Professional Documents
Culture Documents
TABLE OF CONTENTS
LIST OF TABLES
10-1 Significant zinc composites from underground rock channel samples (2002).
11-1 Significant drill intercepts (zinc) from Franconia’s 2002 drilling program.
14-1 Descriptions and assays from due diligence samples collected by CCIC in 2004.
14-2 Description of samples collected from 600 and 650 Mine Levels., Horn Silver Mine (2001).
14-3 Assays of samples collected from 600 and 650 Mine Levels., Horn Silver Mine (2001).
15-1 Location of properties in the area of the San Francisco Zinc property.
17-1 Unqualified Reserve estimates from historical information, Horn Silver Mine.
21-1 Recommended phase 1 diamond drilling program, San Francisco property.
21-2 Recommended phase 2 diamond drilling program, San Francisco property.
23-1 Summary of assays from TeckCominco sampling, 2001, at the Mahoney Zinc property.
27-1 Location of historic diamond drill hole setups/collars at the Mahoney property.
31-1 Description of samples collected by CCIC from the Mahoney property, New Mexico.
31-2 Summary of samples collected by CCIC from the Mahoney property, New Mexico.
37-1 Recommended phase 1 reverse circulation drilling program, Mahoney Zinc property.
37-2 Recommended phase 2 diamond drilling program, Mahoney Zinc property.
40-1 Summary of exploration work completed to date on the Birch Lake property, Minnesota.
41-1 Stratigraphic column of the South Kawishiwi intrusion, Duluth Complex, Minnesota.
47-1 Analytical methods and detection limits used in drill core assays, Birch lake property.
48-1 Summary of drill core intervals examined by CCIC during site visit to Birch Lake property, 2004.
49-1 Significant deposits in the vicinity of the Birch Lake property, Minnesota.
51-1 Summary of Inferred Mineral Resource estimates, Birch Lake property.
54-1 Recommended exploration program for the Birch Lake property.
LIST OF FIGURES
38-5 Land status map showing surface rights for the ACNC portion of the Birch Lake property.
38-6 Land status map showing mineral rights for the ACNC portion of the Birch Lake property.
39-1 Location of the Birch Lake property boundary relative to diamond drill hole collars.
41-1 Location of the Duluth Complex relative to the Midcontinental Rift System.
41-2 General geological map of the Duluth Complex with location of sulphide deposits.
41-3 Generalized geology of the Duluth Complex.
41-4 Location of Cu-Ni-PGE deposits in the area of the Birch Lake property.
41-5 Generalized geology on the Birch Lake property and location of drill hole collars.
42-1 Schematic cross-section for the various models for mineralization in the Duluth Complex.
45-1 Location of diamond drill hole collars at the Birch Lake property.
51-1 Location of diamond drill holes and outlines of Resource areas from the Birch Lake property.
LIST OF APPENDICES
1.0 SUMMARY
Caracle Creek International Consulting Inc. (“CCIC”) has been retained by Franconia Minerals
Corporation (“Franconia”) to provide an independent assessment, and National Instrument 43-
101 compliant Technical Report, for the San Francisco Zinc, Mahoney Zinc and Birch Lake
Platinum-Palladium-Copper-Nickel properties held by Franconia in the United States of America
(“USA”). This independent assessment is based on information supplied by various United
States government agencies, published reports, discussions with representatives from Franconia,
discussions with consultants familiar with the properties, and site visits to the properties carried
out in April 2004 (Birch Lake PGE property, Minnesota), February 2004 (second visit to the San
Francisco Zinc, Utah), January 2003 (Mahoney Zinc, New Mexico), March 2001 (San Francisco
Zinc, Utah), and March 2001 (Birch Lake area and Duluth Complex, Minnesota). This Qualified
Person’s Report was prepared on behalf of Franconia for their ability to raise funds to further
explore and develop theses properties. Franconia will undertake to gain admission to the Toronto
Stock Exchange Venture Exchange (“TSX-V”).
The San Francisco Zinc property is located in the San Francisco Mining District, Beaver
County, southwest Utah, about 14 mi (22.5 km) west of the town of Milford (population 1,500) and
is accessible by road. The San Francisco property is currently subject to a joint venture
agreement with TeckCominco and Franconia also has in place an agreement with Horn Silver
Mines Inc., owners of the patented claims. The San Francisco property offers excellent potential
for polymetallic manto-type (zinc-lead-silver) replacement deposits. One of Franconia’s main
objectives is to determine if economic quantities of zinc mineralization exist beyond the known
areas of mineralization and in particular if a manto model for zinc mineralization can be applied to
this property.
The property includes the historic Horn Silver Mine which lies entirely on patented mining claims.
Mineralization at the Horn Silver is hosted by fault breccia which lies within the Horn Silver Fault
Zone and consists of silver-rich, lead and zinc oxides, some copper oxides and minor zinc-lead-
copper-iron sulphides to a depth of about 600 ft (183 m). Below 600 ft and with increasing depth,
the mineralization becomes progressively dominated by zinc sulphides; mineralization is open at
depth and westward into the footwall carbonate rocks. Mineralized breccia samples collected by
CCIC in 2001 assayed up to 43.2% Zn and up to 156 g/t Ag (4.6 opt Ag) and a sample from the
footwall carbonate contained 245 ppm Zn; this is 3-6 times expected background, and is
potentially the result of mineralizing fluids penetrating the generally massive footwall carbonate
rocks.
In June-July 2002, Franconia completed 3 diamond drill holes on the property, aimed at testing
for manto-style mineralization at depth and within the carbonate rocks. Drill hole SF-1
intersected, from 657-663.5 ft (200-202.2 m), 6.5 ft (2 m) grading 3.71% zinc. Drill hole SF-2
intersected, from 1170-1225.7 ft (357-373.6 m), 55.7 ft (17 m) grading 12.88% zinc, including
15.7 ft (48 m) grading 25.48% zinc. Drill hole SF-3 intersected, from 1177.6-1189.0 ft (359-362
m), 18.01 ft (5.5 m) grading 18.01% zinc, including 6.4 ft (2 m) grading 26.9% zinc; SF-3 also
intersected, from 1228.5-1278.0 ft (374.4-389.5 m), 49.5 ft (15.1 m) grading 16.63% zinc,
including 13.7 ft (4.2 m) grading 34.3% zinc. The zinc intersections consist almost entirely of the
zinc carbonate mineral smithsonite. These deep intersections in SF-2 and SF-3 may represent
new areas of mineralization or perhaps extensions of known mineralization; further diamond
drilling is required to determine the significance of these intercepts and the potential for manto-
type mineralization in the carbonate rocks west of the Horn Silver Fault.
The Mahoney Zinc property is located in the Tres Hermanas Mining District, Luna County,
southwest New Mexico, about 22 miles (35 km) south of the town of Deming (population 21,000).
This property is accessible by road from Deming which is located at the junction of highway NM-
180 and interstate I-10. Data on the Mahoney property was initially reviewed by Joe Worthington
as part of the ongoing review of TeckCominco’s database, located in Spokane, Washington;
Franconia is currently in negotiations regarding a joint venture with TeckCominco. Franconia
staked 54 unpatented mining claims in January 2004 and is currently negotiating a lease for nine
patented claims that cover the main zinc showings and historic workings of the Mahoney Mines
Area.
Franconia’s aim at the Mahoney property is to determine the vertical extent of the known surface
zinc oxide mineralization and to test the further potential of the mineralizing system at depth.
There is ample evidence from previous exploration and mining on the property that manto-style
zinc mineralization (largely the zinc silicate willemite and zinc carbonate smithsonite) is present
on the property. The exploration target is open-pittable, manto-type zinc (sulphide-oxide)
mineralization hosted in Mississippian age carbonate rocks adjacent to a large Tertiary quartz
monzonite stock. Past mining activity appears to have removed all near-surface (<200 ft)
resources, and as such geophysical surveys, geological mapping and diamond and reverse
circulation drilling are recommended to test for deeper mineralization.
The Birch Lake Platinum-group element (“PGE”) property is located in St. Louis and Lake
counties, northeast Minnesota, about 78 miles (126 km) north of the City of Duluth (population
87,000) and about 8 miles (13 km) northeast of the mining town of Babbitt (population 1,670).
The Birch Lake property, located along the western margin of the Duluth Complex, provides a
unique opportunity for Franconia to become a producer of precious metals. The property consists
of more than 9,459 net mineral acres with mineral title held under numerous leases and permit
agreements with the State of Minnesota and private land owners. In November 2002, Franconia
entered into an option agreement with Beaver Bay Joint Venture (“BBJV”) with regard to the Birch
Lake property. In December 2003, BBJV, on behalf of the Birch Lake project, entered into a
binding letter of intent to acquire from American Copper & Nickel Company, Inc. (“ACNC”), to
acquire a further 5,339 acres of mineral rights, contiguous with the Birch lake property. This
acquisition extends the land package for more than 10 miles along the prospective western
contact of the Duluth Complex and includes the Maturi and Spruce Road Cu-Ni-PGE deposits.
Franconia’s main objective is to determine the economic parameters required to bring the Birch
Lake deposit into a commercial, underground mining operation including further diamond drilling,
metallurgical studies and mining test studies. The Birch Lake mineralization is disseminated,
interstitial copper and nickel sulphides, with platinum group minerals; palladium concentrations
are generally 2:1 to 3:1 with respect to platinum. Sulphide minerals exhibit exsolution and
replacement textures with a degree of intergrowth that precludes beneficiation into separate
copper and nickel concentrates, similar to other known deposits in the Duluth Complex. The
Birch Lake PGE-Cu-Ni mineralization is located consistently in the upper portion of the ultramafic
U3 unit starting at or immediately above, its contact with an overlying pegmatitic unit; the U3 unit,
marker pegmatite and mineralization are traceable hole to hole. The U3 unit dips shallowly to
sub-horizontally to the southeast and its top has been intersected at depths of 1,148 ft to 4,833 ft
(350 m to 1,473 m) on the property and 1,148 ft to 2,461 ft (350 m to 750 m) in the resource area.
Vertical thickness of the U3 unit averages 174 ft (53 m). The U3 unit has been drilled for 9,843 ft
(3,000 m) north-south and 3,281 ft (1,000 m) east-west within the resource drilling area that totals
approximately 643 acres (260 ha). The Birch Lake property has witnessed a number of drilling
campaigns since the early 1970’s with the most recent in 2000 and 2001. The drill hole database
contains 40 holes and 49 wedge offsets totalling 109,380 ft (33,339 m). Of these, 86 holes and
wedges totalling 108,898 ft (33,192 m) have been entered in a resource database prepared by
Snowden Mining Industry Consultants (Pty.) Ltd. (“Snowden”). Roscoe Postle Associates Inc.
(“RPA”) were requested by Franconia to review and audit mineral resource estimates for the
Birch Lake property and to prepare an independent report conforming to reporting requirements
for National Instrument (NI) 43-101, companion policy NI 43-101CP and Form 43-101F1; the
results of this study are favourable. Further exploration and delineation diamond drilling is
planned to further define the Birch Lake deposit, along with bulk sampling for metallurgical
purposes and further investigation into hydrometallurgical technology for the recovery of the
precious metals.
It is the opinion of CCIC that there exists potential at the San Francisco and Mahoney Zinc
properties for the discovery of additional zinc mineralization, in particular polymetallic
manto-type, zinc-lead-silver mineralization, and the potential for discovery of new base-
and precious metal deposits.
It is the opinion of CCIC that there exists potential within the Birch Lake PGE property for
the discovery of additional Resources and that this property holds excellent potential for
future development and possibly underground mining.
CCIC is satisfied that the properties represent legitimate exploration projects and are of
sufficient merit to justify the exploration programs as recommended.
All site visits to the properties were arranged by Franconia. Two site visits were completed to the
San Francisco property. The first was in March 2001 and was attended by Mr. Brian Gavin,
President, Franconia, Mr. Allen Ambrose, Vice-President, Franconia and Bill Rowell, Projects
Manager, Franconia. The second was in February 2004 and was attended by Kathy Tureck and
Jim Telford, consulting geologists familiar with the property and the region. A site visit to the
Mahoney property was completed in January 2003 and was attended by Joe Worthington,
Geologist, Franconia, and also familiar with the property and the region. A site visit to the Birch
Lake property was carried out in April 2004, attended by Bill Rowell, Projects Manager for
Franconia. An initial site visit to the Duluth Complex properties was completed in March 2001,
attended by Mr. Brian Gavin, President, Franconia, Mr. Allen Ambrose, Vice-President, Franconia
and Bill Rowell, Projects Manager, Franconia. During the April 2004 and March 2001 site visits to
Minnesota, meetings were held with Ernest Lehmann, Co-Founder, Franconia, and geologist with
extensive experience on the Duluth Complex and the Birch Lake property.
The San Francisco and Mahoney projects are two of a number of zinc exploration projects being
pursed by Franconia under agreement with TeckCominco. The agreement with TeckCominco
provides for a one-time back-in right by TeckCominco on exploration projects generated and
worked on under the agreement. Specifically, on the San Francisco property, TeckCominco has
a one-time option to joint venture the property once Franconia has drilled eight holes (9,600 ft or
2926 m) and expended approximately US$500,000. Also under the option TeckCominco can
earn a 60% interest in the project by producing a feasibility study.
In November 2003, Franconia entered in to an Earn-In Agreement with the Beaver Bay Joint
Venture (“BBJV”) with regard to the Birch Lake platinum-palladium-copper-nickel project in the
Duluth Complex. The Birch Lake project is an advanced stage exploration project with a large
resource and an average thickness of 80 ft (24 m). The Birch Lake deposit, is potentially
amenable to low cost, mechanized underground mining. Franconia may earn up to an 82%
interest through a combination of payments in stock and cash and expenditure to advance the
project to production. Approximately US$4.7 million has been spent at Birch Lake to date. Impala
Platinum Holdings (“Impala”), the world’s second largest platinum producer, is Franconia's
partner in an earn-in and joint venture agreement to explore for platinum group metals in the
Duluth Complex. Impala will contribute a total of US$600,000 to evaluate Franconia’s portfolio of
fourteen properties (28,000 acres or 11,331 ha) thereby earning the right to select properties for
subsequent joint venture. A subsequent joint venture would allow Impala to earn a 51% interest
by spending US$2 million on exploration. Franconia has compiled a large database from public
and proprietary sources and property positions have been established on fourteen priority targets.
These targets are being systematically evaluated with geochemical and geophysical surveys and,
if warranted, tested by drill holes.
Conversion factors utilized in this report include: 1 troy ounces/ton = 34.29 gram/tonne; 0.029 troy
ounces/ton = 1 gram/tonne; 1 troy ounces/ton = 31.10 gram/ton; 0.032 troy ounces/ton = 1
gram/ton; 1 gram = 0.0322 troy ounces; 1 troy ounce = 31.104 grams; 1 pound = 0.454
kilograms; 1 foot = 0.3048 metres; 1 mile = 1.609 kilometres; 1 acre = 0.405 hectares; and, 1 sq
mile = 2.59 square kilometres. The term gram/tonne or g/t is expressed as “gram per tonne”
where 1 gram/tonne = 1 ppm (part per million) = 1000 ppb (part per billion). Other abbreviations
include ppb = parts per billion; ppm = parts per million; opt = ounce per short ton; Moz = million
ounces; Mt = million tonne; t = tonne (1000 kilograms); and, st = short ton (2000 pounds). A
glossary of geological terms is provided in Appendix 1.
3.0 DISCLAIMER
This Independent Technical Report was prepared for Franconia Minerals Corporation by Caracle
Creek International Consulting Inc.. The information, conclusions and recommendations
contained herein are based on data provided both by Franconia and various geological
departments within the states of Utah, New Mexico and Minnesota, and appears to be of sound
quality. CCIC is unaware of any technical data other than that presented by Franconia or its
agents. CCIC has relied exclusively on information provided by Franconia regarding land tenure,
and the validity and adequacy of the agreements with Teck Cominco American Incorporated,
Impala Platinum, Beaver Bay Joint Venture and Horn Silver Mines Inc.. CCIC have reviewed
signed and un-signed copies of agreements as provided by Franconia and copies of the reviewed
agreements are included in Appendices 3A, 4A and 5A. CCIC has reviewed only the land titles to
claims and mineral leases as supplied by Franconia; details are provided in Appendices 3B, 4B
and 5A.
The quality of the exploration work carried out by Franconia, its joint venture partners, and the
State agencies is of high standard, and the relationship between Franconia and its joint venture
partners and State agencies appears to be cordial.
CCIC is not responsible for any omissions in, and CCIC does not guarantee, and makes no
warranty as to the accuracy of, information received from outside sources. CCIC has
made all reasonable efforts to outline any land tenure or environmental issues relating to
Franconia’s projects and CCIC disclaims all responsibility for missing or inaccurate
property information. Any use of, or reliance on, this report by any third party, without
written permission of CCIC, is at the party’s sole risk. CCIC has conducted this
independent technical assessment in accordance with the methodology and format
outlined in National Instrument 43-101, companion policy NI 43-101CP and Form 43-101F1.
PART I
SAN FRANCISCO ZINC PROPERTY
FRISCO, UTAH
The property, which includes old mine workings historically referred to as the Horn Silver Mine,
covers an area of 578.343 acres (234 ha) and comprises 41 patented federal lode claims
(Appendix 3B). The San Francisco occupies Sections 13-16, 21-24 and 25-27 in Township T27S
and Range R13W (Figure 4-2). All of the claims have been legally surveyed, some of them as far
back as the late 1800’s. Franconia’s agreement with the underlying landowner, Horn Silver
Mines Inc., and their strategic alliance with TeckCominco are outlined below with details in
Appendix 3A. A complete listing of the patented claims associated with the San Francisco
property are provide in Appendix 3B.
The permitting agency for the State of Utah is the Department of Natural Resources, Division of
Oil, Gas and Mining, located in Salt Lake City, Utah. A state permit is required to conduct any
exploration activities, regardless of land status (i.e., patented or unpatented lands) including
drilling, road building and shaft sinking. In addition to a state permit, a Bureau of Land
Management (“BLM”) approved Notice of Intention to Conduct Exploration (“NOI”) is required to
conduct exploration activities on unpatented lands. The NOI permits activities such as drilling
and shaft sinking but does not permit water rights. Patented lands, such as those at the San
Francisco property, are exempt from the NOI. Water law in the western United States is
complicated and generally it is purchased from current water rights holders.
Financial bonding, which is new to the state in 2003, is required to cover reclamation. CCIC are
not aware as to whether or not Franconia has applied for necessary permits or has posted the
required financial bond. Any corporation doing mineral exploration in the state of Utah and
applying for a permit is required to be registered with the Division of Corporations and have a
business license. CCIC are not aware as to Franconia’s current business status in the state of
Utah.
CCIC have know knowledge of any outstanding royalties, back in rights, carried or
working interest, outstanding payments, or encumbrances against the San Francisco
property. In addition, CCIC have no knowledge of any immediate environmental liabilities
associated with the San Francisco property.
In accordance with the agreement, TeckCominco submits exploration ideas it has previously
identified to Franconia for review. Franconia has the option of acquiring and exploring these
properties. Subsequently, TeckCominco will have a one-time right to elect to joint venture any of
these properties. TeckCominco will also make its extensive in-house geologic database available
to Franconia, along with consultation with its professional staff, in order to facilitate generation of
new exploration projects.
TeckCominco’s first submittal is the San Francisco Zinc property. Franconia’s agreement with
TeckCominco provides TeckCominco with a one-time option to joint venture the property once
Franconia has drilled eight drill holes and expended approximately US$300,000. Under the
option TeckCominco can earn a 60% interest in the project by producing a feasibility study. From
this point Franconia and TeckCominco would be contributing partners on a 60:40 basis.
CDN$18,000 every six months for the next two years (paid CDN$9,000 in March 2004), then
CDN$27,000 every six months until the tenth anniversary of the effective date of the agreement
and then CDN$36,000 every six months until the end of the term of the lease including any
renewals or extensions thereof. Each advance royalty payment paid during the term of the lease
will be credited against payment of any and all production royalty payable pursuant to the terms
of the lease.
Franconia may purchase all or part of the production royalty to which Horn Silver Mines Inc. is
entitled to under the terms of the lease, by paying CDN$750,000 per 1% of Net Smelter Return
(“NSR”) or a total of CDN$2,250,000 to purchase the entire production royalty of 3% of NSR. On
commencement of commercial production, Franconia is obliged to pay Horn Silver Mines Inc. a
one time production royalty bonus of CDN$500,000, which will be a credit against any and all
production royalty payable pursuant to the terms of the lease. After commercial production
begins, Franconia is obliged to pay a production royalty of 3% of the NSR.
Access to the Horn Silver Mine is via an 800 ft (244 m), two compartment mine shaft (King David
shaft) situated on a separate structure about 1200 ft (366 m) northwest of the collapsed workings
(Figure 4-2). From this shaft a haulage drift (crosscut), about 850 ft (259 m) in length intersects
the 650 Level of the mine, providing limited access to the 650, 700, 800, and 900 levels which are
connected by an un-collapsed part of an older shaft (Metal Producers shaft). The mine is
completely dry to the 1000 Level and reports indicate that the water table lies several hundred
feet below this level.
The climate in the area is arid with temperatures averaging 65-33°F (18-0.5°C), with about 9 in
(23 cm) of precipitation and 36 in (91 cm) of snow fall (average depth of 1 in or 2.5 cm) per year.
Most precipitation is in early Spring to late Summer and there are considerable fluctuations in
day-night temperatures, especially in Summer.
