />
2031<br />
point 2<br />
point 3<br />
656,600<br />
656,538<br />
9,594,623<br />
9,594,623<br />
point 4 656,538 9,595,500<br />
point 5 656,700 9,595,500
Table # 3 continuation<br />
Concession<br />
Name<br />
RUTH 300580<br />
SOLEMARIA 300545<br />
SUCA 300519<br />
ZUDOS 1 5200<br />
ROMA 300216<br />
Code Area Ha<br />
2.00<br />
23.81<br />
3.80<br />
323.47<br />
661.92<br />
Authorisation<br />
date<br />
Registration<br />
date<br />
- 18 -<br />
Expiry<br />
date<br />
Easting<br />
UTM<br />
PSAD56<br />
Northing UTM<br />
PSAD 56<br />
Concession<br />
Limits<br />
initial point 654,554 9,588,481<br />
18 September 01 October 01 October point 1 654,754 9,588,481<br />
2001<br />
2001 2031 point 2 654,754 9,588,381<br />
point 3 654,554 9,588,381<br />
initial point 655,300 9,592,585<br />
point 1 655,300 9,591,550<br />
point 2 655,100 9,591,550<br />
point 3 655,100 9,591,650<br />
04 April 2002 18 April 2002<br />
18 April<br />
2032<br />
point 4<br />
point 5<br />
655,000<br />
655,000<br />
9,591,650<br />
9,591,678<br />
point 6 654,935 9,591,678<br />
point 7 654,935 9,591,978<br />
point 8 655,135 9,591,978<br />
point 9 655,135 9,592,585<br />
initial point 654,100 9,589,200<br />
19 October 22 October 22 October point 1 654,290 9,589,200<br />
2001<br />
2001 2031 point 2 654,290 9,589,000<br />
point 3 654,100 9,589,000<br />
initial point 653,100 9,591,500<br />
point 1 653,100 9,595,823<br />
point 2 653,938 9,595,823<br />
point 3 653,938 9,595,000<br />
point 4 653,900 9,595,000<br />
point 5 653,900 9,594,700<br />
point 6 653,600 9,594,700<br />
05 July 2001 09 July 2001<br />
09 July<br />
2031<br />
point 7<br />
point 8<br />
653,600<br />
653,350<br />
9,594,500<br />
9,594,500<br />
point 9 653,350 9,594,200<br />
point 10 653,600 9,594,200<br />
point 11 653,600 9,593,700<br />
point 12 653,900 9,593,700<br />
point 13 653,900 9,592,700<br />
point 14 654,000 9,592,700<br />
point 15 654,000 9,591,500<br />
initial point 656,538 9,594,623<br />
point 1 654,400 9,594,623<br />
point 2 654,400 9,595,000<br />
point 3 654,000 9,595,000<br />
point 4 654,000 9,594,623<br />
point 5 653,938 9,594,623<br />
point 6 653,938 9,595,823<br />
point 7 653,238 9,595,823<br />
10 Jun. 2003<br />
06 August<br />
2001<br />
06 August<br />
2031<br />
point 8<br />
point 9<br />
653,238<br />
654,438<br />
9,597,223<br />
9,597,223<br />
point 10 654,438 9,596,423<br />
point 11 655,538 9,596,423<br />
point 12 655,538 9,597,223<br />
point 13 656,538 9,597,223<br />
point 14 655,038 9,595,423<br />
point 15 655,038 9,595,123<br />
point 16 654,738 9,595,123<br />
point 17 654,738 9,595,423
Table # 3 continuation<br />
Concession Name Code Area Ha<br />
SUCA 4 300523<br />
PACAYURCO<br />
BAJO<br />
NUEVA<br />
ESPERANZA 3<br />
NUEVA<br />
ESPERANZA 6<br />
189<br />
300089<br />
300195<br />
1.00<br />
9.00<br />
30.00<br />
77.80<br />
Authorisation<br />
date<br />
19 October 2001<br />
11 Jun. 2003<br />
Registration<br />
date<br />
30 October<br />
2001<br />
06 August<br />
2001<br />
- 19 -<br />
Expiry date<br />
30 October<br />
2031<br />
06 August<br />
2031<br />
06 July 2001 09 July 2001 09 July 2031<br />
06 July 2001 09 July 2001 09 July 2031<br />
Concession<br />
Limits<br />
Easting UTM<br />
PSAD56<br />
Northing UTM<br />
PSAD 56<br />
initial point 654,450 9,590,000<br />
point 1 654,550 9,590,000<br />
point 2 654,550 9,589,900<br />
point 3 654,450 9,589,900<br />
initial point 655,038 9,595,423<br />
point 1 655,038 9,595,123<br />
point 2 654,738 9,595,123<br />
point 3 654,738 9,595,423<br />
initial point 653,600 9,589,900<br />
point 1 654,100 9,589,900<br />
point 2 654,100 9,589,700<br />
point 3 653,800 9,589,700<br />
point 4 653,800 9,589,200<br />
point 5 654,100 9,589,200<br />
point 6 654,100 9,589,000<br />
point 7 653,600 9,589,000<br />
initial point 654,490 9,589,000<br />
point 1 654,490 9,589,200<br />
point 2 654,500 9,589,200<br />
point 3 654,500 9,589,500<br />
point 4 654,650 9,589,500<br />
point 5 654,650 9,589,900<br />
point 6 654,550 9,589,900<br />
point 7 654,550 9,590,000<br />
point 8 655,100 9,590,000<br />
point 9 655,100 9,590,130<br />
point 10 655,300 9,590,130<br />
point 11 655,300 9,590,200<br />
point 12 655,450 9,590,200<br />
point 13 655,450 9,589,500<br />
point 14 655,400 9,589,500<br />
point 15 655,400 9,589,000<br />
point 16 655,015 9,589,824<br />
point 17 655,215 9,589,824<br />
point 18 655,215 9,589,524<br />
point 19 655,115 9,589,524<br />
point 20 655,115 9,589,424<br />
point 21 655,015 9,589,424<br />
point 22 654,915 9,589,524<br />
point 23 655,015 9,589,524<br />
point 24 655,015 9,589,324<br />
point 25 654,915 9,589,324<br />
point 26 654,800 9,589,400<br />
point 27 654,900 9,589,400<br />
point 28 654,900 9,589,300<br />
point 29 655,000 9,589,300<br />
point 30 655,000 9,589,100<br />
point 31 654,800 9,589,100
Table # 3 continuation<br />
Concession<br />
Name<br />
NUEVA<br />
ESPERANZA 4<br />
NUEVA<br />
ESPERANZA<br />
NUEVA<br />
ESPERANZA 2<br />
Code Area Ha<br />
300086<br />
152<br />
300085<br />
SAN JOSE 2 385<br />
135.66<br />
5.00<br />
42.00<br />
5.00<br />
LILLY RAY 473 7.76<br />
EL SOROCHE<br />
UNIFICADO<br />
506<br />
32.80<br />
Authorisation<br />
date<br />
Registration<br />
date<br />
05 July 2001 09 July 2001<br />
06 July 2001 09 July 2001<br />
09 July 2001 10 July 2001<br />
06 July 2001 09 July 2001<br />
17 October<br />
2001<br />
24 October<br />
2001<br />
06 July 2001 10 July 2001<br />
- 20 -<br />
Expiry date<br />
09 July<br />
2031<br />
09 July<br />
2031<br />
10 July<br />
2031<br />
09 July<br />
2031<br />
24 October<br />
2031<br />
10 July<br />
2031<br />
Concession<br />
Limits<br />
Easting<br />
UTM<br />
PSAD56<br />
Northing UTM<br />
PSAD 56<br />
initial point 654,700 9,593,980<br />
point 1 654,700 9,594,200<br />
point 2 654,000 9,594,200<br />
point 3 654,000 9,594,300<br />
point 4 654,400 9,594,300<br />
point 5 654,400 9,594,623<br />
point 6 656,600 9,594,623<br />
point 7 656,600 9,594,000<br />
point 8 655,000 9,594,000<br />
point 9 655,000 9,593,980<br />
initial point 654,135 9,590,910<br />
point 1 653,835 9,590,910<br />
point 2 653,835 9,591,010<br />
point 3 653,935 9,591,010<br />
point 4 653,935 9,591,110<br />
point 5 654,135 9,591,110<br />
initial point 653,600 9,590,100<br />
point 1 654,100 9,590,100<br />
point 2 654,100 9,589,900<br />
point 3 653,400 9,589,900<br />
point 4 653,400 9,591,500<br />
point 5 653,600 9,591,500<br />
initial point 654,290 9,589,300<br />
point 1 654,390 9,589,300<br />
point 2 654,390 9,589,200<br />
point 3 654,490 9,589,200<br />
point 4 654,490 9,589,000<br />
point 5 654,290 9,589,000<br />
initial point 654,100 9,594,130<br />
point 1 654,300 9,594,130<br />
point 2 654,300 9,593,784<br />
point 3 654,290 9,593,784<br />
point 4 654,290 9,593,740<br />
point 5 654,100 9,593,740<br />
initial point 654,100 9,590,500<br />
point 1 653,600 9,590,500<br />
point 2 653,600 9,591,500<br />
point 3 653,700 9,591,500<br />
point 4 653,700 9,591,200<br />
point 5 654,000 9,591,200<br />
point 6 654,000 9,591,110<br />
point 7 653,935 9,591,110<br />
point 8 653,935 9,591,010<br />
point 9 653,835 9,591,010<br />
point 10 653,835 9,590,910<br />
point 11 654,100 9,590,910
Table # 3 continuation<br />
Concession<br />
Name<br />
MACHAY 300320<br />
Code Area Ha<br />
1,273.00<br />
Authorisation<br />
date<br />
12 September<br />
2001<br />
Registration<br />
date<br />
01 October<br />
2001<br />
- 21 -<br />
Expiry<br />
date<br />
01 October<br />
2031<br />
Concession<br />
Limits<br />
Easting<br />
UTM<br />
PSAD56<br />
Northing UTM<br />
PSAD 56<br />
initial point 651,600 9,599,000<br />
point 1 651,600 9,593,500<br />
point 2 650,400 9,593,500<br />
point 3 650,400 9,599,000<br />
point 4 645,600 9,599,000<br />
point 5 645,600 9,599,700<br />
point 6 651,700 9,599,700<br />
point 7 651,700 9,599,100<br />
point 8 651,900 9,599,100<br />
point 9 651,900 9,599,700<br />
point 10 653,700 9,599,700<br />
point 11 653,700 9,597,300<br />
point 12 653,100 9,597,300<br />
point 13 653,100 9,599,400<br />
point 14 652,000 9,599,400<br />
point 15 652,000 9,599,000
9'604.000N<br />
9'602.000N<br />
9'600.000N<br />
9'598.000N<br />
9'596.000N<br />
9'594.000N<br />
9'592.000N<br />
9'590.000N<br />
9'588.000N<br />
9'586.000N<br />
646.000E 646.000E<br />
648.000E<br />
648.000E<br />
650.000E<br />
650.000E<br />
652.000E<br />
652.000E<br />
- 22 -<br />
654.000E<br />
654.000E<br />
656.000E<br />
Company Concessions<br />
Concessions<br />
Fig. 3<br />
IAMGOLD ground and underground survey control point locations<br />
(A total of 2,591 points are plotted on the map)<br />
656.000E<br />
9'604.000N<br />
9'602.000N<br />
9'600.000N<br />
9'598.000N<br />
9'596.000N<br />
9'594.000N<br />
9'592.000N<br />
9'590.000N<br />
9'588.000N<br />
9'586.000N
4.4 Permitting<br />
All information used in this <strong>report</strong> was provided to the author by <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong><br />
Corporation. Source information included internal Company’s <strong>report</strong>s, information provided by<br />
IAMGOLD within terms and conditions of Letter Agreement (Appendix B) which usage has been<br />
authorized by Company and information publicly accessible and listed in 21.0 and properly cited<br />
in the respective context. The original information and data is unchanged, listed in original form<br />
as provided by Mr. Franklin Guañuna, the Company’s Geological Administrator, and a qualified<br />
person as defined by National Instrument 43-101 during author’s visit to the Project area.<br />
13 Environmental Permitting<br />
According to “<strong>Mining</strong> Law”, Title V, Chapter II, Article 79, and others “The holders of mining<br />
concessions and plants for processing, smelting and refining must make environmental impact<br />
studies and environmental management plans to prevent, mitigate, control, rehabilitate and<br />
compensate environmental and social impacts derived from their activities; such studies shall be<br />
approved by the Environmental Sub-secretariat of the Ministry of Energy and Mines”.<br />
Environmental management plans are to contain the following elements:<br />
1. Description of the <strong>project</strong> and the environmental means to be applied, including:<br />
• Protection of natural elements and native communities<br />
• Prevention and control of contamination, deforestation, erosion and sedimentation<br />
• Follow-up and monitoring<br />
• Rehabilitation and restoration of natural elements<br />
• Maintenance of infrastructure<br />
• Emergency and contingency plans<br />
• Mitigation of any negative impacts<br />
• Compensation to persons or communities negatively affected by the <strong>project</strong><br />
2. Chronogram of Activities<br />
3. Maps of Activities and Infrastructure<br />
4. Waste Treatment<br />
5. Evaluation of Compliance with the stated program<br />
6. Declaration of the environmental effect for the exploration stage,<br />
7. Environmental Impact Studies for the stages of exploitation, design, construction, operation<br />
and dismantling<br />
8. Permanent programs of environmental training and education for employees<br />
- 23 -
“<strong>Mining</strong> Law” provides further details concerning the element itemized above.<br />
4.6. Environmental Liabilities<br />
The agreement by which IAMGOLD transferred the Zaruma <strong>project</strong> areas to Minera Australiana<br />
(Appendix B) does contain a declaration by IAMGOLD that its work on the concession was done<br />
in such a manner as not to result in any damages that would require restitution to the state or to<br />
third parties.<br />
The small scale mining activities within the <strong>project</strong> area are limited to rustic hand mining using<br />
explosives, milling of the mineralized material in a small mechanized “Chilean Mill”, gravity<br />
concentration of the milled material in concrete settling channels and final concentration by hand<br />
panning. Gold is extracted from the resultant gravity concentrate by mercury amalgamation (Fig.<br />
4). Several plants on the site where gold is extracted from mineralized material use a cyanide<br />
process. Both the mercury amalgamation process and the cyanide extraction process have the<br />
potential to release harmful chemicals into the environment.<br />
Fig. 4<br />
Small scale cyanide-process plant, channel system for gravity extraction and final hand-panning.<br />
Muluncay zone north of the Zaruma Project boundary.<br />
- 24 -
5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE and<br />
PHYSIOGRAPHY<br />
5.1 Location<br />
The Zaruma Project is situated in El Oro Province of southern Ecuador, about 175 kilometres<br />
south and 60 kilometres southeast of the major port cities of Guayaquil and Machala<br />
respectively (Figure 4). The centre of the property is located on 654,500 East and 9,592,000<br />
North (UTM PSAD-56, zone 17S) or longitude 79° 36’ 31” West and latitude 3° 41’ 20” South<br />
(Provisional South American 1956 <strong>project</strong>ion).<br />
5.2 Access<br />
Good asphalted roads provide access to the mining towns of Zaruma and Portovelo about 2<br />
hours drive from the city of Machala. Access on the <strong>project</strong> area is facilitated by a relatively<br />
dense network of secondary roads. The <strong>project</strong> area is also traversed by a main highway to the<br />
city of Loja.<br />
5.3 Climate and Physiography<br />
The property lies on the western flank of the Cordillera Occidental of Andes mountain range. Hill<br />
slopes are moderately steep to very steep with elevations ranging from the 1040 to 1600m a.s.l.<br />
Being traditionally a mining district, areas which are not disturbed by mining activity are used for<br />
farmlands, grazing and local minor secondary forestry. The climate is subtropical and humid with<br />
temperatures ranging from 18 o to 30 o C. Yealy rainfall averages 1,341mm (1985 to 1994 in<br />
Clavijo, 1998), with heaviest rainfalls occurring in the months of January to June.<br />
5.4 Local Resources<br />
The location of two medium-sized cities namely Zaruma with population of 29,000 and Portovelo<br />
with population of 14,000 within the Project area would provide both the labour force and all<br />
other facilities a mining operation needs e.g. hotels, food supply, material supply,<br />
communication resources, public security and government institution representatives. A strong<br />
mining background for the district guarantees skilled workers for underground mining and the<br />
availability of basic mining-related material in the Project area. High-tension power lines<br />
providing electricity are connected to both Zaruma and Portovelo and the Rio Amarillo and Rio<br />
Calera rivers are able to supply adequate water for large scale mining operations throughout the<br />
year.<br />
- 25 -
6.0 HISTORY<br />
The hills of Zaruma and Portovelo have been mined for gold and silver for centuries. The Incas<br />
were already extracting gold and silver in the area with hydraulic mining of the oxidized parts of<br />
veins when Mercadillo, one of Pizzarro´s force, followed the Rio Amarillo River upstream and<br />
encountered the Inca mine and founded the town of Zaruma in 1549 (Billingsley, 1926).<br />
Exploitation of the Zaruma and Portovelo districts continued during the time of Spanish<br />
colonization until 1870 when an Ecuadorian-Chilean company was established.<br />
In 1880, Grant Zaruma Company, from England, bought controlling shares of a newly-formed<br />
Ecuadorian-Chilean mining company. Operational rights were immediately endorsed to<br />
Southern American Development Company (SADCO), an American company, who operated the<br />
mine from 1897 to 1950 by gaining control of the district’s main gold deposits in 1897.<br />
Exploration programmes of SADCO commenced in 1896 and brought the mine into production<br />
at 108t/day in 1905 (Fig. 5). The mine was subsequently deepened to 13 level located at an<br />
elevation of 270m above sea level, 800m below the uppermost workings (PRODEMINCA, 2000<br />
in Spencer, R.M. et al., 2002). In the 53 years that followed, SADCO recovered some 3.5 million<br />
ounces of gold and 12 million ounces of silver from 7.6 million tones of ore at a cut-off grade of<br />
14.4 g/t Au and 48.9 g/t Ag (Van Thournout et al., 1996).<br />
After the lower levels of the Portovelo mine were flooded in 1944 and facing increasing costs,<br />
taxes and a complicated political situation, SADCO finally withdrew from the country in 1950 and<br />
the Ecuadorian government took over the mine. A state-owned company, CIMA, took over the<br />
mining operations in the area until 1980 and it is estimated to have produced a further 375,000<br />
oz of gold by 1965. In 1984, thousands of poverty-stricken miners invaded the old SADCO pits<br />
and small-scale and artisan mining has been going on in the area ever since. An additional<br />
35,000 to 50,000 oz of gold has been produced each year since then by informal miners, smallscale<br />
operating mining societies and principally from the family-owned BIRA. In the 1990´s<br />
statistical information, mining from the Zaruma and Portovelo areas totalled 3 million tonnes<br />
(INEMIN – CODIGEM, 1990, in Jemielita and Bolaños, 1993).<br />
In the mid-90´s several overseas companies attempted to consolidate the area and carried out<br />
systematic exploration programmes. In 1995, the Canadian-based TVX Corporation reached<br />
agreement with most of the Zaruma area mining societies and informal miners and started with<br />
underground and surface mapping particularly within the Zaruma and Muluncay areas from<br />
March 1995 until February 1996 in which the author of this <strong>report</strong> was involved. A resource<br />
estimate was carried out by M.Alfaro and is listed in section 10.1.<br />
- 26 -
After TVX Corp. withdrew from Ecuador in 1998 all information was acquired by IAMGOLD.<br />
IAMGOLD continued with more extensive exploration programmes including surface trenching,<br />
surface and underground sampling, surveying and diamond drilling. IAMGOLD significantly<br />
improved the Zaruma Project area with legal consolidation of titles, adding valuable information<br />
to the <strong>project</strong> database, employing systematic geochemical data quality control and undertaking<br />
geological modelling.<br />
In August 2003, all the IAMGOLD properties and the <strong>project</strong> database were transferred to<br />
<strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corporation which continued the exploration up to date of this <strong>report</strong>.<br />
Fig. 5<br />
View of the old SADCO vertical shaft in Portovelo<br />
- 27 -
7.0 GEOLOGICAL SETTING<br />
7.1 Regional Geological Setting<br />
The general geological setting is described in Billingsly (1926), Van Thournout et al. (1996), and<br />
Spencer et al. (2002). Original sources are cited in section 18.0.<br />
Fig. 6<br />
Simplified Geological Map of Ecuador<br />
The Project area consists of a 15 km long vein system that lies immediately north of the Piñas<br />
Fault, a major regional structure that separates a metamorphic terrain to the south from a<br />
- 28 -<br />
Zaruma –<br />
Portovelo
Tertiary volcanic sequence to the north (Fig. 6). The metamorphic rocks, subparallel to the Piñas<br />
Fault, show that this structure represents a suture dated as Jurassic to early Cretaceous<br />
(Aspden et al., 1995). Tertiary volcanic rocks preserved on the northern side of the Piñas Fault<br />
(Fig. 7) unconformably overlie metamorphic rocks facies of continental origin, implying that the<br />
suture marks a site of continent-continent collision in the late Jurassic to early Cretaceous.<br />
- 29 -<br />
Puna Formation, siltite<br />
Quaternary volcanics<br />
Pinon Formation diabase, pyroclastics<br />
Undiferentiated Quaternary sediments<br />
Metamorphic rocks<br />
Fig. 7<br />
Regional Geological Map of the Zaruma – Portovelo District<br />
(Segment of Geological Map of Ecuador, Governmental Geological Service, 1969)<br />
Sandstone, conglomerates<br />
Precambrian metamorphic basement<br />
Intrusive rocks undiferentiated<br />
25 km<br />
Preserved volcanic units show southward-thickening that define growth sequences formed in a<br />
half graben during normal movement on the Piñas Fault (Coward, 2001 in Spencer, R.M. et al.,<br />
2002) and as a consequence of deceleration in the rate of subduction of the Nasca plate<br />
beneath the South American plate at 37 Ma. North-south-directed compression increased the<br />
rate of the plate convergence at 20 Ma and caused the hanging wall of the Piñas Fault to bulge<br />
into an open, regional-scale antiform.
