Los Ricos

Location: Jalisco, Mexico
Status: Exploration - 10,000m drill program in progress

 


Overview

On March 25, 2019, the Corporation acquired the rights to an agreement which provides the option to acquire 100% of the concessions of the Los Ricos project (the “Option Agreement”).  The Los Ricos property located in Jalisco state, Mexico, is comprised of 29 concessions and covers over 22,000 hectares and is home to several historical mining operations. The property is located roughly 100 km northwest of the city of Gaudalajara and is easily accessible by paved road.  There are 65 historical drill holes on the property from 2003 and 2004, and the majority of them intercepted mineralization from near surface.  There are numerous historical underground workings on the property, which date as far back as early Spanish colonial times, but are primarily from operations in the early twentieth century when Marcus Daly Jr., the son of the founder of the Anaconda Copper Company, and James Watson Gerhard developed it into a modern mine producing up to 500 tonnes of ore per day by the time it closed in 1930 due to the stock market crash.

On August 22, 2019, GoGold entered into various agreements (“the Concession Agreements”) to accelerate the acquisition of the 29 concessions. The Concession Agreements replace the option agreement GoGold had for the Los Ricos property and save GoGold $5.4 million dollars (all amounts USD).

 

Los Ricos Property Acquisition

With the signing of the Concession Agreements, GoGold is required to make payments as follows:

  1. $500,000 in cash upon signing;
  2. $3,220,000 in cash paid in installments over 24 months; and
  3. 9,046,968 GoGold common shares to be delivered in equal numbers over 24 months.

 

Upon signing the Concession Agreements, 5 of the 29 concessions will be transferred to the Company, with the remaining 24 concessions transferred at a rate of 5 concessions every 5 months. The first 5 acquired concessions is where GoGold is conducting its current drill program. Total consideration for the acquisition is $7.1 million based on the Company’s closing share price on August 21, 2019.

In conjunction with the signing of the Concession Agreements, the option agreement previously entered into by the Company to acquire the 29 concessions at Los Ricos (see press release dated March 26, 2019) has been terminated.  The terminated option agreement had provided the Company exclusive exploration rights at Los Ricos for a five year term for $1.5 million, with the option to acquire the concessions for a lump sum payment of $11.0 million for a total purchase price of $12.5 million. Also, pursuant to the terminated option agreement, the private Mexican owners would retain a 2% net smelter return royalty (“NSR”) on 5 of the 29 concessions at Los Ricos.  Pursuant to the Concession Agreements, the 29 concessions at Los Ricos can now be purchased by GoGold for $7.1 million dollars in cash and share consideration divided over the next 24 months, which represents a $5.4 million discount.

 

Royalty Purchase

In addition to the Concession Agreements, the Company has entered into an agreement to acquire the existing 2% NSR for the Los Ricos property for payments as follows:

  1. $1 million in cash; paid in equal installments over 36 months; and
  2. 4,875,012 GoGold common shares to be delivered in equal numbers over an 18 month period.

 

Brad Langille, President and CEO said “With the success we’ve seen with our drilling, the time is right to acquire ownership of the Los Ricos concessions and royalty. Our track record of developing assets and  monetizing royalties, like our Santa Gertrudis sale, should increase shareholder value and provide future financing optionality from the royalty.”

 

Drilling Program

GoGold is currently undertaking a 10,000m diamond drilling program of HQ size core in conjunction with a field program of geological mapping, sampling and trenching on the property. The core drilling campaign is focused on defining the mineralized halo around the historical high grade ore shoots as defined by the underground workings and the 65 historical RC drill holes on the property.

 

Figure 1. A longitudinal section diagram showing both historical and GoGold's drilling results to date at Los Ricos.

 

Full View PDF

 

Full details of recent holes including intercepts and locations are available in the appendix below or as a downloadable PDFs.

 

Figure 2. provides a 3D view of the Los Ricos property surrounding the historical underground workings at the Main Area, with the location of the other zones shown.

 

Figure 3. Corebox 3 dimensional model showing drill results to date.

 

 

Location and Access

The Cinco Minas property is accessible by either a four lane highway west from Guadalajara, the third largest city in Mexico, or via an older two-lane highway that passes through the town of Tequila on to the community of Magdelana, a distance of about 70 km. From Magdalena the property is accessed by another 5 km of paved road and then another 20 km of good gravel road. Access is adequate in a two-wheel-drive vehicle with good tires. The topography on and around the property is fairly rugged and steeply incised. Elevations on the property range from around 1100 m ASL to 1500 m ASL, and the Cinco Minas vein and workings occur at about the 1300 m level and somewhat higher to the northwest.

