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Los Reyes

Overview

In June 2018, Valterra signed an option agreement to acquire 100% of the Los Reyes Project, Chihuahua, Mexico for staged payments totalling $4 million over a 5 year period. The property consists of two claims totalling 45ha which cover a highly prospective Cu-Au Skarn target within the Faja de Plata of north-central Mexico, one of the world’s most productive regions for polymetallic Skarn and Carbonate Replacement Deposits (CRD). The project is located 12 kilometers south of the city of Jimenez, Chihuahua (population ~34,000) and 2 kilometers from a highway, power and railroad. The highway and railroad connect the city of Jimenez with the city of Torreon, 254km to the Southeast.

Geology and Mineralization

The Los Reyes Property is located along a prominent northwest-trending regional structure formed along the western margin of the Sierra Madre Oriental that hosts numerous high-grade current and past operating mines including Naica (26Mt @ 213g/t Ag, 5.9% Pb, 5.6% Zn and 0.4% Cu) and the Velardena district (+15Mt @ 175g/t Ag, 0.5g/t Au, 4.0% Pb, 5.0% Zn, and 2.5% Cu).

The property geology consists of a granodiorite intrusive 1.8 kilometers in diameter surrounded by Lower Cretaceous limestone and shales that dip vertically along the contact but flatten slightly outward from the contact with the granodiorite. The intrusive is coarse grained and contains abundant xenoliths of foliated biotite schist. Numerous small prospects occur surrounding the intrusion, containing copper mineralization related to skarn, fractures and narrow mantos, the strongest of which occurs along the eastern contact of the intrusion, in the area covered by the Los Reyes claim, for a length of  700 – 800 meters long by 100 meters wide orientated in a north – south direction. In this area the limestone has been altered to a distance of 50 to 100 meters from the intrusion. This target is entirely covered by the 36ha El Rey claim.

Figure 1: Property Geology, with Proposed and Historic Exploration

The strongest copper mineralization follows the intrusive – skarn contact zone and consists of hematite – magnetite with rich copper mineralization. The skarn consists of chlorite, epidote, hedenbergite and magnetite.  On surface, the skarn locally contains weak disseminated galena and sphalerite. Further to the east, the skarn transitions to marble.

Figure 2: High-grade Cu oxide mineralization around one of the historic pits on the Los Reyes Claim

Locally the contact zone between the marble and skarn contains small pockets of lead and zinc mineralization which may represent a earlier mineralizing event related to the granodiorite intrusion and that the hematite-magnetite ore bodies with high-grade copper-gold mineralization located in the contact skarn zone representing a second and more economically important mineralizing event, possibly related to a younger intrusion sitting at depth near the granodiorite – skarn contact.

Mineralization along this contact consists of hematite, chalcopyrite, bornite, malachite, chrysocolla, azurite, tenorite, chalcocite and magnetite. Some siliceous breccias or jasperoids are also locally emplaced along this contact.

Exploration Potential

An 800 metre long by up to 100 metre wide variably mineralized, Cu-Au skarn alteration zone occurs along the eastern contact between a relatively unaltered Tertiary age granodiorite and skarnoid altered Cretaceous age limestones and shales. Two targets present themselves:

Cu-Au Near-Surface Skarn Target: Several small prospects, pits and adits occur in the skarn altered contact around the intrusion. Old reports indicate that mining development extended no more than 60 metres depth (the approximate depth of the oxide zone) and individual zones were reported to be up to 60 metres wide and 125 metres thick. Sampling of the prospects returned grades of up to 8% Cu suggesting the high-grade nature of the mineralization. A number of these bodies coalesce into the larger, property wide drill target which is the subject of Valterra’s immediate exploration efforts.

The initial exploration target for Valterra is 3-5Mt with a grade of 1-4% Cu and 1-4g/t Au. This is conceptual exploration target and is based on limited historical information, surface mapping and sampling and other historic reports on drilling and geophysics on the property and should not be relied upon as a mineral resource estimate. Although highly prospective, there is no guarantee that exploration will result in the target being delineated as a mineral resource.

Cu-Au Porphyry Target at Depth: This conceptual exploration target is based on the strong Cu-bias of the Skarn mineralization as opposed to the Ag-Pb-Zn mineralization related to skarns throughout Mexico.  The central granodiorite intrusion is barren, so it is hypothesized that a younger, more productive intrusion buried at depth is responsible for the high-grade mineralization in the skarn at the surface. At this point, the target is too conceptual to assign ranges of grades and tonnages to, suffice to say that if exploration is successful in delineating the near-surface skarn target above, this potentially larger, deeper target will be explored more rigorously.

2019/20 Exploration/Drill Program

The program planned includes:

  • surface mapping + sampling to be followed by a short IP geophysical program over the target area; and
  • an initial six core hole program totaling 3,000m which will test along a 600m strike length of the target Cu-Au skarn

Phase 1 of this program is now complete with excellent results. Figure 2 shows a location map of the surface samples and Table 2 is a table of results of initial surface sampling.

Figure 3 – Sample locations with Geology and Cu Geochemistry from 2019 sampling

Table 2 – Assays from 2019 sampling program

The surface program comprised a 4.8 line kilometre 2D/3D DCIP geophysical survey and detailed surface mapping and sampling along an 800 metre strike length of a Cu-Au skarn target forming the eastern contact between a Tertiary-age granodiorite intrusive and Cretaceous-age limestones and shales. The exploration target is locally over 100 meters wide and contains multiple zones of strongly copper-enriched mineralization (see Figure 3). Near surface mineralization exposed in shallow artisanal workings and adjacent dump material is strongly oxidized.

Surface sampling of waste dumps related to the artisanal workings and limited outcrop chip samples returned 22 of 28 samples with Cu values >1% Cu at an average grade of 3.1% Cu and up to 5.9% Cu. The anomalous samples contain elevated precious and base metal values up to 0.57g/t Au, 25.3g/t Ag, 0.47% Mo and 1.7% Zn (see Table 2). Anomalous samples were collected along the full 800m strike-length of the exploration target on the property with most of the samples collected in 5 clusters adjacent to open cuts and pits related to the historically mined portions of the trend.

The 3D conductivity successfully imaged a strong conductive response along the intrusive contact which projects for 400m through four of the five main areas of historic workings and defines the primary target area, along the contact, for future drill targeting. The conductivity anomaly is strongest near surface and plunges to depth to the southeast. Conductivity and chargeability anomalies in the 2D inversions are identified on each of the five survey lines and are spatially associated or immediately adjacent to areas of known historical surface mineralization which helps further refine drill targeting.

The company is initially targeting delineation of a shallow, high grade Cu-Au resource localized along the 800m strike length of the exposed skarn zone. Further work will examine the deeper potential of the mineralizing system and a potential porphyry Cu-Au source for the shallow high-grade mineralization.

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