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RIONEGRO, A NEW GOLD DISTRICT IN

SANTANDER, COLOMBIA

Book · January 2015

DOI: 10.13140/RG.2.1.2831.4964

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Ricardo Valls
Alicanto Mining Corp
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RIONEGRO, A NEW GOLD DISTRICT
I N S A N TA N D E R , C O L O M B I A
FIELD GUIDE TO THE RIONEGRO HORST/GRABEN SYSTEM

Ricardo A. Valls, P. Geo., M. Sc.

Dr. Jorge Cruz Martin, Ph.D.
Dr. Vadim Galkin, Ph.D., P. Geo.
Alicanto Mining Corp.
JUNE, 2015
Ricardo A. Valls, P. Geo., M. Sc.
Dr. Jorge Cruz Martin, Ph.D.
Dr. Vadim Galkin, Ph.D., P. Geo.
Alicanto Mining Corp.

RIONEGRO, A NEW
GOLD DISTRICT
I N S A N TA N D E R ,
COLOMBIA.

Field Guide to the Rionegro Horst/Graben System

Toronto, Ontario
Bucaramanga, Colombia
June, 2015
ISBN 1-896664-38-5

Production: Alicanto Mining Corp.

Editing: Liudmila V. Valls
Design and layout: Ricardo A. Valls
Photos and illustrations: Ricardo A. Valls, Jorge Cruz Martin, Fredy Jones Navas

Cover: Google image showing the location of the Rionegro application and the Mina
Guayos license in the Santander Department, Colombia,

Copyright © 2015, by Valls Geoconsultant.

All rights reserved. This publication is protected by copyright and permission should be
obtained from Valls Geoconsultant prior to any reproduction, storage in a retrieval system,
or transmission in any form or by any means, electronic, mechanical, photocopying,
recording, or likewise. For information regarding permission, write to Valls Geoconsultant
at 1008-299 Glenlake Ave., Toronto, Ontario, M6P 4A6, Canada, Tel.: 416-767-8226, E-
mail: vallsvg@gmail.com.

Printed and bound in Toronto, Ontario, Canada, and in Bucaramanga, Colombia.

P.O.D.
Table of Contents
Introduction .................................................................................................................................... 11
Project Description and Location ................................................................................................... 13
Accessibility, Climate, Vegetation, Local Resources, Infrastructure, and Physiography .............. 14
Accessibility and Physiography ...................................................................................................... 14
Climate and Vegetation .................................................................................................................. 16
Infrastructure and Local Resources ............................................................................................... 16
History ............................................................................................................................................ 17
Geological Setting and Mineralization ........................................................................................... 18
Regional Geology ........................................................................................................................... 18
Proterozoic Eon .............................................................................................................................. 25
Paleozoic Era ................................................................................................................................. 25
Mesozoic Era .................................................................................................................................. 26
Cenozoic Era .................................................................................................................................. 28
Local Geology ................................................................................................................................ 31
Structural Geology.......................................................................................................................... 33
Structural Lineament Analysis ....................................................................................................... 35
Lineaments processing with 1000x1000m averaging window. ...................................................... 41
Analysis of Lineament Orientations ............................................................................................... 44
Physical Modeling .......................................................................................................................... 45
Plastic modeling results ................................................................................................................. 50
7.3.4.2 Elastic Modeling Results .................................................................................................... 51
Mineral Processing and Metallurgical testing ................................................................................ 53
Leaching Results on Alicanto-Black River Sample ....................................................................... 54
Mineralization ................................................................................................................................ 55
Deposit Types ................................................................................................................................. 60
Marine basin Paleo placers ............................................................................................................. 60
Modern Placers ............................................................................................................................... 65
Mineral Resource estimates ............................................................................................................ 77
Definition of Mineral Resources .................................................................................................... 77
Artisanal Production ....................................................................................................................... 77
Inferred Mineral Resources ............................................................................................................ 78
Mining methods .............................................................................................................................. 80
Environmental Studies, Permitting and Social or Community Impact ........................................... 81
Adjacent Properties ........................................................................................................................ 82
Road Geology from the window of the Truck................................................................................ 83
Stop 1. Las Brisas Restaurant ......................................................................................................... 84
Stop 2. Entrance to the license ....................................................................................................... 85
Stop 3. Upper Cretaceous limestones ............................................................................................. 86
Stop 3. Alterated schists and siltstones........................................................................................... 87
Stop 4. La Luna Formation (Ksl).................................................................................................... 88
Stop 5. Paleoplacers........................................................................................................................ 90
Stop 6. Igneous rocks ..................................................................................................................... 92
Stop 7. Exploitation work ............................................................................................................... 94
Stop 8. Conglomerates.................................................................................................................... 95
Stop 9. Regional alteration ............................................................................................................. 96
Interpretation and Conclusions ....................................................................................................... 97
Recommendations .......................................................................................................................... 99
Proposed Budget............................................................................................................................. 99
References .................................................................................................................................... 101
List of Figures

Figure 1. Caribbean Plate Tectonics. ......................................................................................................... 11

Figure 2. The presence of a subduction zone explains the magmatic events in the region. The
picture also reflects the environment for the back-arc basin. ............................................................... 12
Figure 3. Current applications in the area of Rionegro. ....................................................................... 13
Figure 4. Access roads to the Rionegro Project. ..................................................................................... 14
Figure 5. Wooden bridges at some sections of the road to the Rionegro Project. ........................... 15
Figure 6. Horst/Graben relief at the Rionegro Project. .......................................................................... 15
Figure 7. Semi-industrial exploitation of paleo placers at the Lebrija River, downstream from the
Rionegro Project. ............................................................................................................................................ 17
Figure 8. Regional geology of the Rionegro Project. ............................................................................. 18
Figure 9. Regional stratigraphy of the area. ............................................................................................. 19
Figure 10. Detail of the Paleozoic Stratigraphic Column for Rionegro............................................. 20
Figure 11. Paleozoic environment at Rionegro. ...................................................................................... 20
Figure 12. Jurassic environment at Rionegro. ......................................................................................... 21
Figure 13. Cretaceous environment at Rionegro..................................................................................... 21
Figure 14. Tertiary environment at Rionegro. ......................................................................................... 22
Figure 15. Digital elevation model of Rionegro...................................................................................... 23
Figure 16. System of horst/grabens in Rionegro. The area corresponding to the exploitation
License Mina Guayos is in red. ................................................................................................................... 24
Figure 17. Black shales of the Simití formation in the Rionegro Project. ......................................... 26
Figure 18. Elliptical concretions of limestone of the Salada member of the Luna Fm. in the
Rionegro Project. ............................................................................................................................................ 27
Figure 19. Ammonites of the Galembo member of the La Luna formation. .................................... 27
Figure 20. Coal bed in a carbon-rich shales. ............................................................................................ 28
Figure 21. Lisama formation in the Rionegro Project. .......................................................................... 28
Figure 22. La Mesa Formation, Inferior member (Ymi) in the Rionegro Project. .......................... 30
Figure 23. Thick colluvial deposits in the Rionegro Project. ............................................................... 30
Figure 24. Wide alluvial deposits in the Rionegro Project. .................................................................. 30
Figure 25. Alluvial profile at Rionegro. .................................................................................................... 31
Figure 26. Oxidized acid water draining from the tonalite intrusive. ................................................. 32
Figure 27. A silica cap from the Rionegro Project. ................................................................................ 32
Figure 28. Location of the Horst/Graben structure at the Rionegro Project. .................................... 33
Figure 29. Tectonic model of the Rionegro Project. .............................................................................. 34
Figure 30. Main stages of the method applied to the area. ................................................................... 34
Figure 31. Data used for Lineament Analysis: A-
LINEAMIENTOSRIONEGROCURVASYD.img, B- p008r055_7p20010206_z18_nn80.tif, C-
EPP008R055_7F20010206, D- N-18-05_lr_2000; E- Google Earth. ................................................ 36
Figure 32. Tertiary Lineaments at the Rionegro Project. ...................................................................... 37
Figure 33. Secondary Lineaments at the Rionegro Project................................................................... 37
Figure 34. Main Lineaments at the Rionegro Project. ........................................................................... 38
Figure 35. Circular lineaments at the Rionegro project. ........................................................................ 38
Figure 36. Maximum Density Areas of “All Lineament Intersections weighted”. ......................... 42
Figure 37. Maximum Density Areas of Secondary Lineaments”........................................................ 42
Figure 38. Maximum Density Areas of “Tertiary Lineaments”. ......................................................... 43
Figure 39. All Maximums in transparent mode and targets on a geological base. .......................... 43
Figure 40. Example of a graphical representation of a rose diagrams. .............................................. 44
Figure 41. Rose diagram at 10,000 m intervals. ...................................................................................... 45
Figure 42. Physical modelling process. ..................................................................................................... 46
Figure 43. Mechanical sketch of the mainly pure shear group of deformation. ............................... 48
Figure 44. Mechanical sketch of the mainly simple shear group of deformation............................ 48
Figure 45. Plastic deformation, experiment 5. ......................................................................................... 50
Figure 46. Plastic deformation experiments evaluation. In red – zones of highest deformations in
most experiments, green – zones of medium deformations, blue – low deformations................... 50
Figure 47. Elastic experiment 5 for Rionegro.......................................................................................... 51
Figure 48. Elastic deformation experiments evaluation. In red – zones of lowest deformations in
most experiments, green – zones of medium deformations, blue – high elastic deformations. ... 51
Figure 49. First and second order structural targets at Rionegro......................................................... 52
Figure 50. Gold grains in a heavy mineral concentrate from the Lebrija River. ............................. 55
Figure 51. Back Scattered Image and Semi-Quantitative Analyses from the Electron Microscope
of a Gold Grain from the Reject Sample. ................................................................................................. 56
Figure 52. Above- magnetite (red), hematite (green) and pyrite (yellow) locked in magnetite and
free non-opaque gangue minerals (NOP). Below- an ingrowth of magnetite and hematite, free
oxides and NOP. ............................................................................................................................................. 57
Figure 53. Intergrowth of magnetite (red), hematite (green), pyrite (yellow) and NOP. Below- an
ingrowth of magnetite and hematite, free oxides and NOP. ................................................................. 58
Figure 54. Ingrowth of magnetite (red), hematite (green) and free NOP. Below- ingrowths of
magnetite and hematite, free oxides, NOP, and an aggregate comprised of fine grained pyrite
(yellow). ........................................................................................................................................................... 58
Figure 55. Ingrowth of magnetite (red), hematite (green) and free NOP gangue minerals. Below-
ingrowths of magnetite and hematite, free oxides, NOP, and pyrite (yellow). ................................ 59
Figure 56. Coarse nuggets of over 2mm from the Rionegro Project. ................................................. 61
Figure 57. Flakes and gold nuggets in the concentrates from the Rionegro Project. ...................... 62
Figure 58. One of the many paleo placers at the Rionegro Project..................................................... 63
Figure 59. Gravity acceleration field over the Rionegro Project. ........................................................ 68
Figure 60. Magnetic declination field over the Rionegro Project. ...................................................... 69
Figure 61. Factual map of the sampling at the Rionegro Project. ....................................................... 70
Figure 62. Factor cluster 1 (U+Th+Total) at the Rionegro Project. ................................................... 70
Figure 63. Factor cluster 2 (Ts+Tp+Elevation/Prof.+Kappametry) at the Rionegro Project. ....... 71
Figure 64. RCC 1 (2Th+2Total+U+K) at the Rionegro Project. ......................................................... 71
Figure 65. Potential paleo-placer targets identified by the lineament analysis. ............................... 72
Figure 66. Variogram properties used in SURFER. ............................................................................... 73
Figure 67. Quartile map for Rionegro with suggested hard rock targets. .......................................... 75
Figure 68. Semi-industrial gold production from paleo placers of the Lebrija River downstream
from the Rionegro Project. ........................................................................................................................... 80
Figure 69. The Client sponsored the activities of the local football team at Venegas, Rionegro. 81
Figure 70. There are two Colombian Companies currently exploiting the paleo placer in the
Lebrija River downstream from the Client license. ................................................................................ 82
Figure 71. Access roads to the Rionegro Project. ................................................................................... 83
Figure 72. Having breakfast at Las Brisas Restaurant. .......................................................................... 84
Figure 73. South limit of Alicanto's application at the opening of a well-defined horst/graben
structure. ........................................................................................................................................................... 85
Figure 74. Upper Cretaceous fossil-rich limestones............................................................................... 86
Figure 75. Oxidized sandstone and siltstone covering the Upper Cretaceous limestones. ............ 86
Figure 76. Iron stained clays and siltstones probably due to a metasomatic event. ........................ 87
Figure 77. Oxidized schists, deformed and fragmented, probably as the result of the compression
of the unit during the subduction event. .................................................................................................... 87
Figure 78. The elliptical concretions of the La Luna Formation at Rionegro are made of flint
instead of limestones, probably as the result of the circulation of silica-rich hydrothermal fluids.88
Figure 79. Bituminous-rich, cryptocrystalline limestones at the base of La Luna Formation. ..... 88
Figure 80. Magnification 36.1x of the bituminous-rich limestone. .................................................... 89
Figure 81. Fracture along the limestones showing oxidation. .............................................................. 89
Figure 82. Combination of active and paleo placers at the Lebrija River. ........................................ 90
Figure 83. A paleo placers of over 1 km in width on the right bank of the Lebrija River. ............ 90
Figure 84. Over 35 metres of a paleo placer on the left bank of the Lebrija River. ........................ 90
Figure 85. Dr. Cruz shows a terrace on one of the paleo placers at Mina Guayo. .......................... 90
Figure 86. Auger samples on top of an alluvial island in a paleo placer on the left bank of the
Lebrija River. .................................................................................................................................................. 91
Figure 87. This large intrusive was not previously mapped and correspond to the circular structure
identified by the Authors during the lineament analysis of Rionegro. ............................................... 92
Figure 88. The tonalite outcropping along the road. .............................................................................. 92
Figure 89. Iron stained, sulphur smelling, acid water (pH=4.5-5) leaching from fractures in the
tonalite intrusive. ............................................................................................................................................ 92
Figure 90. The gold mineralization in the matrix of the conglomerates probably related to the
tonalite intrusive at Rionegro. ..................................................................................................................... 93
Figure 91. Rhyolitic tuffs located to the North of the Rionegro application. ................................... 93
Figure 92. Using backhoes and a washing table (zaranda) the Colombian miners are producing
between 1.5 to 2.5 kg of gold per front. .................................................................................................... 94
Figure 93. A normal front is 30 x 15 metres in area and it is dug up to the basal conglomerate. 94
Figure 94. The black sand gets concentrated on this type of water table locally known as zaranda.
............................................................................................................................................................................ 94
Figure 95. In an effort to recuperate the fine gold, the Colombians dredge the pound where they
recirculate the water used for washing the sediments. ........................................................................... 94
Figure 96. Conglomerates in contact with a fault. .................................................................................. 95
Figure 97. Detail of the polimictic nature of the conglomerates. ........................................................ 95
Figure 98. Polimictic conglomerates located to the North of the Rionegro application. ............... 95
Figure 99. Regional oxidation (limonite and hematite) observed to the North of the Rionegro
application........................................................................................................................................................ 96
Figure 100. Zones of intense advance argilitization and oxidation observed to the North of the
Rionegro application. .................................................................................................................................... 96
List of Tables

Table 1. Coordinates of the Rionegro I and II licenses in Colombia, WGS 84 UTM 18 N. ............ 13
Table 2. Different access routes to the Rionegro Project. ........................................................................ 14
Table 3. Results of the digitalization of the lineament analysis. ............................................................ 39
Table 4. Chemical analysis of Alicanto Black River sample. ................................................................. 53
Table 5. Summation of oxides (%) in Alicanto Black River simple. .................................................... 53
Table 6 . Leaching results from the magnetites from Rionegro. ............................................................ 54
Table 7: Leach Test Results ........................................................................................................................... 54
Table 8. WDS analysis of gold nuggets from the Lebrija River............................................................. 55
Table 9. Composition in weight% of the gold grains................................................................................ 56
Table 10. Anomaly levels off the different parameters. ......................Error! Bookmark not defined.
Table 11. Proposed targets at Rionegro. ...................................................................................................... 76
Table 12. Inferred Mineral Resources per square kilometer at Rionegro............................................. 79
Table 13. Inferred mineral resources for the first 4 metres per square kilometre at the Rionegro
Project. ................................................................................................................................................................. 79
Table 14. Inferred mineral resources for the basal conglomerate per square kilometre at the
Rionegro Project. ............................................................................................................................................... 79
Table 15. Different access routes to the Rionegro Project. ...................................................................... 83
Table 16. Proposed budget for the Rionegro Project. ................................................................................. 3

Back pocket: Maps.