Host rocks of the Zaruma – Portovelo vein system are late Oligocene to early Miocene (28.4 –<br />
21.5 Ma) in age (Dunkley and Geybor, 1997 in Spencer, R.M. et al., 2002) and range in<br />
composition from calc-alkaline to alkaline, compatible with their emplacement in an extensional<br />
cordillera setting. Four porphyry intrusions of dioritic to granodioritic composition have intruded<br />
the hinge of the Cangrejos antiform; one has been dated at 16 Ma (Pratt et al., 1997). On one<br />
of these, the Fierro Urcu porphyry, drilling revealed a mass of coalescing sills which is<br />
compatible with intrusion into a compressive stress field (PRODEMINCA, 2002 in Spencer, R.M.<br />
et al., 2002).<br />
7.2 Zaruma Project Geological Setting<br />
7.2.1 Geological Setting<br />
The Zaruma Project area is underlain by intrusions and mafic to intermediate volcanic rocks that<br />
constitute the Portovelo Unit of the Saraguro Group. Aerial photography has revealed a distinct<br />
10km in diameter ring-type structure which has been tentatively interpreted as a caldera<br />
structure (Quiroga, J.G., 1995).<br />
The monotonous volcanic sequence in the Zaruma – Portovelo area has been subdivided<br />
(Billingsley, 1926) into three units:<br />
• The lowest part of the sequence has been nominated the Muluncay Series and is<br />
dominantly volcanic breccias, tuffs, lava flows and minor ignimbrites. Breccias include<br />
autobreccias, flow breccias, pyroclastic breccias and matrix-supported conglomerates<br />
which have been interpreted as mud-flow deposits<br />
• The middle part of the local stratigraphy consists of medium-grained andesitic sills of the<br />
Portovelo Unit which constitutes the concordant limb of a lapolithic intrusion of<br />
melanodioritic composition which is similar in composition to the enclosing andesitic<br />
volcanic rocks<br />
• The uppermost unit, the Faique Series, consists of volcanic rocks which are similar to the<br />
Muluncay Series except that the breccias tend to be coarser grained.<br />
- 30 -
Piñas normal fault<br />
Lopolithic intrusives<br />
at onset of Miocene inversion?<br />
Fig. 8<br />
Schematic cross-section showing a model for the development of the Portovelo Unit volcanics<br />
associated with normal faulting. (After R. Spencer,2002)<br />
Considering similarities between the Muluncay Series and the Faique Series it was suggested<br />
that both units may form part of an upward-coarsening sequence that was intruded along flatlying<br />
fractures by a melanodioritic lopolith (Fig. 8) which has an eastern limb that constitutes the<br />
Portovelo Unit (Spencer, R.M. et al., 2002).<br />
Numerous, mostly fine-grained intrusions varying in composition from melanocratic diorite to<br />
quartz monzonite are known in the <strong>project</strong> area and are interpreted as high-level, subvolcanic<br />
intrusive bodies. Sigmoidal shapes of the intrusive bodies in plan view are suggesting an<br />
asymmetry which is compatible with intrusion into a right-lateral stress field. In some cases, it<br />
was observed that melanocratic diorite dykes run parallel to the main veins (Fig. 9) suggesting a<br />
close spatial relationship between dykes and mineralising fluids that are suspected to be related<br />
to a late stage of melanocratic diorite intrusive activity (Quiroga, J.G., 1995).<br />
- 31 -<br />
Oligocene<br />
growth sequences
The main host rocks to mineralisation are the volcanic units described above, however,<br />
immediately to the NW of Zaruma city a strongly altered porphyry was also observed as a host<br />
rock (Quiroga, J.G.., 1995).<br />
9606000<br />
9604000<br />
9602000<br />
9600000<br />
9598000<br />
9596000<br />
9594000<br />
9592000<br />
9590000<br />
9588000<br />
9586000<br />
646000<br />
648000<br />
SEC: SEC: SEC: 9'599.500<br />
9'599.500<br />
9'599.500<br />
SEC: SEC: SEC: 9'598.000<br />
9'598.000<br />
9'598.000<br />
SEC: SEC: SEC: SEC: 9'597.500<br />
9'597.500<br />
9'597.500 9'597.500<br />
9'597.500<br />
650000<br />
SEC: SEC: SEC: 9'600.000<br />
9'600.000<br />
9'600.000<br />
135/45<br />
135/45<br />
135/45<br />
150/50<br />
<strong>Dynasty</strong> Concessions<br />
155/60<br />
155/60 155/60<br />
155/60<br />
120/50<br />
120/50<br />
120/50<br />
130/47 130/47<br />
130/47<br />
130/47<br />
120/57<br />
120/57<br />
120/57<br />
SEC: SEC: SEC: 9'595.000<br />
9'595.000<br />
9'595.000<br />
SEC: SEC: SEC: 9'594.500<br />
9'594.500<br />
9'594.500<br />
SEC: SEC: SEC: SEC: 9'594.000<br />
9'594.000<br />
9'594.000<br />
9'594.000<br />
SEC: SEC: SEC: 9'593.000<br />
9'593.000<br />
9'593.000<br />
SEC: SEC: SEC: 9'591.500<br />
9'591.500<br />
9'591.500<br />
SEC: SEC: SEC: SEC: 9'591.000<br />
9'591.000<br />
9'591.000<br />
9'591.000<br />
SEC: SEC: SEC: 9'590.755<br />
9'590.755<br />
9'590.755<br />
SEC: SEC: SEC: 9'590.655<br />
9'590.655<br />
9'590.655<br />
SEC: SEC: SEC: 9'590.255<br />
9'590.255<br />
9'590.255<br />
SEC: SEC: SEC: SEC: 9'590.155<br />
9'590.155<br />
9'590.155 9'590.155<br />
SEC: SEC: SEC: 9'589.555<br />
9'589.555<br />
9'589.555<br />
SEC: SEC: SEC: SEC: (653000,9588010;656500,9591040)<br />
(653000,9588010;656500,9591040)<br />
(653000,9588010;656500,9591040)<br />
(653000,9588010;656500,9591040)<br />
(653000,9588010;656500,9591040)<br />
(653000,9588010;656500,9591040)<br />
(653000,9588010;656500,9591040)<br />
(653000,9588010;656500,9591040)<br />
(653000,9588010;656500,9591040)<br />
652000<br />
152/38<br />
152/38 152/38<br />
152/38<br />
140/55<br />
140/55<br />
140/55<br />
140/40<br />
140/40<br />
140/40<br />
140/50<br />
140/50<br />
140/50<br />
130/47<br />
130/47<br />
130/47<br />
130/35<br />
130/35<br />
130/35<br />
160/40<br />
160/40<br />
160/40<br />
130/50<br />
130/50<br />
130/50<br />
654000<br />
140/40<br />
140/40<br />
140/40<br />
140/60<br />
134/40<br />
140/60<br />
134/40<br />
140/60<br />
140/60<br />
134/40<br />
155/50<br />
155/50<br />
155/50<br />
ZARUMA<br />
ZARUMA<br />
123/60<br />
123/60<br />
123/60<br />
140/30<br />
140/30<br />
140/30<br />
145/30<br />
145/30<br />
145/30<br />
130/0<br />
130/0<br />
130/0<br />
PORTOVELO<br />
PORTOVELO<br />
656000<br />
- 32 -<br />
658000<br />
Intrusive rocks<br />
Dacite tuff (green)<br />
Volcanic sediments (red)<br />
Volcanic sediments and lava flows (red to violet)<br />
Andesitic volcanics (breccia, lava flows)<br />
Dacite porphyry stocks<br />
Melanocratic diorite. magnetite-rich<br />
Quartz-diorite stocks and dykes<br />
Quartz-monzonite porphyry dykes<br />
Diorite<br />
Metamorphic basement rocks<br />
Miscelanoeous<br />
SEC : 9'593.000<br />
W<br />
Alluvial deposits<br />
Colluvial deposits<br />
Crystal-clast tuff<br />
Pumice tuff<br />
Andesitic lava flows<br />
N<br />
L E G E N D<br />
Andesite porphyry (dark green)<br />
Quartz-diorite porphyry<br />
Metamorphic basement - amphibolite<br />
S<br />
Metamorphic basement - gabbro<br />
Metamorphic basement - gneiss<br />
Major structures (mapped)<br />
Major structures (inferred)<br />
Geological Seccion Location<br />
Fig. 9<br />
The Zaruma Project Geological Map and <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corporation controlled<br />
and/or owned claims plotted as a red outline.<br />
(After IAMGOLD original map at 1 : 10,000 scale, modified and updated by author)<br />
E
7.2.2 Structural Setting<br />
Veins in the Zaruma – Portovelo District are arranged in four principal en-echelon sets controlled<br />
by NW-SE striking oblique faults parallel to the Piñas Fault (Fig. 10). The majority of the veins<br />
strike north and some show a sigmoidal geometry in which southeast-striking tails rotate into the<br />
north-striking central portions of the veins (Spencer, R.M. et al., 2002).<br />
Faults that control the en-echelon sets formation strikes NW and dip to the southwest at 40 o to<br />
60 o . The oblique right-lateral thrust movement on the north-west-striking thrust ramps have been<br />
defined. It is suggested that Zaruma, Sesmo-Colorada, Muluncay and R-level Thrust root on the<br />
Piñas Fault.<br />
Fig. 10<br />
Northwest striking thrusts control the en-echelon set formations<br />
and the sigmoidal geometry of the veins.<br />
- 33 -
7.2.3 Alteration<br />
Alteration styles within the Zaruma – Portovelo area show a transition from high temperature<br />
assemblages in the NE portion of the area centred on El Poglio porphyry to low temperature<br />
assemblages towards the southwest and south (Fig. 11).<br />
COOLING<br />
Fig. 11<br />
Alteration mineral zonation within the Project area.<br />
(After R. Spencer, 2002)<br />
- 34 -<br />
While veins are exposed up to 900m<br />
below a secondary biotitetourmaline-magnetite<br />
altered El<br />
Poglio porphyry, still further north<br />
and at higher elevations, K silicate<br />
altered dioritic porphyries passes<br />
upward into a high-temperature<br />
advance argillic altered zone with a<br />
pyrophyllite-diaspore-topaztourmaline<br />
assemblage defined as a<br />
lithocap (Sillitoe, R., 2000). Advance<br />
argillic alteration comprising vuggy<br />
silica, dickite, pyrophyllite and minor<br />
alunite caps high-relief hills in the<br />
southwestern part of the <strong>project</strong> area<br />
near Zaruma Urcu and Santa<br />
Barbara and are interpreted as<br />
relicts of a SW dipping advance<br />
argillic-altered volcanic sequence<br />
that formed part of the lithocap<br />
related to the El Poglio porphyry<br />
cluster (Sillitoe, R., 2000). Veins<br />
closest to the El Poglio porphyry lie<br />
adjacent to the area of secondary<br />
biotite and the vein infill consists of<br />
dog-tooth quartz intergrown with<br />
banded Fe-rich chlorite, epidote,<br />
tourmaline, magnetite and in some<br />
cases, coarse-grained muscovite.
