Zinco Mining Corporation - Cuale

Bramador La Mina Desmoronado Aranjuez Technical Papers

Volcanogenic massive sulfide (VMS) deposits in the Cuale District were first discovered in 1804 by two indigenous people looking for flint in the area of Descumbriadora Mountain. One of them showed some massive sulfide samples to the Spaniards in Talpa de Allende, and the earliest known claim in the District was registered by the Hernandez family on the east flank of Canton Mountain in 1824. The mines were intermittently worked by the family for the next 30 years. When the owners died, the lawyer hired to settle the estate somehow acquired the mining licenses, and formed the Union en Cuale Company. Overall production between 1824 and 1900 is estimated at 250 000 tons of selected ore, with grades of 900 to 1000 g/t Ag. The mines were closed down in 1900 due to low silver prices. Since then, several companies including Esperanza Co. (1918-1922), Peñoles (1936-1942) and Eagle Pitcher (1954-1959) have attempted to re-open the old workings. In 1965, Compañia Fresnillo (a subsidiary of Peñoles), claimed the area and initiated a major drilling campaign between 1972 and 1976 resulting in sufficient tonnage to proceed to production. Mining operations commenced in 1980's by Zimapan for silver, gold, lead, zinc and copper from near surface, open-pittable reserves. Between 1980 and 1987, Zimapan S.A. de C.V., the local mining branch of Industrias Peñoles, mined about 1.3 million tons of ore grading 0.8 g/t Au, 204 g/t Ag, 1.4% Pb, 5.4% Zn, and 0.4% Cu from the Cuale District (Giles and Garcia, 2000). The principal orebodies mined by Peñoles were La Coloradita, Los Chivos, Socorredora, Naricero, Refugio, San Nicolas, Jesus Maria and Grandeza.

Zinco Mining Corporation (ZIM) acquired about 70% of the Cuale VMS camp by staking of the El Maple and La Diana concessions in 1998, and the Canton concession in 2005. The Company now holds the mining rights to past producers Naricero, San Nicolas, Refugio and Jesus Maria, as well as the unexploited Patrocinio, San Juan and San Rafael occurrences.

In 2003, Bissig mapped the central portion of the Cuale District at 1:7500 as part of a collaborative research effort between the Mineral Deposits Unit of British Columbia and Zinco Mining Corporation. Two distinct rhyolites are now recognized in the District: an older, quartz and feldspar porphyritic rhyolite with radiometric age determinations of 159.2 +/- 2.2 Ma and 157.2 +/- 0.5 Ma, and a younger, weakly porphyritic to aphyric rhyolite with radiometric age determinations of 152.5 +/- 1.5 Ma and 154.0 +/- 0.9 Ma (Bissig et. al, 2005). Mineralization occurs in both rhyolites, but syn-sedimentary massive sulfides preferentially accumulate in black shale basins both intercalated with and cross-cut by the younger rhyolite unit. Locally, rhyolite lapilli have been re-worked to "conglomerates", and patch reef limestones also occur in the volcanic pile.

Geologically, the Cuale VMS camp shares many similarities with the Eskay Creek gold-VMS deposit in British Columbia (Sherlock et al., 1999): (i) the host rock ages are similar, (ii) both deposits formed in shallow water, and (iii) both districts are characterized by high precious metal values. Shallow water depths allowed for boiling of the mineralizing fluid, which is an effective mechanism for precipitation of gold and silver.

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Geologic map of the Cuale District (Bissig et. al, 2005.). Cross-section locations in PINK lines.

In early 2007, ZIM completed a soil geochemical survey of specific targets identified by the 2006 airborne geophysical survey. At Cuale, the survey was centered on resistivity lows that correlate with black shale, the main host-rock for precious-metal rich massive sulfide. The survey has clearly defined several geochemical anomalies beyond the known mines, workings and drill holes. Gold and silver values are particularly high between Jesus Maria, Naricero, San Juan and San Nicolas.

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Contour map of lead geochemistry in soil samples

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Contour map of zinc geochemistry in soil samples

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Contour map of copper geochemistry in soil samples

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Contour map of silver geochemistry in soil samples

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Contour map of gold geochemistry in soil samples Naricero

The Naricero deposit was the largest past producer of the Cuale District. Historically mined from underground, in the 1980's Peñoles produced 782 544 tonnes of 0.34 g/t Au, 157 g/t Ag, 1.05% Pb, 2.85% Zn and 0.06% Cu from an open pit about 200 meters long, 125 meters wide and about 50 m deep from a plateau above the Arroyo Corazon canyon.

The deposit is immediately underlain by a quartz-pyrite stockwork. A seven meter wide chip-channel sample across the pipe contained 180 ppm Zn and 3.1 ppm Ag with anomalous Sb and Bi (sample 19794). Peripheral to and below the quartz-pyrite zone, the rocks grade into chlorite-altered rhyolite hyaloclastite breccia. These rocks are characterized by high background copper values on the order of 200-400 ppm Cu (e.g. samples 24081 and 24078).

