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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a-16 AND 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Period April 2005 | File No. 001-32267 |
Desert Sun Mining Corp.
(Name of Registrant)
65 Queen Street West, Suite 810, P.O. Box 67, Toronto, Ontario CANADA M5H 2M5
(Address of principal executive offices)
1.
Jacobina Technical Report
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F........Form 40-F..XXX.......
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes .....No .XXX.
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________
SEC 1815 (9-05)
Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.
DESERT SUN MINING CORPORATION
AN UPDATED MINERAL RESOURCE AND MINERAL
RESERVE ESTIMATE AND RESULTS OF 2004
EXPLORATION PROGRAM FOR THE JACOBINA AND
BAHIA GOLD BELT PROPERTY, BAHIA STATE,
BRAZIL
MARCH 2005
TABLE OF CONTENTS
1.0
SUMMARY
1
1.1
GEOLOGY AND MINERALIZATION
3
1.2
MINERAL RESOURCES
4
1.3
MINERAL RESERVES
4
1.4
CONCLUSIONS AND RECOMMENDATIONS
5
2.0
INTRODUCTION AND TERMS OF REFERENCE
7
3.0
DISCLAIMER
9
4.0
PROPERTY DESCRIPTION AND LOCATION
10
5.0
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND
PHYSIOGRAPHY
12
6.0
HISTORY
13
7.0
GEOLOGICAL SETTING
15
7.1
REGIONAL GEOLOGY
15
7.2
PROPERTY GEOLOGY
19
7.2.1
Host Rocks
19
7.2.2
Structural Geology
24
8.0
DEPOSIT TYPES
26
8.1
THE WITWATERSRAND BASIN
26
8.2
TARKWA
27
8.3
THE RORAIMA GROUP
27
8.4
JACOBINA
27
9.0
MINERALIZATION
29
9.1
GOLD MINERALIZATION
29
9.2
ORE ZONE DESCRIPTIONS
29
9.3
STRATIGRAPHY OF THE GOLD MINERALIZED UNITS OF THE LOWER
CONGLOMERATE MEMBER
30
9.4
STRATIGRAPHY OF THE GOLD MINERALIZED UNITS OF THE UPPER
CONGLOMERATE MEMBER
33
10.0
EXPLORATION
38
10.1
JMC EXPLORATION
38
10.2
PHASE 1(2002) EXPLORATION PROGRAM
38
10.3
PHASE 11(2003) EXPLORATION PROGRAM
38
10.4
2004 EXPLORATION PROGRAM
41
10.4.1 Jacobina Mine Area
41
10.4.2 Exploration program, Bahia Gold Belt (excluding Jacobina Mine area)
41
Pindobaçu
42
Fumaça
45
AguaBranca
46
Entry Points
46
Northern Extension of Sena do COnego Formation
46
Samburá/Biquinha/Cercadinho
46
11.0
DRILLING
48
11.1
JMC
48
11.2
DSM
49
11.2.1 Drilling Results
49
Joao Belo Zone
49
Mono do Vento
53
Mono do Vento Extension (Basal/Main Reefs - Cuscuz)
66
Canavieiras
69
Sena do COnego — Maneira Reef
82
Serra do Córrego — Lagartixa/Viuva
82
Sena do Cónego — Maricota
82
Joao Belo Sul
82
Campo Limpo
84
Rio Coxo
84
12.0
SAMPLING METHOD AND APPROACH
85
12.1
JMC EXPLORATION
85
12.2
DSM EXPLORATION
85
13.0
SAMPLE PREPARATION, ANALYSES AND SECURITY
86
13.1
JMC
86
13.2
DSM GENERATED DATA
87
13.2.1
Security
87
13.2.2
Sample Preparation and Analyses
87
14.1 JMC
93
14.1.1
Production Reconciliation
93
14.2 DSM
94
14.2.1
QA/QC
94
14.2.2
Database Checks
98
15.0
ADJACENT PROPERTIES
99
16.0
MINERAL PROCESSING AND METALLURGICAL TESTING
100
16.1
SNC LAVALIN FEASIBILITY STUDY
100
16.2
MORRO DO VENTO TEST WORK
101
17.0
MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES
103
17.1
OVERVIEW
103
17.2
MINERAL RESOURCE ESTIMATES
103
17.2.1
Database
103
17.2.2
Specific Gravity
103
17.2.3
Estimation Methodology
103
17.3
RESOURCE CLASSIFICATION
104
17.4
MINERAL RESOURCES
105
17.5
MINERAL RESERVES
109
17.5.1 Reserve Estimation Methodology
114
Specific Gravity
114
Geometry
114
Methodology
114
Mining
Method
115
Dilution
115
Block Cut off Grade
119
17.6
RESPONSIBILITY FOR ESTIMATION
120
18.0
OTHER RELEVANT DATA AND INFORMATION
121
19.0
INTERPRETATION AND CONCLUSIONS
122
19.1 MINERAL RESOURCES
122
19.2 MINERAL RESERVES
123
19.3 EXPLORATION AND DEVELOPMENT
123
19.2.1 Exploration
123
19.2.2 Development and Exploration
124
20.0 RECOMMENDATIONS
126
REFERENCES
127
CERTIFICATE
129
CERTIFICATE
131
APPENDIX 1: TITLE OPINION, LIST OF CLAIMS AND MAPS SHOWING
LOCATION AND EXTENT OF CLAIMS
133
APPENDIX II: OPINION LETTER CONCERNING MINERAL RESOURCE
ESTIMATION BY MICON PiTERNATIONAL
134
List of Tables
Page
Table 1.1 MINERAL RESOURCE SUMMARY FOR THE JACOBINA PROJECT
4
Table 1.2: Estimated mineral reserves as of March 1, 2005
5
Table 6.1 JACOBINA ANNUAL PRODUCTION HISTORY
14
Table 7.1 CHARACTERISTICS OF THE PRINCIPAL MINERALIZED REEFS
24
Table 10.2 TOTAL DRILLED BY DSM - From Sep 2002 to Dec 2004
41
Table 11.1 SUMMARY OF DRILLING, JACOBINA MINE
48
Table 11.2 ASSAY SAMPLES IN DATABASE
49
Table 11.3: Significant Drilling Results, Jacobina Mine (Joao Belo Zone)
50
Table 11 .4: Significant Drilling Results, Mono do Vento
55
Table 11.5 SIGNIFICANT DRILLING RESULTS, HISTORICAL HOLES, MORRO DO
VENTO
64
Table 11.6: Significant Drilling Results, Mono do Vento Extension
67
Table 11.7: Summary of Significant New Drilling Results, Canavieiras
72
Table 11.8: Summary of Significant Results from Sampling of Historic Drill Holes, Canavieiras.