Utah, the 11th largest state in the USA, is located in the southwest USA and is bordered to the
north by Wyoming and Idaho, to the east by Colorado, to the west by Nevada and to the south by
Arizona (Figure 4-1). The property lies in a region of extensive past and present mining
operations in a mining friendly state, and is relatively far from any major population centres,
reducing the potential for cultural/societal confrontations. Residential power lines run within a few
miles of the property but any industrial source of power would have to come from the Milford
area. Although there are natural springs in the region, water for the most part is scarce. Water
for drilling programs must be brought in by truck and stored on the property during the course of
the program.
The San Francisco, elevated about 6,500 ft (1,981 m) above sea level and lying at the south end
of the San Francisco Mountains, is typical open Pinion Pine and Juniper covered high desert
(Figure 5-1). Maximum elevation in the district is Frisco Peak at 9,660 ft (2,944 m) above sea
level. Grampian Hill, located immediately southwest of the Horn Silver Mine is elevated at 7,341
ft (2,238 m) above sea level; the Horn Silver Mine is elevated at 6,600 ft (2,012 m) above sea
level. Outcrop is generally rare in flat regions between hills and mountains and cover consists
mainly of sandy desert soils ranging from a few inches to several feet thick.
6.0 HISTORY
The earliest recorded work in the area of the Horn Silver Mine is from 1875 at which time the
historic Horn Silver Mine was discovered; the San Francisco Mining District was organized in
1871.
1875-1952 Horn Silver Mine: Discovery of the silver-lead orebody resulted during shaft sinking
on surface outcrops of leached manganiferous iron gossan, located on what is now the extreme
north end of the orebody. The orebody ultimately had dimensions of 700 ft (213 m) in the
horizontal, 30-60 ft (9-18 m) width (maximum 180 ft or 55 m wide) and extended at least 960 ft
(293 m) down-dip in the vertical. Underground development in the mineralized fault zone reaches
a depth of 1600 ft (488 m). No ore was produced below the 900 Level and no extensive lateral
workings were developed below the 900 Level. Workings below the 600 Level are in sulphide
rock to at least 1000 ft (305 m) below surface. Extensive stoping resulted in the collapse of all
workings above the 700 Level in 1885 and work on the property essentially ceased.
Total production of oxide, mixed sulphide and oxide, and sulphide ore from 1875 through 1952
(the last year of operation) is 835,000 tons grading 21.5 opt Ag and 23.5% Pb. A zone of
supergene copper enrichment (chalcocite and covellite) was mined mainly between 1899 and
1905. For the 290,000 tons of ore for which zinc production was reported the average zinc grade
was 8%. Zinc grades were not reported until 1904. Zinc-rich ore was avoided in favour of lead-
silver rich oxide ore for most of the life of the mine due to lack of processing facilities and the
suitability of the oxidized ore for direct shipping. Kipps (1929 and 1931) produced numerous
section, plan and level maps for the Horn Silver Mine. Reviews of the property since production
ended in 1952 suggest that extensive zinc-rich oxide and zinc-rich sulphide ore remain in place,
in the workings. Little drilling has been done to determine the extent of this mineralization in the
carbonate rocks away from the existing workings.
1940’s U.S. Bureau of Mines: A portion of the mine workings were rehabilitated and several
underground drill holes were completed to test the deposit for the possibility of producing metals
for the war effort. These holes, totalling 1,299 ft (396 m), are thought to be the drill holes shown
on the 650 and 800 level plan maps in Figures 6-1 and 6-2. Underground diamond drilling on the
650 and 800 levels show substantial zinc-rich sulphide mineralization extending into the footwall
carbonate rocks, including: 55 ft (16.8 m) of 19.1% Zn from an 800 Level drill hole, and 29 ft (8.8
m) of 14.7% Zn from a 650 Level drill hole. No underground drilling is reported from the 700 or
900 levels where footwall carbonate-hosted zinc-rich sulphide mineralization is also reported.
1944-1956 Metal Producers: Horn Silver Mine was leased to Metal Producers and during this
time the lower levels at the north end of the deposit were rehabilitated. In addition, minor
underground development was made in order to facilitate mining and shipping of a limited
tonnage of oxide zinc ore. This included driving a connecting crosscut from the 650 Level to the
King David shaft. Metal Producers also conducted an underground drilling program on the north
end of the orebody with aims of proving up oxide zinc reserves within the breccia environment.
This drilling did not test the footwall carbonates at any distance from the main mineralized fault
breccia.
1964 Plata Verde Mining Company: The Horn Silver Mine was acquired by Page Blakemore via
the Plata Verde Mining Company.
1965 Plata Verde Mining Company: Surface drilling program in immediate vicinity of Horn Silver
Mine pits in order to test potential for near-surface, open-pitable oxide zinc reserves. Drilling
1966 Rosario Exploration Company: Drilling and trenching program on the Elite, Lulu and St.
Louis claims that totalled 6,103.2 ft (1,860.3 m) of air-rotary drilling and 94.3 ft (28.7 m) of
diamond drilling (core) at 11 drill sites. Two holes on the Lulu claim tested the down dip potential
of the Horn Silver Fault adjacent to the Lulu workings. Work on the Elite claims targeted the
intersection of the Horn Silver Fault with the Emporia Fissure and the Squaw Springs Fault.
Assay results of the drilling were discouraging and are documented by Godbe (1966).
1982 Horn Silver Mines Inc.: A total of 6 drill holes, each 200 ft (61 m) in length, were completed
at the Washington Mine and Double-Block Barrel Tunnel area, located about 7,600 ft (2,317 m)
northwest of the Horn Silver Mine and 1,200 ft (366 m) south of the Washington Mine,
respectively (Godbe, 1982b). Drill hole no. 5 at the Washington Mine intersected 20 ft (6.1 m) of
vein-type sulphides grading 16.05% Pb, 5.7% Zn, 14.05 opt Ag and 0.11 opt Au. The host rock is
described as “calc-silicated carbonate rocks” by Telford (1988) and may be evidence for manto-
type mineralization.
1982 Horn Silver Mines Inc.: Dr. Robert A. Jones (R.A. Jones & Associates Inc.) was
commissioned to sample the silica breccia zone at the old workings and supervise bench leach
test (Jones, 1982). The purpose of the program was to determine an average assay for the
breccia zone and the leaching characteristics of the potential ore. The tests (Bottle-Agitation and
Column-Percolation cyanide leach tests) showed that the breccia ore is readily amenable to a
heap leach operation. Further work was recommended.
1982 Horn Silver Mines Inc.: M.C. Godbe III (1982a), a geological engineer, was commissioned
to review the ore reserve potential of the mine and immediate area. The report determined that
there was sufficient reliability in the available data to suggest that a large reserve, totalling some
753,641 short tons of oxide zinc (14.5% Zn) exists within the area of the old workings. In addition
to breccia hosted mineralization, Godbe (1982a) suggested the possibility for manto-type
replacement mineralization within the western footwall carbonates.
1982-1985 Freeport Exploration Company: The Horn Silver Mine was leased to Freeport
Exploration and an exploration program was managed by Hunt, Ware, and Proffett (“HW&P”).
During the three years of exploration, a program of surface and underground mapping and
sampling, trenching, underground rehabilitation and surface drilling was completed. In 1983,
more than 12,000 ft (3,658 m) of rotary and diamond drilling was completed, consisting of 10 drill
holes designed to test the down dip structure and potential of the area immediate to the Horn
Silver Fault and at depth. All but one hole was collared east of the Horn Silver Fault.
Underground sampling of the northern portions of the 650 and 800 levels show substantial zinc-
rich sulphide in place along drift walls (Figures 6-1 and 6-2), including: 105 ft (32 m) of 14.5% Zn,
82 ft (25 m) of 8.8% Zn and 126 ft (38.4 m) of 4.2% Zn from the 800 Level, and 71 ft (21.6 m) of
4.7% Zn, 99 ft (30.2 m) of 7% Zn, 49 ft (14.9 m) of 5.3% Zn, and 135 ft (41.2 m) of 3.1% Zn from
the 650 Level. No continuous sampling is reported from the 700 Level (largely inaccessible) or
900 Level where footwall carbonate-hosted zinc-rich sulphide mineralization is reported.
Telford (1988) remarks that Freeport appeared to consider the deep potential along the fault
system to be much greater than the potential for replacement mantos west of the fault. Telford
(1988) considers the work that was completed during this three year period to be poorly
documented and considered most of the available maps (plans and sections) to be preliminary
and unfinished. The property was turned back to Horn Silver Mines Inc. in 1985.
1989 Bethlehem Resources Corp.: Along with Arapaho Mining Corp., Bethlehem Resources
completed a regional exploration program over the southern San Francisco Range mapping at 1
inch = 400 feet scale (Goodson, 1989). In addition high quality topographic and orthographic
maps were produced, 8,500 ft (2,591 m) of road was excavated and rock samples were taken
from the various prospects. Several Pulse-Electromagnetic (“PEM”) and Induced Polarization
(“IP”) geophysical surveys were completed over various prospects in the area. Eight reverse
circulation drill holes totalling more than 5,079 ft (1,548 m) were completed. These RC holes
were aimed at testing the geophysical anomalies and testing for potential flat lying mineralization
within the footwall carbonates. The holes failed to reach the target manto-style mineralization
situated at the 900 Level, west of the workings.
1999 Cominco: Cominco staff accessed the 650, 700, 800, and 900 levels of the mine and
confirmed that extensive amounts of zinc sulphide ore remains in-situ within the ribs of the
workings. Work included a review of the Cominco database, a review of the Horn Silver Mines
Inc. database, underground sampling, and data and map compilation. At this time, manto-style
geometries of sphalerite mineralization were observed on the 650 Level. Random grabs of
sulphide rock on the 650, 800, and 900 levels assayed up to 39% Zn; 8.9% Pb, 0.3% Cu, 9.3 opt
Ag, and 4 ppb Au. Cominco noted that on the 650 Level, similar looking “ore” material was
apparently used as stope backfill.
2002 Franconia Minerals Corporation: Franconia carried out exploration work from March 2002
to November 2002. This work included: 1) Compilation and research on available geologic and
historic mine data; 2) Digital compilation of underground Horn Silver Mine level geologic maps,
analytical, and sample data into a geographic information system (“GIS”) database (Gemcom
software), resulting in a 3D mine model; 3) Creation of a surface GIS database including a digital
topographic map (“DTM”) or base map and the conversion of new and historic surface data into
digital format; 4) Locating and re-establishing the 100 X 100 foot surface and underground Horn
Silver Mine grid (electronic survey control of base lines and mine shafts); 5) Completion of
surface geological mapping (1:1200 scale) and conversion of data into digital GIS format; 6)
Opening and rehabilitating the King David mine shaft; constructed a portable hoist system to
access the 650 Level; installed safety line and harness system between the 650 and 1000 levels;
7) Completion of an electronic survey of 650 Mine Level and the King David mine shaft; 8)
Mapping of the 650 Mine Level (previously unmapped) and field checking of accessible portions
of the 800, 900 and 1000 levels; 9) Sampling of the 650, 900 and 1000 levels (135 rock samples);
10) Conducting a modified Mise-a-la-Masse geophysical survey; and k) Completion of a diamond
drilling (core) program totalling 3,528 ft (1,075.3 m) in three holes (SF-1, SF-2 and SF-3) and
producing 167 core samples. Worthington (2002a) provided an appraisal for the geological and
economic factors regarding the Horn Silver Mine.
The Paleozoic strata dip moderately (<10°) to the west and lie within the Sevier thrust belt in
which Cambrian age rocks over thrust Pennsylvanian age rocks. The range is bounded by north-
south trending basin and range faults of which the most important is the Horn Silver Fault, located
on the east side of the mining district (Figure 7-2). East-west structures (Reciprocity,
Washington, Drum and Emporia fissure systems) offset and cut the dominant north-south
structural trend.
The Horn Silver Mine is situated near the southeast margin of a Tertiary quartz monzonite stock
that intrudes the north-south fault structure in the northern part of the mine area and hosts a
weakly developed copper porphyry system (Figures 7-2 and 7-3). Within the area of the Horn
Silver Mine, lead-silver-zinc mineralization occurs in a high-angle, north-south trending, normal
Basin and Range fault (Horn Silver Fault) which reaches widths of 100 ft (30.5 m) and juxtaposes
west-dipping Cambrian-Ordovician carbonate rocks (Orr Formation) on its west side with Tertiary
volcanic rocks (Horn Silver Andesite) on the eastern boundary (Figure 7-3). Throw on the fault is
in excess of 1,500 ft (457 m), Cambrian carbonates upward.
Manto, a Spanish mining term used to describe a blanket-shaped orebody, is a term generally
used to describe the both the orientation of individual ore lenses and also to describe a class of
orebodies. Traditional “mesothermal manto deposits” such as Mantos Blancos (Chile) and the
Superior-Magma mine (Arizona) share many similarities with what is generally referred to in North
America as polymetallic base- and precious metal carbonate-hosted deposits. Similarities include
wholesale replacement of carbonate rocks along bedding planes producing flat, bedded, and
sheetlike deposits or mantos along and vein mineralization consisting of hydrothermal
polymetallic replacement bodies (i.e., lenses, pipes, and chimneys) that are conformable to
crosscutting in the carbonate rocks; in some cases the chimneys and/or mantos are stacked.
Fissure veins also develop in proximal non-reactive rocks.
In general, manto deposits tend to be small, highly irregular and discontinuous and are
overshadowed on a world scale by large syngenetic classes of base metal deposits (i.e.,
sedimentary exhalative and volcanogenic massive sulphide). Worldwide, individual deposits of
the manto-type average about 1 Mt, grading tens to hundreds of grams per tonne silver and 5-
20% Zn-Pb. Despite the generally small size, high precious metal contents and potentially rich
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zinc concentrations (+20%) make them interesting target for smaller producers. Very large
tonnage deposits do exist and include: Santa Eulalia District (Mexico) which has produced about
24 Mt of 300 g/t Ag, 8% Pb and 9% Zn; and, the Leadville District (Colorado) which has produced
some 30 Mt of 70-130 g/t Ag and 12-15% Pb-Zn. In many cases, early production comes from
the oxidized ore zones which have higher grades and are easier to mine.
The bulk of past production and exploration focus at the San Francisco has been on the high-
grade, fault breccia-hosted lead-silver-zinc within the Horn Silver Fault and the old workings of
the Horn Silver Mine (Figures 8-1 and 8-2). No serious attempt has been made to determine the
limits of sulphide ore either at depth, along the strike of the structure, or down-dip (west) within
the carbonate (Orr Formation) rocks (i.e., manto-type).
Geologically, the mineral system is open laterally to the south and west, less so to the north, and
vertically, and there is ample area for several million tons of carbonate-hosted sulphide
mineralization to be discovered below and lateral to the lower workings of the mine.
Principal minerals include sphalerite, galena, pyrite, chalcopyrite, marcasite while subordinate
minerals include arsenopyrite, enargite, tetrahedrite, electrum, geocronite, digenite, jamesonite,
jordanite, stephanite, polybasite, rhodochrosite, and sylvanite; chimneys are typically zinc-rich
and relatively lead-poor relative to mantos. Gangue mineralogy includes quartz, barite and
gypsum. Alteration mineralogy includes dolomitization and/or silicification of the host carbonate
rocks, and chloritization-sericitization of the associated igneous rocks. In areas which have not
been extensively glaciated, such as the southwest USA (i.e., New Mexico and Utah) and Mexico,
a deep oxidation zone will develop that can include minerals such as cerusite, smithsonite.
Examples of large North American polymetallic replacement deposits are Bisbee, Arizona and
East Tintic District, Utah.
Manto deposits are generally irregular in shape as blankets, lenses, pipes, chimneys and veins
and in some deposits the mantos and/or chimneys are stacked. Some manto deposits have
associated breccias which contain a high proportion of sulphide ores.
9.0 MINERALIZATION
Past mining activities at the Horn Silver Mine were concentrated on oxidized supergene lead-
silver ores but also included the recovery of copper, zinc and gold, mainly from sulphide
mineralized marble breccias associated with the Horn Silver Fault. The Horn Silver orebody or
orebodies occur between north-trending and east-trending cross-structures with the
mineralization being hosted by a breccia (Figures 8-1 and 8-2). The geometry of the Horn Silver
orebody is tabular, and prior to mining extended about 700 ft (213 m) north-south, 960 ft (293 m)
vertically from surface and had an average width of about 30-60 ft (9-18 m) in the east-west
dimension; maximum width was 180 ft (55 m) with underground development in the mineralized
fault zone reaching a depth of 1,600 ft (488 m).
The distribution of metals is complex with oxidation and supergene enrichment overprinting
earlier magmatic/metamorphic metal zonation, resulting in copper-rich, lead-silver-rich, and zinc-
rich oxide ore zones in addition to zinc-lead-silver sulphide ore zones (Tureck, 2002).
Mineralization in the Horn Silver Fault zone consists of silver-rich lead and zinc oxides, some
copper oxides and minor zinc-lead-copper-Fe sulphides to a depth of about 600 ft (183 m).
Below 600 ft and with depth, the mineralization shows less supergene enrichment (oxidation) and
becomes progressively dominated by sulphides; admixed sulphide-oxide persists down to at least
the 1000 Level. The sulphide is primarily fine to coarsely crystalline sphalerite (up to 20-30%)
with lesser galena and pyrite.
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Godbe (1982a) determined, from past production records, that the sulphide ores averaged 10%
Pb, 10% Zn, 10 opt Ag, the siliceous gold ores (gold-silver-barite breccia pipe centred on Mine
Grid 400W, 200S) averaged 0.16 opt Au, 2-6 opt Ag and 1% Pb, and the Main Stope silver-lead
ores average 18.5 opt Ag, 10-20% Pb and 1-3% Zn. Godbe (1982a) also surmised that current to
1982, the immediate area of the Horn Silver Mine contains 753,641 short tons of oxide zinc ore at
a potential average grade of 14.5% Zn; the tonnage was determined from “Reasonably Assured”
and “Potential Reserve” classifications.
Telford (1988) surmised that the area of the Horn Silver Mine has not been fully explored for its
potential to host stratabound lead-zinc-silver mantos west of the Horn Silver Fault, within the
footwall carbonate (Orr Formation) rocks. To date, only two reverse circulation percussion drill
holes tested the carbonates on the west side of the mineralized Horn Silver Fault. These were
drilled in 1989 and are 940 ft (286.5 m) and 960 ft (292.6 m) deep. Because of a westward rise in
topography, neither hole was deep enough to reach the down dip projection of the 800 and 900
level manto which would be expected at greater than 1,000 ft (304.8 m) vertically.
Historic diamond drilling into the western carbonate rocks on the 650 and 800 levels, provide
some indication of the potential for potentially economic manto-type mineralization (Figures 6-1
and 6-2). In addition, observations made by CCIC in the footwall carbonate rocks also suggest
the possibility for replacement style mineralization. This is supported by samples JB-01 and JB-
02 which were collected from the west wall on the 650 and 600 levels, respectively (see Section
14.0).
Tureck (2002) noted that the zinc oxide mineralization intersected in SF-2 is high angle
(structural) and that while some of the mineralization intersected in SF-3 is approximating
bedding, much of this mineralization is also high angle (structural). Moreover, Tureck (2002) was
of the opinion that the mineralogical and petrological evidence collected to date, along with the
observations from the logging, could not provide any direct support for manto-style mineralization
and suggested further drilling be completed.
1. Breccia Replacement: considered the most productive from the Horn Silver Mine and is
typified by filling and replacement of limestone breccia by mineralizing fluids within the Horn
Silver Fault, concentrated at its intersection with a series of E-W fault fissures (i.e.,
Reciprocity Fissure Zone);
2. Breccia Pipes: described on one occasion, occurring on the south part of the Horn Silver
orebody and consisting of loose siliceous breccia with fragments of limestone and dyke rock,
circular to oval in outline and near-vertical; substantial amounts of gold-silver-lead were
mined from this area;
3. Fissure Filling: appears to be the least important to historic production, and is characterized
by highly variable, siliceous lead-copper-zinc-silver veins, confined to intersections of two
fissures or “fissure-favourable” bedding intersections;
4. Bedded Replacement: manto-style zinc-lead-silver mineralization was reported on several of
the Horn Silver Mine levels and in particular the 900 Level (Blickenstaff workings) from which
there was production; Blakemore (1980) reported mantos in outcrop, occurring in nearly flat
lying carbonates and consisting primarily of lead sulphide and zinc sulphide in excess of 20 ft
(6.1 m) thick. These surface deposits were most likely the result of surface leaching and
enrichment processes and were likely not true mantos; and,
5. Contact Skarn: occurs as skarn, at or near the surface and at fissure intersections, and is
not considered a major contributor to production.
10.0 EXPLORATION
In 2002, Franconia completed surface and underground mapping and sampling, geophysical
survey and a thorough compilation of all data available to date from the San Francisco property.
This exploration program consisted of five main parts and was managed by Kathy Tureck; further
details are provided by Tureck (2002).
The location of the original mine grid was electronically surveyed and re-established and
excellent control was gained by surveying off several grid stakes that were located in the field and
tying into shafts and control points. This grid, extended to the underground workings, was utilized
for locating surface geophysical stations, for placement of underground geophysical probes, and
for surface mapping reference. The grid also allowed precise location of diamond drill holes with
respect to underground workings and geological targets during the 2002 drill program. The 00N
and 00E baselines were surveyed, staked and tagged every 100 ft (30.5 m) from 1000N to 600S
and 1200W to 400E; all other grid points were staked every 200 ft (61 m) and located by Brunton
compass and measuring tape. The King David shaft, Horn Silver shaft, and critical drill hole sites
were surveyed from the grid origin point, located at an elevation of 6,490 ft (1,978 m) above sea
level.
