GOLDBANKS PROPERTY, PERSHING COUNTY, NEVADA
Summary: 25 February, 2008
Desert Gold Ventures, Inc. is currently exploring the Goldbanks gold property located in northwestern Nevada. Goldbanks is a high-level epithermal gold system located in a historic mercury district and was principally explored as a large bulk-minable deposit by Kinross Gold Corporation, and its predecessor, until the late 1990’s. The Kinross work defined a large, low-grade resource containing 166 Mt @ 0.0154 oz/t Au and 0.045 oz/t Ag. An updated ore model and resource calculations based upon a higher average gold price has defined a resource of 28.3 Mt @ 0.020 oz/t Au (556,700 oz Au).
The gold mineralization is largely oxidized and is contained in both Tertiary volcanoclastic sediments and pre-Tertiary sedimentary rocks. During exploration of the bulk-minable mineralization, high-grade, quartz vein- and stockwork-type mineralization was intermittently encountered in the dominantly vertical rotary drilling program. Kinross targeted some the high-grade style of gold mineralization late in their exploration effort, but it was Newmont Gold in 2000 that targeted the high-grade vein zones and successfully intercepted several high-grade intervals (up to 5.5’@ 1.07 oz Au/t) in the 11 diamond drill holes they completed. Based upon the documented high-grade gold intercepts and the large low-grade resource, Desert Gold Ventures, Inc. (hereinafter DGV) optioned the property from Kinross in 2004 and began geologic studies to target the high-grade veins, up-grade the known resource, and detailed surface geochemistry. An initial drilling program to test some of the high-grade intercepts was curtailed due to an abnormally heavy winter. The subsequent exploration focus shifted to a systematic geologic and geochemical evaluation of the property and a detailed re-evaluation of all previous drilling.
Geologic mapping and geochemical sampling have defined two large new areas of highly anomalous surface geochemistry in association with moderate to intense hydrothermal alteration and pervasive silicification and/or quartz veining. These areas, designated as the Northern Anomaly and the KW-West Anomaly, contain highly anomalous gold in rocks (up to >15 ppm Au) and soils (up to >300 ppb Au) in individual samples associated with highly anomalous As, Sb, Hg, etc.
The 2008 exploration effort by DGV will be a drilling-intensive program. Both the Northern and KW-West Anomalies will be a focus of significant exploration drilling (~30,000’). In addition, an extensive amount of exploration drilling (~30,000’) will also be devoted to further definition of the high-grade vein zones; expanding the limits of known mineralization; and attempt to define the feeder structures for the two resource areas. In addition, the surface exploration program is slated to complete the evaluation of several other promising areas exhibiting significant hydrothermal alteration and anomalous geochemistry.
Introduction and History
The Goldbanks property is located in Pershing County, Nevada and is situated approximately 35 miles south of Winnemucca in the Goldbanks Hills along the east flank of the East Range. Mercury mineralization was discovered in 1913 and was exploited on an intermittent basis at the Nevada Quicksilver Mine from 1914-1969. Gold exploration conducted by Bear Creek Exploration on a large block of claims from 1979-85. In 1986, G.L. Grauberger staked 300 claims centered around the Nevada Quicksilver Mine and after an initial successful drilling program in 1988, proceeded to drill over 500 holes before entering into a 50/50 joint venture with Kinross Gold Corporation in May, 1995; eventually selling his interest to Kinross in 1997; but reserving a 3.5%NSR on future production.
Desert Gold Ventures currently holds the property under the terms of an Exploration License and Option Agreement between Kinross Goldbanks Mining Company (a subsidiary of Kinross Gold Corporation) of Toronto, Ontario and DGV Inc. of Vancouver, British Columbia, Canada, dated
April 29th, 2004. Under the terms of the amended Agreement DGV, the project operator, is required to complete an aggregate of $5,000,000 in staged exploration expenditures and issue up to 400,000 shares in staged payments on or before December 31, 2008 in order to earn a 50% interest in the property.
Land
The original Goldbanks property optioned from Kinross included a total of 501 lode mining claims covering 10,020 acres. It became obvious as the geologic mapping and reconnaissance progressed on the property that a large area bordering the northwest and northern boundaries of the original property was identified as exhibiting extensively developed alteration, abundant epithermal quartz veining, and highly anomalous gold concentrations. DGV located a total of 243 new lode claims in 2005-2006 to cover the new anomalous area and expanding the property package to 745 unpatented lode mining claims covering approximately 14,888 acres in T30N, R38E, and T31N, R38E.