73
Table 11.9: Significant Drilling and Sampling Results, Sena do COnego
78
Table 11.10: Significant Drilling Results, Joao Belo Sul
83
Table 17.1: Summary of Mineral Resources Updated by DSM
105
Table 17.2: Mineral Resources by Mine and Zone
108
Table 17.3 Mineral Resource Summary, Joao Belo Zone, August 2003 by Micon (Hennessey
2003b)
109
Table 17.4 Mineral Reserve Summary Joao Belo Zone, August 2003 by Dynatec (SNC Lavalin
2003)
110
Table 17.5 Updated Mineral Resource Summary, Joao Belo Zone, December 15, 2005
110
Table 17.6 Updated Mineral Reserve Summary, Joao Belo Zone, March 1,2005
111
Table 17.7: Estimated mineral reserves as of March 1,2005
114
Table 17.8 Grade of Dilution, Joao Belo Zone
118
Table 19.1 MINERAL RESOURCE SUMMARY FOR THE JACOBINA PROJECT
122
Table 19.2: Estimated mineral reserves as of March 1,2005
123
List of Figures
Page
Figure 1.1 JACOBINA PROJECT LOCATION MAP
2
Figure 4.1 JACOBINA PROJECT LOCATION MAP
11
Figure 7.1 Geotectonic setting of the East Part of the São Francisco Craton, Bahia, Brazil
17
Figure 7.2 Geology of the Sena de Jacobina Region and the Bahia Gold Belt
18
Figure 7.3 Property Geology and Major Targets, Jacobina Mine Area
20
Figure 7.4 Stratigraphic Column of the Sena do Córrego Formation — Jacobina Group
21
Figure 7.5 Jacobina Mine Area Geology
22
Figure 7.6 Stratigraphic Conelation of Mine Packages at Jacobina
23
Figure 9.1 Mono do Vento, Schematic Cross Section, looking north
32
Figure 9.2 Joao Belo Cross Section
35
Figure 9.3 Canavieiras Cross Section, looking north
37
Figure 10.1 Major Targets in the Jacobina Mine area
40
Figure 10.2 Distribution of gold deposits and occurrences in the Bahia Gold Belt
44
Figure 11.1 Longitudinal Section of Joao Belo Zone
52
Figure 11.2 Longitudinal Section, Mono do Vento
65
Figure 11.3 Cross Section, Mono do Vento Extension
68
Figure 11.4: Canavieiras Cross Section 875 8300N looking north
75
Figure 11.5: Canavieiras Cross Section 875845 8N looking north
76
Figure 11.6: Longitudinal Section of MU Reef, Sena do Córrego
80
Figure 11.7: Longitudinal Section of LU Reef, Sena do Córrego
81
Figure 13.1 Graph of Analytical Results at Lakefield for Standard OREAS 6Pb
90
Figure 13.2 Graph of Analytical Results at Lakefield for Standard OREAS 7Pa
91
Figure 13.3 Graph of Analytical Results at Lakefield for Standard OREAS 53P
92
Figure 14.1: Comparison of All Check Assay Data, New Sample Preparation Protocols (3 graphs
with different scales showing the overall data set)
95
Figure 14.1: Comparison of All Check Assay Data, New Sample Preparation Protocols (3 graphs
with different scales showing the overall data set)
96
Figure 14.2: Comparison of Check Assay Data, New Sample Preparation Protocols — Lakefield
versus Chemex Pulps
97
Figure 14.3: Comparison of Check Assay Data, New Sample Preparation Protocols — Lakefield
versus Chemex Rejects
98
Figure 17.1: Longitudinal Section of the Jacobina Mine (Joao Belo Zone) showing Reserve
Blocks
112
Figure 17.2: Plan Map of 590 Level, Jacobina Mine showing Reserve Blocks and Development
Plan
113
Figure 17.3: Typical Drilling Pattern for Stope Layout, Jacobina Mine
117
Figure 17.4 Schematic Diagram showing Typical Example of Dilution, Joao Belo Zone
118
1.0
SUMMARY
This report summarizes the results of the 2004 exploration program and presents updated mineral resource and mineral reserve estimates incorporating new drilling results in the Jacobina Mine area and the 155km long Bahia Gold Belt property owned by Desert Sun Mining Corp. (DSM) in Bahia, Brazil. This report and the updated mineral resource estimate thaws heavily from a previous NI 43-101 report prepared by Terry Hennessey, P.Geo. of Micon International Limited (Micon) in August 2003 and filed on SEDAR carried out a review of the mineral resources in the Jacobina mine area prepared by DSM. Similarly, the updated mineral reserve estimate thaws from the Feasibility study prepared by SNC Lavalin-Dynatec in September 2003 and filed on SEDAR. Both of these reports were prepared by independent qualified persons from Micon for the mineral resources (Terry Hennessey , P.Geo.) and for the mineral reserves from Dynatec (Mr. Leo Hwozdyk, P.Eng.)
The Jacobina mine and mill, which are located near the town of Jacobina, in Bahia State, Brazil, belong to Jacobina Mineração e Comércio SA (JMC). DSM initially earned a 51% interest in the Jacobina property by spending US$2,000,000 in exploration which was completed by September 2003. At this time, DSM exercised its option to purchase the remaining 49% for $CDN5,000,000 in cash and shares in September 2003, so that DSM owns a 100% interest in the property and surface assets including the processing plant and mine infrastructure. DSM began exploring the property in September 2002 and has had on-going exploration programs ever since. Over the past two and one-half years to December 31, 2004, a total of 40,000m in 125 diamond drill holes has been completed. Results of this exploration which have been positive are discussed in detail within this report.
In September 2003, DSM announced results of the SNC Lavalin Feasibility study (filed on www.sedar.com) that indicated that the mine can produce at a rate of 102,000 ounces of gold per year at an average cash cost of US $189 per ounce. The study used a gold price of US $350 per ounce and a Real (Brazilian currency) to$US exchange rate of 3:1. DSM began the process of re-developing the Jacobina mine in April 2004 and expects to be in steady state production by the second quarter of 2005. The Company recently announced that the first gold pour will be in April 2005.
The Jacobina property, as shown in Figure 1.1, is located in the state of Bahia in northeastern Brazil approximately 340 km northwest of the city of Salvador. Salvador, the state capital of Bahia, has a population of 2.5 million. The property is comprised of5,996.3ha of mining concessions, 117,757.1 ha of granted exploration concessions and 10,406.57 ha of filed exploration claims. The Jacobina property forms a contiguous elongated rectangle extending155km in a north-south direction, and varying from 2.5 to 4 km in width. This shape is a reflection of the underlying geology with the gold-mineralized host rocks trending along the property’s north-south axis.
The Jacobina mine operations consist of a plant and metallurgical facility, which is adjacent to the former ItapicurU mine, as well as two former mines, the João Belo mine (now being reactivated as the Jacobina mine), approximately three kilometres from the metallurgical site, and the smaller Canavieiras mine, about five kilometres away.
1.1
GEOLOGY AND MINERALIZATION
The gold mineralization of the Jacobina mine is hosted almost entirely within quartz pebble conglomerates of the Serra do COrrego Formation, the lowermost sequence of the Proterozoicage Jacobina Group. This Formation is typically 500 m thick but locally achieves thicknesses of up to one kilometre. Overall, the property covers155km of strike length (8728800N—8,900,000N) along the trend of the Jacobina Group. Within the property the Serra do Cónego Formation is exposed for 75 km (8,728,800 N —8,810,330 N). Despite the extensive exposure of the mine sequence most of the exploration and all of the non-artisanal mining activities have been concentrated along a 10-km long (8749000N-8759000N) central zone.
The host rocks to the Jacobina gold mineralization are highly sorted and rounded quartz pebble conglomerate reefs of the Serra de COrrego Formation. Gold as fine grains 20 to 50 microns in size predominantly within well packed conglomeratic layers in which medium to larger- sized quartz pebbles are present. The gold occurs within the matrix and often in association with pyrite and fuchsite. However, these accessory minerals also occur in the absence of gold. Gold-rich reefs show a characteristic greenish aspect because of the presence of the chromium-rich muscovite, fuchsite. Intra-reef quartzites typically contain low gold grades (<0.70 g/t Au). Higher concentrations of gold are often encountered within the foreset beds, adjacent to topset beds, within a cross-bedded reef although this may also reflect structural upgrading. An important example of this style of mineralization is the Canavieiras mine, an important exploration targets.
The gold-bearing reefs range in size from 1.5 to 25 m wide and can be followed along strike for hundreds of metres, and in some cases for kilometres. Some contacts between reefs and the later crosscutting mafic and ultramafic intrusives are enriched in gold.
Not all conglomerates of the Sena do Córrego Formation are mineralized, and many are completely barren of gold. Although they are quite homogeneous along their strike and dip extensions, the mineralized conglomerates differ from one another in stratigraphic position and mineralization patterns. The differences are likely due to changes in the depositional environment, and possibly also in the source areas. Recent work by DSM, however, indicates that structure has a more important role in localizing gold mineralization than previously recognized.