A high quality topographic base map was reproduced from original survey data obtained from
Watson Engineering (Cedar City, Utah) who produced the original orthophotographic and
topographic maps for Bethlehem Resources Corporation in 1989. New and historic data was
converted into a digital GIS format. During the course of data conversion Franconia geologists
discovered an elevation discrepancy between the surface and underground maps and sections.
It was determined that the true elevations of the mine workings are 90 ft (27.4 m) lower than
those reported on Kipps (1931) level and section maps. The elevations were subsequently
adjusted on all sections, maps, drill hole collars, and in the database for consistency with surface
elevations. It is therefore necessary, when viewing historic mine maps, to lower the elevation by
90 ft (27.4 m) to match the current topography.
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The San Francisco property was mapped at 1:1200 scale from mine grid 1400N to 400S and
1200W to 400E (Appendix 3F). Geologists who had previously mapped the property for
Bethlehem Resources (1989) and Hunt, Ware & Proffett (1983) were used as assistants during
the mapping program. Special emphasis was placed on structural and lithologic controls to
mineralization in the Orr Formation which hosts the main Horn Silver lode and numerous nearby
silver-lead-zinc-Fe prospects. The most prominent feature in the map area is the mineralized,
north-trending, Horn Silver Fault located at roughly mine grid 300W (Appendix 3F). This steep,
normal, Basin-and-Range fault juxtaposes west-dipping Cambrian-Ordovician carbonate rocks on
the west with Tertiary volcanic and intrusive rocks on the east side; throw along the fault is about
1600 ft (488 m). The fault terminates against Tertiary quartz monzonite (Cactus Stock) to the
north at about mine grid 2000N and is intruded by quartz monzonite fingers and dykes in the
northern portion of the Horn Silver Mine.
On surface, the Horn Silver Fault zone reaches widths of over 100 ft (30.5 m) and is strongly
brecciated with accompanying intense clay-silica alteration. Mineralization is confined to the
hanging wall carbonate breccias. Intense clay-silica alteration overprints both the carbonate and
Tertiary volcanic rocks in the vicinity of the Horn Silver Fault. Local “klinker” rock, a friable silica
rock, is shown on the Franconia maps north of the mine adjacent to faults (past workers have
referred to these zones as “leached cap rock”). Irregular pink hematitic carbonate breccia bodies
and silver-lead-Fe-zinc mineralized breccias extend all along the strike of the Horn Silver Fault
from 400N to 400S, reaching widths of about 200 ft (61 m). These breccias were the host to the
rich oxide ores.
The Horn Silver Fault is offset by, and disrupted by, steeply dipping, west-northwest cross
structures which are locally intruded by intermediate porphyry (Tureck, 2002). In places,
mineralization, alteration, and brecciation expand at these structurally prepared intersections. In
addition, gently dipping mineralized breccia zones were observed in the pit faces (as well as
underground) and appears to be mineralized bedding-plane shears locally. Theses three
intersecting fracture/shear sets appear to have focused mineralizing fluids and locally control the
higher grade mineralization, especially with respect to supergene upgrading at higher levels in the
mine. This is especially noteworthy in the north pit where exposed workings are concentrated at
these intersections (Tureck, 2002). Similar relationships are noted at approximate mine grid
locations 0N, 300-400N, 200S, 300-400W, and 300N, 400W. Underground, zones containing
very high concentrations of pyrite, copper and zinc appear to lay at the intersections of northerly-
trending normal fault splays of the Horn Silver Fault and northwest trending, north dipping cross
faults. The pyrite bodies are elongate along these faults but may be pipe like in gross
morphology, spreading along structurally prepared cross faults and perhaps bedding or low angle
shears that dip northwest. A high grade (oxide) zone on the 650 Mine level also shows a
concentration of steep north-trending, moderate north-northwest, and flat structural elements in
the vicinity of 250N, 300W (Tureck, 2002).
The resulting mine model was used extensively for reference to plan Franconia’s drilling and
underground mapping and sampling programs in 2002. Franconia’s 2002 work was added to the
database as it progressed. This included 650 Level geological mapping, 650 Level survey data,
650, 900 and 1000 level chip sampling locations and results, and drill hole survey, geology,
mineralization and analytical results. The mine database is best visualized on the computer using
3D visualising software such as Gemcom as 3D renditions of the mine model are difficult to
appreciate in paper print.
The accuracy of the location of the underground stopes and workings has been in question for
some time and this needed to be established in order to accurately produce a 3D model. Earl
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Harrison (Western Mine Development, Nevada) re-conditioned the King David shaft, relocated
and resurveyed the surface mine grid and surveyed the crosscut and 650 Level workings. The
Franconia survey results show excellent correlation with the Kipps (1931) and Metal Producers
(1950s) level maps and tie in, with some adjustment, to the mine grid. Small discrepancies are
due to caving, ground shift or undocumented excavation by Metal Producers (1950s). Based on
650 Level results, further surveying on lower levels was not required and there is a high level of
confidence in the historic data.
The 650 Mine Level was never mapped by Kipps (1931) since most of the development took
place after Kipps’ work and was only partially sampled by Metal Producers (1950s). The 650
Level was mapped at 1 inch=30 feet (1:30 scale or 1 cm=0.3 m) and parts of the 700, 800, 900
and 1000 levels were field checked for accuracy (Tureck, 2002). Overall, the physical condition
of the workings is unsafe and decaying timbers and numerous areas of ground failure exist on
every level examined. After a quick geologic review and recording of observations the 700 and
800 levels were found to be too dangerous to work in. With the exception of the 1000 Level, air
supply and quality was good. The mine is absolutely dry, creating problems for samplers and
mappers as any amount of rock sampling resulted in voluminous suspended dust that failed to
settle or evacuate readily. Mapping was further hindered by a heavy dust and crust coating on all
the walls, virtually obscuring the rock surface. The use of UV lamps for both mapping and
sampling proved invaluable as the sphalerite in the Horn Silver Mine is triboluminescent and
phosphorescent and glows under the lamp, often allowing one to more readily observe areas of
zinc sulphide through the dust.
A total of 136 horizontal and vertical continuous rock chip samples were collected from portions of
the 650, 900 and 1000 levels and submitted to ALS Chemex Laboratories (Sparks, Nevada) for
41-element assay-grade analyses. Selected results from these analyses, along with composites,
are shown in Table 10-1. A total of 52 samples that showed a high degree of silicification were
selected out of the 136 samples and submitted for gold assay, in addition to the 41-element. A
list of the assay results obtained from the underground sampling is provided in Appendix 3C.
Channel samples returned gold concentrations ranging from <5 ppb (one sample) to 1705 ppb
over 5 ft (1.5 m). Average gold concentration is 349 ppb and is typically present at >100 ppb.
Several samples also contained elevated concentrations of silver (several >200 ppm Ag), copper
(several >0.1% Cu), As (several >6,000 ppb As), Ba, Cd and Fe.
Table 10-1. Significant zinc composites from underground rock channel samples.
Sample No. From To Length Length Zn Level Description
(ft) (ft) (ft) (m) (%)
206601-613 25 62 37 11.28 3.07 650 shear
206625-627 5 15 10 3.05 1.21 650 Dam
206631-644 5 68 63 19.20 4.85 900 East of Blickenstaff workings
206655-668 20 65 45 13.72 2.25 650 south drift
206671-673 0 16 16 4.88 4.99 650 new drill station tunnel
206677-680 31 51 20 6.10 6.88 650 new drill station tunnel
206752-753 0 10 10 3.05 18.55 650 shear; north wall
206759 0 9 9 2.74 2.56 650 shear; vertical chip sample
206765-796 0 40 40 12.19 3.77 650 mid South drift
206798-630 5 15 10 3.05 2.85 650 mid South drift
Although, the geology mapped by Tureck (2002) agreed well with past work this latest work
showed a much higher sulphide (pyrite-galena-sphalerite-chalcopyrite) content than previously
indicated. Very high pyrite zones (also high in copper and zinc) appear to lay at the intersections
of northerly-trending normal fault splays of the Horn Silver fault zone and northwest trending,
north dipping cross faults. The high pyrite bodies are described as elongate along these faults
but possibly pipe like in gross morphology, spreading along structurally prepared cross faults and
perhaps bedding or low angle shears that dip northwest (Tureck, 2002). Detailed surface
mapping (1:360 and 1:1200 scales) confirmed similar trends with high grade (oxide)
mineralization occurring at intersections of gently north and northwest dipping bedding(?) plane
shears with high angle north-south normal faults and east-west trending cross faults. Mapping by
Tureck (2002) also showed oxidation falling off rapidly away from the main north-south Horn
Silver Fault, leaving room immediately west and north of the stopes for significant zinc in primary
ore.
Tureck (2002) completed sampling on the 900 Level east of the Blickenstaff workings; the
Blickenstaff workings were inaccessible. This sampling yielded an average grade of 4.85% Zn
over 63 ft (19.2 m) of continuous channel sampling (from east to west), including 20 ft (6.1 m)
averaging 7.72% Zn, 7.94% Pb and 8.44 opt Ag. Mineralization is described as hosted in a
multiply brecciated, silicified, heterolithic sulphide breccia that terminates against a steep
northwest-trending oxidized fault and porphyry breccia (Tureck, 2002). Over the interval, the
breccia varies from matrix- to clast-supported and fragments include chalcedony, carbonate,
mixed sulphide, and re-brecciated sphalerite and galena clasts. Grades reported by Tureck from
the 900 Level are similar to sulphide grades reported from sulphide breccias in other parts of the
mine.
Results of the geophysical survey above the 650 Level were technically very good but the
surveys failed to provide any new information regarding potential sulphide mineralization below
the 650 Level. Frontier Geosciences Ltd. was to apply 3D inversion modelling using the
University of British Columbia’s (Vancouver, Canada) 3D Resistivity and IP Inversion software.
However, this modelling process was apparently not completed due to software problems (pers.
comm. Tureck, 2004). There may still be value in utilizing 3D inversion software on the data and
this should be considered prior to further drilling.
O’Connor and Candy (2002) recommended two geophysical targets on the basis of their surveys.
The first lies along the Horn Silver trend at 600-800S and 200-300W which is situated south of
Franconia’s 2002 drill hole SF-3 and along the main Horn Silver trend, in an area with good
geological potential. The only past work that may have come close to testing this target is
Freeport Exploration Company’s drill hole HS-8 (total depth of 1,730 ft or 527 m) which was
drilled from the east. On the basis of a very poor quality cross-section, hole HS-8 may have
penetrated into the Horn Silver Fault at about 400W and at the approximate 1500 Mine Level
(about 5,000 ft or 1,524 m elevation). However, this drill hole depth at 400W is far beyond the
survey modeling depth and therefore the first geophysical target remains unexplained and
untested. The second geophysical target lies is to the north of the King David mine shaft at
1000N and 1000W where the underground source produced a strong off-hole, low resistivity and
high chargeability anomaly. This geophysical anomaly is situated on a northwest-trending
Tertiary dyke that intrudes limestone breccia.
11.0 DRILLING
Franconia completed a three hole (SF-1, SF-2, SF-3) surface diamond drilling (core) program,
totalling 3,528 ft (1,075.3 m) and producing 167 core samples. The drilling was aimed at testing
for flat-lying mineralization within the footwall carbonate rocks, west of the Horn Silver Fault and
Horn Silver Mine (Figure 11-1). Unless otherwise stated all drilling intersections are not
representative of true widths (thickness) but are intersection lengths. Tureck (2002) commented
that the mineralization intersected in SF-3 is more than likely low angle (about 75° from core axis)
and therefore the sample footages could represent true thickness.
None of the drill holes were surveyed with appropriate dip or azimuth tests and as such their
exact location in 3D space is not known. For the purposes of this report, CCIC is assuming that
the drill holes followed the course (orientation and dip) originally set at the drill collar. Selected
results of the drill program are listed in Table 11-1 with simplified plan maps, cross-sections and a
drill hole summary provided in Appendix 3D.
Table 11-1. Significant zinc intercepts from Franconia’s 2002 drilling program (Tureck, 2002).
Drill Hole Depth (ft) Depth (m) Az/Dip* From (ft) To (ft) Int. (ft) Int. (m) %Zn
SF-1 949.0 289.3 0/-90 657.0 663.5 6.5 1.98 3.71
SF-2 1257.0 383.1 117/-81.5 928.0 940.0 12.0 3.66 5.86
1170.0 1225.7 55.7 16.98 14.01
Includes: 1170.0 1130.0 60.0 18.29 12.00
1170.0 1207.0 37.0 11.28 16.58
1179.3 1195.0 15.7 4.79 25.48
1212.0 1225.7 13.7 4.18 12.13
1217.5 1222.7 5.2 1.59 23.90
SF-3 1322.0 403.0 149/-75 1177.6 1189.0 11.4 3.48 18.01
Includes: 1177.6 1184.0 6.4 1.95 26.90
1228.5 1278.0 49.5 15.09 16.63
Includes: 1244.0 1278.0 34.0 10.36 20.18
Includes: 1244.0 1270.0 26.0 7.93 24.59
Includes: 1256.3 1270.0 13.7 4.18 34.30
*actual traces of the drill holes were not surveyed; Az = azimuth
Hole SF-1 was lost in a solution cavity or workings at a depth of 949 ft (289.3 m) at about the 950
Mine Level and intersected only minor mineralization (Table 11-1). Drill holes SF-2 and SF-3
encountered a second type of high grade oxide mineralization in the form of nearly monomineralic
smithsonite gossans, unusual in their lack of lead-silver and in their high Cd content (Tureck,
2002). Perhaps of more importance, drill holes SF-2 and SF-3 intersected zinc that appears to lie
well below the last know level of production (>900 Mine Level), with intersections at and just
below the 1100 Mine Level (Figures 11-2 and 11-3).
In drill holes SF-2 and SF-3, the zinc occurs in the oxide mineral smithsonite and is accompanied
by little or no silver or lead (Appendix 3D). The style and type of alteration and mineralization
observed in SF-3 is visually and chemically very similar to that cut by SF-2, located 200 ft (61 m)
north of SF-3, and lies at approximately the same elevation as the SF-3 intercepts (equivalent to
the 1100 to 1150 Mine Level).
The zinc gossan zones in SF-2 all appear to be steeply dipping across the lower angle relic
carbonate bedding/foliation, suggesting a structural control on the mineralization. However, in
drill hole SF-3, oxide zinc mineralization appears to occupy both lower angle foliation/bedding(?)
and steeply dipping structural fabrics and it is not possible to eliminate either a “manto” or high
angle structure as a control to mineralization; in fact both may play a role (Tureck, 2002).
Cadmium concentrations in zinc mineralized core from the drill program are very high, typically in
excess of 500 ppm and in many cases >1000 ppm. Tureck (2002) suggested that because Cd is
relatively immobile, its presence reflects in-situ weathering or dissolution of precursor zinc
sulphide. Moreover, the exclusive occurrence of smithsonite in the gossan zones in SF-2 and
SF-3 is likely the result of in-situ sulphide oxidation and subsequent enrichment due to volume
loss during oxidation.
Mineralization intersected in SF-2 and SF-3 remains open to the east, south, and west. Further,
because no known exploration for zinc mineralization has ever been conducted below the 1000
Mine Level and, with the exception of SF-2 and SF-3, no drill holes have ever tested the region
below the 900 Level, mineralization remains open to the north, below the 1000 Level. The
relationship of the zinc mineralization in Franconia’s recent drilling relative to the historic Horn
Silver orebody is not yet known, nor is the geometry of the body or bodies encountered in drill
holes SF-2 and SF-3. The continuity of the mineralization and whether or not the mineralization
is within separate, high angle structures or shallow dipping mantos remains to be resolved.
It is possible that the smithsonite gossan zones in SF-2 and SF-3 connect to a sulphide body
laterally or at depth (Tureck, 2002). An analogous relationship was observed underground where
zinc sulphide ore bodies lie adjacent to zinc oxide and silver-lead oxide bodies between the 550
and 900 levels (Tureck, 2002). On these levels, there is oxidation and supergene enrichment
producing the silver-lead ores, an indication that zinc has been removed and transported
elsewhere to form secondary zinc oxide ore bodies.
If the location of the drill holes in 3D space is confirmed, then the intercepts in holes SF-2 and
SF-3 could represent newly discovered zinc oxide mineralization that is either:
a) An extension of two small oxide ore bodies delineated by Metal Producers on the 1000
Level. The mineralization in SF-2 and SF-3 lies below and south of the southernmost known
oxide orebody, shown on Metal Producers 1000 Level map. If contiguous, these intercepts would
extend the zinc mineralization approximately 250 ft (76.2 m) south-southwest of the southern
Metal Producers orebody (Tureck, 2002).
b) A separate and new orebody or orebodies: Holes SF-2 and SF-3 intercepts represent
mineralization deeper than, and further west of any know mineralization. Although it is oxide,
sulphide mineralization could be nearby if it is similar to that observed underground. There is a
moderate to steep brittle fabric in SF-2 mineralization suggesting mineralization along a steep
structural zone, but it is not possible to say if the zone parallels the Horn Silver Fault or is a cross
structure (Tureck, 2002).
The ERL study also characterized the alteration assemblage in and near the zinc gossan
intervals as oxidized and rich in clay minerals including wollastonite, talc, kaolinite,
montmorillonite, and serpentine-group (ERL, 2002). Chrysotile is especially abundant in the
lower portion of SF-2 where it forms bright green spheroids (Tureck, 2002). Hole SF-2 contains
significant amounts of gypsum from 1170-1225 ft (356.6-373.4 m). Detailed mineralization and
alteration are provided in the drill logs and shown graphically on drill sections and plan maps
(Tureck, 2002).
The core logging process recorded intervals of core recovery and condition, structures,
lithologies, alteration, intersections with old workings, oxide and sulphide mineralization, general
descriptions (graphic and text) and intervals that were sampled. The footage of intervals in the
core boxes are marked by wooden blocks. Sample number sequences were derived from a
sampling book and the sample interval is determined by matching the sample number and
interval with the intervals marked by the wooden markers in the core boxes. Core samples were
taken on the basis of geology, structural breaks and mineralization, using the tops and bases of
visual alteration (oxidation) and/or mineralization (down to 0.1 ft or 30 cm) and occasionally
geology to determine the sample interval; sampling was extended above and below areas of
mineralization. In general samples were taken in intervals ranging from 2-5 ft (0.6-1.5 m) with
some sample intervals greater than 7 ft (2.1 m). Results of the drill logging were entered into GIS
database. The drill core was logged by K. Tureck (Tureck, 2002).
results from QC checks to the Quality Assurance Department to compile and make sure
standards are being met. Further information on ALS Chemex is provided in Appendix 2.
Shipments of the half drill core from Minersville to ALS Chemex in Sparks, Nevada were
completed using UPS ground courier. Drill core is currently stored at a locked and secure
(fenced compound) storage unit in Minersville, Utah (B&C Self Storage) which was visited by
CCIC in February 2004. The pulps and rejects were retained by ALS Chemex for their standard
holding period.
The results of any analyses generated by ALS Chemex are strictly confidential and the sole
property of the client. Unauthorised use or release of any analytical data is not permitted.
Furthermore all internal ALS Chemex documents, reports, lists, files and methods may not be
disclosed or photocopied without permission. Any act in violation of these rules would be
considered grounds for dismissal. Their policy on client confidentiality is in the Staff Brochure that
is given to all new employees. They also require new employees to sign a Confidentiality
Agreement indicating that they understand these terms of employment and accept them.
Information stored in their computer system is available only to authorized staff and clients, all of
whom have password-protected accounts. Clients can retrieve their data electronically in a
secure fashion using the WebtrieveTM system. The internal security system maintains a record of
any activity in a client work order file, including the act of viewing a file, and records the name of
the user and the time, date and nature of the activity. In this way we can verify and confirm that
no unauthorised activities have taken place in a client file. Other technological advances that
have helped improve data security include auto-faxing from the computer so that accidental
misdialing does not occur.
In so far as the ability to utilize drill hole data from holes SF-1, SF-2, and SF-3 for future resource
calculations or underground planning it must be made clear that no dip or azimuth tests were
done during the drilling campaign by Franconia. If the results of the drilling are to be relied upon
in the future, then dip-azimuth surveys should be completed; otherwise the spatial location of the
data should be deemed unreliable.
As part of the data verification process, CCIC made two visits to the San Francisco property,
have had discussions with geologists that have worked on the property or are familiar with the
property and have had discussions with geologists familiar with the style of mineralization being
explored for on the property. In addition, CCIC have reviewed assay certificates, signed copies of
agreements and other information relating to the property. All available technical data supplied
by Franconia was reviewed by CCIC. CCIC are satisfied with the procedures taken in the field in
regards to sampling, data entry, use of accredited laboratory facilities, and security where
applicable. Selected photographs taken during the site visits are provided in Appendix 3E.
Mineralized sections of drill core from SF-02 and SF-03 were photographed by CCIC and
selected portions of previously sampled intervals were collected for general comparison. In
general, the mineralized and altered sections are heavily gossaned (zinc oxide – smithsonite),
highly fractured and locally brecciated. A series of photos are provided in Appendix 3E.
Table 14-1. Description and assays from samples collected during 2004 site visit (drill core).
Sample Description From To Int Int Zn Pb Ag
(FRANCONIA sample) (ft) (ft) (ft) (m) (%) (ppm) (ppm)
LLDÆ - - - - - 0.01 2 1
SF02 205605 (29.9% Zn) 1185.0 1186.0 1.0 0.31 24.25 31 <1
SF03 205771 (26.9% Zn) 1179.8 1180.4 0.6 0.18 31.03 27 2
*SF03 205771 (26.9% Zn) - - - - 30.95 24 <1
*internal duplicate from lab; LLD = lower limit of detection
Sample SF02, collected from core interval 1185-1186 ft (361.2-361.5 m) in drill hole SF-2,
assayed 24.25% Zn, 31 ppm Pb and was below detection for silver (<1 ppm) and gold (<5 ppb).