 I N T RO D U C T I O N

This publication is the result of three years of field exploration in Colombia and it
represents our current knowledge about the regional geology, petrology, and geochemistry
of the Santander District in Colombia.
Our main objective was to study the gold potential of the area. We also wanted to study the
geological evolution of the region to better understand the ore potential of the area.
This publication incorporates information previously disclosed in other technical reports
written by the Authors. It also includes a more complete stratigraphic section and updated
geological information. All field names of the units have been changed to proper
petrographic terminology, and we included new description points for the field guide.
The Caribbean Plate is the result of the Mesozoic-Present interaction of the Nazca, Cocos,
North, and South American plates. The margins of these plates are large deformed belts
resulting from several compressional episodes that started in the Cretaceous and had been
followed by tensional and strike-slip tectonics. Santander is situated within the Eastern
Cordillera in northeastern Colombia. The Eastern Cordillera bifurcates at a point south of
the Maracaibo Basin. The western branch swings to the northwest, while the eastern branch
maintains the northeast trend and continues as the Sierra de Merida in Venezuela, to the
east of the Maracaibo Basin (Figure 1).

Figure 1. Caribbean Plate Tectonics.

The area of the Rionegro Horst/Graben system is located in the planes of the transition zone
between the Eastern Cordillera and the Magdalena Middle Valley. Pre Paleozoic to Cretaceous
sedimentary rocks and Quaternary unconsolidated materials outcrop in the region. The Project
is located west of the Bucaramanga-Santa Marta Fault, which is the largest tectonic structure in
the area. Within the Project there are other smaller structures, like the Solferino Fault, the Río
Cáchira Fault, the Cuesta Rica Fault, the Lebrija Fault, as well as the synclinal and anticlinal of
Venegas.
P.Geo. Ricardo Valls introduced the idea in 2011 that the migration of the Caribbean Plate
to the East split the Andean Cordillera in the three branches (Western, Central, and Eastern
Cordillera). This process incorporated subduction events (Figure 2 responsible of the
magmatic events in the area, both porphyries and volcanics.

Figure 2. The presence of a subduction zone explains the magmatic events in the region. The
picture also reflects the environment for the back-arc basin.
The emplacement of porphyry bodies is usually controlled by regional fault structures and
zones of fractured rock. The intrusive bodies themselves may be composed of a single or
multiple intrusions, as is more likely in our case. The intrusions are passively emplaced
into the surrounding host by stopping and assimilation. Geological evidence shows that the
igneous bodies that generated porphyry ores were emplaced at relatively shallow levels in
the crust (less than 4 km) and that they might have provided the magma source for the
generation of large volcanoes on the surface which have since been eroded away. Where
several intrusions of magma are present, it is common for mineralization to be related to
the latest intrusions, which tend to be the most differentiated.
The combination of sedimentary and magmatic events in the region from the early
Paleozoic to the Quaternary, has created different mineralized processes that ended in the
formation of various precious metals and the identification of a new gold district- The
Rionegro Gold District.
 P R O J E C T D E S C R I P T I O N A N D L O C AT I O N

The present guide covers the applications of Alicanto Mining Corp. in the Rionegro area
as shown in Figure 3. These are licenses Rionegro I (PCL-11051 with 98.1 km2) and
Rionegro II (PCL-11341 with 91.95 km2). Within the Rionegro II Alicanto has the
exploitation area contract JG3-1392 (Mina Guayos) with 7.65 km2. Within the Rionegro
applications there is an exploitation contract IH8-11141 of 4 km2 and the application
license GEG-154A of 0.2 km2 located within the Mina Guayos exploitation contract that
do not belong to Alicanto. Coordinates of the Rionegro applications are shown in Table 1.

Figure 3. Current applications in the area of Rionegro.

Table 1. Coordinates of the Rionegro I and II licenses in Colombia, WGS 84 UTM 18 N.

Point UTM E UTM N

1 688817 808191
2 688811 811141
3 689438 810884
4 689933 809804
5 689846 809324
6 689993 808920
7 690001 808607
8 690167 808649
9 689897 809330
10 689965 809782
11 689541 810863
12 688811 811279
13 688810 811666
14 689259 812191
15 690809 812194
16 690779 808920
17 690816 808920
18 690780 808195

All exploration permits have been obtained and are in order, and to the extent known, there
are no royalties, back-in rights, payments or other agreements and encumbrances by third
parties to which the licenses are subjected other than royalties to the government.
Environmental and production permits have been filled for the exploitation of some placers
in the area of Mina Guayos.
ACCESSIBILITY, CLIMATE, VEGETATION, LOCAL RESOURCES, INFRASTRUCTURE, AND
PHYSIOGRAPHY

ACCESSIBILITY AND PHYSIOGRAPHY

There are currently six access routes to the license (Table 2, Fig. 4). The main access is by
a paved road and then the last few kilometres by the ancient tracks of a railroad that used
to serve the city of Bucaramanga and was discontinued. It takes around 2.5 hours to get to
the site from the city of Bucaramanga and with the exception of some wooden bridges (Fig.
5), it does not need a 4x4 vehicle.
Table 2. Different access routes to the Rionegro Project.

Route Km Type Name

Route 1
Bucaramanga - Brisas 12 Paved 66
Brisas –El Conchal 12 Dirt road Access road
Conchal - Salamaga 3 Dirt road Old railroad
Route 2
Bucaramanga- El Cero 8 Paved I-45
El Cero - Bocas 2 Paved Access road
Bocas - Salamaga 22 Dirt road Old railroad
Route 3
Bucaramanga – La Fortuna 81 Paved 66
La forutna – Sabana de Torres 47 Paved 45
Sabana de Torres - Provincias 14 Partially paved Old railroad
Provincias -Salamaga 21 Dirt road Old railroad
Route 4
Bucaramanga la Azufrada 16 Paved 66
La Azufrada - La Chinigua - la Salamaga 20 Dirt road Access road
Route 5
Bucaramanga - La Azufrada 16 Paved 66
La Azufrada, - Uribe-Uribe - La Magdalena 30 Dirt road Access road
La Magdalena - La Salamaga 12 Dirt road Old railroad
Route 6
Bucaramanga - Cuesta Rica 60 Partially paved 66
Cuesta Rica- La Salamaga 22 Dirt road Access road

Figure 4. Access roads to the Rionegro Project.

Figure 5. Wooden bridges at some sections of the road to the Rionegro Project.

The Rionegro Project is located on a plateau in the Cordillera Oriental of the Colombian
Andes, and many residents occupy unstable lands descending steeply from the meseta.
Westbound of it, the Rio de Oro Canyon is located at an altitude of 600m.a.s.l. Eastbound,
the Andean Range rises up in high peaks, reaching almost 3,700m.a.s.l. in the place locally
known as "Páramo de Berlín". The city of Bucaramanga is located at 7°08′N, 73°08′W.
The Rionegro is a Horst/Graben system with relative steep walls on both sides of the river
basin (Fig. 6).

Figure 6. Horst/Graben relief at the Rionegro Project.

CLIMATE AND VEGETATION

Under the Köppen climate classification1, Rionegro features a tropical monsoon climate,
though it is a noticeably cooler version of the climate. It falls just short of a tropical
rainforest climate as its driest month, January, averages just under 60mm of rainfall.
Altitude affects not only temperature, but also vegetation. In fact, altitude is one of the most
important influences on vegetation patterns in Colombia. The mountainous parts of the
country can be divided into several vegetation zones according to altitude, although the
altitude limits of each zone may vary somewhat depending on the latitude.
The "tierra caliente" (hot land), below 1,006m, is the zone of tropical crops such as bananas.
The tierra templada (temperate land), extending from an altitude of 1,006 to 2,012m, is the
zone of coffee and maize. Wheat and potatoes dominate in the "tierra fría" (cold land), at
altitudes from 2,012 to 3,200m. In the "zona forestada" (forested zone), which is located
between 3,200 and 3,901m, many of the trees have been cut for firewood. Treeless pastures
dominate the páramos, or alpine grasslands, at altitudes of 3,901 to 4,602m. Above 4,602m,
where temperatures are below freezing, is the "tierra helada", a zone of permanent snow
and ice.
Vegetation also responds to rainfall patterns. A scrub woodland of scattered trees and
bushes dominates the semiarid northeast. To the south, savannah (tropical grassland)
vegetation covers the Colombian portion of the llanos. The rainy areas in the southeast are
blanketed by tropical rainforest. In the mountains, the spotty patterns of precipitation in
alpine areas complicate vegetation patterns. The rainy side of a mountain may be lush and
green, while the other side, in the rain shadow, may be parched.

INFRASTRUCTURE AND LOCAL RESOURCES

The existing infrastructure forms the base of a successful exploitation program. Roads,
water, and industrial electricity are readably available.
Within the limits of the project’s license, there are areas for potential tailing storage, waste
disposal, and potential processing plant sites. Experienced mining personnel will need to
be brought in, although local workers and “gampineros” are available in the area.

1 http://koeppen-geiger.vu-wien.ac.at/
 H I S T O RY

The area has been previously explored for coal without much success. There are current
semi-industrial mining operations in the Lebrija River (Fig 7). Besides regional work
completed by geologist from Ingeominas and other Government funded regional surveys,
there is no previous systematic work completed in the area.

Figure 7. Semi-industrial exploitation of paleo placers at the Lebrija River, downstream from
the Rionegro Project.
 G E O L O G I C A L S E T T I N G A N D M I N E R A L I Z AT I O N

REGIONAL GEOLOGY

Figure 8 shows a section of the regional geology corresponding to the Rionegro area.

Figure 8. Regional geology of the Rionegro Project.

The area of the Project is located in the planes of the transition zone between the Eastern
Cordillera and the Magdalena Middle Valley. In the region outcrop pre Paleozoic to Cretaceous
sedimentary rocks and Quaternary unconsolidated materials. The Project is located west of the
Bucaramanga-Santa Marta Fault, which is the largest tectonic structure in the area. Within the
Project there are other smaller structures such as the Solferino Fault, the Río Cáchira Fault, the
Cuesta Rica Fault, the Lebrija Fault, as well as the synclinal and anticlinal of Venegas.
The most recent stratigraphic column of the area at a regional scale follows.
Figure 9. Regional stratigraphy of the area.
The older formations in the area belong to the Proterozoic to Paleozoic Era and are not well
studied yet. They do not outcrop within the limits of the license. Figure 10 shows a detail of this
section.

Figure 10. Detail of the Paleozoic Stratigraphic Column for Rionegro.

According to Royero & Clavijo (2001) the area of the proposed placer operation corresponds to
the structural depression of Venegas conformed of Paleozoic to Cretaceous formations oriented
N-NW and limited to the East by the Solferino Fault and to the West by the Lebrija Fault. The
depression appears to be the result of a Horst/Graben structure between the Solferino and the
Lebrija Faults. Within the Bocas formation, there is an elongated rhyolite body probably related
to the uplifting of the Horst structure. The Authors discovered a felsic intrusive with associated
volcanic rock (tonalite) of possible Tertiary age on the Eastern flank of the Horst/Graben that
probably caused the formation of multiple East-West minor fractures and faults in the area.
The following is our current model of the evolution of the region. On a metamorphic Paleozoic
basement (Fig. 11) a large marine environment expands from the Jurassic up to the Pliocene.

Figure 11. Paleozoic environment at Rionegro.

From East to West this basin was deeper during the Jurassic and it gradually filled up with
sediments as it is shown by the general sequence of clays to conglomerates in that same
direction (Figs.12-14). There is evidence that the basin was under a more oxidizing
environment during the Jurassic Period and a noticeably reduced environment during the
Eocene.

Figure 12. Jurassic environment at Rionegro.

Figure 13. Cretaceous environment at Rionegro.

 Figure 14. Tertiary environment at Rionegro.

After the displacement of the Caribbean Plate to the East, all these sediments compressed and a
series of horst/graben structures formed perpendicularly to the direction of the compression
(Figs 15-16).
Figure 15. Digital elevation model of Rionegro.
Figure 16. System of horst/grabens in Rionegro. The area corresponding to the exploitation
License Mina Guayos is in red.

Latest in the evolution of the area is the subduction event to the East that ended with the intrusion
of granodiorites and tonalites along the main fault of the subduction border.
PROTEROZOIC EON

Proterozoic Superior
Bucaramanga Complex (PEm): The original name of the Bucaramanga gneiss was first
used by Goldsmith, et al. (1971) and later by Ward, et al. (1973). It is composed by a
sequence of quartz-feldspar, hornbende, mica and garnet-rich paragneiss with lesser
amounts of amphibolites, migatites, quartzites, marble and sometimes granulites.
Proterozoic superior to Paleozoic inferior
Berlin Orthogneiss (PEpa): It was first described by Ward, et al. (1973) as a massive meta
intrusive, felsic to intermediate, with gneissic structure. The Berlin Orthogneiss intrudes
the Bucaramanga Complex and is covered unconformably by sedimentary units of the
Devonian.