3
1.2
MINERAL RESOURCES
Measured and indicated mineral resources for all zones at Jacobina now total24,800,000tonnes grading 2.53 g Au/t containing 2,050,000 ounces of gold as shown in Table 19.1 below. This is significant increase of 690,000 ounces of gold compared to the August 2003 measured and indicated resource of 14,800,000 tonnes at 2.86 g Au!t containing 1,360,000 ounces of gold. Most of this increase has been at the Joao Belo Zone where an additional 3,500,000 tonnes grading 2.48 g Au/t containing 280,000 ounces of gold was added to indicated resources and in the Mono do Vento area where 5,000,000 tonnes grading 2.07 g Au/t containing 350,000 ounces of gold above the 800 level were added to the indicated category.
Inferred mineral resources in all zones now total 22,200,000 tonnes grading 2.61 g Au/t containing 1,900,000 ounces of gold. This a reduction of 600,000 ounces compared to the August 2003 inferred resource of 29,500,000 tonnes grading 2.62 g Au/t containing 2,500,000 ounces of gold. This reduction reflects the successful achievement of the drilling program’s objectives to upgrade inferred resource blocks to the indicated category.
Table 1.1
MINERAL RESOURCE SUMMARY FORTHEJACOBINA PROJECT
Category | Tonnes | Grade (glt Au) | Contained Gold (ounces) |
Measured Indicated | 2,620,000 22,200,000 | 2.83 2.49 | 240,000 1,810,000 |
Total Measured and Indicated | 24,800,000 | 2.53 | 2,050,000 |
Inferred | 22,200,000 | 2.61 | 1,900,000 |
Micon reviewed the updated resources estimation and agreed that they were properly estimated classified according to the requirements of NI 43-101.
1.3 MINERAL RESERVES
DSM has completed an updated mineral reserve estimate for its Jacobina mine-Joao Belo zone-based on the new measured and indicated mineral resource estimates described in this report. Mineral reserves in the Joao Belo zone as estimated in the SNC feasibility study of September, 2003, were 7,471,000 tonnes at 2.10 grams per tonne gold containing 504,000 ounces of gold.
Proven and probable mineral reserves in the Joao Belo zone are now 11,102,000 tonnes grading 2.04 grams per tonne gold containing 727,000 ounces, an increase of 44 per cent in contained ounces. Total proven and probable mineral reserves in all zones at Jacobina, which previously were 10,746,000 tonnes at 2.20 grams per tonne gold, containing 758,000 ounces of gold, are now 14,378,000 tonnes at 2.12 grams per tonne gold containing 980,000 ounces of gold as summarized in Table 19.2 below. The conversion rate of the new indicated resource to mineral reserve is about 75 per cent, which is comparable with the historical experience at the mine and to the conversion rate of the SNC Lavalin feasibility study.
4
This new reserve is now being used in the Jacobina mine development plan and increases mine life by over two years. The other major zones--Mono do Vento, Morro do Vento extension (basal/main reef), Canavieiras and Serra do Córrego--will have updated andlor new mineral reserves estimated as mine planning/feasibility studies for each area are completed. The total measured and indicated mineral resource at Jacobina for all zones is 24.8 million tonnes grading 2.53 grams per tonne gold containing 2.05 million ounces of gold.
________Table 1.2: Estimated mineral reserves as of March 1, 2005
Area | Proven | Probable | Proven & Probable | ||||
Tonnes | g Au/t | Tonnes | g Au/t | Tonnes | g Au/t | Ounces Cold | |
JoaoBelo* | 1,955,000 | 2.02 | 9,147,000 | 2.04 | 11,102,000 | 2.04 | 727,000 |
Basal Reef~* | Nil | Nil | 2,304,000 | 2.51 | 2,304,000 | 2.51 | 186,000 |
Serrade Corrego** | Nil | Nil | 972,000 | 2.14 | 972,000 | 2.14 | 67,000 |
Total | 1,955,000 | 2.02 | 12,423,000 | 2.14 | 14,378,000 | 2.12 | 980,000 |
+
Mineral reserves have been classified in accordance with CIM standards under NI 43-101
*
Desert Sun Mining internal reserve estimation March 1, 2005 following procedures outlined in SNC Lavalin
feasibility study.
** As per original Dynatec mineral reserve estimation September 2003 in the SNC Lavalin feasibility study
1.4
CONCLUSIONS AND RECOMMENDATIONS
It is recommended that a two part Exploration and Development program estimated to cost US$10,600,000 be carried out to extend known mineral resources and define new resources in the Jacobina Mine area. Exploration should also be expanded in the northern area especially at Pindobaçu where excellent drill results have been obtained and a major mineralized structure has been identified.
A major development and exploration program is recommended to define additional reserves in the south-eastern and downdip extension of the Joao Belo Ore zone. It is further recommended that Mono do Vento become a development project with underground development, bulk sampling and underground drilling to be completed to form the basis for a feasibility study.
Exploration
A continuation of the intense exploration program in the Jacobina mine area carried out in 2004 is recommended for 2005 along with a considerable increase in funds allocated to explore the northern area. The proposed program which will cost an estimated $US5,200,000 ($R2.6 =$US1 .00) as summarized in Table 19.3 includes at least 25,000m of diamond drilling as follows:
•
Basal/Main Reef in Mono do Vento Extension—6,800m of surface and underground drilling to followup high grade intersections in both reefs and test if the Main reef extends to surface in the Mono do Vento Extension;
5
•
Canavieiras — 6,500m of underground drilling focussing on the south-eastern and southern extensions of the MU/LU reefs and the Piritoso/Liberino reefs;
•
Serra do COrrego — 3,00Gm of definition to test the downdip and on-strike extension of the existing mineral resource;
•
Serra do COrrego (LGX, Viuva, Maneira) — 3,ôOOm of surface drilling to test targets where limited previous drilling suggests the potential for higher grade mineralization;
•
Pindobaçu — 6,30Gm of surface drilling to followup the excellent results of the 2004 program and also test other targets identified on-strike; and
•
Regional Exploration — 1,50Gm of drilling to test for potential entry point areas in the northern area
In addition to drilling, approximately 50 line kilometres of induced polarization surveys will be completed in the Pindobaçu Fumaça area to better define targets in the major hydrothermal alteration zone. Coverage of grids will be extended and soil geochemical surveys also completed.
Development and Exploration
A two part development and exploration program focussed on extending the Joao Belo zone to the south and evaluating the newly developed Mono do Vento zone. The total cost of the program is estimated to be US$5,400,000. The recommended 2005 development and exploration program will consist of:
JOAO BELO
Objective: Expand and define the Joao Belo II ore zone in the south.
•
8,000 meters of under ground diamond drilling
•
300 meters of development drifts
•
USS 325,000 Capital investments
MORRO DO YENTO
Objective:
1.
Determine the continuity of the ore zone above the 800 meter level.
2.
Determine the continuity of the ore zone by actual drifting
•
2,400 meters from the 750 meter level.
•
3,450 meters from the 750 meter level.
•
70 meters of slashing development
•
480 meters cross-cut development
•
300 meters of exploration development in ore
•
290 meters (equivalent) for drilling stations
•
USS 577,000 for equipping and services.
•
USS 3,367,000 Capital investments
6
2.0 INTRODUCTION AND TERMS OF REFERENCE
This report summarizes the results of the 2004 exploration program and presents updated mineral resource and mineral reserve estimates incorporating new drilling results in the Jacobina Mine area and the 155km long Bahia Gold Belt property owned by Desert Sun Mining Corp. (DSM) in Bahia, Brazil. This report and the updated mineral resource estimate draws heavily from a previous NI 43-101 report prepared by Terry Hennessey, P.Geo. of Micon International Limited (Micon) in August 2003 and filed at www.sedar.com who carried out a review of the mineral resources in the Jacobina mine area prepared by DSM. Similarly, the updated mineral reserve estimate draws from the Feasibility study prepared by SNC Lavalin-Dynatec in September 2003 and filed on www.sedar.com. Both of these reports were prepared by independent qualified persons from Micon for the mineral resour ces (Terry Hennessey, P.Geo.) and for the mineral reserves from Dynatec (Mr. Leo Hwozdyk, P.Eng.)
