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Santa Elena is classified as a bimodal-mafic VMS deposit. This type of deposit is similar to that found in many of the major district of the Precambrian Shields of Canada, Western Australia, and Scandinavia, as well as the Urals and in the Cretaceous of Peru. The latter is comprised of the giant Tambo Grande deposits; TG1 and TG3, adjacent deposits comprising a single ore system contain a non43-101 compliant resource of over 138 MT of 1.3% Cu and 1.1% Zn. The Tambo Grande deposits are in a very similar setting to the Santa Elena occurrence, and given that both are in what appears to be an oceanic back-arc setting, this district may be a model for Santa Elena. It is important to note that VMS deposits almost always occur in districts and that their sizes are log-normally distributed.

The concessions contain 1,287.5 hectares near the north end of the Antioquia batholith, at the intersection between the San Pablo formation (Cretaceous marine sediments) located to the north, the basaltic volcanic flows located to the west, and the Antioquia batholith quartz-diorite complex to the east.

The infrastructure is excellent and includes paved road access, two hydroelectric plants within 5 km, and abundant water supply.

Geological mapping and sampling has identified 3 VMS areas of outcropping (TEM-1, TEM-2, and TEM-3) all of which coincide with historical geophysical anomalies. Several new mineralized outcrops have been located recently south of the known VMS outcrops.

Recently completed geophysical surveys have validated the historical data, as well as produced many new targets which will be drill tested.

Geology

The Santa Elena property contains several classic examples of the bimodal-mafic class of VMS deposits. The Cretaceous volcanic strata that contain the deposits are predominantly mafic, with felsic rocks only locally evident immediately adjacent to and within the sulfide zones. Virtually all sections of the drill core consist of an “ore” sequence comprised, from the stratigraphic base, of highly altered footwall mafic flows, a locally distinct but strongly altered felsic unit that has limited lateral extent, a well-defined footwall stringer zone consisting of pyrrhotite-chalcopyrite mineralization, several zones of massive sulfide, each separated by 0.5 to 3 meters of felsic volcanic material or, at the upper levels, chert, and a capping cherty exhalite. The hanging wall rocks to the sequence are distinctly silica-veined, but otherwise unaltered basalt. Alteration is easily mapped using the assay data; the entire footwall is Na and Ca depleted, and consistently enriched in K and Ba. This means that feldspar has been largely destroyed by footwall alteration, and replaced by sericite.

Mineralization

The distributions of copper relative to zinc are totally typical of most VMS systems, with chalcopyrite-pyrrhotite in the footwall stringers and at the base of the massive sulfides, and sphalerite-pyrite forming the upper part of the system. The sulfide deposition has occurred in at least three distinct intervals, so that stringer-type sulfides overlie the massive sulfides and intervening felsic volcanic and chert units, causing the compositions to “telescope”. Gold and silver distributions are strongly correlated with copper, a feature typical of a high-temperature deep-water (non-boiling) VMS system.

TEM-1 (Azufral), TEM-2 (Arroyo), and TEM-3 VMS Outcrops

 

TEM-1 Target

These discontinuous mineralized outcrops occur over a strike length of approximately 70 meters, and are up to 11 meters in true thickness. At total of 94 channel samples have been collected from the TEM-1 outcrops – 46 horizontal channel samples and 48 vertical channel samples. Results returned averaged grades of 2.62% copper, with 0.15 g/t gold, 0.38% zinc, and 5.1 g/t silver.

TEM-2 Target

Similar to the TEM-1 outcrop, with an approximate strike length of 20 meters, an 8 meter thickness and southerly dip of 45 degrees – the TEM-2 target is located 500 meters south of the TEM-1 target. Average grade of channel samples are 1.82% Cu, with 0.10 g/t Au, 0.11% Zn and 9.8 g/t Ag.

TEM-3 Target

The TEM-3 outcrop was discovered by company geologists and is a small massive sulfide outcrop situated directly between the TEM-1 and TEM-2 outcrops. Channel sampling returned values of 4.31% Cu, with 0.06 g/t Au, 0.12% Zn and 16.8 g/t Ag.

Summary of Geophysics

A surface geophysical TEM survey at 50 m intervals was conducted on a selected area of the property where outcropping mineralization was visible. The survey was conducted by VAL D’OR Geophysics for Noranda Mining and Exploration Inc in 1996-1997.

The historical ground geophysics had identified 4 strong conductors with good vertical extent, 3 of which are coincident with the TEM-1, TEM-2, and TEM-3 outcrops.

An airborne magnetometer and radiometric survey was flown in August 2011. These surveys were followed-up by ground based induced polarization and resistivity surveys. These surveys validated the original survey data, and also generated several new drill targets which are currently being drill tested.

The company plans to initiate down-hole TEM surveys along with additional induced polarization and resistivity surveys in January 2012.

Santa Elena Exploration Tunnel

The Exploration Tunnel has a length of over 120 meters and is located 300 meters due east of the large TEM-1 outcrops, and is on a direct east-west strike with the TEM-1 anomaly. These underground workings exposed intensely altered zones, sheared and brecciated mineralization, along with massive sulfides. Sampling of the Santa Elena exploration tunnel returned values of 1.33% copper, 0.22% zinc, 0.07 g/t gold, and 6.7 g/t silver over a length of 11 meters. One individual sample returned 5.14% copper, 0.23% zinc, 0.24 g/t gold, and 23 g/t silver.

The mineralization within both the tunnel and TEM-1 outcrops exhibit the same dip and strike, and it is believed that both occurrences could be part of the same ore zone. Drilling is currently focused on testing the continuity of the massive sulfide mineralization.

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