The Cauca Project is a first for Miranda in that it is an acquisition of an advanced property in Colombia. It has a significant historic estimated resource that is supported by internal company professional work and third party consulting that includes recovery testing, mining and milling, and cost and recovery studies, and design work that resulted producing an optimized pit shell that includes 307,450 ounces of gold, 1,323,000 ounces of silver, and 80,897,000 pounds of copper from a volume of 34 million tons of mineralized material, within a 0.3 g Au/t cut-off grade shell. Miranda views this work as historic until and if qualified persons can substantiate the work with a supporting NI43-101 report.
Carboandes, a private primary coal producer, made a discovery called La Custodia on the project in 2010, following up work started by INGEOMINAS and JICA. La Custodia is gold-copper porphyry with persistent over-printing by sub-vertical gold-silver epithermal veins and carbonate-base metal-gold veins.
Miranda notes that it is common to see epithermal veins subparallel to core with very high values (to 2m @ 1095 g Au/t). These epithermal veins overprint multi-directional porphyry-style gold-copper veinlets and inferred to be sub-vertical. The epithermal veins are gold-silver veins, but there are also overprinting carbonate-base metals-gold veins noted.
Miranda believes that the vertical, higher-grade veins are underrepresented in the drill pattern testing porphyry-style mineralization and internally estimated resource grades could be significantly higher.
Miranda has an option to earn 100% of Cauca from Carbonandes and can either advance the project by itself or take in a funding joint venture partner.
Importantly the Cauca Project presents Miranda shareholders with a potential quality discovery with excellent upside potential.
Location and means of access to the property:
The Cauca Project is located in the Almaguer Mining District in the Cauca Department, in the municipalities of La Sierra and La Vega. The project can be accessed by car driving 47km south from Popayan on the Pan-American Highway, then 19km on a secondary paved road to Sierra, and then 39km by tertiary paved roads to the project.
The project and consists of one large title and a smaller application, for a total land area of 1,808 hectares.
Initial Prospecting and Exploration Model:
INGEOMINAS conducted geological studies in an area including the Cauca project between 1973 and 1978. JICA (Japan International Cooperation Agency performed additional studies in the 1980's. In 2002 INGEOMINAS offered the area of tender; this area included the La Custodia deposit on the Cauca project, subsequently discovered by Carbonandes. Carboandes conducted exploration and related work between 2007 and 2016, including surface prospecting and sampling, drilling in several campaigns, metallurgical work, resource estimation, and preliminary costing and design for an open pit operation of 5,000 tons per day.
The Exploration Model for Cauca is porphyry gold-copper mineralization, overprinted by epithermal gold-silver veins, and quartz-carbonate-base metal- gold veins. The gold-copper system on Cauca is thought to have affinity with a large Miocene and or Cretaceous Mineral Belt that extends from Ecuador into Central Colombia. Very large discoveries including Cascabel and La Colosa are located in the same mineral belt as Cauca.
Geology and Mineralization:
Structural controls and mineralized porphyry-emplacement are related to fault and fracture systems of the Cauca-Romeral Mega-structure or Suture zone. The predominant lithologies are continental sediments intruded by hypabyssal diorite and quartz-diorite porphyry. Alteration is external propylitic to phyllic to internal potassic in the core of the intrusives. Epithermal veins trend predominantly northwest, secondarily northeast and have phyllic and potassic selvages. The La Custodia is a gold-copper porphyry deposit with a persistent low-sulfidation epithermal overprint, including gold-silver quartz veins, veinlets and stockwork, and quartz-carbonate veins with base metals and gold.
The epithermal mineralization frequently shows classic dark ginguro texture with abundant fine-to-coarse free gold. Dark bands in the veins are probably silver minerals. Fluid inclusion studies show temperatures of vein formation at 400 to 500°C for Type A and Type B porphyry-style veins, and 150°C for epithermal veins, indicating specific stages for vein formation. Porphyry mineralization was probably followed by carbonate-gold-base metal veins, and then low-temperature gold - silver veins.