Geology
The Goldbanks property is on the southern extension of the Getchell trend, a northeast-trending linear alignment of large gold deposits and metallization. The property also is situated on a regional, arcuate, NS-trending, magnetic anomaly as defined by the USGS and designated as Northern Nevada Rift (Central Zone) that is sub-parallel and genetically related to the Northern Nevada Rift. The property is underlain by a pre-Tertiary basement of Pennsylvanian-Permian Havallah Sequence rocks comprised of chert, argillite, quartzite, and greenstone; the upper plate sequence of the Golconda Allochthon. These allochthonous rocks are unconformably overlain and intruded by the Triassic-age Koipato volcanic sequence. A Triassic clastic and carbonate section was deposited onto both the Havallah and Koipato Sequences at Goldbanks. The Tertiary section is comprised of volcanic and volcanoclastic rocks and was, in part, deposited into a rapidly subsiding Miocene basin (and/or graben) that covers a large portion of the Goldbanks property. Previous workers at Goldbanks divided the Tertiary age, basin-fill sediments into at least seven lithologically distinct stratigraphic units that are capped by regionally extensive basalt flows.
The property geology is very complex structurally, beginning with the emplacement of the Havallah Sequence rocks on the Golconda allochthon during the Permian-Triassic Sonoma Orogeny resulting in folded and is tectonically disrupted rocks along imbricate low-angle faults that eliminate and/or repeat lithologic units. High-angle faulting is intensely developed and includes north-northwest, northeast, west-northwest, and east-west orientations and these faults commonly juxtapose units into complex contact relationships. The surface expressions of the fault zones are commonly subtle, although tectonic brecciation and locally extensive zones of fracturing occur on outcrop scale in the pre-Tertiary rocks.
Hydrothermal Alteration and Mineralization
Hydrothermal alteration is widespread and has affected all pre-Tertiary rock units and Tertiary rocks at the opalite level and below. The alteration is of locally variable intensity, and is comprised replacement silicification, sericitic and argillic clay alteration, pyritization (typically oxidized), and epithermal quartz veining. Silicification is the most common alteration type and is a widespread feature that is closely associated with sericitic alteration and lesser argillic (illite and illite-smectite) clays. Alteration is more widespread and intensely developed than previously documented and typically exhibits a close spatial relationship to individual faults and fault zones.
Mercury Mineralization
Historic mercury mining occurred at the Goldbanks Quicksilver mine that partially overlies the main gold zone. The opalite-type mercury mineralization occurs as exposed zones of siliceous replacement mineralization comprised of cinnabar-bearing silica developed in volcaniclastic sediments deposited in a lacustrine environment and as sub-aerial sinter deposits (largely removed by erosion). Much of the mercury-bearing silica occurs as microcrystalline and locally crystallized quartz and/or chalcedony; locally, opal-lined vugs and open spaces also occur. The mineralogy of the mercury mineralization is comprised of cinnabar-lined fractures and open spaces, siliceous breccias infillings, and as disseminated cinnabar. Mineralization occurs as two, thin, sub-parallel, tabular zones consisting of an upper zone (2 to 7’) and lower zone (~2 feet) separated by about 2 to 3 feet of gangue. Previous underground and open pit mining efforts exploited these zones with ore grades of ≥1% mercury.
Gold Mineralization
The Goldbanks property is one of a number of Miocene-age gold deposits associated with bi-modal volcanism related to a regional-scale, NS-trending magnetic anomaly and structural zone related to the Northern Nevada rift. Numerous precious metal deposits are associated with Miocene, rift-related volcanism in Nevada, including several other hot springs-style gold deposits such as Midas, Ivanhoe, and Silver Cloud whose geologic environments is very similar to that of Goldbanks. The Goldbanks exploration model is the nearly identical to these deposits with high-grade gold-bearing feeder structures occurring below the hot spring-related mercury and/or sporadic gold mineralization.