This sample was taken from a portion of an original Franconia sample interval (205605), 1183.5-
1187 ft (360.7-361.8 m), that assayed 29.9% Zn, 10 ppm Pb and below detection silver and gold
(Appendix 3D). Sample SF03, collected from core interval 1179.8-1180.4 ft (359.6-359.8 m) in
drill hole SF-3, assayed 31.03% Zn, 27 ppm Pb, 2 ppm Ag and was below detection for gold (<5
ppb Au). This sample was taken from a portion of an original Franconia sample interval
(205771), 1177.6-1184 ft (358.9-360.9 m), that assayed 26.9% Zn, 20 ppm Pb and below
detection silver and gold (Appendix 3D). The assays from core samples collected by CCIC
are in very good agreement with the original sample assays from Franconia’s 2002
diamond drilling program.
Table 14-2. Description of samples collected from 600 and 650 levels, Horn Silver Mine (2001).
Sample Level Location Description
JB-01 600 south end of workings FW carbonate; fg disseminated ZnS(?)
FW carbonate-breccia; west edge of breccia;
JB-02 600 ~250 ft north of JB-01
veinlets of grey ZnS(?) Ag(?) + disseminated ZnS
breccia on west side; triboluminescent; fg ZnS,
JB-03 600 ~150 ft north of JB-02
pyrite; zincite(?)
breccia/gouge on west side; triboluminescent
JB-04 650 south end – ore dumps
ZnS; fg ZnS with zincite
west side; breccia; triboluminescent ZnS;
JB-05 650 +2 ft wide band, triboluminescent ZnS
fragments of zincite(?) yellow ZnS(?)
fg = fine-grained; ZnS = sphalerite
Table 14-3. Assays of samples collected at the Horn Silver Mine, 2001 (ICP-70, Hg add-on).
Sample Zn Zn Pb Ag Cr Ni Cu As Cd Sb Hg
(ppm) (%) (ppm) (g/t) (ppm) (ppm) (ppm) (ppm) (ppm) (ppm) (ppm)
LLDÆ 0.5 0.01 2 0.2 1 1 0.5 3 1 5 1
JB-01 245 - 75 <0.2 6 2 1.8 46 <1 <5 <1
*JB-01 261 - 77 <0.2 5 2 1.5 47 <1 <5 <1
JB-02 - 10.4 >10000 15.6 14 14 30.4 233 766 47 <1
*JB-02 - 10.4 - 15.8 - - - - - - -
JB-03 - 4.77 >10000 130.0 44 5 4030 702 283 2110 13
JB-04 - 43.2 >10000 43.4 17 3 32.4 281 >10000 49 19
JB-05 - 20.9 >10000 156.0 57 12 54.2 1660 >10000 138 6
*internal duplicate from lab; LLD = lower limit of detection
Sulphide minerals observed in hand samples and in the workings include sphalerite, galena,
pyrite, chalcopyrite, bornite and tetrahedrite; possibly stibnite and chalcocite.
Samples of the breccia-hosted triboluminescent zinc sulphide (JB-03, 04 and 05) have the
highest concentrations of zinc (up to 43.2% Zn) and/or silver (up to 156 g/t or 4.6 opt Ag); the
highest copper value (0.40% Cu) also came from the breccia. It is noteworthy that the
triboluminescent zinc sulphide samples contain relatively low Mg and Mn and high Fe, Cr, Cd, Sb,
Pb, and Hg in comparison to footwall carbonate samples; elements such as Cr, Sb and Cd may
account for the luminescent and phosphorescence qualities.
Sample JB-01 contains 245 ppm Zn which is about 3-6 times expected background (background
in carbonate is estimated at 40-70 ppm Zn) and may be indicative of mineralized fluids
penetrating the generally massive footwall carbonate rocks. Sample JB-02, collected from the
footwall carbonate is significantly denser than JB-01, and contains carbonate fragments
cemented by finely disseminated and veinlet mineralization. This sample appears to be from the
“edge” of the main fault breccia and contains elevated concentrations of zinc and silver. Although
collected in proximity to the mined out fault breccia, this sample has characteristics suggestive of
mineralized fluids penetrating and replacing the footwall carbonate. Assays from the grab
samples collected by CCIC are in very good agreement with historic assays from the
property and from underground chip samples collected during Franconia’s 2002
exploration program.
Some of the deposits mentioned in this section have similarities to the geology and mineralization
around the Horn Silver Shaft as far as rock types, alteration patterns, and mineralogy are
concerned. The locations are approximate, measured relative to the location of the Horn Silver
Shaft, and all of the descriptions are compiled from Blakemore (1980). The approximate UTM
coordinates were provided by J. Telford (pers. comm., 2004) and are listed in Table 15-1.
Table 15-1. Location of properties in the San Francisco property area (UTM: NAD27-CON US).
Mine/Property Name Easting Northing Comments
Horn Silver 301400 4257950 main Zn oxide surface pit
Imperial 299870 4259440 Cu skarn, upper adit
Lulu 301500 4257620 shaft on Horn Silver fault, south of Horn Silver
Cactus 299900 4262400 breccia pipe, main surface pit
Indian Queen 297980 4264760 adit
Washington 299450 4258990 skarn, shaft
Carbonate 304475 4261450 aka Frisco Carbonate, shafts
Cupric 298820 4259000 shaft and adits
Frisco Contact 301560 4260400 shafts
New Years 299630 4262760 shaft, northwest of Cactus
Dolly Mack and Americus 301360 4257080 two claims, contiguous with and south of the Lulu
Antwerp and Florida 299700 4259440 two claims, immediately west of the Imperial
Sunbeam 298800 4258850 single claim, shaft, south-southeast of the Cupric
Frisco Silver Mines 299470 4258590 large group of claims, formerly Peacock Copper Consol.
St Louis 300400 4257410 four claims, southwest flank of Grampian Hill
Cupric Tungsten - - ~4,000 ft W-NW of Horn Silver Shaft
Stock, there is no porphyry system associated with the stock and the mine is best considered a
copper-bearing breccia pipe (pers. comm. J. Telford, 2004).
15.3 Sunbeam
This property is located about 1.7 miles (2.7 km) west-northwest of the Horn Silver Shaft. A few
hundred tons of ore was extracted from the Sunbeam shaft where the Reciprocity Fissure system
and Squaw Springs Fault intersect. The ore has been described as being hosted in limestone.
15.10 Imperial
Located about 1.3 miles (2.1 km) northwest of the Horn Silver Shaft and consisting of a copper
skarn.
15.11 Lulu
This property is located about 0.2 miles (0.3 km) south-southeast of the Horn Silver Shaft and
comprises a mine shaft sunk into the Horn Silver Fault.
15.13 Carbonate
This property is located about 2.9 miles (4.7 km) northeast of the Horn Silver Shaft. Apparently
there are exploration shafts on the property and the rock type present is the Aka Frisco
carbonate.
This report also indicated that the economics may be compromised due to secondary crushing
operations and recommended that a pilot heap leach plant be constructed.
Results of both tests indicate that the breccia ore would be amenable to heap leaching. The high
gold recovery and lower silver recovery indicates that the gold probably occurs as films along
fracture faces or in porous veinlets whereas the silver is contained mainly as disseminations
throughout the breccia (Jones, 1982). It was also concluded that approximately 750,000 tons of
brecciated material grading 0.052 opt gold and 2.85 opt sliver could be available for a heap leach
operation. Although assay sheets are available for review, CCIC cannot rely on the resource
estimate of 750,000 tons as no supporting documentation is available.
In Godbe (1982a), a report written for Horn Silver Mines Inc. on the ‘ore reserve’ potential of the
Horn Silver Mine, it is stated that the standard ore reserve classifications used at that time,
cannot be used due to the varying sources of data, inability to field check control samples and
physically examine exposures. However, Godbe (1982a), on the basis of a 1948 in-house memo
by Metal Producers, concluded that a “large” zinc oxide reserve exists at the Horn Silver Mine
from surface down to the 100 Level (Table 17-1).
Table 17-1. Unqualified Reserve estimates (un-mined and in place), from Godbe (1982a).
PROVEN AND POSSIBLE Avg. Avg. Ag Avg. Au
ORE TYPE Avg. Zn%
RESERVES Pb% (opt) (opt)
Oxide Zn Ore 753,641 14.5 - - -
Oxide Ag-Pb Ore 250,000 to 500,000 1-3 10-20 18.5 -
Sulphide Zn-Pb-Ag Ore 200,000 10 10 10 -
Siliceous Au Ore 200,000 1 - 2-6 0.16
Mineralization is dominated by sulphides below the 600 Level with known zinc oxide associated
with fault breccias extending to at least the 1000 Level workings. Although the exact location of
drill holes SF-2 and SF-3 in 3D space is not known, it is likely that the broad intersections of high-
grade zinc-oxide mineralization (smithsonite) encountered in these holes equate to the 1150
Level, which is much deeper than previously known. These drill intercepts may be indicative of a
large oxide zinc resource.
Outside of Franconia’s 2002 drilling program, no serious attempt has been made to determine the
limits of zinc-sulphide or zinc-rich oxide ore either at depth, along strike (north-south), or west of
the known “resource” (proximal to the Horn Silver Fault) and excellent potential remains for
undiscovered resources. It is not yet clear as to the nature of the zinc mineralization in the region
of the Blickenstaff workings at the Horn Silver as there is evidence suggesting the presence of
manto-style (bedding) and/or structurally controlled zinc oxide mineralization.
20.0 RECOMMENDATIONS
By their very nature, mantos, carbonate breccias, and mineralized (or unmineralized) fault zones
may pinch, swell, and be structurally displaced. Therefore, further effort should be directed
towards drilling and geophysics, potentially utilizing down hole electromagnetic (“EM”) and
IP/Resistivity surveys, which can detect off-hole responses, and underground mapping should
new areas of the Horn Silver mine or other workings be rehabilitated. Deep penetrating (+600 ft
or +183 m) surface geophysical surveys such as Time Domain EM (“TDEM”) or IP/Gradient
surveys should also be considered in efforts to locate potential sulphide bodies at depth.
Geological mapping remains critical and should especially be considered foremost in any regional
exploration program beyond the current San Francisco property boundary.
Franconia is recommending a two-phase diamond drilling program with the second phase being
contingent on the results of the first (Tables 21-1 and 21-2). The first phase of drilling is expected
to be completed in about four to six months and will require five, 1,200 ft (366 m) diamond drill
holes totalling about 6,000 ft (1,829 m) of core. The drill program is expected to generate about
300 core samples and each of the drill holes will be surveyed. This first phase of drilling will be
aimed at providing information regarding the size and geometry of the mineralization drilled in
holes SF-2 and SF-3 and testing for manto-type and/or high angle mineralization west of the Horn
Silver Fault. In addition, this drilling will test the down dip extension of the Blickenstaff workings.
Expected costs for this first phase of diamond drilling are on the order of US$360,000 (Table 21-
1).
Contingent on the results of the first phase of drilling, Franconia is recommending a second
phase of diamond drilling. This second phase is expected to be completed in a two to three
month time frame and will require two, 1,500 ft (457 m) drill holes, totalling about 3,000 ft (914 m).
These drill holes will be planned contingent on the results of the first phase of drilling. Expected
costs for the second phase of diamond drilling are on the order of US$196,000 (Table 21-2).
CCIC are in agreement with the proposed drilling programs (~US$556,000) but suggests that in
additional to the diamond drilling, Franconia consider down hole EM and IP/Resistivity
geophysical surveys in order to test for the possibility of mineralization lateral to and below drill
intersections; this geophysical information could also aid in structural interpretations. In addition
CCIC recommends that Franconia consider deep penetrating (+600 ft or +183 m) surface
geophysical surveys such as Time Domain EM (TDEM) or IP/Gradient surveys in order to test for
potential zinc sulphide/oxide bodies at depth and perhaps guide further diamond drilling. The
costs of these geophysical surveys will be dependent on the survey system utilized, the number
of drill holes surveyed and the number of line miles of survey required.
It is the opinion of CCIC that the character of the San Francisco property and the mineral
targets being sought are of sufficient merit to justify the exploration program as
recommended.
Table 21-1. Recommended phase 1 diamond drilling program, San Francisco property, Utah.
ITEM DESCRIPTION COSTS (US$)
Drilling Cost
Footage Charges – all in costs Five 1,200 foot Core Holes - Total 6,000 ft (60 rig days) $240,000.00
Survey Control Work
Surface Control 600/day $1,800.00
Downhole Survey Camera 1600/mo $4,800.00
Analytical Work
Sample analysis 300 samples @ 12.00 $3,600.00
Sample Shipment $1,500.00
Sampling Supplies $1,000.00
Project Geologist
Consulting Fees 75 days @ 425/day $31,875.00
Expenses 75 days @ 150/day $11,250.00
Computer Consultant
Consulting Fees 350/day $8,750.00
Expenses 150/day $1,800.00
Gemcom Program Rental 325/mo $1,137.50
Core Shed Rental 1,000/mo $3,500.00
Core Sampler/Helper 1,000/mo $3,000.00
Road/Site Construction
Dozer 125/hr $3,000.00
Land Costs $18,000.00
Contingency 5% of above $15,850.00
Administration $9,000.00
Phase I Total: $359,862.50
Table 21-2. Recommended phase 2 diamond drilling program, San Francisco property, Utah.
ITEM DESCRIPTION COSTS (US$)
Drilling Cost
Footage Charges – all in costs Two 1,500 foot Core Holes - Total 3,000 ft (30 rig days) $120,000.00
Survey Control Work
Surface Control 600/day $1,200.00
Downhole Survey Camera 1,600/mo $2,400.00
Analytical Work
Sample Analysis 150 samples @ 12.00 $1,800.00
Sample Shipment $1,000.00
Sampling Supplies $750.00
Project Geologist
Consulting Fees 40 days @ 425/day $17,000.00
Expenses 40 days @ 150/day $6,000.00
Computer Consultant
Consulting Fees 350/day $4,200.00
Expenses 150/day $900.00
Gemcom Program Rental 325/mo $650.00
Core Shed Rental 1,000/mo $2,000.00
Core Sampler/Helper 1,000/mo $1,500.00
Road/Site Construction
Dozer 125/hr $1,500.00
Contingency 5% of above $8,050.00
Administration $9,000.00
Land Costs $18,000.00
Phase II Total: $195,950.00
PART II
MAHONEY ZINC PROPERTY
NEW MEXICO, USA
On January 21st and 22nd, 2004 Franconia staked the FRA-TH claim group which occupy parts of
sections 20, 21, 22, 27, 28 and 29 within Township T27S and Range R9W (Figure 21-2). The
FRA-TH claim group consists of 54 unpatented lode mining claims were staked on Federal
ground, with each of the 54 claims at the standard size of 600 ft by 1500 ft (183 m by 457 m).
Location monuments were erected on the centre line of each claim, usually 20 ft (6.1 m) from the
end line; in New Mexico there are no side-centre or end-centre posts. The location monuments
are 2"x2"x4' wooden posts on which a copy of the Lode Mining Claim Location Certificate
(formerly know as the Notice of Location) were posted. Claim corners were monumented with
similar 2"x2"x4' wooden posts. Like the location monuments, the corner posts were inscribed
with the claim name and number. In addition, the corner post show the name and number of
contiguous claims.
The Location Certificates for claims 1 through 54 of the FRA-TH group were recorded at the Luna
County courthouse, located in Deming, and with the State office of the Bureau of Land
Management in Santa Fe, New Mexico on March 22nd, 2004. CCIC have reviewed copies of
the 54 signed and sealed Lode Mining Claim Location Certificates as submitted to Luna
County, New Mexico; copies of selected examples of these documents are provided in Appendix
4A. The filing of the Location Certificates was accompanied by a map show the general lay-out of
the claims and their location relative to the Federal Township and Range system (i.e., referenced
to a Section corner). Filing fees at the courthouse are US$9.00 per certificate (per claim) and at
the BLM the charge is US$25.00 per claim. Assessment fees, required to keep the mining claims
valid, will be due August 31st, 2004 and in each subsequent year. Details of the recording and
information relating to the Mahoney land tenement are provided in Appendix 4B.
The 54 claims that comprise the unpatented FRA-TH claim group were established with a hand-
held Trimble 5500 GPS system (sub-meter accuracy); a map outlining the unpatented and
patented mining claims is provided in Appendix 4B.
The FRA-TH claim group surrounds a group of nine patented claims that occupy parts of sections
21 and 28 in Township T27S and Range R9W (Figure 21-3). Several known zinc showings and
old mine workings occur within an area referred to as the ‘Mahoney Mines Area’ which is located
within this patented claim group. According to Mr. Foy, the patented claims have no water rights
(pers. comm. Jim Telford, 2004). The patented claims would have been formally surveyed at
some point in their history but CCIC are not aware of the details.
The permitting agency for the State of New Mexico is the Energy, Minerals and Natural
Resources Department, Division of Mining and Minerals, located in Santa Fe, New Mexico. A
Minimal Impact Exploration Permit (MIEP) is required to conduct any exploration activities,
regardless of land status (i.e., patented or unpatented lands), as long as the area of disturbance
is less than 5 acres (2 ha). In addition to the MIEP, a Bureau of Land Management (BLM)
approved "Notice of Intention to Conduct Exploration" or NOI is required to conduct exploration
activities on unpatented lands. The NOI permits activities such as drilling and road building but
does not permit water rights. Patented lands, such as those held by Mr. Foy covering the
Mahoney Mines, are exempt from the NOI. However, without a signed lease from Mr. Foy,
Franconia will be unable to apply for a state permit. Water law in the western United States is
complicated and generally water rights are purchased from current water rights holders.
Financial bonding is required to cover disturbances of areas greater than 2 acres (0.8 ha).
CCIC have know knowledge of any outstanding royalties, back in rights, carried or
working interest, outstanding payments, or encumbrances against the Mahoney property.
In addition, CCIC have no knowledge of any immediate environmental liabilities associated
with the Mahoney property.
Franconia is currently negotiating a joint venture agreement with TeckCominco regarding the
Mahoney Zinc Property.
This region lies within the northwest extent of the Chihuahuan Desert – the largest desert in North
America. In this desert to semi-desert region, the driest months are April and May and the
wettest are July, August and September. In general, hours of daylight range from about 14 hours
in late June to about 10 hours in late December. Winter temperatures average 59-27°F (15 to -
3°C) with about 1.6 in (4 cm) of precipitation. Spring temperatures average 76-41°F (24-5°C) with
less than 1 in (2.5 cm) of precipitation. Summer temperatures average 94-62°F (34-17°C) with
an average of 4 in (10 cm) precipitation. Autumn temperatures average 77-45°F (25-7°C) with
about 2.5 in (6.4 cm) of precipitation. Overall snowfall averages about 3 in (7.6 cm) per year.
New Mexico, the 5th largest state in the USA, is located in the southwest USA and is bordered to
the north by Colorado, to the east by Oklahoma and Texas, to the west by Arizona and to the
south by Texas and the country of Mexico (Figure 21-1). The state of New Mexico recognizes the
importance of mineral exploration and mining to the state economy and actively supports these
activities. The Mahoney is situated in a region that has experienced some minor mining
operations in the past and is relatively distant from any major population centres, reducing the
potential for cultural/societal confrontations. Residential power lines run within about 10 miles
(16.1 km) of the property but any major source of power (industrial) would have to come from
Deming. Water may be available from the Swope tanks, owned by Johnson Ranches, located
within the property boundaries.
The Mahoney, elevated 4,440 ft (1,353 m) above sea level, lies near the northwest base of the
Tres Hermanas (Three Sisters) Mountains, a set of three northeast-trending peaks that attain a
maximum elevation of about 7,151 ft (2,180 m) above sea level. North, west and east of the Tres
Hermanas, the high plains (pediment) are at about 4,200 ft (1,280 m) above sea level.
Vegetation is typical of a southwest United States desert, dominated by low-lying shrubs (i.e.,
Creosote Bush, Mormon Tea, Ocotillo), wildflowers and numerous species of cacti (i.e., Jumping
Cholla, Prickly Pear, Barrel, Cane Cholla). Outcrop is generally rare in the flat regions between
hills and mountains and cover consists mainly of sandy desert soils ranging from a few inches to
several feet thick.
23.0 HISTORY
The Tres Hermanas district of Luna County has a history of minor, high grade zinc and lead
production from zinc oxide deposits in the area. The early history of the region is not well known
but the Mahoney Mine deposits are thought to have been discovered around 1885 (Griswold,
1961). As of 1961, the district had produced an estimated US$500,000 from minerals with
revenues from zinc and lead, silver, gold and copper (Griswold, 1961). Main areas of production
were from replacement zinc-lead mineralization which was mined from small vein and manto-
style deposits at the Cincinnati, Hancock and Mahoney (Figure 23-1); most of the production
came from the Mahoney Mines. Other production in the area came from local vein systems of
lead and gold hosted within the quartz monzonite porphyry.
1905 Cincinnati Claim: located about 2 miles (3.2 km) southwest of the Mahoney, this claim is
considered to be the largest producer in the area (US$100,000 in 1910). The Golden Cross and
Eagle Company mined some thousand tons of rich lead ore with some gold, from a narrow vein
(up to 8 in or 20 cm wide) in the quartz monzonite porphyry. The ore was found within 100 ft
(30.5 m) of surface and developed with a 400 ft (122 m) shaft (Figure 23-1).