PALEOZOIC ERA

Silgará Formation (Pzm): The unit of the Cambrian-Ordovician was first described by
Ward, et al. (1973) to describe a sequence metamorphosed clastic rocks, thinly stratified,
composed by phillites, quartzites, meta sandstones and lesser amounts of slates and
carbonaceous-rich phillites.
Ordovícico - Silúrico (Pzms): The unit was first described by Forero (Clavijo, 1994) to
describe a unit composed of phillites, quartzites, meta sandstones, meta conglomerates,
carbonaceous-rich meta siltstones and clayish-rich siltstone. Locally inside the dark gray
marbles can be found fosiliferous layers. The metamorphism in this unit corresponds to
the green schist facies.
Silúrico-Devónico (Pzpa): Cordani (Etayo, et al., 1983), determined the age of this unit
using K/Ar as 394 ± 23 m.a. The unit is composed by a pink to gray, biotite-rich, phaneritic,
equigranular monzonites (Batolito de Mogotes) that localy varies into granites, alites,
and granodiorite, tonalities, and diorites. The Batolito de Mogotes is pink to gray
El Tibet Formation (Dim). This Devonian formation was first described by Cediel (1969)
to identify an epicontinental unit composed of sandstones at places conglomeratic, fine
grained sandstones, alternating with red siltstones, sometimes with plant fosiles. At the
base there is a silica-rich, white and red conglomerate.
Floresta Formation. This mid Devonian marine platform unit has a thickness of 600-700
metres and was named by Olsson y Ramírez (Hubach, 1957) and later by Botero (1950),
Cediel (1969) and Mojica and Villarroel (1984). From the base to the top, the unit is
composed by black siltstones and multicolored sandstones with intercalations of reddish,
purple, yellowish gray and reddish yellow siltstones with fosiliferous layers in dark gray
sandstones.
Diamante Formation (CP). This Carboniferous-Permian epicontinental unit was redifined
by Ward, et al. (1973). The unit has a thickness of 550 m (Navas, 1962). Tha basis of the
unit is composed by a purple gray, fine grained to coarse grained (sometimes up to
conglomeratic) sandstone. The central part is composed by a dark gray slitstone with
intercalations of limestones of the same color. At the top is composed by a dark gray cay-
bearing siltstone with thin intercalations of siltstones and gray to reddish gray
sandstones.

MESOZOIC ERA

Simití Formation (Kis). Etayo S. (1965) assigned an age of Superior Middle Albian to this
formation and suggests a sedimentation environment with little ventilation in the seabed,
producing intermittently reducing conditions allowing the margins to have benthic life. The
formation is composed of black shales with thin interbedded sandstone-rich limestones and
clayey fine-grained, grey yellowish sandstone, stratified into banks up to 50cm thick with
ferruginous and calcareous nodules (Fig. 17). The overall thickness of the unit, based on the
geological cross sections is 250 m.

Figure 17. Black shales of the Simití formation in the Rionegro Project.
The Luna Formation (Ksl) was first described by Garner (1926) in the Venezuelan section of
the Perija Mountains. Contact of La Luna formation with the ferruginous Simití formation is in
conformity. Later on Mendoza-Parada et al. (2009) subdivided the formation in three members-
Salada, Pujamana, and Galembo. According to Royero & Clavijo (2001), in the type locality
located near to the Sogamoso River town, the Salada member contains black and hard
calcareous-rich slates of thin stratification, A few thin layers of black limestone of fine texture,
are present with bands and pyrite concretions. Elliptical concretions of limestone with cross
section and major axis of 10 to 15 cm, are characteristic of this unit (Fig. 18).
Figure 18. Elliptical concretions of limestone of the Salada member of the Luna Fm. in the
Rionegro Project.
The Pujamana member contains thin layers of a gray to black calcareous-rich shales. Finally,
the Galembo member is predominantly a thin, black, hard, stratification of calcareous-rich
shales with thin interbedded clay-rich limestone. They are concretions of discoid limestone,
with major axis up to of 8 m. The member contains ammonites (Fig. 19) and thin layers of dark
blue chert. Phosphate layers near the top of the Galembo contain abundant bone fragments and
vertebrae of fish and a few teeth.

Figure 19. Ammonites of the Galembo member of the La Luna formation.

Also from the Cretaceous Period is the Umir Fm (Ksu). Mendoza-Parada et. al. (2009) dated
this formation as Upper Cretaceous Epoch, Campanian-Maastrichtian age. The formation is
indicative of an age of marine regression and is conformed from top to bottom by soft greenish-
gray shales with layers of a fine-grained, hard sandstone and thin layers of coal that turns to
gray to bluish-gray shales at the bottom of the profile with grains and phosphatide fragments of
the lower La Luna Formation (Fig. 20). The bottom is a non-conformance contact and represents
a variable amount of erosion in the La Luna formation before the deposition of shales of the
Umir Fm., as it was revealed in the studies of phosphatic residuals of the La Luna formation.

Figure 20. Coal bed in a carbon-rich shales.

CENOZOIC ERA

Paleogene Period
Lisama Formation (Tpl). Taborda, (1965) suggested that this unit was deposited during the
Paleocene. The unit was named by Mendoza-Parada et al. (2009). It consists of brown and
violet, soft, micaceous-rich clay; interspersed with fine grain and medium hardness,
slightly conglomeratic greenish-grey, micaceous-rich sandstones also some clayey strata
containing thin layers of gypsum and mantles of coal towards the top of this unit.
The low hardness of these clay layers make the Lisama formation widely vulnerable to the
generation of colluvial deposits (Fig. 21).

Figure 21. Lisama formation in the Rionegro Project.

La Paz Formation (Tel). By chrono-stratigraphic correlation with adjacent units, the La Paz
Fm. has been given an Eocene Age. It lies at an angular unconformity with the Lisama
Formation. The La Paz formation consists of hard, conglomeratic, mica-rich, grey fine
grained sandstones, with pebbles of quartz, intercalated with gray violet, soft and mica-
rich clays.
Esmeralda Formation (Tee). Pilsbury & Olsson (1941) assigned an Eocene Age, based on
gastropods and pelecypods. The unit lies conformably on top of La Paz Fm. It represents
the top of the western slope of the La Paz ridge. This unit is formed by mica-rich fine-
grained, yellowish grey and yellowish brown sandstone, with cross-bedding and layers of
grey clay at the top
La Mugrosa Formation (Tom). This formation is of Oligocene Age and has two members.
The Inferior Member (Tomi) is composed of yellowish grey and yellowish-white, fine
grain, weakly consolidated and argillaceous sandstone; interleaved with greenish-gray
mica and clay-rich limonite. The Superior Member (Toms) is composed of gray-green and
violet clay with layers of coarse-grained sandstone, with feldspar and quartz pebbles, as
well as a layer of coarse-grained brown and yellowish conglomerate with angular quartz,
feldspar and fragments of metamorphic rocks. The description includes the sporadic
presence of glauconite. Towards the top of the formation there is a fossil horizon with
presence of freshwater gastropods and bones of fish, dating of Oligocene age. In the area
of the Valley of the Magdalena this unit is currently drilled for oil.

Neogene Period
Colorado Formation (Toc). Taborda (1965) dated freshwater gastropods which indicate an
age of transition between the upper Oligocene to lower Miocene periods. The formation is
composed of layers of gray, hard, conglomerates with pebbles from limestone, chert, and
metamorphic rocks, intercalated with lenticular layers of gray coarse-grained sandstone
and sand-rich clay.
Real group (Tmr). The typical location outcrops at the Doradas creek and it is composed
of three members, but in the area we only see the medium Group (Tmrm) consisting of
layers of medium to coarse grained feldspathic, massive light grey sandstone, with some
layers of sand-rich clay and a yellowish white sandstone and quartz-rich conglomerate.
According to Mendoza-Parada et al. (2009) the age of this Group is Miocene based on
leaves of plants and gastropods which indicates a continental origin. The Inferior Group
(Tmri) consists of a sequence of thick yellowish-grey conglomerates with pebbles of
sandstones, igneous and metamorphic rocks, which are interbedded with coarse-grained
volcanic and metamorphic lithic-rich sandstones.
La Mesa Formation, Inferior member (Ymi). The thickness of this unit is of approx. 1,100
m and there are no recorded fossils that allow a determination of its age, but based on
chrono-stratigraphic correlations its age is estimated as lower Pliocene Epoch. In the area,
this formation consists of yellowish to yellowish gray, medium to coarse and moderately
consolidated grain structures of cross-bedding conglomeratic-rich sandstones.
Intercalated are clusters of yellowish-grey to grey-brown, little consolidated, jagged layers
and lenses with pebbles from sandstone, quartz, rocks, igneous, metamorphic and volcanic
lithic-rich conglomerates (Fig. 22).
Figure 22. La Mesa Formation, Inferior member (Ymi) in the Rionegro Project.

Quaternary Period
In the area there are two important materials of recent formation, corresponding to colluvial
and alluvial deposits.
Colluvial Deposits (Q). These are caused by processes of weathering and degradation of
the rocks that make up the soil or subsoil generating through the erosion of rock, from
fragments of the lithologic units emerging in higher areas, then they are transported by
means of a natural agent, which is usually rain water. They are mainly located in some
sectors of the western slope of the plateau of Lebrija (Fig.23).

Figure 23. Thick colluvial deposits in the Rionegro Project.

Alluvial Deposits (Qal). They cover much of the area, on the banks of the Lebrija River.
These units are set to the topographical lower areas and they are generated by the deposition
of fluvial load material (Fig. 24). They form a flat to soft wavy relief on which the
development of cattle ranching has been established.

Figure 24. Wide alluvial deposits in the Rionegro Project.

 LOCAL GEOLOGY

Fifty five percent of the area of the concession consists of alluvial Quaternary deposits (Qal
and Qtf) and the rest are sedimentary rocks from the Cretaceous Formations of La Luna
(Kisl), Umir (Ksu), and Lisana (Tpl). In this section the focus is on the alluvial Quaternary
deposit formed by the Lebrija River, since the mineral of interest is the alluvial gold.
Figure 25 shows a typical profile of the alluvial sediments at the bed of the river.

Figure 25. Alluvial profile at Rionegro.

Among the host rocks of the La Luna, Umir, and Lisama Formations, we have mapped a
tonalite intrusive with several zones of intense alteration, represented by acid water (pH
4.5-5) and oxidized stains with noticeable sulphur smell (Fig. 26).
Figure 26. Oxidized acid water draining from the tonalite intrusive.

The Authors have also mapped an outcrop of a silica cap (Fig. 27) as well as several
outcrops of basalts to andesite-basalt which indicate the presence of volcanic activity in
the area that has not been mapped yet.

Figure 27. A silica cap from the Rionegro Project.

 STRUCTURAL GEOLOGY

The study area presents numerous faults and folds that correspond to structures of the North
to Northwest structural depression of Venegas. The most important structures starting with
the more regional character are:
Bucaramanga - Santa Marta Fault.
With a SSE-NNW direction this sinestral fault system has had over time various vertical
components. Its importance lies in the contribution to the development of the Magdalena
Valley and the lifting of the Santander Massif.
Lebrija Fault.
It is located approximately 1.7 km west of the Township of Venegas with a sinuous course
towards NNW, until it reaches the municipality of Rionegro. It is a normal fault with a light
displacement on the slates of the Q'umir Formation in the area of the Quebrada Salamaga.
Main vertical displacement can be seen in the municipality of Rionegro.
Cuesta Rica Fault.
This fault intersects the Lebrija Fault and moves slightly to the Northwest. Apart from this
displacement the fault ends in Tertiary units west of the Lebrija Fault. It is estimated a
vertical displacement of 400m in Tambor-Giron contact.
Anticline and Syncline Venegas.
Royero & Clavijo (2001) describe the Anticline of Venegas as a structure with a somewhat
undulating axis and soft pitching towards the South. Regarding the Venegas Syncline,
which occurs in continuity to the Southeast, the study states it pitches toward the South and
disappears beneath the Lebrija River alluvial Quaternary sediments.
The studied area corresponds to a large Horst/Graben structure, possible pre-PZ in age with
an N-S orientation that tends to be diverted to the SW in the direction of the Boyacá folded
structures (Fig. 28).

Figure 28. Location of the Horst/Graben structure at the Rionegro Project.

Horsts are elevated blocks delimited by parallel normal faults on both sides. Grabens are
block sunk bounded on both sides by parallel normal faults (Fig. 29). These faults represent
the structures of the first order and are the oldest in the area.
Figure 29. Tectonic model of the Rionegro Project.

The Graben has served as a perfect watershed both for active sediments as for paleo placers,
and it is very likely that the secondary fractures and faults have helped concentrate the
heavy mineralization along such structures.
Dr. Galkin completed a lineament study of the whole area of the Rionegro application.
Here we are summarising his Complex Structural Analysis (Fig. 30).

Figure 30. Main stages of the method applied to the area.

The analysis includes the following consequent techniques:

- Lineament (fault and fractures) Analysis using aerial and satellite data of various
sources (available for purchase or free of charge on the Net). The analysis itself is purely
manual procedure. Hence, apart from natural occasional human errors, and distortions or
the flaws of the images, no artificial systemic errors ( such as automatic processing bias)
affect the results
- Physical (analogue) modeling of the main lineament/structural frame mechanical
response to the different geodynamic conditions
- Processing of the data with various computer programs (custom-built and commercial)
and creating contour maps of lineament densities and strain levels for the area
- Analysing the data and outlining the areas which should be the Primary Exploration
Targets from the standpoint of the method ideology
The final part of the method (Analyzing the resulted maps and schemes along with
geological/geophysical/geochemical data) is currently being processed by P. Geo. R. Valls.
The agreed area for the analysis was 1,300 km2. The boundary effect distorts the automatic
contouring, that is why the study area should normally be larger than the studied object
itself.

STRUCTURAL LINEAMENT ANALYSIS

Lineaments can be defined as linear surface features, visible on a map. Accordingly, one
may speak of topographic, photo-, satellite, geological, geophysical lineaments etc. In our
study we deal with photo- and topographic lineaments. These linear features, as a matter
of fact, represent the surface reflection (projection) of either a geological body (such as a
dyke or a layer, bed, intrusion) or of a plane of anomalous physical property/-ies such as
fault rupture, zone of mechanical weakness (or hardness), zone of high (low) permeability
etc. Hence, by studying lineaments we indirectly study the surface pattern of the physical
properties, mainly – the distribution of fractures and faults projection on the earth’s surface.
Lineament analysis as a method of obtaining new geological information has been in
existence for at least 50 years. “Pros” and “contras” of the method have been discussed in
numerous papers. The method is considered to be a “mainstream” in hydrogeology, where
the direct links between water accumulation and fractures density pattern has been proved.
Direct link with mineralization is not that straightforward, since the mineralization is often
geologically old, and the lineaments observed are believed to be of somewhat recent age.
On the other hand, more and more data are being published that prove the fact that the
visible lineaments inherit to rather larger extent the pattern of pre-existing fractures.
In 1980-s a lot of papers were published with the results showing that statistically relevant
correlation exists between regional (or even global) network of lineaments and spatial
distribution of the mineral deposits (Selby, 1987). Even relatively recently Carlos J.
Chernicoff et al. (2002) argued that there exists an un-doubtful crustal lineament control
on magmatism and mineralization in north-western Argentina. We will leave the discussion
outside the limits of the current study. Let us note, nevertheless, that while there might be
a disagreement amongst the geologists with regard to spatial correlation of mineral deposits
versus lineaments, everybody agrees that a lot of ore deposits are controlled by fault and
fracture networks. The fact is that as descending” from global and regional scale to more
“prosaic” local geology and tectonics many vague lineaments most often turn into real
faults and fractures.
Anyhow, it seems to have become a conventional view that, if taken in combination with
other geological methods and applied with precaution, the technique might provide a
researcher with new kind of valuable information which would have remained hidden
otherwise. This study takes into consideration only lineaments and their distribution,
without preliminary geological/geophysical/geochemical data analysis.
The current lineament analysis was conducted using several different datasets:
- LINEAMIENTOSRIONEGROCURVASYD.img
- p008r055_7p20010206_z18_nn80.tif– black and white – resolution 15 m/px
- EPP008R055_7F20010206 – color, resolution 30m/px
- N-18-05_lr_2000 – resolution30 m/px
- Google Earth
Fig. 31 shows the location of the area of the study and the mining licenses with relation to
the available datasets.