Epithermal-style quartz veins are exposed at the surface as a common feature spatially associated with the KW Zone and as vein swarms that form a halo that extends up to a mile around the KW Zone. This style of siliceous mineralization comprises the large, low-grade mass of siliceous gold mineralization that comprises both the Main and KW Zones in the subsurface. The siliceous zones are comprised of weak to strong silica replacements containing variable developed of crosscutting quartz stockworks and massive quartz veins to vein-filled breccia zones. The sporadic occurrence of high-grade gold mineralization is associated with epithermal quartz veining and siliceous tectonic and hydrothermal breccias. Similar veins were intersected by drill holes in the Main and KW Zones and contain high gold grades (0.X to ≥1 oz/t Au). The veins exhibit textural features common to those in other Tertiary precious metals epithermal districts in Nevada and California. The individual veins are commonly measured in inches and 10’s of inches (to >3 feet) wide while vein zones can attain widths to >10 feet. Veins are typically comprised of fine-grained to crystalline quartz and quartz+chalcedonic silica mixtures and commonly exhibit multiple generations of silica deposition forming intricately banded veins. Rhythmic banding occurs as symmetrical layers on either side of an open center lined with crystallized quartz (with or without FeOx). Well-formed boiling textures (quartz replacing lamellar calcite) are common as are crustiform, comb and cockade textures and are indicative of vein formation above the principal boiling zone. Veins exhibit a low (1-3%; up to 5%) sulfide content and occurs principally as pyrite with traces of arsenopyrite and marcasite. The shallow erosional level suggests that potential exists for bonanza-style gold mineralization to occur deeper in the Goldbanks hydrothermal system.
Style and Physical Controls of Gold Mineralization
Two styles of epithermal gold mineralization occur on the Goldbanks property: low-grade, large-tonnage siliceous replacement (including quartz veinlet stockworks) type and high-grade, small-tonnage (?), structurally-controlled mineralization associated with epithermal veins and vein zones. Both styles of gold deposition are related to the Tertiary, high-level, epithermal-hot spring system that deposited mercury mineralization at the surface (and gold mineralization at depth). The gold mineralization occurs in variably silicified heterolithic breccias and sediments that contain varying amounts of argillic clays, quartz veining, and finely disseminated hypogene sulfide minerals. This large low-grade mass of siliceous gold mineralization contains sporadic, high-grade gold mineralization associated with banded, epithermal, steeply-dipping quartz veining and siliceous hydrothermal breccia zones. Free gold particles ranging in size from <10 to ~350m occur in these veins and breccias, with most of the gold grains are finer than 150m. Gold mineralization occurs throughout the Tertiary section although it is most prevalent in the heterolithic breccia unit. In general, however, gold deposition seems to favor the Tertiary-pre-Tertiary basement contact where the most continuous intercepts and/or those with the best overall gold grades typically occur within ±50-100’ of the contact (above and below) and along dike-sill contacts. In addition, a large proportion of intercepts containing ≥0.20 oz Au/t occur within 50’ of the basement contact as do the greatest concentrations of quartz veining.
Mineralization (both Hg and Au) is spatially associated with a north-trending Tertiary (mid-Miocene) volcano-tectonic graben formed within the pre-Tertiary basement rocks during the mid-Tertiary. Initiation of graben development and subsidence is interpreted to roughly coincide with Basin and Range faulting which began approximately 16 million years ago. Graben development is believed to have occurred along high-angle, northerly-trending, normal faults associated with contemporaneous infillings of Tertiary terrigenous clastic sediment, volcanoclastic, volcanic rocks, and carbonaceous mudstone deposited in a sub-aqueous environment. Subsurface data indicates that the graben is wedge-shaped and daylights to the north. Tertiary age, silicic to intermediate composition, dikes intruded the wall rocks and the basin-filling sediments and were presumably fed by a larger magma reservoir at depth. Heat resulting from this event drove the mid-Miocene hydrothermal convection system, facilitating the ascent of hydrothermal fluids along high-angle faults and the faulted basin margins resulting in the hydrothermal system deposited gold mineralization in the basin-filling sediments located below a near-surface cap of mercury-bearing opalite and sub-aerial sinter deposits. It has been suggested that this basin is a maar feature resulting from volcanic activity and diatreme explosions although the largely concealed nature precludes establishing a definitive genetic origin of the feature.
Geochemistry
The geochemical signature of the Goldbanks gold mineralization typically consists of slightly too high elevated concentrations of gold, silver, arsenic, antimony and mercury. The surface expression of the Main Zone is largely dominated by highly anomalous mercury associated with opalite and locally anomalous arsenic and trace gold. It appears as if the tabular mudstone and clay-rich volcanoclastic sediments that overlies the gold mineralization was a semi-impervious barrier to the ascending gold-bearing silica-rich fluids. As a result, the Main Zone was essentially a blind zone of gold mineralization with little indication of surface gold anomalies. In contrast, the pre-Tertiary rocks surrounding the KW Zone contain moderate to highly anomalous Au, As, Hg, Sb, etc. geochemistry in both soils and rocks.
