Thought on the porphyry poten-al beneath lithocap at Kuruga

<strong>Thought</strong> on the porphyry poten-al beneath lithocap at Kuruga Prepared for Avala Resources d.o.o March 5, 2011 Richard M. Tosdal, Ph.D., Pgeo Picacho Ex L.L.C.

KUDD-­‐005 KUDD-­‐009 Geology of the northern end of the Kuruga lithocap, Timok area, Serbia Area is underlain by a series of inferred supracrustal andesi@c volcanic, volcaniclas@c and tuffaceous rocks Extensive advanced argillic altera@on has converted much of the high topography to a silica±alunite±pyrophyllite lithocap. Significant hydrothermal breccia is present and the surface and in the historical drilling. KUDD-­‐034 3 drill holes were examined; KUDD-­‐005 and KUDD-­‐009 were drilled on the north into the mineralized part of a breccia complex; KUDD-­‐034 explored the poten@al for a deep porphyry Cu system on the SW corner of the area. Map courtesy of Ivan Strambanovic, Avala Resources, March 2011

Sillitoe, 2010What is seen in the Kuruga deep drill hole (KUDD-­‐034)? Quartz – pyrophyllite?-­‐kaolinite (supergene) at 33m Serici@zed gusano textured qtz-­‐pyrophyrllite rock @ 57m

Sillitoe, 2010Kuruga KUDD-­‐034 Chlorite-­‐sericite pyrite overprint on 2 nd bio@te-­‐magne@te @288 m Anhydrite-­‐pyrite vein with bleached chlorite-­‐bearing selvage @330m

Sillitoe, 2010Kuruga KUDD-­‐034 Groundmass feldspar overprinted by anhydrite-­‐pyrite-­‐chlorite @428m Transi@on from pervasive 2 nd bio@te-­‐magne@te to “unaltered” host hornblende diorite over 5 cm @460m

Sillitoe, 2010KUDD-­‐034 What part of a porphyry system might the deep Kuruga drill hole KUDD-­‐034 have encountered? From top to ~462 m depth, the drill hole passed through rocks showing the typical hydrothermal silicate altera@on assemblage characteris@c of a porphyry Cu hydrothermal system. However, there was a remarkable lack of quartz veins as well as Cu-­‐Fe sulfide minerals. The overall grade is likely low, perhaps in the 0.1+% Cu from the serici@c zone through the K silicate (potassic) altera@on zone. Pyrite where present is replacing Fe-­‐bearing minerals (2 nd bio@te and magne@te) that form a pervasive replacement of mafic phases as well as veins Pyrite is also associated with anhydrite. The transi@on in the drill core from intensely altered to almost unaltered is very sharp (over 5 cm); sharp lateral gradients are expected as hydrothermal fluid flow on the margins will be largely ver@cal and in the case of the drill hole based on grain boundary diffusion due to the lack of significant veins. Taking all the observa@ons suggests that the drill hole KUDD-­‐034 may have just cut the pervasive altera@on that extend outside the Cu shell (dashed line on cartoon to lej).

Loca-on of KUDD-­‐034 with respect to soil Mo geochemistry Molybdenum forms a low grade shell (9 ppm KUDD-­‐034 Drill hole was collared at the southern end of the area of anomalous Mo and oriented easterly (shown approximately in pale green). Collec@vely, the soil geochemistry and the rocks in the drill hole suggest that the main por@on of a poten@ally mineralized porphyry may lie to the north of the KUDD-­‐034. Map provided by Ivan Strambanovic, Avala Resources, 2011

Anatomy of a hydrothermal breccia In general, hydrothermal breccia show systema@c facies. There is a core of highly brecciated material. Where fluidiza@on has been intense, the matrix consists of rock flour (finely milled rock) with clasts of varying sizes. In a single stage breccia, clast sizes increase in size and angularity toward the margin. Rocks immediately outside of the breccia are crackled, that is fractured in place and essen@ally can be fit together as a jig-­‐saw. Inter-­‐clast displacement and rounding increases toward the breccia. Mul@-­‐stage breccia have complex overprin@ng facies from the subsequent events. Breccia nucleate at depth and propagate upward un@l the energy is dissipated, thereby forming conical body. The roof rocks are cut by fingers of crackle breccia to rock flour breccia which represent the upward propaga@on of the larger body. Areas of maximum permeability are along breccia margins; complex when mul@ple breccia bodies present. Where they breach the surface, they form dis@nc@ve volcanic-­‐like features (see next slide)

