MALLAMA

MALLAMA

MALLAMA

OVERVIEW

Location: Nariño, Colombia, in the Piedrancha district
Commodity: Gold and silver
Target Type: Intermediate sulfidation epithermal system
Property Size: 9,036 ha
Ownership: 100% Outcrop Gold
Land Status: Two titles
Status: Available for Joint Venture

LOCATION

The Mallama project is in the municipalities of Mallama and Guachaves in the Nariño department. It is 56 km in a direct line form San Juan de Pasto, the capital of Nariño and 126 km by paved roads, unimproved roads and trails to access the interior of the project. The Mallama titles are trimmed to conform to an elevation well below the Paramo with its environmental restrictions.

HISTORY

The Mallama project covers a large portion of the Piedrancha district, a large and well-known Miocene district that contains more than thirty-five mapped and projected intermediate sulfidation epithermal veins that have strike lengths of up to 4 to 5 km.

In 1984 the Japanese International Cooperation Agency (JICA) mapped, sampled, and drilled part of Piedrancha. The Mallama project covers approximately half of the JICA study area.  The gold in soils anomalies taken by JICA were very effective in revealing unexposed veins.

Figure 1. The Mallama concessions are shown in orange and the JICA-study area to north is shown as an irregular black polygon. The veins in the JICA area are observed by Outcrop Gold to continue onto Mallama. The mine symbols reflect groups of sub parallel veins. The vein density in the JICA study result from mapping and soil sampling.

The department of Nariño received very little modern exploration before the insurgent group FARC and the government agreed to an armistice, and the ELN entered serious peace negotiations.

EXPLORATION RESULTS

Outcrop Gold has established that the Mallama project covers a large part the Piedrancha epithermal vein district where veins are distributed over 100 km2 area. Piedrancha is one of the largest and most important epithermal districts in Colombia. The Diamante mine in the Piedrancha district is famous for high grades and vein widths to 12 m.

Mapping and sampling within the Mallama project show a prevalence of high-angle, high-grade gold and silver veins that occur in groups of eight or more veins averaging 1.0 m width. Mapping in artisan mines shows that the veins are a composite of earlier and deeper ductile shear zones and later and shallower epithermal veins. The shears and veins formed in distinctly different tectonic regimes indicating a long life for the system and multiple mineralization events. These multiple events probably provide the Piedrancha districts very high gold and silver values.

The JICA data shows that the known veins can be traced well with soil sampling. The soil sample anomalies indicate that numerous veins are unexposed near existing workings.  Outcrop Gold has concentrated in the Bombona Zone where historic workings are extensive and currently in operation by artisanal miners. In part of an accessible mine within the Bombona Zone a high-angle vein and adjacent mineralized shear zone extends with notable consistency for the entire 200 meters of the main level of the mine and in 30 vertical meters of mine levels. The vein and shear occupy the same structure and it is believed this relationship reflects a ductile shear zone progressing over time to open-space dilation hosting open-space veins. The vein, shear and granitic wall rock lack significant post mineral deformation resulting in good vein continuity.

The shear zone as well as the vein are consistently mineralized with up to 50 g Au/t in the shear and up to 75 g Au/t in the vein. The shear and vein taken together measure from 0.6 to 1.7 m wide. In the Bombona Zone, work by Outcrop and the JICA study show up to 11 sub-parallel and or anastomosing veins and mineralized shear zones extend northwest to southeast for 3 to 4 km.

Systematic sampling demonstrates that in situ mining grades in the largest accessible working of the Bombona zone show a weighted average grade of 23.3 g Au/t and 182 g Ag/t with a mean grade of 22 g Au/t. The average gold to silver ratio is 7:1 and the vein width is from 0.7 m to 3.0 m wide. Primitive artisan mining methods have developed 5 levels in an area of approximately 45 m x 30 m within the vein. Mineralization is open up-dip and down-dip in the vein, and to the northwest and southeast along the veins with 0.78 meters at 29.34 g Au/t and 0.95 meters at 36.77g Au/t respectively. The “ore” under development shows remarkable continuity with no significant disruption by faults, although the vein is “lost” at 200 m within the haulage level, probably by minor fault displacement.

Production portals suggest four or more veins are under development in the central Bombona zone. Additional active mines occur to the northwest and southeast along 4 km of veins.

Figure 2. The central Bombona zone. Five or more mine portals are in this area providing access to four or more individual veins. The veins occur between the upper-most and lower-most mine disturbances in this photo. Mining areas like this provide Outcrop Gold near-term drill target as mineralization is open in all directions within the veins.

