NI 43-101
TECHNICAL REPORT
ON THE
ELVENEI GOLD PROJECT,
CHUKOTKA AUTONOMOUS OKRUG, RUSSIA
PREPARED FOR
ZOLOTO RESOURCES LTD.
Dated February 9, 2008
Prepared by
William J. Crowl, R.G.
Gustavson Associates, LLC
+1 (303) 443-2209
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TABLE OF CONTENTS
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LIST OF FIGURES
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LIST OF TABLES
APPENDICES
A. | Elvenei License – Scan of Russian License | 51 |
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1. | SUMMARY |
Zoloto Resources Ltd. through its wholly-owned subsidiary, Chukot Gold ZAO, holds the Elvenei License in the Chukotka Autonomous Okrug, Russia. The license comprises 12 km2 , and is located about 540km southwest of the town of Pevek, the administrative center for the Chaunsky area of Chukotka and the largest Arctic seaport that also has an airport accommodating large aircraft. The town of Bilibino is about 110km from the deposit and the town of Baranikha is about 40km from the project.
Gustavson Associates, LLC (“Gustavson”) was commissioned by Zoloto Resources Ltd ("Zoloto") to (1) prepare a Canadian National Instrument 43-101 (NI43-101) compliant Independent Technical Report on the Elvenei gold exploration project (the "Project") in the Chukotka Autonomous Okrug, Russia, and (2) to review Zoloto’s proposed 2007 to 2009 exploration programs for the Project. Mr. William J. Crowl, R.G. is the Qualified Person (as defined in NI43-101) responsible for the preparation of this report.
Zoloto acquired Chukot Gold ZAO (“Chukot”) as a wholly owned subsidiary on December 1, 2006 for a consideration of US$327,750 to the founding shareholder of Chukot in connection with the initial acquisition of two exploration properties (Elvenei and Tumannoye) in the Federal Subsoil Agency auction held August 17, 2006, in Anadyr, Chukotka Autonomous Okrug, in the Russian Far East. Chukot is a company incorporated under the laws of the Russian Federation to acquire tendered or licensed properties in the region of Chukotka. The Elvenei license was acquired by Chukot Gold ZAO for US$1,230,000.
Zoloto has expended approximately $6,600,000 on the properties, of which approximately $2,600,000 has been spent on property acquisitions and $4,000,000 on equipment purchases (bulldozers, drills and camp facilities). The equipment was shipped in the summer of 2006 for movement to site on winter roads. At the time of the site visit in July/August, 2007, no site preparatory work (camp set up) had been conducted at Elvenei. Subsequent to the site visit, camp preparation, road building and drilling were carried out up to December 31, 2007.
The Elvenei license was acquired by Zoloto because past Russian exploration programs defined several zones of gold mineralization that were sufficiently interesting that they deserved additional follow-up exploration.
The geology of the area was studied through geological investigations at different scales starting in the early 1940 and ending in 1991. The most recent geological exploration was in 1987-1992 by Arynpyglyavaamsky GSO. They made many geological traverses, test trenches, collected grab samples, and drilled 933m of geochemical test holes in order to investigate the alteration halos and drilled 321m of core holes to obtain samples for process testing.
This work at the Elvenei deposit has resulted in the mapping of formations and associated mineralization types, the identification of mineralization zones, alteration zones, initial delineation of the deposit and associated mineralization system, and some gold and tungsten grades. This exploration work, involving drilling and surface trenching, has resulted in the initial
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outlining of mineralized structures from the surface to a depth of 60 meters. Two processing testing samples were collected and lab tested. Potential commercial mineralization zones and properties were identified.
The Elvenei prospects display characteristics consistent with high sulphidation gold systems. Gold is predominantly associated with quartz and pyrite, with minor amounts of arsenic, antimony and silver in veins, veinlets and stockworks in linear zones of crushing and brecciation. Base metal and tungsten / bismuth mineralization is peripheral to the gold mineralization and may be associated with the intrusives in the area and thus may be better related to contact metamorphic (metasomatic) processes.
The Elvenei deposit is on the left bank of the Elveneiveem River and is part of the northwest striking Rauchuansky gold bearing zone. A projected and as yet untapped intrusive plutonic dome is bordered by a halo of contact metamorphism and associated Late Cretaceous ring dike intrusions. Products of early Cretaceous age contact metamorphism and associated metasomatism are confined to the central part of the ring dike. The gold mineralization is apparently confined to this well-developed ring structure. Mineralization includes sulfide mineralized gold and tungsten deposits in the central zone of the Elvenei area.
The deposit includes four major sets of fractures: trending WNW, NE, NS, and ring (or incomplete ring) fractures. The ring fractures are typically intruded with microdiorites, diorite porphyries, and veins of early stage, tungsten-bearing, hydrothermal alteration. Tungsten is associated with fractures trending nearly north-south and northwest on the west and southwest flanks of the deposit.
The Elvenei prospects display characteristics consistent with low sulphidation gold systems. Gold is predominantly associated with quartz and pyrite, with minor amounts of arsenic, antimony and silver in veins, veinlets and stockworks. Base metal and tungsten / bismuth mineralization is peripheral to the gold mineralization and may be associated with the intrusives in the area and thus may be better related to contact metamorphic (metasomatic) processes.
Gold is the only metal for which the Elvenei deposit is likely to have a grade and tonnage adequate for commercial extraction. The gold content along the strike of orebodies is very uniform with very few occurrences of abnormally high (spike/outlier) grades. Analyses carried out on roughly equally sized grab samples collected on a regular grid between trenches and short channel samples from old trenches also point to gold being the only metal likely to be commercially viable. Body #1 has been traced along a strike length of 900 m. Drill hole 269 intersected a mineralized interval between 59.2 and 61.9 m depths. Below are some of the test results from trenches and drill holes on Body #1.
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Trench 201 | 4.0 m grading 15.7 g/t gold |
Trench 202 | 1.5 m grading 11.7 g/t gold |
Trench 203 | 1.0 m grading 12.6 g/t gold |
Hole 269 | 1.7 m grading 12.4 g/t gold |
Holes 90 and 92 | 0.8 m grading 17.8 g/t gold |
Trench 210 | 1.1 m grading 4.4 g/t gold |
Mineralized Body #1 Average | 1.7 m grading 13.2 g/t gold |
Mineralized bodies #2 and #3 were intersected once and the following grades were found. Body #2 had a mineralized intercept of 0.5 m grading 12.2 g/t gold and Body #3 had a mineralized intercept of 1.0 m grading 19.0 g/t gold. Body #2 has been traced along strike for 600 m and Body #3 has been traced along strike for 500 m. Grab samples from Bodies #4, #5, and #6 had grades of 18.0 g/t gold, 5.9 g/t gold, and 13.0 g/t gold, respectively. These mineralized bodies have been traced along strike for 500, 400, and 500 m, respectively.
According to Russian calculations, the following average values for Mineralized Body #1 were used for predictive estimation of all of the bodies under consideration: average body width of 1.7m and average gold grade of 13.2 g/t. The combined length of the six bodies is 3,400m. Assuming that the vertical extent of mineralization is 300 meters, and the specific gravity is 2.6 t/cubic meter, the total potential mineral resource (non 43-101 compliant) would be 4.5 million tonnes. The predictive gold resources (Russian estimated and non 43-101 compliant) of the Elvenei Au mineralized system were estimated to be 60 tonnes. A Qualified Person has not done sufficient work to classify the historical estimate as a current mineral resource, Zoloto is not treating the historical estimate as a current mineral resource and the historical estimate should not be relied on. This historical resource estimate is hypothetical in nature, estimated using techniques that are non-NI43-101 compliant and is mentioned here as merely being indicative of the potential of the area for discovery of gold-containing mineral resources.
Zoloto has contracted with the Russian company CJSC Chaunskoye to carry out the Elvenei exploration. The Chaunskoye budget for 2007 to 2009 is approximately US$8.1 million. In addition to the Chaunskoye budget, Zoloto has spent or is in the process of spending approximately US$4.00 million on the three Chukotka projects – Elvenei, Tumannoye and Kenkeren for equipment, camps and incidentals. After the site visit in July, 2007 Zoloto began building the Elvenei man camp, completed some roads and trenches and drilled one core hole to 120m by the end of 2007.
According to reports from Chaunskoye, sulfide mineralization (pyrite and arsenopyrite) is seen through the entire length drilled in hole c-24. Potentially significant mineralization is seen in the intervals 28.7 – 36.3m; 56.5 – 69.1m; and 99.0 – 104.0m, with widely developed quartz veinlets and strong sulphidic mineralization. The Chaunskoye geologists report that the interval 99.0 – 104.0m has a true thickness of 1.5 – 2.0m. At the top of the interval, a series of contiguous quartz-sulphidic veinlets with a thickness of 0.3 – 0.5m are seen. Rich antimonite veinlet-impregnations are seen at a depth of 102.6m. Based on results of historical drilling and
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trenching, high grades of gold seen in trenches 201 - 203 (i.e. in the area where hole c-24 was collared), have spatially been confined to veins of antimonite structure, as seen in c-24.
Zoloto’s 2007 - 2009 program represents a staged approach to defining the physcial form of the ore occurences at Elvenei. Decision points have been defined that will re-direct efforts to other areas if and when the first phase of the exploration program should prove unsuccessful.