From north to south through vein outcrops a gradual decrease in temperature was observed in<br />
wall-rock alteration, culminating in illite-smectite mix-layered clay in proximity to the Piñas Fault<br />
(Reyes, 1990 in Spencer, R., 2002).<br />
7.2.4 Mineralisation<br />
The Zaruma – Portovelo <strong>Mining</strong> District consists of a 15km-long vein system developed<br />
immediately north of the Piñas Fault and is arranged in four principal en-echelon sets from<br />
south to north: the Portovelo en-echelon system → the Sesmo-Colorada en-echelon system →<br />
the Muluncay en-echelon system → the R-nivel en-echelon system (Fig.9). The best<br />
development of veins was observed in the immediate footwall of the northwest striking thrust<br />
faults where they are wider (Fig. 12) and continuous along strike when hosted by competent<br />
rocks. Most veins throughout the strike length of the Zaruma – Portovelo vein system dip to the<br />
east at an average of 60 o .<br />
Fig.12<br />
Minable vein width up to 6m.<br />
Jane Vein, Zaruma<br />
Fig.13<br />
Banded textures with symmetric geometry.<br />
Cristina Vein, Zaruma
Vein textures in the Zaruma <strong>project</strong> area do not significantly change along 10km of vein trend.<br />
Typical textures for low-sulphidation veins have been observed including rhythmically banded<br />
textures (Fig. 13) with dominantly symmetric geometry, drusy textures, hydrothermal breccia<br />
textures, dissolution and replacement textures (Fig. 14).<br />
Fig.14<br />
Banded, laminated, hydrothermal breccia and drusy textures. Cristina Vein, Zaruma.<br />
In contrast, veins in the Portovelo system in the southern part of the trend change composition<br />
gradually along strike southward from quartz through quartz-calcite, to calcite-dominated<br />
compositions over a strike of 2 km. A vertical zonation in composition from quartz dominated<br />
deeper portions of veins to calcite dominated assemblages near surface was observed, in<br />
particular, within the Portovelo en-echelon block.<br />
Mineral assemblages within veins showing a zonation is a function of cooling direction (Fig.11).<br />
While northern portions of veins are dominated by relatively higher temperature assemblages<br />
with disseminated chalcopyrite-pyrite-magnetite in K-silicate altered El Poglio porphyry and<br />
banded quartz-chalcopyrite-pyrite-magnetite-dark-green chlorite within veins in R-nivel enechelon<br />
set. Going south, the mineral group progresses into the quartz-chalcopyrite-pyrite<br />
dominated Muluncay en-echelon set then into quartz-chalcopyrite-sphalerite-galena in the
Sesmo-Colorada en-echelon up to the sphalerite-dominant, quartz-carbonates-sphalerite-pyritegalena<br />
± chalcopyrite assemblage in the Portovelo en-echelon system. Similar zonation can be<br />
observed in an EW section with higher temperature assemblages in eastern and central part of<br />
the district dominated by chalcopyrite changing into sphalerite-dominated to galena-dominated<br />
assemblages in the easternmost part of the district as shown on Fig.15.<br />
Fig. 15<br />
Mineralisation Zonation in the Zaruma – Portovelo <strong>Mining</strong> District (After R. Spencer, 2002)<br />
- 37 -
7.2.5 Mineral Assemblage Studies<br />
On a request from TVX Gold Corp., the author of this <strong>report</strong> carried out in 1995 petrographic and<br />
mineral assemblage microscopic studies. The results from these studies are summarized below.<br />
A total of 9 petrographic sections were used for transcurrent light studies and 5 polished<br />
sections were used in reflected light studies.<br />
Rock Types:<br />
1. Quartz Andesite – a crystalline rock with phenocrysts and a vitreous groundmass. The<br />
rock belongs to group of rocks with a low presence of quartz and without K-feldspars.<br />
The dominant mineral is idiomorphic phenocrysts of Na-Ca feldspars (andesine) with<br />
poikilitic inclusions of quartz and mafic minerals. Strong albitisation and carbonitisation<br />
was observed. Mafic minerals, mainly biotite and amphibole, are strongly chloritised.<br />
Irregularly-shaped quartz crystals are present in less than 5% of the rock. The<br />
groundmass is vitreous and consists of strongly altered clay (kaolinite) with undefined<br />
opaque minerals. Pseudomorphs of chlorite and carbonate after mafic minerals are<br />
common (Botoneros labour, 10m north from BT-009 survey point, Zaruma).<br />
2. Pyroxene Andesite – this rock is characterized by a holocrystalline texture with a<br />
dominance of groundmass over phenocrysts. The presence of K-feldspars was detected.<br />
Dominant minerals are Na-Ca feldspars (andesine to labradorite) and a monoclinic<br />
pyroxene (35º - 48 o ) which is relatively fresh, frequently twinned in a 100º axes and<br />
determined as probably augite. Chlorite and carbonate are present as pseudomorphs<br />
after pyroxene and/or other mafic minerals. The groundmass texture is finely-crystallised<br />
and is composed by quartz and feldspar (Naranjitos labour, reference point N-032).<br />
3. Dacite Porphyry – two types of porphyries have been detected:<br />
• A porphyritic type with mega-crystals of feldspars and quartz in a microcrystalline<br />
groundmass of similar composition<br />
• A less porphyritic variety with only medium-size laminar and randomly-oriented<br />
feldspar phenocrysts which were apparently xenoliths from an older intrusive<br />
phase<br />
Only Na-Ca feldspars of andesine composition have been observed in both types of<br />
porphyry with frequently pronounced albitisation and carbonitisation alteration. Megacrystals<br />
of quartz are common and with the crystals size, liquid > gas fluid inclusions<br />
have been detected. Mafic minerals have been observed only as pseudomorphs of<br />
- 38 -
chlorite, epidote / zoisite and carbonate without relict textures which make the primary<br />
mineral identification difficult, although amphibole is possible (Pacayurco area, 655.875E<br />
/ 9´597.050 N).<br />
4. Granodiorite Porphyry – this rock is characterised by intensively albitised Na-Ca<br />
feldspars with minor K-feldspars. Interstitial spaces between the feldspars phenocrysts<br />
are infilled with quartz. Mafic minerals are totally replaced by carbonates and chlorite,<br />
and only pseudomorphs have been observed. (San Antonio labour, Muluncay are,<br />
reference point SA-017)<br />
5. Dacite – this rock has a significant amount of quartz, very low to absent K-feldspars and<br />
hemicrystalline to porphyritic textures. Vesicular textures observed are different in size<br />
and mineral infill. Small vesicules are oval-shaped and usually filled with finely laminated<br />
and radial-crystallised chlorite; while the larger vesicules are infilled with quartz, albite,<br />
chlorite, epidote / zoisite, actinolite and carbonate. Albitisation is the whole rock<br />
alteration style and is replacing mainly the feldspars. (La Chonta labour, Muluncay area,<br />
Zaruma. Reference: 5m east from CH-008 underground survey point)<br />
6. Amphibole-biotite Granodiorite – this rock is characterised by feldspar twinning of<br />
Carlsbad-type in euhedral crystals with poikilitic inclusions of plagioclase (andesine),<br />
quartz and mafic minerals. Potassic feldspars, frequently in paragenetic association with<br />
quartz and biotite, show a lower crystalline grade as Na-Ca feldspars are present. In<br />
some mega-crystals of Na-Ca feldspars, potassic feldspars have been observed as<br />
poikilitic inclusions. Monoclinic amphiboles form one dominant mineral (20 o ). Anhedral<br />
quartz fills the interstitial space between plagioclase crystals and finely laminated biotite<br />
with Fe-Ti oxides and ilmenite. (Muluncay zone north from the Zaruma <strong>project</strong> boundary)<br />
Ore mineralisation assemblages:<br />
1. Quartz – forms the common and dominant mineral in all ore-samples studied. At least<br />
two generations of quartz have been identified:<br />
• An older generation of coarsely-granulated quartz with interstitial space<br />
infilled with sulphides (mainly chalcopyrite and pyrite), native gold and<br />
hematite. Gold impregnations, up to 50 µm in size, are abundant in this<br />
- 39 -
quartz generation (La Chonta labour, reference point CH-045, Jane<br />
vein)<br />
• A younger generation of crystallised, euhedral quartz and micro-drusy<br />
quartz frequently with sulphides inclusions. Quartz crystal surface<br />
corrosion by sulphides is common<br />
2. Pyrite – occurs in the main as single, disseminated hexahedral crystals in the older<br />
generation quartz. Pyrite aggregates infill with chalcopyrite and native gold have been<br />
observed (La Chonta labour, CH-045, Jane vein and Las Cañas labour, 5m south of SC-<br />
43, Cristina vein). Pyrite crystal surface corrosion textures by gold have been observed.<br />
3. Chalcopyrite – forms commonly as infill of drusy-quartz, in pyrite aggregates and in<br />
cataclased pyrite grains. Isometric inclusions of native gold are frequent. Chalcopyrite is<br />
defined as an older mineral in comparison with galena and sphalerite due to the<br />
corrosion textures of chalcopyrite on contact with younger galena and sphalerite.<br />
4. Sphalerite – is a common mineral in studied assemblages and corrodes chalcopyrite<br />
grain surfaces togetherwith or slightly before galena. Evidence of the sphaleritechalcopyrite<br />
solid solution segregations are usually observed as > 5 µm grains of<br />
chalcopyrite in sphalerite. Textures of sphalerite surface corrosion by native gold and<br />
polybasite have been observed. Concentration of chalcopyrite inclusions in sphalerite<br />
decrease from early stage-formed sphalerite to younger stage-formed sphalerite were<br />
observed in zoned sphalerite crystals. Based on colour changes seen in zoned<br />
sphalerite crystals, two varieties of the mineral are present – iron-rich marmatite as a<br />
older sphalerite generation and an iron-poor sphalerite, honey coloured cleophane, as a<br />
younger generation.<br />
5. Galena – occurs less abundantly than sphalerite and is apparently slightly younger.<br />
Togetherwith sphalerite, galena has been observed corroding chalcopyrite surfaces and<br />
in turn the galena surface has shown corrosion by native gold and polybasite (Pacay<br />
Blanco labour, Cristina Vein)<br />
- 40 -
6. Polybasite – forms a frequent silver mineral in association with gold and exhibits<br />
corrosion textures on sphalerite and galena grain surfaces.<br />
7. Acanthite – a common silver mineral in association with gold and polybasite; infilling<br />
micro-fractures in galena crystals.<br />
8. Gold – a ubiquitous mineral in all samples. With silver minerals (polybasite and<br />
acanthite) native gold forms inclusions in chalcopyrite, sphalerite and galena. Gold also<br />
shows corrosion textures on sphalerite and galena grains, infilling exfoliation fractures in<br />
galena crystals and infilling micro-fractures within pyrite crystals. Gold is frequently<br />
observed in association with dark-green chlorite in the northern part of the Zaruma<br />
District (Fig. 18). Spectacular native gold specimens are well-known from the Zaruma<br />
area in the form of hairy-gold in drusy-quartz and coarse gold, including cubic gold<br />
crystals, occurs as a carbonate vein infill in the Portovelo area (Fig. 19). The author of<br />
this <strong>report</strong> had an opportunity to see up to 0.5 kg native gold specimens in the form of<br />
thick plates with typical triangular-shaped crystals (corners of cubic crystals of gold) on<br />
the surface similar to the well-known European deposits like Baja Mare and Capnic in<br />
Romania. Free-gold specimens vary in colour from bright yellow to dark yellow-greenish<br />
which suggest a gold purity in the range of 600/1000 to 850/1000. At the time of this<br />
study, the author did not have access to either EDA or microprobe facilities.<br />
9. Carbonates – form coarsely-crystallised minerals which are in the main calcite and occur<br />
as the youngest drusy-infill with quartz.<br />
- 41 -
8.0 GOLD AND SILVER DISTRIBUTION<br />
The gold and silver distribution differs from that of base metals. Major concentrations of gold and<br />
silver were observed closely related to the footwall of southerly dipping thrust faults which lie<br />
parallel to the Piñas Fault especially in the northern en-echelon sets of R-nivel, Muluncay and<br />
Sesmo-Colorada. While in the Portovelo en-echelon set, almost 90% of precious metal<br />
production was from the central part of the veins (Figs 16 and 17).<br />
?<br />
?<br />
Fig. 16<br />
Gold Distribution in Zaruma – Portovelo <strong>Mining</strong> District<br />
(After R. Spencer, 2002)<br />
- 42 -
The decrease of gold and silver in proximity to the Piñas Fault is probably a result of alteration<br />
zonation where this part of the District is well within the illite-smectite wall-rock alteration zone<br />
(Spencer, R.M. et al., 2002) as shown in Figs 11 and 16. This alteration mineral assemblage<br />
represents relatively cool hydrothermal conditions with temperatures ranging from 100 o to 200 o<br />
C and mineral deposition in subsurface levels (Hedenquist, J.W. et al., 2000).<br />
AU/AG<br />
SPH CP PY<br />
Fig. 17<br />
Longitudinal Section along Sesmo Vein showing gold and polymetallic mineralisation<br />
(After R. Spencer, 2002)<br />
Two stages of gold and silver mineralisation have been detected in the Zaruma – Portovelo<br />
<strong>Mining</strong> District and their distribution is shown in Fig 15.<br />
• Stage 1 – Quartz-adularia-base metals-gold-silver veins are considered as the earliest<br />
stage of mineralisation (Fig. 18). Vein assemblages contain pyrite, chalcopyrite,<br />
sphalerite, Ag-bearing galena and minor bornite and silver-poor tetrahedrite. In near<br />
surface levels also chalcocite and covellite can be present as well as copper-oxides<br />
(Quiroga, J., 1995). Mineral assemblages vary according to NS and EW zonations<br />
described in Section 7.2.3.<br />
- 43 -
Fig. 18<br />
Early stage gold intergrowth with dark-grey chlorite. Jane Vein, Zaruma.<br />
(Photo from author’s archive)<br />
• Stage 2 – Quartz-calcite-chlorite-electrum-Ag sulphosalts are considered to be a<br />
younger mineralisation event and characterised by low to zero sulphides and free coarse<br />
gold (Fig.18). This sulphide-poor stage contains a wide spectrum of sulphosalts including<br />
tetrahedrite, tennantite, Ag-tetrahedrite (freibergite), safflorite; Ag-sulphosalts as<br />
pyrargyrite, proustite, stephanite and including gold-telluride like nagyagite. Free,<br />
colloidal gold is <strong>report</strong>ed from the dark, banded botryoidal quartz with disseminated finegrained<br />
pyrite in the Sucre Vein (Marikovsky, 1958 in Spencer, R.M. et al., 2000) and<br />
similar to the Sleeper low sulphidation deposit in Nevada (author’s comment).<br />
- 44 -<br />
1 mm
Fig. 19<br />
Late stage coarse and partially crystallised gold (shown by arrow) in association<br />
with calcite and quartz. Abundancia Vein, Portovelo area. (Photo from author’s archive)<br />
The total sulphide content in veins varies in a north-south direction from 10 to 15 % in the Rnivel<br />
and Muluncay en-echelon systems with dominated chalcopyrite and pyrite through to 5-10<br />
% in the central part of the Sesmo-Colorada en-echelon set dominated by sphalerite-pyritegalena<br />
to >5% to nil sulphides in Portovelo en-echelon set. A similar distribution can be<br />
observed in an east-west direction with low, >5% to nil sulphides in eastern part of the district<br />
increasing gradually to west with 20-50% sulphides and mainly sphalerite-galena dominated<br />
assemblages (Sillitoe, R.H., 2000).<br />
Literature on gold/silver ratios within the Zaruma Project and on the Zaruma-Portovelo District<br />
are scarce. From SADCO´s historic production data, a ratio of Au:Ag = 1:3.25 is suggested.<br />
However, SADCO´s production output was mainly from the Portovelo zone. A ratio Au:Ag = 1:8<br />
was calculated by TVX based dominantly on historic data and limited sampling. The gold/silver<br />
ratio calculated from TVX, IAMGOLD and <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corporation data totalling<br />
3,447 samples, carried out by the author, is suggesting a higher ratio (Au:Ag = 1:11). Studies<br />
- 45 -<br />
5 mm
indicate wide ratio variations occur within the same vein (Table 4) including samples collected<br />
on the same level (Fig.20).<br />
Table 4. Gold / Silver ratios, Zaruma – Portovelo District<br />
250m<br />
Ratio from Ratio to Proportion<br />
1 : 1 1 : 5 33%<br />
1 : 5 1 : 10 14%<br />
1: 10 1: 20 18%<br />
1 : 20 1 : 50 22%<br />
1 : 50 1 : 100 8%<br />
1 : 100 1 : >100 5%<br />
CRISTINA VE<br />
Gold / Silver Ratio - Zaruma Project<br />
over 100<br />
50 to 100<br />
20 to 50<br />
10 to 20<br />
5 to 10<br />
1-5<br />
250m<br />
CRISTIN<br />
Fig. 20<br />
Gold / Silver Ratio Variations – Cristina Vein<br />
- 46 -<br />
CRISTINA VEIN
9.0 EXPLORATION<br />
9.1 Exploration History<br />
Systematic exploration activity closely related to mining advance was carried out by SADCO<br />
from 1897 to 1950, however, only limited information is available from that period. Detailed<br />
underground maps and 103,657 assay result records which have been rescued from local<br />
miners and from local archives by TVX Gold Corp. and IAMGOLD are now in the possession of<br />
<strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corporation.<br />
Modern exploration activity within the Zaruma – Portovelo <strong>Mining</strong> District begun in 1995 when a<br />
first attempt of property area consolidation and district-scale exploration was made by TVX<br />
Gold Corporation, a Canadian-based company. For over one year, a crew of more than 10<br />
geologists, GIS and support staff studied the property. During this period, over 40km of<br />
underground workings were correctly surveyed and mapped on 1:500 scale. The author was<br />