1905-1959 Mahoney Mines: The old workings at Mahoney Mines consist of surface pits, small
shafts, a number of adits and shallow declines (Figure 23-2). The deepest known penetration in
the Mahoney Mines area is the main Comfort shaft, which reaches about 200 ft (61 m) vertical
(Figure 23-2). There are levels at 24 ft (7.3 m) and 43 ft (13.1 m) which are within the shallow
zone of production near the top of the Escabrosa Limestone. Beneath that are levels at 120 ft
(36.6 m) and 198 ft (60.4 m); no information is available on these levels. Deeper replacement
ores were intersected in some of the smaller workings west of the Comfort shaft.
After the galena ores were exhausted, attention turned to the zinc minerals described as heavy,
white massive or crystallized and occurring in the old lead-zinc sulphide workings (Lindgren et al.,
1910). Shipments were made to smelters in the Mississippi Valley in 1905 but the cost of
shipping and smelting lift little room for profit from 29% zinc ore and little or no activity followed in
1906 and 1907 (Lindgren et al., 1910). The depth of oxidation and the current water table are
several hundred feet beneath the bottom depths (+200 ft) of the Comfort shaft (Worthington,
2002b).
The Mahoney Mines operated from about 1915 to 1948 but in this time only 8 years of production
are documented (Griswold, 1961). From 1915 to 1918 total production was about 1,300 tons of
zinc ore grading 34.5% and about 267 tons of lead ore grading 26.7% (Griswold, 1961);
production figures in other years remain problematic. The ores were undoubtedly upgraded by
hand-cobbing and the oxide ores were shipped directly to smelters. The bulk of production
appears to be from shallow workings in the Comfort and Contention mines (Figure 23-2).
1906 Contention Claim: an incline was sunk on the mineralization for 150 ft (45.7 m) following
the 30° dip of the strata and some lead and zinc ores were shipped in 1906 (Lindgren et al.,
1910).
1987 Newmont Mining Corporation: held lease on Mahoney patented claims. No information is
available on their exploration programs or results and a search of the BLM records and the New
Mexico Bureau of Mines by Jim Telford in 2004 revealed no past Notice of Intents (outline of the
proposed work program filed with the BLM) and no core in the core library.
1989-1991 Cyprus Copper: held lease on Mahoney patented claims. No information is available
on their exploration programs or results and a search of the BLM records and the New Mexico
Bureau of Mines by Jim Telford in 2004 revealed no past Notice of Intents (outline of the
proposed work program filed with the BLM) and no core in the core library.
2001 Cominco American Incorporated: TeckCominco staked 231 claims surrounding the
patented claim block, extending the unpatented claim group east to cover the Lindy Ann mine
area, located about 2 miles (3.2 km) east of the Mahoney (Figure 23-2). TeckCominco’s intent
was to stake all the carbonate exposures, the quartz-monzonite and carbonate contact and the
surrounding covered areas along the north flank of the Tres Hermanas Mountains; the patented
claim group was never leased. TeckCominco completed surface sampling and mapping,
underground mapping and sampling, mineralogical studies, magnetometer survey and limited
VLF survey. This work outlined manto-style mineralization on the property and TeckCominco
filed on 28 claims immediately surrounding the patented block. TeckCominco’s Spokane office
was not able to convince TeckCominco’s head office in Vancouver of the property's merit,
potentially due to the lack of an open pit target, and no follow up work was completed; the claims
were allowed to lapse.
During March and April, 113 grab and chip samples were collected from the area including the
Mahoney Mine, Lindy Ann Mine, Cincinnati Vein and Hancock Vein. A total of 68 samples were
collected from Mahoney Mines, 16 from Lindy Mine and 39 from other areas on the property.
Highlights from the results are provided in Table 23-1.
These samples are indicative of the enriched levels of zinc on the property and the presence of
zinc oxide minerals related to manto-style mineralization. TeckCominco conducted petrographic
studies that confirmed the presence of willemite (Zn2SiO4) and franklinite (Zn, Mn, Fe)2+(Fe,
Mn)3+2O4 in the Mahoney manto-type zinc mineralization. A sample of zinc ore (TH-1) was
submitted to TeckCominco Research for metallurgical testing and results of this are discussed in
Section 33.0.
TeckCominco completed a reconnaissance Total Field Magnetics ground survey in the area, with
line spacing of 1500 ft (457 m) and extending from about 3539000mN-232000mE to 3538000mN-
244000mE (NAD27 CONUS). The survey covered the Mahoney and Lindy Ann mines and the
results show a prominent positive magnetic feature centred within and slightly west of Mahoney
Mines. The anomalous area is in gravel covered terrane and nothing on the surface can account
for the magnetic response. Telford (2004) suggests that the anomaly could be caused by a
cupola of quartz monzonite or a magnetite-rich contact zone at depth, closer to the contact with
the quartz monzonite intrusive. The limited lines of VLF survey did not produce any significant
results (Telford, 2004).
The Tres Hermanas Mountains consist primarily of a Tertiary quartz monzonite stock that
intruded Paleozoic and Cretaceous sedimentary rocks and several types of Tertiary volcanic
rocks. Paleozoic sequences include Fusselman dolomite (Silurian), Lake Valley or Escabrosa
limestone (Mississippian), undifferentiated limestones (Pennsylvanian) and Hueco Formation
(Permian). The Fusselman dolomite and Hueco Formation do not outcrop on the Mahoney
property but they do outcrop in the region. Contact metamorphism is evident between the quartz
monzonite stock and the sedimentary rocks. Marbleization and silicification are the principal
types of alteration with magnesium, and calcium silicates also present (Griswold, 1961).
Lower Cretaceous rocks include limestones interbedded with cobble conglomerates, shale and
sandstone. The conglomerates, dominated by a calcite matrix, contain cobbles of limestone and
dolomite thought to have been derived from the Paleozoic sedimentary rocks (Griswold, 1961).
Tertiary igneous rocks include latite (extrusive equivalent of monzonite) breccias, tuffs and
subordinate flows. The latite directly overlies Paleozoic rocks in the area, suggesting
considerable faulting and erosion of the Cretaceous surface prior to deposition of the latite
(Griswold, 1961).
striking about N80°E (Lindgren et al., 1910; Griswold, 1961); several dip reversals were noted by
Griswold (1961).
The contact between the quartz monzonite and the sedimentary sequences is irregular but
generally strikes northeast across the Mahoney Mine area. Intrusion of the quartz monzonite
stock has altered and recrystallized the limestones, including the Escabrosa Formation, to marble
(marbleized). The Pennsylvanian limestone, immediately overlying the Escabrosa Formation and
referred to as “impure limestone”, became hornfels and garnet bearing as a result of the contact
metamorphism conditions (Griswold, 1961). Distal from the contact region, the limestones show
some silicification but overall show lesser effects of the contact metamorphism.
Griswold (1961) categorized faults on the Mahoney property into two groups: 1. a pre-ore east-
west set; and, 2. a post-ore northwest-striking zone. The pre-ore group consists of three main
faults, each showing only minor displacement with throw less than 50 ft (15.2 m) on each. Two of
these faults host zinc mineralization while the third fault, the most southerly of the east-west set,
contains no zinc mineralization. The second set of faults comprises two distinct northwest-
trending faults that appear to join south of the Comfort claim in the middle of the New Years Gift
claim (Figure 23-2). This northwest fault zone can be traced for more than 1 mile (1.6 km) to the
southeast and generally dips steeply to the southwest. Griswold (1961) estimated a throw on the
more easterly fault of more than 200 ft (61 m) and a total throw across the most westerly and
easterly faults to be in excess of 350 ft (107 m). Telford (2004) noted mineralized structures
trending north, northwest, northeast and east-west.
Manto is a Spanish mining term used to describe a blanket-shaped orebody and is a term
generally used to describe the orientation of individual ore lenses and also to describe a class of
orebodies. Traditional “mesothermal manto deposits” such as Mantos Blancos (Chile) and the
Superior-Magma mine (Arizona) share many similarities with what is generally referred to in North
America as polymetallic base- and precious metal carbonate-hosted deposits. Similarities include
wholesale replacement of carbonate rocks along bedding planes producing flat, bedded, and
sheetlike deposits or mantos along and vein mineralization consisting of hydrothermal
polymetallic replacement bodies (i.e., lenses, pipes, and chimneys) that are conformable to
crosscutting in the carbonate rocks; in some cases the chimneys and/or mantos are stacked.
Fissure veins also develop in proximal non-reactive rocks.
In general, manto deposits tend to be small, highly irregular and discontinuous and are
overshadowed on a world scale by large syngenetic classes of base metal deposits (i.e.,
sedimentary exhalative and volcanogenic massive sulphide). Worldwide, individual deposits of
the manto-type average about 1 Mt, grading tens to hundreds of grams per tonne silver and 5-
20% Zn-Pb. Despite the generally small size, high precious metal contents and potentially rich
zinc concentrations (+20%) make them interesting target for smaller producers. Very large
tonnage deposits do exist and include: Santa Eulalia District (Mexico) which has produced about
24 Mt of 300 g/t Ag, 8% Pb and 9% Zn; and, the Leadville District (Colorado) which has produced
some 30 Mt of 70-130 g/t Ag and 12-15% Pb-Zn. In many cases, early production comes from
the oxidized ore zones which have higher grades and are easier to mine.
Past production at the Mahoney Mines and in the region has come from relatively shallow (<200
ft or <61 m) mining of karst and bedded manto-style zinc oxide mineralization. No attempt has
been made to determine the limits of carbonate hosted zinc oxide and perhaps zinc sulphide ores
either at depth, along strike (northeast-southwest), down-dip (northwest) or at shallow levels
(<200 ft or 61 m) in the up-dip direction (southeast).
On the basis of surface and underground mapping (TeckCominco, 2001 and Telford, 2004) the
mineralization has a north-south dimension of about 3,280 ft (1000 m) and an east-west
dimension of about 1,805 ft (550 m). Geologically, the mineral system is open vertically beyond
200 ft (61 m) – deeper replacement ores were intersected in some of the smaller workings west
of the Comfort shaft (Worthington, 2002b) - and laterally to the north and west. Recrystallized
limestones of the Escabrosa Formation extend well beyond the limits of known mineralization,
covered on the north side of the property by overlying Pennsylvanian carbonate rocks and to the
west by Tertiary volcanic rocks and Quaternary cover on the pediment. These dimensions are
suggestive of a large mineralizing system with ample area within the regional expanse of the
Escabrosa Formation for several million tons of carbonate-hosted mineralization (Worthington,
2002b). It is notable that the Escabrosa or Lake Valley Formation is considered a
favourable host for mineralization elsewhere in New Mexico, such as the historic mining area
of the Lake Valley District near Las Cruces, about 60 miles (97 km) east of Deming.
Principal minerals include sphalerite, galena, pyrite, chalcopyrite, marcasite while subordinate
minerals include arsenopyrite, enargite, tetrahedrite, electrum, geocronite, digenite, jamesonite,
jordanite, stephanite, polybasite, rhodochrosite, and sylvanite; chimneys are typically zinc-rich
and relatively lead-poor relative to mantos. Gangue mineralogy includes quartz, barite and
gypsum. Alteration mineralogy includes dolomitization and/or silicification of the host carbonate
rocks, and chloritization-sericitization of the associated igneous rocks. In areas which have not
been extensively glaciated, such as the southwest USA (i.e., New Mexico and Utah) and Mexico,
a deep oxidation zone will develop that can include minerals such as cerusite, smithsonite.
Examples of large North American polymetallic replacement deposits are Bisbee, Arizona and
East Tintic District, Utah.
Manto deposits are generally irregular in shape as blankets, lenses, pipes, chimneys and veins
and in some deposits the mantos and/or chimneys are stacked. Some manto deposits have
associated breccias which contain a high proportion of sulphide ores.
26.0 MINERALIZATION
On the Mahoney property, replacement zinc-lead-silver deposits were mined from manto and
small vein deposits in the Mississippian Escabrosa (Lake Valley) Formation limestones. Both the
Comfort and Contention mine workings cut through the uppermost tens of feet of the Escabrosa,
near outcrop of overlying Pennsylvanian limestones (Worthington, 2002b). Lindgren et al. (1910)
described the mineralization at the Mahoney Mines as lying parallel to the stratification, but also
develop near-perpendicular fissures and veins that cut across the bedding and vary in strike from
northwest to southwest. Lindgren et al. (1910) also described “irregular bunches” in the
limestone and near-vertical veinlike mineralization between beds of coarsely crystallized
limestone. The historic vein mineralization, including the Black Hawk, Cincinnati and Marie veins
located about 2 miles (3.2 km) southwest of the Mahoney Mines area, have a distinct northeast
trend (Figure 23-1).
Lindgren et al. (1910) described the zinc ores occur as dark-grey cellular masses of willemite
(Zn2SiO4 – 58.6% Zn), an anhydrous silicate, light grey or bluish smithsonite (ZnCO3 – 52.1%
Zn), a zinc carbonate, hydrozincite (ZnCO3·2Zn(OH)2 – 59.9% Zn), an earthy encrustation, and
tabular crystals of calamine (H2Zn2SiO5 – 54.7% Zn), a hydrous silicate of zinc. Lindgren et al.
(1910) also described the galena as accompanied by a little pyrite and intimately intergrown with
wollastonite. Mineralization in the mantos and associated vertical structures consists of crudely
banded calcite, willemite, hemimorphite, hematite and silica (Telford, 2004). Franklinite ((Zn, Mn,
Fe)2+(Fe, Mn)3+2O4) was identified by XRD to be a minor constituent (Jerry Zieg, Sr. Geologist,
TeckCominco, 2002) and textural evidence indicated that the willemite and franklinite are primary,
hypogene minerals (Jerry Zieg, Sr. Geologist, TeckCominco, 2002). Scarce amounts of galena
were observed by the author on the dumps and secondary copper oxides are nearly absent from
the dumps and stockpiles. Lead oxide minerals include cerrusite (PbCO3) and anglesite (PbSO4).
Supergene oxidation is strong and pervasive and the depth of oxidation and current water table
are beneath the bottom of the Comfort shaft. The confirmation by TeckCominco (Jerry Zieg, Sr.
Geologist, TeckCominco, 2002) that willemite and franklinite occur as primary hypogene phases
and the strong evidence for supergene oxidation, suggests supergene enrichment as the principal
concentrating mechanism for the zinc mineralization. Several samples from TeckCominco’s 2001
work program have low zinc to lead ratios which also suggests the possibility for supergene
enrichment whereby meteoric fluids oxidized the original zinc sulphide minerals, redistributing the
ratio of zinc to lead, and perhaps reprecipitating zinc at deeper levels.
27.0 EXPLORATION
Franconia has completed cursory examination of the Mahoney property through 2 phases of
exploration – one in 2002 and the other in early 2004. A ground magnetic survey was completed
on the property in February 2004.
In January-February 2004, field mapping was completed (Telford, 2004). At this time, three
diamond drill hole collars were located on the patented claim group (Table 27-1). All three of the
drill holes (Unk-1, Unk-2, Unk-3) appear to be of the some vintage and all are BX size with thin
wall surface casing still in place (Telford, 2004). The drill holes were found without drill pads,
mud pits or access roads, which suggests that the drilling effort was less than substantial. At one
drill site core was found discarded indicating a less than serious effort. During the course of field
mapping Telford (2004) located two diamond drill holes (K-1, K-2), previously drilled by Kaiser
FRANCONIA MINERALS CORPORATION
San Francisco, Mahoney & Birch Lake Properties, April 2004 62
CCIC CANADA
Cement, on the west side of the property, out on the pediment. Both of these drill holes were
surveyed by handheld GPS (Table 27-1). Drill hole K-1 (755 ft or 230 m in length) intercepted
marble at 650 ft (198 m). Drill hole K-2 was stopped in Tertiary volcanic rocks at 344 ft (105 m).
There are no reports to indicate if either drill hole intercepted any kind of mineralization.
Table 27-1. Locations of historic diamond drill holes, located by hand held GPS (Telford, 2004).
Hole No. *Easting *Northing Comments
K-1 238237 3536151 collar location located
K-2 238240 3536670 approximate location; collar NOT found
Unk-1 238715 3536302 located near white Tertiary monzonite outcrop
Unk-2 238642 3536531 located west of Contention workings
Unk-3 238942 3536181 located south of Comfort Main shaft
*readings taken in NAD27: CONUS (Zone 13)
The current survey, completed on a 300 ft x 300 ft (91.4 m x 91.4 m) grid with station spacing at
100 ft (30.5 m), totalled 187,200 ft (57,059 m) or about 35.5 line miles (57.1 km). The magnetics
survey results were contoured by North American Exploration – no recommendations or
discussion of results were provided by the contractor.
The magnetics survey produced 3 magnetic lows and 1 magnetic high within the boundaries of
the patented mining claims. One magnetic low occurs north of the Contention workings and
straddles the boundary of the Contention and Minnie Helene patented claims. A second
magnetic low is centred near the southeast corner of the Minnie Helene patented claim. A third
magnetic low occurs at the boundary between the Homestake and Flat Foot patented claims. A
distinct magnetic high occurs within the New Year’s Gift patented claim, centred near the contact
between Quaternary alluvium and Escabrosa formation limestone and proximal to a small
exposure of white monzonite (Tertiary). This survey provides detail with respect to the large
magnetic high outlined by the 2001 TeckCominco Survey and in addition, confirms its presence,
west of the Comfort Hill area. The source of this magnetic high is not readily apparent and
in the opinion of CCIC this anomaly should be followed up during future exploration
programs.
28.0 DRILLING
To date, Franconia has not completed any drilling on the property and there is currently no drilling
being conducted on the property either by Franconia or on their behalf. Telford (2004) located
some historical drill holes on the property but data from this drilling is limited or unavailable.
because method code ICP70 utilizes a nitric aqua regia digestion, silver may precipitate from
solution as a chloride and may there fore be underestimated. A fire assay determination for silver
is recommended should absolute silver concentrations be desired.
The highly weathered and oxidized state of the sampled rock material makes the identification of
individual zinc minerals and other potential ore minerals nearly impossible. The oxidation and
high density of samples CH-01, CH-02 and CHE-01, relative to the obvious gangue material
(calcite, wollastonite, chalcedony, quartz) in the dumps, is the only suggestion of potential zinc-
lead bearing rocks. Some of the minerals observed in hand sample and in the workings include
hematite, hemimorphite, sphalerite (rare), galena (rare), pyrite, chalcopyrite and possibly stibnite
and willemite.
Table 31-1. Descriptions of samples collected by CCIC, Mahoney property, New Mexico.
Sample *Easting *Northing Location Description
heavily oxidized (red); phosphoresces
northeast side of Comfort Hill;
CHE-01 239062 3536240 bright lime green with disseminated
old workings
minor bright orange
cream white carbonate; local oxidation;
near Comfort Hill main shaft;
CH-01 238916 3536193 phosphoresces bright lime green and
from dumps
minor bright orange
vuggy, white-grey carbonate; local
CH-02 238916 3536193 near Comfort Hill main shaft oxidation; phosphoresces bright lime
green in carbonate
south side of porphyry; ~2.4
medium-grained, monzonite; locally
PORP-01** 239750 3533975 miles along road from
altered; trace pyrite
water/windmill
*readings taken in NAD27: CONUS (Zone 13); **approximately located
Table 31-2. Summary of assays, samples collected by CCIC, Mahoney property, New Mexico.
Sample Zn Zn Pb Ag Au As Co Ni Cu Cd Sb
ppm % ppm ppm ppb ppm ppm ppm ppm ppm ppm
LLDÆ 0.5 - 2 0.2 1 3 1 1 0.5 1 5
CHE-01 5510 - >10000 1.9 15 663 25 30 287 20 159
CH-01 1980 - 717 2.5 27 68 1 8 349 38 15
CH-01 Dup 1960 - 729 2.6 25 68 1 5 346 39 15
CH-02 >10000 5.28 2620 3.6 19 151 1 7 277 68 35
PORP-01 65.4 - 61 0.3 <1 <3 2 5 6.2 <1 <5
*silver by ICP70 may be underestimated – see text; LLD=lower limit of detection; DUP=duplicate assay
much of this information including anecdotal comments is from Griswold (1961). The locations of
several of these properties can be found on Figure 23-1.
depressions or lows and are covered with overburden. Just south of the Marie mine, an area of
intense alteration occurs within the stock, exposed by a shallow prospect pit, and containing
strongly sericitized, kaolinized, and pyritized quartz monzonite. Some dump material near a
vertical shaft contained about 5% combined pyrite and arsenopyrite in quartz monzonite.
In 1937, four churn drill holes were completed by Eagle-Picher Co. aimed at discovering a
disseminated orebody containing copper-lead-zinc mineralization (Figure 23-1). One of the holes
intersected 255 ft (77.7 m) of +/- 0.5% lead-zinc (churn hole CDH-2). Three of the churn drill
holes were drilled in the west half of section 3, Township T28S and Range R9W, and one hole
was drilled near the “Section 35 Prospect” located in the southeast quarter of section 35,
Township T27S and Range R9W (Figure 23-1). A relatively large hydrothermal alteration zone,
covering an area of about 200 acres (81 ha) is located in a broad valley in the northeast quarter
of Section 34, Township T27S and Range R9W. It is the opinion of CCIC, that this area and
mineralization style should be considered as part of a regional exploration program aimed
at understanding the mineral zoning pattern associated with the porphyry.
Griswold (1961) summarized the known alteration zones of the Tres Hermanas stock as follows:
1. Small areas appear to be characterized by intense hydrothermally altered rocks; 2. Large
areas appear to be characterized by mild alteration patterns consisting of sericitization,
kaolinization, and pryritization; 3. Copper minerals are rare in the known altered zones, and only
subordinate galena and sphalerite are present; 4. In 1961 the water table was at 560 ft (171 m)
below the collar of churn drill hole CDH-2 and oxidation only extends down to a shallow depth,
therefore little secondary enrichment should be expected to occur; 5. Results of the historical
drilling indicate that a shallow disseminated orebody is unlikely to be discovered south of the
Marie mine and in the are of “Section 35” prospect; and, 6. There may be other interesting areas
that may host an ore deposit, however the surface exposures of the known areas do not indicate
the presence of extensive copper or other valuable metals.