Figure 31. Data used for Lineament Analysis: A-

LINEAMIENTOSRIONEGROCURVASYD.img, B- p008r055_7p20010206_z18_nn80.tif, C-
EPP008R055_7F20010206, D- N-18-05_lr_2000; E- Google Earth.

All lineaments were divided (ranged) into four groups - main, secondary tertiary and
circular. The drawing itself has been done in ArcGIS environment.
Tertiary lineaments can be seen as straight lines due to changes in surface pattern or color
nuances in the image (Fig. 32). The length of tertiary lineaments in this study was about
250-1500 m.
830000 665000 670000 675000 680000 685000 690000 695000 700000

830000
825000

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815000

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665000 670000 675000 680000 685000 690000 695000 700000

Figure 32. Tertiary Lineaments at the Rionegro Project.

Secondary lineaments can be seen as straight lines due to changes in surface pattern or
color nuances extended through several hundred meters. They are 2.5-7 km long for the
area image (Fig. 33).
665000 670000 675000 680000 685000 690000 695000 700000
830000

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665000 670000 675000 680000 685000 690000 695000 700000

Figure 33. Secondary Lineaments at the Rionegro Project.

Main lineaments can be clearly traced through at least 1/2 of a map or longer, they are of
considerable width (may be represented as series of closely placed parallel lineaments) and
long 11-28 km for the area image (Fig. 34).
 665000 670000 675000 680000 685000 690000 695000 700000
830000

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665000 670000 675000 680000 685000 690000 695000 700000

Figure 34. Main Lineaments at the Rionegro Project.

Circular lineaments (Fig. 35) can be seen and drawn using both the colour changes and
the pattern. Circular lineaments played an important role in this study.
665000 670000 675000 680000 685000 690000 695000 700000
830000

830000
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665000 670000 675000 680000 685000 690000 695000 700000

Figure 35. Circular lineaments at the Rionegro project.

It is important to note that the lower limit for the lineament’s length (minimal length of
tertiary lineament) is scale dependant. The image with 0.3-1.3 m/pi resolution allows
seeing and drawing very short lineaments – 4-5 m long. The number of the features to draw
would become enormous - hundreds of thousands and/or millions. Since the analysis is
done manually, it would take several months of work for one person, which is
unreasonable. That is why the researcher has to spend some time just evaluating the right
scale with which to start. In our case the area was ~ 1300 km2, so the analysis if the tertiary
lineaments was done using the screen scale (ArcMap scale toolbar 1:25,000).
We observed a total of 18,913 tertiary, 730 secondary, 21 main and 31 circular lineaments
for the area.
The total number of different groups of lineaments, and the number intersections between
each type of the main 4 groups of lineaments were calculated and exported as an Excel
sheet Table 3. The full dataset is included in the DVD attached to this report.
Table 3. Results of the digitalization of the lineament analysis.

Calculation was done with specially designed software written for ArcView 3.2 using
different 4veraging window size. In this study we used 1000mx1000m, 2000x2000m, and
4000x4000m windows. The author tried the 500x500 m and 700x700 m, but the calculation
failed due to huge amount of data to process. It is the author understanding that the main
challenges for the capacity of the average laptop were the calculation of the number of the
lineament intersections as well as possible tiny incompatibilities between Windows 7 and the
ArcView 3.2 lineament software.
The data then was processed and interpreted with the Surfer software. The resulted maps
are contour maps of lineament (lineament intersections) densities. The maximums on such
maps represent the areas with the highest lineament population (density), and therefore,
with the highest permeability for any fluid flow passing through the system. Apparently,
an amount of fluid flowing through the zone with maximum lineament (intersections)
density is larger with comparison to the minimum, and the mineralization is more likely to
occur in the maximum density zone.
We also used some weighting procedure during the interpretation.
Weighing is somehow arbitrary and reflects the researcher’s conception of the lineaments
nature and origin. From mechanical standpoint fractures and faults (which we observe as
lineaments) form in some hierarchic order, usually from the smallest – first in time, and
then to the largest. Again, mechanically-wise, the fracture’s shape in the homogeneous body
must be close to a square or disc. So, the lineament, say, 200 m long may cut into the rock
down to approximately 200m, and the main lineament 6 km long¸ accordingly, to 6 km
down. Such a conception may be an oversimplification, yet the tendency of the longer and
wider lineaments to penetrate deeper than shorter ones is a well-established geological fact.
Apparently, an amount of fluid flowing through the main lineament is larger with
comparison to the tertiary ones, and the mineralization is more likely to occur in the vicinity
of the main lineament. Therefore, it makes sense to weigh (assign the importance value)
the main lineament heavier than secondary, and much higher than tertiary. In our
processing we used the following weighting coefficients: tertiary – 1, secondary – 3, main
– 10, circular -5. The intersections, accordingly, became weighted, since the weighted
numbers for different groups changed. In the areas where the mineralization is controlled,
to some extent, by intrusive magmatism and volcanism it is reasonable to weigh the circular
structures heavier than small linear features. These circular structures may reflect location
of eroded intrusive bodies, volcanoes or their translucent projections onto the surface.
By the same token, though, if the geological data suggest that the mineralization occurs at
shallow depth and related to, say, rather small intrusive bodies, then the role (weight) of
tertiary/secondary lineaments and their intersections would be more important (heavier
weight). Since this study does not involve geology/geophysics/geochemistry consideration
in detail, we will show contour maps built with different weighing procedures.
From general considerations the locations with maximal densities of
lineaments/intersections will be considered as the most favourable for mineralization to
occur, since those areas must have the highest permeability for circulating fluid.
Application of different averaging window sizes gives some ideas about the regional
significance of the max/min density zones. Sometimes, when moving from smaller to larger
averaging window size the maximums disappear and/or shift to another location. In such a
case one can reasonably assume that the maximums reflect the very local (and relatively
shallow) structural situation. As often, though, the maximums stay at the same location,
just growing in size. Such a pattern suggests the existence of deeper and more regional
source of the tectonic disturbance in the area. Again, depending on the geological model
accepted for the mineralization in the study area, either smaller or larger window results
may be chosen as more important from the exploration standpoint.
The pattern, the spatial distribution of zones with different lineament densities are really
important. Lineament analysis does not give the exact targets for immediate drilling, rather
provides some clues for further ground exploration.
LINEAMENTS PROCESSING WITH 1000X1000M AVERAGING WINDOW.

Window 1000x1000m is the most reliable in terms of the calculating procedure (it does not
contradict to what was just said above, since we are talking pure math here). For any such
window there usually are many tertiary, at least few secondary/main and very often at least
one circular lineament. So, during the calculation and automatic contouring the window is
never empty, meaning that the interpolation can be done smoothly. Using window with,
say 150x150m size, we would get very abrupt drops in contours, somehow losing the
clearness of the interpretive picture. We must emphasize that the smaller the size of the
window, the less reliable become the exact spatial positions of the maximums and their
absolute magnitudes, since the number of secondary, main and circular lineaments is not
usually statistically large for such a window. Still, with cautiousness, the results can be
very useful in combination with other data.
While the full, integrated interpretation will be completed soon, preliminary maps of the
maximums for different patterns will be shown here, on the basis of real world image as a
background, to avoid irrelevant information. Yet one question should be discussed with
regard to maximum cut-offs. The method is not intended to obey to strict statistical rules.
And every region is geologically unique. Same can be said about the lineaments. Their
distribution can be fairy even, and in such a case the min-max values of their densities
won’t be of a huge difference. The cut-offs, say, 75% of the max value (or even higher)
could be appropriate to map the maximums. As another extreme – the lineament
distribution can be very uneven, and cut-offs of 30% of max value can be used. We do not
want the maximum to be neither too small-size nor too large. In the first case, one cannot
be absolutely sure that there was no error made during the manual procedure of drawing or
during the processing. In the second case, one can obtain maximums (targets) which cover
more than 50% of the area, and that definitely would not make sense from the exploration
standpoint. So, the mapping of the maximums is a compromise between the statistics and
practicality. Understanding of this issue becomes particularly important when we walk
down the size of the averaging window. The smaller the size the more cautious one will
have to be sometimes in terms of choosing the cut-offs.
We are including in this report only a portion of the obtained maps (Figs. 36-38).
Figure 36. Maximum Density Areas of “All Lineament Intersections weighted”.

Figure 37. Maximum Density Areas of Secondary Lineaments”.

Figure 38. Maximum Density Areas of “Tertiary Lineaments”.

All the maps have many common features. By overlaying all the individual maps and
extracting areas where 3 or more individual maps maximums intersect obtained the
“averaged” scheme shown in Fig. 39.

Figure 39. All Maximums in transparent mode and targets on a geological base.
At this point we can only make a following conclusion:
Obtained contour maps of lineament densities repeatedly show areas with higher densities
in several spatial stable locations. These zones are considered as the most favorable for
mineralization from the method foundations standpoint and may be recommended as the
first target zones for future exploration activities.
The size of the averaging window (1000x1000m) suggests that the actual position of the
maximums on the ground may vary within a hundred meters limits.

ANALYSIS OF LINEAMENT ORIENTATIONS

Processing of the directional data very often involves construction and analyzing of rose-
diagrams and their spatial variation. Rose-diagram can be defined as a circular histogram
plot which displays directional data and the frequency of each class (Fig. 40). Radial
distance indicates the relative frequency of an observation at a certain azimuth.

Figure 40. Example of a graphical representation of a rose diagrams.

Two types of rose diagrams are used – full (Fig. 40, left) and half rose diagrams –northern
180-degrees (Fig.40, right). Rose diagrams are commonly used in sedimentary geology to
display paleo-current data, or the orientation of particles. In structural geology rose
diagrams are used to plot the orientation of joints and dykes. Wind directions and
frequencies (meteorology and geography) can also be plotted on rose diagrams.
In this study rose diagrams were used to visualize the preferred directions and frequency
of the lineaments, and their spatial distribution over the Project Property. Basically, the
longer and narrower the peaks in any particular direction is, the stronger and more spatially
bound is the lineament system.
Similar to lineament densities calculation, the counting and rose diagram drawings were
made with different averaging window sizes – 1000x1000m, 2000x2000m, 4000x4000m,
6000m and 10000m. We used our own proprietorship software to process the lineaments
and build the diagrams.
The analysis of the data shows that there is no clear regional spatial partitioning in the
tertiary/secondary lineaments distribution for 1000m window. It is also difficult to interpret
the images of the tertiary lineaments at 4000 or 6000m spaces, but the 10,000m window
(Fig 41) is much more interesting.
Figure 41. Rose diagram at 10,000 m intervals.

PHYSICAL MODELING

Main earth crust and/or uppermost mantle heterogeneities (such as deep faults and fault
zones as well as favourable pattern of faults and their intersection) are considered to be the
locations of magma generation and penetration, sedimentary basins development, high
permeability zone formation, metamorphic processes and fluid flow canalization. The last
two lead to remobilization and re-precipitation (redistribution) of ore, oil, gas etc.
Spectrum of deposit types that are mainly controlled by faults geometry and pattern is
extremely wide ranged – from diamonds and PGM to oil and gems.
It would seem to be simple, then, at least at a first glance, to design some structural
exploration method: one must find and outline all major faults in the area of interest, outline
zones of maximal faults densities and “knots” of fault intersections, and these resulted spots
should be the most favourable for deposit finding.
There are, though, two problems for this procedure to be easily fulfilled.
First problem. It is not always possible to establish all major faults at once, especially
when one studies an area with an overburden or just because of absence of any reliable
geological data.
Second problem. Theoretical consideration as well as experimental results and geological
practice indicate that only a few among many faults (fractures in experimental works) and
their intersections play controlling role in deposit location whereas others serve either as
pathways for deposit mass supply or don’t affect geological system at all. This phenomenon
becomes clear from the following simple experiment which everyone can reproduce at
leisure time.
Let us take a rubber eraser and make several cuts on one of its facets. Then, press eraser
from two sides horizontally. You will immediately see that openings form along some cuts
(which are parallel or close to parallel to the direction of compression) whereas other cuts
do not manifest themselves. Now try to press eraser in different direction, bend it, twist it,
and play with it around. You will find a number of deformational patterns, yet initial system
of cuts is the same. This experiment gives may be too general, yet a good analogy of faults
/strain field interaction in nature (cuts represent faults and strain field - pressure applied by
your fingers).

Figure 42. Physical modelling process.

The First problem can be solved by lineament analysis of relief, air- and satellite images,
radar images, geophysical fields etc.
Lineaments are superficial “traces” of buried faults, and their visibility even through
hundreds of meters of overlaying sediments is well explained from the mechanical
standpoint. Many specialists in mechanics believe that any fault with substantial length
(say, 2 km) behaves as a very mobile structure, since even in a dormant tectonic
environment cumulative stress on it happens to become greater than the average strength
of rocks. Once formed, such faults manifest themselves in tiny movements which are not
significant in magnitude but still keep the faults active. These continuous movements can
be seen through later structures as lineaments – faults or fracture zones with constant, often
pendulum-like (pulsating) type of little displacements.
Thorough lineaments analysis and subsequent processing of lineament data allows us to
find the most important (main) structures which control the system mechanical behaviour.
Yet, to overcome the Second problem (see above) and find which high fracture density
zones must be explored first and foremost we have to do some additional discriminative
analysis. We need to select those faults and their intersections, those high fracture density
zones which were the most geologically active and dominant in the area under study. There
is no way to crack this problem theoretically since the real faulted volume behaves as a
non-linear system for which mechanical equations proved to be insoluble.
There is, nevertheless, a way around, namely, tectonophysical (physical, analogue)
modeling.
Physical modeling deals with simulation of real geotectonic processes by using analogue
materials instead of rocks, and substituting natural tectonic stresses, temperatures and
pressures by specifically selected laboratory conditions. While deforming selected models
with initial fault structures again and again, one has to register all newly formed strain
structures (usually with digital camera) and, then, analyze dozens of images to select and
outdraw repeating zones of high strain.
Many-year experience of research indicates, that no matter what orientation of stress and
what materials one chooses, he will always find only a few of such zones of highest strain
with astonishingly stable spatial location!
These zones in experiments and their analogues in nature, called structural (tectonic)
concentrators, indicate the most favorable localities for any type of mineral deposit.
Let us consider the implementation of such method for Rionegro Project area.
Some preliminary words need to be said about the physical modeling foundations relevant
to the case-study:
Basically, tectonic deformation, as any deformation, consists of three consecutive stages:
elastic (reversible), plastic and rapture (permanent, irreversible). When the plastic stage is
short in time and insignificant in magnitude we usually describe the deformation as brittle
– it occurs under relatively low temperature and/or high stresses and high strain rate.
During all these stages in the heterogeneous geological media (faults are the most important
of heterogeneities) mineralization tends to localize in the (or close to) zones of low
compressive and/or high tensional stresses. Generally speaking, we may say that
mineralized fluids move from zone of high compressive stresses into zones of openings
(raptures, fractures, faults) and low compressive (or high tensional stresses) where they
precipitate and form ore bodies.
Thus, if we use physical modeling to allocate the most favourable zones for deposit
discovery we have to find zones of: high rapture deformation or, in other words, zones with
high density of fractures and openings – so called ‘dilation (dilatation) zones’, or in the
areas of relatively low compressive stress compared to adjacent high-stressed zones.
To cover all three stages of deformation in experiments we have to use two different types
of materials (this is just a nature of the modeling and will not be discussed here) and,
accordingly, two different series of experiments have to be conducted: elastic deformation
(reversible) and plastic + rupture deformation (irreversible).
Deformations have occurred (or might have occurred) many times, under different
thermodynamic and tectonic conditions. That is why we need to study separately several
(namely, eight) strain regimes – group of mainly “pure shear” with four different
orientations of compression and group of mainly “simple shear” with four different
orientations of shearing.
The model itself was made with clay dope whose mechanical properties satisfy, in general,
the demands of The Theory of Similarity for this class of analogue modeling.
In the clay block with dimensions 20x20x2 cm a series of vertical cuts was made. These
cuts represent main lineaments (faults) obtained from lineament analysis of the satellite
images. The same fault-template was used in all experiments, yet its orientation relative to
stress varied in each case.
Mainly Pure Shear Group. Mechanical sketch of this situation may be represented as
follows.