Gustavson recommends that Zoloto carry out the following tasks in addition to the drilling, sampling and testing programs proposed:
- Prepare a centralized database and carry-out a detailed data verification program; and
- Implement CIM-compliant resource estimation procedures for sampling, assaying, QA/QC programs and resource estimation. These procedures should be guided by the CIM “Best Practice Guidelines”.
Gustavson considers the exploration program proposed by Zoloto to be appropriate for the project at its current state. The staged exploration program will be conducted in a manner that supports the eventual estimation of NI 43-101 – compliant Mineral Resources (if warranted).
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2. | INTRODUCTION |
Gustavson Associates, LLC (“Gustavson”) was commissioned by Zoloto Resources Ltd ("Zoloto") to (1) prepare a Canadian National Instrument 43-101 (NI43-101) compliant Independent Technical Report on the Elvenei gold exploration project (the "Project") in the Chukotka Autonomous Okrug, Russia, and (2) to review Zoloto’s proposed 2007 to 2009 exploration programs for the Project.
2.1 | Terms of Reference |
This report has been prepared in accordance with the guidelines provided in National Instrument 43-101 ("NI43-101"), Standards of Disclosure for Mineral Projects, dated December 31, 2005. The Qualified Person responsible for this report is Mr. William J. Crowl, R.G., Vice President, Mining Sector at Gustavson.
2.2 | Property Ownership Structure |
On July 5, 2007, Sutcliffe Resources Ltd. (“Sutcliffe”) changed the name of the corporation to Zoloto Resources Ltd. Where Sutcliffe is cited in this report, the reader should consider the citation to be Zoloto Resources Ltd. as well.
Zoloto acquired Chukot Gold ZAO (“Chukot”) as a wholly owned subsidiary on December 1, 2006 for a consideration of US$327,750 to the founding shareholder of Chukot in connection with the initial acquisition of two exploration properties (Elvenei and Tumannoye) in the Federal Subsoil Agency auction held August 17, 2006, in Anadyr, Chukotka Autonomous Okrug, in the Russian Far East. Chukot is a company incorporated under the laws of the Russian Federation to acquire tendered or licensed properties in the region of Chukotka.
Zoloto has expended approximately $6,600,000 on the properties, of which approximately $2,600,000 has been spent on property acquisitions and $4,000,000 on equipment purchases (bulldozers, drills and camp facilities). The equipment was shipped in the summer of 2006 for movement to site on winter roads. At the time of the site visit in July/August, 2007, no site preparatory work (camp set up) had been conducted at Elvenei. Subsequent to the site visit, camp preparation, road building and drilling were carried out up to December 31, 2007.
The successful bid amount for the Elvenei License was 31.5 million Russian rubles (US$1,230,000). Zoloto has a 20 year license to exploit and explore the deposit area.
Figure 2-1 is a general location map of the Chukotka properties of Zoloto Resources.
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Figure 2-1 Location Map of Zoloto Resources’ Chukotka Gold Properties
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2.3 | Purpose and Basis of Report |
Gustavson has prepared this report exclusively for Zoloto. The information presented, opinions and conclusions stated, and estimates made are based on the following information:
- Information provided by Zoloto, Chukot and ML Ltd.;
- Assumptions, conditions, and qualifications as set forth in the report; and
- Data, reports, and opinions from third-party entities.
Gustavson has not independently conducted any title or other searches, but has relied upon Zoloto for information on land ownership, tenure and permit status. In addition, Gustavson has not independently conducted any mining, processing, or economic studies, or permitting and environmental studies.
2.4 | Personal Inspection |
A personal inspection of the Elvenei prospect on July 25, 2007 was conducted by William J. Crowl, the Qualified Person responsible for preparation of this report. The site visits were made in the company of Messrs. Georgiy Isaikin – Chief Geologist and Afanasiy Bylgaev – Director and Translator of Chukot Gold, Alexander Popov – Deputy Director, Production and Oleg Lagniy – Chief Geologist of IVK Resources and Alan Tenenbaum, Investor Relations, Zoloto Resources. In addition, 2 days were spent in Zoloto/ML’s Konakovo offices and several days in the Anadyr offices of Chukot/Zoloto.
2.5 | Units |
Unless explicitly stated, all units presented in this report are in the International System (SI) or the Metric System (i.e. tonnes, meters, grams, etc.). All references to economic data are in U.S. dollars and cents, unless otherwise noted.
2.6 | Acknowledgements |
Gustavson wishes to acknowledge the hospitality of ML Ltd. in Konakovo and Zoloto in Anadyr. The cooperation of the Zoloto and other company’s staff made the understanding of the Projects possible.
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3. | RELIANCE ON OTHER EXPERTS |
A number of individuals have contributed to the data and technical programs discussed in this technical report, besides the Qualified Person. This report is largely a compilation of the works by Russian investigators over the long exploration history of the project. Mr. Oleg Lagniy, a consultant to Zoloto and Georgiy Isaikin, Zoloto Chief Geologist and the author have discussed the geology and the proposed exploration program at Elvenei a number of times.
Mr. William J. Crowl has personally reviewed the input of the above individuals to this report in order to ensure that it meets all of the necessary reporting criteria as set out in Canadian Instrument NI43-101 guidelines.
4. | PROPERTY DESCRIPTION AND LOCATION |
4.1 | Property Description and Location |
The Elvenei project is located in a license covering 12.0 sq km (km2). The term of the license is 20 years. Table 4-1 provides the geographical coordinates of the corner points of the license, defined in Latitude and Longitude using the WGS84 spheroid. Figure 4-1 shows the license boundaries for Elvenei.
Table 4-1 Geographical Coordinates of the Elvenei Project License
Corner No. | Latitude | Longitude |
1 | 68° 18’ 10”N | 168° 35’ 17”E |
2 | 68° 20’ 41”N | 168° 35’ 17”E |
3 | 68° 20’ 41”N | 168° 39’ 00”E |
4 | 68° 18’ 10”N | 168° 39’ 00”E |
The license site has the status of a mining allotment. The mining allotment is limited to a depth of 1000 m from the surface.
Gustavson has not reviewed the permits that must be acquired by Zoloto with respect to the exploration and exploitation of Elvenei. Gustavson is not aware of any environmental liabilities associated with the properties.
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Figure 4-1 Elvenei Project Land Position
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4.2 | Mineral Land Tenure |
The license was granted on August 25, 2006 for a period of 20 years. There are work requirements (both physical and geological), industrial and labor safety requirements, environmental requirements, social and economic development requirements, defined taxes and payments associated with the Licenses. A scan of the original Russian-language Elvenei License is included in Appendix A. The work requirements and taxes/payments (as restated from the machine translation) are summarized below.
4.2.1 | Elvenei License 13813 |
The subsurface user that carries out geological studies, prospecting and extraction of gold within the boundaries of the License site is held to the following conditions:
Work Requirements for Elvenei are:
a) not later than October 20, 2007, the preparation and approval of a geological exploration plan for the license site and positive approval following state ecological examination;
b) not later than January 20, 2008, begin prospecting activity on the license site;
c) not later than October 20, 2010, at the conclusion of the exploration program and submittal of an appropriate geological report on the program that includes an estimate of gold reserves for the Territorial Agency on the Mineral Use of Chukotka Autonomous Region. The reserve estimate is to be based on the following minimum amount of exploration work:
In 2008: not less than 500 m3 of mine drifting works (trenching)
In 2009: not less than 5000 m of drilled boreholes and not less than 500 m3 of surface mine drifting works (trenching)
In 2010: not less than 5000 m of drilled boreholes and not less than 500 m3 of surface mine drifting works
d) not later than April 20, 2011, preparation, coordination and approval of a technical program (design) for exploration, and approval from the state environmental examination and examination of industrial safety;
e) not later than October 20, 2014, at the conclusion of the exploration and submission of a geological report on the program that includes an estimates of gold reserve categories C1 and C2 for the State appraisal expert;
f) not later than October 20, 2015, preparation, coordination and approval of a technical program (design) for commercial development of the License area, and approval from the state environmental examination and examination of industrial safety;
g) not later than October 20, 2016, the beginning of mine and infrastructure construction
h) not later than October 20, 2017 commissioning of a mine with production of not less than 100,000 tons of ore per year (annual production rate is specified after the end of deposit prospecting and following technical design of development);
i) not later than six months prior to the completion of the mining of the deposit, completion of the closure plan design for the mine that will include removal of equipment, facilities and infrastructure and environmental safeguards.
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Taxes and Payments are Due as Follows:
a) | Subsurface user pays the following payments for subsoil use: | ||
Regular payments for subsurface use including exploration and resource/reserve estimation of gold ore on the entire License area (except for areas with discovered deposits undergoing more detailed exploration) are established under the following rates: | |||
90 roubles per km2in 2006 | |||
256 roubles per km2in 2007-2009 | |||
270 roubles per km2in 2010 | |||
b) | Regular payments for subsurface use of prospecting gold ore deposits on the entire License area (except for areas of the gold deposit undergoing commercial mining operations) are established by the square kilometer under the following rates: 10,875 roubles from the first through third (inclusive) calendar years of carrying out of deposit prospecting, but not later than 2011; 18,000 roubles from the fourth and following calendar years of carrying out of deposit prospecting, but not later than 2015 | ||
c) | Mineral extraction (severance) tax – this tax rate is defined according to the Russian Federation tax law; | ||
d) | Water tax is levied for the extraction of groundwater during mining operations according to the Russian Federation legislation in effect. |
A one-time payment of 31,500,000 roubles for subsurface use has been set as a result of an auction bid. According to the Russian Federation budgetary legislation, the one-time payment for subsurface use, with a deduction of the previously paid deposit (30,000,000 roubles), is due to the federal government within 30 days of the registration of the license by the State.