The Jacobina mine and mill, which are located near the town of Jacobina, in Bahia State, Brazil, belong to Jacobina Mineração e Comércio SA (JMC). DSM initially earned a 51% interest in the Jacobina property by spending US$2,000,000 in exploration which was completed by September 2003. At this time, DSM exercised its option to purchase the remaining 49% for
$CDN5,000,000 in cash and shares in September 2003, so that DSM owns a 100% interest in the property and surface assets including the processing plant and mine infrastructure. DSM began exploring the property in September 2002 and has had on-going exploration programs ever since. Over the past two and one-half years to December 31, 2004, a total of 40,000m in 125 diamond drill holes has been completed. Results of this exploration which have been positive are discussed in detail within this report.
In September 2003, DSM announced results of the SNC Lavalin Feasibility study (filed on www.sedar.com) that indicated that the mine can produce at a rate of 102,000 ounces of gold per year at an average cash cost of US $189 per ounce. The study used a gold price of US $350 per ounce and a Real (Brazilian currency) to$US exchange rate of 3:1. DSM began the process of re-developing the Jacobina mine in April 2004 and expects to be in steady state production by the second quarter of 2005. The Company recently announced that the first gold pour will be in April 2005.
The Jacobina mine operations consist of a plant and metallurgical facility, which is adjacent to the former Itapicurü mine, as well as two former mines, the Joäo Belo mine (now being reactivated as the Jacobina mine), approximately three kilometres from the metallurgical site, and the smaller Canavieiras mine, about five kilometres away.
The authors of this report, Dr. William N. Pearson, P.Geo. and Mr. Peter Tagliamonte, P.Eng., are both experienced exploration and mining professionals who have extensive experience at Jacobina and in Brazil. Dr. Pearson is Vice President, Exploration for DSM and has made numerous trips to Jacobina in the course of the exploration carried out since August 2002 and is the qualified person responsible for the scientific and technical work for all exploration at DSM. In addition, he worked at the Jacobina Mine from 1996 to 1998 while with the previous owner, William Resources. Mr. Tagliamonte is the Vice President, Operations and Chief Operating Officer for DSM, responsible for overseeing all aspects of the re-development of the Jacobina
7
mine. He has been on-site at Jacobina since April 2004. Prior to joining DSM, he was Manager of the Sao Bento mine in Minas Gerais, Brazil for Eldorado Resources.
8
3.0 DISCLAIMER
All of the technical information presented in this report has been prepared by DSM or in the case of work by previous operators, reviewed and verified by DSM. In the course of the exploration and mine development program, DSM has employed a number of independent consultants to perform various reviews including Micon International (review exploration program and mineral resources—Hennessey 2003a and 2003b), SRK Consulting (preliminary economic evaluation-2004) and SNC Lavalin (feasibility study-2003). All of these reports have been filed and are available on www.sedar.com.
The various agreements under which DSM through its wholly owned Brazilian subsidiary Jacobina Mineração e Comércio (JMC) holds title to the mineral lands for this project have been reviewed by Mr. Marco Antonio Morherdaui of Monaco Morherdaui, a legal firm based in Sao Paulo, Brazil who is the legal counsel for DSM in Brazil. DSM maintains a comprehensive mineral title administration system in Jacobina using ArcView, a well known GIS software package. The DIARTO OFICIAL DA UINIAO (Official Diary) of the Brazilian government, which is issued daily, is regularly reviewed by DSM personnel and any updates to the claims recorded as they are published.
The metallurgical, geological, mineralization and exploration technique and results descriptions used in this report are taken from reports and internal memorandums prepared by DSM, Micon, William Resources, the BLM Service Group and the JMC mine staff The name Jacobina, as used herein, refers to the mountain range, stratigraphic group designation, mine or town as specified.
All currency amounts are stated in US dollars with occasional reference to the Real, the Brazilian currency. Quantities are stated in SI units, the Canadian and international practice, including metric tons (tonnes, t) and kilograms (kg) for weight, kilometres (km) or metres (m) for distance, hectares (ha) for area, grams (g) and grams per metric tonne (g!t) for gold grades (g/t Au). Precious metals quantities may also reported in Troy ounces (ounces, oz), a common practice in the gold mining industry.
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4.0 PROPERTY DESCRIPTION AND LOCATION
The Jacobina property, as shown in Figure 4.1, is located in the state of Bahia in northeastern Brazil approximately 340 km northwest of the city of Salvador. Salvador, the state capital of Bahia, has a population of 2.5 million.
The property is comprised of 5,996.3 ha of mining concessions, 117,757.1 ha of granted exploration concessions and 10,406.57 ha of filed exploration claims. A complete list of all exploration concessions and claims, with their current status and the text of an opinion letter by Marco Moherdaui of Monaco Moherdaui, a Brazilian legal firm located in Sao Paulo, are given in Appendix I. The leases and granted exploration concessions were surveyed a number of years ago and are marked by concrete monuments at each corner which remain in place.
The Jacobina property forms a contiguous elongated rectangle extending155km in a north-south direction, and varying from 2.5 to 4 km in width. This shape is a reflection of the underlying geology with the gold-mineralized host rocks trending along the property’s north-south axis. DSM has a full computerized claim management system in place to closely monitor its land holdings.
The Brazilian government department responsible for mining lands (DNPM) has recently introduced an internet-based system for accessing information on exploration concessions granted in Brazil. DSM monitors this site regularly and updates its claim data as appropriate as well as monitoring the DIARIO OFICIAL DA UNJAO (Official Diary) which is published daily with legal details on issuance of claims.
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5.0ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY
Salvador is a key commercial centre in Brazil and is serviced by an international airport with numerous daily flights, as well as by a large port facility. It is one of the oldest cities in the country and, until about two centuries ago, was the capital. Access to the property from Salvador is via paved secondary highway up to the town of Jacobina, and by a well-maintained paved road from the town to the mine site and the recently active mining operations of Canavieiras, ItapicurO and Joäo Belo. Travel times are typically 4 to5hours from the mine to Salvador and less than 20 minutes from the mine to Jacobina.
The town of Jacobina was founded in 1722 and is a regional agricultural centre with an official population of 76,484 updated in 2003 by the INSTITUTO BRASILEIRO DE GEOGRAFIA E ESTATISTICA (IBGE). It provides all the accommodation, shopping and social amenities necessary for the mine’s labour force. As part of the re-development of the Jacobina Mine, electrical services were re-established to the mine by COELBA—Companhia de Eletricidade da Bahia. Telephone and high speed internet service are available in Jacobina and these services have been installed at both the mine site and at the exploration offices in the town of Jacobina.
The Jacobina project is located in a region of sub-tropical, semi-arid climate with generally flat to low rolling hills. Precipitation at Jacobina is somewhat higher that the regional average, likely due to the mountain range which hosts the deposits. Average annual precipitation is 84 cm with the May to October period being somewhat drier than the rest of the year. Temperatures vary little throughout the year. July is the coldest month with average daytime highs of 26° and nightly lows of 17°. February is the warmest month with average daily highs of 32° and nightly lows of 20° (Weather Underground website at www.wunderground.com).
The Jacobina mine itself is located within the heart of the Serra do Jacobina mountain chain, a local exception to the regional topography. The mountains exist due the resistant weathering of the quartzite and quartz pebble conglomerate of the Serra do Corrego and Rio do Ouro Formations from which they are formed and which have been thrust faulted to surface at this location. The mountains have resulted in a local micro-climate of highly variable but somewhat greater rainfall amounts than the surrounding region.