Figure 43. Mechanical sketch of the mainly pure shear group of deformation.

The results of experiments were recorded with digital camera, and shots were interpreted
separately. Zones of openings along existing faults as well as new fractures and areas of
high plastic deformations were outlined. Due to large distortions of initial pattern of faults
during the deformation we copied these contours to the initial template and corrected their
position to match with real lineaments pattern.
Mainly Simple Shear Group. Mechanical sketch of this situation may be represented as
follows (Fig. 44).

Figure 44. Mechanical sketch of the mainly simple shear group of deformation.

Simple shear is considered as an ideal situation which is seldom to exist in earth crust,
some kind of trans-pressure (additional compression perpendicular to red arrow on the
figure above) or trans-tension occurs usually. In our experiments such additional shortening
was at a range of 10-20%.
Zones of openings along existing faults as well as new fractures and areas of high plastic
deformations were outlined. Due to large distortions of initial pattern of faults during the
deformation we copied these contours to the initial template and corrected their position to
match with real lineaments pattern.
All contours of high deformations in eight experiments were overlaid on one picture, and
dividing into four districts of strain level was made as following:
1-white - zones of zero strain – no strain was recorded in all experiments.
2-blue – zones of weak strain – strain was recorded in only one experiment
3-yelow- zones of medium strain – strain was recorded in 3-4 experiments
4-red - zones of high strain – strain was recorded in 5 or more experiments.
Finally, the table of strain intensity was made, with the following values for strain levels:
 zones of zero strain -0
zones of weak strain – 1
zones of medium strain – 3
zones of high strain – 10.

For those cells which contained several areas of different strain-levels, simple weighting
was applied.
Some emphasis must be put on the interpretation of the results. In our view, actual location
of zones of high strain (and, thus, of high possible permeability and destruction of rocks)
should be obtained from lineament scheme. In case of mismatch of lineaments densities
and high-strain zones locations an additional consideration from regional geology data
must be taken into account for one to decide which result should overrule the other. In other
words, final targets must not be selected based on quantitative coefficients only – this
particular case-study has not yielded sufficient amount of data to apply purely quantitative
analysis.
Elastic modeling
Optical modeling simulates the very first stage of deformation – elastic deformation.
Optically active materials, such as plexiglas and gelatines are used to be the most suitable
for this purpose. Optically active materials while placed between polarizing films and
deformed show rainbow-coloured pattern similar to what one can observe in rock thin
sections under the microscope. The more “reddish” colors show higher stresses, the more
bluish – lower stresses. The higher the order of rainbow spectrum the higher stress is.
When all the experiments have been done we’ve outlined the patterns of high, medium and
low stresses/deformations for each of the experiment. Overlaying these patterns onto each
other we usually find that in the model (in the region under study) such zones exist where
the deformation was high in, say, 5 and more out of all experiments.
These ‘cumulative’, repeating zones of high deformation in the plastic/rapture series
and zones of low stresses (or openings, dilation zones) in elastic series both represent
the favourable places for the deposit discovery.
The results of physical modeling may be used for exploration targeting independently.
Better still, though, to use them as overlays over the results of lineament analysis. It is those
locations where the highest densities of lineaments, lowest elastic strains and highest
plastic/rupture strains come along that must be treated as the most favourable for any type
of mineralization to occur. We used the main lineaments scheme for the elastic modeling.
PLASTIC MODELING RESULTS

We completed eight sets of experiments. Every experiment was photographed (Fig. 45)
and, then, we outlined all the zones of maximal deformations. We tried to use all the
possible schemes of loading in terms of compression/shearing orientations.

Figure 45. Plastic deformation, experiment 5.

Overlaying all the results onto each other we can find the areas where the deformations
always were high, and we can also see zones of medium (green), low (blue) and zero
(white) deformations (Fig. 46).

Figure 46. Plastic deformation experiments evaluation. In red – zones of highest deformations in
most experiments, green – zones of medium deformations, blue – low deformations.

Plastic group of experiments, basically, suggests that zones of main lineaments

intersections represent areas with the highest cumulative deformations. These zones – from
the modeling standpoint – may be taken as the most favourable for the future exploration
activities.
ELASTIC MODELING RESULTS

We completed 12 experiments to study the elastic field. Every experiment was

photographed and, then, all the zones of maximal deformations were outlined. We tried to
use all the possible schemes of loading in terms of compression/shearing orientations.
For the elastic field we are looking for the areas with lowest stresses or dilational zones.
Overlaying all the results onto each other we can find the areas where the deformations
always were the lowest (Fig. 47).

Figure 47. Elastic experiment 5 for Rionegro.

Processing the results with specially designed software we also created Surfer contour
maps for high deformation areas. Such maps are necessary for the mutual analysis with the
lineament schemes in GIS environment. Again, we used 3 averaging window sizes -
1000m, 2000m, and 4000m. Elastic group of experiments suggests that most zones of main
lineaments intersections represent areas with the lowest stresses (Fig. 48).

Figure 48. Elastic deformation experiments evaluation. In red – zones of lowest deformations in
most experiments, green – zones of medium deformations, blue – high elastic deformations.

These zones – from the modeling standpoint – may be taken as the most favourable for the
future exploration activities.
In summary, the structural analysis of the Rionegro Project has identified several First and
Second order targets (Fig. 49).
Figure 49. First and second order structural targets at Rionegro.

Those zones where all the maximums are in spatial coincidence are considered as the most
favorable for mineralization from the method foundations standpoint and may be
recommended as the first target zones for future exploration activities.
 M I N E R A L P R O C E S S I N G A N D M E TA L L U R G I C A L T E S T I N G

During the exploration of this project, P. Geo. R. Valls discovered that over and above the
free gold occurrence in the active and the marine basin environment, there is also a
significant amount of gold encapsulated in the magnetite. Alicanto has conducted
preliminary metallurgical studies with Process Research Ortech Inc. (Ortech, 2015).
Process Research Ortech Inc. (PRO) developed a mixed chloride leaching technology for
the recovery of Au from various Au containing materials (i.e. ores, concentrates, tailings
etc.). The technology utilizes PRO’s patented mixed chloride leach technology to recover
Au. PRO received two (2) samples from Alicanto Mining Corp. One of the samples (Black
River) was sent for the following chemical analyses by AGAT Laboratories in Mississauga,
Ontario:
4 Acid Digest - Metals Package, ICP-OES finish
Lithium Borate Fusion - Summation of Oxides, XRF finish
Fire Assay - Trace Au, ICP-OES finish (ppm)
A summary of the pertinent elements is presented in Table 4 and of oxides in Table 5.
Table 4. Chemical analysis of Alicanto Black River sample.

Ag Au Al As Ba Be Ca Cd Co Cr Cu Fe Ga K La Mg Mn
ppm ppm % ppm ppm ppm % ppm ppm ppm ppm % ppm % ppm % ppm

Detection 0.5 0.01 0.01 1 1 0.5 0.01 0.5 0.5 0.5 0.5 0.01 5 0.01 2 0.01 1
limit
Alicanto <0.5 16.9 0.47 1 25 <0.5 0.15 <0.5 19.5 280 16.7 42.6 31 0.1 849 0.04 2020
Sample

Mo Na Ni P Pb S Sb Sc Sr Th Ti Tl U V W Zn Hg
ppm % ppm ppm ppm % ppm ppm ppm ppm % ppm ppm ppm ppm ppm ppm

Detection 0.5 0.01 0.5 10 1 0.01 1 1 1 5 0.01 5 5 0.5 1 0.5 0.01

limit
Alicanto 4.2 0.03 61 1110 63 0.2 7 5 15 439 1.28 <5 <5 648 <1 128 9.05
Sample

Table 5. Summation of oxides (%) in Alicanto Black River simple.

Al2O3 BaO CaO Cr 2O3 Fe2O3 K2O MgO MnO Na2O P2O5 SiO2 TiO2 SrO V2O5 LOI Total

Detectio
0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01
n limit

Alicanto
0.94 0.37 0.23 0.06 84.7 0.14 0.13 0.36 0.05 0.54 5.93 3.82 <0.01 0.17 -1.5 95.7
Sample
 LEACHING RESULTS ON ALICANTO-BLACK RIVER SAMPLE

PRO performed two leaching tests on as received sample and ground sample. The samples
were leached using PRO’s proprietary mixed chloride technology, i.e., the mixture of
hydrochloric acid (HCl) and magnesium chloride (MgCl2). An oxidant was added to the
lixiviant to increase the terminal Eh. The oxidant used was sodium chlorate (NaCl03). A
one liter batch glass reactor with reflux condenser was used for the leaching experiments.
A summary of the samples tested, leach conditions and Au recovery is presented in 6. The
leach tests were performed in a batch process. The effect of grinding of the material on
gold recovery was explored. Extraction of Au is reached to 95.5%, when ground sample is
used in leaching.
Table 6 shows these results.
Table 6 . Leaching results from the magnetites from Rionegro.
o
Test Sample MgCl2 (g/L) HCl (N) T ( C) Solids % Time (h) Au (Res/Head), % Fe (Res/Head), % Al (Res/Head), %
1 As Received 100 4.5 95 7.5 3 52.3 95.6 53.9
2 Ground at 200 Mesh 100 4.5 95 7.5 3 96.9 95.5 56

The current test shows that the method is capable of extracting over 50% of the
encapsulated gold processing the magnetite as is. By milling the magnetite to 200 mesh,
the recovery increases to almost 97%. The Client plans to introduce a magnetic separator
before the Knelson concentrator and to extract the gold encapsulated in the magnetite using
a hydrometallurgical method.
Table 7: Leach Test Results
Au Fe Al
MgCl2 HCl T Solids Time (Res/Head) (Res/Head) (Res/Head)
Test Sample
(g/L) (N) (oC) (%) (h)
(%) (%) (%)
1 As 100 4.5 95 7.5 3 52.3 95.6 53.9
Received
2 Ground 100 4.5 95 7.5 3 96.9 95.5 56.0
 MINERALIZATION

Gold mineralization at Rionegro is currently found in the placer, but P. Geo. R. Valls
believes that an additional source of gold could be the hydrothermally altered
conglomerates or the gold bearing limestones within the Horst/Graben structure.

Figure 50. Gold grains in a heavy mineral concentrate from the Lebrija River.

Alicanto requested a Wavelength-Dispersive X-Ray Spectroscopy (WDS) study of some

gold nuggets from the placers of the Lebrija River. Table 8 shows the results of this test.
Table 8. WDS analysis of gold nuggets from the Lebrija River.

WDS Spots Au 1 Au 2
Au 37.30 54.40
Ag 26.00 26.50
Pb 5.60 10.60
S 14.60 4.30
Fe 10.80 0.40
Sub-Total 94% 96%
Mo 0.10 0.20
Hg 0.10 0.20
Te 0.00 0.10
Sb 0.20 0.10
In 0.05 0.05
Zn 0.04 0.02
Cd 0.00 0.02
Co 0.00 0.01
Bi 0.10 0.00
Cu 0.03 0.00
Other 5.10 3.20
Total 100% 100%
Based on this composition sample 1 maybe composed of Weishanite2 ((Au,Ag)3Hg2), with
possible inclusions of galena, pyrite and/or magnetite. Sample 2 appears to be composed
of Krennorite3 ((Au0.8,Ag0.2)Te2), Anyuiite4 (Au(Pb,Sb)2), and possible galenite.
SGS examined two samples (Black Sands and Pan Gold). Tassos Grammatikopoulos from
Lakefield SGS prepared two polished mounts from each sample in order to determine the
presence of gold.
Tassos Grammatikopoulos used a Tescan scanning electron microscope (SEM) equipped
with an energy dispersive spectrometer (EDS) to scan the samples. The gold scan of the
Pan Gold mounts identified only one coarse gold grain (Figure 51). There was no
microscopic (visible gold greater than 1 micron) identified in the black sands.

Figure 51. Back Scattered Image and Semi-Quantitative Analyses from the Electron Microscope
of a Gold Grain from the Reject Sample.

Table 9. Composition in weight% of the gold grains.

Spectrum Au Hg Total Mineral ID

1 100.0 100.0 Au
2 87.9 12.1 100.0 Au-Hg Alloy

Both samples consist primarily of magnetite and hematite, non-opaque minerals (NOP),
and traces of sulphides including mainly pyrite and rare chalcopyrite and pyrrhotite. Note
that the NOP cannot be identified because the mineralogical examination was conducted
on polished mounts and reflected light only).
The Fe-oxides range from <50 to 800 μm but are typically <200 μm. Both magnetite and
hematite form distinct minerals, but hematite very commonly variably replaces magnetite.
They are weakly intergrown with NOP and can carry sulphide inclusions. Sulphides are
generally subhedral to rounded and <300 in size. They are mainly free but weakly

2 http://www.mindat.org/min-4261.html

3 http://en.wikipedia.org/wiki/Krennerite

4 http://www.mindat.org/min-271.html
associated with the Fe-oxides.
NOP minerals range mainly from <<50 to 300 μm, are subhedral and free.
Figure 52 to Figure 55 illustrate the main minerals comprised the two samples under plane
polarized reflected light.

Figure 52. Above- magnetite (red), hematite (green) and pyrite (yellow) locked in magnetite and
free non-opaque gangue minerals (NOP). Below- an ingrowth of magnetite and hematite, free
oxides and NOP.
Figure 53. Intergrowth of magnetite (red), hematite (green), pyrite (yellow) and NOP. Below - an
ingrowth of magnetite and hematite, free oxides and NOP.