Geochemical sampling and geologic mapping have identified and defined two large and significant surface anomalies containing highly anomalous gold. These areas, the Northern and the KW-West Anomalies, contain highly anomalous gold in rocks (to >15 ppm Au) and soils (to >300 ppb Au) in individual samples associated with highly anomalous As, Sb, Hg, etc., and will be drilled in 2008.
Principal Resource Areas
The Tertiary graben is a principal focus of hydrothermal alteration and drill-defined gold mineralization in the Goldbanks district. Two distinct zones of gold mineralization have been drill-defined to date; the Main Zone and the smaller KW Zone located approximately 2.5 miles to the north.
Main Zone: The Main Zone is a tabular, west-dipping block of gold mineralization partially overlain by the mercury deposits and under Squaw Butte (a prominent topographic feature). This mineralized block is approximately 5,000-feet in a north-south direction and 1,000-feet in an east-west direction and is up to 350-feet thick in the western part of the deposit. The top of the mineralized zone occurs beneath a Tertiary mudstone unit at depths ranging from 150 to 250 feet. The Main Zone accounts for the majority of the known mineralization. Within the blanket of low-grade material are erratic occurrences of gold in quartz veins, vein zones, and quartz-cemented brecciated zones that range in grade from 0.1 to 8.2 oz Au/ton.
KW Zone: The KW Zone is best described as a zone of structurally-controlled gold mineralization. Northwest-trending structural zones appear to be the primary structural controls of gold mineralization developed within Tertiary breccias and pre-Tertiary basement rocks. Pipe-like mineralized zones formed at intersections between the northwest- and the northeast-trending fault-fractures zones.
Calculated Resource: In 1998, KGC completed a mineral inventory study that defined 166 million tons of 0.48 ppm Au and 1.40 ppm Ag. This resource does not conform to the CIM Standards on Mineral Resources and Reserves Definitions and Guidelines therefore does not meet NI 43-101 standards.
In 2006, Mine Development Associates completed an estimate of the mineral resources of the Main and KW Zones for the Goldbanks Project. Table 1.1 lists the gold resources at a cutoff grade of 0.010 oz Au/ton for the oxide resources and 0.030 oz Au/ton for the sulfide resources.
Table 1.1
2008 Exploration Program
Surface Exploration: Geochemical sampling to date has provided ample verification that the Northern Anomaly contains substantial levels of gold mineralization and constitutes a major gold and associated trace element anomaly. The soil survey will be completed in an attempt to define the boundaries of the anomaly. This soil sampling will be done in conjunction with rock sampling and geologic mapping in the areas discussed above.
Drilling Program: Two separate drilling programs are planned for 2008 and include: 1.) core and reverse circulation drilling to test the high-grade target areas defined in the KW and Main Zone areas, and 2.) reverse circulation exploration drilling to test the surface geochemical anomalies (Northern and KW-West Anomalies). The start date of the drilling program is anticipated to be April, 2008 as is dependent upon the approval of the Plan of Operations by the BLM and by drill rig availability. Each target type is described briefly below.
High-grade Targets and Expansion of Resource Areas: A limited drilling program is planned to test the high-grade intercepts encountered by Kinross Gold and Newmont in the KW and Main Zones. Additional drilling will be devoted to expanding the resource areas and testing the root zones of the resource areas for the principal feeder structures. It is anticipated that 25,000 to 30,000 feet of diamond core drilling will be required to initially test these targets resulting from detailed studies of the KW and Main Zones.
Surface Geochemical Anomalies: The Northern Anomaly lies in northwestern portion of the Goldbanks property and is characterized by highly anomalous gold and trace element rock and soil anomalies associated with intense hydrothermal alteration. The KW-West Anomaly is a smaller but incompletely defined area and will be a focus of ongoing geochemical sampling. Under the currently proposed Plan of Operations we can drill anywhere within these anomaly and currently have >100 drill hole locations sited within the Operating Plan. Drill hole locations were selected based upon preliminary rock and soil geochemical sampling and geologic mapping. The initial drilling is planned to be all reverse circulation. We anticipate that at least 25,000-30,000 feet of drilling will be completed in a number of phases.