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6.0HISTORY
The Serra do Jacobina mountains have been mined for gold since the late 17th century. Numerous old workings (garimpos) from artisanal miners (garimpeiros) can be seen along a 15 km strike length, following the ridges of the mountain chain. Garimpeiro activity, on a small scale, has taken place sporadically up to the present day, mining mostly weathered ores.
From 1889 to 1896, Companhia Minas do Jacobina operated the Gomes Costa Mine in the Morro do Vento area. Total reported production is 84 kg of gold from a 130-rn long drift. In the 1930’s, when the price of gold rose, the garimpeiro activity increased until the easily accessible weathered surface ore was mostly exhausted.
In the 1950’s three mines opened, Canavieiras, João Belo, and Serra Branca. Canavieiras was the largest of these operations, and, at a capacity of 30 t per day (t/d), it produced 115,653 t with an average recovered grade of 18.13 g!t Au. By the 1960’s all three of these operations were shut down due to political circumstances.
The modem history of the Jacobina mining camp began in the early 1970’s with extensive geological study and exploration carried out by Anglo American. The company was attracted to the Jacobina area because of the apparent strong similarity of the local gold bearing conglomerates to the well-known Witwatersrand reefs in South Africa. This work, which was carried out from 1973 to 1978, provided the basis for proceeding with a feasibility study in 1979- 80.
The feasibility study recommended that a mine be developed at Itapicurá with an initial plant capacity of 20,000 t per month (t/m). Development of the ItapicurO mine to access the Main Reef commenced in October, 1980. The processing plant was commissioned in November, 1982. In 1983, the first full year of production, production was 242,550 t with a recovered grade of 4.88 g/t Au yielding 38,055 ounces of gold.
From 1984 to 1987, exploration focused on evaluating the mineralized conglomerates of the João Belo Norte Hill, located about two kilometres south of the Itapicurá mine. This work outlined sufficient reserves to warrant an open pit operation, development of which commenced in August, 1989. Concurrently, the processing plant capacity was increased to 75,000 t/m. In 1990, 538,000 t grading 1.44 g/t Au were produced, mainly from the open pit. Total production at Jacobina in 1990 was 45,482 ounces of gold from 680,114 t milled for a recovered grade of 2.08 g/t Au. Underground development at João Belo commenced in 1990, as pit reserves were limited.
William Resources Inc. (now Valencia Ventures Inc.) acquired 100% of the Jacobina gold mine and assumed management effective August 1, 1996, by purchasing JIMC from subsidiaries of Minorco of Luxembourg and Banque Paribas de France.
William operated the João Belo and ItapicurO mines from August, 1996 until December, 1998 when the mines were closed due to depressed gold prices. The Canavieiras mine was also dewatered and rehabilitated during this period with a small amount of production. William did
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considerable work on optimizing the operations, increasing plant capacity and it began an evaluation of the exploration potential however only limited exploration drilling was carried out due to a lack of funds.
From 1983 to 1998 JMC processed 7.96 million t of ore at a recovered grade of 2.62 g/t Au to produce approximately 670,000 ounces of gold as shown in Table 6.1. The bulk of production came from the Ttapicurá and Joäo Belo areas. João Belo production during 1989 to 1993 was predominantly from open pit reserves whereas Ttapicurá and post-1993 Joäo Belo production has been from underground.
Table 6.1
JACOBINA ANNUAL PRODUCTION HISTORY
ltapicurü | Canaviciras | Joâo Belo | Stockpile | Total | ||||||||
Tonnes | g/t Au1 | Tonnes | Wt A& | Tonnes | g/t Au’ | Tonnes | g/t A& | Tonnes | g/t A& | Ounces | ||
1983 | 218,117 | 4.68 | 24,433 | 6.67 | 242,550 | 4.88 | 38,055 | |||||
1984 | 233,059 | 4.73 | 60,490 | 5.26 | 8,397 | 2.97 | 301,946 | 4.79 | 46,500 | |||
1985 | 202,088 | 4.48 | 46,470 | 4.88 | 34,319 | 1.78 | 282,877 | 4.22 | 38,380 | |||
1986 | 246,500 | 3.91 | 34,506 | 3.20 | 30,128 | 1.58 | 311,134 | 3.61 | 36,111 | |||
1987 | 290,322 | 3.98 | 30,271 | 4.57 | 866 | 1.71 | 321,459 | 4.03 | 41,651 | |||
1988 | 267,076 | 3.82 | 32,370 | 4.93 | 23,819 | 2.71 | 323,265 | 3.85 | 40,014 | |||
1989 | 116,713 | 3.61 | 23,908 | 4.09 | 58,259 | 2.26 | 82,024 | 0.90 | 280,904 | 2.58 | 23,301 | |
1990 | 113,726 | 4.36 | 27,960 | 5.19 | 538,428 | 1.44 | 680,114 | 2.08 | 45,482 | |||
1991 | 142,160 | 3.99 | 29,371 | 6.22 | 604,069 | 1.75 | 775,600 | 2.33 | 58,101 | |||
1992 | 105,750 | 450 | 2,802 | 5.64 | 485,629 | 1.81 | 594,181 | 2.31 | 44,129 | |||
19~3 | 7,532 | 3.62 | 511,355 | 2.14 | 518,887 | 2.16 | 36,035 | |||||
1994 | 105,167 | 3.94 | 445,974 | 1.90 | 551,141 | 2.29 | 40,578 | |||||
1995 | 105,865 | 3.82 | 474,048 | 2.15 | 579,913 | 2.45 | 45,679 | |||||
1996 | 105,683 | 3.63 | 447,745 | 2.00 | 34,741 | 0.93 | 588,169 | 2.23 | 42,380 | |||
1997 | 107,732 | 3.38 | 540,283 | 2.07 | 217,666 | 0.84 | 865,681 | 1.92 | 53,562 | |||
19982 | 82,728 | 2.09 | 30,013 | 2.27 | 593,957 | 1.68 | 34,391 | 1.61 | 741,089 | 1.76 | 39,695 | |
Total | 2,450,218 | 4.04 | 342,594 | 4.75 | 4,797,276 | 1.88 | 368,822 | 0.93 | 7,958,910 | 2.62 | 669,653 |
1 Recovered.
2 To November 30, 1988
Prior to DSM’s involvement, the most recent mineral resource and reserve statement issued by the mine was produced in May, 1998. The mineral resources and reserves from this statement were reviewed in Hennessey (2002, 2003a). Micon was of the opinion in these reports that the historical mineral resources were relevant at that time and that it was reasonable for DSM to rely on them as justification for its proposed exploration program. This information was superseded by an updated mineral resource estimate incorporating diamond drilling results in 2002-2003 by DSM and reviewed by Micon in August 2003 (Micon 2003b). The August 2003 resource estimate has been further updated in this current report to include diamond drilling results in 2004 by DSM. This resource estimate has also been reviewed by Micon. The feasibility study completed by SNC-Lavalin and D ynatec established a new mineral reserve for Jacobina and was based on the resource estimate of August 2003 reviewed by Micon (2003b). The current report updates the mineral reserves in the Joao Belo zone based on the updated mineral resource estimate presented in this report.