Figure 54. Ingrowth of magnetite (red), hematite (green) and free NOP. Below - ingrowths of
magnetite and hematite, free oxides, NOP, and an aggregate comprised of fine grained pyrite
(yellow).
Figure 55. Ingrowth of magnetite (red), hematite (green) and free NOP gangue minerals. Below -
ingrowths of magnetite and hematite, free oxides, NOP, and pyrite (yellow).
 DEPOSIT TYPES

Apart from the active and paleo placers associated to the conglomerates, we
might also have quartz veins type of deposits due to metasomatic
remobilization of some gold from the paleo placers, and modern placers.
Most of the information presented here is quoted from the Ministry of
Energy, Mines and Petroleum Resources of British Columbia, Deposit
Types/Mineral Deposit Profiles5.
The presence of pyrite, coal, and other indicators, seems to support P. Geo. R. Valls idea
of the Rionegro conglomerates to be similar to a younger version of the Witwatersrand type
from South Africa. There is also the potential for Carlin and skarn type of mineralization
in the area.

MARINE BASIN PALEO PLACERS

Synonyms: Paleoplacer deposits; paleochannel deposits; fluvial and alluvial placers.

Commodities: Mainly Au and PGE {also Cu, Ag, garnet, cassiterite, rutile, diamond and
other gems: corundum (rubies, sapphires), tourmaline, topaz, beryl (emeralds), spinel;
zircon, kyanite, staurolite, chromite, magnetite, ilmenite, barite, cinnabar}. Most of the
minerals listed in brackets are recovered as byproducts.

Examples: Williams Creek, Bullion, Lightning Creek, Otter Creek, Spruce Creek all of
them in British Columbia, Canada. Other examples include Chaudière Valley (Au, Québec,
Canada), Livingstone Creek (Au, Yukon, Canada), Valdez Creek (Au, Alaska, USA),
Ballarat (Au, Victoria, Australia), and Bodaibo River (Au, Lena Basin, Russia).

GEOLOGICAL CHARACTERISTICS
Capsule Description: Detrital gold, platinum group elements and other heavy minerals
occurring in buried valleys (typically with at least several metres of overlying barren
material, usually till, clay or volcanic rocks), mainly as channel-lag and gravel-bar deposits.

Tectonic Settings: Coarse-grained, paleo channel placer Au deposits occur mainly in

Cenozoic and Mesozoic accretionary orogenic belts and volcanic arcs, commonly along
major faults that may also control paleo drainage patterns. Fine-grained paleo placers also
may occur in stable tectonic settings (shield or platform environments) where reworking
of clastic material has proceeded for long periods of time.

Depositional environment/Geological Setting: Mainly incised paleo channels in

mountainous areas including: high-gradient (generally >0.05, less commonly >0.1), narrow
bedrock-floored valleys (paleo gulches); high-level, abandoned tributary valleys with
intermediate gradients (typically 0.01 to 0.1); large, buried trunk valleys (on the order of

5 http://www.em.gov.bc.ca/Mining/Geolsurv/MetallicMinerals/MineralDepositProfiles/profiles.
100 m deep, a few hundred metres wide and >1 km long) with low channel gradients
(generally <0.02 in mountainous reaches and <0.001 in plateau areas); channels buried in
modern alluvial valleys with gradients similar to the modern streams. The first two settings
are dominated by high-energy, low-sinuosity, single-channel, coarse-grained
autochthonous placer deposits, whereas the latter two are characterized by autochthonous
and allochthonous placers deposited in wandering gravel-bed river, braided stream and
alluvial fan environments. In most paleo channels, coarse-grained placer concentrations
occur mainly along channel floors or along other erosional surfaces such as at the base of
cut-and-fill sequences; in meandering stream environments finer grained placers also occur
along point bar margins and in other areas of slack water.

Age of Mineralization: Mostly Tertiary and Pleistocene. Older paleo placers (excepting
the Proterozoic Witwatersrand placers) are rare, due to poor long-term preservation of
deposits in high-relief, subaerial environments.

Host/Associated Rock Types: Coarse (pebble to boulder), rounded gravels (or

conglomerate), commonly with sandy interbeds or lenses. Gravels usually imbricated,
clast supported, open work or with a sandy matrix, and typically with abundant resistant
rock types (quartzite, quartz vein, chert, basalt, granite) and minor, less resistant,
lithology (shale, siltstone, schist, etc.). Au placers are commonly associated with rock
types hosting epithermal or mesothermal vein deposits. Paleo placers can be buried under
a variety of materials, including lacustrine silts and clays, fluvial sands and gravels, marine
sediments and basalt flows.

Deposit Forms: Highly variable and laterally discontinuous; pay streaks typically thin
(<2m), lens shaped and tapering in the direction of paleo flow; usually interbedded with
barren sequences.

Texture/Structure: Typically well rounded, flattened flakes or plates of low sphericity;

coarse, more spherical nuggets common in high-gradient channels (Fig. 56); fine (flour)
gold common in distal stream reaches; evidence of primary crystal structure very rare.

Figure 56. Coarse nuggets of over 2mm from the Rionegro Project.
Ore Mineralogy (principal and subordinate): Au nuggets, flakes and grains and PGE
minerals, Cu, Ag, and various industrial minerals and gemstones (Fig. 57).

Figure 57. Flakes and gold nuggets in the concentrates from the Rionegro Project.

Gangue Mineralogy: Quartz, pyrite and other sulphides and in many deposits sub
economic concentrations of various heavy minerals, especially magnetite and ilmenite.

Alteration Mineralogy: Fe and Mn oxide precipitates common. Clay alteration of

unstable clasts and matrix in some deposits.

Ore Controls: Dominant controls on the geographic distribution of ore include the
location of paleo drainage channels, proximity to bedrock sources, and paleo relief (Fig.
58). Paleo channels are locally controlled by faults and less resistant rock units.
Stratigraphically, placers accumulate mainly at the base of erosional successions along
unconformities overlying bedrock or resistant sediments such as basal tills or glacio-
lacustrine clays. Overlying bedded gravel sequences generally contain less placer minerals
and reflect bar sedimentation during aggradational phases. Aggradation is the depositional
process where material is added in a vertical filling. (Aggradation is sometimes referred to
as vertical accretion). In the stratigraphic sequence, there is no generalized grain size
distribution in the vertical direction because each bed usually displays varying texture and
composition. There may be a tendency to coarsen toward the source of the sediment. The
bedding is usually relatively flat and may thin in one direction. Aggradation is normally
associated with vertical basin filling6.

6
Figure 58. One of the many paleo placers at the Rionegro Project.

Genetic Model: Placer deposits are buried when base level rises or channel abandonment
occurs. Factors inducing these changes include glaciation, volcanism, stream capture and
cut-off, or rising sea level.

Associated Deposits Types: Paleo channel placer deposits are associated with alluvial
fan and fan-delta paleo placer deposits in some areas. Autochthonous fluvial and alluvial
placers commonly derive from hydrothermal vein deposits.

Comments: Alluvial fan and fan delta paleo placer sequences comprise a distinct subtype
of buried placer deposits. They occur in relatively unconfined depositional settings
compared to paleo channel placer deposits and typically are dominated by massive or
graded, poorly sorted gravels and sands, locally with interbedded diamicton7. They are
generally lower grade and larger volume than fluvial deposits but they contain relatively
uniform placer concentrations. Paleo fan deposits are mainly local in origin as indicated by
high clast angularity and local derivation. Placer minerals occur in both poorly sorted
debris-flow sediments and interstratified fluvial gravels and sands. Concentrations are
commonly highest at sites of subsequent fluvial degradation.

7 Diamicton is a sediment that consists of a wide range of non-sorted to poorly sorted terrigenous
sediment, i.e. sand or larger size particles that are suspended in a mud matrix.
EXPLORATION GUIDES
Geochemical Signature: Anomalous concentrations of Au, Ag, Hg, As, Cu, Fe and Mn
in stream sediments. Gold fineness (relative Ag content) and trace element geochemistry
(Hg, Cu) can be used as a signature to identify lode sources.

Geophysical Signature: Shallow seismic refraction and reflection techniques are useful
for delineating paleo channel geometry and depth to bedrock. GPR is recommended to
determine the presence of paleo channels. Electromagnetic, induced polarization,
resistivity and magnetometer surveys are locally useful. Geophysical logging of drill holes
with apparent conductivity, naturally occurring gamma radiation and magnetic
susceptibility tools can supplement stratigraphic data.

Other Exploration Guides: Exploration should focus on sites of natural overburden

removal, such as along water channels, and areas underlain by Tertiary fluvial deposits.
Buried placers are commonly preserved below lake sediments, on the lee-side of bedrock
highs where erosion was minimal and along narrow valleys oriented transversely to the
regional direction of the erosional vector. Air photo interpretation and satellite imagery
data can aid exploration for buried valley placers. Concentrations of magnetite, hematite,
pyrite, ilmenite, chromite, garnet, zircon, rutile and other heavy minerals can be used to
indicate placer potential.
ECONOMIC FACTORS
Typical Grade and Tonnage: Placer concentrations in fluvial deposits are highly
variable both within and between individual deposits. In paleo channel gold placers, grades
of 0.5 to 5 g/m3 Au are typical, although grades as high as 75 g/m3 Au are reported. The
values, however, do not include overburden dilution factors which can reduce grades
tenfold or more. Deposit sizes are also highly variable, ranging from 1000 t to 10 Mt.
Economic Limitations: The main economic limitation to locating, evaluating and
mining paleo channel placer deposits is the thick overburden which results in high stripping
ratios. Over-consolidation of tills and other makes overburden stripping difficult and is a
major limitation inhibiting exploitation of these buried deposits.

Importance: Placer gold deposits account for more than two-thirds of the world's gold
reserves. Buried- channel placers have been under developed in many countries because of
difficulties in locating deposits and high overburden to ore stripping ratios.
 MODERN PLACERS

Synonyms: Holocene placer deposits; terrace placers; fluvial, alluvial, colluvial, eolian
(rare) and glacial (rare) placers.
Commodities: Au, PGEs and Sn, {locally Cu, garnet, ilmenite, cassiterite, rutile, diamond
and other gems - corundum (rubies, sapphires), tourmaline, topaz, beryl (emeralds), spinel
- zircon, kyanite, staurolite, chromite, magnetite, wolframite, sphene, barite, cinnabar}.
Most of the minerals listed in brackets are recovered in some deposits as the principal
product.
Examples: In British Columbia we find Fraser River (Au) and the Quesnel River (Au).
Also in Canada we have the North Saskatchewan River (Au, Alberta, Canada), Vermillion
River (Au, Ontario, Canada), Rivière Gilbert (Au, Québec, Canada), and Klondike (Au,
Yukon, Canada). International examples include Rio Tapajos (Au, Brazil), Westland and
Nelson (Au, New Zealand), Yana-Kolyma belt (Au, Russia), Sierra Nevada (Au,
California, USA).
GEOLOGICAL CHARACTERISTICS
Capsule Description: Detrital gold, platinum group elements and other heavy minerals
occurring at or near the surface, usually in Holocene fluvial or beach deposits. Other
depositional environments, in general order of decreasing importance, include: alluvial fan,
colluvial, glaciofluvial, glacial and deltaic placers.
Tectonic Settings: Fine-grained, allochthonous placers occur mainly in stable tectonic
settings (shield or platform environments and inter-montane plateaus) where reworking of
clastic material has proceeded for long periods of time. Coarse, autochthonous placer
deposits occur mainly in Cenozoic and Mesozoic accretionary orogenic belts and volcanic
arcs, commonly along major faults.
Depositional Environment/Geological Setting: Surficial fluvial placer
concentrations occur mainly in large, high-order, stream channels (allochthonous deposits)
and along bedrock in high-energy, steep-gradient, low-sinuosity, single-channel streams
(autochthonous deposits). Concentrations occur along erosional surfaces at the base of
channel sequences. Alluvial fan, fan-delta and delta deposits are distinct from fluvial
placers as they occur in relatively unconfined depositional settings and typically are
dominated by massive or graded sands and gravels, locally with interbedded diamicton.
Colluvial placers generally develop from residual deposits associated with primary lode
sources by sorting associated with downslope migration of heavy minerals. Glacio-fluvial
and glacial placers are mainly restricted to areas where ice or meltwater has eroded pre-
existing placer deposits.
Age of Mineralization: Generally Tertiary or younger in unglaciated regions.
Host/Associated Rock Types: Well sorted, fine to coarse-grained sands; well rounded,
imbricated and clast-supported gravels.
Deposit Form: In fluvial environments highly variable and laterally discontinuous; pay
streaks typically thin (< 2 m), lens shaped and tapering in the direction of paleo flow;
usually interbedded with barren sequences.
Texture/Structure: Grain size decreases with distance from the source area. Gold
typically fine grained (< 0.5 mm diameter) and well rounded; coarser grains and nuggets
rare, except in steep fluvial channel settings where gold occurs as flattened flakes. Placer
minerals associated with colluvial placer deposits are generally coarser grained and more
angular.
Ore Mineralogy (principal and subordinate): Au, PGE and cassiterite (Cu, Ag and
various industrial minerals and gemstones).
Gangue Mineralogy: Quartz, pyrite and other sulphides and in many deposits
subeconomic concentrations of various heavy minerals such as magnetite and ilmenite.
Alteration Mineralogy: Fe and Mn oxide precipitates common; Ag-depleted rims of Au
grains increase in thickness with age.
Ore Controls: In fluvial settings, placer concentrations occur at channel irregularities, in
bedrock depressions and below natural riffles created by fractures, joints, cleavage, faults,
and foliation or bedding planes that dip steeply and are oriented perpendicular or oblique
to stream flow. Coarse- grained placer concentrations occur as lag concentrations where
there is a high likelihood of sediment reworking or flow separation such as at the base of
channel scours, around gravel bars, boulders or other bedrock irregularities, at channel
confluences, in the lee of islands and downstream of sharp meanders. Basal gravels over
bedrock typically contain the highest placer concentrations.
Fine-grained placer concentrations occur where channel gradients abruptly decrease or
stream velocities lessen, such as at sites of channel divergence and along point bar margins.
Gold in alluvial fan placers is found in debris- flow sediments and in interstratified gravel,
sand and silt. Colluvial placers are best developed on steeper slopes, generally over a
weathered surface and near primary lode sources. Economic gold concentrations in fluvial
deposits occur mainly along erosional unconformities within otherwise a gradational
sequences and typically derive their gold from older placer deposits.
Genetic Model: Fluvial placers accumulate mainly along erosional unconformities
overlying bedrock or resistant sediments such as basal tills or glacio-lacustrine clays. Basal
gravels over bedrock typically contain the highest placer concentrations. Overlying bedded
gravel sequences generally contain less placer minerals and reflect bar sedimentation
during aggradation phases. Frequently the generation of more economically attractive
placer deposits involves multiple cycles of erosion and deposition.
Associated Deposit Types: Fluvial placers commonly derive from hydrothermal vein
deposits and less commonly from porphyry and skarn deposits. Allochthonous fluvial
placers are far traveled and typically remote from source deposits.
EXPLORATION GUIDES
Geochemical Signature: Anomalous concentrations of Au, Ag, Hg, As, Cu, Fe, Mn, Ti
or Cr in stream sediments. Au fineness (relative Ag content) and trace element
geochemistry (Hg, Cu) of Au particles can be used to relate placer and lode sources.
Geophysical Signature: Ground penetrating radar especially useful for delineating the
geometry, structure and thickness of deposits with low clay contents, especially fluvial
terrace placers. Shallow seismic, electromagnetic, induced polarization, resistivity and
magnetometer surveys are locally useful. Geophysical logging of drill holes with apparent
conductivity, naturally occurring gamma radiation and magnetic susceptibility tools can
supplement stratigraphic data.
Other Exploration Guides: Panning and other methods of gravity sorting are used to
identify concentrations of gold, magnetite, hematite, pyrite, ilmenite, chromite, garnet,
zircon, rutile and other heavy minerals. Many placer gold pay streaks overlie clay beds or
dense tills and in some camps these 'false bottom' pay streaks are important.
ECONOMIC FACTORS
Typical Grade and Tonnage: Deposits are typically high tonnage (0.1 to 100 Mt) but
low grade (0.05-0.25 g/t Au, 50-200 g/t Sn). Placer concentrations are highly variable both
within and between individual deposits.
Economic Limitations: The main economic limitations to mining surficial placer
deposits are typically low grades and most deposits occur below the water table.
Environmental considerations are also an important limiting factor as these deposits often
occur near, or within modern stream courses.
Importance: Placer gold deposits account for more than two-thirds of the world's gold
reserves. Shallow alluvial placers also account for a large part of world tin (mainly from
SE Asia and Brazil) and diamond (Africa) production.
 E XP L O R AT I O N

GEOPHYSICS

With the exception of regional works conducted by geologists from Ingeominas, no

systematic exploration work has been completed in the area.
Using existing databases of regional gravimetry and magnetometry8 the QP compiled
Figures 59 and 60, both of which perfectly identify the Horst/Graben structure in the area.