Two horizons of massive sulfide mineralization are exposed in the open pit. The lowermost horizon is exposed in a pillar near the edge of the Corazon canyon. Near this locality, the average result of two historic drill hole intersections was 363.5 g/t Ag, 0.69 g/t Au, 0.18% Cu, 1.5% Pb and 4.64% Zn across 6.9 meters (Holes 19C and 22). Surface chip channel samples confirm the overall tenor of the mineralization. Bedding measurements of the mineralized horizon strike between 208º and 214º, and dip 18º-32º NW. Based on the cross-section of Holes 19C and 22, the average dip is estimated at 23º NW. The open pit bottoms out at 1860 meters elevation, well above down-dip projection of the Lower Horizon.

The hangingwall to the Upper Horizon is at least partly exposed in the central part of the pit wall. Chip-channel sampling across the hanging wall yielded an average result of 80.4 g/t Ag, 0.5 g/t Au, 0.02% Cu, 0.5% Pb and 1.4% Zn across 19.1 m (samples 20549-20557). Next to this channel cut, there is a collapsed adit with massive sulfide boulders near the entrance. A grab sample of the massive sulfide contains 457 g/t Ag, 0.33 g/t Au, 20.4% Zn, 6.8% Pb and 0.17% Cu (sample 19776). The nearest drill hole is Hole 23 which cut 3.3 meters of 500 g/t Ag, 0.94 g/t Au, 18.76% Zn, 3.08% Pb and 0.37% Cu. The down-dip projection of the drill hole intersection projects 3 to 5 meters below the adit, assuming a dip of 23º.

To define the Naricero deposit, Peñoles drilled 5036 meters in 96 holes, and almost all of these tested the Upper Horizon. Of these holes, 11 are longer than 100 meters, and the longest is 196 m. Partial geochemical results are available for 10 holes.

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View of Naricero from San Juan (looking west). Below the pit, there is a zone of yellow-weathering quartz-pyrite stockwork veining about 75 meters wide.

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Chlorite-altered rhyolite hyaloclastite breccia in the Arroyo Corazon. These rocks carry about 3% disseminated sulfides, and low metal values. A sample from this locality contains 196 ppm Cu and 168 ppm Zn across 2 m (sample 24078). Soil samples overlying chlorite alteration carry similar copper values.

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View of the Lower Naricero Horizon where it outcrops on surface. The average result of two samples across this zone is 346 g/t Ag, 24.1% Zn, 5.5% Pb and 1.7 g/t Au (samples 15943 and 20538). Sulfides consist of fine grained, stratiform sphalerite, galena, pyrite and chalcopyrite with minor tetrahedrite intercalated with black argillite.

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Fig. 4. Using a rope, 19.1 meters of chip-channel sampling were completed across the hangingwall of the Upper Horizon. The average result of samples 20549 to 20557 was 80.4 g/t Ag, 0.15 g/t Au, 0.02% Cu, 0.5% Pb and 1.4% Zn across 19.1 m

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Fig 5. Photo of silicified tuff-sandstone beds with disseminated sulfides in the hangingwall to the Upper Horizon. Sample 20558, cut across 1 meter, carries 185 g/t Ag, 3.6% Zn, 1.1% Pb, 0.29 g/t Au and 0.05% Cu.

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Massive sulfide from the adit near Hole 23. A grab sample of this ore contains 457 g/t Ag, 0.33 g/t Au, 20.4% Zn, 6.8% Pb and 0.17% Cu (sample 19776).

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Cross section showing historic results from the Upper and Lower Horizons. San Nicolas

The San Nicolas deposit is located about 400 meters southwest of Naricero, and consists of two adits and several open cuts on a steep south-facing slope. Historic production in the 1980's totaled 79 965 tonnes of 0.19 g/t Au, 121 g/t Ag, 1.57% Pb, 3.18% Zn and 0.136% Cu.

The deposit is underlain by a deep green-black, chlorite altered porphyritic rhyolite tuff. The chlorite alteration is pervasive, and occurs with up to 5% disseminated euhedral pyrite. Samples of the alteration contain anomalous base metal values. The best result from the alteration pipe was 1125 ppm Cu, 260 ppm Pb, 562 ppm Zn, 2 ppm Ag and 19.46% Fe across 2.5m (sample 19790).

Massive sulfide mineralization is exposed in the bottom of the open pit. The ore horizon consists of sericite-chlorite schist intercalated with hydrothermal (?) Fe-carbonate. A continuous chip-channel sample across the zone yielded average results of 0.3% Cu, 2.5% Pb, 3.8% Zn and 310 g/t Ag across 14.5 meters (samples 19781-19785). East and south of the main horizon (in the proximal footwall), a zone of quartz-sericite altered rhyolite with disseminated sulfide yielded results of 1.7% Cu, 1.05% Pb, 0.01% Zn and 17 g/t Ag across 5 meters. Finally, a 2 ton float boulder of massive sulfide in the in the creek below the pit contains 1.1% Cu, 1.5% Pb, 47.7% Zn, 193.9 g/t Ag and 0.32 g/t Au (sample 19787).