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7.0 GEOLOGICAL SETTING
Figure 7.1 shows the geology of the central part of the Bahia Gold Belt and its neighborhood. The Bahia Gold Belt overlays most of the Jacobina range, where quartzites, metaconglomerates and schists of the Paleoproterozoic Jacobina Group constitute a series of north-south, elongated, mountain ranges that rise up to 1,200 metres above sea-level. The deep and longitudinal valleys, bordering the mountains, correspond to deeply weathered ultramafic sills and dikes. The east-west oriented valleys represent weathered mafic to intermediate dikes. Archean tonalitic, trondhjemitic and granodioritic gneiss-dominated basement and related remnants of supracrustal rocks, grouped as the Main Complex, are found on both flat to slightly hilly areas east of the Jacobina range. At its eastern border and also in a flat landscape, there are the fine grained biotite gneisses of the Archean SaUde Complex. The transition between the hilly and the scarped domains of the eastern border corresponds to the exposures of the Archean Mundo Novo Greenstone Belt. To the west of the Jacobina range, Paleoproterozoic late- to post-tectonic, peraluminous granites (the Miguel Calmon-Itapicuru, Mirangaba-Carnaiba, and Campo Formoso granitoids) outcrop as hilly landscapes.
The gold mineralization of the Jacobina mine is hosted almost entirely within quartz pebble conglomerates of the Serra do COrrego Formation, the lowermost sequence of the Proterozoicage Jacobina Group. This Formation is typically 500 rn thick but locally achieves thicknesses of up to one kilometre. The geological map of most of the Bahia Gold Belt (Figure 7.2) shows the location of the DSM property and major rock formations within the concession boundaries. Overall, the property covers155km of strike length (8728800N — 8,900,000N) along the trend of the Jacobina Group. Within the property the Serra do COrrego Formation is exposed for 75 km (8,728,800 N — 8,810,330 N). Despite the extensive exposure of the mine sequence most of the exploration and all of the non-artisanal mining activities have been concentrated along a 10-km long (87 49000N - 8759000N) central zone.
Past production has occurred from three separate larger mines, Canavieiras, João Belo, and ItapicurU. Several smaller mines, such as João Belo Sul (South) and Galleria5,have also produced gold. Numerous inactive garimpos pepper the hillsides from one end of the belt to the other. The former Joao Belo mine is now being re-activated by DSM and is referred to as the Jacobina Mine (Joäo Belo Zone).
7.1 REGIONAL GEOLOGY
The Jacobina Group, consisting of conglomerate, quartzite, and pelite of Proterozoic age, was originally deposited over early Precambrian basement rocks (see Figure 7.2). The Group is greater than 5,000 m in thickness and is divided into three formations which form a continuous north-south belt extending for 180 km. The Jacobina Group strikes in a northerly direction with moderate to steeply easterly dipping sedimentary and deformation structures. The sedimentary markers found indicate an eastbound source of sediments.
During the Transamazonic Orogeny (~ 2.0 Ga), the 5,000 rn-thick sedimentary package was thrust towards the west, forming tectonic slabs. The Jacobina Group reflects either a rift or a
15
foreland sequence association. The rift model has been proposed by a number of workers since the 1970’s while more recent researchers have favoured a foreland basin model.
Three sedimentary cycles, represented by individual stratigraphic formations, are traditionally account for the development of the Jacobina Group. From oldest to youngest these are the Serra do COrrego, Rio do Ouro and Cruz das Almas Formations. The Serra do COrrego Formation consists of interbedded quartzite and conglomerate, with preserved sedimentary structures characteristic of a braided strearn type of deposition. The two conglomeratic members are separated by an intermediary quartzitic member. The Rio do Ouro Formation consists mainly of quartzite, locally with some interbedded conglomerates. The Cruz das Almas Formation consists of a package of chlorite and quartz-muscovite schists, along with phyllonite, phyllites and quartzites, which are cyclically interbedded. Work by DSM, however, indicates that the Cruz das Almos Formation may, in fact, consist of slices of Serra do Córrego and Rio do Ouro Formation quartzites tectonically imbricated with slices of Mn- and Fe- rich chemical sediments and volcaniclastics of the Archean Mundo Novo Formation.
The sedimentary sequence of the Jacobina Group indicates a continental environment evolving towards a marine turbiditic phase. The deposits are believed to be the product of a metallogenic cycle of erosion, sedimentation and mineral deposition similar to the South African Witwatersrand gold ores
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7.2
PROPERTY GEOLOGY
7.2.1
Host Rocks
The Jacobina sequence forms a prominent ridge, which is, on average, more than 400 m in elevation above the surrounding countryside, peaking at 1,200 m above sea level. As shown in Figure 7.3, the gold-bearing quartz-pebble conglomerate in the Serra do Córrego Formation forms a thrust contact with the basement gneiss-greenstone terrane. The formation is exposed for 75 km along strike, from Campo Limpo in the south to southeast of Carnaiba in the north, with a maximum thickness of 1,000 m at Itapicuru.
Originally it was thought that outcrop of the Serra do Córrego Formation only continued to5km north of the town of Jacobina in Serra Branca, after which the cyclical accumulations of fluvial gravel and sand layers fine upward into marine quartzite that forms the Rio do Ouro Formation. However, work by DSM indicates that the Serra do Córrego Formation is actually much more extensive, extending 50 km north of Jacobina, however the amount of conglomerate in the sequence diminishes considerably after about 20 km north of Jacobina. The underground mine excavations at Jacobina expose structures that characterize the fluvial system which controlled the deposition of the Serra do Córrego Formation. Cross-bedding and ripple marks show that the most prominent direction of stream flow was up the dip and to the north. The series appears as a mon oclinal structure with the beds striking north and dipping from 45° to 65° to the east.
The Serra do Córrego Formation is subdivided into three main members as shown in Figure 7.4. The thickness of these members is variable from section to section. Within each member are several units of quartz pebble conglomerate. These conglomerate units are called reefs, following the nomenclature used for the geologically similar region of the Witwatersrand in South Africa. Several of the reefs within the Upper and Lower Members have been mined, specifically the Basal, Main, Piritoso, Liberino, Holandez, Maneira, Intermediario, LMPC and MPC. All of these are situated less than 4 km from the Ttapicurá plant (Figure 7.5), and contain extensions of mineralization at depth and often along strike. Other conglomerate units, situated further from the plant, are lesser known and constitute further potential for the discovery of new mineral resources. Amo ngst these are the Serra Branca, Joäo Belo Sul and Campo Limpo areas where gold mineralization has been encountered in surface trenches or limited diamond drilling. Blind mineralization may also occur north of Jacobina, where the conglomerates are covered by the Rio do Ouro Formation. This formation is also characterized by auriferous quartz veins associated with mafic to ultramafic shear zones.
The main characteristics of the mineralized reefs are summarized in Table 7.1 and Figure 7.6 shows the stratigraphic correlation of mine packages. The individual reefs are described in more detail in the following sub-sections.
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7.2.2
Structural Geology
Ductile deformation of the Jacobina Group package appears to be limited due to the very high quartz content of the rocks as evidenced by the presence of numerous primary sedimentary fabrics. Deformation therefore typically consists of brittle faults. Major faults are widely spaced, usually on the scale of hundreds of metres, with minor parallel ancillary faults. These major faults are moderate to high angle transverse faults and they are often accompanied by mafic to ultramafic intrusives. Often bordering the intrusives are narrow zones of recemented quartz pebble conglomerate breccia. Where intrusives are lacking, these units display wider breccia zones of a few metres. Numerous moderate- to high-angle brittle block faults are apparent and result in small offset of units.
Where exposed, the contact between the Precambrian basement and the Serra do Córrego Formation is highly sheared and is likely a thrust contact. It is represented by a single, relatively sharp, chioritic fault which parallels, or is slightly discordant to, bedding in the sediments. The
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entire sequence of the Jacobina Group, comprising the mountains of the Jacobina mine area, is a thrust slice onto the Precambrian basement rocks. The property is crosscut and broken up by N70 E trending faults. These faults have a right lateral movement of several hundred to one thousand metres and cause successive blocks of the Jacobina Group to shuffle to the east, as one moves north. These faults have some vertical component of movement to them and may be occupied by mafic dykes. The N70 E structures break the Jacobina Group up into 2 to5km long blocks. The structures are frequently occupied by streams which have carved deep, steep-sided valleys and which represent the dividing lines between the major mines within the area. Much more minor, bedding-parallel faults also occur near the Jacobina mines.