Figure 59. Gravity acceleration field over the Rionegro Project.

8 http://www.altaresolucao.com.br/
Figure 60. Magnetic declination field over the Rionegro Project.

The Client also completed a surface survey of the Mina Guayos license using a grid of
approximately 100 x 100m. On each point a pit was dug down to the bottom of Horizon B
(Fig. 61). From there a sample for ICP-MS multi-element analysis plus FA was collected
and a series of geophysical parameters were measured, including radiometry, kappametry,
and the temperature differences between the surface and the bottom of the hole. A total of
416 holes were completed, documented and photographed. Also part of the material of the
bottom of nearly 100 holes was panned. All panned samples indicated the presence of
colors.
As of the date of this report, only the geophysical data was available. The QP processed
the data using factor and correlation analysis. We show the main results in Figures 62-64.
Figure 61. Factual map of the sampling at the Rionegro Project.

Figure 62. Factor cluster 1 (U+Th+Total) at the Rionegro Project.

Figure 63. Factor cluster 2 (Ts+Tp+Elevation/Prof.+Kappametry) at the Rionegro Project.

Figure 64. RCC 1 (2Th+2Total+U+K) at the Rionegro Project.

The maps show interesting anomalies to the North and Northwest of the sampled area,
probably associated to a series of EW lineaments. There is also a significant U+Th+Total
anomaly to the SW, probably associated to the tonalite identified in the area.
LINEAMENT ANALYSIS

As part of the structural analysis completed by Dr. Galkin, he separately recommended

some targets for potential paleo-placers. Fig. 65 shows the location of such areas.

Figure 65. Potential paleo-placer targets identified by the lineament analysis.

The complete statistical analysis of the lineament study included the following procedure:
1. The original data and the weighted data are presented in separated tabs (RAW,
Weighted and stress and strain, etc.).
2. Exploratory analysis using factor analysis by WINSTAT (an add-in to Excel)
confirmed that there are no significant difference between both suites, so we will only use
the RAW data.
3. We used SURFER to combine these tables.
3a. First we create a grid file for each parameter. The grid was 100 x 98 points.
3b. In the case of the stress and strain, we need to input that grid.
3c. We use Surfer to open each grid file and export it as TXT.
3d. Finally, we combined all this in one single tab (Grid data).
4. For the grid data we determine:
4a. Hurricane values using four times the standard deviation limit. The statistical
outliers are changed for the value of the original mean
4b. Determination of the distribution law using asymmetry and excess. The parameters
with values of asymmetry and/excess above 3, were transformed to logarithms. Original
negative values were changed to 0.00001.
5. Correlation analysis.
6. Factor analysis using WINSTAT.
7. Preparing the final table for SURFER (SURFER) using the RAW data.
7a. Add the elastic and plastic data to that TAB at the right end of the table.
8. Variogram analysis on SURFER- correct the title, select the variance line, and
eliminate the subtitle. Also add the information of the adjusted curve to the graphic by
copying and cropping the screen in SURFER (Fig 66).

Figure 66. Variogram properties used in SURFER.

9. Grid file using krigging and variogram information for all the RCCs, the Factors,
and elastic and plastic.
9a. Remember to use the right X, Y coordinates for the plastic and elastic columns.
10. Anomaly levels for the different parameters (opacity 70%). See Table 10.

Parameter A+1 A+2 A+3

F1 191.0 230.0 253.0
F2 3.0 4.7 5.5
F3 7.4 8.4 10.0
F1+2+3 200.0 239.0 261.0
RCC1 7.4 8.4 10.0 Equal to F3
RCC2 774.0 934.0 1030.0 Equal to F1
RCC3 8.9 13.7 16.1 Equal to F2
Elastic 2.9 5.8 7.2
Plastic 2.4 5.9 8.2
El+Pl 6.0 10.0 12.0
11. Quartile analysis9 to combine all the parameters into a single prospecting map.
11a. Since the plastic and elastic data have a different scale of measurements, first we
need to convert them into the same 100*98 grid of the rest of the parameters for that we
open the plastic and elastic data and fix the grid to the 100*98 Now we can use the Math
option under Grid in Surfer to add both grids- that will be named Totalq.
The quartile map included the results of the physical modelling (strain and stress analysis)
and the three identified factors:
Factor 1=ST+ALL+TT+T+S+SS
Factor 2=TC+MC+C+CC+MM+MS
Factor 3=MT+M
Once combined, the quartile anomalies will indicate the best potential targets in the area.
Figure 67 shows the quartile map for the Rionegro project with the location of the main
and secondary hard rock targets to explore in the area.

9Quartile analysis is a mathematical method developed by P. Geo. R. Valls that allows the combination of all the
parameters into a single map, which makes the interpretation more direct.
Figure 67. Quartile map for Rionegro with suggested hard rock targets.
Table 11 explains the proposed targets and the work on each one.
Table 10. Proposed targets at Rionegro.

Target Lenght Width Grid Profile Stakes Samples Time,d Objective

Target 1 4000 2000 500*250 11 9 99 10 Define if it has merits. If
not, then reduce the area
accordingly.
Target 2 2000 4000 500*250 5 17 85 4 Define if it has merits. If
not, then reduce the area
accordingly.
Target 3 2000 3000 500*250 5 13 65 4 Define if it has merits. If
not, then reduce the area
accordingly.
Target 4 3000 3000 500*250 7 13 91 6 Exploration
Target 5 3000 3000 500*250 7 13 91 6 Exploration
Target 6 2000 3000 500*250 5 13 65 4 Exploration
Target 7 6000 2000 500*250 13 9 117 12 Exploration
Target 8 2000 3000 500*250 5 13 65 4 Exploration
Target 9 3000 3000 500*250 7 13 91 6 To define if it is worth to
extend the limits of the
concesion.
Target 10 3000 3000 500*250 7 13 91 6 To define if it is worth to
extend the limits of the
concesion.
Target 11 3000 3000 500*250 7 13 91 6 To define if it is worth to
extend the limits of the
concesion.
Target 12 3000 3000 500*250 7 13 91 6 To define if it is worth to
extend the limits of the
concesion.
Target 13 3000 3000 500*250 7 13 91 6 To define if it is worth to
extend the limits of the
concesion.

We also recommend a heavy mineral survey study with spectral analysis of the different
fractions along the banks of the Lebrija River to find the best places for the exploitation of
such placers. The paleo placers should be explored with a combination of GPR to define
the potential banks, with pitting and geochemical sampling to confirm the presence of
precious metals. The host rocks should be studied with a combination of lineament and
satellite interpretation followed by the GFcsa™ to identify the source of the gold in the
placers.
 M I N E R A L R E S O U R C E E S T I M AT E S

DEFINITION OF MINERAL RESOURCES

Mineral resources are sub-divided in order of increasing geological confidence into

Inferred, Indicated, and Measured categories. An Inferred Mineral Resource has a lower
level of confidence than that applied to an Indicated Mineral Resource. An Indicated
Mineral Resource has a higher level of confidence than an Inferred Mineral Resource but
has a lower level of confidence than a Measured Mineral Resource.
A Mineral Resource is a concentration or occurrence of diamonds, natural solid inorganic
material, or natural solid fossilized organic material including base and precious metals,
coal, and industrial minerals in or on the Earth’s crust in such form and quantity and of
such a grade or quality that has reasonable prospects for economic extraction. The location,
quantity, grade, geological characteristics and continuity of a Mineral Resource are known,
estimated or interpreted from specific geological evidence and knowledge10.
The term Mineral Resource covers mineralization and natural material of intrinsic
economic interest which has been identified and estimated through exploration and
sampling and within which Mineral Reserves may subsequently be defined by the
consideration and application of technical, economic, legal, environmental, socio-
economic, and governmental factors. The phrase ‘reasonable prospects for economic
extraction’ implies a judgment by the Qualified Person in respect to the technical and
economic factors likely to influence the prospect of economic extraction. A Mineral
Resource is an inventory of mineralization that under realistically assumed and justifiable
technical and economic conditions might become economically extractable. These
assumptions must be presented explicitly in both public and technical reports.
The Authors cannot consider the exploration work completed on the license as sufficient
to establish reserves. Therefore here we have only determined Inferred Mineral Resources
for the Rionegro Project.
ARTISANAL PRODUCTION

The area of the Rionegro Project has not seen any type of artisanal production except for
local “bariqueros” that pan the active alluvial sediments of the Lebrija River after a heavy
rain, taking advantage of the eroded gold from the nearby California Gold District.
Downstream from the Rionegro Project there are two Colombian semi-industrial
operations that are reporting between 1 and 2 kg of gold per each 1,800 m3 of washed
sediments. Currently it takes them between 4 and 5 days to process such volume of
sediments.

10
http://www.download-genius.com/download-k:CIM-DEFINITION-STANDARDS-For-Mineral-Resources-
And.pdf.html?aff.id=6745
 INFERRED MINERAL RESOURCES

An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and
grade or quality 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.
Due to the uncertainty that may be attached to Inferred Mineral Resources, it cannot be
assumed that all or any part of an Inferred Mineral 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 economic viability worthy of public disclosure.
Inferred Mineral Resources must be excluded from estimates forming the basis of
feasibility or other economic studies.
The following estimations are based on the current production from the paleo placers
downstream from Alicanto’s license and are not compliant with CIM or NI 43-101.
The resource is given as an illustration of the gold potential of the target. The Authors used
the most conservative figures possible. The Authors estimated two case scenarios- (i)
Processing the whole profile from the surface down to 4 meters, (ii) Processing just the
bottom meter (basal conglomerate). It is important to mention that 4 metres is the minimum
depth of the paleo placers, with maximum known thickness of over 40 metres close to the
host rocks of the Horst wall.
The first option has the advantage of no strip ratio and the processing of the included
magnetic fraction and whatever gold is contained in the sediments. The second has the
advantage of higher grades, but a strip ratio of ¼ and we lose the magnetic fraction
contained in the upper sediments.
Other assumptions are:
1. Maximum depth 4 meters.
2. 5% of black sand (concentrate) is extracted from the washed sediments.
3. The black sand is composed of mostly magnetite. We consider extracting 95% of the
encapsulated gold in the magnetite11.
4. The gold grade in the magnetite is considered at 16 g/t12.
5. The average gold grade in the sediment is considered as 0.83 g/m3 of sediment13.
Under these conditions we estimated the resource per square kilometer as follow (Table
12).

11 Based on the studied completed in Canada (Ortech, 2015).

12 Gold grades in the magnetic fraction has been assayed as high as 200 to 400 g/t in other samples by reputable
laboratories both in Colombia (SGS) and Canada.

13 Based on the current average production of the exploitation downstream from the Mina Guayos license.
Table 11. Inferred Mineral Resources per square kilometer at Rionegro.

3 3
Length Width Depth Volume, m Grade g/m Total in grams Total in ounces
1000 1000 4 4,000,000 4.75 18,989,333 607,659
1000 1000 2 2,000,000 5.58 11,161,333 357,163
1000 1000 1 1,000,000 7.25 7,247,333 231,915

So if we consider the exploitation of the whole profile of 4 meters, per each square
kilometer they will have almost 19 million grams of gold (0.6 million ounces). If they only
exploit the bottom metre, then they will have 7.25 million grams (0.23 million ounces).
Using these parameters, the Authors estimated the Inferred Mineral Resources of the
Rionegro Project as follows (Tables 13 and 14).

Table 12. Inferred mineral resources for the first 4 metres per square kilometre at the Rionegro
Project.

Km2 Total in grams Total in ounces

1 18,989,333 607,659
2 37,978,667 1,215,317
3 56,968,000 1,822,976
4 75,957,333 2,430,635
5 94,946,667 3,038,293

Table 13. Inferred mineral resources for the basal conglomerate per square kilometre at the
Rionegro Project.

Km2 Total in grams Total in ounces

1 7,247,333 231,915
2 14,494,667 463,829
3 21,742,000 695,744
4 28,989,333 927,659
5 36,236,667 1,159,573
 MINING METHODS

Presently, Alicanto is considering only the exploitation of the paleo placers of the marine
basin by using off-the-shelf gravimetric technology. Once this stage has been achieved,
Alicanto plans to expand the exploitation of the active placers by dredging. The potential
mineralization in the host rocks will be studied at a later stage.
The Client will use a washing plant similar to the one shown on Figure 68 to obtain a heavy
concentrate material.

Figure 68. Semi-industrial gold production from paleo placers of the Lebrija River downstream
from the Rionegro Project.
Alicanto intends to increase the recovery from the washing plant by using Nomad
matting14as well as a Knelson concentrator to avoid using mercury to extract the free gold
from the black sands.
The free gold will be separated by gravity methods, using a combination of washing tables
and a Knelson concentrator.
The encapsulated gold in the magnetite will be recovered using hydrometallurgical
methods. The Client has been in discussions with Process Research Ortech Inc. regarding
customising their circuit to the characteristics of the gold-bearing magnetite ore from
Rionegro.

14 http://www.keeneeng.com/mm5/merchant.mvc?Store_Code=KES&Screen=PROD&Product_Code=NMMR
 E N V I R O N M E N TA L S T U D I E S , P E R M I T T I N G A N D S O C I A L O R C O M M U N I T Y I M PA C T

Alicanto concluded in January 2015 an environmental impact study (Cruz Martin et al.,
2015) as required by Colombian law. The document has been filed with the CDMB and
Alicanto is awaiting for the final approval. The document includes all aspects of an
environmental study, including ecosystem analysis, hydrology, anthropology, forest
conservation and all the necessary controls of the impact of mining activities in the area.
Following this approval Alicanto plans to immediately commence exploitation activities in
the area of the Mina Guayos license.
Although not required by law, Alicanto has conducted an intensive social work with the
communities (CSR) in the area, explaining the program, hiring local personnel and
participating in social activities in the area in coordination with the local Major (Fig. 69).