A fee for the use of geological information for the license site is due for the State’s past geological studies of the subsurface from federal controls of the state subsurface fund. The size of the payment for the use of geological information and the schedule for its collection is defined in established rates based upon the quantity of information.
The subsurface user is obliged to pay a licensing fee for the subsurface site of 8000 roubles, due within 20 days of the state registration of the license.
The licensing fee is due to the federal budget according to the budgetary legislation of the Russian Federation.
Other kinds of payments and taxes, stipulated by the tax legislation of the Russian Federation, including those for the right to use land areas and environmental contamination, are required by Subsoil user in established order.
Gustavson considers that all of the above requirements are in good standing as of the date of this report.
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5. | ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE andPHYSIOGRAPHY |
5.1 | Accessibility |
The Elvenei deposit is located on the left bank of the Elveneiveem River near the confluence with the Rauchua River in the general area between the Ugryumy and Vilka Rivers. It covers about 12km2 in the Chaunsky area of Chukotka. The area is remote with no telephone or mobile phone coverage and no local population or inhabitants. A 110 KW power line follows the road.
5.2 | Climate |
The climate of the area is characterized as arctic with long cold winters and short cool summers. The average daily temperature varies from 30°C to -50°C. Snow cover typically extends from the middle of September until June. The average annual precipitation is 160-170 mm.
5.3 | Local Resources and Infrastructure |
The Elvenei project is located about 540km southwest of the town of Pevek, the administrative center for the Chaunsky area of Chukotka and the largest Arctic seaport that also has an airport accommodating large aircraft (figure 5-1). The town of Bilibino is about 110km from the deposit and the town of Baranikha is about 40km from the project. A road between Bilibino and Pevek is located about 15km from the project. Electricity for the region is supplied via the powerline LEP-110 coming from a 43MW nuclear power plant and also the 23.5MW Chaunsky regional power plant. This is the main power source for the region.
5.4 | Physiography |
The project area includes spurs of the Elvenei Mountains and the watershed of the Rauchua and Konevaam Rivers. The relief around the project is moderate with an extensively developed stream drainage network. The stream system divides the area into many small hills with narrow, rough-ridged watersheds with relatively steep slopes. Maximum ridge elevations on the deposit are 810 m above sea level, with local relief (elevation differences) of up to 400 m in the project area.
5.5 | Environmental Conditions |
No major mining has taken place in the immediate vicinity of the Elvenei deposit. The Exploitation and Exploration Licenses specify permitted activities at the sites as well as requirements at the time of closure. At the time of the author’s site visit, Zoloto had not caused any ground disturbances in the area.
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Figure 5-1 Local Area Infrastructure Near Elvenei
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6. | HISTORY |
6.1 | General Background |
The geology of the area was studied through geological investigations at different scales starting in the early 1940s and ending in 1991. In 1968, the second Sredne-Elveneisky exploration party discovered tungsten mineralization hosted in a series of quartz veins 0.15 to 0.35m wide with 30 to 300m of strike and a stockwork zone covering an area about 300 m by 500 m. The tungsten mineralization graded from 0.5 to 3%. Gold mineralization discovered in the deposit, despite the rather high grades (up to 34 g/t), was of little interest when it was first discovered.
A geochemical survey at a scale of 1:200,000 was conducted on streams in the area of the Rauchuansky mineralization zone in 1981-1984. That survey resulted in significant revisions to the evaluation of the mineral potential of the area. The survey party concluded that gold deposits are very likely to be found in the area. In particular, the Elvenei mineralization system was identified based on a combination of observed anomalies. Prospects for both gold and rare-metal mineralization discoveries within the Elvenei mineralization system were deemed to be good.
The most recent geological exploration was in 1987-1992 by Arynpyglyavaamsky GSO (J. M. Telegin, 1995). They made many geological traverses, test trenches, collected grab samples, and drilled 933 m of geochemical test holes in order to investigate the alteration halos and drilled 321 m of core holes to obtain samples for process testing.
This work at the Elvenei deposit has resulted in the mapping of formations and associated mineralization types, the identification of mineralization zones, alteration zones, initial delineation of the deposit and associated mineralization system, and some gold and tungsten grades. This exploration work, involving drilling and surface trenching, has resulted in, the initial outlining of mineralized structures from the surface to a depth of 60 meters. Two processing testing samples were collected and lab tested. Potential commercial mineralization zones and properties were identified.
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7. | GEOLOGICAL SETTING |
7.1 | Regional Setting |
Quoting from Miller, et al (2002), “The Mesozoic represents an important time span of subduction-related magmatism along the northern circum-Pacific margin. As a result, volcanic and plutonic belts of Mesozoic age now form fundamental elements of the geology of the Pacific margins of both North America and Northeast Asia (Figure 7-1). The emplacement of these belts was followed by continued magmatism into the Cenozoic. At the scale of the northern Pacific, magmatic belts appear to have remained relatively stationary through time in the Western U.S. and Canadian Cordillera (Figure 7-1). In contrast, a progressive migration of magmatism toward the Pacific seems to have occurred in the Alaska and northeastern Russia sectors of the belt. This migration locally included subduction zone jumps with the formation of backarc basins during the Tertiary (Figure 7-1).” Further, “Compared to the Cordillera, less is known about the timing of magmatic events in northeastern Russia. Our preliminary comparison suggests that tectonic and magmatic events in northeastern Russia are similar to those of the Cordillera but that in several cases nearly opposite tectonic environments characterize these time intervals. For example, a magmatic episode coeval with crustal shortening on one side of the Pacific may coincide with a coeval period of magmatism on the other side of the Pacific that occurred in a neutral to extensional tectonic environment.” The Elvenei prospect lies on the edge of an area of late Cretaceous volcanic and plutonic belts.
Figure 7-2 shows the crustal structure in northeastern Russia and Alaska (Wolf, et. al. 2002).
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Figure 7-1 Index Map of Northern Circum Pacific (see caption below) after Miller, etal. (2002)
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Figure 7-2 Crustal Structure in Alaska and Northeastern Russia (after Wolf, etal., 2002).
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7.2 | Property Geology |
The Elvenei deposit is on the left bank of the Elveneiveem River and is part of the northwest striking Rauchuansky gold bearing zone. The gold mineralization is apparently confined to a well-developed distinct ring structure. During the Cretaceous age emplacement of an intrusive plutonic felsic rock intrusion, a ring dike structure formed. Products of early Cretaceous age contact metamorphism and associated metasomatism are confined to the central part of the ring dike. Mineralization includes sulfide mineralized gold and tungsten deposits in the central zone of the area in question (Elvenei deposit). Downslope of the primary Elvenei hard rock gold deposit, gold placers were likely deposited due to erosion of scattered gold-quartz outcrops.
The deposit was emplaced in terrigenous derived upper Triassic rocks of the Norian stage, known as the Kuveenkaisky Group. The Kuveenkaisky group contains two units with different lithologies. The Lower Kuveenkaisky is siltstone containing some fine-grained sandstones (flanks of the deposit). The Upper Kuveenkaisky is a silty sandstone and sandstone with some siltstone in (the central and eastern part of the area). A projected and as yet untapped intrusive plutonic dome is bordered by a halo of contact metamorphism and associated Late Cretaceous ring dike intrusions.
The deposit includes four major sets of fractures: trending WNW, NE, NS, and ring (or incomplete ring) fractures. The ring fractures are typically intruded with microdiorites, diorite porphyries, and veins of early stage, tungsten-bearing, hydrothermal alteration. Tungsten is associated with fractures trending nearly north-south and northwest on the west and southwest flanks of the deposit (figures7-3A and 7-3B).
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Figure 7-3A Elvenei Geological Plan Map
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Figure 7-3B Legend for Figure 7-3A
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8. | DEPOSIT TYPES |
The Elvenei prospects display characteristics consistent with high sulphidation gold systems. Finely dispersed gold is predominantly associated with quartz and pyrite, with minor amounts of arsenic, antimony and silver minerals in veins, veinlets and stockworks in linear zones of crushing and brecciation. Base metal and tungsten / bismuth mineralization is peripheral to the gold mineralization and may be associated with the intrusives in the area and thus may be better related to contact metamorphic (metasomatic) processes.
9. | MINERALIZATION |
The following is an English translation of the Russian description (in the Russian Proyect documents) of the Elvenei mineralization. Gustavson took sight of the mineralization at Elvenei, but did not visit every site discussed herein.
The sulfide gold mineralization is confined to a series of NS fractures in the central and eastern parts of the area. There appears to be a roughly concentric zonation of mineral deposition. The center zone is typically gold-bearing and also contains arsenic, antimony, and silver minerals. Outwards, there is tungsten, bismuth, copper, and zinc mineralization, especially in the western and eastern parts of the deposit alteration edge. This is especially prominent to the southwest portion of the prospect (figures 9-1, 9-2 and 9-3).
Of the metals present in the mineralization, only gold and tungsten reach significant grades. The associated gold placers have been largely mined or are uneconomic. Tungsten or wolframite placers are apparently not of economic grade.
