Famatina

Background

This large property covers a total of 136 square kilometres and hosts   significant porphyry and epithermal style copper-gold-silver mineralization and favourable geological and alteration patterns. It sits approximately 200 km to the east of the Andes Cordilleran belt in a range of mountains known as “Sierra de Famatina”:

Exploration is focused on a 20-25 square kilometre core area of alteration primarily around and to the south-east of the historic Mejicana ridge.  In early 2005, Famatina was   optioned to Barrick Exploration Argentina S.A. (a wholly owned subsidiary of Barrick Gold). Barrick have targeted a new concept to the north and west of the Mejicana ridge known as Quebrada Ancha. Terms of this agreement are for Barrick to earn a 70% interest in the property through a minimum expenditure of US$10 million and a US$500,000 payment to Yamiri.

Geology & Mineralisation

In the immediate project area, the dominant lithology consists of a sequence of metamorphosed shales, siltstones and sandstones that host much of the epithermal and porphyry mineralisation. Later granitic stocks intruding the meta-sediments form many of the higher peaks such as at Cerro Belgrano while several Pliocene-aged dacitic porphyry bodies intruded along a general N-S trend represent the principal event of the Andean orogeny. Other prominent structural trends include an E-W system along which much of the High Sulphidation (HS) Au-Ag-Cu vein systems (La Mejicana, Offir, Montey) and Low Sulphidation (LS) systems, such as at La Caldera occur. The epithermal mineralisation is developed within meta-sediments principally around the La Mejicana ridge area over an area of ~20-25 km² (north-west corner of the property).

Mineral Resources

In 1997, CRA/RTZ generated a Mineral Resource of 89Mt grading 0.91g/t gold for 2.6M ounces of contained gold (an estimate carried out by RTZ Consultants).  This resource was classified as Inferred according to a NI43-101 Technical Report completed by Hatch Ltd. in 2005.

At the same time, CRA/RTZ estimated that an oxide resource of 1.82Mt grading 1.27g/t Au (at a 0.5g/t Au cut-off grade) was contained within this Inferred Resource (also by RTZ Consultants).

Current Status

Since the start-up of exploration activities in early 2005, Yamiri’s Joint Venture partner Barrick Gold Corporation (“Barrick”) (30% Yamiri, 70% Barrick) has completed a systematic work program of geological mapping, alteration mapping (PIMA), geochemistry, geophysics, and other field investigations leading to the definition of 12 separate targets within the 136 square kilometer property. The widespread gold and base metal mineralization found on the property is associated with several centres of Tertiary-age epithermal and porphyry mineralization hosted in both the older Ordovician metasediments and the younger sub-volcanic intrusives and dykes.

Following evaluation of the initial 2005 exploration results, attention has now focused on a specific 1,500m by 1,500m area of interest where a heavily-altered package of metasediments and dacite porphyries is found with a diatreme breccia complex mapped on the western flank of the zone. The extent of the previously known advanced argillic alteration has been expanded and high temperature advanced argillic alteration has been recognized. Strongly silicified stockwork and breccia outcrops on surface carry gold values of 100ppb to more than 1,000ppb Au, with some trenches having continuous mineralization of 58-70m grading 1.5-2.0g/t Au. Depth of oxidation is typically in the range of 30-100m below surface. Induced Polarization geophysics has been an effective tool for mapping sub-surface contacts and identifying drill targets.

Two phases of diamond drilling have been completed to date for a total of 5,972m in 19 holes. Significant results are as follows:

Click to open a geology map showing location of all drill holes completed to date on the project.

Mineralization is found not only in the intruding porphyry and dyke complexes, but also in the overlying folded metasediments where several of the higher grade vein and stockwork intersections have been encountered. Grade is often related to intensity of stockwork fracturing or has a spatial relationship to dyke and sill intrusives. Mineralisation occurs in disseminated form typically with pyrite plus various clay species such as alunite and dickite, and in quartz-sulphide stockwork and veins. Enargite has been identified along with occasional chalcopyrite, bornite, and covellite.

Drilling and other exploration activities are at an early stage, however the results to date confirm the presence of a coherent model of gold mineralization in epithermal, stockwork, and porphyry settings.  An additional 6,000 m of drilling to begin in March 2007 will extend the current limits of the mineralization to the north and east.

Historical Highlights

The Famatina range has attracted explorers since the time of the Spanish conquistadores and was the site of high grade vein copper-silver-gold production by British settlers in the early 20^th century.

Overland cable car system from past production

In the 1990’s, the property was joint-ventured to CRA/RTZ who completed a comprehensive 3-year program of mapping, geophysics, sampling, and drilling of a 2 square kilometre bulk-tonnage gold target. Some of the wider zones of gold mineralisation reported from the 52-hole drill program (Reverse Circulation and Diamond Drilling) were:

Selection of Drill Results, CRA/RTZ, 1994-96

In 2000, Corriente Argentina S.A. focused on the complex of veins found along Mejicana ridge and drill-tested the depth extent below some of the historic underground workings. Some of the better drill results (diamond drilling) reported by Corriente were as follows:

Corriente also sampled and mapped several of the original underground workings where high-grade but discontinuous gold values up to the 125g/t were reported immediately below mined out stopes at the Gibraltar vein (widths of 0.5m). In the Atacama vein, high-grade silver values greater than 1,000 g/t over narrow widths were encountered giving way to lower values at depth (<150g/t Ag).

High Sulfidation pyrite-enargite mineralisation

Metallurgy

Some principal metallurgical conclusions from the CRA/RTZ completed in the 1990s were as follows:

• gold occurs free, or associated with pyrite and quartz
• in the oxide zone, tellurides such as calaverite are the dominant mineral species
• in the sulphide zone, pyrite is dominant along with common sulfo-salts, for example enargite
• chalcopyrite is a common accessory mineral, while bornite occurs occasionally with covellite in the supergene zone
• the gold distribution in oxides is largely in the <45 micron fraction, while in the sulphide zone there is a wide range of size fractions represented

Bottle roll tests using RC drill chips were performed on several oxide and sulphide samples. In oxide material, high gold recoveries were obtained in the order of 94% but at high lime and cyanide consumptions. In sulphides, recoveries were low and variable between 13% and 72% and again consumed high quantities of cyanide.

Flotation tests provided better overall results in terms of metallurgical response. Gold recovery grades in final concentrate (from drill core) were good at ~75%. A variety of flotation tests examined several different methodologies of which rougher flotation with pyrite depression followed by a cleaning stage offered the best possibility of achieving more attractive gold recoveries. Gold extractions in oxide material >98% were suggested as achievable using cyanidation after pressure or biological oxidation techniques.  More recently, in December 2006, the Barrick-Yamiri Joint Venture collected drill core for metallurgical testing at Barrick.