actively involved in this work. Valuable historic information, mostly SADCO´s maps and assay<br />
results were rescued from local miners in this time. Total amount of samples which were<br />
collected by TVX is difficult to estimate, however, the author estimates over 4,000 underground<br />
channel samples were taken based on daily <strong>report</strong>s of mapping geologists where the author<br />
participated. Sampling databases submitted to <strong>Dynasty</strong> <strong>Metals</strong> and Minerals Corp. by IAMGOLD<br />
do contain 733 samples, however, several hundred sample locations and assay results were<br />
digitised from original maps by the Company´s GIS staff.<br />
Following TVX´s withdrawal from Ecuador in 1998, all information was acquired by IAMGOLD<br />
which continued exploration including surface trenching, surface and underground sampling,<br />
surveying and diamond drilling (Fig. 21). IAMGOLD significantly improved the Zaruma Project<br />
area legal consolidation, added valuable information to <strong>project</strong> databases and was the first<br />
company working within the area to employ geochemical data quality control and geological<br />
modelling. IAMGOLD databases available to the author contained:<br />
1. 680 surface rocks channel and chip samples<br />
2. 2,126 underground channel samples<br />
3. 5,415 soil samples<br />
4. 37 diamond drill hole results including sample assay results<br />
5. 1,114 DDH core samples<br />
6. 2,591 topographical control points survey (Fig. 3)<br />
- 47 -
7. 39 stream sediments samples<br />
8. 369 channel samples form surface trenching<br />
9'604.000N<br />
9'602.000N<br />
9'600.000N<br />
9'598.000N<br />
9'596.000N<br />
9'594.000N<br />
9'592.000N<br />
9'590.000N<br />
9'588.000N<br />
9'586.000N<br />
W<br />
N<br />
S<br />
E<br />
646.000E 646.000E<br />
648.000E<br />
Piñas Piñas Piñas Piñas Piñas Piñas Piñas Piñas Piñas Thrust Thrust Thrust Thrust Thrust Thrust Thrust Thrust Thrust<br />
648.000E<br />
650.000E<br />
650.000E<br />
<strong>Dynasty</strong> Concessions<br />
RS-22<br />
652.000E 652.000E<br />
- 48 -<br />
Huertas Huertas Huertas Huertas Huertas Huertas Huertas Huertas Huertas Fault Fault Fault Fault Fault Fault Fault Fault Fault<br />
RM-2<br />
RM-1<br />
RM-9<br />
RM-10<br />
RM-6<br />
RM-8<br />
RM-7<br />
RM-5<br />
RM-4<br />
RS-11<br />
RS-6<br />
RS-8<br />
RS-10<br />
RS-7<br />
RS-1<br />
RS-9<br />
RS-23<br />
RS-21<br />
654.000E<br />
654.000E<br />
RM-13<br />
RS-3<br />
RM-12<br />
RS-4<br />
RM-11<br />
RS-15<br />
RS-14<br />
RS-13<br />
RS-12<br />
RS-2<br />
RS-5<br />
RS-18<br />
RS-16<br />
RM-14<br />
RM-16<br />
RS-19<br />
656.000E<br />
RS-17<br />
RM-15<br />
656.000E<br />
RS-20<br />
9'604.000N<br />
9'602.000N<br />
9'600.000N<br />
9'598.000N<br />
9'596.000N<br />
Puente Puente Puente Puente Puente Puente Puente Puente Puente Buza Buza Buza Buza Buza Buza Buza Buza Buza Fault Fault Fault Fault Fault Fault Fault Fault Fault<br />
Fig. 21<br />
IAMGOLD Drilling Programme and Zaruma Project Tenements<br />
9'594.000N<br />
9'592.000N<br />
9'590.000N<br />
9'588.000N<br />
9'586.000N
In August 2003, all the IAMGOLD properties and <strong>project</strong> databases were transferred to <strong>Dynasty</strong><br />
<strong>Metals</strong> and <strong>Mining</strong> Corporation which continued with exploration programmes up to date of this<br />
<strong>report</strong>. The Company had 3 geologists re-sampling selected IAMGOLD and TVX original<br />
sampling channels with the purpose of data verification and repeatability of the original assay<br />
results. New sampling programmes carried out by the Company in the zones of Sucre and<br />
Pacayurco mines resulted in the discovery of additional resources of high-grade mineralisation<br />
and were stated in the Company’s Press Release on July 7, 2004 (Appendix D).<br />
9.2 Sample Preparation, Assaying and Security<br />
Limited information about sample preparation, analyses and security is available from SADCO´s<br />
times, however, details of registers from production and plant are confirming company’s assay<br />
records in which the entire database totalling 103,657 assay results is in the possession of<br />
<strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corp. SADCO´s on-site laboratory used a 3-acid digestion and<br />
gravity and/or fire-assay analysis for gold and silver determinations while base metal were<br />
determined by quantitative spectral assaying. The quality control data has not preserved and it<br />
is likely that SADCO did not use systematic analysis control.<br />
TVX Gold Corp. sample databases available to author were missing quality control samples,<br />
however, the author of this <strong>report</strong>, being one of the TVX Gold Corp. Zaruma <strong>project</strong> geologists,<br />
would confirm that systematic procedures were controlled by standard and duplicate samples<br />
inserted with a frequency of 2 standards, 2 field duplicates and 2 laboratory duplicates samples<br />
per hundred samples sent for assay.<br />
Samples from surface, underground and drilling core collected by IAMGOLD were bagged on<br />
site, sealed and sent to an external recognized laboratory (Chemex Labs) for assaying. Blanks<br />
and standards were routinely submitted with these samples with an interval of 1 standard per 20<br />
samples, while blank insertion was random but not less than 2 blanks per 100 samples. The<br />
standard procedure included sample homogenization under -80# and -150#, Au and Ag content<br />
was determined by fire assay method from 50g pulps. For the multi-element analysis of 35<br />
elements, Induced Coupled Plasma (ICP) and/or Neutron Activation (NAA) methods were<br />
employed. Procedures for these methods are known and descriptions can be found in the<br />
literature. A total of US$ 887,929.31 was spent on laboratory costs by IAMGOLD. Detection<br />
limits for the ICP method of analyses are listed in Table 5.<br />
- 49 -
Table 5.<br />
Elements assayed by IAMGOLD and detection limits for the ICP method applied for the Zaruma<br />
Project sample analyses.<br />
Element Method Units Low limit High Limit<br />
Au50 FA-50 PPB 5 10000<br />
Au Rew 1 PPB 5 10000<br />
Au Rew 2 PPB 5 10000<br />
Au Gra v FA PPM 0.17 999999<br />
Au Wt 1 FA-AA GM 0.01 999.99<br />
Ag ICP PPM 0.2 200<br />
Cu ICP PPM 1 10000<br />
Pb ICP PPM 2 10000<br />
Zn ICP PPM 1 10000<br />
Mo ICP PPM 1 10000<br />
Ni ICP PPM 1 20000<br />
Co ICP PPM 1 20000<br />
Cd ICP PPM 0.2 2000<br />
Bi ICP PPM 5 2000<br />
As ICP PPM 5 10000<br />
Sb ICP PPM 5 2000<br />
Hg CV AA PPM 0.01 50<br />
Fe ICP PCT 0.01 10<br />
Mn ICP PPM 1 20000<br />
Te ICP PPM 10 2000<br />
Ba ICP PPM 1 2000<br />
Cr ICP PPM 1 20000<br />
V ICP PPM 1 20000<br />
Sn ICP PPM 20 2000<br />
W ICP PPM 20 2000<br />
La ICP PPM 1 2000<br />
Al ICP PCT 0.01 10<br />
Mg ICP PCT 0.01 10<br />
Ca ICP PCT 0.01 10<br />
Na ICP PCT 0.01 10<br />
K ICP PCT 0.01 10<br />
Sr ICP PPM 1 2000<br />
Y ICP PPM 1 2000<br />
Ga ICP PPM 2 10000<br />
Li ICP PPM 1 20000<br />
Nb ICP PPM 1 10000<br />
Sc ICP PPM 5 2000<br />
Ta ICP PPM 10 1000<br />
Ti ICP PCT 0.01 5<br />
Zr ICP PPM 1 5000<br />
- 50 -
9.3 Data Verification<br />
As mentioned in section 8.1 there is no data available on sampling and assay control in both the<br />
103,657 SADCO´s sample database or in the 733 samples from TVX Gold Corp. database. The<br />
Company’s ongoing sampling programme within the Zaruma Project area included original<br />
channel re-sampling with the purpose of data verification and repeatability of the original assay<br />
results, in particular for high-grade samples. Assay result comparison data charts of original and<br />
re-sampled channels will be released after the programme has been completed.<br />
Recent sample assay results <strong>report</strong>ed by IAMGOLD do have an appropriate QA/QC quality<br />
control similar to that by the majority of mining companies. IAMGOLD used basically 3<br />
standards and their behaviour was followed-up on a total of 17,448 samples. However, only<br />
9,335 samples were from the Zaruma Project area. The frequency of 1 standard per 20 samples<br />
was established with random selection of different standards types, with a total of 213 standard<br />
samples being used. Blank samples were inserted randomly but not less than 2 blanks per 100<br />
samples.<br />
Gold values (ppb)<br />
1000<br />
950<br />
900<br />
850<br />
800<br />
750<br />
700<br />
985:516030800;422570<br />
924:436580100;423340<br />
733:466015600;420960<br />
- 51 -<br />
928:6190200;99426160<br />
912:6200200;99426160<br />
900:6141400;99426170<br />
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26<br />
Number of assay<br />
KH1-STANDAR MEAN+20 MEAN-20 AU_STD1 AU_STD2 AU_STD3 AU_STD4<br />
Fig. 22<br />
KH – 1 standard behaviour, IAMGOLD database
The behaviour of the standards show acceptable levels of dispersion with a stable performance<br />
for standard KH-1 with all results falling within the range of ± 15% and are considered “good”<br />
(Fig.22). Standard OX-4 gave higher dispersion values reaching in sample Au_STD33 up to a<br />
80% higher value than expected and in the case of sample Au_STD20 almost 60% less. Despite<br />
these 2 extremely out-of-range samples, the performance of standard OX-4 can be considered<br />
satisfactory (Fig. 23). The author has no relevant information regarding procedures used<br />
VALORES DE ORO (ppb)<br />
190<br />
170<br />
150<br />
130<br />
110<br />
90<br />
70<br />
50<br />
129: 514278000; 421680<br />
120: 494416400; 9942565<br />
60: 464087000: A0012761<br />
145; 464156600: 464156600<br />
117:494413200; 9942506<br />
- 52 -<br />
139: 514367200; 422870<br />
177: 514562000; 422900<br />
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26<br />
DETERMINACIONES<br />
OX4-SAMPLE1 OX4-SAMPLE2 OX4-MEAN MEAN MEAN +3 MEAN -3 AU_STD1<br />
AU_STD2 AU_STD3 AU_STD4 AU_STD5 AU_STD6 AU_STD7 AU_STD8<br />
AU_STD9 AU_STD10 AU_STD11 AU_STD12 AU_STD13 AU_STD14 AU_STD15<br />
AU_STD16 AU_STD17 AU_STD18 AU_STD19 AU_STD20 AU_STD21 AU_STD22<br />
AU_STD23 AU_STD24 AU_STD25 AU_STD26 AU_STD27 AU_STD28 AU_STD29<br />
AU_STD30 AU_STD31 AU_STD32 AU_STD33 AU_STD34<br />
Fig. 23<br />
OX-4 standard behaviour, IAMGOLD database<br />
with sample batches that contained the standards Au_STD33 and Au_STD20 and these should<br />
be re-assayed. The performance of standard OX-8 is considered “very good”, particularly in<br />
sample batches submitted to the laboratory in late 1999 and before June, 2000 when the<br />
QA/QC charts above were completed (Fig. 24).
240<br />
220<br />
200<br />
18 0<br />
16 0<br />
14 0<br />
12 0<br />
0 5 10 15 20 25 30<br />
OX8_SAMPLE1 OX8_SAMPLE2 Number of OX8_MEAN assay<br />
OX8_ST D MEAN+8<br />
MEAN-8 AU_STD1 AU_STD2 AU_STD3 AU_STD4<br />
Fig. 24<br />
OX-8 standard behaviour, IAMGOLD database.<br />
Original laboratory certificates for IAMGOLD and TVX are not among the material available to<br />
the author of this <strong>report</strong>. Sources of data used for mineral resource calculations were<br />
spreadsheet files on four compact discs given to the author by <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong><br />
Corporation. However, the fidelity of the data was confirmed by the second copy of the data the<br />
author obtained personally from the IAMGOLD office directly off the IAMGOLD GIS professional<br />
Glenda Mantilla. Files originated with TVX Gold Corp. date from April 1995 to March 1996.<br />
The IAMGOLD drill hole data contains complete results and was confirmed directly in the<br />
IAMGOLD offices in Quito by the author of this <strong>report</strong>. In the case of data from tunnel samples, I<br />
have included data listings from all veins in the Zaruma-Portovelo District which are within the<br />
land tenements held and/or controlled by <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corporation.<br />
- 53 -
10.0 MINERAL RESOURCES<br />
10.1 Historic Resource Estimations<br />
The first attempt at a district precious metals resource estimation was made by TVX Gold Corp.<br />
geologists in 1995. The author at the time of writing this <strong>report</strong> has no knowledge of earlier<br />
Zaruma-Portovelo District potential resource estimations.<br />
In March 1995, Quiroga, G., Regional Exploration Manager of TVX Gold Corp., estimated a<br />
resource of 9.1 MT with average grade of 8 g/t totalling 2.3 Moz of gold in whole Zaruma-<br />
Portovelo district (Ambrus, J., 1995) without considering silver and polymetalic credits. Mario<br />
Alfaro, a TVX Gold Corp. consulting geologist, estimated on June, 1995 a total district potential<br />
of 10 Moz from which up to 2.5 Moz should be contained in the northern, under-explored sectors<br />
of Muluncay and Minas Nuevas (Alfaro, M., 1995). It is considered that the above calculations<br />
refer to historic potential resource estimates in the <strong>project</strong> area and would be similar in broad<br />
terms to an Inferred Mineral Resource category. It is also believed by the author that the<br />
reliability of the potential resource estimate is fair reasonable.<br />
Resource calculations made by IAMGOLD were not available to author, but an attempt was<br />
carried out by IAMGOLD GIS expert Glenda Mantilla by applying the polygonal method and 3dimensional<br />
blocks using Gemcom software (personal information) in which each sample was<br />
considered as a “drill hole” intersection. Apparently IAMGOLD did not conclude this task before<br />
properties were transferred to Minera Australiana, however; a statement by IAMGOLD regarding<br />
gold potential of the Zaruma Project is available on the IAMGOLD web site<br />
http://www.iamgold.com/public-relations/press-releases/releases/pr_0401.htm#section7 :<br />
“A revised geological model of the Zaruma-Portovelo vein system, based on IAMGOLD drill<br />
results and old mine data, indicates that major (+ 1 million ounce) pay-shoots are unlikely to<br />
exist in areas along strike and down-dip of old workings although smaller pay-shoots may be<br />
present.”<br />
10.2 Definitions and Parameters<br />
The definitions and parameters employed in this <strong>report</strong> are identical to that defined by<br />
Companion Policy 43-101.CP to National Instrument 43-101 Standards of Disclosure for Mineral<br />
Projects, Section 1.4 Mineral Resources and Mineral Reserves Definitions (Canadian Institute of<br />
<strong>Mining</strong>, Metallurgy and Petroleum; CIM Standards on Mineral Resources and Reserves;<br />
Definitions and Guidelines, January 28, 2004):<br />
- 54 -
1. “Indicated Mineral Resource” – An ‘Indicated Mineral Resource’ is that part of a Mineral<br />
Resource for which quantity, grade or quality, densities, shape and physical<br />
characteristics, can be estimated with a level of confidence sufficient to allow the<br />
appropriate application of <strong>technical</strong> and economic parameters, to support mine planning<br />
and evaluation of the economic viability of the deposit. The estimate is based on detailed<br />
and reliable exploration and testing information gathered through appropriate techniques<br />
from locations such as outcrops, trenches, pits, workings and drill holes that are spaced<br />
closely enough for geological and grade continuity to be reasonably assumed.<br />
2. “Inferred Mineral Resource” – That part of a Mineral Resource for which quantity and<br />
grade or quality can be estimated on the basis of geological evidence and limited<br />
sampling and reasonably assumed, but not verified, geological and grade continuity. The<br />
estimate is based on limited information and sampling gathered through appropriate<br />
techniques from locations such as outcrops, trenches, pits, workings and drill holes.<br />
10.3 Methodology of the Mineral Resource Calculation<br />
The outcome of the mineral resource calculation was based on dimensions and grades of<br />
individual veins determined from outcrops, trenches, tunnels and drill holes. A classic block<br />
method has been applied using all available data at the time of writing this <strong>report</strong>. No resource<br />
blocks that are dependent entirely on surface data have been considered in the indicated<br />
resource calculation.<br />
Indicated Resource blocks are assumed to extend for 1/5th part of the known strike extension<br />
but not more than 75 meters up-dip and down-dip along the vein above and below the tunnel.<br />
The plunge of mineralized ore shoots is taken into account in estimating the geometry of the<br />
block, but that no more than 75 meters are measured in the dip direction of the structure. Blocks<br />
included in Indicated Resource calculations are not extended laterally along strike beyond the<br />
tunnel or outcrop in which they were defined.<br />
Inferred Resource blocks are assumed to extend for 1/3 part of the known extension but not<br />
more than 125 meters up-dip and down-dip along the vein, above and below the tunnel or below<br />
the outcrop. As in the case of Indicated Resource, the plunge of mineralized ore shoots was<br />
taken into account in estimating the geometry of the block, but that no more than 125 meters are<br />
measured in the dip direction of the ore shoot. An application of these parameters is illustrated<br />
on Fig. 25. Blocks included in Inferred Resource calculations as in the case of the Inferred<br />
Resource do not extended laterally along strike beyond the tunnel or outcrop in which they were<br />
- 55 -
defined. As mentioned previously, ore shoot geometry is determined by oblique, strike slip left<br />
lateral faults and result in ore shoots plunging 65 o -75 o south.<br />
800<br />
600<br />
9600<br />
Jane Vein - Gold distribution<br />
Au [g/t]<br />
over 100 g/t (13)<br />
25 to 100 g/t (85)<br />
10 to 25 g/t (185)<br />
5 to 10 g/t (218)<br />
2 to 5 g/t (564)<br />
< 1 g/t (1159)<br />
9800<br />
- 56 -<br />
10000<br />
L E G E N D<br />
> 10 g/t resource<br />
7 - 10 g/t resource<br />
< 7 g/t resource<br />
Fig. 25<br />