The project has several exploration targets. Exploration targets similar to La Custodia include La Esperanza and El Limón - both with porphyry-gold-copper combined with epithermal-type mineralization. The Hueco Hondo prospect is 3.8km from La Custodia - midway between La Custodia and La Esperanza -- and is characterized by parallel northwest-trending epithermal veins that show reconnaissance channel sample values up to 127 g Au/t. The Hueco Hondo target is important in that it may illustrate the prevalent orientation of veins on the project, including the orientation of potentially under-sampled veins in La Custodia. Hueco Hondo consists of multiple parallel high-grade veins without a porphyry component, further supporting a persistent epithermal overprint.
Several gold-arsenic soil anomalies occur across a significant part of the 1,808 hectare property - but only two anomalies have been drilled to date. Drilling in one of these soil anomalies resulted in the identification of the La Custodia deposit. Open soil anomalies occur between La Custodia and Hueco Hondo, east of La Custodia, and north, south and east of La Esperanza, which is seven kilometers north of La Custodia. Several high level stream sediment anomalies have not been followed up with prospecting or soil grids.
Significant drill intercepts are provided in the following table from the La Custodia deposit. Only intercepts greater than 0.5 g Au/t are shown. Values over 1 g Au/t consistently show some amount of epithermal quartz or quartz-carbonate veins, generally sub-parallel to core and thus the veins are probably near vertical.
Miranda believes that closer-spaced, and properly angled holes with respect to the vein trend, will better delineate the continuity and thickness of sub-vertical, higher gold grade epithermal veins that we believe are presently under-sampled on a volume weighted basis in the current La Custodia drill pattern and the La Custodia internal resource estimate.
** True thicknesses cannot be accurately estimated at this time, but generally, due to the nature of the deposit, drill thicknesses are thought to be close to true thicknesses.
Historic Internal Valuation Studies:
Carboandes discovered the La Custodia in 2010, and produced a project technical report. They have conducted internal studies in support of resource estimations, preliminary economic evaluations, metallurgy, and mining studies. The internal resource estimate of the La Custodia - completed and internally reported in 2015 -- provided a resource of 700,000 ounces gold at 0.66 g Au/t. Within this resource, using a plus-0.3 g Au/t cut-off, a three-dimensional "grade-shell" was modeled and used for a trial pit optimization. Internal to the pit, the gold-grade shell contains estimates of 307,450 ounces of gold, 1,323,000 ounces of silver, and 80,897,000 pounds of copper from a volume of 34 million tons of mineralized material - at prices significantly below current prevailing prices. Additional plus-0.3 g Au/t grade shells occur both below and adjacent to the pit shell. The vendor's third-party metallurgical work shows a 95% gravimetric recovery of gold in the oxide zone and an 85% recovery of gold; 80% recovery of copper; and 60% recovery of silver combining gravity with flotation, in the sulfide zone.
The optimization utilized very preliminary assumptions for mining costs for an open-pit blast, shovel, and truck operation with a production rate of 5,000 tons per day. A simple inverse distance-squared isometric projection appropriate to generally uniformly distributed mineralization, with cumulative frequency grade capping was used to model grades. The optimization used metal prices of $1,254 per ounce gold, $15.80 ounce silver, and $2.05 per pound copper and recovery by gravimetric and conventional flotation milling. Recoveries were estimated from multiple bench-scale and larger tests performed by independent labs. The Carboandes internal report refers to all of its estimated resource as "inferred" but this should be considered a general term and not completed in accordance with CIM definitions of mineral resource categories, until substantiated by qualified persons.