The tungsten-bearing mineralization to the west is part of the Elvenei mineral system. After several years of exploration it was concluded that further exploration for tungsten trioxide would be a waste of time. The narrow tungsten deposits are apparently too small to be commercially attractive, despite considerable historical prospecting. The principle reasons for this finding are the narrowness of the mineralized veins (0.1 -0.37m) and the wide spacing of the mineralized veins despite grades of grab samples from trenching as high as 0.1’s% to 3%.
The vast majority of the gold mineralization is confined to the central ore zone in the center and northeast parts of the deposit, elongated north-south and measuring about 2 km by 1 km. Most of the mineralization is confined to the sandy portion of the upper part of the Triassic Upper Kuveemkaisky Group and the mineralization tends to be insignificant in the northern part of the deposit in the siltstones of the Lower Kuveemkaisky. Alteration of sandy and silty facies is common and is represented by recrystallization and silicification, thin sericitic alteration zones, and chloritic alteration, and is confined mainly to clusters related to hydrothermal metasomatism. Local altered and mineralized zones are typically confined to the area bordering N-S fault zones with brecciation that are spaced 80 to 120 m apart. The data from the trenching and geological traverses with grab samples taken in the central area resulted in delineation of six orebodies. Orebody #1 has been studied the most to date.
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The gold mineralization is found mainly in fine-grained sandstones and confined to elongated zones around breccias formed and refractured at various times. The mineralization is confined to vein-like breccia zones 0.5 to 1.5 m wide that have varying amounts of sandstone clasts and demonstrating at least two silicification generations. In the northern part of the deposit breccia zone edges are less distinct; lenticular breccia bodies (up to 10’s cm thick) are present; and quartz vein systems prevail in arenaceous facies. In both of these, the quartz is of two types: early medium-fine crystalline milky white and late fine crystalline, with sucrosic to quartzite-like texture and light gray to gray color. Clear crystalline quartz is most typical of the central part of the deposit over a 700-800 m size area. On the southern flanks of these orebodies and in the orebodies located to the east and west, the quartz has more finely crystalline structures (up to chalcedonic) and darker coloration. In the southeast, there is a gold-barren near-surface zone, where breccia contains almost exclusively chalcedonic dark gray quartz that is hard to distinguish from neighboring coarse alluvial deposits. Veins of white or pinkish calcite were observed in some of the drilled cores. Within a zone a few meters wide along breccia and vein contacts, sericite alteration occurs in places (hornfels alteration in others with shale or shaley precursor rock), and pinkish fine scaly sericite clearly prevails (as opposed to the pervasive presence of the white sericite within the ore zone). Larger grains develop in blebs up to 0.01 mm in diameter. In places pyrite is present around multiple nucleation sites and in some places there are open cavities due to leaching of pyrite and the presence of iron hydroxides including jarosite. All distributions of sericite (pervasive and spotty) are focused in a sub parallel orientation. Fine needled tourmaline (0.02 -0.03 mm long) is found cross-cutting sericite, along with smaller amounts of arsenopyrite.
The mineralogy of the deposit is rather simple. Pyrite and arsenopyrite are the main ore minerals throughout the deposit. Sporadically stibnite (antimonite) is found, however, it is pervasive in the vicinity of trenches K-201 to K-203. Other ore minerals could only be observed under a microscope. Samples studied in polished section did not reveal native gold, but gold was found in assays. This indicates that the gold may be within the pyrite and arsenopyrite minerals.
Breccia was observed in samples from the bottom of trench K-203, in which fragments of rock were cemented and replaced to different degrees by quartz, ranging from transparent sugary textured quartz to gray quartzite-like texture. Some heavily leached and silicified breccia contained rock fragments that were nearly entirely replaced by silica but faint ghost-like outlines of the original fragments remained. Large amounts of sulfides are found in these areas. Early pyrite (pyrite1), up to 20% of the original sulfide mineral content, is indicated by leached cavities in rock fragments. Late euhedral pyrite is associated with arsenopyrite. Both types of pyrite are corroded by arsenopyrite and marcasite. Arsenopyrite (up to 30% of the sulfide minerals) is euhedral with elongated prismatic up to needle crystal with rhombic sections. The size of the arsenopyrite grains is 0.006 -0.5 mm. Stibnite (up to 50% of sulfide minerals) forms as bunches of crystals as large as 7 by 10 mm and is also the latest primary mineral.
Early pyrite (20%) was observed in samples from trench K-201, in association with early arsenopyrite (70%). Arsenopyrite (arsenopyrite1) grains range 0.01’s to 3-4 mm size. Early arsenopyrite (arsenopyrite1) is fractured, and fractures are coated with scorodite. Late
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arsenopyrite (arsenopyrite2) is fine grained with indistinct borders up to needle size, all less than 0.06 mm.
Two generations of silicification were observed in samples from the core of shallow holes: These are transparent medium to fine crystalline quartz (quartz1) and translucent fine grained to chalcedonic-like quartz (quartz2). In fragments containing other types of alteration, a network of isolated pyrite blebs up to 1 mm were observed.
Small veins and anhedral pyrite crystals of second generation are also observed throughout the deposit. Pyrite is locally replaced by marcasite and goethite. Arsenopyrite also has two generations – arsenopyrite1 is macrocrystalline (0.5 mm and larger size crystals) shattered with inclusions of pyrrhotite and rhombic cross-section needles, indicating formation from diffuse material. Fine grained (less than 0.06 mm) anhedral crystals of chalcopyrite are also widespread. Small crystals of sphalerite were also observed in separate polished sections. The general sequence of mineral deposition was pyrite1 – arsenopyrite1 – pyrite2 – arsenopyrite2 – marcasite + pyrrhotite - sphalerite + chalcopyrite.
A prevalence of pyrite over arsenopyrite was observed along with an insignificant amount of sphalerite in samples from the southern end of Body #1 (trench K-209).
Overall, along the strike of the deposit, there was little change in mineral zonation observed; only the southern part of the deposit had small amounts of chalcopyrite and sphalerite.
The mineral associations of the deposit have similarities to the gold mineralization description for the north flank of orebodies in the western part of the deposit. The amount of stibnite (antimonite) increases within the boundary of Body #6 (location undetermined).
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Figure 9-3 Elvenei Geology and Exploration, 1:2000, Legend for Figures 9-1 & 9-2
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10. | EXPLORATION |
10.1 | Historical Exploration |
The historical exploration programs conducted on the Elvenei license are described in detail in Section 6 History of this report. Tables 10-1 to 10-3 summarize the details of those exploration efforts.
Table 10-1 Elvenei Drillholes and Trenches
Number | Cum. Length (meters) | Number of Samples | Date (year/years) | |
Drillholes (core) | 91 | 1580 | 1400 | 1989-1990 |
Trenches | not in report | not in report | not in report | 1968, Second Middle-Elvenei geological-search party |
Trenches | 21 | 3370 | 3300 | 1988-1989, Arynpygliavaamskiy GSO |
Table 10-2 Elvenei Larger Area Surveys
Number | Date (year/years) | |
Grab Samples (grab and crushed samples) | 1060 | 1988-1989 |
Bulk Samples (>25 kg ea.) | 2 | 1990 |
Geomagnetic | 1 | 1988-1989, Arynpygliavaamskiy GSO |
electrical survey (SDVR and SG) | 2 | 1988-1989, Arynpygliavaamskiy GSO |
geochemical surveys | n/a | 1984, Rauchuanskiy GHO |
geochemical surveys | 7200 samples | 1989, Arynpygliavaamskiy GSO |
Table 10-3 Elvenei Survey Detail
Type | Area | Sampling Density and/or Cum. Length | Date (year) |
Geophysical surveys: | |||
Geomagnetic | 103 km2 | 200 x 40 | 1989-1990 |
351 km2 | 400 x 40 | 1989-1990 | |
electrical survey (SDVR) | 106 km2 | 200 x 40 | 1989-1990 |
351 km2 | 400 x 40 | 1989-1990 | |
method SG (middle gradients) | 2 km2 | 20 x 50 | 1989 |
geochemical surveys | unknown | 100 x 25 | 1984 |
- scale 1:10000 | 14 km2 | 100 x 20 | 1989 |
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10.1.1 | Geologic Mapping |
No record of the geologic mapping techniques was available to Gustavson for review. However, maps of 1:2000 and 1:10000 were available for review.
10.1.2 | Trenching |
Several trenches were visited by Gustavson during the site visit in July 2007. The documented mineralization was observed as mapped previously (Figures 10-1A &B).
Typically, trenching in areas of permafrost required opening of the area of the eventual trench to bedrock with a dozer, a waiting period during the summer months for thawing and deepening of the trench after thawing.
10.1.3 | Geochemical Sampling |
No record of the geochemical sampling techniques or protocols employed was available to Gustavson for review. On the ground, evidence abounds of a significant number of sampling campaigns (pits, trenches and prospect holes), as is typical of Russian prospect testing. A 1:10,000 scale map was sourced that displays gold in secondary dispersion halos. Figure 10-2 shows that gold distribution.
10.1.4 | Geophysics |
Russian documents on the Elvenei prospect mention geophysical surveys (geomagnetic, electrical and SG), but they do not discuss the results of those surveys. Surveys such as these are typically used by Russian expeditions (exploration campaigns) to assist with focusing efforts on the more prospective zones in a larger property package.
