I.

Introduction Generalities. This report was requested by Mister Claudio Castillo Ramirez, Chief Executive of the mining company Claudio Alberto 1 S.A, which operates the mining property ANA MARA, located in the village El Trapiche, of the municipality of La Higuera. The field work was done on October of 2011, by covering all the developed levels of the mine. Objectives. The main objective of the tour was to diagnose the current geological and mining situation of the mine and to focus new works related to reconnaissance and mining.

Geological Report ANA MARA MINE October, 2011.

Figure 1. Location and accesses of the surroundings of Ana Mara Mine.

Location and approach roads. Ana Mara Mine is located in the village El Trapiche, in the municipality of La Higuera, Province of Limar, Coquimbo Region. The coordinates of the center of the mining property are: 294.625 E and 6.746,000 N with an approximate elevation of 600 m a.s.l. The main access to the mine is through the North Panamerican Highway or Ruta 5 by the village El Trapiche (75 kms North of La Serena city), from Ruta 5 to the mine the distance must be done through a dirt road of regular state for a total of 3.2 kms (Figure 1). Mining Property. The mineralized structure is protected by the Mining and Mining Concession constituted and denominated as ANA MARA-GABRIELA, Role: 04102-1293-5, whose owner is Mr. Mario Alvarez Vega, who leases to the Mining Company Claudio Alberto 1 S.A. The above mentioned area covers several important structures which are positioned in NW direction, parallel to the main vein. Towards the North extension of the structure, constituted properties can be seen. These properties cover the projection of the veins. (Fig.2)
Figure 2. Mining properties in the surroundings of Ana Mara Mine, Mining Company Claudio Alberto 1.

 A detailed list of the mining concessions of the field of study is presented below:

Mining Labors. The current mine started to develop in 2003, with a ramp main entry of 115 m length which through a spiral ramp is connected with 4 levels located approximately 10 m away in a vertical distance. In each level, mining and mining labors have been performed. These labors consist on raises which begin in draw points made on the reclining side of fault which controls main mineralized structures, where vein structures of an average power of 4m with width ranges from 3 to 6 m, are exploited in stope.


Figure 3. Aerial view of Ana Mara Mine where the lines in red indicate the main structure of Mine Ana Mara and the lines in blue show tracings associated with potential mineralized structures.

As seen in Figure 3, the surrounding area of the mine or mining property contains several mineralized structures with a paragenesis of copper-iron-gold, determined by visible lines in the aerial image. These structures are included in different mining properties located in the surroundings, which is an important factor to consider when exploring and adding geological resources to the project. Works performed. In order to meet the objectives of the work, the main mining settlements in current development and mining, which consist of two sectors with total longitudinal developments of about 650 m. The first and oldest one is located to the North end and the second one, which is in a developing state, will reach depth levels below 400. In the south sector, 5x5 drifts, which are made lengthways of the vein, are being developed, initiated with the scaling of old labors, which will reach an elevation of 250 m.

The horizontal levels are separated by a height of 25 m, with section drifts 3.5 m high x 4.0 m wide, where the power of the veins are variable between 1.5 and 5 meters. In both sectors the structure is more or less constant in relation to power, which allows the appreciation of several parallel structures of similar characteristics. Sampling was performed, whose resulting averages are shown in the table below:
Table 1. Mina Grande sampling results

Ore

Total Cu % 2.7

Total Fe % 53.6

Au g/ton

Ag g/ton

2. REGIONAL GEOLOGICAL SETTING Generalities. Granite rock from Earlier Cretaceous is found in areas adjacent to the mine, i.e. from Vallenar South border to La Higuera, corresponding to Illapel Superunit (Kiag), which is a great intrusive body dating from Early High Cretaceous to Late Low Cretaceous, formed by light to dark grey granodiorite to quartzipherous diorite (monzogranite) of medium to coarse grain. Regions III and IV are associated to copper-gold and iron (Cu-Au- Fe) mineralisation, just like Candelaria IOCG ore deposits, located near Copiap, and (Cu- Au) Andacollo, located Southeast of La Serena. This unit is equivalent to the wall rock vein in Mina Grande. Intrusive rock from Early Cretaceous is found to the West, formed by tonalite, monzodiorite, pyroxene diorite, hornblende, and biotite rock, as well as granodiorite. These units are associated to the fault area in Atacama and El Romeral, as well as to iron mineralisation (Kibg).

Basalt to rhyolite lava, breccias, domes, and volcanic agglomerate interspersed with deep- sea and continental sediment of Bandurrias Formation (Fm. Arqueros) (JK3) are found to the East, dating from Late Jurassic to Early Cretaceous. Here mineralization is found in major tabular vein-shaped bodies, whether massive or disseminated, embedded in andesite volcanic, sediment, and limestone rock from Early Cretaceous. It is formed mainly by iron oxides associated to iron and copper sulphates with gold ores. Mineralization in the area is related to gold mainly and also copper, embedded in granite rock. Copper is found in fault-filling vein type deposits (structure control) together with quartz, hematite, rock fragments, calcite and limonite. In addition, finding some mantiform deposits associated to andesite is also possible.


