Las Minas

Las Minas is a skarn and epithermal gold-silver-copper property located in the north-central region of the State of Veracruz approximately 270 kilometres east of Mexico City. Access is via a paved highway and a rural 15 km road connecting the highway to the village of Las Minas. The project is comprised of six mineral concessions covering approximately 1,616 hectares in the heart of the historic Las Minas mining district. A hydro-electric power station is located nearby and water is readily available.

Previous Mining and Exploration

Mining at Las Minas dates back to Aztec period when the indigenous people in the area mined gold to pay taxes to the Aztec empire. The district was exploited from Spanish Colonial times until the Mexican Revolution. Thirty small-scale, high-grade mines operated in the district between 1870 and 1910. High-grade ore shipped from Las Minas to smelters in Mexico and elsewhere graded from 15 to 30 percent copper and 20 to 40 grams per tonne gold.* The area was essentially idle from 1910 until the 1970's when the Consejo De Recursos Minerales (CRM), a mining division of the Mexican government, evaluated the area. Their mapping and sampling concluded that the central part of the district (controlled by Source) has a potential of 80 million tonnes of mineralized skarn** grading 1.14 g/t Au and o.44% Cu or 1.89 g/t Au Eq(1), which, while relevant from an exploration perspective, is not 43-101 compliant and cannot be relied upon.

In February of 1996, International Northair optioned the concessions and carried out extensive sampling and mapping. Results from 583 samples identified several large zones grading 1.0 to 5.0 g/t gold and 0.5 to 2.0% copper. The total average from all of the samples was 1.70 g/t gold and 0.39% copper or 2.37 g/t Au Eq. All samples were taken a 2 to 3 metre channels from outcrops or mine workings.

In 2007, Chesapeake Gold Corp acquired the concessions and carried out preliminary exploration and sampling. The reconnaissance evaluation identified 25 alteration zones hosting mainly skarn mineralization with significant gold with associated silver and copper mineralization.

Geology and Mineralization

The district lies within the neo-volcanic province, which is aligned along a major east-west crustal break that bisects the country. In the Las Minas region, younger ash flow tuffs overlie a Tertiary-aged muti-phase granitic to dioritic batholith that intrudes Cretaceous-aged limestone. The main intrusive complex is more than 10 kilometres in diameter.

A number of mineralized deposits are located within the concessions and include both metasomatic and hydrothermal deposits. The metasomatic deposits are located at the contact of the granitic and granodiortic rocks in endo and exoskarn exposed along a two kilometre zone at the base of the stream beds. Mineralization in the exoskarn consists of gold, native copper, chalcopyrite, bornite pyrrhotite, pyrite, magnetite and hematite. Mineralization is localized in zones along the contact between the overlying limestones and intrusive rocks. Gold mineralization is associated with sulfide development, and commonly runs from 1 to 5 g/t with locally higher values over 30 g/t. Native copper has been observed in the core, and copper grades can range up to 5.0%. Porphyry and epithermal occurrences are also present in the district.

Several hydrothermal vein type deposits exist on the La Miquita concession in the northern part of the property The veins vary from 0.50 to 2.20 metres in width with lengths of 100 to 300 metres and dip at 70 degrees. The mineralization consists of mainly free gold associated with chalcopyrite, pyrite, pyrrhotite, arsenopyrite and iron oxides in a gangue of quartz and calcite

Project Potential

The mineral potential of the property is considered excellent for discovery of lower-grade bulk-tonnage skarn mineralization as well higher-grade epithermal vein systems. CRM estimated that the central part of the district has the potential of 80 million tonnes of skarn, which, while relevant from an exploration perspective, is not a 43-101 compliant estimate and cannot be relied upon.

To date, Source has explored six significant mineralized areas covering an overall area measuring approximately 1.8-by-1.5 kilometers or 2.70 square kilometers (270 hectares). The target areas consist of mineralized skarn zones exposed at the contact of a granodiorite intrusive and the overlying limestone. The intrusive is outlined by historical mine workings and measures more than 10 kilometers in diameter.

Exploration Programs and Recent Drill Results

In 2011 and 2012, Source Exploration carried out a geological mapping and sampling program over several of the concessions including Pepe, Pepe Tres and La Miqueta. A number of drilling targets were defined, and 8,732.60 metres of drilling were completed to test high-priority gold-silver and copper targets. A particular emphasis of the program was on the bulk- tonnage potential of the mineralized skarn zones.

Drilling along strike of the Eldorado corridor mineralized skarn zone outlined significant gold- silver and copper mineralization over a strike distance in excess of 800 metres. Hole LM-11-SC-36 intersected 82 metres grading 1.08 g/t gold, 2.54 g/t silver and 0.40% copper or 1.80 g/t Au Eq contained within a broad 244.9 metre intersection grading 0.75 g/t Au and 0.35% Cu or 1.72 g/t Au Eq. This hole also contained high grade intercepts within the wider mineralized interval including 5.90 g/t gold, 65.1 g/t silver and 5.35% copper or 16.8 g/t Au Eq over 2.0 metres.