Longitudinal Section of the Jane Vein, Zaruma. Mineral Resource calculation based on 2245<br />
underground channel samples.<br />
Only limited Mineral Resource calculations were based on drill holes due to the wide spacing of<br />
the IAMGOLD drilling programme. In the case where a drill hole intersection was included into<br />
the mineral resource calculations, this resource was considered only in the Inferred Resource<br />
calculation. Exceptionally, as in the case of the Tamayo Vein resource calculation, the drill hole<br />
RM-11 intersection was included in the Indicated Resource calculation as this particular drill hole<br />
intersected an obvious extension of the mineralized ore shoot as shown on Fig. 26.<br />
Inferred Resource blocks may be based on a single drill hole intercept. It is assumed to extend<br />
for 50 meters up-dip and down-dip from the drill hole intercept, taking into account the plunge of<br />
10200
mineralization. It is also assumed to extend for 50 meters laterally along strike in both directions<br />
from a drill hole intercept.<br />
Fig. 26<br />
High-grade RM-11 drill hole intersection in <strong>project</strong>ion of ore shoot on Tamayo Vein.<br />
- 57 -
11.0 MINERAL RESOURCE ESTIMATES<br />
11.1. Available Data<br />
Data available at the date of <strong>report</strong> writing provided by both <strong>Dynasty</strong> metals and <strong>Mining</strong> Corp.<br />
and IAMGOLD totalled:<br />
1. 680 surface rocks channel and chip samples<br />
2. 2,126 underground channel samples (IAMGOLD)<br />
3. 733 underground channel samples (TVX Gold Corporation)<br />
4. 103,657 underground channel samples (SADCO)<br />
5. 5,415 soil samples<br />
6. 37 diamond drillholes results including sample assay results<br />
7. 1,114 DDH core samples<br />
8. 2,591 topographical control points survey<br />
9. 39 stream sediments samples<br />
10. 369 channel samples form surface trenching<br />
Apart from sample databases IAMGOLD provided GIS information including topographical<br />
survey with 10m vertical resolution, geological mapping at the scale 1:10,000 and 12 geological<br />
sections. A total of 43.26km of underground survey and geological mapping at 1:2,000 scale<br />
was provided by IAMGOLD and additionally original TVX Gold Corp. underground survey and<br />
geological mapping totalling 27.56km at the scale 1 : 1000 was available in <strong>Dynasty</strong> <strong>Metals</strong> and<br />
<strong>Mining</strong> office in Quito.<br />
11.2. Units conversions<br />
Ore grades which have been in ounces have been converted to grams per ton (ppm = parts per<br />
million) with purposes of statistics and grade estimation. This conversion prevented rounding<br />
errors during computation. All distance units which have not been in the metric system have<br />
been converted to meters, millimetres and kilometres respectively.<br />
11.3. Data statistics<br />
Approximately 49% of the 103,657 underground channel sample from SADCO database were in<br />
the interval 0 to 5 g/t Au, 35% in the interval 5-15 g/t Au; 15% in the interval 15-100 g/t Au and<br />
2% in the interval over 100 g/t Au. It was assumed that gold values exceeding the 98 th percentile<br />
were erratic highs and these were cut to the 98 th percentile value. Thus in the case of gold<br />
- 58 -
values, those exceeding 82.73 g/t Au were cut to 82.73 g/t Au (Fig.27). The 98 th percentile<br />
values for other metals were: 132.3 g/t for silver (Fig.28); 0.93% for lead (Fig.29); 1.3 % for zinc<br />
(Fig.30) and 1.2% for copper (Fig. 31). The original data for silver and base metals 98 th<br />
percentile values calculations<br />
Sampling width interval distribution calculated on SADCO database returned 12% of the<br />
samples in less than 0.5m sample length; 23% in the interval of 0.5-1.0m; 50% in the interval<br />
1.0-2.0m and 15% in the interval 2.0 -
Fig. 28<br />
Silver values distribution log/probability plot and summary statistics.<br />
The 98 th percentile indicated by red line<br />
Fig. 29<br />
Lead values distribution log/probability plot and summary statistics.<br />
The 98 th percentile indicated by red line<br />
- 60 -
Fig. 30<br />
Zinc values distribution log/probability plot and summary statistics.<br />
The 98 th percentile indicated by red line<br />
Fig. 31<br />
Copper values distribution log/probability plot and summary statistics.<br />
The 98 th percentile indicated by red line<br />
- 61 -
The summary geochemical correlations statistics calculated from IAMGOLD underground<br />
channel samples assay results is suggesting surprisingly poor correlation between silver and<br />
gold ( 0.55) and very weak, if any correlation of gold with zinc (0.25), lead (0.37) and copper<br />
(0.29) respectively (Fig. 32 and 34). Silver (Fig. 32 and 33) shows strong correlation with<br />
copper (0.76) and moderate correlation with lead (0.60), zinc (0.51) and bismuth suggesting Ag-<br />
Cu-Bi sulphosalts (benjaminite, matildite?) presence in mineral assemblages supported by<br />
moderate correlation of Bi with Cu (0.58). Very strong correlation between Zn and Cd (0.96) is<br />
suggesting cadmium bearing sphalerite and thus correlation between Ag and Cd (0.55) could be<br />
explained by previously mentioned moderate correlation of Ag with Zn. Strong correlation of Cd<br />
and Pb (0.73) is suggesting very close genetic relationship between and almost simultaneous<br />
crystallization of galena and sphalerite from hydrothermal solutions confirmed by microscopic<br />
study as described in section 7.2.5. Remaining correlations which can be observed in<br />
correlations diagram (Fig. 34) can be attributed to classic mineral pairs and assemblages (Fe-<br />
Mn-V-Co-Ni).<br />
Fig. 32<br />
Triplot analysis of Au-Pb-Zn showing very poor<br />
correlation of Au with Pb-Zn<br />
Fig. 33<br />
Triplot analysis of Ag-Pb-Zn showing slightly<br />
better correlation of Ag with Pb-Zn in<br />
comparison with Au<br />
- 62 -
Fig. 34<br />
Underground channel sampling assay results correlations.<br />
(IAMGOLD data base)<br />
- 63 -
11.4. Summary of Mineral Resources<br />
The summary of Mineral Resources of gold both Inferred Mineral Resource and Indicated<br />
Mineral Resource calculated from the SADCO sample database is presented in Table 6. Silver<br />
equivalence has not been taken into consideration as the silver assay results were missing in<br />
the 103,657 SADCO samples available to the author at the time of writing this <strong>report</strong>. Only<br />
estimated silver equivalence can be considered which is based on the Au : Ag ratios as listed in<br />
Table 4 and calculated from the IAMGOLD and TVX data ( Au : Ag = 1 : 11).<br />
Table 6.<br />
MINERAL RESOURCES CONTAINED IN ZARUMA PROJECT AREA AT<br />
22 OCTOBER 2004<br />
MINERAL RESOURCES CALCULATED FROM SADCO DATA<br />
MINERAL RESOURCE INDICATED INFERRED<br />
STRUCTURE TONNES G/T Au ozs TONNES G/T Au ozs<br />
25 20,613 9.52 6,309 32,750 6.17 6,497<br />
29 10,249 15.17 4,999 20,010 9.68 6,228<br />
ABUNDANCIA 233,087 17.03 127,635 369,170 5.83 69,204<br />
AROSEMA 5,483 24.43 4,307 15,312 15.17 7,468<br />
BARBASCO 34,126 14.17 15,548 88,646 8.07 23,002<br />
CAD 21,989 32.02 22,639 37,696 22.24 26,956<br />
CANTABRIA WEST 8,432 61.03 16,546 15,991 49.31 25,354<br />
CRISTINA 28,067 37.22 33,590 74,783 18.01 43,306<br />
FORTUNA 29,294 20.09 18923 71,370 11.57 26,551<br />
JANE 49,063 17.22 27,166 93,145 7.90 23,660<br />
MATALANGA 2,404 24.43 1,888 11,420 16.67 6,121<br />
NUDO and NUDO WEST 47,476 13.88 21,188 80,071 12.31 31,693<br />
QUEBRADA 7,62 23.55 5,770 11,500 10.91 4,034<br />
SUCRE 14,766 14.87 7,060 30,289 9.31 9,067<br />
TAMAYO 29,636 15.51 14,779 62,534 10.17 20,449<br />
TRES REYES 14,369 16.99 7,849 22,314 10.91 7,827<br />
MINERAL RESOURCES 556,676 18.78 336,196 1,036,999 10.12 337,417<br />
- 64 -
The mineral resources stated in Table 6 were entirely calculated from the original SADCO data<br />
which, despite a lack of QA/QC control were confirmed by outgoing mine production and so the<br />
author considers the data credible. Original data with coordinates in local SADCO´s grid have<br />
been converted to UTM PSAD 56, zone 17S grid based on underground surveys carried out by<br />
IAMGOLD. Data was converted from original ounces to grams per ton = parts per million (g/t =<br />
ppm) and plotted on longitudinal sections in MapInfo v.7.0 as points. MapInfo’s thematic mapper<br />
utility and its built-in Ranges Natural Break algorithm have been applied for individual plotted<br />
samples and were plotted on the sections.<br />
Average width and grade for each block was then calculated from samples within the block limits<br />
+ up-dip and down-dip extensions as defined in Section 10.3. The block extensions were strictly<br />
defined and limited by ore shoot geometry. For the purpose of ore shoot geometry definition the<br />
dataset for each vein were converted to CVS files and imported to Geosoft v.5.1.7 assay<br />
databases. Data was then processed by a Minimum Curvature gridding utility with grid cell size<br />
set on ¼ of sample to sample distance with logarithmic algorithm. Blanking distance of 50m has<br />
been set in order to avoid geochemical anomalies distortion or false anomaly extensions due to<br />
missing data. Internal tension has been set to 0.6 in order to avoid a false anomaly extensions<br />
when high grade samples were within the edge of the area covered by the data. In some cases,<br />
a slight colour range adjustment was required of the final colour-shaded plot’s in order to fit<br />
individual ranges to scale defined by dataset statistic parameters (mean mean + 1STD <br />
mean + 2STD).<br />
The colour-shaded vein profile results were extremely useful for correct definition of ore shoot<br />
geometry which could be difficult if not impossible to determine from range value point plot<br />
profiles produced by MapInfo as shown on some typical vein profiles after data have been<br />
processed by gridding in Geosoft (Figs 35 and 36).
9200<br />
400<br />
200<br />
0<br />
-200<br />
-800<br />
-600<br />
-400<br />
-200<br />
0<br />
200<br />
400<br />
Fig. 35<br />
Longitudinal profile of the Abundancia Vein. Colour shaded plot of gold distribution is based on<br />
15,542 sample data points<br />
800<br />
600<br />
400<br />
9400<br />
9600<br />
9800<br />
Fig. 36<br />
Longitudinal profile of the Cristina Vein. Colour shaded plot of gold distribution is based on 9,501<br />
sample data points<br />
600<br />
- 66 -<br />
800<br />
10000<br />
1000<br />
1200<br />
10200<br />
1400
The Mineral Resources calculated from the SADCO data and listed in Table 6 was added to by<br />
Mineral Resources in both the Indicated and Inferred category from recent data acquired by TVX<br />
Gold Corp., IAMGOLD, Minera Australiana and <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corp. and are listed<br />
in Table 7. The dataset used for this calculation includes underground channel sample data,<br />
drilling intersections and surface trenching data. However, Mineral Resources calculated from<br />
surface trenching results and surface vein outcrops channel sampling (Fig. 38) were added<br />
exclusively to the Inferred Mineral Resource.<br />
- 67 -
Table 7.<br />
MINERAL RESOURCES CONTAINED IN ZARUMA PROJECT AREA AT<br />
22 OCTOBER 2004<br />
MINERAL RESOURCES CALCULATED AND ADDED FROM IAMGOLD, TVX GOLD<br />
Corp., MINERA AUSTRALIANA and DYNASTY METALS AND MINING CORP. DATA<br />
MINERAL RESOURCE INDICATED INFERRED<br />
STRUCTURE TONNES G/T Au ozs TONNES G/T Au ozs<br />
BARBASCO EAST 15,432 19.60 9,725 46,136 11.23 16,659<br />
BARBASCO SOUTH 12,577 7.80 3,154 27,527 6.30 5,576<br />
QUEBRADA SW 0 0.00 0 21,300 10.91 7,472<br />
FORTUNA SOUTH 8,945 24.60 7,075 62,766 5.20 10,494<br />
MATALANGA WEST 0 0.00 0 76,468 8.40 20,653<br />
MATALANGA 2 0 0.00 0 11,355 8.40 3,066<br />
PACAYURCO 14,400 32.03 14,830 18,976 30.34 18,512<br />
SUCRE 22,500 10.00 7,234 109,500 9.50 33,448<br />
SUCRE EAST 6,600 21.20 4,499 10,650 20.10 6,883<br />
SUCRE WEST 22,800 11.78 8,636 37,075 11.05 13,172<br />
TAMAYO NORTH 0 0.00 0 88,148 7.84 22,221<br />
TAMAYO EAST 46,454 14.80 22,106 74,602 10.34 24,803<br />
TRES DIABLOS 1,600 4.30 221 2,300 4.10 303<br />
ELENA 11,436 8.40 3,088 64,327 5.83 12,058<br />
ELENA SOUTH 0 0.00 0 53,221 6.43 11,003<br />
TRES REYES EAST 13,872 14.20 6,333 32,012 10.20 10,499<br />
MINERAL RESOURCES 176,616 15.30 86,901 736,363 9.16 216,822<br />
- 68 -
9'604.000N<br />
9'602.000N<br />
9'600.000N<br />
9'598.000N<br />
9'596.000N<br />
9'594.000N<br />
9'592.000N<br />
9'590.000N<br />
9'588.000N<br />
9'586.000N<br />
W<br />
Date :<br />
Author :<br />
Scale :<br />
Projection :<br />
N<br />
S<br />
646.000E 646.000E<br />
648.000E<br />
Mapped veins<br />
Piñas Piñas Piñas Piñas Piñas Piñas Piñas Piñas Piñas Thrust Thrust Thrust Thrust Thrust Thrust Thrust Thrust Thrust<br />
Inferred veins<br />
Exploited veins<br />
DYNASTY METALS & MINING INC.<br />
ZARUMA PROJECT<br />
Rock Geochemical Programme<br />
- Au distribution color shaded plot<br />
(log distribution, 800m blanking distance)<br />
04-01-2004<br />
M.Kalinaj<br />
1 : 25,0000<br />
PSAD 1956, UTM 17S<br />
E<br />
Update :<br />
By:<br />
Figure # :<br />
648.000E<br />
650.000E<br />
650.000E<br />
<strong>Dynasty</strong> Concessions<br />
652.000E 652.000E<br />
- 69 -<br />
Huertas Huertas Huertas Huertas Huertas Huertas Huertas Huertas Huertas Fault Fault Fault Fault Fault Fault Fault Fault Fault<br />
654.000E<br />
654.000E<br />
656.000E<br />
656.000E<br />
9'604.000N<br />
9'602.000N<br />
9'600.000N<br />
9'598.000N<br />
9'596.000N<br />
Puente Puente Puente Puente Puente Puente Puente Puente Puente Buza Buza Buza Buza Buza Buza Buza Buza Buza Fault Fault Fault Fault Fault Fault Fault Fault Fault<br />
Fig. 37<br />
Surface Rock Geochemistry colour shaded plot with individual sample locations (1,413 samples)<br />
and a plot of the traces of veins and major thrusts<br />
9'594.000N<br />
9'592.000N<br />
9'590.000N<br />
9'588.000N<br />
9'586.000N
Taking into consideration the land tenement situation as shown in Fig. 2, the Mineral Resource<br />
calculated on structures within the Portovelo area and on the property owned and/or controlled<br />
by <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corp. is listed separately in Table 8. If <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong><br />
Corporation negotiations with the remaining small producer associations is successful and the<br />
Company reaches an entire district tenement consolidation this Mineral Resource should<br />
considerably increase the total Mineral Resource over and above the 1´461,525 oz of gold as<br />
stated in Table 9.<br />
Table 8.<br />
MINERAL RESOURCES CONTAINED IN PORTOVELO AREA AT<br />
22 OCTOBER 2004<br />
MINERAL<br />
RESOURCE<br />
MINERAL RESOURCES CALCULATED FROM SADCO DATA<br />
INDICATED INFERRED<br />
STRUCTURE TONNES G/T Au ozs TONNES G/T Au ozs<br />
ABUNDANCIA<br />
EAST<br />
124,307 17.32 69,228 188,441 10.45 63,318<br />
CENTENARIO 65,625 9.60 20,257 93,750 9.00 27,130<br />
COLORADA 33,750 9.60 10,418 60,000 9.10 17,556<br />
CURIPAMPA 42,660 26.27 36,034 79,377 12.12 30,934<br />
JORUPE 48,769 13.50 21,169 64,786 8.77 18,269<br />
PALACIOS 14,063 38.15 17,250 42,188 36.20 49,106<br />
POBRE 17,500 13.60 7,652 52,500 12.90 21,776<br />
PORTOVELO 44,409 23.12 33,014 69,176 13.24 29,449<br />
SALVADORA 981 65.08 2,052 2,390 33.20 2,551<br />
VIZCAYA 6,533 21.22 4,457 18,096 4.97 2,891<br />
MINERAL<br />
RESOURCES<br />
398,597 17.33 221,531 670,704 12.19 262,980<br />
- 70 -
Table 9.<br />
TOTAL MINERAL RESOURCES CONTAINED IN ZARUMA PROJECT INCLUDING THE<br />
PORTOVELO AREA<br />
RESOURCE INDICATED INFERRED<br />
AREA TONNES G/T Au ozs TONNES G/T Au ozs<br />
ZARUMA<br />
PROJECT<br />
PORTOVELO<br />
DISTRICT<br />
ZARUMA AND<br />
PROTOVELO<br />
733,292 17.94 423,097 1,773,362 9.72 554,239<br />
398,597 17.33 221,531 670,704 12.19 262,980<br />
1,131,889 17.73 644,628 2,444,066 10.40 817,219<br />
In the Total Mineral resource calculation listed in Table 9 has not been included the potential of<br />
the northern areas of Muluncay and Minas Nuevas sectors which can be another significant<br />
additional source for an increase in the Mineral Resource. As mentioned previously, the author<br />
of this <strong>report</strong> had no available digital information from these sectors, however; hardcopies of the<br />
TVX information have been revised in the Company´s office. It is the author’s opinion that these<br />
sectors could increase significantly the Mineral Resource potential if <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong><br />
Corp. did consolidate the land tenements covering the Muluncay and Minas Nuevas areas and<br />
negotiate reasonable option terms with the tenement holders.<br />
- 71 -
12.0 OTHER RELEVANT DATA and INFORMATION<br />
As have been mentioned in previously in this <strong>report</strong>, there is information concerning the Zaruma<br />
Project that was not available to me in digital form at the time this <strong>report</strong> was written, TVX Gold<br />
Corp. underground sampling databases in particular. Much of the material that was not available<br />
consists of sampling results from veins outside of the <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corporation<br />
owned and/or controlled properties (Muluncay and Minas Nuevas areas) and thus irrelevant to<br />
this <strong>report</strong>.<br />
The author is confident that sufficient information is available to support the statements and<br />
conclusions reached in this <strong>report</strong>. I do not believe that missing information would substantially<br />
change the statements and conclusions made herein.<br />
13.0 CONCLUSIONS AND RECOMMENDATIONS<br />
The gold mineralisation distribution in the Zaruma – Portovelo area is today well understood<br />
particularly thanks to IAMGOLD´s systematic research during the last couple of years. The gold<br />
mineralisation concentration has been proved to be confined to the footwall of NW-SE thrusts<br />