10.1.5 | Bulk Sampling |
Mention is made of bulk samples being taken from 2m deep pits, yielding samples in the range of 25kg. Such samples are often used in preliminary metallurgical tests of potentially economically mineralized zones.
10.2 | Exploration in 2007 |
According to a DRAFT of the Plan Design of Prospecting Works on Elvenei Ore Field, Zoloto is carrying out “prospecting works” at Elvenei based on the “Design on carrying out of search-estimated works within the limits of Elvenei ore field” developed by CJSC Chaunsky GGP as coordinated by Chukotnedra and approved by FGUP (Geoloexpertiza). In 2007, the following prospecting works (exploration) were carried out (m3 refers to quantity of excavated material):
1. | Construction drilling platforms - 7 platforms. Total amount GPR - 5095 m3. | |
2. | Construction of access roads - 2000 m3. | |
3. | Core drilling of holes - 1 hole, 120.0 linear m. Hole is not finished. |
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Figure 10-2 Gold in Secondary Dispersion Halos
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4. | Sampling from core - 110 samples with a gross weight of 900 kg. | |
5. | Processing of samples - 77 samples. Weight of samples after reduction – 0.5 kg (the scheme of processing of the samples is attached). |
Exploration work was carried out by forces of CJSC Chukot GGP under the turnkey contract No 17 dated July 17th, 2007. Zoloto provided the funding of the 2007 exploration program through a subsidiary, CJSC Chukot Gold. Work started in July, 2007, with road building and camp construction. Core hole No. c-24 was started on October 27, 2007. The hole was collared at the location shown in Figure 10-3. The designed depth of the hole is 200m, with azimuth being 090° and the inclination at 70° from the horizontal.
An SKB-5 core drill is employed. Drilling in friable sediments (up to 10m) was carried out by "dry" hard-alloy crowns by diameter 132-93 mm. Further drilling used diamond crowns by drilling complex KK--59 with washing is applied that provides maximal output of core. Return compressed air blowing with subsequent casing by pipes in diameter of 73mm is applied in zones of intensive fracturing.
On December 1, 2007, drilling was stopped at a depth of 120 m, in a zone of intensively fractured rocks. A summary of the geology observed in the hole is presented in Table 10-4. The Russian geological descriptions are preserved therein, as only they have directly observed the core.
On the basis of the data shown in Table 10-4, it is apparent that the hole crosses a thick section of fine-grained sandstones with rare interbeds of siltstones. A measure of fracturing is reported to show that massive (minimally fractured) core makes up nearly 47% of the core logged, while intensely fractured rocks make up almost 21% and the rest is moderately fractured (32%).
According to reports from Chaunskoye, sulfide mineralization (pyrite and arsenopyrite) is seen through the entire length drilled in hole c-24. Potentially significant mineralization is seen in the intervals 28.7 – 36.3m; 56.5 – 69.1m; and 99.0 – 104.0m, with widely developed quartz veinlets and strong sulphidic mineralization. The Chaunskoye geologists report that the interval 99.0 – 104.0m has a true thickness of 1.5 – 2.0m. At the top of the interval, a series of contiguous quartz-sulphidic veinlets with a thickness of 0.3 – 0.5m are seen. Rich antimonite veinlet-impregnations are seen at a depth of 102.6m. Based on results of historical drilling and trenching, high grades of gold seen in trenches 201 - 203 (i.e. in the area where hole c-24 was collared), have spatially been confined to veins of antimonite structure, as seen in c-24 (Figure 10-3).
Core logging is at a scale of 1:50, according to the accepted and approved techniques and meets requirements of existing instructions. Photo documentation of the core is carried out on site.
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Table 10-4 Lithology and Mineralization Descriptions Hole No. 24, Elvenei Project
Depth (m) | Lithology | Alteration/Structure/Mineralization |
0.0 – 0.5 | Deluvial | |
0.5 – 2.0 | Eluvial | |
2.05 – 5.0 | Intensively fractured thin-fine- grained sandstones | |
5.0 – 8.3 | Fractured rocks | |
8,.3 – 10.3 | Massive fine-grained sandstones | Sulphidic mineralization |
10.3 – 16.3 | Massive fine-grained sandstones | Impregnation of sulfides |
16.3 – 28.7 | Fractured sandstones transferring in massive | Metasomaticly changed rocks |
28.7 – 36.3 | Fractured sandstones with massive layer of 2 meters | Quartz veinleting with sulphidic mineralization |
36.3 – 43.0 | Fractured fine-grained sandstones | Quartz veinleting, carbonate formation, sulphidic mineralization |
43.0 – 50.0 | Fractured fine-grained sandstones with meter interval of intensively fractured and three-meter interval of massive | Rocks are carbonated |
50.0 – 56.5 | Two-meter interval of massive fine- grained sandstones, four-meter interval of fractured fine-grained sandstones | Sulphidization |
56.5 – 69.1 | Massive fine-grained sandstones | Zone of breccias with quartz veinleting and sulphidization |
69.1 – 76.5 | Intensively fractured fine-grained sandstones | Sulphidization |
76.5 – 81.5 | Intensively fractured siltstones, silty sandstones | Quartz-carbonate veinleting with sulphidic mineralization |
81.5 – 86.9 | Massive quartzed fine-grained sandstones | Impregnation of sulfides |
86.9 – 90.3 | Intensively fractured silty sandstones | Sulphidization |
90.3 – 104.6 | Massive quartzed fine-grained sandstones | Quartz veinleting, sulphidic mineralization (int. 99,0 - 104,0 - prospective ore zone) |
Sampling of holes.Sampling is conducted on a core which output makes up to 92%. In total 110 samples by gross weight 900 kg are selected, all of them are delivered to the base of CJSC «Chaunskoye GGP».
Laboratory works.According to the turnkey contract, laboratory researches will be made in laboratory of Bronnitskiy geological-geochemical expedition.
Initial sample preparation of all tests is carried out in laboratory of CJSC Chaunskoye GGP using a preparation scheme accepted for ore samples in CJSC Chaunskoye GGP.
On December 25, 2007, 77 samples were processed in the CJSC Chaunskoye GGP laboratory. The weight of samples after sample preparation is 0.5kg.
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11. | DRILLING |
11.1 | Core Drilling |
As of the date of the site visit by the author (July, 2007), Zoloto had not conducted drilling at the Elvenei site. See Section 10 above for a description of core drilling that started in October, 2007.
According to the historical Russian reports, some 91 core holes were completed at Elvenei. The exact locations of the collars of these holes are not evident in the Russian data available to Gustavson. As is typical of Russian core drilling campaigns, there is no core remaining to be examined, as all of the core was consumed in the analysis process. Gustavson has recommended that core drilling programs by Zoloto follow Western protocols, where drill core is split and 50% is retained for future examination and 50% is sent for assay and analysis.
It has been the author’s experience that Russian methods of geologic logging and sampling follow relatively rigid mandated protocols and the resulting data and logs are typically usable to plan future drilling campaigns and can be used in geologic modeling and resource estimation after verification of methodologies and results. Zoloto must seek out all available records to assist in guiding their exploration programs. Their Chief Geologist and the head of the field programs are both Russian and very familiar with the Russian systems. They have both agreed upon the need to assemble all available data as soon as possible.
12. | SAMPLING METHOD AND APPROACH |
Gustavson did not independently re-sample or assay any of the samples comprising the historic data for Elvenei. The following discussion of sampling methodology and approach is taken from Russian reports and records of personal interviews and inspections by the author.
12.1 | Core Sampling |
Whole drill core was submitted for assay, with none remaining for future examination. This is a typical Russian procedure. No evidence of core photographs was presented.
12.2 | Channel Sampling |
Reportedly, trenches were channel sampled along their full length. Direct evidence of these activities was not available to the author during the site visit.
12.3 | Bulk Sampling |
According to the Russian records, 2 bulk samples (>25kg) were collected from the Elvenei prospect. Chapter 16 of this report presents the results of testwork on these samples.
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13. | SAMPLE PREPARATION, ANALYSES, AND SECURITY |
Zoloto has made assurances to the author that sample preparation and analyses conducted during their exploration programs will satisfy the requirements of Western Best Practices and will pass the scrutiny of future investigators as required by NI43-101. Prior programs reportedly have followed Russian protocols which are similar to Western requirements, but there is no readily accessible documentation to review. The Zoloto geologists must gain access to the previously generated data and provide descriptions of the methodologies applied during all phases of data collection and analysis.
13.1 | Sample Preparation |
No available information. See above. Typical Russian procedures are adequate for this early stage exploration program.
13.2 | Sample Analysis |
No available information. See above. Typical Russian procedures are adequate for this early stage exploration program.
13.3 | Check and Duplicate Sampling/Preparation and Assaying |
No available information. See above. Typical Russian procedures are adequate for this early stage exploration program.
13.4 | Security |
No available information. See above. Typical Russian procedures are adequate for this early stage exploration program.
14. | DATA VERIFICATION |
Gustavson has not independently conducted any title or other searches, but has relied upon Zoloto for information on the status of the claims, property title, agreements, and other pertinent conditions. In addition, Gustavson has not independently conducted any mining, processing, or economic studies, or permitting and environmental studies.
14.1 | Verification of Geologic Data |
The site visit by the author confirmed the general layout of the prospects as portrayed on the maps of the mineralized zones. Examination of the rocks at various sites on the prospect verified that the geologic information shown on the maps was accurate. Zoloto should re-sample some of the trenches and pits to gain an understanding of the relationship between the previously collected data and the data to be collected during their campaigns.