Figure 4. REGIONAL GEOLOGICAL SETTING. In the area surrounding La Higera, the following geologicalal units are recognized, according to the nomenclature of the Geological Map of Chile, scale 1:1.000.000 of National Service of Geology SERNAGEOMIN (2002)

Sedimentary sequence

Intrusives

Volcanic sequences

3 GEOLOGY OF THE MINERAL DEPOSIT Wall Rock: In the property of Mina Grande, the wall rock is made of intrusive rock of medium grey dioritic to monzonitic composition and medium-grain with biotite, plus ferromagnesians such as hornblende and pyroxene. They present considerable amounts of hematite, magnetite and calcite veinlets and p fine disseminations of pyrite and traces of chalcopyrite. Minor Intrusives. Dikes of dioritic composition can be appreciated throughout all the levels of the mine. These dikes may be parallel to the vein or crossing it and the thickness varies from 0,5 to 20,5 m. Structures. A very significant group of structures NW (N45-60W) can be seen, as the ones in Figure 3. This occurs in the III and IV Regions, where copper vein deposits are embedded, as the ones described in this mine, varying to south with a more gold-bearing composition.


Figure 5. North front of ANA MARA vein. In this sector a slash in the vein was performed, due to the advance of a road access to higher levels. At this point the structure has a power of 20.8 m, mainly formed by magnetite with slight amounts of copper oxide 3- 5 % MT and hematite 5%MT. Visual iron grade estimated in 50%.

In the aerial image a series of structures of NNW direction can be appreciated, which are associated to small quartz, hematite and sulfide veinlets. As seen in the aerial view (Fig.3),

the main vein of the mine has a direction N50W, and dips of 75 to 80 SW can be measured. The structure, as seen in figure 4, presents strike variations which give it a curly aspect in detailed-scale mapping. The faults of the recumbent and the dike gives the structure a quite good definition of the walls, which significantly benefit the vein developing and reconnaissance labors. In terms of vein power, it is fairly constant with an average value between 2.5 and 3.5 with some pockets of rich ore of 6.0 m where chalcopyrite lens of sulfur from 10 to 25 cm associated to power bulks or width of several meters (3 to 6 m) of hematite, magnetite, specularite with pyrite, bornite and chalcocite veinlets. It is seen as well, veintlets of silicate and carbonates of a few cm of thickness. Furthermore, there can be defined two mineralization cases marked with the presence of grey silica with black ferromagnesians and surfur veintlets as very abundant chalcopyrite and less pyrite and chalcocite. These are, at the same time, cut by light silica veintlets (quartz and feldspars clay and interstitial jarosite) with a finely disseminated mineralization with lower proportion in relation with the other veinlets. The mineralogical features of the vein, mey indicate a mesothermal origin, as the presence of abundant hematite resembling copper and gold veins embedded in Jurassic granitoides to inferior cretaceous of the III Region, as the ones of Las Animas and Ojancos districts. These consist on veins with primary mineralization formed by chalcopyrite, pyrite, arsenopyrite, magnetite, specularite (hematite) and gold. The wall rock presents a halo of alteration constituted by actinolite, potasic feldspars, biotite, epidote, sericite and quartz. Just as occurs in the north, the majority of these veins and their associated alteration are spatially and genetically related to the Lower Cretaceous Magmatism. The wall rock, presents a biotite alteration disseminated on the rock and fracture fillings, very fine calcite veinlets with pyrite halos and less chalcopyrite, fine magnetite which is finely disseminated and can be clearly appreciated in the main entry or access, where the last sampling produced low gold and copper grades .

 Figure 6. North front of the vain Ana Mara in the southern sector. 4. Geological evaluation of Ana Mara Mine. The vein shape structure of Ana Mara Mine corresponds to a normal major fault with a strike of N07W and moreover, it presents some features which are sings of displacement along the sinestral strike which monzodioritic slashes where a vein formed mainly by siliceous and ferric material was embedded. This vein has a very good structural definition, for it can be deduced a similar behavior along the strike north, which would allow the projection of this structure beyond the limits of the mining property, approaching to the chain of mountains located NW. According to an estimation of resources performed on a topographic basis considering the average power from 10.8 to 20.5 m and according to the simple airspace, a preliminary value of 5.609.011 tons of iron ore was calculated, corresponding to magnetite in its

majority. The estimated grade, according to the analysis of samples taken from 3 fronts of the vein represents al average of 53,6% of iron (see annex). As indicated by the foregoing, a rate of mining extraction from 50.000 to 70.000 ton/month, which would mean an initial useful approximately eight to ten years. In the following table the is a summary of the location of iron deposits in Ana Mara Mine.

Sector North South Sub_Nv-250 Total

Tons 2,915,405 1,536,719 1,156,887 5,609,011

Total iron % 53,6 50,0 50

Total Cu % 1,5 2,0 0,5

Category N/A

Figure 5. Access view and main entry to the mine.

 Figure 5. Access view and stockpiles of minerals and mucks. 5. Conclusion and discussion. The main structure of Ana Mara Mine corresponds to a vein with mesothermal characteristics of copper, iron and gold, controlled by faults of considerable sizes which belong to a group of important structures of the surrounding areas of the mine, which allows hoping for a great geological and mining associated resource potential. As it can be observed in the aerial image, there are superficial labors which correspond to other structures apart from the exploited vein in Mina Grande, whose limits are located northeast. Therefore, it is possible that the current vein is almost completely unexploited towards the surface and it could be considered as an additional resource. Way north and deep, the vein has very good probabilities of maintaining the same characteristics known in the current labors. With the total estimated resources in the property, an approximate of 5,605,000 tones of sulphide minerals of copper and iron can be reached. This could serve as a basis of operative projections to a rate of 30,000 to 50,000 tons/month of iron ore lumps and iron ore fines, for a project of approximately ten years. 6. Recommendations.

It is recommended to continue with the reconnaissance and developing labors. Due to its structural and mineralogical features, the existence of other structures in the surrounding areas is possible. Reason for which an appropriate and detailed exploration would have to be performed and that is why it is necessary to do a geological study around the complete area of the property, very detailed and to schedule a exploration drilling campaign and along with it to do an geological evaluation through a model based on sections and detailed plants.