along the 15 km strike length of the vein system. Two generations of gold mineralisation have<br />
been determined on an extensive data and research base:<br />
1. Gold associated with strong base metals mineralisation encapsulated in sulphides and<br />
probably closely genetically related to base metal deposition<br />
2. Gold associated with dark, botryoidal quartz and silver sulphosalts (Section 7.2.5)<br />
Such botryoidal quartz associated with bonanza-grade gold mineralisation was intersected by<br />
IAMGOLD in drill hole RM-11 in the southern part of the Tamayo Vein (Fig. 26) with an<br />
intersection of 0.75m @ 49.32 g/t Au. The Tamayo Vein occurs almost entirely within the<br />
<strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong> Corporation controlled area and is one of the most promising<br />
exploration targets defined by the Company.<br />
Another gold concentration controlling factor was the defined competent wall-rocks, in particular,<br />
melanocratic diorite, however, high-grade mineralisation has also been encountered in welded<br />
ignimbrites, diorites and quartz diorites.<br />
One of the most important factors controlling high-grade gold concentrations was determined by<br />
the zone immediately beneath the change in wall-rock alteration from illite to illite-smectite mixed<br />
- 72 -
layer clays (Fig. 11). This suggests that the most prospective ground for exploration lies within<br />
the northwest striking trend of the transition from the southernmost part in vicinity of the old<br />
Portovelo mine to the more western located veins (e.g. Sucre area). This transition trend, as<br />
defined by IAMGOLD, is almost entirely controlled by Company. Another feature controlling the<br />
gold mineralisation is despite the generally northward dipping ore shoots these are arranged in<br />
band-like clusters which plunge to the south (Billingsley, 1926 in Spencer, R., 2002). This can<br />
have a crucial significance to the Company because it means that the already exploited<br />
bonanza-grade veins in the old Portovelo area may extend into the southern part of the district<br />
beneath illite-smectite alteration. This area is once again entirely under the control of <strong>Dynasty</strong><br />
<strong>Metals</strong> and <strong>Mining</strong> Corporation.<br />
Applying all the above mentioned high-grade gold mineralisation controls to the Company<br />
controlled areas in the Zaruma – Portovelo area it is obvious that <strong>Dynasty</strong> <strong>Metals</strong> and <strong>Mining</strong><br />
Corporation is controlling all exploration targets within the district as shown on Fig. 38. Each<br />
exploration target is based on the proximity to the footwall of major thrust ramps or within the<br />
transition from Iillite-smectite to illite zone or in the continuation of southerly plunging ore shoot<br />
clusters in the Portovelo area. The abundance of untested drill targets almost exclusively within<br />
the property controlled by the Company and the consolidated land tenement potential thanks to<br />
ongoing negotiations with the remaining small miners are all factors which makes the Zaruma<br />
Project one of the promising high-grade gold targets in Ecuador in the present day.<br />
From this point of view, the calculated Mineral Resource of the Zaruma Project presented in this<br />
<strong>report</strong> can be considered as conservative.<br />
- 73 -
9'604.000N<br />
9'602.000N<br />
9'600.000N<br />
9'598.000N<br />
9'596.000N<br />
9'594.000N<br />
9'592.000N<br />
9'590.000N<br />
9'588.000N<br />
9'586.000N<br />
W<br />
N<br />
S<br />
E<br />
646.000E<br />
646.000E<br />
0.8 0.8 g/t<br />
g/t g/t<br />
Piñas Piñas Piñas Piñas Piñas Piñas Piñas Piñas Piñas Thrust Thrust Thrust Thrust Thrust Thrust Thrust Thrust Thrust<br />
648.000E<br />
Calcite Calcite Calcite Calcite Calcite Calcite Calcite Calcite Calcite in in in in in in in in in<br />
Illite Illite Illite Illite Illite Illite Illite<br />
Illite-smectite<br />
Illite-smectite<br />
Illite-smectite<br />
Illite-smectite<br />
Illite-smectite<br />
Illite-smectite<br />
Illite-smectite<br />
Illite-smectite<br />
Illite-smectite<br />
648.000E<br />
650.000E<br />
Actinolite Actinolite Actinolite Actinolite Actinolite Actinolite Actinolite Actinolite Actinolite<br />
Epidote Epidote Epidote Epidote Epidote Epidote Epidote Epidote Epidote in in in in in in in in in<br />
650.000E<br />
<strong>Dynasty</strong> Concessions<br />
Chlorite Chlorite Chlorite Chlorite Chlorite Chlorite Chlorite Chlorite Chlorite<br />
0.7 0.7 g/t<br />
g/t<br />
0.8 0.8 g/t<br />
g/t<br />
4.4 4.4 4.4 4.4 g/t g/t<br />
g/t<br />
0.5 0.5 0.5 0.5 0.5 g/t<br />
g/t<br />
4.2 4.2 4.2 g/t g/t<br />
g/t g/t<br />
652.000E<br />
Biotite Biotite Biotite Biotite Biotite Biotite Biotite Biotite Biotite<br />
Chlorite Chlorite in<br />
in<br />
652.000E<br />
- 74 -<br />
4.5 4.5 g/t g/t g/t<br />
g/t<br />
654.000E<br />
Huertas Huertas Huertas Huertas Huertas Huertas Huertas Huertas Huertas Fault Fault Fault Fault Fault Fault Fault Fault Fault<br />
1.2 1.2 g/t g/t g/t<br />
g/t g/t<br />
654.000E<br />
656.000E<br />
Tourmaline Tourmaline Tourmaline Tourmaline Tourmaline Tourmaline Tourmaline Tourmaline Tourmaline In In In In In In In<br />
Magnetite Magnetite Magnetite Magnetite Magnetite Magnetite Magnetite Magnetite Magnetite in in in in in in in<br />
656.000E<br />
Puente Puente Puente Puente Puente Puente Puente Puente Puente Buza Buza Buza Buza Buza Buza Buza Buza Buza Fault Fault Fault Fault Fault Fault Fault Fault Fault<br />
Actinolite Actinolite Actinolite Actinolite Actinolite Actinolite Actinolite Actinolite Actinolite<br />
Epidote Epidote Epidote Epidote Epidote Epidote Epidote Epidote Epidote in in in in in in in in in<br />
9'604.000N<br />
9'602.000N<br />
9'600.000N<br />
9'598.000N<br />
9'596.000N<br />
9'594.000N<br />
9'592.000N<br />
9'590.000N<br />
Calcite Calcite Calcite Calcite Calcite Calcite Calcite Calcite Calcite in in in in in in in in in<br />
Fig. 38<br />
Zaruma Project Soil Sampling Programme - Gold distribution colour shaded plot.<br />
A yellow circle represents exploration targets. A total of 5,415 samples are plotted on the map.<br />
9'588.000N<br />
9'586.000N
14.0 REFERENCES<br />
- Spencer, R.M., et al, 2002, The Portovelo-Zaruma <strong>Mining</strong> Camp, Southwest Ecuador.<br />
Porphyry and Epithermal Ebvironments. SEG Newsletter, Society of Economic Geologists,<br />
April 2002, Number 49, 14 p.<br />
- Mapa Geológico de La República del ECUADOR, 1969. National Service of Geology and<br />
<strong>Mining</strong> of Ecuador and Bureau d´Etudes Industrielles et de Cooperation de Institut Français du<br />
Petrole<br />
- Billingsley, P.,1926, Geology of the Zaruma gold district of Ecuador. American Institute of<br />
<strong>Mining</strong> and Metallurgical Engineering, v. 74, p.255-275<br />
- Sillitoe, R.H., 2000, Comments on the Portovelo-Zaruma vein gold district and environs,<br />
Ecuador. Unpublished <strong>report</strong>, IAMGOLD Corp., 6 p.<br />
- Corbett, G.J. and Leach T.M., 1988, Southwest Pacific Rim Gold-Copper system, structure,<br />
alteration and Mineralisation. Society of Economic Geologist, Special Publication, number 6.<br />
236 p.<br />
- Hagemann, S.G. and Brown, P.E., 2000, Gold in 2000, Reviews in Economic Geology, volume<br />
13, 559 p.<br />
- Goossens, P.J., 1972, Metallogeny in Ecuadorian Andes, Economic Geology, vol. 67, 458-468<br />
p.<br />
- Australian Code for Reporting of Mineral Resources and Ore Reserves (The JORC Code).<br />
Prepared by the Joint Ore Reserves Committee of The Australasian Institute of <strong>Mining</strong> and<br />
Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC).<br />
September 1999, 25 p.<br />
- Kalinaj,M., 1995, Resultados de estudio microscopico de laminas transparentes y secciones<br />
pulidas. Unpublished Internal <strong>report</strong> for TVX Gold Corpration, 1995, 7 p.<br />
- Quiroga,G. J., 1995, Visit to Portovelo Minino District, El Oro Province Southern Ecuador.<br />
Unpublished Internal <strong>report</strong> for TVX Gold Corporation, March 7, 1995, 8 p.<br />
- Allen, D.G., 2003, Summary Geological Report on the Pacayurco Property (Roma &<br />
Pacayurco bajo Concessions), El Oro Province – Southwestern Ecuador. Unpublished Internal<br />
<strong>report</strong> for Minera Australiana S.A., January 2003, 9 p.<br />
- Alfaro, M., 1995, Informe Preliminar Proyecto Portovelo. Unpublished Internal <strong>report</strong> for TVX<br />
Gold Corporation, June 29, 1995, 19 p.<br />
- 75 -
15.0 APPENDIXES<br />
APPENDIX A<br />
Miroslav Kalinaj<br />
Los Cedros 420, La Molina<br />
Lima 012, PERU<br />
Telephone: 0051-1-3654840<br />
Fax: 0051-1-3654840<br />
Email: mirkal@terra.com.pe<br />
CERTIFICATE of AUTHOR<br />
I, Miroslav Kalinaj, MSc. do hereby certify that:<br />
1. I am Consulting Geologist of:<br />
<strong>Dynasty</strong> <strong>Metals</strong> & <strong>Mining</strong> Inc.<br />
Ultimas Noticias N37-81 y Joaquín Auz,<br />
Quito, ECUADOR<br />
2. I’m the graduate of the University of Komensky, Bratislava, Czechoslovakia having received<br />
an Hon. B.Sc. in Earth Sciences in 1987, and have practiced my profession as a geologist<br />
continuously since. I also hold the degree of MSc. granted by Komensky University in Bratislava,<br />
Czechoslovakia, in 1989.<br />
3. I am a member of the Association of <strong>Mining</strong> Engineers and Geoscientists of Peru License #<br />
1599 and a Fellow of the Society of Economic Geologist in USA.<br />
4. I have read the definition of "qualified person" set out in National Instrument 43-101 ("NI 43-<br />
101") and certify that by reason of my education, affiliation with a professional association (as<br />
defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be a<br />
"qualified person" for the purposes of NI 43-101.<br />
5. I am responsible for the preparation of section sections 1, 2, 3, 4, 5, 6, 7, 8, 9, 10,11,12,13,<br />
14, 15, 16, 17 and 18 of the <strong>technical</strong> <strong>report</strong> titled ZARUMA PROPERTY (the "Technical<br />
Report").<br />
6. I visited the Zaruma Project on the 4th and 8th of February 2004. During the visit I examined<br />
several underground workings and outcrops mentioned in this <strong>report</strong>.<br />
7. I have had prior experience with the property within the period of 8 months during 1995 and<br />
1996 carrying out underground mapping and geochemical sampling as a staff geologist of TVX<br />
Gold Inc.<br />
- 76 -
8. I am not aware of any material fact or material change with respect to the subject matter of<br />
the Technical Report that is not reflected in the Technical Report, the omission to disclose which<br />
makes the Technical Report misleading.<br />
9. I am independent of the issuer applying all of the tests in section 1.5 of National Instrument<br />
43-101. I am not an employee of <strong>Dynasty</strong> <strong>Metals</strong> & <strong>Mining</strong> Inc.<br />
10. I have read National Instrument 43-101 and Form 43-101 F1 and the Technical Report has<br />
been prepared in compliance with that instrument and form.<br />
11. I consent to the filing of the Technical Report with any stock exchange and other regulatory<br />
authority and any publication by them for regulatory purposes, including electronic publication in<br />
the public company files on their websites accessible by the public, of Technical Report<br />
12. A copy of this <strong>report</strong> is submitted as a computer readable file in Adobe Acrobat PDF format.<br />
The requirements of electronic filing necessitate submitting the <strong>report</strong> as an unlocked, editable<br />
file. I accept no responsibility for any changes made to the computer file after it leaves my<br />
control.<br />
Dated this 22 day of October, 2004<br />
“Miroslav Kalinaj”<br />
Miroslav Kalinaj<br />
Miroslav Kalinaj<br />
Los Cedros 420, La Molina<br />
Lima 012, PERU<br />
Telephone: 0051-1-3654840<br />
Fax: 0051-1-3654840<br />
Email: mirkal@terra.com.pe<br />
- 77 -
APPENDIX B<br />
MINERA AUSTRALIANA S.A.<br />
Letter Agreement dated August 08 ,2003<br />
between Minera Australiana S.A. and IAMGOLD Ecuador S.A.<br />
Avenida Ultimas Noticias N37-81<br />
Y Joaquin Auz<br />
Quito, Ecuador<br />
fax number 593 (2) 225-4138<br />
IAMGOLD Ecuador S.A.<br />
Avenida El Tiempo N37-67 y El Comercio, Quito, Ecuador<br />
Fax number 593 (2) 246-8673<br />
Attention: Richard Spencer, Exploration Manager – South America, IAMGOLD Corp.<br />
- 78 -<br />
August 08, 2003<br />
Dear Sirs:<br />
Re: Retazos Project, Ecuador (the “Property”)<br />
We provide this letter to confirm the terms and conditions upon which we will acquire the Property. By<br />
signing this letter the parties hereto have entered into a binding agreement (the “Agreement”) on the<br />
terms and conditions contained herein.<br />
1. For the purposes of this Agreement, the following terms shall be defined as follows:<br />
(a) “Australiana” means Minera Australiana, an Ecuadorian corporation;<br />
(b) “Closing Date” means September 15 th , 2003;<br />
(c) “Effective Date” means the date of this Agreement;<br />
(d) “Iamgold” means IAMGOLD Ecuador S.A.;<br />
(e) “NSR Royalty” means the royalty to be granted by Australiana to Iamgold pursuant to<br />
Section 5 of this Agreement, in the form attached to this Agreement as Schedule “C”;<br />
(f) “Property” means the property represented by the concessions described on Schedules<br />
“A1” and “A2” and shown on the map attached as Schedule “B”;<br />
(g) “Reporting Issuer” means a party which acquires an interest in the NSR Royalty as<br />
described in Section 6 of this Agreement; and<br />
(h) “Underlying Agreements” means all agreements relating in any manner to the Property.<br />
2. Australiana has entered into this Agreement based upon the following representations<br />
and warranties made by Iamgold:<br />
(a) Iamgold is the registered and beneficial owner of the concessions that constitute part of<br />
the Property as described in Schedule A1. Applications have been filed for all of the<br />
concessions listed in Schedule “A1”, such applications having been made in the ordinary<br />
course and in accordance with prevailing laws, and such concessions have been
egistered in the ordinary course in accordance with prevailing laws. All such<br />
concessions are in all respects in good standing in the offices of the applicable mining<br />
authorities to the respective dates specified in Schedule A1; Concessions listed in<br />
Schedule A2 constitute the remainder of the Property and are held by Iamgold through<br />
third party agreements. No warranty is given by Iamgold as to the status of these<br />
concessions: this will be verified by Australiana in its due diligence of the concessions<br />
described in Schedule A2.<br />
(b) Iamgold has the rights to the concessions listed in Schedule A2 through its rights and<br />
privileges under third party agreements, copies of which are included in Schedule D.<br />
(c) Iamgold is a valid and subsisting corporation duly incorporated and in good standing<br />
under the laws of Ecuador.<br />
(d) Iamgold has not taken steps to encumber or alienate the Property;<br />
(e) Iamgold has provided to Australiana complete copies of all of the Underlying Agreements;<br />
(f) except as reflected in the Underlying Agreements, to the best of Iamgold’s knowledge, no<br />
other person claims any mineral title to any area covered by the Property nor any interest<br />
in the Property itself;<br />
(g) Iamgold has the necessary corporate capacity and authority to execute and deliver this<br />
Agreement and to observe and perform its covenants and obligations hereunder and has<br />
taken all necessary corporate action in respect thereof, and this Agreement will constitute<br />
a legal, valid and binding contract of Iamgold enforceable against Iamgold in accordance<br />
with its terms. Neither this Agreement nor the completion of the transactions<br />
contemplated hereby conflicts, or will conflict, or will result, in a breach or violation of any<br />
law or regulation of any kind whatsoever applicable to Iamgold, any constating<br />
documents of Iamgold or any agreement of any kind whatsoever to which Iamgold is a<br />
party or by which Iamgold is bound.<br />
These representations and warranties shall survive the completion of this Agreement for a period of one<br />
year from the Effective Date.<br />
3. Iamgold has entered into this Agreement based upon the following representations and<br />
warranties made by Australiana:<br />
(a) Australiana is a valid and subsisting corporation duly incorporated and in good standing<br />
under the laws of the jurisdiction of Ecuador.<br />
(b) Australiana has the necessary corporate capacity and authority to execute and deliver this<br />
Agreement and to observe and perform its covenants and obligations hereunder and has<br />
taken all necessary corporate action in respect thereof, and this Agreement will constitute<br />
a legal, valid and binding contract of Australiana enforceable against Australiana in<br />
accordance with its terms. Neither this Agreement nor the completion of the transactions<br />
contemplated hereby conflicts, or will conflict, or will result, in a breach or violation of any<br />
laws or regulation of any kind whatsoever applicable to Australiana, any constating<br />
documents of Australiana or any agreement of any kind whatsoever to which Australiana<br />
is a party or by which Australiana is bound.<br />
These representations and warranties shall survive the completion of this Agreement for a period of one<br />
year from the Effective Date.<br />
4. Iamgold hereby agrees to assign, transfer and convey to Australiana the full title to, or<br />
application for, the Properties listed in Schedule A1 and Iamgold's interest in the third party agreements<br />
relating to the Properties listed in Schedule A2, free and clear of any liens, claims, charges or<br />
- 79 -
