Chinchillas, Jujuy
On August 3, 2011 the Company announced an option agreement with a private group to acquire a 100% interest in the 979ha Chinchillas Silver Project located in Jujuy Province. Chinchillas is an advanced stage project with 14 drill holes completed of which 11 holes cut potentially economic mineralized intercepts.
Highlight intercepts from the previous drilling at Chinchillas include:
- 112m at 85.5 g/t AgEQ* (silver equivalent), including 44m at 110 g/t AgEQ* in CH-1
- 14m at 8.06% Zn in CH-6
- 20m at 183.1 g/t Ag and 8m at 228.8 g/t Ag in CHD-15
*Silver Equivalents (AgEQ) were calculated using US$ 40/oz for Silver, US$ 1.20/lb for lead and US$1.10/lb for Zn; metallurgicalrecoveries and net smelter returns are assumed to be 100%.
**True width of the intercepts is not known
The Chinchillas project is located in the prolific Bolivian silver--zinc-tin belt which extends into northern Argentina. The Company believes that Chinchillas has the potential to host a large silver+/- zinc+/-lead deposit. Similar projects in the district include Silver Standard Resources Inc.'s Pirquitas mine which produced 6.3Moz silver produced in 2010 and reported 195.1 Moz P&P Reserves at 200 g/t Ag (Silver Standard website) which is located 30km southwest of Chinchillas.
The project is underlain by a Tertiary volcanic dome complex with associated lava flows and tuffs and several large overlapping or cross-cutting breccias bodies that have intruded Paleozoic sedimentary rocks, forming a bowl-shaped depression approximately 1.5km by 600m-800m in size.
A total of 2,996m in 14 holes (7 RC and 7 diamond holes) have been drilled by two previous operators within a 1km by 0.4km area in the north-central portion of the property. This drilling tested 5 main mineralized targets, listed below, which now require detailed infill and expansion drilling.
- Socayon del Diablo. A hydrothermal Ag-Zn-Pb diatreme breccia, approximately 70m in diameter.
- Silver Manto. Near surface zone (0-100m) in the western basin with several high grade silver intercepts interpreted as a possible flat-lying breccia zone.
- Silver Deep. Below Silver Manto CHD-16 cut a 10m zone averaging 176.2 g/t AgEQ* at 240m depth.
- Zinc Zone. Hole CH-6, located in the center of the property between Socayon del Diablo and Silver Manto, cut high grade zinc, with 14m @ 8.06% Zn.
- Potrero Tunnel. Ag-Zn-Pb brecciated and mineralized Paleozoic sediments at margin of Dome complex.
Option Agreement Terms:
Under the terms of the Option Agreement Golden Arrow may acquire a 100% interest in the Chinchillas project by making the cash payments to the vendor totaling $1.8 million over four years, as shown below; $20,000 was paid on signing and a further $80,000 is due by the 6 month anniversary. Furthermore the Company must make an additional payment of $1.2 million to the vendor upon the commencement of commercial production.
Timing Cash Payments ($US) |
| On Signing | $20,000 |
| By 6th Month Anniversary | $80.000 |
| By 1st Anniversary | $150,000 |
| By 2nd Anniversary | $250,000 |
| By 3rd Anniversary | $400,000 |
| By 4th Anniversary | $900,000 |
| Total | $1,800,000 |
The historical project information reported above for the Chinchillas property was supplied to the Company by the property vendor and was not collected by Golden Arrow and should therefore be considered historical in nature. It has been reviewed by Bruce Smith, Chartered Professional AUSIMM, Golden Arrow's Exploration Manager and a Qualified Person, and by Dr. David A. Terry, P.Geo., director for Golden Arrow, and a Qualified Person as defined in National Instrument 43-101, and the work is believed to have been carried out in a professional manner. The Company has conducted a due diligence site visit, including collection of surface confirmation samples. RC holes CH-1 to CH-7 were completed in 1996 by Aranlee Resources and diamond holes CHD-10 to CHD-16 were completed by Silex Argentina S.A., a subsidiary of Golden Minerals Company (formerly Apex Silver Mines Limited), in 2007-2008. No QAQC data is available for the RC drillholes but a QAQC program and raw data for the Silex diamond holes was reviewed by the Company and no issues identified. Based on the historical and preliminary nature of the drilling carried out to date on the Chinchillas project, no estimation of the true thickness of the recorded mineralized intercepts is possible at this time.