Figure 69. The Client sponsored the activities of the local football team at Venegas, Rionegro.
 A D J A C E N T P R O P E RT I E S

There are several licences for coal in the area, most of them about to expire. Downstream
from Alicanto’s license there are three semi-industrial paleo placer operations conducted
by Colombian Companies (Fig. 70). There are no other adjacent properties in the vicinity
of the Rionegro target.

Figure 70. There are two Colombian Companies currently exploiting the paleo placer in the
Lebrija River downstream from the Client license.

We feel that mentioning the existence of these deposits is relevant to this guide because it
gives the reader an indication of the extrapolated potential of the Rionegro target. However,
the reader must be clear that the existence of such mineralization in nearby locations is not
necessarily indicative of the mineralization of the Rionegro target.
 ROA D G E O L OG Y F R O M T H E W I N D O W O F T H E T RU C K

There are currently six access routes to the license (Table 15, Fig. 71). The main access is
by a paved road and then the last few kilometres by the ancient tracks of a railroad that
used to serve the city of Bucaramanga and was discontinued. It takes around 2.5 hours to
get to the site from the city of Bucaramanga and with the exception of some wooden
bridges, it does not need a 4x4 vehicle.
Table 14. Different access routes to the Rionegro Project.

Route Km Type Name

Route 1
Bucaramanga - Brisas 12 Paved 66
Brisas –El Conchal 12 Dirt road Access road
Conchal - Salamaga 3 Dirt road Old railroad
Route 2
Bucaramanga- El Cero 8 Paved I-45
El Cero - Bocas 2 Paved Access road
Bocas - Salamaga 22 Dirt road Old railroad
Route 3
Bucaramanga – La Fortuna 81 Paved 66
La forutna – Sabana de Torres 47 Paved 45
Sabana de Torres - Provincias 14 Partially paved Old railroad
Provincias -Salamaga 21 Dirt road Old railroad
Route 4
Bucaramanga la Azufrada 16 Paved 66
La Azufrada - La Chinigua - la Salamaga 20 Dirt road Access road
Route 5
Bucaramanga - La Azufrada 16 Paved 66
La Azufrada, - Uribe-Uribe - La Magdalena 30 Dirt road Access road
La Magdalena - La Salamaga 12 Dirt road Old railroad
Route 6
Bucaramanga - Cuesta Rica 60 Partially paved 66
Cuesta Rica- La Salamaga 22 Dirt road Access road

Mina
Guayos

Figure 71. Access roads to the Rionegro Project.

 STOP 1. LAS BRISAS RESTAURANT

In order to avoid the heavy trafic and to complete the tour in less than 8 hours, we leave
town around 6 AM driving North along Route 66 for 12 km. At this point, before turning
right to enter a dirt road that access the property, we recommend a brief stop to have
breakfast at Las Brisas Restaurant. Don’t forget to buy water!

Figure 72. Having breakfast at Las Brisas Restaurant.

Notes:
 STOP 2. ENTRANCE TO THE LICENSE

Weather permiting, you will get here an excelent view of the main horst/graben structure
of Mina Guayos.

Figure 73. South limit of Alicanto's application at the opening of a well-defined horst/graben
structure.

Notes:
 STOP 3. UPPER CRETACEOUS LIMESTONES

Just a few metres from the South border of Alicanto’s application, there is an excelent
outcrop with abundant fossils of Upper Cretaceous limestones (Fig. 74).

Figure 74. Upper Cretaceous fossil-rich limestones.

These limestones are the yongest in the sedimentary sequence and are covered by
oxidazed sandstones and siltstones (Fig. 75).

Figure 75. Oxidized sandstone and siltstone covering the Upper Cretaceous limestones.

Notes:
 STOP 3. ALTERATED SCHISTS AND SILTSTONES

Further down the road we have several outcrops of oxydized clay-rich schists and
siltstones. This low level metamorphic rocks maybe an indication of the dinamo-
metamorphism associated with the compression towards the East of the rocks during the
subduction event.

Figure 76. Iron stained clays and siltstones probably due to a metasomatic event.

Figure 77. Oxidized schists, deformed and fragmented, probably as the result of the
compression of the unit during the subduction event.

Notes:
 STOP 4. LA LUNA FORMATION (KSL)

We have several excellent outcrops of the limestones of the La Luna Formation in the area
(Fig 78). It is very interesting to notice that while in other places, like in the California
District, the elliptical concretions of this formation are indeed made of the same
limestones, at Rionegro these concretions are pervasively silicified to form a flint.

Figure 78. The elliptical concretions of the La Luna Formation at Rionegro are made of flint
instead of limestones, probably as the result of the circulation of silica -rich hydrothermal fluids.

At the base of these limestones, sometimes we find a bituminous-rich, cryptocrystalline,

very fine layered limestone (Fig. 79) that can very easily be confused for a carbon-rich
schist. However the Authors have studied the rock under a microscope (Fig. 80) and
verified the presence of a carbonate matrix.

Figure 79. Bituminous-rich, cryptocrystalline limestones at the base of La Luna Formation.

Figure 80. Magnification 36.1x of the bituminous-rich limestone.

We are discussing these limestonesbecause they carry significant amounts of gold (above
35 ppb Au) and they might be the host rocks for a Carlin type of mineralization in the area.

Figure 81. Fracture along the limestones showing oxidation.

Notes:
 STOP 5. PALEOPLACERS

There are many good examples of paleoplacers that we visit during this trip. They are
shown in Figs. 82-85.

Figure 82. Combination of active and paleo Figure 83. A paleo placers of over 1 km in
placers at the Lebrija River. width on the right bank of the Lebrija River.

Figure 84. Over 35 metres of a paleo placer on Figure 85. Dr. Cruz shows a terrace on one of
the left bank of the Lebrija River. the paleo placers at Mina Guayo.

There is that there is free gold from the surface down to the basal conglomerate. On top of
an alluvial island inside a paleo placer on the left bank of the Lebrija River, the autors took
two auger samples from surface to a depth of 2.5 m that run 17 and 23 kg/t of Au without
any concentration (Fig. 86)!
The Authors believe that a significant portion of this gold is encapsulated in the magnetite
which is the main mineral of the magnetic fraction.
Figure 86. Auger samples on top of an alluvial island in a paleo placer on the left bank of the
Lebrija River.

Note:
 STOP 6. IGNEOUS ROCKS

The preliminary lineament analysis identified a circular structure. The structure

corresponded to a Tonalite intrusive (Figs. 87-89).

Figure 87. This large intrusive was not

previously mapped and correspond to the
circular structure identified by the Authors Figure 88. The tonalite outcropping along
during the lineament analysis of Rionegro. the road.

Figure 89. Iron stained, sulphur smelling, acid water (pH=4.5-5) leaching from fractures in
the tonalite intrusive.

In parts of the intrusive iron stained, sulphur smelling, acid water leaches from fractures
on both sides of the Lebrija River. This intrusive is key for the formation of gold in the
conglomerates (Fig. 89), the limestones (Skarn and/or Carlin), as well as a porphyre, so
it merits more detailed studies.
Figure 90. The gold mineralization in the matrix of the conglomerates probably related to the
tonalite intrusive at Rionegro.

There are several outcrops of felsic tuffs (Fig. 91) and other volcanic rocks. Their
provenance and spatial distribution are not yet well understood.

Figure 91. Rhyolitic tuffs located to the North of the Rionegro application.

Note:
 STOP 7. EXPLOITATION WORK

There are two Colombian companies currently exploiting the paleo placers on a nearby
license downstream from Alicanto’s Mina Guayo. Semi-artisanal in nature, they are
producing from 1.5 to 2.5 kg of gold per front. A front is a 30x15m area down to the basal
conglomerate). The Authors estimate that they are currently recovering less than 80% of
the free gold and none of the gold encapsulated in the magnetite. It takes them around 4-5
days to complete the exploitation of a front, including the restoration (Figs. 92-95).

Figure 92. Using backhoes and a washing Figure 93. A normal front is 30 x 15 metres in
table (zaranda) the Colombian miners are area and it is dug up to the basal
producing between 1.5 to 2.5 kg of gold per conglomerate.
front.

Figure 94. The black sand gets concentrated Figure 95. In an effort to recuperate the fine
on this type of water table locally known as gold, the Colombians dredge the pound where
zaranda. they recirculate the water used for washing
the sediments.

Note:
 STOP 8. CONGLOMERATES

Towards the North end of the application, we see several outcrops of polimictic
conglomerates probably Tertiary in age, with abundance of iron stains. These stains
indicate the previous presence of sulphides.

Figure 96. Conglomerates in contact with a

fault.

Figure 97. Detail of the polimictic nature of the

conglomerates.

Figure 98. Polimictic conglomerates located

to the North of the Rionegro application.

Note:
 STOP 9. REGIONAL ALTERATION

Regional hydrothermal alteration usually associated with intrusives can be found far to the
North and South of the known intrusive (Figs. 99-100). Since the tonalite intrusive
discovered by the Authors is limited to the central part of the Rionegro application, we
believe there maybe other similar intrusives not yet mapped in the area.

Figure 99. Regional oxidation (limonite and

hematite) observed to the North of the Rionegro
application. Figure 100. Zones of intense advance
argilitization and oxidation observed to the
North of the Rionegro application.

Note:
 I N T E R P R E TAT I O N A N D C O N C L U S I O N S

The Rionegro Project represents a Horst/Graben pre PZ structure covered by Jurassic to

Quaternary sediments. The work completed by Alicanto in the Rionegro Project has
confirmed the presence of active placers associated to the Lebrija River that flows across
the Horst/Graben structure oriented N-S and paleo placers from a Jurassic marine basine.
The host rocks have also potential as a source of gold mineralization in the paleo
conglomerates, in the tonalite, and in the gold-bearing limestones (Carlin type?). Of great
importance is the discovery of gold encapsulated in the magnetite of these placers, which
constitutes and additional gold source currently unexploited in the region. According to
studies completed by Process Ortech by request of the Client it is possible to extract up to
97% of the gold encapsulated in the magnetite.
The lineament analysis allowed us to identify a Tertiary tonalite intrusive that could have
been the key for the remobilization and concentration of gold associated with zones of
hydrothermal and metasomatic alterations, controlled by the sub-parallel faults. The water
coming out from some of these faults are oxidized with sulphur smell and a pH of 4.5-5
indicating the presence of sulfures in the host rock.
The Inferred Mineral Resources estimated in this report are based on the gold production
reported by two different Colombian Companies working downstream from Alicanto’s
Mina Guayo (JG3-16392) and on limited studies completed by Alicanto using certified
laboratories. We used the minimum values reported from these laboratories to be as
conservative as possible.
With the PTO and the Environmental Study completed and filed, Alicanto is poised to start
production on the paleo placers, generating cash-flow sufficient to self-finance the
exploration of the host rocks.
 R E C O M M E N D AT I O N S

To obtain a more global understanding of the gold potential of Alicanto’s licenses in the area
we suggests a HMC survey of the Lebrija River as well as some of its tributaries within the
limits of both Rionegro licenses. The current recommendations and budget are just for the
concession contract JG3-16392 (Mina Guayos). The objective of the exploration program is to
find the best areas for an industrial operation of up to 200 t/h to obtain not only the precious
metals, but also magnetite and other products that could be commercialized.
The source of the precious metals should also be explored in the conglomerates and other host
rocks using a combination of lineament analysis, satellite interpretation, mapping, geophysics,
and geochemistry (GFcsa™).

PROPOSED BUDGET

We present here a budget in three stages. The initial stage has been almost completed and it
was estimated at US$259,381.
Stage I corresponds to the calibration of the exploration methods in the area. We estimate
US$40,533 for this stage which includes a combination of GPR, soil sampling, and pitting. The
cost of the linear kilometre of GPR is currently US$330 and represents the largest portion of
the cost to study the paleo placers. We estimate 12 linear kilometres, the cost should be around
US$4,000.
Stage II consists of the proper exploration of the license, including more geochemical and
geophysical work, as well as drilling. We estimated a first campaign of 121 holes at a grid of
100x100 and an average depth of 10 m, followed if necessary by a more detail campaign of 10
infill holes using a 50x50m grid and the same average depth of 10 m. The drilling could be
done with mechanical augers or RC. We used an average cost of 60 US$ per metre for this
drilling program. This stage includes the construction of a base camp. We estimate US$216,695
for this stage. The advance to the third stage is contingent on positive results of stage II.
The third stage is estimated at almost one million US dollars and includes all the necessary
capital and operational costs to start the exploitation of Alicanto’s license.
Table 16 shows the details of the proposed budget.
Table 15. Proposed budget for the Rionegro Project.

Description Cost Unit Total Observation Stage total

Preliminary payments 90 days
Surficial cannon 40,050 1 40,050 90
Cannon interest 6,850 1 6,850
PTO 50,000 1 50,000
Artisanal mining policy 130 1 130
Enviromental license 150,000 1 150,000
Unexpected (5%) 12,352 1 12,352 $259,382
Stage I- Calibration of the methods 40 days
Sr. Geologist 4,000 1 - 40
Technician 1,250 1 -
Workers 825 3 -
Driver 1,067 1 -
Truck 3,000 1 -
Gas 900 1 -
Food (3 meals and water) 2,000 1 -
Rent 1,500 1 -
Tools 2,000 1 -
Repairs 2,000 1 -
Excavator (5 days) 5,000 5,000
GPR testing 4,000 4,000
Soil sampling (INAA, Enzyme leach, etc) 41 500 20,500
Unexpected (5%) 1,379 1,379
Administrative costs 9,654 9,654 $40,533
Stage II- Exploration 85 days
Sr. Geologist 6,000 1 - 85
Technician 1,250 1 -
Workers 825 3 -
Driver 1,467 1 -
Truck 4,125 1 -
Gas 1,238 1 -
Food (3 meals and water) 2,750 1 -
Building camp 30,000 1 30,000
Tools 2,750 1 -
Repairs 2,750 1 -
GPR, geochemistry, logging survey 300 11 3,300
INAA 22 270 5,940 50*100m
Drilling 60 1,210 72,600 100*100*10m
Drilling detail 60 100 6,000 50*50*10
Soil sampling (INAA, Enzyme leach, etc) 41 1,000 41,000
Falcon or Knelson 5,000 1 5,000
Separating table 6,000 1 6,000
External consulting 20,000 1 20,000
Unexpected (5%) 4,232 1 4,232
Administrative costs 22,623 1 22,623 $216,695
Stage III- Exploitation
Pilot plant studies 120,000 1 120,000
Buying equipment 325,000 1 325,000
Contracting personnel 90,000 1 90,000
Installing machinery 60,000 1 60,000
Production 45,000 4 180,000
Unexpected (5%) 26,000 1 26,000
Administrative costs 182,000 1 182,000 $983,000

GRAND TOTAL $1,499,610

So, let’s say US$ 1,500,000.

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RIONEGRO- A NEW GOLD DISTRICT
I N S A N TA N D E R , C O L O M B I A

FIELD GUIDE TO THE RIONEGRO HORST/GRABEN SYSTEM

___________________________________________________________________________

Limited edition: 3 units

June, 2015