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14.2 | Verification of Analytical Data |
Neither Gustavson nor Zoloto has completed any independent sampling and/or confirmatory geologic logging of core. Future rounds of evaluation of the existing data may involve re-assaying sample pulps and rejects, if available.
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15. | ADJACENT PROPERTIES |
There are no adjacent non-alluvial gold properties in the vicinity of the Elvenei License.
16. | MINERAL PROCESSING AND METALLURGICAL TESTING |
Two samples were generated for assaying and process testing to gain an understanding of the composition and processing amenability of the mineralization. The first combined samples from the bottom of trenches 201 and 203 that characterized the central part of the deposit that has been partly oxidized near the surface. The second used core from drillholes 90 and 92. Despite the intersection of mineralization at a shallow depth (5-11 m), secondary enrichment was not observed. The samples were tested by the geological exploration institute (Central Scientific Research Institute for Geological Exploration, Magadan).
Test sample #1 | |
Gross mass: 108.0 kg | |
Average elemental content: | |
Gold | 15.5 g/t |
Silver | 5.8 g/t |
Arsenic | 0.92% |
Antimony | 0.3% |
Copper | 0.016% |
Mineralogy (gangue minerals): | |
Quartz | 60.8% |
Sericite | 21.2% |
Chlorite | 2.79% |
Feldspar | 3.0% |
Mineralogy (major ore minerals): | |
Gold, native | 4.4x10 -6 % |
Silver, native | 2.8x10 -6 % |
Arsenopyrite | 0.8% |
Pyrite | 0.1% |
Mineralogy (minor ore minerals) | |
Jarosite | 1.5% |
Other Iron hydroxides 1.8% | |
Scorodite | 0.7% |
Ilmenite | 0.6% |
Rutile | 0.6% |
Pyrolusite, magnetite, bismuthinite, wolframite, and argentite are hundredths of a percent | |
(0.01’s %) |
Gold and silver contents of minerals:pyrite 312.0 g/t (gold)/708.0 g/t (silver);iron hydroxides4.0 g/t (gold), 23.1 (silver);arsenopyrite 55.6 g/t (gold) and 411.0 g/t (silver),stibnite(antimonite) 11.4 g/t (gold) and 11.2 g/t (silver). Native gold is no larger than 0.1 mm and the majority (56.7%) is in the size range of up to 0.05 mm. The gold has a fern-shaped flattened morphology and is less often lumpy. The average fineness of the gold is 839 and the class
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(fineness) distribution is as follows: 700-750 – 26.8%, 750-800 – 14.3%, and 900-950 - 42.8% (table 16-1).
Table 16-1 Results of Metallurgical Testing (Test Sample #1)
Concentrates | output % | Au extraction (%) | Ag extraction (%) |
Gravity Concentrate | 0.34 | 10.0 | 27.3 |
Flotation Conc. (Basic flot.) | 2.69 | 22.2 | 45.8 |
Flotation Conc. (Oxid. Flot.) | 5.33 | 17.9 | 12.3 |
Total Flotation Conc. | 8.01 | 40.1 | 58.1 |
Tails of Concentration | 91.65 | 49.9 | 14.6 |
Total | 100.0 | 100.0 | 100.0 |
According to the chemical (selective dilution) analysis, the deposit has 47.2% of the gold content and 70.6% of the silver content in a mineralogic form that is amenable to cyanide leach extraction. Only 12.7% of the gold content and 6.3% of the silver content is within oxidized or carbonate minerals where decomposition in muriatic acid or other suitable process must precede cyanide extraction. The sulfide minerals contain about 3.1% of the gold and 8.9% of the silver content and quartz and other acid-soluble minerals contain about 37.0% of the gold and 14.2% of the silver content. This data indicates the poor dressability of the ores. For the tested process, the maximum recovery of gold (50.1%) and silver (85.4%) is achieved through the processing flow: one-stage gravitational enrichment and three stage basic and oxidized flotation and tails with remaining gold and silver contents of 8.5 g/t and 5.8 g/t, respectively.
Test sample #2 (sample selected from holes 90 and 92) | |
Gross mass: 18.3 kg | |
Average elemental content: | |
Gold | 17.4 g/t (tonne) |
Silver | 1.9 g/t |
Arsenic | 1.54% |
Antimony | 0.05% |
Zinc | 0.02% |
Copper | 0.016% |
Sulfide-source sulfur for Test #2 is about four times that of Test #1 | |
Mineralogy (gangue minerals): | |
Quartz | 58.6% |
Sericite | 20.4% |
Chlorite | 2.5% |
Feldspar | 6.0% |
Biotite | 3.5% |
Mineralogy (major ore minerals): | |
Gold, native | 1.7x10 -6 % |
Arsenopyrite | 3.3% |
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Pyrite | 0.1% | |
Stibnite | 0.08% | |
Mineralogy (minor ore minerals) | ||
Jarosite | 1.2% | |
Other Iron hydroxides | 2.7% | |
Rutile | 0.5% | |
Chalcopyrite, sphalerite, galena, scorodite, and ilmenite hundredths of a percent | ||
(0.01’s %) |
The arsenopyrite fraction contains 359.0 g/t and 168.0 g/t of gold and silver, respectively. The distribution of native gold by size fractions is: 0.2 to 0.1 mm 38.1%, 0.1 to 0.005 mm 57.14%, and less than 0.05 mm 4.76% . The native gold has a flattened fern-shaped or a lumpy morphology. The fineness of the gold (20 assays) is much higher than the gold in Test #1, with a distribution between classes as follows: 7.14% 700-800, 14.29% 800-900, 21.43% 900-950, and 57.14% 950-1000 (table 16-2).
According to the chemical (selective dilution) analysis, the deposit has 16.1% of the gold content in a mineralogic form that is easily amenable to cyanide leach extraction. Only 9.8% of the gold content is within oxidized or carbonate minerals that can be dissolved in hydrochloric acid that must precede cyanide extraction. The sulfide minerals contain about 60.3% of the gold content and quartz and other silicate minerals contain about 13.7% of the gold content (The latter was deemed to be virtually irrecoverable).
Processing research has confirmed that the majority of the gold is fine sized and finely dispersed within sulfide minerals or entrapped by them. The ore would be deemed refractory and poorly amenable to recovery by hydrometallurgical methods. Maximum extraction of gold to concentrate (80.5% recovery) would include one-stage gravity separation followed by a three-stage flotation process. The gold content of tails from this processing would be 3.4 g/t.
Table 16-2 Results of Metallurgical Testing (Test Sample #2)
Concentrates | output % | Au extraction (%) |
Gravity Concentrate | 2.4 | 26.4 |
Flotation Conc. (Stage 1) | 2.1 | 30.2 |
Flotation Conc. (Stage 2) | 2.0 | 16.1 |
Flotation Conc. (Stage 3) | 1.7 | 7.8 |
Comb. Flotation Conc. | 5.8 | 54.1 |
Tails of Concentration | 91.8 | 19.5 |
Total | 100.0 | 100.0 |
According to the Russian descriptions of the testing and results, Test #1 (sample #1) found that the majority of the gold occurs as microscopic inclusions in quartz, and Test #2 (sample #2) found that most of the gold occurs as finely dispersed particles within sulfide minerals or entrapped by them. This may be explained by the near-surface oxidation effects in sample #1 material along with slightly larger gold grain sizes. The unoxidized primary mineralization from
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a 5-10 m depth remains in its primary sulfide dominant state. The shallow depth of unoxidized sulfide dominant ore indicates that there are no thick zones of secondary ore that have formed as a result of oxidation near the surface due to weathering of the deposit.
Gold is the only metal for which the Elvenei deposit is likely to have a grade and tonnage adequate for commercial extraction. The gold content along the strike of orebodies is very uniform with very few occurrences of abnormally high gold grades in samples. Analyses carried out on roughly equally sized grab samples collected on a regular grid between trenches and short channel samples from old trenches also point to gold being the only metal likely to be commercially viable. Orebody #1 has been traced along a strike length of 900 m. Drill hole 269 intersected a mineralized interval between 59.2 and 61.9 m depths. Below are some of the test results from trenches and drill holes on Orebody #1 table 16-3).
Table 16-3 Mineralized Body #1 Mineralization Intercepts
Trench 201 | 4.0 m grading 15.7 g/t gold |
Trench 202 | 1.5 m grading 11.7 g/t gold |
Trench 203 | 1.0 m grading 12.6 g/t gold |
Hole 269 | 1.7 m grading 12.4 g/t gold |
Holes 90 and 92 | 0.8 m grading 17.8 g/t gold |
Trench 210 | 1.1 m grading 4.4 g/t gold |
Mineralized Body #1 Average | 1.7 m grading 13.2 g/t gold |
Mineralized bodies #2 and #3 were intersected once and the following grades were found. Body #2 had a mineralized intercept of 0.5 m grading 12.2 g/t gold and Body #3 had a mineralized intercept of 1.0 m grading 19.0 g/t gold. Body #2 has been traced along strike for 600 m and Body #3 has been traced along strike for 500 m. Grab samples from Bodies #4, #5, and #6 had grades of 18.0 g/t gold, 5.9 g/t gold, and 13.0 g/t gold, respectively. These mineralized bodies have been traced along strike for 500, 400, and 500 m, respectively. The specific location of these Bodies was not available to Gustavson. Examination of the gold mineralization depicted on Figures 7-3A, 9-1, 9-2 and 10-2 indicates that the Bodies lie along the north-south quartz veins and in the silicified structures.