Within the large blocks mentioned above, the stratigraphic sequence is often a monoclinal one, dipping steeply at 600 to 70° to the east. An exception to this is the block containing the Canavieiras mine where a broad rolling fold, hosting the mineralization, changes from steep east, through flat and shallow west dips before resuming the typical steep east dip.
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8.0
DEPOSIT TYPES
Anglo American was attracted to the Jacobina area in the early 1970’s by what it felt was the remarkable similarity of the local gold-bearing conglomerates to the well-known Witwatersrand reefs in South Africa. More recently, Goldfields’ success at Tarkwa in Ghana highlighted the unique gold-bearing quartz pebble conglomerates in the lower Proterozoic of Africa and South America.
Africa and South America were originally part of a supercontinent known as Gondwanaland. Gondwanaland was originally part of an even greater land mass known as Pangea, but separated from that continent about 180 million years ago. Later, Africa and South America broke apart and drifted to their present positions.
Africa and South America have large Precambrian shield areas which underlie significant portions of both continents. The shields are composed of ancient rocks such as granite, gneiss, schist, and greenstone which were part of the primordial surface of the Earth. Sedimentary and metamorphic rocks of younger Precambrian age overlie the older rocks. The younger Precambrian rocks contain gold-bearing conglomerates. These include the Roraima, Tarkwa, and Witwatersrand sequences in South America and Africa, which are many thousands of feet in thickness (Heylmun, 2000).
8.1
THE WITWATERSRAND BASIN
The Witwatersrand Basin lies within the Kaapvaal Craton of southern Africa, formed 3.7 to 2.7 Ga. The strata of the basin lie unconformably on the Archean cratonic basement. The basal sequence, the Dominion Group, is a sequence of thin conglomerates and thick lava flows containing only one known gold-bearing zone and a uranium-rich stratum. The basal sequence was deposited approximately 3.0 to 2.7 Ga. After a hiatus of 100 million years, the Witwatersrand Supergroup was deposited. The Supergroup is divided into two units, the lower West Rand Group and the upper Central Rand Group. The West Rand Group was deposited at approximately 2,970 Ma and consists of shales, quartzites, grits and conglomerates and only one gold-rich conglomerate bed. In contrast, the Central Rand Group, deposited from approximately 2,914 Ma on, consists of quartzites (90%), grits and r are shale and, most importantly, numerous gold-bearing conglomerate horizons.
The exceptional gold reefs of the Witwatersrand Basin dip at 20 to 25° towards the centre of the basin and are found to persist over areas of 10 to 100 km2, maintaining consistent gold grades (approximately 15 g/t) and reef mineralogy. The auriferous reefs are commonly no more than one metre in thickness, although some of the richest reefs within the mid-fan facies are only centimetres thick. These reefs are conglomeratic units commonly overlying ‘interformational’ unconformities in the alluvial fan deposits (Barnicoat et al., 1997). The conglomerate units are typically pebble-supported, mature (free of clays and silts) and tightly cemented.
There are two families of thought on the formation of the Witwatersrand deposits, the paleoplacer group and the hydrothermal group. There is some evidence supporting both models.
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Today most writers seem to believe that these deposits were placers which have locally experienced some remobilization of gold by fluids after lithification.
The Witwatersrand has produced over 43,000 t of gold and the remaining reserves are known to contain another 40,000 t, making it, by well over an order of magnitude, the greatest gold producing area in the world.
8.2 TARKWA
The Tarkwa mine is located in south central Ghana. In Ghana, the Birimian greenstone belt sequence occurs as irregular basins of predominantly metasedimentary strata, separated by a series of north-east trending belts of metavolcanics, on which the majority of the major gold deposits are clustered, and a north-northwest striking belt, the Lawra belt, which extends northwards into Burkina Faso. The Birimian greenstone belts in Ghana are unconformably overlain by Proterozoic age Tarkwaian metasediments, which are host to the gold mineralization at the Tarkwa mine. The style of the gold mineralization is similar to that found in the Witwatersrand Basin, concentrated in conglomerate reefs.
The deposit at Tarkwa is composed of a succession of stacked tabular palaeoplacer units, consisting of quartz pebble conglomerates, developed within Tarkwaian sedimentary rocks. Approximately ten such separate economic units occur in the concession area within a sedimentary package ranging between 40 m and 110 m in thickness. Low grade to barren quartzite units are interlayered between the separate reef units.
Five separate production areas are located on and around the Pepe Anticline, a gently north-plunging fold structure that outcrops as a whaleback hill. The sedimentary sequence and the interlayered waste zones between the mineralized units thicken to the west. In 2002, Goldfields reported reserves of 150.7 million t grading 1.4 g!t Au containing 6.530 million ounces (Moz) of gold. Total measured and indicated resources were reported as 329.9 million t grading 1.8 g!t Au containing 18.890 Moz of gold.
8.3 THE RORAIMA GROUP
The Roraima group in northern Brazil, southern Venezuela and the Guyanas contains conglomerate beds in which are found gold and diamonds. Most of the placer gold and diamonds found in Venezuela and northern Brazil are thought to have been derived from paleoplacers in the Roraima (Heylmun, 2000). The gold-bearing quartz pebble conglomerates of the Serra do COrrego Formation at Jacobina are the most significant known deposit of this type in South America.
8.4
JACOBINA
Anglo American proposed a Witwatersrand-type paleoplacer model for the deposits of the Jacobina area and operated its mines on this principle, concentrating on stratigraphic mapping and correlation. DSM is of the view, however, that the majority of gold mineralization formed as a result of extensive hydrothermal alteration related to fluid flow along the Pindobaçu Fault
27
system which forms the eastern margin of the Jacobina basin. Fuchsite, which is widespread and often associated with gold, is a hydrothermal alteration mineral. Gold mineralization is associated with strong silicification and pyritization and occurs both within the conglomerates in the Jacobina mine area as well as strongly fractured and brecciated quartzites in the Pindobaçu area, 50km In addition, the highest-grade mineralization known to exist in the area occurs at Canavieiras where the most extensive structural deformation occurs.
DSM has employed a hydrothermal model for mineralization in its exploration however, stratigraphy is very important because the conglomerates are the most permeable units in the package and are prime sites for hydrothermal mineralization.
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9.0MINERALIZATION
9.1
GOLD MINERALIZATION
The host rocks to the Jacobina gold mineralization are highly sorted and rounded quartz pebble conglomerate reefs of the Serra de COrrego Formation. Gold as fine grains 20 to 50 microns in size predominantly within well packed conglomeratic layers in which medium to larger- sized quartz pebbles are present. The gold occurs within the matrix and often in association with pyrite and fuchsite. However, these accessory minerals also occur in the absence of gold. Gold-rich reefs show a characteristic greenish aspect because of the presence of the chromium-rich muscovite, fuchsite. Intra-reef quartzites typically contain low gold grades (<0.70 g/t Au). Higher concentrations of gold are often encountered within the foreset beds, adjacent to topset beds, within a cross-bedded reef although this may also reflect structural upgrading. An important example of this style of mineralization is the Canavieiras mine, an important exploration targets.
The gold-bearing reefs range in size from1.5to 25 m wide and can be followed along strike for hundreds of metres, and in some cases for kilometres. Some contacts between reefs and the later crosscutting mafic and ultramafic intrusives are enriched in gold.
Not all conglomerates of the Serra do COrrego Formation are mineralized, and many are completely barren of gold. Although they are quite homogeneous along their strike and dip extensions, the mineralized conglomerates differ from one another in stratigraphic position and mineralization patterns. The differences are likely due to changes in the depositional environment, and possibly also in the source areas. Recent work by DSM, however, indicates that structure has a more important role in localizing gold mineralization than previously recognized.