Bedding measurements from the roadcut in the footwall, and from roadcuts north of the pit show that the sedimentary formations hosting San Nicolas Horizon strike 270º-300º and dip 25º-40º to the northeast, with the dip shallowing to the northeast.

Soil geochemistry clearly shows the geochemical zoning at San Nicolas. Soils overlying the chlorite-altered footwall contain markedly anomalous copper values ranging from 428 to 163 ppm Cu over a strike length of more than 400 meters below the San Nicolas Pit. Zinc geochemistry is subdued in the chlorite-altered rhyolite footwall, but markedly anomalous in the sediments above the footwall, with values ranging from 298 to 3272 ppm Zn. Zinc geochemistry in soil is moderately anomalous to the northeast, above the projected down-dip extension of the San Nicolas Horizon, and co-incident with the airborne resistivity low. The geochemical vector clearly implies that "tops" of the hydrothermal system lie to the northeast.

Peñoles drilled 1696 meters in 30 holes to test the San Nicolas deposit. Most holes were collared between 1880 meters and 1780 meters elevation, and 5 holes were longer than 100 m. It doesn't appear that the longer holes were positioned to test the geometry of San Nicolas implied by ZIM's geologist. Additional drilling is planned.

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View of the San Nicolas Pit from San Juan. The arroyo left (southwest) of the mine is a major fault that is marked by chlorite alteration.

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View of the chloritic footwall below the San Nicolas production adits. The host rocks are porphyritic rhyolite tuffs that have been pervasively altered to blue-green and even black chlorite with disseminated pyrite cubes. Iron-oxyhyroxide precipitates mark the mouth of the adit.

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Photo of mineralization in the bottom of the open pit. Sample 15945 contains 0.81% Cu, 17.4% Pb, 32.2% Zn, 136 g/t Ag as well as anomalous Cd, Sb, Bi and Hg.

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Cross section of the San Nicolas deposit showing projection of proposed holes SN 1 and SN 2. Jese Maria-Patrocinio

Jesus Maria was developed as an open pit immediately down-dip of a historic adit. A chip-channel sample across weathered saprolite near the collar of the adit yielded precious metal values of 1.02 g/t Au and 131 g/t Ag across 10 meters (19798). Past production figures for Jesus Maria are 43,000 tonnes of 0.34 g/t Au, 182 g/t Ag, 1.47% Pb, 3.35% Zn and 0.24% Zn. A grab sample of massive sulfide from the bottom of the pit carries 0.62 g/t Au, 98.3 g/t Ag, 0.4% Cu, 10.78% Pb and 23.83% Zn (sample 19787).

At the Cuale camp, some of the best precious metal results in the recently completed soil survey have been returned from Jesus Maria and Patrocino. Samples taken across the horizon define a contiguous geochemical anomaly over 600 meters long, and 150 meters wide comprised of 24 samples in 5 lines 100 meters apart with metal values as high as 3207.5 ppb Au and more than 100 ppm Ag, as well as high concentrations of Pb, Zn, Cu, Hg, Sb and As. The anomaly extends well beyond the existing workings and drill holes.

Bedding measurements show that the sulfides were stripped off a dip-slope oriented 110º-120º/50º SW. The dip reverses to 45°NE south of Patrocinio. It appears that Peñoles took only the near-surface part of the Jesus Maria lens where it was in a favourable orientation for an open-pit mine.

A total of 17 holes were drilled in the Jesus Maria area. Most of these most were less than 50 meters long, and drilled sub-parallel to the strike of the lens. The best result available from the drilling is Hole 403, which cut 15.6 meters of 0.47 g/t Au, 235 g/t Ag, 1.15% Cu, 1.18% Pb and 2.51% Zn. The hole was only 16 meters long, and bottomed out in mineralization. Five exploration holes drilled down-dip of Jesus Maria were all about 100 meters long, and were too short to test the moderately dipping horizon.

Patrocinio was tested with 11 short holes, all about 50 meters deep. Data for four of these holes are available. The best results are from Hole 417, where two mineralized intervals were intersected. The uppermost intersection returned values of 15.72 g/t Au, 2845 g/t Ag, 0.12% Cu, 1.67% Pb and 1.61% Zn across 2.98 m. The second interval was 4.07 g/t Au, 791 g/t Ag, 0.13% Cu, 1.61% Pb and 4.75% Zn across 4.1 meters. The cross section implies that Patrocinio sits structurally above the Jesus Maria horizon, and is closely related to sediments intercalated with (weakly porphyritic) QFP flows (Fig. 2).

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San Juan

The best silver geochemistry on ZIM's Property comes from two soil lines that cross the San Juan occurrence. Two lines spaced 100 meters apart define an anomaly of more than 5 ppm silver that is about 200 meters long, and open to the west in an area of steep topography. The mineralization consists of disseminated galena and sphalerite in silicified rhyolite with cockscomb quartz veinlets. A grab sample of these rocks contains 1.1% Pb, 0.6% Zn and 343 g/t Ag as well as 622 ppm Sb, 1476 ppm As and 230 ppb Au (sample 24085). Drill testing is warranted to better define how the silver occurs.