Figure 3. The Bombona zone includes three active artisan mine areas extending over 4 km. At least eight mines are active in the zone and many more mines are caved or inactive. More than 35 artisan miners work in the Bombona zone with primitive mining methods and inefficient milling.

Figure 4. The JICA soils show close correlation between gold-silver anomalies and the surface trace of veins. The soils appear to map eleven or more veins in the Bombona zone and more unmined veins to the northeast.

 

 

Figure 5. Outcrop Gold completed systematic sampling in one of several primary production areas within the Bombona zone. Mapping suggests good continuity of the vein for 200 m before the vein has what is probably a minor offset. Detailed sampling show artisans are mining in situ “ore” of 22 g Au/t and 187 g Ag/t non-selectively. The two high-grade areas connect for a length of 90 m and likely the entire 200 m length of the mine is in “ore”. This mineralization is open and provides a drill target.

Figure 6. A three-dimensional map of the artisan workings sampled by Outcrop Gold. The mine levels are developing “ore” at 22.3 g Au/t in situ according to Outcrop Gold sampling. Levels continue above the main level but were not accessed by Outcrop Gold.

Fig 7. This figure shows historic reconnaissance sampling conducted by geologists working for Minera Mallama SAS in 2010. These reconnaissance assays are like the Bombona mine sampling. There is a remarkable distribution of high-grade on Mallama. At least four vein zones are represented by this sampling.

Reconnaissance prospecting my Minera Mallama SAS identified six other open artisanal mines providing channel samples ranging from 11.8 g Au/t to 73g Au/t and 47g Ag/t to 1114g Ag/t. These samples are reported by Minera Mallama SAS to represent production faces in artisanal mines and date from around 2010. Sample widths were not recorded but vein widths are probably like the Bombona zone. The national mining agency Ingeominas reports two reconnaissance samples taken at 75g Au/t and 1,400g Ag/t and 130g Au/t and 120g Ag/t from workings in the Bombona zone to the northwest and northeast of the mine sampled by Outcrop Gold. The Ingeominas sample widths are not recorded.

Outcrop Gold has taken a total of forty-seven channel samples in the course of its work in Bombona zone workings. One-third of all samples taken exceed 15g Au/t. These forty-seven samples include some taken for characterization of unmineralized wall rock.

Twenty active or sporadically active artisanal mines are recorded in the Bombona zone. Similar vein packages parallel to the Bombona zone occur 1.5 kilometers to the northeast and 3 kilometers to the southwest. These are the La Cruz and La Fortuna zones respectively. La Cruz has more historic mining activity and more veins of greater strike length than recorded than the Bombona zone. Little is known about La Fortuna because it is remote, and it is the most recently discovered vein in the Mallama District.

 

EXPLORATION MODEL

The Mallama project is located 130 km northeast the Llurimagua discovery and 50 km northeast of Solgold’s Cascabel discovery. Mallama is within a well-endowed mineral and tectonic belt that hosts Cascabel and La Colosa which are the largest discoveries in Ecuador and Colombia respectively.

Figure 8. The Piedrancha district occurs within a regional metal belt that includes Cascabel and Llurimagua. Mallama is only 50 km from Cascabel in the same regional structure.  Districts within this belt are large and the belt provides potential for world-class discoveries or porphyry and porphyry-epithermal deposits.

Outcrop Gold infers that four vein zones occur across the project from northeast to southwest spaced two to three kilometers apart, and that each vein package consists of numerous veins that extend for three to four kilometers. It is expected that forty or more veins can be identified on the property. These veins will average

0.6 to 2 m and show mineralization over a large vertical extent.  Outcrop Gold thinks the Mallama project veins provides a target of over one million ounces of gold and over seven million ounces of silver at district grades of 15 to 20 g Au/t.

Outcrop believes significant resources will be identified by exploring and delineating the extensions of current artisan mine workings down dip and to surface and along the entire three to four-kilometer strike of the vein zones.

The extensive distribution of veins and active workings in a district the size of Piedrancha indicates that Mallama could produce a large mine operation. Piedrancha is an established vein district and that essentially a “discovery” has already been made by artisan miners.

Figure 9. The Mallama project covers four vein groups of the Piedrancha district. The veins trend northwest and are seen to strike for 4 to 5 km where revealed by significant artisan mine workings in the northeast part of the project. In the southwest part of the project isolated mines probably reflect similar vein groups but poor access and isolation have prevented their development. The four vein groups are likely to accumulate 30 to 40 individual veins of 3 to 4 km strike.