 

History of the Cinco Minas

The Destajos, Famosa and Trinidad zones (levels) of the Cinco Minas vein were exploited as early as Spanish colonial times in the early 1500's (Rivera & Vazquez, 1963). The next documented record of exploitation in the area was in 1824 when a Coronel Schiaffino had the property. Subsequently, the property was worked by a Mr. Luis Martinez of Guadalajara, but after him the mine was significantly enlarged by the Cinco Minas Mining Company (CMMC), owned by Marcus Daly Jr., the son of the founder of the Anaconda Copper Company.

CMMC built the road to the mine and town and also brought in a 220 kV power line that is still standing and functional today (Anon., 1954). CMMC bought the power from the Chapala hydroelectric plant on Lake Chapala, just south of Guadalajara (Lindsay, 1957). The mine operated until 1930 when it was shut down partly due to depleted reserves and the Depression, partly due to civil unrest in Mexico. During its operation, CMMC developed and mined the El Abra zone ore shoot on seventeen levels (see Figures 4 & 5). The shoot was mined over a distance of about 700 metres vertically and horizontally over 450 metres near the top of the vein and over about 100 metres at the lowest levels.

Total production records are not available, but back-calculations done by Zahony (1981), based on production records noted by Wisser (1930) indicate that the deposit produced in the order of 2.1 million tonnes of 0.13 oz/t Au (4.46 g/t) and 18.6 oz/t Ag (637 g/t). A calculation done by Minera Las Cuevas during 1981-1982 produced a mined estimate of 1.3 million tonnes of ore averaging about 1 kg/ton Ag (>29 oz/t) and about 3 to 4 g/t Au (~0.1 oz/t) from an ore shoot with dimensions of approximately 200 m x 6 m x 455 m deep (Ausburn, 1997). This is from a smaller and richer block contained within the greater orebody.

 

Regional Geology

The Hostotipaquillo mining district occurs within the approximate intersection of two extensive calc-alkaline magmatic arcs, the older Sierra Madre Occidental volcanic province and the younger Trans-Mexican volcanic arc (or Neo-Volcanic Belt). The Sierra Madre Occidental volcanic province trends northwest along the Pacific margin of Mexico and parallels the western coastline. It extends for approximately 1,700 kilometres from the USA border to the Mexican state of Guerrero. The later east-west trending Trans-Mexican volcanic arc (Eje Neovolcanico) overlaps and partially obscures the southern portion of the Sierra Madre Occidental volcanic province (Ausburn, 1997).

The geology of the Hostotipaquillo district is characterized by late Oligocene to Pliocene volcanic and subvolcanic intrusive rocks deformed by a set of northwest and approximately east-west trending graben-forming normal faults. Oligocene and Miocene volcanics are primarily andesite flows, rhyolite ash flow and air fall tuffs, and rhyolite and dacite flow-domes that have been partially covered by Pliocene to Recent basalt flows. The northwest trending graben that extends across most of the district is one of several late Miocene to Quaternary tectonic depressions formed in the area of  the intersection of the south Sierra Madre Occidental volcanic province and the Trans Mexico volcanic arc, and is part of the larger regional west-northwest trending Zacoalco graben system. The Rio Santiago flows northwest through the district along the northeast margin of the Hostotipaquillo district graben structure, including the Gran Cabrera group of mines, the El Salomon-El Favor group of mines and the Cinco Minas and the Santo Domingo-La Espanola mine group vein systems (Figure 15) These faults form prominent scarps that are the canyon walls on the southwest and south side of Rio Santiago. The mineralized vein systems in these faults form dip slopes in the river canyon walls at several locations, such as Cabrera and Santo Domingo-La Espanola.

Andesite occurs in various colours and textures. Northwest of the El Aguila mine, near the bottom of the vein and in San Miguel Creek and the mouth of La Calera Creek (location unknown), the andesite is greenish-grey in colour and has a very fine texture. It contains abundant quartz phenocrysts, and previous investigators have classified it as a quartz andesite.

At the village of Cinco Minas occur outcroppings of the andesite that form the hanging wall to the Cinco Minas vein. They are reddish-purple, porphyritic and rest atop andesitic tuffs (Rivera & Vazquez). The author observed these andesites in an open pit exposure at the El Abra workings.

Large, post-mineral fault has dragged these volcanics down the dip-slope of the Cinco Minas vein such that they appear to rest conformably on the vein/fault surface.

In the mine, rhyolites are observed overlying andesite in the lower parts of the vein. On surface, the rhyolites are found principally in outcroppings above the vein and underlie most of the higher hills found to the northeast of it. The rhyolites have various shades of pink and light green and often contain quartz phenocrysts. The latter type was observed by the author along crosscuts connected to the La Famosa level haulage located in the footwall of Cinco Minas vein.

Two types of tuffs were observed: andesitic and rhyolitic. The former type outcrop in Cinco Minas creek, are light green, fine grained and locally have purplish inter bands and show some signs of internal folding. The latter type outcrops in the higher parts of the hillside in the extreme northwest part of Cinco Minas vein near the San Juan workings. Here they have a pale pink colour and contain abundant quartz and biotite phenocrysts and phenocrysts of feldspars that are kaolinized.