encumbrances other than the NSR Royalty defined in Schedule C, on the Closing Date or such other date<br />
as mutually agreed to by the Parties.<br />
5. In consideration of the transfer described in Section 4, Australiana will grant in favour of<br />
Iamgold the 3% NSR Royalty on the Closing Date.<br />
6. On the Closing Date:<br />
(a) Iamgold will deliver to Australiana such bills of sale and other documents as may be<br />
necessary or appropriate to transfer title to the Property into the name of Australiana, free<br />
and clear of any encumbrances other than the NSR Royalty, such bills of sale to be in<br />
registrable form; and<br />
(b) Australiana will grant the 3% NSR Royalty in favour of Iamgold.<br />
7. From and after the Effective Date:<br />
(a) Australiana shall have the sole and exclusive right and authority to explore and develop<br />
the Property in accordance with the laws of Ecuador.<br />
(b) Australiana shall hold Iamgold harmless for environmental damages resulting from<br />
Australiana’s exploration, development and production activities on the Property.<br />
8. The Parties further agree that:<br />
(a) any disputes hereunder shall be submitted to a single arbitrator for arbitration pursuant to<br />
the Commercial Arbitration Act of British Columbia;<br />
(b) any notice, demand, payment or other communication (collectively the “Correspondence”)<br />
to be given hereunder shall be in writing and shall be delivered to the address or fax<br />
number of the party appearing herein;<br />
(c) they shall do all such things and execute all such written materials as may be required to<br />
carry out the full intent and meaning of this Agreement;<br />
(d) Australiana shall be entitled to assign this Agreement (or the Property or any part of or<br />
interest in the Property) to any person without the consent of and with notice to the other,<br />
provided that the assignee agrees to be bound in writing to Iamgold by the terms and<br />
conditions of this Agreement and the NSR Royalty; on transferring 100% of its interest on<br />
this agreement Australiana will cease to have any obligations or liabilities under this<br />
agreement provided that the assignee has agreed to be bound in writing to Iamgold by<br />
the terms and conditions of this Agreement and the NSR Royalty.<br />
(e) this Agreement shall enure to the benefit of and be binding upon the parties hereto and<br />
their respective successors and permitted assigns;<br />
(f) this is the entire Agreement between the parties in respect of the matter referred to herein<br />
and no amendment or interpretation of this Agreement will be binding on the parties<br />
unless same is in writing executed by the parties hereto;<br />
(g) this Agreement shall be construed and governed with respect to property title matters and<br />
status of the parties as participants in a joint venture by the laws in force in Ecuador and,<br />
with respect to all other matters, by the laws in force in British Columbia; and<br />
- 80 -
(h) Australiana has no obligation to maintain the concessions or agreements related to the<br />
concessions and may discontinue them without the consent of and without notice to<br />
Iamgold.<br />
(i) the Parties agree that they shall take from time to time such action and shall sign or<br />
execute such additional instruments to fully register this Agreement and/or the NSR<br />
Royalty at the applicable mining registries in Ecuador or as may be reasonably necessary<br />
or convenient to implement and carry out the intent and purpose of this Agreement. The<br />
Parties acknowledge that such registration shall require the translation of this Agreement<br />
and/or the NSR Royalty into Spanish, and agree that the English version of this<br />
Agreement shall prevail in the event of any inconsistency.<br />
9. Each of Iamgold and Australiana and their respective affiliates undertakes and agrees<br />
that all data, records and other information of any kind developed or acquired by any party in connection<br />
with this Agreement (“Confidential Information”), shall be treated as confidential, provided that the<br />
Confidential Information may be disclosed to affiliates, to the public or to government agencies as<br />
required by pertinent law, or to a stock exchange as required by its rules, or to any contractors, subcontractors<br />
or consultants a party may engage who agree to keep it confidential. Australiana may release<br />
information to a third party provided that they sign a confidentiality agreement.<br />
10. The obligations of Australiana in pursuance of this Agreement are subject to the fulfilment<br />
of a Due Diligence period for 30 days after the Effective Date, or within such other time as may be<br />
mutually agreed upon by the Parties, of the following conditions precedent for the exclusive benefit of<br />
Australiana:<br />
(a) completion of a review by Australiana of title to the Property to the satisfaction of<br />
Australiana;<br />
(b) Iamgold furnishing to Australiana all <strong>technical</strong> data with respect to the Property, and<br />
Australiana completing a review of such data to its satisfaction;<br />
(c) Australiana will take posession of the bore hole core from the Property. Costs associated<br />
with moving the core to another location other than that in which it is presently located in<br />
Zaruma will be for Australiana’s account.<br />
(d) Iamgold furnishing to Australiana complete copies of all of the Underlying Agreements<br />
and Australiana completing a review of the Underlying Agreements to its satisfaction; and<br />
(e) all requisite regulatory approvals.<br />
11. On completion of the Due Diligence, Australiana will have no recourse to Iamgold regarding the<br />
completeness and accuracy of data provided.<br />
Please sign and return the enclosed copy of this Agreement to us to indicate your agreement to the terms<br />
and conditions set forth herein. The parties acknowledge that this Agreement may be signed in<br />
counterpart and by facsimile, if necessary.<br />
- 81 -
Yours truly,<br />
Minera Australiana S.A.<br />
Per:<br />
Signature of Signatory<br />
Name and Title of Signatory:<br />
Robert Washer, General Manager<br />
This Agreement has been signed and delivered by:<br />
IAMGOLD Ecuador S.A Address:<br />
Per: Avenida El Tiempo N37-67 y El Comercio<br />
Quito, Ecuador<br />
Signature of Signatory Fax No. (593) 2 246-8673<br />
Name and Title of Signatory:<br />
Richard Spencer,<br />
Exploration Manager – South America<br />
IAMGOLD Corporation<br />
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SCHEDULE C<br />
Schedule C to the Letter Agreement dated August 08 ,2003<br />
between Minera Australiana S.A. and IAMGOLD Ecuador S.A.<br />
NET SMELTER RETURN ROYALTY<br />
1. Grant of Royalty: Australiana, or its Affiliate which holds the Property (in this Schedule,<br />
“Australiana”) shall pay to IAMGOLD a net smelter return royalty (the “Royalty”) on all ores,<br />
minerals, metals or other products mined and sold (or deemed sold) by Australiana arising from<br />
the exploitation of the Property calculated at a rate of 3.0% of Net Smelter Returns.<br />
2. Definitions: For the purpose of this Schedule, the following words and phrases shall have the<br />
following meanings:<br />
(a) “Affiliate” means, as to any party, any person, partnership, joint venture, corporation or<br />
other form of enterprise which directly or indirectly controls, is controlled by or is under<br />
common control with that party, and for the purposes of this definition “control” means<br />
possession, directly or indirectly, of the power to direct or cause the direction of<br />
management and policies through ownership of voting securities, contract, voting trust<br />
or otherwise;<br />
(b) “Average Spot Price” means, with respect to any particular calendar quarter, the<br />
average Spot Price of gold per troy ounce for such calendar quarter;<br />
(c) “business day” means any day which is not a Saturday, Sunday or banking holiday in<br />
the City of Toronto, Canada or in the city of Quito, Ecuador;<br />
(d) “control” means, with respect to any person, voting securities carrying more than 50%<br />
of the votes for the election of directors of such person which, if exercised, are<br />
sufficient to elect a majority of the board of directors of such person, or any other<br />
person who has the power to direct or cause the direction of the management and<br />
policies of such person, whether through the ownership of shares or by contract or<br />
otherwise;<br />
(e) “Encumbrance” means any mortgage, hypothec, title retention, pledge, lien, right of<br />
set-off, charge, security interest or other encumbrance whatsoever, whether fixed or<br />
floating and howsoever created or arising;<br />
(f) “Expenses” means, with respect to any particular period, the following expenses to the<br />
extent incurred by Australiana during such period:<br />
(i) sales and production taxes, payable by Australiana or the operator of the<br />
Property that are based directly upon, and actually assessed against, the value<br />
or quantity of Minerals sold or otherwise disposed of from the Property; but<br />
excluding any and all taxes based upon the net or gross income of Australiana<br />
or the operator of the Property, the value of the Property or the privilege of<br />
doing business, and other taxes assessed on a similar basis;<br />
(ii) charges and costs, if any, for transportation and security costs (including, but not<br />
limited to, direct insurance costs while in transit) of Minerals from the Property<br />
to places where such Minerals are smelted, refined and/or sold or otherwise<br />
disposed of; and<br />
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(iii) charges, costs (including assaying, sampling and sales costs) and all penalties, if<br />
any, charged by any off-site arm’s length smelter or refiner of the Minerals; but,<br />
if smelting and/or refining are carried out in facilities owned or controlled, in<br />
whole or in part, by Australiana, then the charges and costs for such smelting<br />
or refining of such Minerals shall be the lesser of: (A) the charges and costs<br />
Australiana would have incurred if such smelting or refining was carried out at<br />
facilities that are not owned or controlled by Australiana and that are offering<br />
comparable services for comparable products; and (B) the actual charges and<br />
costs incurred by Australiana with respect to such smelting and refining.<br />
(g) “Gold Bullion” means gold bullion meeting the standards of London Good Delivery<br />
Gold Bars as defined by The London Bullion Market Association;<br />
(h) “Gross Proceeds” means, without duplication, with respect to any particular period, the<br />
value of all consideration, monetary or otherwise (including insurance proceeds) paid to<br />
any person, including Australiana in respect of the sale or other disposition of Minerals<br />
during such period; and, the value of the consideration received by Australiana shall be<br />
deemed to be the Spot Prices of the applicable Minerals, and for purposes of<br />
determining the Gross Proceeds received or deemed to be received by Australiana in<br />
respect of gold or silver contained in Minerals processed by a Refinery, the amount that<br />
is equal to the number of ounces of gold or silver contained in Minerals that is credited<br />
to Australiana by the Refinery during such period, multiplied by the Average Spot Price<br />
for such period;<br />
(i) “Letter Agreement” means the Letter Agreement to which this Schedule is attached;<br />
(j) “Minerals” means all naturally occurring metallic and non-metallic minerals that are<br />
mined or otherwise recovered from the Property, whether in the form of doré,<br />
concentrates, tailings or otherwise, including, without limitation, gold, silver, lead,<br />
nickel, zinc, copper, limestone, precious gems, coal, salt and all beneficiated or<br />
derivative products thereof;<br />
(k) “Net Smelter Return” means, with respect to any particular period, the amount that is<br />
equal to Gross Proceeds for such period minus Expenses for such period;<br />
(l) “Payment Date” means, with respect to any particular Royalty payment owing in any<br />
particular calendar year, the date that is 30 days after the Quarter in respect of which<br />
such Royalty payment is due;<br />
(m) “Prime Rate” means, at any particular time of determination, the reference rate of<br />
interest, expressed as a rate per annum, that the Bank of Nova Scotia establishes as<br />
its prime rate of interest in order to determine interest rates that it will charge for<br />
demand loans in U.S. dollars to its Canadian customers;<br />
(n) “Property” means the property represented by the concessions described on<br />
Schedules “A1” and “A2” to the Letter Agreement to which this Schedule is attached;<br />
(o) “Quarter” means, with respect to any particular calendar year, the three month period<br />
ending on March 31, June 30, September 30 or December 31, as applicable, in such<br />
calendar year;<br />
(p) “Refinery” means any smelter, refiner or other processor, purchaser or other user of<br />
the Minerals;<br />
(q) “Royalty” means a net smelter return royalty granted to IAMGOLD by Australiana in<br />
the percentage described in Section 1 of this Schedule;<br />
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(r) “Spot Price” means, with respect to a particular Mineral, the price determined for such<br />
Mineral on the date on which payment for such Mineral is delivered or credited to the<br />
account of Australiana and, for such purposes, the “spot price” of gold shall be<br />
determined using the price of gold in U.S. dollars on the London Bullion Market<br />
Afternoon Fix on such day, the “spot price” of silver shall be determined using the price<br />
of silver in U.S. dollars on the London Bullion Market Afternoon Fix on such day and<br />
the “spot price” of any other Mineral shall be determined using the price of such Mineral<br />
quoted at the close of business on such day by the New York Commodity Exchange;<br />
and if for any reason the London Bullion Market or the New York Commodity Exchange<br />
is no longer in operation or the “spot price” of a particular Mineral is not quoted on the<br />
London Bullion Market or the New York Commodity Exchange, the “spot price” of such<br />
Mineral shall be determined by reference to the price of such Mineral on another similar<br />
commercial exchange entity having the largest volume of trading in such Mineral on<br />
such day; and the exchange rate used to convert a “spot price” to U. S. Dollars from<br />
any other currency on a particular date shall be the exchange rate for such other<br />
currency on such date published by the Globe & Mail newspaper, Toronto;<br />
(s) “Surrounding Property” means any property or permit held by Australiana that lies<br />
within two kilometers of the boundary of the existing Property or from the boundaries of<br />
a reduced Property should such reduction occur; and<br />
(t) Other capitalized terms shall except where otherwise defined in this Schedule have the<br />
meaning assigned to them in the Letter Agreement.<br />
3. Currency: For the purpose of determining Net Smelter Returns, all receipts and<br />
disbursements in currency other than United States currency shall be converted into United<br />
States currency on the day of receipt or disbursement, as the case may be.<br />
4. Time and Manner of Royalty Payments:<br />
(a) The Royalty shall be calculated using the Spot Price and paid to IAMGOLD by Australiana in<br />
U.S. dollars on each Payment Date in respect of Net Smelter Returns for each Quarter ending<br />
after the date hereof. Any portion of any Royalty payment that relates to the sale or other<br />
disposition of gold shall be paid to IAMGOLD, at IAMGOLD’s option, in gold bullion and shall be<br />
satisfied by the provision of appropriate gold credits in respect thereof in favour of IAMGOLD at<br />
the applicable Refinery. IAMGOLD shall provide written notice of IAMGOLD’s election to<br />
receive payment of the Royalty in gold bullion or in cash not less than 10 business days prior<br />
to the commencement of the Quarter to which the Royalty payment relates, provided that<br />
IAMGOLD shall not deliver more than two notices to Australiana during any 12 month period.<br />
Each Royalty payment paid in gold bullion shall be converted to gold bullion at the Average<br />
Spot Price. Any Royalty payment, or portion thereof, that is not payable in gold bullion shall be<br />
paid in immediately available U.S. dollars, in cash or by certified cheque, bank draft or wire<br />
transfer. All Royalty payments that are not payable in gold bullion shall be delivered to<br />
IAMGOLD at its principal place of business as provided in the Letter Agreement or in such<br />
other manner or at such other place as specified in writing by IAMGOLD.<br />
(b) Concurrently with each Royalty payment, Australiana shall prepare and deliver to<br />
IAMGOLD a detailed statement of the manner in which such Royalty payment was<br />
calculated, including: (i) the quantity of Minerals to which such Royalty payment is<br />
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applicable; (ii) the calculation of the applicable Net Smelter Returns; and (iii) the calculation<br />
of the Average Spot Price applicable in respect of such Quarter.<br />
(c) IAMGOLD may object in writing to any statement and payment amount within 12<br />
months after receipt of the relevant statement or payment. If any Royalty payment has<br />
not been paid in full as provided herein, IAMGOLD may dispute the payment by serving<br />
notice to Australiana in writing of such default. Australiana shall have fifteen days (15)<br />
to resolve the matter and make payment to IAMGOLD unless Australiana objects to the<br />
dispute. All unresolved disputes shall be referred to a third party (accountant) of<br />
mutual choice where both parties shall accept the verdict of such an audit. If the<br />