The tests determined that the zinc ore as submitted would be a good candidate for a
leach/solvent extraction/electrowinning process; also referred to as the “leach/SX” process. The
study indicated that further testwork was required to optimize the settling and filtration of the
neutral residue and that fluorine concentrations (high fluorine can lead to corrosion problems)
should be monitored to determine if the high concentrations recorded in this testwork are
representative of the ore body. Highlights from the study include:
• Zinc leaching reached 98% and in comparison to other ores tested by the lab, this
particular sample was low in most soluble elements. A 10% bleed of the leach solution
stream would be sufficient to maintain an acceptable concentration of cadmium and
other minor elements.
• Silica did not present a problem and precipitated readily in the acid leach.
• The net acid consumption was moderate at 0.52 kg/kg Zn as was the limerock
consumption at a moderate 0.39 kg/kg Zn.
• Settling rates were slow, particularly for the neutral residue. Gas evolution during the
acid settling test suggested that calcite gangue was still reacting. Settling for the acid
residue was 0.26 m3/(m2h) and for the neutral residue it was 0.01 m3/(m2h).
• Solid filtration rates were moderate for the acid residue at 244 kg/(m2h) and slow for the
neutral residue at 28 kg/(m2h). Wash rates were about 25% and 15% of the filtration
rates for the acid and neutral residues, respectively. Two displacement washes
recovered more than 95% of the filtrate zinc contained in the residue.
Overall, Teck Cominco Research (Backus et al., 2004) found this early testwork to be very
successful with excellent zinc leaching, good silica precipitation, moderate reagent
consumption and low minor element leaching.
Historically, Teck Cominco Research has tested a range of zinc oxide ores to determine their
suitability for a leach/solvent extraction/electrowinning process. Zinc carbonates such as
smithsonite are good candidates for this process but for some zinc silicates such as
hemimorphite and willemite, precipitation of soluble silica can be problematic, resulting in poor
settling or filtration of the residue (Backus et al., 2004). For future testing, Backus et al. (2004)
recommended continuous tests (requiring a larger sample) in order to yield a more realistic
residue which could be used for additional settling and filtration tests.
The nature and extent of mineralization observed at the Mahoney Mines area, the lack of
extensive workings to any appreciable depth and the number of mineral occurrences and past
producers in the area suggest that this property holds excellent potential for the discovery of
further zinc mineralization.
Principle to this is the presence of prospective structures and stratigraphy, controlling factors
central to the emplacement of mantos, which occur within the boundaries of the Mahoney
property. Examination of old surface workings at the Mahoney Mines area provides substantial
evidence for the presence of manto-style (bedding) and/or structurally controlled zinc-oxide
and/or zinc-sulphide mineralization, as observed by CCIC, Telford (2004) and Worthington
(2002b). Outside of shallow (<200 ft or <61 m) selective mining at the Mahoney Mines area, no
serious attempt has been made to determine the limits of zinc-sulphide or zinc-oxide ore either at
depth or laterally away from the known areas of mineralization; excellent potential remains for
undiscovered resources.
37.0 RECOMMENDATIONS
The nature and extent of mineralization and the limited depth of the workings at the Mahoney
Mines area highlights the need for further exploration on the Mahoney property. Further effort
should be directed towards drilling and geophysical surveys, potentially utilizing down hole EM
and IP/Resistivity surveys, which can detect off-hole responses. In addition, deep penetrating
(+600 ft or +183 m) surface geophysical surveys such as Time Domain EM (TDEM) or
IP/Gradient surveys should also be considered in efforts to locate potential zinc oxide/sulphide
bodies in the area and at depth. Geological mapping remains critical and should especially be
considered in any regional exploration program beyond the current Mahoney property boundary.
Contingent on the results of the first phase of RC drilling, Franconia is recommending a second
phase of diamond (core) drilling. This second phase is expected to be completed in a two to
three month time frame and will require five, 1,000 ft (305 m) drill holes, totalling about 5,000 ft
(1,524 m). The second phase drilling program is expected to generate about 325 core samples
FRANCONIA MINERALS CORPORATION
San Francisco, Mahoney & Birch Lake Properties, April 2004 71
CCIC CANADA
and each of the drill holes will be surveyed. The location and parameters of these drill holes will
be planned contingent on the results of the first phase of RC drilling. Expected costs for the
second phase of diamond drilling are on the order of US$333,000 (Table 37-2).
Table 37-1. Recommended phase 1 reverse circulation drilling program, Mahoney property, New Mexico.
ITEM DESCRIPTION COST (US$)
Drilling Costs
Footage Charges – all in costs Eight 800 foot RC Holes - Total 6,400 ft (25 rig days) $128,000.00
Analytical Work
Sample Analysis 1,280 samples @ 12.00 $15,360.00
Sample Shipment $1,000.00
Sampling Supplies $1,500.00
Project Geologist
Consulting Fees 35 days @ 425/day $14,875.00
Daily Expenses 35 days @ 200/day $7,000.00
Other
Backhoe, standby 150/day $3,750.00
Dozer, road building 100/hour $2,000.00
Water $2,500.00
Reclamation $3,000.00
Land
Lease/purchase $5,000.00
Land holding costs $10,000.00
Contingency 5% of above $8,950.00
Administration $7,500.00
Phase I Total: $210,435.00
Table 37-2. Recommended phase 2 diamond drilling program, Mahoney property, New Mexico.
ITEM DESCRIPTION COSTS (US$)
Drilling Costs
Footage Charges - all in costs Five 1,000 foot Core Holes - Total 5,000 ft (50 rig days) $200,000.00
Downhole survey $4,000.00
Analytical work
Sample analysis 325 samples @ 12.00 $3,900.00
Sample Shipment $1,000.00
Sampling Supplies $1,000.00
Project Geologist
Consulting Fees 70 days @ 425/day $29,750.00
Daily Expenses 70 days @ 200/day $14,000.00
Other
Backhoe, standby 150/day $7,500.00
Dozer, road building 100/hour $4,000.00
Water $5,000.00
Reclamation $5,000.00
Land
Lease/purchase $15,000.00
Down-hole Geophysics $20,000.00
Contingency 5% of above $14,750.00
Administration $7,500.00
Phase II Total : $332,400.00
CCIC are in agreement with the proposed drilling programs (~US$544,000) but in addition
suggest that Franconia consider down hole EM and IP/Resistivity geophysical surveys (based on
phase 2 diamond drilling) in order to test for the possibility of mineralization lateral to and below
drill intersections; this geophysical information could also aid in structural interpretations. In
addition CCIC recommends that Franconia consider deep penetrating (+600 ft or +183 m) surface
geophysical surveys such as Time Domain EM (TDEM) or IP/Gradient surveys in order to test for
potential zinc oxide/sulphide bodies at depth and perhaps guide further diamond drilling. The
costs of these geophysical surveys will be dependent on the survey system utilized, the number
of drill holes surveyed and the number of line miles of survey required.
It is the opinion of CCIC that the character of the Mahoney property and the mineral
targets being sought are of sufficient merit to justify the exploration program as
recommended.
PART III
BIRCH LAKE PGE-CU-NI PROPERTY
(DULUTH COMPLEX)
MINNESOTA, USA
The Birch Lake property comprises 9,459.75 net mineral acres (3,828.23 ha) and the land parcels
are contiguous with the exception of two parcels that are isolated in the north (northwest of Birch
Lake) and one parcel that is separated from the main block of ground in the southwest (Figure
38-3 and 38-4).
Mineral title is held under 23 leases and permit agreements of which Private Leases account for
3,781 acres (1,530.12 ha) or 40% of the property. Minnesota State Leases and Federal
Prospecting Permits account for 6,782 acres (2,744.58 ha) or 60% of the property. Net smelter
return royalties vary from 3.5% to 5% and annual rental costs to maintain property title are
US$49,210 in 2004, increasing to US$83,300 by 2007. Information regarding the agreements,
payments and royalties for the various mineral leases and permits is provided in Appendix 5A.
CCIC have know knowledge of any outstanding royalties, back in rights, carried or
working interest, outstanding payments, or encumbrances against the Birch Lake
property. In addition, CCIC have no knowledge of any immediate environmental liabilities
associated with the Birch Lake property.
In December 2003, BBJV, on behalf of the Birch Lake Project, entered into a binding letter of
intent to acquire from American Copper & Nickel Company, Inc. (“ACNC”), a wholly owned
subsidiary of INCO Limited (“INCO”), a total of 5,338.78 acres (2,160.5 ha) of mineral rights on
the Duluth Complex Project, in St. Louis and Lake counties, Minnesota (see Section 38.3). The
mineral rights being acquired from ACNC are contiguous with the existing lands of the Birch Lake
property, extending the land package for more than 10 miles (16.1 km) along the prospective
basal area of the Duluth Complex.
On June 25, 2002, Franconia entered into the Duluth Complex earn-in agreement among Impala,
through its subsidiary, Platco Inc. and Franconia, through its subsidiary, Franconia Mineral
Corporation US, (“Impala Earn-In Agreement”) to formalize these terms. In May 2003, Franconia
entered into an amendment to the Impala Earn-In Agreement. According to this amendment,
Impala agreed to provide an additional US$200,000 for the acquisition and exploration of PGE
properties in the Duluth Complex. This additional amount of US$200,000 will be a credit towards
expenditures required in any subsequent joint venture agreement. None of the proceeds of the
current Offering will be used on the Duluth PGE projects.
Common Shares totalling $1,500,000. Franconia may earn an additional 10% interest in the
Birch Lake property by funding an additional $10,000,000 in work over five years and paying
$500,000 cash to BBJV. Franconia may subsequently increase its ownership to 82% by funding
BBJV’s interest in the Birch Lake property to commercial production. The amount of this funding,
plus interest, will be recovered by Franconia from production.
In May 2003 the Birch Lake option agreement was amended to extend the option term to
September 30th, 2003. The consideration for the extension was $7,500. In addition, Franconia
agreed to pay an additional US$20,000 to BBJV on termination of the option and to be
responsible for all costs related to maintaining BBJV’s land position. Moreover, the first year
Allowable Expenditure under the Beaver Bay JV Agreement attached to the option agreement
was reduced to US$500,000. The option agreement remained unchanged in all other respects.
A second amendment to the Birch Lake option agreement, made effective September 30, 2003,
extended the option period to October 31, 2003 and called for Franconia to pay the US$20,000
specified in the first amendment at that time.
On October 27, 2003, Franconia exercised its option to enter into an earn in agreement to acquire
up to an 82% interest in BBJV’s Birch Lake Property. Under the terms of the option agreement,
Franconia made a payment of US$35,000 and issued 2,730,721 Common Shares to BBJV
(registered in the name of Lehmann Exploration Management Inc. (“LEM”), (as operator of the
BBJV holding in trust for the partners of BBJV) at a deemed price of $0.06 per share and issued a
promissory note in the amount of US$135,000 payable on or before March 1, 2004.
property are outlined in Figure 38-5 and the mineral rights in Figure 38-6. Further details of the
agreement and related transactions are provided in Appendix 5A.
Franconia will be re-evaluating the exploration and development potential of the newly acquired
ACNC lands as part of its current Birch Lake Project, with plans to conduct exploration in the as
yet unexplored but highly prospective area between the Birch Lake property and the newly
acquired Maturi deposit (see Section 49.0).
From a juncture 3.5 miles (5.6 km) to the northwest on this gravel road, the Bob Bay dirt road
branches west for 1.9 miles (3 km) to Township T61N, Range R12W, Sections 25 and 36 where
most the drill holes were collared. Property parcels north of Birch Lake are accessed from the
Birch Lake campground road. The areas on the property adjacent to Birch Lake may be reached
seasonally in summer by boat or by vehicles operating on the ice in winter. Surface bedrock
exploration and surficial sampling can be done for about 8-9 months of the year, depending on
the severity and length of winter. For the most part, diamond drilling and geophysical surveys
can be carried out year round utilizing numerous State Highways, rural roads and skidder
(logging) roads/trails; drilling water is sufficient.
The northern Minnesota climate is temperate, with four distinct seasons, typical of the Southern
Precambrian Shield, and moderated by the proximity to the Great Lakes. Minnesota only rarely
experiences heat waves or drought. Local temperatures average 4˚F (-16˚C) in January and
66˚F (19˚C) in July. Annual rainfall averages approximately 28 in (71 cm) with 30% occurring
from November to April and 70% from May to October. Annual snowfall averages 60 in (152 cm)
with accumulation on the ground of about 24 in (60 cm) to 35 in (90 cm).
Minnesota, the 12th largest state in the USA, is located in the northeast USA and is bordered to
the north by Canada, to the east by Wisconsin and Lake Superior (largest freshwater lake in the
world), to the west by North Dakota and South Dakota, and to the south by Iowa (Figure 38-1).
The state of Minnesota recognizes the importance of minerals to the state economy and actively
supports exploration and mining. The state regulatory process is predictable and sets standards
similar to other mining districts in North America. Northeast Minnesota has a long mining history
and there are currently six operating open pit iron ore mines that produce over 40 million tons of
taconite pellets annually from the Mesabi Range. The existing infrastructure includes low cost
electric power, a well developed network of roads, railroads and power lines, mine equipment
suppliers, mining professionals and a highly skilled labour force. A single line spur to the Dunka
pit less than one kilometre west of the Birch Lake provides nearby rail access. An important
advantage of the area is that metal (PGE, copper, nickel) concentrates could be shipped to
established smelters from several harbours on Lake Superior’s north shore including the city of
Duluth, which is linked to the rail system and offers deep-water access via the Great Lakes/St.
Lawrence Seaway to US and Canadian industrial centres and the Atlantic Ocean (Figure 38-1).
In addition, the Mississippi River provides economic bulk barge transport to other states and the
Gulf of Mexico.
The Duluth Complex forms a moderate topographic high with mean sea level elevation ranging
from about 1,575 ft (480 m) in the west near Babbitt to about 1,740 ft (530 m) in the Sonju Lake
area through to <1000 ft (<300 m) along the eastern shore of Lake Superior (Two Harbors area).
From the western part of the complex through the central region, relief is moderate to low. The
eastern parts of the complex, approaching Lake Superior, have a much higher relief, more typical
of upland Precambrian Shield topography and contrasted by the lower elevations of Lake
Superior. Elevations on the Birch Lake property range from about 1,411 ft (430 m) to 1,542 ft
(470 m).
Drainage on the property is part of the Birch Lake watershed but is poorly integrated. The Dunka
River drains the southwest part of the area and the Roaring Stoney Creek the east. Birch Lake
itself occupies approximately 10% of the property in the north part. Small spring and seepage
kettle lakes are located in the south central portion of the property.
Forest cover in the upland areas consists of a second growth mix of conifers and deciduous trees
including spruce, balsam, birch, poplar, pine (white, red and jack), ash, tamarack, fir and cedar.
Treed swamps and open marshes support reeds, sedges and sphagnum mosses. Topographic
relief is generally low, scoured and shaped by Wisconsinan continental glaciation. Outcrop
exposure on the property limited to about 5% overall with much of the area covered by glacial till,
gravel, outwash sand and silt reaching tens of meters in thickness in low areas occupied by
swamps.
40.0 HISTORY
North-central Minnesota has been prospected mainly for iron since the early 1800’s and has
witnessed the development of large, open pit iron ore mines in the Mesabi Formation since 1884;
six iron ore mines continue to operate in the region. The abandoned Dunka iron ore open pit lies
less than one kilometre west of the Birch Lake property (Figure 39-1). The Duluth Complex itself
has been explored for copper-nickel deposits since the 1950’s and titaniferous magnetite deposits
since the 1960’s. The earliest recorded work of significance on the Duluth Complex is from 1948,
when the first report of copper-nickel mineralization was made at the base of the complex, in an
area now known as the Spruce Road Deposit (Figure 38-2).
Subsequent to the initial copper-nickel discovery, a relatively large amount of exploration work
has been completed, concentrating mainly along the western contact of the complex, where
exposure is best (Figure 38-2). According to the Minnesota DNR, from 1951 to present, more
than 1,900 diamond drill holes totalling more than 754,591 ft (230,000 m) have been drilled to
explore the western margin and base of the Duluth Complex for copper and nickel. This work has
outlined at least nine potential copper-nickel “deposits” which have a combined estimated
resource of 4.4 billion tons grading 0.66% Cu and 0.20% Ni (Listerud and Meineke, 1977). Table
40-1 summarizes the history of exploration on the Birch Lake property. The following
summarizes some of the work completed on the Duluth Complex since 1980.
1980 Minnesota Geological Survey: aeromagnetic survey over the entire complex. Several
anomalies were tested during an ongoing scientific drilling program.
1981-1983 Billiton plc and E.K. Lehmann & Associates J-V: explored for copper-nickel
mineralization in the interior of the complex. The program included 3,300 line miles (5,311 line
km) of airborne Input Electromagnetic Survey, ground magnetometer, Horizontal Loop EM
(HLEM) and IP surveys, and overburden geochemical surveys. Five anomalies were tested with
9 drill holes. EM conductors at 4 sites were determined to be magnetite in oxide-bearing gabbro
or serpentine. At one location, a thin unit of massive sulphide with anomalous copper-nickel
concentrations was identified as the conductor source.
1985 Utah International and E.K. Lehmann & Associates J-V: completed a stream sediment
sampling program covering 9 drainages flowing eastward from the complex into Lake Superior.
Anomalous platinum-palladium-gold concentrations were obtained from the Stewart and Split
Rock Rivers which are the two most southern rivers in the study area.
1982-2001 Beaver Bay Joint Venture: Recent exploration of the Birch Lake property began in
1982 with prospecting by the Beaver Bay Joint Venture (BBJV) that was composed of Lehmann
Exploration Management Inc. and Connor Securities Company. To date some 40 pilot holes and
49 wedge offset holes (including some wedge offsets from old holes), have been drilled on the
property, to bring the total footage drilled on the property by BBJV, option partners and others to
109,379 ft (33,339 m). The BBJV spent US$1.5 million and partners Impala spent US$3.2 million
on exploration of the property; a total expenditure of US$4.7 million since 1985. Results to date
suggest that there is realistic potential for a financially viable PGE-copper-nickel deposit. (see
Section 51.0).
1989 Minnesota Department of Natural Resources: The Minnesota DNR released the results
of a regional overburden geochemistry survey conducted over the Lake County portion of the
Duluth Complex. Multi-element geochemical analyses were obtained for 566 partial heavy
mineral concentrates, 567 clay/silt samples, 312 humus samples and 715 vegetation samples.
The study outlined several areas where the overburden contains anomalous concentrations of
platinum, palladium and gold, as well as base metals. Metal values obtained from the surveys are
considered to reflect underlying rock types, rather than glacial material that has been transported
a significant distance.
1994 Minnesota Department of Natural Resources: The Minnesota DNR released platinum-
palladium-gold values for B-horizon soil samples taken by the United States Geological Survey
between 1971 and 1975 from 1385 sites in the northwest part of the Duluth Complex. The B-
horizon survey confirmed many of the results from the glacial till survey and outlined additional
areas with anomalous platinum, palladium and gold values in soils.
1999 Franconia Minerals Corporation: conducted a reconnaissance rock and soil sampling
program in selected areas of the Duluth Complex.
In February 2002, core drill holes were completed on the Cloquet Valley and Lillian PGE targets.
At Cloquet Valley where the target is located near a hornfels inclusion within the Pequayan Lake
troctolite, one hole was drilled in ferrogabbros to a depth of 307 ft (93.6 m) to test a bedrock
conductor located near a magnetic anomaly. Selected sections of the core with elevated
concentrations of sulphide and/or magnetic minerals were assayed. Only background
concentrations of metals were detected. At Lillian a single drill hole tested a coincident magnetic-
EM anomaly located in the vicinity of a large hornfels body at the boundary between the Partridge
River (PRI) and Western Margin (WMI) intrusions. The location and presence of a hornfels
inclusion suggested that the anomaly represented sulphides along a structure separating two
intrusions. The drill hole encountered exceptionally thick glacial overburden (135 ft or 41.1 m)
before mechanical difficulties forced the hole to be abandoned at 184 ft (56.1 m). Magnetite-
bearing ferrogabbros were encountered in the hole. Selected sections of the core assayed only
background concentrations (News Release: April 2, 2002).
In May-June, 2002 three core drill holes were completed at the Sonju Lake layered complex
comprising 1,200 ft (365.8 m). Hole SL02-1 cut two broad zones of anomalous but sub-economic
PGE concentration in oxide-bearing gabbros. The strongest zone was 30 ft (9.1 m) thick,
occurring between 300 ft and 330 ft (91.4 to 100.6 m) down the hole, and assaying 0.26 g/ton
Pd+Pt (Pt:Pd = 1:3). Within this zone the highest grade was 0.50 g/ton Pt+Pd. A second, lower
grade, slightly thicker anomalous zone was cut between 378 ft and 415 ft (115.2 to 126.5 m)
down the hole. Drill holes SL02-2 and –3, each drilled to a depth of 250 ft (76.2 m), both
intersected similar zones of anomalous PGE in zones, interpreted as continuations of the upper
zone cut in hole SL02-1. Assay results showed only elevated concentrations of PGE (News
Release: July 24th, 2002).