No other resource estimates pre-date or post-date the 2015 estimate, and a qualified person has not done enough work to verify or classify this historical resource estimate as current mineral resources or reserves. Therefore, Miranda is not treating the information as a current mineral resource or reserve. The internal work was conducted using professional internal company standards and is considered reliable for its level of detail, but Miranda has not independently reviewed and substantiated the work - Miranda is using the internal Carbonandes work only to provide an estimate of exploration potential and as rationale to continue exploration. An independent qualified person will need to perform their own grade and resource modeling after additional drilling - and will do its own cost estimations and studies before preparing and filing an independent NI 43-101 technical report to support the mineral resource. Most important will be an accurate measurement and projection of higher grade epithermal-associated gold.
Importantly, Carboandes' internal pit design is contained within a small area of only 14 hectares of the total 1,808 hectare project area. The project is near the Pan-American Highway and secondary paved roads, the national power grid, and an airport. Topographic, elevation, social, and environmental aspects of the Project are favorable for exploration and development.
Nature of interest and terms of acquisition:
Miranda has signed a definitive option agreement to earn up to 100% of the Cauca Project, in three phases, as follows:
- To acquire the first 51% undivided interest in the Cauca project:
|First anniversary of Effective Date
|Second anniversary of Effective Date
|Third anniversary of the Effective Date
|Fourth (2) anniversary of Effective Date
- may be extended up to 12-months with payment of US$500,000
Also included in the earn-in, is a commitment to core drill up to 12,000 meters, to be completed during the first earn-in period.
Subsequent to Miranda’s exercise of the first option, the vendor shall be entitled to a 1.5% NSR royalty (the “Base Royalty”) on any gold or gold equivalent ounces in excess of 1.0 million ounces produced from the property.
- To acquire the second 19% undivided interest in the Cauca project:
|First anniversary of the exercise of first option
|Second anniversary of the exercise of first option
Also included is a commitment to core drill up to 15,000 meters, to be completed during the second earn-in period, for a total commitment of 27,000 meters.
- To acquire the final 30% undivided interest in the Cauca project:
|First anniversary of the exercise of second option
||Delivery of a NI 43-101 Preliminary Economic Assessment (“PEA”), with the cost borne entirely by Miranda.
|Maximum of 120 days following the delivery of the PEA
||Delivery of a notice of intent to purchase the remaining 30%.
|Maximum of 90 (or 180) days following the delivery of the intent to purchase
||Agreement as to the fair market value (“FMV”) of the Cauca project, within 90 days, to be mutually determined; or failing mutual agreement, by the use of an independent professional valuation expert. The valuation expert, if needed, may be given an additional 90 days to produce the final FMV report.
|Maximum of 60 days following the FMV agreement or delivery of the final FMV report on the Cauca project
||Payment of the pro-rata portion of the FMV, in cash. Payment of a 1.5% NSR royalty on all gold and gold equivalent ounces of production from the property (replacing the Base Royalty), beginning from the FMV agreement closing date and continuing for the life-of-mine.
In addition, there will be a payment due to the vendor based upon either Miranda's Maiden NI 43-101 Technical Report, or Miranda's Maiden internal resource estimate -- either of which must contain an estimate of measured, indicated and/or inferred gold resources on the property (the "Resource Bonus"). The payment of the Resource Bonus shall be calculated as USD$5.00 per ounce of gold or gold equivalent of such resources to a maximum of USD $4,500,000. The Resource Bonus shall be payable in two tranches: the first 50% shall be due on the date of the exercise of the first option, and the second 50% shall be due 12-months later.
The first-year Miranda expenditure obligation is modest and will be designed to provide "Proof of Concept" that higher grade epithermal associated gold is significantly under-sampled by the current drill-hole orientation and spacing. Early Miranda exploration programs will prioritize close-spaced trenching to resolve epithermal vein distribution and geometry, followed up by close-spaced angle-drilling to create a three dimensional geology and grade model.
Miranda believes that our early drilling results, combined with Carboandes' existing drilling in the La Custodia target zone will allow Miranda to produce a "Maiden" NI 43-101 Resource Report as early as 2019.
In 2019 Miranda will decide whether to continue to advance Cauca on its own or bring in a funding joint venture partner.