Gustavson considers that potentially economic mineralization includes only gold that is finely dispersed, mainly within sulfides.
17. | MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES |
17.1 | Elvenei Russian Resource Estimates |
There are no NI 43-101-compliant mineral resource estimates for the prospects on the Elvenei License.
As identified by previous Russian investigators, six potentially exploitable bodies have been identified and partially outlined within the Elvenei mineralized system. These are confined to silicified breccia zones trending N-S with dispersed vein mineralization zones. The mineralized zones are 0.8 to 4.0 meters wide and 400 to 900 meters long. In three of the zones, trenches
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intersected material with potentially commercial gold grades. The other 3 bodies were explored by grab samples along traverses. All bodies dip steeply westward (75-80©). The gold mineralization is represented by sulfide-bearing rock with finely dispersed gold (mostly in arsenopyrite). Preliminary predictions by Russian investigators suggest that the vertical extent of mineralization is at least 300 meters.
According to Russian calculations, the following average values for Mineralized Body #1 were used for predictive estimation of all of the bodies under consideration: average body width of 1.7m and average gold grade of 13.2 g/t. The combined length of the six bodies is 3,400m. Assuming that the vertical extent of mineralization is 300 meters, and the specific gravity is 2.6 t/cubic meter, the total potential mineral resource (non 43-101 compliant) would be 4.5 million tonnes. The predictive gold resources (Russian estimated and non 43-101 compliant) of the Elvenei Au mineralized system were estimated to be 60 tonnes. This historical resource estimate is hypothetical in nature, estimated using techniques that are non-NI43-101 compliant and is mentioned here as merely being indicative of the potential of the area for discovery of gold-containing mineral resources.
18. | OTHER RELEVANT DATA AND INFORMATION |
Gustavson is unaware of any other data and/or information that would be relevant to this report and is not contained in one of the existing Sections of this report.
19. | INTERPRETATION AND CONCLUSIONS |
19.1 | General Conclusions |
As described in Sections 9 and 17 above, the prospective gold mineralization at Elvenei occurs along generally north-south striking silicified breccia zones. The fine-grained gold is associated with arsenopyrite and pyrite associated with quartz. Plan maps generated by Russian investigators indicate that the zone of gold mineralization contains perhaps 6 exploitable mineralized bodies from 0.8 to 4.0m in thickness over a strike length of 400 to 900m.
The exploration data presented by Zoloto and reviewed by Gustavson supports such a conclusion on the occurrence of gold mineralization at Elvenei. A thorough review of all available previously collected data by Zoloto geologists is required in order to direct a reasonable test of the mineralized system. Several minor instances of Trench Number transposition have been noted. These minor errors will be caught in the review by Zoloto geologists.
20. | RECOMMENDATIONS |
Zoloto acquired the Elvenei license because of the potential for advancing the already discovered precious metal mineralization to a stage where measured and indicated mineral resources are definable. To that end, Zoloto committed a budget to the exploration of the Elvenei gold mineralized system. Table 20-1 documents the budget, stated in Russian roubles and US$ (24.37rbl/US$ ) for the 2007 through 2009 program. This budget was approved by Chukotnedra.
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The drilling, sampling, geophysics and day-to-day operations have been and will be carried out under contract by CJSC Chaunsky.
Table 20-1 2007 to 2009 Elvenei Budget
ELVENEI PROJECT TOTAL ESTIMATED COST OF GEOLOGICAL EXPLORATION WORKS - 2007 to 2009
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Actual cost of work carried out in 2007 on the Elvenei project was 10,631,062 roubles (with VAT), or US$436,236.
20.1 | Exploration Program for 2008 |
The following is a description of the exploration program planned for 2008 by Zoloto. The work program has been designed to test the zone of gold mineralization with drilling, trenching, grab sampling and geophysics (downhole and surface). The description has been paraphrased from a Russian-English translation.
In 2008, the exploration program will consist of geological studies and evaluation of the Elvenei deposit(s) and the peripheral mineralized structures. A re-assessment of the 2007 exploration program, as well as the information on the historical exploration programs carried out by foreign organizations.
Of first priority in 2008, work on Body #1, from trench K-201 south to the vicinity of trench K-209, will concentrate on tracing the Au-bearing structures under a cover of fine-grained sandstones and siltstones, as in 2007. In total it is planned to drill 5 holes on 5 sections with depth ranging from 90 to 100m, totaling 480 m. Ditches and trenches will be excavated, totaling 7835 m3 and 6415 m3of excavation respectively.
As a second priority, on Bodies #1, 1a and 2, 10 holes are planned totaling 1,800m, testing the occurrence of mineralization at depth and in hidden veins.
Types and volumes of prospecting works planned for 2008 are presented in the following Tables 20-2 through 20-5:
Table 20-2 Proposed Drilling for 2008
## | Profile number | Hole number | Design depth, m | Target |
1 | IIp-19 | c-4 | 110 | Studying of parameters of gold mineralization on depth in vein zones of sub-meridional deposition of ore bodies 1 and 1a |
2 | IIp-17 | c-13 | 90 | Studying of parameters of gold mineralization on depth in vein zones of sub-meridional deposition of ore bodies 1 and 1a |
3 | c-14 | 200 | ||
4 | c-15 | 100 | ||
5 | IIp-15 | c-26 | 250 | Opening on depth of zone of vein-like body of breccia and potentially ore-bearing vein zones of ore body1 |
6 | c-25 | 90 | ||
7 | IIp-13 | c-34 | 250 | Studying of parameters of gold mineralization on depth in vein zones of sub-meridional deposition of ore bodies 1 and 2 |
8 | c-36 | 200 | ||
9 | c-37 | 120 | ||
10 | c-35 | 100 | ||
11 | IIp-11 | c-49 | 200 | Studying of parameters of gold mineralization on depthPT1 |
12 | c-48 | 100 | ||
13 | IIp-9 | c-59 | 100 | Studying of parameters of gold mineralization on depthPT1 |
14 | c-58 | 200 | ||
15 | c-60 | 170 | ||
TOTAL on ore field | 2280 |
Hole c-48 will be the first in 2008.
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Table 20-3 List of designed mining-prospecting developments on Elvenei ore field on 2008
## | Profile number | Trench number | Design volume, m/m3 | Target |
1 | IIp-19 | --2 | 33/547 | Opening of vein-like body of breccias and potentially ore-bearing vein zones of an ore body 1 |
2 | --3 | 44/730 | ||
3 | IIp-17 | --3 | 56/928 | Opening of vein-like body of breccias and potentially ore-bearing vein zones of an ore body 1 |
4 | --4 | 33/547 | ||
5 | IIp-15 | --4 | 56/928 | Opening of vein-like body of breccias and potentially ore-bearing vein zones of an ore body1 |
6 | --5 | 56/928 | ||
7 | PTj-5 | 44/3172 | ||
8 | IIp-13 | --3 | 222/3681 | Opening of vein-like body of breccias and potentially ore-bearing vein zones of an ore body 1 |
9 | PTj-3 | 56/4036 | ||
10 | IIp-11 | --4 | 27/448 | Opening of vein-like body of breccias and potentially ore-bearing vein zones of an ore body 1 |
11 | --5 | 33/547 | ||
12 | IIp-9 | --2 | 133/2205 | Opening of vein-like body of breccias and potentially ore-bearing vein zones of an ore body 1 |
13 | IIp-7 | --4 | 33/547 | Opening of vein-like body of breccias and potentially ore-bearing vein zones of an ore body 1 |
14 | PTj-4 | 33/2379 | ||
TOTAL on an ore field | 859/21623 |
Trench --4 33/547 will be first in 2008.
Table 20-4 Construction of roads and drilling platforms
## | Types of works | Unit of measure | Amount of works | Volumes, m3 | |
1 pl. | In total | ||||
1 | Platforms for derrick | platform | 9 | 717,2 | 6455 |
2 | Road for derrick | m | 3500 | 1,14 | 3990 |
TOTAL | 10445 |
Table 20-5 Designed types and volumes of sampling on 2008
# | Type of sampling | Quantity of samples | Weight of sample, kg | Gross weight of samples, kg |
1 | Sampling of core of holes | 2258 | 5 | 11290 |
2 | Channel sampling | 859 | 7,8 | 6700 |
3 | Chip sampling | 26 | 8 | 206 |
Geophysical researches in holes – 7755 m.
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20.2 | Expected results of exploration in 2008 |
The Russian Zoloto staff considers that the expected results of the 2008 program are:
1. | For Body #1, development of mineralization in sub-meridional (N-S) structures under thickness of fine-grained sandstones and siltstones in the form of “blind” veins. | |
2. | For Body #2, exploration is expected to identify mineralization of similar style to that found in Body #1. |
The above program represents a staged approach to defining the physcial form of the ore occurences at Elvenei. Decision points have been defined that will re-direct efforts to other areas if and when the first phase of the exploration program should prove unsuccessful.