Breccias occur above the rhyolite northeast of El Pitayo (location not known). They form stratiform layers with a northwesterly strike and dip of 320 to the northeast. They consist of angular fragments of red and green volcanics 1 to 5 mm across. The orientation and distribution of clasts suggests a vent source to the west. The matrix is of a rhyolitic origin.

Younger basalts overlay all the units mentioned above. Two types are distinguished: one group occurs below the Cinco Minas vein. They overlay the rhyolite northeast of El Capizayo (location not known) and have a fine grained texture. Petrographic analysis indicates that it is a porphyritic basalt containing hornblende and enstatite. Their stratigraphic position suggests that they were deposited early in the volcanic succession and possibly are part of a bimodal suite which includes structure

Faults play an important role in the emplacement of the Cinco Minas vein and others in the area. The fault containing Cinco Minas is part of the large feature described earlier, related to graben development in response to tectonics. The Cinco Minas vein system occupies a major fault that trends 1350 AZ and dips from 600 to 700 to the southwest.

At the start of the major tectonic regime in the early Tertiary, right-lateral movement predominated over a great but unknown distance. The regional geology map sheet for this area shows the faults to have left-lateral movement, but this is unlikely as the relative movement of the two tectonic plates here is right-lateral.

At Cinco Minas shearing occurred over a zone many metres wide. Rhyolite dykes subsequently intruded the fractured zone    followed by local quartz barren of sulphides. Later quartz permeated much of the shear zone and adjacent wall rock as small shearing movements continued (Black, 1981). Sulphide emplacement increased and shearing diminished greatly, causing tensional forces to build and subsequent oblique movement of blocks. More sulphides were emplaced during this phase followed by a cessation of shear forces. This was followed by post-mineral normal faulting when a large graben was formed to the southwest. Vertical displacement of 10's to possibly 100's of metres took place; there was some minor late stage quartz veining accompanying this event. This post-mineral faulting is evident as slickensides on the Cinco Minas vein.

 

Deposit Type

Cinco Minas is a classic Tertiary age, volcanic-hosted, low sulphidation, epithermal, precious metal deposit. The vein, which is up to about 30 metres wide, has had at least 3 quartz veining/metal precipitating events noted. The size and dimensions of the Cinco Minas vein varies somewhat from report to report. An unknown author (signature not discernible) in a 1954 report describes the vein as being about 3 km long and about 20 feet wide at the Cinco Minas mine (El Abra workings?), yet at the Dos Juanes crosscut he describes the Cinco Minas vein as being 100 feet wide and the Dos Juanes vein as being somewhat narrower and separated from Cinco Minas by about 100 feet of country rock.

Northwest of Dos Juanes the San Juan vein continues as the El Aguila vein. He further suggests that the Cinco Minas and San Juan veins are one. Wisser (1930) states that the Cinco Minas vein lies in the footwall of the regional fault zone, paralleling it in strike in dip (this would be the high grade shoot portion of the vein, as seen at El Abra). It is a shatter zone with some displacement, and the vein is merely a mineralized member of the group of fractures making up the fault zone.

The vein is not a simple fissure; it seldom shows clean-cut walls except where a fault of the regional fault zone forms its hanging wall. Fracturing varies from mere sheeting to intense shattering and crushing. Vein matter may consist of thin irregular stringers or be present in large amounts, cementing jumbled andesite fragments; in places a solid vein several metres wide occurs.  The footwall shows the least shattering, consisting of closely-spaced stringers or massive quartz with or without calcite. Shattering increases towards the hanging wall, and the vein consists of andesite and quartz fragments cemented by quartz and calcite; calcite is usually more abundant next to the hanging wall.

Silicification of both the wallrock and included fragments is often intense. Vein textures range from coarsely crystalline to chalcedonic; the finer grained form is more common.

 

Mineralization

The veins, which have been described somewhat above, are typically epithermal with banded white to amethystine quartz which has been broken, brecciated and recemented by later quartz (Zahony, 1981). There are several episodes of sulphide deposition contemporaneous with the episodic quartz. Pyrite and chalcopyrite are the most abundant sulphides with locally abundant galena, sphalerite and black fine-grained sulphides. The latter consist of argentite, native silver, miargyrite (AgSbS2) and possibly some other silver sulphosalts +/ manganiferous minerals.

Oxidation is prevalent in all levels above the water table (Cinco Minas level at present), and supergene enrichment may in part be responsible for the silver distribution of the workings above the water table. The author observed limonites, jarosite and malachite in the upper workings (Formosa, San Pedro, El Abra adits) during our examination and tour. Fine grey to sooty-black minerals (argentite + ?) form irregular, amorphous masses or thin laminae within.

 

Appendix

Los Ricos Drill Summary

(as of November 20, 2019)

 

Los Ricos Historical Drill Summary

(as of September 13, 2019)