2003-2004 Franconia Minerals Corporation: During the first half of 2003 Franconia, in
partnership with Implats, completed Phase I of its exploration program for PGE in the Duluth
Complex. The work consisted of re-evaluation of geophysical surveys, geologic mapping,
geochemical sampling and ground examination of targets identified from airborne geophysical
surveys as a precursor to planned drilling on its Osier Lake, Chow Lake, Partridge Lake and Big
Lake targets.
Table 40-1. Summary of exploration work completed to date on the Birch Lake property.
Year Exploration Work Completed
Duval Corporation diamond drilled a fence of wide spaced holes to the base of the Duluth
1970-1975
Complex
BBJV undertakes prospecting in vicinity of property and acquires initial mineral permits for
property. Under an earn-in agreement with Utah International Inc. to explore for PGE in Duluth
Complex, BBJV carries out data compilation and stream sediment survey extending to the shore
1985
of Lake Superior. Minnesota DNR samples Duval core and discovers 2 m of PGE mineralization
in DU-15 associated with chromite rich oxides. LEM leased ground for Cascade Joint Venture and
drilled wedged offset hole to confirm PGE.
Mapping and geophysical surveys; BBJV joint venture with Utah and INCO on land under option
1985-1987
from INCO north of Birch Lake.
Hole C88-1 drilled west of Duval hole DU-15 intersected copper mineralization but no PGE. Utah
1988 and INCO terminate their earn-in agreements with the BBJV. Joint venture earn-in agreement
signed with International Platinum Company Inc. (IPCO).
1989 Holes 89-1 and 2 drilled under IPCO agreement.
BL90-1 and 2 drilled south of Birch Lake and 90-3 to north for assessment on lands sub-leased
1990
from INCO. IPCO earn-in agreement terminated.
BBJV reorganized with new partners; BL-95-1and BL95-1W drilled to test magnetic anomaly at the
1995
north edge of Birch Lake, no encouragement.
MN Natural Resources Research Institute (NRRI) work suggests PGE associated with Birch Lake
1997 fault zone; BBJV acquires State Lease for lake bottom, obtains funding from State and Anglo
Platinum Corporation Limited (Amplats).
BL98-1 and 1W from south shore west into Birch Lake and intersects PGE values. Preliminary
1998 metallurgical tests by Anglo American Platinum Corporation (Amplats). Earn-in joint venture
agreement signed with Altoro Gold Corporation.
BL99-1 and 2 and wedges drilled and property land package expanded. Altoro abandoned
1999
agreement with BBJV.
Earn-in joint venture agreement signed with Impala Platinum Holding Ltd. (Implats). Eleven holes
2000
and 25 wedges of BL00 series drilled (10,301 m) to delineate PGE-Cu-Ni mineralization.
6,956 m in seven drill holes and 19 wedges drilled, five holes collared from barge in Birch Lake as
2001 step outs to further delineate mineralization. Drilled wedge hole off old Exxon hole D-5 south west
of Birch Lake deposit.
A wild cat hole drilled on boundary of property 600 ft. SW of old Exxon hole. Resource estimates
2002 by Snowden and LEM. Implats drops option late in year; property optioned to Franconia Minerals
Corporation.
*summary after Routledge (2004)
In the western and northern regions of the DC, footwall contacts of the intrusive are sharply
defined against greywackes and slates of the Proterozoic Virginia and Biwabik Iron Formations of
the Mesabi Range, and the Late Archean Giants Range batholith. In contrast, the eastern
hanging-wall contacts with comagmatic volcanic rocks of the North Shore Volcanic Group are
FRANCONIA MINERALS CORPORATION
San Francisco, Mahoney & Birch Lake Properties, April 2004 84
CCIC CANADA
gradational and generally poorly defined. The western contact and base of the complex dips
shallowly to moderately to the southeast (10° to 35°), offering excellent exposure of the DC along
the western margin.
Aeromagnetic data suggests that the DC consists of at least 12 discrete intrusions including the
South Kawishiwi, Bald Eagle, Partridge River, Greenwood Lake and Sonju Lake intrusions, the
Powder Line and Silver Bay gabbros and the Logan Sills. These intrusions coalesced over a
2,510 square mile area (6,500 km2) and age-dating indicate that the intrusives were emplaced
over a period of 10-12 Ma (Figure 41-3). Because of the relatively poor exposure and limited
regional diamond drilling, the boundaries of individual intrusions that comprise the DC are poorly
defined.
To date, the bulk of scientific research and mineral exploration has focused almost exclusively on
the Partridge River and South Kawishiwi intrusions (e.g., Theriault et al., 2000), located along the
western margin of the DC, which are known to host disseminated PGE-bearing copper-nickel
mineralization; little is known about the rest of the complex as it is largely covered by a blanket of
glacial till.
formed multiple intrusions that subsequently coalesced to collectively produce the DC. A younger
series of northwest-trending strike-slip faults offset older, magma-controlling northeast faults.
On the Birch Lake property, the SKI ranges in vertical thickness from 1147 ft (349.6 m) to 4421 ft
(1347.5 m) as interpreted from 34 pilot drill hole drill intercepts of the footwall metasedimentary
rocks or Giants Range batholith. Miller et al. (2002) subdivided the intrusion into five major map
units from the base upwards: 1) a heterogeneous basal contact zone of sulphide-bearing
troctolitic, gabbroic, and noritic rocks; 2) ophitic augite-troctolite; 3) poikilitic leucotroctolite; 4)
ophitic troctolite; and 5) homogeneous troctolite. Severson (1994) have further subdivided the
marginal zone of the intrusion into 17 different units, with sulphide mineralization dominantly
confined to four units (moving upwards): the Basal Augite-Norite (BAN), Basal
Heterogeneous (BH), Updip Wedge (UW), and Ultramafic 3 (U3) units. Minor mineralization
higher up in the igneous stratigraphy of the intrusion occurs locally in the Ultramafic 1 (U1) and
Ultramafic 2 (U2) units. The rocks types and igneous stratigraphy of the SKI has been simplified
to four principal units found on the property (Table 41-1 and Figure 41-5).
Diamond drilling to date has confirmed that the Ultramafic 3 or U3 unit is by far the most
significant in terms of PGE mineralization. The copper-nickel bearing sulphides and associated
PGE mineralization at Birch Lake occur consistently in the upper portion of the U3 unit, generally
below its contact with overlying pegmatitic phases of relatively PGE-barren, hanging wall
troctolites, gabbros, and anorthosites; this is corroborated by Routledge (2004). The U3 unit,
characterized mainly by troctolite phases with compositions ranging to anorthosite, is variable in
modal mineralogy, composition and texture over short distances and could be described locally
as variably- or vari-textured. The U3 unit can be distinguished by the presence of pervasive
sulphides, cumulus olivine with interstitial plagioclase and olivine rich ultramafic intervals (dunite,
melatroctolite, picrite) that range from less than 1 ft (0.3 m) to tens of feet in thickness. What may
be late granitic and felsic dykes cut the SKI and U3 unit; alternatively some of these felsic
features may represent late felsic fluids trapped in dilation zones.
Table 41-1. Stratigraphic column of the South Kawishiwi Intrusion (after Routledge, 2004).
Unit Thickness Remarks
Anorthositic Troctolite and Troctolite thick thin picrite units at top or middle of unit
Cu-Ni-PGE Mineralization
Footwall Rocks
contact metamorphosed to pyroxene
Biwabik Iron Formation 120 m
hornfels
Giants Range Batholith -- melted and recrystallized
The U3 unit has been intersected on the property at depths as shallow as 1,125 ft (343 m) and up
to 3,002 ft (915 m) in 31 pilot holes. Intercepts of the U3 range from 47.9 to 375 ft (14.6 to 114.3
m) and vertical thickness averages 174 ft (53 m) based on statistics for 31 pilot holes (Routledge,
2004).
There is a strong correlation between increases in PGE concentrations and sulphide and in many
instances the higher PGE concentrations are associated with disseminated and interstitial, late-
stage copper-nickel sulphides; in particular chalcopyrite, talnakhite (Cu-Fe-Ni sulphide) and
bornite where they occur as replacement mineralization. Weaker concentrations of PGE are
found where chalcopyrite and pyrrhotite are the primary sulphides. Routledge (2004) noted
similar observations.
have been active pre-, syn- and post-emplacement of the SKI and offset the mineralized U3 unit.
Where exposed in parts of the SKI and footwall rocks, movement on these faults ranges from
about 10 ft (3 m) to 394 ft (120 m). West-northwest faults cut the northeasterly faults and show
left lateral displacements in the south portion of the property and right lateral offsets under Birch
Lake (Rowell, 2001b and 2001c). These late faults have vertical displacements in the order of
about 32 ft (10 m) and may be akin to transform faults that accompany rifting elsewhere.
The Bob Bay Fault zone trends north through Bob Bay but northeasterly south and north of Bob
Bay. The faulting appears to have influenced the localization of sulphides and higher PGE and it
effectively cuts off the Birch Lake deposit on the west. Drill holes in this fault zone commonly
intersect massive and disseminated sulphides in the footwall rocks and/or felsic dikes that cross-
cut the intrusion. The sense of displacement between holes 88-1 and DU-15 is in the order of
about 197 ft (60 m) to 295 ft (90 m), east side down.
A regional west-northwest fault diminishes mineralization and metal grades along its length and
divides the deposit into a north, main segment and a small south segment. The spatial
distribution of faults on the property is such that the Birch Lake deposit is displaced laterally and
vertically by the sub-vertical fault sets however, at the relatively wide spacing of the mostly
vertical drill holes that test the deposit, the location of most of the interpreted faults is not known
with the degree of confidence generally required for reserve estimation and mine planning
(Routledge, 2004).
Saussauritization and serpentinization are common deuteric alteration features in the U3 unit,
along with local chlorite (chloritization) and biotite (potassic alteration) minerals. Increased
retrograde alteration and schistosity accompany the east-west and northwest faults.
The Vermilion moraine, in the northern part of the complex, represents a resurgence of ice from
the north-northeast. Contemporaneous with the advance from the north-northeast, a glacial lobe
pushed westward out of the Lake Superior basin and formed the Highland flutes and Highland
moraine that cover the central and eastern part of the complex. The Highland Flutes are bedrock
ridges and drumlins with an orientation parallel to the east-west direction of ice movement.
It is important to note that ice advances were from the north-northeast and east, but not from the
west. This implies that base and precious metal anomalies in soils and tills covering the complex
do not represent the extensive disseminated copper-nickel-PGE mineralization that occurs along
the western margin of the complex.
Several reports are available which discuss the viability of overburden sampling over the DC and
in addition, provide concentrations of platinum-palladium-gold in soils and other mediums from
various programs which targeted PGE in the DC (e.g., Alminas and Dahlberg, 1994; Buchheit et
al., 1989).
Other styles of PGE-copper-nickel mineralization that may become economically significant are
contact-type, where mineralization occurs close or at the intrusive contact and footwall-type,
where mineralization is found within the country rock, several meters to 10’s of meters beyond the
intrusive contact. Other deposit types in the DC include titanium and vanadium oxide-rich
ultramafic plugs.
To date, much of the exploration work on the DC has concentrated on the large-tonnage, low-
grade, disseminated style of mineralization (Types 1 and 2) that occurs along the western margin.
Known copper-nickel prospects along the western margin of the DC total at least nine (Figure 41-
2), and these have generally been considered too low grade to be economic. These copper-
nickel deposits are estimated to collectively contain about 4.4 billion tons of copper-nickel
material with an average grade of 0.66% Cu and 0.2% Ni (using a 0.5% Cu cut-off). The Cu:Ni
ratio averages 3.3:1 with a range from 2.5:1 to 4.4:1. Higher grade massive sulphide ore is
locally present in some of the deposits. In the Local Boy ore zone of the Mesaba (Babbitt)
deposit, the massive sulphide contains 2.2 million tons of material that averages 4.65% Cu and
0.94% Ni (using a 2% Cu cut-off), with localized maximum PGE values of 11.1 ppm Pd and 8.3
ppm Pt.
Stratabound PGE-enriched zones (Type 3) have been delineated at the Dunka Road, Wetlegs
and Mesaba (Babbitt) deposits, and at the Birch Lake deposit (Figure 41-2). At Dunka Road, at
least four zones with 1-3 ppm Pd+Pt (3:1 ratio) are situated beneath olivine-rich ultramafic
horizons. At the Birch Lake deposit, PGE values as high as 8 ppm Pd+Pt (1:1 ratio) are known,
associated with an ultramafic horizon (U3 unit) with pods of chromium-bearing massive oxide.
Other similarly PGE-enriched zones are present throughout the Complex, but geochemical
analyses are more limited and the ore controls are poorly understood.
Although fault-controlled feeder zones have not yet been located in the Duluth Complex, the
large low-grade nickel-copper-PGE deposits along the western margin have important similarities
to high-grade mineralization in the Noril’sk and Voisey’s Bay deposits. These include (Rowell,
2001d): 1. Occurrence in shallow tholeiitic intrusions associated with plateau basaltic volcanism;
2. External sedimentary source of sulphur; and, 3. Openness to repeated magma influx and
expulsion. Authors, such as Chandler and Lively (1998) have speculated about a possible feeder
zone for the Bald Eagle intrusion (located east of the South Kawishiwi), based largely on regional
gravity data. This feeder zone may have also served as an earlier feeder to the South Kawishiwi
intrusion, located in the region that separates the Bald Eagle and South Kawishiwi intrusions and
referred to as the Bald Eagle Trough (Peterson, 2002).
Exploration along the Mid-continent rift system has focused on disseminated copper-nickel
mineralization along basal contacts and not on locating massive sulphide bodies associated with
structures. Intrusions that host the Noril’sk deposits are quite small, generally no more than a few
kilometres in length. This implies that each of the more than 12 intrusive bodies that comprise
the Duluth Complex is sufficiently large to be a potential host for PGE-enriched sulphide
mineralization proximal to structurally controlled magma conduits.
The potential for stratiform PGE mineralization has not been considered by past exploration, but
recent studies by the Minnesota Geological Survey have shown that several intrusive bodies
within the Duluth Complex have the prerequisite characteristics for the development of precious
metal-enriched horizons (Miller, 1998). Miller (2002) suggests that the Sonju Lake intrusion, part
of the Beaver Bay Complex, is prospective for this style of mineralization.
43.0 MINERALIZATION
Empirical information on mineralization in the Birch Lake deposit was obtained from core logging
by personnel of the BBJV, its partners and State geologists, with quantitative information obtained
from laboratory analysis and detailed mineralogical investigations.
Sulphides, which are for the most part intimately associated with elevated PGE concentrations,
are disseminated interstitially in the rock matrix and mirror the size of rock forming mineral grains
whereby coarser sulphides are generally associated with coarse-grained to pegmatitic rocks and
finer sulphides are generally associated with medium-grained rocks. Sulphide mineralization
occurs as intergrown eutectic and replacement textures, as triple point exsolution between rock
mineral grains, intergrown with silicates, and rarely as sulphide seams or veinlets. Photographs
of some of the sulphide textures observed in drill core are provided in Appendix 5D.
The Birch Lake deposit, an example of Confined style, stratabound PGE mineralization (Type
3), consists of 1 to 5% disseminated copper and nickel sulphides accompanied by significant
palladium, platinum and gold concentrations, with lesser silver, cobalt and rhodium. The
mineralization is stratabound whereby it is consistently associated with the top of the U3 unit and
pegmatite marker horizon that is traceable from drill hole to drill hole as the hanging wall
(Routledge, 2004). Palladium and platinum concentrations and the Pt:Pd ratio are greater near
the top of the U3 unit; copper and nickel grades are variable as is the Cu:Ni ratio. In the
Resource Model completed by Routledge (2004), the base of the Birch Lake deposit within the
U3 unit was determined by assay cut-off. Peterson (2002) noted that the copper-nickel
concentrations are typically higher near the top of the U3 and BH units, decreasing toward the
basal contact.
Rowell (2001b and 2002a) noted that the presence of sulphides and/or oxides does not
necessarily indicate PGE enrichment. Where the U3 unit is significantly PGE-enriched it exhibits
one or more of the following characteristics:
Mineral textures indicate that PGE enrichment is associated with late-stage volatile-rich fluids that
likely migrated upward and then laterally along zones of increased permeability. The empirical
relationship between structure and PGE enrichment suggests that there is opportunity to
significantly expand the resource to the north-northeast and south-southwest (Rowell, 2002a).
The petrographic studies by Cabri (2002), identified the major ore minerals to be chalcopyrite
(CuFeS2) and undefined members of the chalcopyrite family, possibly one or more of talnakhite
(Cu9(Fe,Ni)8S16), mooihoekite (Cu9Fe9S16), putoranite (Cu1.1Fe1.2S2) and haycockite (Cu4Fe5S8).
Oxide minerals include chromian spinel, ilmenite (Fe2+TiO3), magnetite (Fe2+Fe3+2O4) and
chromite (Fe2+Cr2O4). Other minerals identified are native copper (Cu) and troilite (FeS).
Common sulphide minerals are the copper sulphides bornite (Cu5FeS4), chalcocite (Cu2S) and
cubanite (CuFe2S3), as well as nickel sulphide minerals heazlewoodite (Ni3S2) and pentlandite
((Fe,Ni)9S8). Trace minerals identified are altaite (PbTe), digenite (Cu9S5), frobergite (FeTe),
galena (PbS), mackinawite ({Fe, Ni}9S8), millerite (NiS), sphalerite ({Zn, Fe}S), nine different
platinum-group minerals, native silver (Ag), silver telluride (AgTe) and alloys of silver and gold.
Up to 2.12 wt% cobalt was measured in pentlandite. Iron sulphide gangue minerals are pyrrhotite
(Fe(1-x)S; x=0-0.17) and troilite.
Platinum-group minerals occur as various fine-grained palladium tellurides with other platinum,
osmium, ruthenium, gold, silver, tellurium and bismuth minerals. Ninety percent of the observed
PGM are associated with copper sulphides as discrete grains attached to sulphides, as sulphide
inclusions and at the margins between sulphides and gangue silicates (Cabri, 2002). The PGM
may form halos around, or be included in, interstitial copper sulphides, pyroxenes, secondary
amphiboles and biotite. Platinum-group minerals are also remobilized in chlorite, serpentine or
secondary magnetite. High PGE concentrations were first analyzed from an interval
characterized by poikilitic chromite in plagioclase feldspar, known as “2 in 1” texture (Alapietti,
1991). Palladium minerals occur at twice the frequency of platinum minerals and this is reflected
in drill core analyses. Native silver is generally occluded in sulphides with silver and gold-silver
alloys found as discrete grains and inclusions.
44.0 EXPLORATION
Recent government and academic studies have concluded that there is excellent potential for
PGE deposits in mafic intrusions emplaced along the Mid-continent rift of North America (e.g.,
Naldrett, 1992; Miller, 1998; Miller, 2002). While there has been renewed interest in rift-related
intrusions in Canada, few companies have considered the more extensive portion of the rift
system that cuts the mid-western United States from northeastern Kansas, northeastward
through Minnesota and into Canada. Franconia has chosen to focus their PGE exploration on the
rift-related intrusions in Minnesota and in doing so has selected targets that have been largely
overlooked by mineral exploration companies.
As part of their PGE exploration program, Franconia entered into an Earn-In Agreement with
Beaver Bay Joint Venture on the Birch Lake property in November 2003. At present no
exploration is being carried out on the property. There is no mine development on the Birch Lake
property and there has not been any mineral production from the property to date.
45.0 DRILLING
Exploration on the Birch Lake property and delineation of the Birch Lake deposit relies exclusively
on diamond drilling, and as such this section warrants additional detail. Diamond drilling on the
property was first initiated in the 1970s by Duval Corporation and more recent drilling (2000 and
2001) has been completed by joint venture partners Impala and BBJV (Rowell, 2000a, 2000b,
2001a, 2001b, 2001c; Impala, 2002). The Birch Lake deposit has not been tested by
underground sampling. Selected information from diamond drilling, including cross sections is
provided in Appendix 5C.
Prior to 1999, diamond drill coring used NQ (47.6 mm) size holes and since 1999 NTW (56 mm)
was used for pilot holes and NQ (47.6 mm) for wedge offset holes. Drilling by the BBJV prior to
2000 was contracted to Boart Longyear Company. Local contractor Idea Drilling carried out the
2000 and 2001 campaigns. During the latter campaigns, nine drill holes were completed from a
barge set-up on Birch Lake.
completed to date is provided in Appendix 5B and the locations of the drill holes on the Birch
Lake property are shown in Figures 39-1 and 45-1. Selected summary drill logs that include brief
geological descriptions and assay results, are provided in Appendix 5B.
Most of the holes used in the current resource estimation of Routledge (2004) have been
surveyed downhole with varying degrees of accuracy for collar location. Routledge (2004) noted
that hole traces in plan for vertical (-90°) holes varies from relatively tight spirals for post 1995
holes to curvilinear vectors for older drilling that place the toe up to 230 ft (70 m) from the collar
versus approximately 33 ft (10 m) for a spiral trace; this suggests lower accuracy in the older
downhole surveys; further details are provided by Routledge (2004). In order to handle the
numerous wedge holes in the Birch Lake deposit, Snowden (Potter et al., 2002) created dummy
pilot holes with surface coordinates and vertical dips that intersect the pilot holes at the wedge
departure depth; from there the hole trace relies on the wedge surveys. Further details are
supplied by Routledge (2004).
facility by the drilling contractor. For the 1999 to 2001 series holes, core was logged in a garage
at a house set up as an office in Babbitt, Minnesota. Core destined for analysis was cut in half by
diamond saw in the basement and bagged and tagged for shipment to Bondar Clegg’s (now ALS
Chemex) prep labs in Reno Nevada and Thunder Bay, Ontario. Pulps from the samples were
then sent to Bondar Clegg in Vancouver, British Columbia. For pre-1999 drill core, some was
sawn in half with a diamond saw and some was halved manually using an impact core splitter.