 

Geology and Mineralization

Outcrop Gold believes the major gold event on Mallama is intermediate sulfidation epithermal veins overprinting an earlier and deeper mineralizing event associated with ductile shears. Between these two events at least a minor Carbonate Base Metal Gold (CBM-Au) event is represented by banded sulfide and carbonate gangue.  Multiple gold and silver events probably combine to provide both the extreme high grades and large distribution of veins throughout Mallama and the greater Piedrancha district. The veins on Mallama are like the nearby Diamante mine veins which are some of the highest-grade and widest veins known in Colombia.

The veins are hosted in the Piedrancha pluton which intrudes volcanic and sedimentary rocks of the Diabase Group and Dagua Groups respectively. Both lithologic units are Cretaceous age. The Piedrancha granodiorite is Paleocene age, the same age of most productive plutons in Colombia like La Colosa, Nuevo Chaquiro and Buritica.  Porphyritic plutons of andesitic and dacitic compositions intrude the Piedrancha pluton and appear associated with the localization of veins on the Mallama project and the Diamante mine to the northeast.

The structures controlling the predominant northwest veins in the Piedrancha district and Mallama are second order structures to the regional northeast Cauca-Patía fault system. Tectonic movement on the Cauca-Patía system dilated the northwest faults to host the veins and earlier ductile shear zones. Repeated movement caused repeated vein formation over a large area.

Figure 10. The Bombona zone veins are characterized by abundant pyrite and minor sphalerite and chalcopyrite frequently in a banded habit within quartz or quartz-carbonate. Gold is both free and in sulfides, silver is likely in sulfosalt minerals and galena. Multiple stages of mineralization are visible.

Figure 11. In this picture the vein is split with a horse of wall rock in between vein strands. The horse contains veins and veinlets both parallel and linking the vein strands. There is a rock hammer with a blue handle in the top center of the picture and the vein with horse is 2.3 m wide. The left margin of the vein is in contact with a ductile shear zone that is also significantly mineralized. The entire width vein and shear is 3.0 m. The channel sample assay here is over 30 g Au/t and is an example of mineralization continuing beyond the workings.

Figure 12.  Quartz and quartz-carbonate vein material and sulfides show banding. Banded carbonate and sulfides can be indicative of CBM (Au) gold mineralization like Buritica. This mineralization event occurred between the shear and the low sulfidation epithermal veins. CBM (Au) veins tend to have very large vertical extent and also are related to porphyritic intrusives at depth.

The veins contain sphalerite and galena commonly in a banded habit in major quartz and minor carbonate gangue. Arsenopyrite is locally abundant but there is no correlation between gold and arsenic. The veins show minor phyllic alteration in granite wall rock.

COMMUNITY AND STAKEHOLDER RELATIONS

Mallama includes lands recognized as traditional homelands of indigenous peoples. This requires a consultation called Consulta Previa with the indigenous communities. This process is underway, and Outcrop has done baseline work to study cultural and social aspects of the community in order to build respectful, effective, supportive and mutual benefiting relationships with the community.

Informal mining has been conducted for decades in Mallama and Outcrop Gold wants to accommodate and or incorporate artisan miners in modern exploration and any future mining activity.

ACQUISITION TERMS

Outcrop Gold acquired Mallama on August 31, 2017 by purchasing the private Colombian share company Minera Mallama SAS.  The formal transfer of the share certificates will occur upon review by the Chamber of Commerce in Colombia. Outcrop has paid $298,000 in outstanding canon fees for the two Mallam titles for the years 2014 to 2017.

Outcrop will be required to make an additional payment of $200,000 when suitable drill permits are issued. Net proceeds royalties of (NPR) of 4% will be payable to the former shareholders on all project production. A minimum of one million dollars will be paid within three years of the commencement of commercial production. The proceeds royalty is capped at four million dollars over the life of the mine. There are no additional annual payments or minimum work commitments on Mallama and no area of influence for the project.

2019 Plans

Outcrop Gold is initially focusing on a 1,200-hectare portion of the 9036-hectare project.  Outcrop intends to complete an environmental study to subtract the titles from a Second Law (1959) Forestry Reserve. Outcrop will continue with Consulta Previa which is a consultation with indigenous peoples with homelands in the area and provide a framework of legalization and accommodation for informal miners.

Outcrop Gold is actively seeking a funding joint venture partner for Mallama.