In 2013 the company undertook a ground based magnetic and Induced Polarization (IP) geophysical surveys. The high-resolution magnetic survey was carried out over an area of 13.5km2 that encompassed several historical mines as well as areas of recent diamond drilling. The survey delineated a large magnetic high anomaly measuring approximately 1,000 metres by 750 metres located adjacent to the underground workings of the historical San Jose de Oro gold mine.

The Survey also identified two significant anomalies proximal to high-grade mineralization intersected by diamond drilling. An anomaly located immediately to the east of diamond drill hole LM-11-SC-45 measured 1,300 metres by 700 metres. Diamond drill hole LM-11-SC-45 graded 15.89 g/t Au, 12.98 g/t Au, 25.4 g/t Ag and 4.0% Cu or 44.51 g/t Au Eq over 4.0 metres. A second anomaly located a further 100 metres to the east measured 500 metres by 500 metres.

The 2014, drilling programs focused on the Santa Cruz area, which forms parts of the El Dorado corridor skarn zone. Drilling was also carried out to link the Eldorado zone with the Juan Bran Zone.

Drilling at Santa Cruz intersected long near surface intervals of high-grade gold, silver and copper mineralization, including 3.57 grams/ tonne Au Eq(1) over 99.0 metres in diamond drill hole LM-14-SC-08. A higher grade interval assaying 24.11 grams/tonne Au Eq is contained within the wider intersection.

Highlights include:

  • 3.57 g/t Au Eq over 99.0 metres in LM-14-SC-08, including
    • 7.42 g/t Au Eq over 39.0 metres , including
      • 24.11 g/t Au Eq over 9.60 metres
  • 2.24 g/t Au Eq over 87.0 metres in LM-14-SC-07 , including
    • 3.13 g/t Au Eq over 49.0 metres, including
      • 4.36 g/t Au Eq over 25.0 metres
  • 3.00 g/t Au Eq over 29.0 metres in LM-14-SC- 09 , including
    • 5.00 g/t Au Eq over 15.0 metres
  • 1.90 g/t Au Eq over 77.0 metres in LM-14-SC-10, including
    • 5.1 g/t over 19.0 metres, including
      • 6.2 g/t over 15.0 metres

Drilling carried out in mid-2014 also linked the Juan Bran and El Dorado zones. The Juan Bran target is located 300 metres north of Santa Cruz. Step-out holes at Juan Bran intersected skarn mineralization over an area measuring 350 metres by 250 metres and the system remains open for expansion.

Highlights include:

  • 1.55 g/t Au Eq over 42.5 metres in LM-14-JB-01
  • 4.45 g/t Au Eq over 6.0 metres in LM-14-JB-02 Upper Zone including
    • 12.67 g/t Au Eq over 2.0 metres, and 2.34 g/t Au Eq over 20.1 metres LM-14-JB-02 Lower Zone, including
    • 3.10 g/t Au Eq over 15.1 metres
  • 1.82 g/t Au Eq over 10.0 metres in LM-14-JB-04

(1) Gold equivalent (Au Eq) calculations use metal prices of US $1200/oz. for gold, US $19.00/oz for silver and US $3.00/lb for copper. No adjustments have been made for potential relative differences in metal recoveries.

Au Eq g/t equals Au g/t + (ag g/t x 0.016) + (Cu% x1.71)

All intervals are reported as down-hole lengths and additional information is required to determine true widths. Assays are uncut, length weighted average values.

Diamond drilling programs at Las Minas have defined a mineralized skarn zone over a continuous strike length of approximately 840 metres and about 400 metres down-dip, with drill intercepts of the mineralized skarn zone varying from 20.0 to 244.9 metres in thickness. There is evidence that the mineralization outlined to date is part of a much larger intrusive system that spans over 10 km.

Current Focus

In 2015, Source will focus on step-out and infill drilling at the Santa Cruz zone as well as exploration drilling at the Juan Bran and Nopaltepec targets to outline a 43-101 compliant resource. The company will also be completing geological mapping, sampling, and target definition across the property.

QA/QC Program

The diamond drilling program was conducted under the supervision of Mr.Sonny Bernales, P.Geo. The Company has implemented and adheres to a strict Quality Assurance/Quality Control program which includes inserting mineralized standards and blanks into the sample stream, 1 for about every 10 samples. The standards and blanks were obtained from CDN Resource Laboratories Ltd. of Langley, BC, Canada. Each sample bag is properly sealed and kept in a secured, restricted storage place prior to shipping to the lab. Samples are shipped directly by Source or picked-up by the lab vehicle with chain of custody/sample submittal signed and dated. The Company sends it samples to SGS Mineral Services (ISO/IEC 17025) at Durango, Mexico, an accredited laboratory.

*The Engineering and Mining Journal, Mines of Zomelahuacan, Veracruz, Mexico, December 19, 1910.

**Cosejo De Recursos Minerales Gerencia Regional Zona Sur Officina Veracruz, Proyecto Tatatila, Ver.

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