9.2
ORE ZONE DESCRIPTIONS
While the reefs are variable in thickness, they are very continuous in strike length and down dip extension, reflecting their sedimentary origins (Figures 7.3 & 7.5). Gold has a heterogeneous distribution within these reefs, with higher-grade concentrations often found at the upper contacts. These higher-grade zones have been interpreted as being due to paleo-weathering, but more likely in the view of DSM reflect structural upgrading. There are, however, other zones of gold enrichment related to tectonic activity. In some cases (e.g. Canavieiras) the structural enrichment by remobilization is very important in forming higher grade zones of mineralization.
Most of the gold occurs in the form of free gold, hosted almost exclusively in the matrix of the quartz pebble conglomerates. Locally, economic zones of gold mineralization are found within the adjacent quartzites, but these are of limited importance. The gold-mineralized matrix of both the conglomerates and adjacent quartzites are typically rich in fuchsite, giving the rocks a distinctive green colour on a fresh surface. However, fuchsite-bearing conglomerates with little or no gold also occur.
29
Several of the conglomerates also have significant pyrite concentrations in their matrix. The presence or absence of pyrite rather than the amount of pyrite is a useful indicator of gold grades. Typically the quartz pebbles in the gold-bearing conglomerates have a bluish-grey colour.
Similar to other gold-bearing quartz pebble conglomerates of the world, the reefs at Jacobina also contain trace amounts of uranium, a potentially useful exploration tool especially in areas covered by later sediments. In addition, due to the heavy minerals concentrated in the conglomerates (principally monazite), the Serra do Córrego Formation is marked by a prominent Thorium anomaly in the airborne radiometric survey. Results of this survey were critical in DSM recognizing that the Sena do COnego Formation extended much further north of Jacobina than previously thought.
9.3
STRATIGRAPHY OF THE GOLD MINERALIZED UNITS OF THE LOWER CONGLOMERATE MEMBER
The Lower Conglomerate Member contains two principal reefs, the Basal Reef and the Main Reef as shown in Figure 9.1, a schematic geological cross section of the Morro do Vento target area.
The Basal Reef is presently known only at Itapicurá where it has been recognized along 1,600 m of strike, 700 m of which is exposed by underground development. It constitutes the first conglomerate of the sequence, usually laid directly over the gneiss-greenstone basement although a narrow, basal quartzite bed is found locally between the basal conglomerate and the basement. Typically the basal conglomerate is 3 to 8 m thick and pyritiferous, with small- to medium-sized well-packed pebbles. Economic concentrations of gold occur along its lower portions, which are interpreted to result from the concentration of gold along shear zone contacts. A layer of pebbly quartzite and a poorly-packed large pebble conglomerate with erratic and uneconomic concentrations of gold covers it.
The Main Reef is the next gold-mineralized conglomerate in the sequence and is composed dominantly of cross-bedded quartzite, with local conglomerate horizons. This zone is up to 12 m thick, and is located about 60 to 90 m above the basement. As with the Basal Reef the Main Reef zone occurs at ItapicurO, extending for 3,000 m from the Mono do Cuscuz area in the north, to Mono do Vento, in the south.
Along its full extent, the Main Reef Zone lies between two remarkably continuous and contrasting conglomerates. The Footwall Conglomerate is a very well packed and sorted, oligomictic, pyritiferous, medium-sized pebble conglomerate. It is 35 to 45 m thick. The Hangingwall Conglomerate is a 30 m- to 40 m-thick, poorly packed, oligomictic, large pebble conglomerate, devoid of pyrite and gold grades, and locally occupies channels cut in the Main Reef Zone.
The Main Reef is exposed underground along its complete strike length. It consists of a bed of pyritiferous, small to medium pebble conglomerate. It varies from 0.1 to 3.0 m in thickness, with an average of about 2.0 m. Three channels of deposition have been identified, which
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usually narrow gently towards their edges and locally host enriched gold concentrations due to possible reworking.
Although it presents attractive grades and thickness, as demonstrated by core holes and the underground exposures, the central channel is broken by a zone of closely-spaced faults, and split into small slices, inhibiting mechanized mining. Only a small part of this channel was exploitable with the methods used and was not considered a mineral reserve for the mine. However, the southern channel is remarkably continuous and uniform and constitutes most of the resources and reserves previously reported by JMC for this conglomerate.
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9.4
STRATIGRAPHY OF THE GOLD MINERALIZED UNITS OF THE UPPER CONGLOMERATE MEMBER
The Upper Conglomerate Member contains sections of mineralized conglomerate units along its complete strike length, from Serra Branca in the north to Campo Limpo in the south, a distance of 30 km. The better-known conglomerates are those already exposed by mining at Canavieiras, Serra do COrrego, Mono do Vento and João Belo.
The Upper Member has a great number of conglomerates, all well-packed, pebble-supported, oligomictic, and dominantly consisting of medium to very large quartz pebbles. The conglomerates are concentrated in three massive units, each one aggregating to65to 80 iii in thickness, all containing interbeds of planar or trough cross-bedded quartzite. The three conglomerate units (Lower, Intermediate, and Upper) are separated by two quartzites with widths ranging up to 90 to 100 m.
The Lower Conglomerate Unit of the Upper Conglomerate Member (Figure 7.4) hosted most of JMC’s resource base reported at the time of mine closure, including the LMPC Reef at the João Belo mine and the Intermediate Reef sequence at the ItapicurO mine. The conglomerate beds consist typically of medium to large quartz pebbles supported in a sandy matrix. The fuchsiterich matrix has significant but variable amounts of pyrite. The individual conglomerate beds can be traced on surface and in underground workings for hundreds of metres along strike and possess significant down dip extension.
At the Joäo Belo mine, the Lower Unit of the Upper Conglomerate Member consists of three consecutive, well-packed, pyritiferous quartz-pebble conglomerate units (Figure 9.2) all of which host mineralization that was previously mined. The lower conglomerate layer, or MPC Reef, is mostly comprised of medium-sized pebbles, with a thickness of 1.0 to 3.5 m. The second conglomerate layer, or LMPC Reef, consists of large and medium pebbles and is 3 to 15 m thick with variable gold values. The upper conglomerate layer, or LVLPC Reef, varies from 3.0 to 5.0 m in thickness and consists of large to very large pebbles in a greyish matrix. At some sites there is a mineralized small pebble conglomerate, known as the SPC Reef, at the upper contact of the LVLPC. Thin wedges of quartzite often mark the contacts between the three conglomerates. There are also differenc es in the colour of some pebbles, ranging from pink to yellow to green. The mined zones extend for at least 900 m along strike and mine workings are presently focused in the LMPC Reef
The Joäo Belo mine included ore zones north and south of the cross cutting mafic dike. The area immediately south of the dike is called Joäo Belo Sul Extension and was originally drilled during 1997, confirming the continuity of the mine stratigraphy over 450 m to the south of the mine workings with similar grades and widths. In 2004, DSM completed significant additional drilling which has significantly increased the mineral resources in this area as outlined in Section 17 below.
At Morro do Vento, two conglomerates of the Lower Unit of the Upper Conglomerate were previously developed and partially exploited underground. These have a pyrite-rich matrix and are well packed. The lower is the Inferior (LU) Reef, with medium to large pebbles and about
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30m above it, the Superior (MU) Reef (marked LMPC on the section) is characterized by medium to small pebbles toward the top and medium to large pebbles in the base. These two reefs are within a larger package known as the Intermediate reefs which are from 40-70m thick and extend along strike at Mono do Vento for 2km. This area was extensively drilled by DSM in 2004 and is discussed in more detail in Section 17 below.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Form 6-K to be signed on its behalf by the undersigned, thereunto duly authorized.
Desert Sun Mining Corp.
(Registrant)
Dated: January 28, 2006 | Signed:/s/ Tony Wonnacott Tony Wonnacott, Corporate Secretary |