Gustavson recommends that Zoloto carry out the following tasks in addition to the drilling, sampling and testing programs proposed:
- Prepare a centralized database and carry-out a detailed data verification program; and
- Implement CIM-compliant resource estimation procedures for sampling, assaying, QA/QC programs and resource estimation. These procedures should be guided by the CIM “Best Practice Guidelines”.
Gustavson considers the exploration program proposed by Zoloto to be appropriate for the project at its current state. The staged exploration program will be conducted in a manner that supports the eventual estimation of NI 43-101 – compliant Mineral Resources (if warranted).
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21. | REFERENCES / BIBLIOGRAPHY | |
21.1 | References with Project Specific Relevance | |
1. | Begunov S.F., Zhuravlev G.F., Larionov Y.S., et al., 1975, Report on a theme 090: “Map of laws of minerals deposits accommodation in territory of activity of Chaunskiy complex prospecting expedition”. | |
2. | Mazenin L.L., Shaporev A.A., Grigorov S.A., Report about work of Middle-Elvenei explorative party of scale 1:10000 for 1967-1969. | |
3. | Zhukov V.A., Zhukova A.I., Gabbasov A.H., Report about geological shooting scale 1:50 000 and searches of gold in pool of Rauchua river (Baranikhinskiy GSO) for 1970-1973. | |
4. | Romanyuk V.I., Nikitin N.P., Report about search and geophysical works carried out on sites Southern and Northern Elvenei deposit of tungsten in 1972-1973. | |
5. | Deparma I.V., Tabolich S.E., Report about general geochemical searches within the limits of central part of Rauchua gold-bearing zone for 1981-1984. | |
6. | Telegin Yu.M., Report about geological restudy of scale 1:50 000 on the area of sheets R-59-121-B-g; G-b,g; R-59-122- -v,g; B-v,g; V,G; R-59-123-V-v; R-59-133- B-b; R-59-134- -a,b v 1987-1992. (Arynpyglyavaamskiy GSO) | |
7. | Zhukov V.A., Field and lab materials of Baranikhinskiy geological-shooting party of scale 1:50 000 for 1970-1971. | |
8. | Telegin Yu.M., Field materials of Arynpyglyavaamskiy GSO for 1987-1992. | |
9. | Tcherepanova I.Yu., Tibilov I.V., 1998, Legend of Anyusk-Caunsk series of the state geological map of the Russian Federation of scale 1:200000 (Edition the second). Explanatory note. Pevek: CJSC “Chaunskoe GGP”, kn.1 – 88 p, kn.2 – 85 p. | |
10. | Temporary norms on carrying out of the preparatory period and designing of geological prospecting works (SVPGO dated 1.09.1988). | |
11. | Temporary rules and specifications of operation account and order of write-off of complexes SSK-59., 1982, VITR . | |
12. | Norms of the charge of coal in divisions SVPGO., 1987, Magadan. | |
13. | Norms of time for processing of materials on computer., 1988, Magadan. | |
14. | Budget quotations on map-publishing, copying and book-binding works, 1984, CMEGEI, Magadan. | |
15. | Collection of temporary norms on designing of geophysical works., 1988, Magadan, SVPGO, MPGEI, 30 p. | |
16. | Control system of a labour safety in the organizations and at the enterprises of the Ministry of geology of the USSR (SUOT)., 1988, Ministry of geology of the USSR, Pevek, 112 p. | |
17. | Wolf, L.W., McCaleb, R.C., Stone, D.B., Brocher, T.M., Fujita, K., and Klemperer, S.L., 2002, Crustal structure across the Bering Strait, Alaska: Onshore recordings of a marine seismic survey,inMiller, E.L., Grantz, A., and Klemperer, S.L., eds., Tectonic Evolution of the Bering Shelf – Chukchi Sea – Arctic Margin and Adjacent Land Masses: Boulder, Colorado, Geological Society of America Special Paper 360, p. 25-37. | |
18. | Miller, E.L., Gelman, M., Parfenov, L., and Hourigan, J., 2002, Tectonic setting of Mesozoic magmatism: A comparison between northeastern Russian and the North |
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American Cordillera,in Miller, E.L., Grantz, A., and Klemperer, S.L., eds., Tectonic Evolution of the Bering Shelf – Chukchi Sea – Arctic Margin and Adjacent Land Masses: Boulder, Colorado, Geological Society of America Special Paper 360, p. 313-332.
21.2 | Selected General Publications | |
1. | Volkov A.S., Dolgov. B.P., 1982, Rotary drilling of prospecting holes. Moscow, 342 p. | |
2. | Instruction on geomagnetic., 1981, Leningrad, Subsoil, 262 p. | |
3. | Instruction on electroprospecting., 1984, Leningrad, Subsoil, 351 p. | |
4. | Instruction on designing and estimates for prospecting works., 1993, Moscow, State Committee on Geology and Subsoil Resources, 82 p. | |
5. | Instruction on topographical-geodetic supply of geological prospecting works. 1984, Moscow, 216 p. | |
6. | Kudryashov B.B., Yakovlev A.M., 1983, Drilling of holes in frozen rocks., Moscow, Subsoil, 286 p. | |
7. | Kazhdan A.B., 1985, Searches and prospecting of deposits of minerals. Manufacture of geological-prospecting works. Moscow, Subsoil, 288 p. | |
8. | Kreiter V.M., 1969, Searches and prospecting of deposits of minerals. Moscow, Subsoil, 292 p. | |
9. | Polyakov G.D., Bulgakov E.S., Shumov L.A., 1983, Designing, calculation and operation of drilling installations. Moscow, Subsoil, 318 p. | |
10. | Safety rules at geological prospecting works., 1991, Moscow, Subsoil, 309 p. | |
11. | Fire prevention rules for prospecting organizations and enterprises., 1979, Mingeo USSR., 126 p. | |
12. | Directory on mining-ore business., 1961, Moscow. | |
13. | Directories of budget norms, releases 1-11., 1992, Moscow, Viems. | |
14. | 14. Addition to the collection of budget norms for prospecting works (SSN-92), rel. 1, parts 1-4, 1996, Moscow. | |
15. | Temporary budget norms of labour and material expenses on computer support GSR- 200, 2001, 48 p. | |
16. | Methodical recommendations on account, storage and transfer of fund information on machine carriers., 1996, Moscow, 52 p. | |
17. | Collection of explanations, additions and changes, Release 2, 2000, Moscow. | |
18. | Technical instruction on carrying out of geophysical researches in holes., 1985, Moscow, Subsoil. | |
19. | Umitbaev R.V., 1986, Okhotsko-Chaunsk metallogenic province. Moscow, Subsoil, 286 p. |
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22. | DATE AND SIGNATURE PAGE |
William J. Crowl |
Vice President, Mining |
Gustavson Associates, LLC |
5757 Central Avenue, Suite D |
Boulder, Colorado 80301 |
Telephone: 303-443-2209 |
Facsimile: 303-443-3156 |
Email: wcrowl@gustavson.com |
CERTIFICATE of AUTHOR |
I, William J. Crowl do hereby certify that:
1. | I am currently employed as Vice President, Mining by Gustavson Associates, LLC at: | |
5757 Central Avenue | ||
2. | I am a graduate of the University of Southern California with a Bachelor of Arts in Earth Science (1968), and a MSc. in Economic Geology from the University of Arizona in 1979, and have practiced my profession continuously since 1973. | |
3. | I am a registered Professional Geologist in the State of Oregon (G573) and am a member in good standing of the Australian Institute of Mining and Metallurgy and the Society of Economic Geologists. | |
4. | I have worked as a geologist for a total of 35 years since my graduation from university; as a graduate student, as an employee of a major mining company, a major engineering company, and as a consulting geologist. | |
5. | I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101. | |
6. | I am responsible for the preparation of the technical report titled “NI 43-101 TECHNICAL REPORT ON THE ELVENEI GOLD PROJECT, CHUKOTKA AUTONOMOUS OKRUG, RUSSIA”, dated February 9, 2008 (the “Technical Report”). | |
7. | A personal visit of the subject property was conducted on July 25, 2007. | |
8. | I have personally completed an independent review and analysis of the data and written information contained in this Technical Report. | |
9. | I have not had prior involvement with Zoloto Resources Ltd. on the property that is the subject of this Technical Report. |
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10. | I am not aware of any material fact or material change with respect to the subject matter of the Technical Report that is not reflected in the Technical Report, the omission to disclose which makes the Technical Report misleading. | |
11. | I do not hold, nor do I expect to receive, any securities or any other interest in any corporate entity, private or public, with interests in the properties that are the subject of this report or in the properties themselves, nor do I have any business relationship with any such entity apart from a professional consulting relationship with the issuer, nor to the best of my knowledge do I have any interest in any securities of any corporate entity with property within a two (2) kilometer distance of any of the subject properties. | |
12. | I have read National Instrument 43-101 and Form 43-101, and the Technical Report has been prepared in compliance with that instrument and form. | |
13. | I consent to the filing of the Technical Report with any stock exchanges or other regulatory authority and any publication by them, including electronic publication in the public company files on the websites accessible by the public, of the Technical Report. |
Dated this February 9, 2008.
![]() | |
Signature of Qualified Person |
“William J. Crowl” | . | |
Print name of Qualified Person |
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23. | ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ONDEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES |
The Elvenei project is neither a development property nor a production property.
24. | ILLUSTRATIONS |
All of the illustrations used in the preparation of this report appear in each of their respective sections.
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APPENDIX A
Elvenei License
Scan of Russian License
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