The core logging process recorded rock quality designation (RQD) and recovery percentages
followed by geologic description and setting out intervals for sampling. Drill log data was entered
into LogPlot software (RockWare Inc.) which can be used to display columns for downhole
footage, RQD, core recovery, sample number, a graphic column for lithology, geologic
description, and assays/analyses. Owing to the number of drilling campaigns on the property
since the 1970’s core logging has been done by various geologists. Consequently, older core
was re-logged by two geologists, William Rowell and Leon Gladden (geologists with Lehmann
Exploration Management - LEM), producing standardized geologic descriptions.
The footages of sampled intervals in the core box are marked by red wood blocks. Sample
numbers are composed of the drill hole alpha-numeric identifier and the sample sequence
number downhole. When examining the drill core, reference must be made from the core box red
marker footage to the drill log to match the sample number to the footage.
Core samples for assay were taken on the basis of geology (contacts, local rock changes,
structures) and mineralization (sulphide mineral concentration, textural changes) where possible
but intervals average about 2 ft (0.6 m).
Sample preparation at both the Chemex and Bondar Clegg facilities consisted of crushing and
splitting of the half core sample, with a subsequent split of the crushed material pulverized using
an agate ring to take the sample to -150 mesh (106 micron).
Multi-element analyses were performed for core samples in 1999 and onward. Prior to this, only
selected elements (Cu, Ni, Pt, Pd, Au, Ag, Cr, ±Co and ±V) were analyzed. A 32 element ICP-
AES (Inductively Coupled Plasma-Atomic Emission Spectroscopy) geochemical package was
used at Chemex for 1998 and 1999 samples. Platinum, Pd and Au were analyzed by fire assay-
lead collection-ICP fluorescence spectroscopy (FA-ICP-AFS). Bondar Clegg analyzed 35
elements by HCL·HNO3 acid digestion and ICP including sulphur for 2000-2001 samples.
Elevated copper was also analyzed by atomic absorption spectroscopy (AA). For some 1989
holes only Au, Pt, Pd, Cu, Ni and Cr were analyzed; the precious metals by the FA-DCP (direct
coupled plasma emission method), hot acid extraction-AA for Cu and Ni and by X-ray
fluorescence (XRF) for Cr. A listing of the detection limits for the various methods employed
during the assaying of drill core is provided in Table 47-1.
Table 47-1. Analytical methods and detection limits used in drill core analysis, Birch Lake.
Element Analytical Method Detection Limit
Cu HCL:HNO3 Digestion/ICP 1 ppm
Cu HF:HCL:HNO3:HCLO4/AA 0.01%
Ni HCL:HNO3 Digestion/ICP 1 ppm
Pt FA/ICP 5 ppb and 15 ppb
Pd FA/ICP 1 ppb and 2 ppb
Au FA/ICP 1 ppb and 2 ppb
Ag HCL:HNO3 Digestion/ICP 0.2 ppm and 0.5 ppm
Co HCL:HNO3 Digestion/ICP 1 ppm
Shipment to the mineral laboratories in Sparks, Nevada was reputable courier services, including
UPS and FEDEX. For Bondar Clegg work in Canada, samples were driven to the U.S. border for
direct pick up by laboratory personnel. Transfer of results for the 2000 and later campaigns was
electronic, directly from the laboratory. Results for earlier core analyses were received by
conventional facsimile and mail delivery (hard copy).
Core is currently stored at a secure Minnesota DNR core library, located in Hibbing, Minnesota.
With company permission, core may released for public examination. Birch Lake core from the
1999 to 2001 campaigns has not yet been released for public examination.
Selected intervals of drill core from holes BL00-09B, BL01-06 W2 (wedge), BL00-07, BL01-04 W2
(wedge) and BL01-02 W2 (wedge). The drill core intersections were thoroughly examined,
comparing visual percentages of mineralization and rock types to assay results and general
geological logs, respectively; in addition numerous photographs were taken (Appendix 5D).
Table 48-1 summarizes the drill core that was examined during the April 2004 site visit.
Table 48-1. Summary of drill core examined during the April 2004 site visit, Birch Lake.
Drill Hole From (ft) To (ft) Description
BL00-9B 1782 1885 thick section of melatroctolite through the U3 unit
BL01-06 W2 2511 2575 excellent “2 in 1” textures; good PGE values; U3 unit
BL00-07 1955.5 2021 excellent high grade PGE sections in pegmatitic troctolite; U3 unit
BL01-04 W2 2037 2248 good Cu-Ni values with lower than expected PGE; U3 unit
BL01-02 W2 2020 2142.5 thick section of U3 unit with excellent PGE-Cu-Ni grades
The Minnesota DNR, Minnesota Geological Survey (MGS), and University of Minnesota (UMN)
and the National Resource Research Institute (NRRI) have analyzed core from the Birch Lake
property at various times to verify that mineralization exists on the property (e.g., Dahlberg,
1987). In addition, information can be accessed on the world wide web via sites set up by LEM
(http://www.pge-birchlake.com/) and the NRRI Economic Geology Group
(http://www.nrri.umn.edu/egg/). Accordingly, CCIC did not conduct independent sampling during
the 2004 site visit. CCIC notes that visual estimates of copper sulphides from examined
drill core agrees well with the recorded core assays; similar correlation was reported by
Routledge (2004).
The LEM analytical check program consisted of compositing pulps or rejects from better grade
intersections over 9 ft (2.7 m) to 14 ft (4.3 m) in 21 holes. The samples were split and analyzed
at Bondar Clegg (Vancouver) and Genalysis Laboratory Services Pty. Ltd. (Genalysis) in
Maddington, Western Australia. Samples were analyzed for Cu, Ni, Au, Pt, Pd, Rh, Ir, Os and
Ru. The latter four elements were not routinely analyzed in the drilling campaigns. A total of 692
samples were combined into 102 composites. The results from the two labs were compared as
well as to the original individual analyses. In addition, 33 individual pulps from drill hole BL00-7
were sent to Genalysis to directly check original Bondar Clegg values. Splits from four
composites were also analyzed by Impala in South Africa; results are not known to CCIC.
In general, there is good agreement between the analytical results for the composites and the
weighted averages for the individual sample pulps (Routledge, 2004). Correlation between
Bondar Clegg and Genalysis is good for the 33 individual samples but Bondar Clegg is
consistently lower for Cu, Ni, Au, Pt and Pd (Routledge, 2004). In part the difference may be
explained by the use of different fire assay collection methods for the precious metals - Bondar
Clegg utilized lead collection whereas Genalysis used the more efficient NiS fusion). However,
this difference in precious metals does not account for the bias in copper and nickel which were
determined by acid digestion methods. Calibration differences for the ICP/AA units may account
for the difference in analyses between the labs. None the less, the check program by LEM is
satisfactory in confirming the reasonable accuracy of Bondar Clegg’s analyses.
A comprehensive QA/QC program that includes field duplicates, blank control and
standard reference samples as well as review of internal laboratory QA/QC has not been
carried out. Results from such work, in combination with internal QA/QC practised at accredited
minerals laboratories, are used to assess the natural variance in distribution of metals in core size
samples and the variability expected in results from each stage of the sampling to analysis
process. Bondar Clegg routinely appends its QA/QC data, analyses of pulp duplicates, reference
standards and analytical blanks, to its analytical certificates. Routledge (2004) reviewed analyses
for blanks and reference standards and compiled a limited amount of the pulps duplicate analysis
data for Cu, Ni, Pt, Pd and Au to assess analytical repeatability or precision. CCIC reviewed the
work done by Routledge (2004), and is in agreement that the precision and accuracy for the
Bondar Clegg analyses fall within accepted industry limits and are reasonable for resource
estimation. It is the opinion of CCIC that a comprehensive QA/QC program be initiated,
including field duplicates, blank control and standard reference samples, should further
resource delineation drilling be undertaken. For further details including graphs and tables,
the reader is referred to Routledge (2004).
The Maturi and Spruce Road deposits are now included in the BBJV property holdings as part of
the recently signed ACNC agreement (see Section 38.0). The mineral rights being acquired from
ACNC are contiguous with the Birch Lake property and this new acquisition extends the
landholdings of the BBJV more than 10 miles (16 km) along the prospective basal area of the DC.
Table 49-1. Significant deposits in the vicinity of the Birch Lake property, Minnesota.
DEPOSIT OWNER TONNAGE/GRADE DEVELOPMENT
Surface drilling, 520 m shaft,
Teck Cominco American 700 million tonnes at 0.46% Cu, UG development, UG drilling,
Mesaba (Babbitt)
Inc. 0.12% Ni (OP). 300 m tonnes (UG) bulk sampling, metallurgical
testing, pre-feasibility studies.
487 million tonnes at 0.30% Cu, Surface drilling, bulk
Northmet
Polymet Mining Corp. 0.08% Ni, 0.08 g/t Pt, 0.29 g/t Pd, sampling, metallurgical
(Dunka Road)
0.04 g/t Au (OP) testing, pre-feasibility study.
Surface drilling, 335 m
American Copper & 224 million tonnes at 0.50% Cu,
Maturi exploration shaft, pre-
Nickel Co.** 0.19% Ni (UG)
feasibility study.
Wallbridge Mining Surface drilling. Advanced
Maturi Extension Du-4 Zone (UG)
Company exploration.
Surface drilling, bulk
American Copper & 236 million tonnes at 0.46% Cu,
Spruce Road sampling, metallurgical
Nickel Co.** 0.16% Ni (OP)
testing, pre-feasibility study.
*OP=open pit; UG=underground; **subject to ACNC-BBJV agreement covering deposits
Mineralization at Spruce Road consists of a lenticular zone about 11,483 ft (3,500 m) in strike
length, resting on the footwall contact of the South Kawishiwi intrusion, and extending up to about
1,312 ft (400 m) upward into the intrusion. The distribution of higher grade PGE-copper-nickel
mineralization within the zone appears to be erratic and consists of small discontinuous zones.
Soever (2000) interpreted the extent of mineralization to be limited with little potential for a
significant tonnage deposit of higher grade material amenable to underground mining methods.
Soever (2000) considered the mineralization at the Maturi deposit to be much more regular than
at Spruce Road, consisting of a tabular sheet, 230 to 328 ft (70 to 100 m) thick and resting on the
lower contact of the South Kawishiwi intrusion. Higher grade PGE-copper-nickel are
concentrated in the upper 98 ft (30 m) of the mineralized zone, plunging gently at about N60°E
along the plane of the contact. A higher grade core consists of a tabular body, about 82 ft (25 m)
thick and averaging 3,937 ft (1,200 m) in strike length, extending 1,969 ft (600 m) down dip and
dipping between 35° and 52°. Inferred Resources in the higher grade core of the Maturi
deposit, using the Australasian Code for Reporting of Mineral Resources and Ore Reserves or
JORC Code, are estimated to be 52 million tonnes grading 0.76% Cu, 0.28% Ni, 0.02% Co, 0.28
g/t Pd, 0.11 g/t Pt and 0.05 g/t Au, using a 0.7% Cu cut-off (Soever, 2000). Soever (2000)
suggested that the mineralization at Maturi has the apparent continuity, geometry and size to be
mined by underground bulk mining methods and if the grade can be improved along with
improved metallurgical (recovery) results, the Maturi deposit has the potential to be economically
viable.
Expected concentrate grades are relatively low with copper at 8.9% to 16.3%, nickel at 2.0% to
4.09%. The four element (4E=Pt+Pd+Au+Ag) concentrations are not likely to significantly exceed
50 g/t with platinum and palladium accounting for 18.98 g/t to 22.92 g/t of the total 4E (Amplats,
1998). Lakefield (2002) concluded that results produced significant differences between the core
and reject samples (possible oxidation in the reject?) and that more comprehensive sampling
would be needed to fully assess metallurgical recovery and concentrate grade.
Routledge (2004) noted that INCO Limited is testing hydrometallurgy for application to Voisey’s
Bay copper-nickel ore with a decision as to production viability to be made by 2008. However,
precious metals are lacking at Voisey’s Bay and process development at INCO will not likely
focus on their recovery. It is important to note that none of the hydrometallurgical processes
discussed here (CESL, PlatSol, INCO) are commercially proven at the present time. A thorough
metallurgical study will be required to optimize concentrate grade and concentration ratio for the
Birch Lake deposit.
The CESL process was designed in 1992 to treat copper-low nickel concentrates for copper
production in Australia and was expanded in 1996-2000 to include the recovery of nickel and
precious metals. It has been tested on bench and pilot plant scales for application to the Mesaba
Project (Jones and Moore, 2002). Nickel and PGM recovery has not yet been published.
Indications from the basic process design for sulphur removal are that PGM may not be
completely leached (Milbourne et al., 2003). Teck Cominco has subsequently determined that
good recovery of gold and palladium can be attained by fine grinding and cyanidation of CESL
process waste but platinum recovery is not yet satisfactory (pers . comm. E. Lehmann, 2004).
Mining Consultants, 2001). In the PlatSol process, the addition of a small amount of chloride at
the high temperature pressure oxidation step dissolves the precious metals as well as the base
metals in the autoclave. Copper and nickel are recovered by solvent extraction and
electrowinning with a small amount of cobalt recovered as a sulphide precipitate. The PGM and
gold are recovered as a saleable concentrate by selective precipitation with sodium hydroxide.
Overall recovery percentages for the PlatSol process exceed are reported in the “high 90’s for
copper and nickel; PGM at 95% and gold near 90%” (International Mining Consultants, 2001).
Overall recoveries, including recovery to concentrate, are reported at 92% Cu; 67% Ni; 75% Pd;
73% Pt; 76% Au; and 39% Co for head grades of (open pit) material significantly lower than
average grade of resources at the Birch Lake deposit.
Routledge (2004) thoroughly reviewed the work completed by Snowden (Potter et al., 2002) and
Lehman (2002) and the reader is referred to Routledge (2004) for complete details of the reviews.
A summary of the resource estimates is provided in Table 51-1 and the resource areas and drill
hole locations are shown in Figure 51-1. Franconia will be submitting the Routledge (2004)
Mineral Resource study, which is 43-101 compliant, as part of their prospectus for listing on the
TSX Venture Exchange. CCIC have reviewed the reports of Snowden (Potter et al., 2002),
Lehmann (2002a and 2002c) and Routledge (2004) and the comments that follow come
largely from the RPA report by Routledge (2004).
the 1999 JORC (Australian Joint Ore Reserves Committee) code which has a classification
framework and guidelines very similar to those of the Canadian Institute of Mining, Metallurgy and
Petroleum (CIM), which were adopted for NI 43-101 reporting of mineralization, Mineral
Resources and Mineral reserves (CIM, 2000).
The Lehmann (2002a and 2002c) reports classify their respective resource estimates as
“probable” which in USGS terms would be equivalent to Indicated Mineral Resources under the
NI 43-101 (CIM, 2000) classification. The Lehmann resource area is smaller and more selective,
in terms of drill holes used for the estimates, than the Snowden area but drill holes remain widely
spaced and characterized by lithology changes over short distances as verified in wedge offset
holes (Figure 51-1).
Under CIM (2000) definitions, an ‘Indicated Mineral Resource’ is “… that part of a Mineral
Resource for which quantity, grade or quality, densities, shape and physical characteristics, can
be estimated with a level of confidence sufficient to allow the appropriate application of technical
and economic parameters, to support mine planning and evaluation of the economic viability of
the deposit. The estimate is based on detailed and reliable exploration and testing information
gathered through appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes that are spaced closely enough for geological and grade continuity to be
reasonably assumed.”
Under CIM (2000) definitions, an ‘Inferred Mineral Resource’ is “… that part of a Mineral
Resource for which quantity and grade can be estimated on the basis of geological evidence and
limited sampling, and reasonably assumed, but not verified, geological and grade continuity. The
estimate is based on limited information and sampling gathered through appropriate techniques
from locations such as outcrops, trenches, pits, workings and drill holes. It cannot be assumed
that all or any part of the resource will be upgraded to an Indicated or Measured Mineral
Resource as a result of continued exploration. Confidence in the estimate is insufficient to allow
the meaningful application of technical and economic parameters or to enable an evaluation of
the economic viability worthy of public disclosure and Inferred Resources must be excluded from
estimates forming the basis of feasibility or other economic studies.”
Table 51-1. Summary of Inferred Mineral Resource estimates, Birch Lake (Routledge, 2004).
Snowden Resource Estimate* (Potter et al., 2002)
Cut-Off** Tonnes
Cu (%) Ni (%) Au (ppb) Pd (ppb) Pt (ppb) Co (%) Ag (ppm)
($US/tonne) ('000's)
0 to 15 142,083 0.57 0.18 148 702 345 0.009 2.12
20 141,872 0.57 0.18 148 703 345 0.009 2.12
25 138,203 0.58 0.18 150 714 351 0.009 2.14
30 121,201 0.59 0.18 160 767 377 0.009 2.18
35 88,945 0.63 0.19 182 877 430 0.01 2.30
40 52,954 0.68 0.21 207 993 486 0.01 2.51
45 20,614 0.75 0.22 235 1,156 552 0.01 2.81
50 7,538 0.85 0.23 268 1,256 605 0.01 3.09
Lehmann Resource Estimate* (2002a, c) PYROMETALLURGY CASE
CIM (2000) definitions for Mineral Resources require at the outset that they have reasonable
prospects for eventual economic extraction. This qualification implies a judgment in respect of
the realistically assumed technical and economic factors likely to influence the prospect of
economic extraction. In the situation where tonnage and grade estimates for mineral
concentrations do not qualify as resource estimates under technical and/or potential economic
criteria, the CIM defines the estimates as “exploration information”.
Notwithstanding their exclusion from feasibility study, Inferred Resources may be disclosed and
subjected to preliminary economic assessment under NI 43-101 reporting guidelines provided
that the preliminary assessment is a material change in the affairs of the issuer and that such
disclosure includes the basis for the preliminary assessment and any qualifications and
assumptions made by the qualified person. The disclosure must also include proximate
statements that: 1. The preliminary assessment is preliminary in nature; 2. It includes inferred
mineral resources that are considered too speculative geologically to have the economic
considerations applied to them that would enable them to be categorized as Indicated or
Measured Mineral Resources; and, 3. There is no certainty that the preliminary assessment will
be realized.
Routledge (2004) carried out a very preliminary assessment of potential operating net revenue
in several scenarios based on grade assumptions from the Snowden (Potter et al., 2002) and
Lehmann (2002a and 2002c) resource estimates. RPA’s estimate of mining and milling costs for
an annual mine production of 2 million tonnes, resource estimation metal prices and current
relatively high metal prices, metal recoveries based on Lakefield (2002), Amplats (1998) and
Northmet flotation recoveries, and smelter terms that RPA has for nickel-copper-PGE
concentrates. The results from these scenarios are mixed and very sensitive to metal recoveries,
metal prices and cost assumptions with operating revenue ranging from positive to negative for
optimistic to conservative parameters. This implies that the deposit has economic prospects and
qualifies as a resource under NI 43-101 requirements and that future economic potential may
depend on metallurgical success and currently developing hydrometallurgical technology
(Routledge, 2004).
Routledge (2004) concluded that the drill holes used in the RPA resource study are too widely
spaced to allow classification of the estimated tonnage and grade in the Birch Lake deposit as
Indicated Mineral Resources. Routledge (2004) suggested that additional drilling is required to
better delineate the resource boundaries and the location of faults within the boundaries as well
as for better definition of the resources within the boundaries.
On the basis of the information supplied to CCIC from Franconia and its agents, CCIC
agrees with the conclusions of Routledge (2004) and have determined that the resource in
the Birch Lake deposit, at the present level of drilling, should be classified as Inferred
Mineral Resources as per the CIM (2000) resource classification guidelines.
The comments under sections 52.1 through 52.4 (below) are from Routledge (2004) and reflect
the state of current parameters as they may impact on pre-feasibility/feasibility work and potential
commercial production at Birch Lake.
From the geometry, sub horizontal to shallow dip and its depth at approximately 350 m to 750 m,
current concepts for mining the Birch Lake deposit would include shaft access and room and
pillar mining (Routledge, 2004).
52.2 Recoverability
Metals recoverability is discussed under the section on Mineral Processing and Metallurgical
Testing. Ground conditions are good to very good as judged from drill core examination.
Assuming eventual production, mining recovery would be expected to be typical of room and
pillar extraction at 75% (Parker, 2000).
o Surface and minerals on Federal land leases administered by Mineral Leasing Act
o Approvals of EIS and plans of operations
o Prospecting permits, conversion of permits to leases
o Endangered species surveys; Archaeological survey; Timber surveys and damage
54.0 RECOMMENDATIONS
Despite the current and obvious reservations regarding the economic viability of the Birch Lake
property, there remain several stages of exploration and development work which will be required
to fully evaluate the project. It is immediately apparent that additional drilling is required to
adequately delineate the tonnage and grade of the Birch Lake deposit. Furthermore, extensive
metallurgical investigations, relating to the beneficiation and treatment, and sale of metal
concentrates, are necessary.
Franconia is recommending further work on the Birch Lake property be directed at definition
drilling of the resource with the goal of converting the Inferred Resource to Indicated and
Measured Resources. The ultimate goal of the company is to move the project through feasibility
and into commercial production. Table 54-1 outlines the proposed exploration budget. As part of
the proposed budget, additional diamond drilling (in-fill drill holes) will be competed to provide
CCIC are in agreement with the proposed exploration program (~US$1,500,000) and believe that
the distribution of he costs as outlined are a fair representation of the work required to move this
project forward in evaluating its economic viability.
It is the opinion of CCIC that the character of the Birch Lake property and the mineral
targets being sought are of sufficient merit to justify the exploration program as
recommended.
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