audited adjustment to the Royalty payment is less than 5% of such payment,<br />
IAMGOLD shall pay all reasonable audit costs, if any, and if the adjustment to the<br />
Royalty payment is greater than 5% of such payment, Australiana shall pay all<br />
reasonable audit costs, if any. An interest charge of Prime Rate plus 2% per annum<br />
shall apply to both IAMGOLD and Australiana upon failing to pay the resolved amount<br />
within 30 days of the date the dispute was received in writing.<br />
(d) All Royalty payments, including interest, if any, shall be made without<br />
withholding of or deduction for, or on account of, any present or future taxes, duties,<br />
assessments, repatriation obligations or governmental charges of whatever nature (collectively,<br />
“Withholdings”), unless such Withholdings are imposed or levied, and are required, by or on<br />
behalf of the Government of Ecuador or any political subdivision thereof, or any department,<br />
authority or agency therein or thereof having power to tax.<br />
5. Commingling: If the Property is brought into commercial production, it may be operated as a<br />
single operation with other mining properties owned by third parties or in which Australiana has<br />
an interest, in which event, the parties agree that (notwithstanding separate ownership thereof)<br />
ores mined from the mining properties (including the Property) may be blended at the time of<br />
mining or at any time thereafter. Before any Minerals are commingled with minerals from any<br />
other properties, the Minerals shall be measured and sampled in accordance with accepted<br />
mining and metallurgical practices for moisture, metal, and other appropriate content.<br />
Representative samples of the Minerals shall be retained by Australiana and assays (including<br />
penalty substances) and other appropriate analyses of these samples shall be made before<br />
commingling to determine metal, mineral and other appropriate content and penalty substances<br />
of the Minerals. From this information, Australiana shall determine the quantity of the Minerals<br />
subject to the Royalty notwithstanding that the Minerals have been commingled with minerals<br />
from other properties. Following the expiration of the period for objections described in Section<br />
4(c) of this Schedule, and absent timely objection, if any, made by IAMGOLD within this period,<br />
Australiana may dispose of the materials and data required to be kept and produced by this<br />
Section 5.<br />
6. Hedging Transactions: Australiana ay, but shall not be under any duty to, engage in hedging<br />
transactions (hereinafter defined) in its sole discretion covering all or part of production from the<br />
Property. All profits and losses resulting from Australiana or the operator engaging in any<br />
commodity futures trading, option trading, metals trading, gold loans or any combination<br />
thereof, and any other hedging transactions (collectively, “hedging transactions”) are<br />
specifically excluded from calculations of Royalty payments pursuant to this Schedule. All<br />
hedging transactions by Australiana or the operator and all profits or losses associated<br />
therewith, if any, shall be solely for Australiana or the operator’s account.<br />
7. Books, Records and Inspections:<br />
(a) Australiana shall keep true and accurate books and records showing the amount of<br />
Minerals shipped, sold or processed, the Expenses and the amount of money received<br />
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for the Minerals, prepared on an accrual basis in accordance with Canadian generally<br />
accepted accounting principles, consistently applied.<br />
(b) Within one hundred and twenty (120) days following the end of each calendar year,<br />
Australiana shall provide IAMGOLD with an annual <strong>report</strong> of the amount of Minerals<br />
shipped, sold or processed, the amount of money received for Minerals, the Expenses<br />
and the Net Smelter Returns payable.<br />
(c) Upon not less than 15 business days’ notice to Australiana, IAMGOLD, or its<br />
authorized agents or representatives, may, under the direction and control of Australiana, enter<br />
upon all surface and subsurface portions of the Property for the purpose of inspecting the<br />
Property, all improvements thereto and operations thereon, and all books and records<br />
described in Section 7(a) of this Schedule, including without limitation such records that are<br />
electronically maintained, provided that:<br />
(i) IAMGOLD and its authorized agents and representatives shall enter the<br />
Property at the risk and expense of IAMGOLD and may not hinder operations<br />
on or pertaining to the Property;<br />
(ii) IAMGOLD and its authorized agents and representatives shall only be<br />
permitted to enter the Property for the purpose of inspecting the Property and<br />
all improvements thereto and operations thereon once in any 12 month period;<br />
and<br />
(ii) IAMGOLD shall indemnify and hold Australiana and its Affiliates and their<br />
respective directors, officers, employees, agents, representatives,<br />
shareholders, contractors and subcontractors harmless from any damage,<br />
claim or demand by reason of injury to IAMGOLD or any of its agents or<br />
representatives, caused by IAMGOLD’s exercise of rights pursuant to this<br />
Section 7(c).<br />
8. Sale or Encumbrance of Property: Australiana shall not sell or transfer all or any part of the<br />
Property, or permit any Encumbrance on all or any part of the Property or the Minerals unless<br />
the purchaser or transferee agrees in writing with IAMGOLD prior to such transfer to be bound<br />
by the terms of this Schedule.<br />
9. No Management Right: None of the provisions of this Schedule shall give IAMGOLD any<br />
right to management of the Property or any mine established thereupon, nor shall the<br />
provisions be interpreted to do so. In particular, but without limiting the generality of the<br />
preceding statement, Australiana will plan, manage, control, conduct and supervise mining and<br />
processing operations and any decision relating to the type, dimensions and location of the<br />
mine, its facilities, pits and service and ancillary establishments, as well as any decision<br />
pertaining to the rate of work, production processes, expansion of the mine and to temporary or<br />
final stoppage of commercial exploitation and mining operations on the Property, provided that<br />
Australiana shall conduct all operations on the Property in a good and workmanlike manner and<br />
in accordance with accepted mining practice.<br />
10. No Obligation to Maintain Property: The parties acknowledge that Australiana is not<br />
obligated to maintain in good standing, renew or otherwise retain any interest in the Property,<br />
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or make application or reapplication therefor, and that Australiana may, in its sole discretion,<br />
without penalty, relinquish, drop, abandon or allow to lapse any or all of the Property (the<br />
“Abandoned Claims”) and/or the Surrounding Property, or the applications or reapplications<br />
therefor, without further obligation to IAMGOLD pursuant to this Schedule, provided that<br />
Australiana provides IAMGOLD with prior written notice of Australiana’s intention to abandon,<br />
surrender, or allow the expiry or lapse of, such Abandoned Claims, provided that the claims<br />
were in good standing at the Closing Date, and if IAMGOLD within 30 days of such notice so<br />
requests in writing, Australiana shall transfer the Abandoned Claims to IAMGOLD, all costs of<br />
such transfer to be borne by IAMGOLD, and further provided that Australiana shall not<br />
abandon or surrender, or allow to lapse or expire, any part or parts of mining claims or leases<br />
relating to or comprising the Property for the purpose of permitting any third party to acquire<br />
such Abandoned Claims or to otherwise avoid the Royalty; and if Australiana, or any associate,<br />
Affiliate or related party of Australiana, acquires any such Abandoned Claims, the calculation of<br />
the Royalty pursuant to Section 1 of this Schedule shall include all Minerals relating to such<br />
Abandoned Claims.<br />
11. Binding Effect: All covenants, conditions, and terms of this agreement shall, to the extent<br />
permitted by the laws of Ecuador, be of benefit to and run as a covenant with the Property and<br />
shall bind and inure to the benefit of the parties hereto, their respective successors and<br />
assigns, including, without limitation, partners, joint venture partners, lessees and mortgagees.<br />
The right to receive the Royalty as and when due shall not be construed to create expressly or<br />
by implication, a joint venture, mining partnership, commercial partnership or other partnership<br />
relationship between Australiana and IAMGOLD, or be deemed to constitute Australiana the<br />
agent or legal representative of IAMGOLD or to create any fiduciary relationship between them<br />
for any purpose whatsoever.<br />
12. Further Assurances; Registration of Interest: Each party shall execute all such further<br />
instruments and documents and do all such further actions as may be necessary to effectuate<br />
the documents and transactions contemplated in this agreement, in each case at the sole cost<br />
and expense of the party requesting such further instrument, document or action. IAMGOLD<br />
shall have the right, from time to time, to the extent permitted by law, to register or record notice<br />
of this agreement, any other instruments relating to this agreement, a notice of the Royalty, and<br />
a caution or other title document against the title to the Property and Australiana shall<br />
cooperate with such registration or recording and provide its written consent or signature to any<br />
documents or things necessary to accomplish such registration or recording. Any successor or<br />
assignee or other acquirer of the Property, or any interest therein, shall be subject to this<br />
agreement and shall be obligated to comply with the terms hereof, including the obligations to<br />
cooperate in respect of the registration of this agreement.<br />
13. Time of the Essence: Time shall be of the essence hereof.<br />
14. Severability: If any provision of this Schedule is wholly or partially invalid, this Schedule shall<br />
be interpreted as if the invalid provision had not been a part hereof so that the invalidity shall<br />
not affect the validity of the remainder of this Schedule which shall be construed as if the Letter<br />
Agreement had been executed without the invalid portion. It is hereby declared to be the<br />
intention of the parties that the Letter Agreement would have been executed without reference<br />
to any portion of this Schedule which may, for any reason, hereafter be declared or held invalid.<br />
15. Assignment: Australiana confirms that any or all rights and obligations of IAMGOLD pursuant<br />
to this Schedule may be assigned to any Affiliate of IAMGOLD and to any financial institution<br />
without the prior consent of Australiana, provided that IAMGOLD provides Australiana with<br />
written notice thereof and the assignee agrees to be bound by the provisions of this agreement.<br />
Australiana may assign its rights and obligations hereunder without the prior written consent of<br />
IAMGOLD, provided that the assignee agrees in writing to IAMGOLD to be bound by the terms<br />
of this Schedule.<br />
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Schedule D to the Letter Agreement dated August 08 ,2003<br />
between Minera Australiana S.A. and IAMGOLD Ecuador S.A.<br />
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APPENDIX C<br />
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APPENDIX D<br />
DYNASTY ADVANCES ITS ZARUMA GOLD PROJECT<br />
Vancouver, BC, July 7, 2004 - <strong>Dynasty</strong> <strong>Metals</strong> & <strong>Mining</strong> Inc. (TSXV:DMM;<br />
the “Company”) is pleased to announce more encouraging results from<br />
recent rock channel sampling conducted at two old mine sites situated<br />
within the Company’s 100% owned Zaruma Gold Project, and the signing of<br />
a cooperative agreement with the national, provincial and local chambers of<br />
mines to work together to develop the region.<br />
The Company has identified 5 vein targets at the old Sucre and Pacayurco<br />
mines, which are located 12 kilometres north west and 1 kilometre north<br />
east, respectively, from the town of Zaruma. Rock channel samples from<br />
these veins produced high-grade assays ranging in value from 0.01<br />
grams/tonne (“g/t”) to 99.57 g/t gold and from 0.8 g/t to 278.7g/t silver.<br />
Sample widths varied from 0.2 to 1.5 metres.<br />
President and CEO Robert Washer comments: “These latest results confirm<br />
our expectation that significant gold and silver mineralization exists within<br />
the trend we previously identified that includes the historical mining area of<br />
Portovelo-Zaruma.”<br />
Mr. Washer further comments: “The agreement with the chambers of mines<br />
is significant to the future development of the region. It is intended to<br />
promote cooperation amongst local government agencies, concession<br />
holders and other interested parties.”<br />
Geology<br />
The geology of Zaruma consists of a 15 km x 5 km base metal-rich, goldsilver<br />
vein system that lies adjacent to a cluster of porphyry intrusions. The<br />
vein trend strikes north-northwest and consists of over 90 kilometres of<br />
veins.<br />
Twenty seven gold-silver veins hosted in lithologies ranging from andesites<br />
to basaltic andesites have been identified by the Company. Four large<br />
under-explored target areas (Sucre, Pacayurco, Tamayo and Tablon) have<br />
been selected for the next phase of exploration, which will determine any<br />
down-plunge and strike extensions to existing bonanza pay shoots.<br />
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Sucre<br />
At Sucre, the vein has been historically mined for a length of 250 metres,<br />
with widths varying from 0.2 to 2.1 metres and to an approximate vertical<br />
depth of 50 metres. Recently, the Company completed approximately 350<br />
metres of underground vein mapping at the lowest level and collected 56<br />
rock channel samples. Assay results ranged from 0.01 g/t to 55.62 g/t gold<br />
and from 0.8 g/t to 278.7g/t silver. The most significant channel sample<br />
locations and results from Sucre are summarized below.<br />
Sample<br />
Number<br />
ZG002<br />
ZG003<br />
ZG013<br />
ZG014<br />
ZG015<br />
ZG033<br />
ZG043<br />
ZG203<br />
Sample<br />
Location<br />
67148.17E<br />
9600555.32N<br />
647149.87E<br />
9600567.02N<br />
647114.04E<br />
9600545.00N<br />
647104.48E<br />
9600578.24N<br />
647095.89E<br />
9600568.82N<br />
648741.00E<br />
9600821.00N<br />
647050.04E<br />
9600798.82N<br />
647244.87E<br />
9601706.36N<br />
Sample<br />
Length (m)<br />
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Gold<br />
(g/t)<br />
Silver<br />
(g/t)<br />
Total<br />
Equivalent<br />
(g/t)*<br />
0.20 55.62 266.40 59.72<br />
0.20 16.72 42.00 17.37<br />
0.30 26.92 169.00 29.52<br />
1.20 11.74 119.00 13.57<br />
0.64 16.80 117.00 18.60<br />
0.72 18.96 18.00 19.24<br />
1.5 x 1.5<br />
bulk sample<br />
1.5 x 1.5<br />
bulk sample<br />
45.60 10.70 45.76<br />
3.50 278.70 7.79<br />
* A silver-gold ratio of 65 to 1 was used for gold equivalent calculation.<br />
Pacayurco<br />
Past mining at Pacayurco exposed a vein of approximately 200 metres in<br />
length with varying widths from 0.3 to 2.4 metres. Recent exploration<br />
completed at Pacayurco included 150 meters of underground mapping and<br />
the collection of 36 rock channel samples. Assay results ranged from 0.02<br />
g/t to 99.57 g/t gold. Sampling widths varied from 0.3 to 1.5 metres. The<br />
Company is still awaiting the results of silver assays.<br />
The Company is highly encouraged with the results from its work to date,<br />
which will add to the Zaruma Gold Project’s resource base. Underground
and surface mapping and channel sampling is continuing in the Tamayo and<br />
Tablon areas. More information will be released as results become available.<br />
Exploration of the Company’s properties is under the supervision of Greg<br />
Whitfield, the Company’s Exploration Manager and a “qualified person”, as<br />
defined by National Instrument 43-101. Mr. Whitfield is responsible for the<br />
preparation of <strong>technical</strong> information in this News Release. Samples are<br />
sealed on the property and shipped to the BSI Inspectorate laboratory in<br />
Lima, Peru for preparation and gold fire assay. Sample pulps are shipped by<br />
BSI Inspectorate to its laboratory in Reno, Nevada for silver fire assay and<br />
multi-element ICP analysis.<br />
About <strong>Dynasty</strong><br />
<strong>Dynasty</strong> <strong>Metals</strong> & <strong>Mining</strong> Inc. is a Canadian based mining company involved<br />
in the exploration and development of mineral properties in Ecuador. For<br />
further information about the Company, please contact Murray Oliver at<br />
(604) 687-0888 Ext. 3 or info@pemcorp.com or visit the Company's website<br />
at www.dynastymining.com<br />
<strong>Dynasty</strong> <strong>Metals</strong> & <strong>Mining</strong> Inc.<br />
Robert Washer, President and CEO<br />
The TSX Venture Exchange does not accept responsibility for the adequacy<br />
or accuracy of this release.<br />
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16.0 DATE<br />
The effective date of this <strong>report</strong> is 22 October 2004<br />
“Miroslav Kalinaj”<br />
Miroslav Kalinaj<br />
Consulting Geologist<br />
Miroslav Kalinaj<br />
Los Cedros 420, La Molina<br />
Lima 012, PERU<br />
Telephone: 0051-1-3654840<br />
Fax: 0051-1-3654840<br />
Email: mirkal@terra.com.pe<br />
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