Anatomy of a hydrothermal breccia that vented to the surface Hydrothermal breccias that breach the surface some@mes are called diatremes. However that term is largely reserved to breccias formed from magma@c or phreato-­‐magma@c processes whereby magma expands catastrophically to excavate a conical crater. In hydrothermal and magma@c-­‐related breccias, the excavate cone is filled with material that was not ejected and that falls back into the crater. Breccia facies are similar to those in hydrothermal breccias but in magma@c breccias there is juvenile material in the form of irregular ameboidal shaped clasts. Permeability will be greatest along the breccia margins, or where mul@ple breccia@on events are superposed. The cri@cal criteria required to dis@nguish interac@on with magma is the presence of the juvenile clasts.

KUDD-­‐009 KUDD-­‐ 005 Kuruga breccia facies placed in context of simple hydrothermal breccia Clas@c rock with 0.5 ppm Au; KUDD-­‐009 Tuffaceous horizon @32m; KUDD-­‐009

KUDD-­‐009 KUDD-­‐ 005 Auriferous crackle brecca forming feeder to overlying porous sediments; KUDD-­‐009 Low Au grade cap over rock flour matrix breccia; KUDD-­‐009 @155 m

KUDD-­‐009 Marginal crackle breccia; KUDD-­‐005 @ 23m with 1.93 ppm Au KUDD-­‐ 005 Alunite cemented rock flour breccia; KUDD-­‐005 @ 195m

KUDD-­‐009 KUDD-­‐ 005 Pyprite-­‐enargite cemente breccia margin; KUDD-­‐005 @ 70 m Mul@ple rebreccia@on with pyrite±enargite replacement of youngest rock flour; KUDD-­‐005 @ 225 m

KUDD-­‐009 Host Rocks to breccia KUDD-­‐ 005 Gusano (worm) texture in host rock — appears to be similar to many of the siliceous clasts in the hydrothermal breccia Relict igneous texture in rare clast sugges@ng breccia cuts plagioclase and hornblende phyric rocks at depth

What type of breccia underlies the northern part of the Kuruga property? Insufficient knowledge is available regarding the original style of breccia that forms the northern part of Kuruga. Drill hole KUDD-­‐009 appears to have drilled into the top of a breccia body, whereas KUDD-­‐005 was collared within a breccia margin. The laqer drill hole was collared at higher eleva@ons, and shows evidence of mul@stage breccia@on. An important observa@on is that the dominant clast in the breccia is silicified rocks, and thus essen@ally country rocks. Hence, trea@ng the breccia as a series of nested largely hydrothermal breccia lacking obvious magma@c input seems to be the most reasonable model at this date. Recognizing the mul@stage evolu@on of the breccia poten@ally is important, and should be clarified as it may play a role in mineraliza@on.

Some concluding thoughts 1. Clearly there is evidence for considerable hydrothermal ac@vity at Kuruga. There is a deep porphyry evident as well as extensive hydrothermal breccia present. 2. Gold in the lithocap is stratabound within a permeable tuffaceous horizon as well as within the crackle and jigsaw margins of the breccia. 3. Copper in the lithocap is associated with a second (or third?) stage of breccia@on and is associated with enargite-­‐pyrite cement. 4. No evidence has been seen to date to indicate that the breccias have a magma@c component. If this is true, then they represent the catastrophic volume expansion of the hydrothermal fluid. If this is true, there is no need for them to be located over the top of a porphyry-­‐style intrusion. Instead, they can be lateral to the intrusive center. 5. The evidence for intense and pervasive K-­‐silicate altera@on in the deep drill demands a porphyry center at depth, as would be expected. What is not know is whether it is mineralized as well. A drill hole into the main part of the likely porphyry is warranted. 6. Judging from the depth of sulfide in drill core and in the nearby Lipa system, the sulfide in the porphyry center is likely to begin around depths of 650 m RL, and extend to depth. This depth approximately corresponds to the depth of extensive and not overprinted K silicate altera@on in KUDD-­‐034.