Mexico Properties

• 2,002 hectares, direct staking, 100% title
• Epithermal veins, silver, gold, zinc, lead
• 183 km NE of Durango, Durango State
  Neighboring claims held by Pan American Silver
• Excellent infrastructure, power, water, services
• Canasil geologic mapping and sampling completed Nov. 2005
• Identified 6 veins over an area of 2,500m x 750m
• Surface samples up to 635 g/t Ag, 9.74 g/t Au, 2.46% Cu, 20.1% Pb
• Trenching and drilling required to test vein system

Location, access and infrastructure

The Sandra and Nora claims are located 183 km northeast of the city of Durango and 40 km north of the community of Tepehuanes, in Durango State, Mexico. The property is located within easy access from Canasil’s operating base in Durango, with excellent infrastructure provided by paved roads (leading directly on to the property), power lines and water access in the district. The property was acquired through direct staking of claims and the Company holds 100% title.

Geology

The Sandra property hosts a prominent vein system, with preliminary surface samples returning encouraging gold and silver values, up to 686 g/t silver and 10.93 g/t gold. The mineralisation consists of low sulphidation veins hosting silver, gold, zinc, copper and lead, possibly in a transition between epithermal and mesothermal formations. The host rocks are composed of andesites, rhyolites and intrusive bodies, possibly of andesitic composition.

Surface Sampling and geological mapping – Sept/Oct 2005  

A total of 120 samples were collected, including rock, vein and silt samples to investigate the mineralized structures observed on the Sandra I and Sandra II claims. The geological structure is typical of the Sierra Madre Occidental region, with Lower Volcanic Group sequence, composed of andesites, agglomerates and breccias, uncomformably overlain by the Upper Volcanic Group sequence, composed mainly of ignimbrites. Acidic dykes and porphyritic andesite form intrusions in these sequences.

The principal Maria Fernanda vein can be traced for 570 metres along strike from east to west, where it splits in two branches, and continues for a further 220 metres. Four other veins, the Sandra, Nora, Barite and Encino veins, outcrop over short distances to the east and west of the Maria Fernanda vein. The presumed extensions of these veins appear to be covered by overburden. The vein system observed on the Sandra project during this sampling program extends over an area of approximately 2,000 metres by 750 metres.

The vein outcrops at surface are relatively narrow, between 0.15 to 1.5 metres, although floats observed around the central part of the Maria Fernanda vein indicate wider widths. The mineralogy consists of argentite, native silver, electrum, sphalerite, galena and chalcopyrite. There is supergene enrichment consisting of malachite and azurite with small flakes of native silver. Gangue material is made up of quartz, calcite and chlorite. Of particular interest is the area around the Encino vein, which is covered by overburden. The mineralized zone sampled was observed in strongly altered bedrock, and returned 57.4 g/t silver over 7 metres. The table below lists the results of the surface sampling program:

Trenching Program – March 2006

Trench sampling confirmed silver and gold mineralization observed in earlier surface samples from the Barite, Maria Fernanda, and Encino veins. Assay results returned silver grades of up to 888 g/t (25.9 oz/t) silver over 0.7 metres at the Barite vein, and up to 9.95 g/t (0.29 oz/t) gold and 365 g/t (10.65 oz/t) silver over 0.5 metres at the Maria Fernanda vein, where trench samples indicate consistent silver/gold mineralization over a strike length of approximately 300 metres.

These results now confirm and define targets for drilling at the Sandra project in order to explore extensions of these veins along strike and at depth. The silver and gold grades observed in samples taken across the entire width of the mineralized structures are encouraging because they confirm the high grades seen in the earlier surface sampling program.  

The mineralized veins and structures identified by the earlier geologic mapping and surface sampling program (announced on November 2, 2005) were tested by trenches cut to expose the vein mineralization at approximately 25 - 50 metre intervals, depending on access and terrain. Samples were taken across the mineralized vein, the hanging wall and the footwall for analysis and interpretation. The results from samples taken from the Barite, Maria Fernanda, and Encino veins are presented below:

Barite Vein:
Two trenches, separated by a distance of approximately 40 metres, cut the Barite vein with the following results. The mineralized widths and high silver grades observed are very encouraging for future drilling to test this structure at depth.

Maria Fernanda Vein:
While the average width of the vein cut by the trenches was relatively narrow (0.30 to 1.0 metres), assays returned significant silver/gold mineralization over a strike length of over 300 metres. These results indicate that the Maria Fernanda vein is a strong mineralized structure carrying silver and gold, and drill testing will be required to test the width of the vein, grades and strike length at depth.

Encino Vein:
The Encino vein structure is buried under 2 –5 metres of overburden. Initial sampling of this structure returned silver values up to 113 g/t (3.30 oz/t) silver over 4.7 metres. The trenches cut to intersect the Encino vein did not reach the vein due to the depth of the overburden. However the exposed alteration zone confirmed the wide structure observed earlier, and returned anomalous silver values. The Encino structure shows potential for a wide, and possibly large, mineralized structure with lower silver grades than those observed at the Maria Fernanda and Barite veins. Drilling will be required to explore this structure below the overburden cover.

Two later check samples from an exposed section of the Encino vein returned the following values:

The strong mineralized structures identified by the earlier geologic mapping and surface sampling program, and now confirmed by the trenching program, have defined drill targets for future exploration at the Sandra project.