The Huampar project is located approximately 80 kilometres north-east of Lima, Peru and approximately 80 kilometres to the south-east of Trevali's Santander Mine in the southern portion of the Central Peruvian Polymetallic Belt. The property is comprised of 43 concessions for an aggregate total of 1,450 hectares. Access to the property is via the Carretera Central, the principal highway servicing the central Andes, a distance of 150 kilometres by road from Lima.
On May 18, 2011, the Company signed a memorandum of understanding with Nueva Condor Inc. wherein Nueva Condor agreed to grant to the Company the exclusive option to acquire all of the outstanding shares of its Peruvian subsidiary Nueva Condor S.A., 100% owner and holder of the Huampar Property for a period of four years from the date of execution of the memorandum of understanding. The Company paid US$50,000 upon signing the memorandum of understanding.
On April 04, 2014 the memorandum of understanding was superseded and replaced by a definitive Stock Purchase Agreement by which the registered owner of 100% of the shares of Nueva Condor S.A. transferred all of his shares to the Company (the "SPA").
Pursuant to the terms of the SPA, the price for the Nueva Condor shares includes: (i) the issuance of 900,000 Common Shares, (ii) a cash payment of US$350,000 to be paid in monthly installments of US$5,000 as from the date of execution of the memorandum of understanding, (iii) an amount in cash equivalent to 5% of the recognized value of the credits listed on Schedule 3 of the SPA and (iv) a 3% net smelter royalty, of which 2% may be purchased in 1% tranches for 4 years as from January 3, 2012 for payments of US$1.5 million and US$2 million.
Payments detailed in (i) and (iii) above, and a US$100,000 annual advance payment (deductible from the net smelter royalty payments), will be due upon the seller's compliance with the covenants set forth in the SPA.
To date the seller has not fully complied with the covenants, therefore payment of the consideration is not due.
History and Resources
Modern mining of several polymetallic veins began in 1956 and continued until 1991 when power shortages forced mine closure. Production initially commenced at 250 tpd and approximately 2.5 million tonnes of mineralized material was processed with an average grade of 1.6 g/t Au, 185 g/t (5.4 oz/ton) Ag, 3.8% Pb and 5.0% Zn.
Mining continued intermittently from 1997 to early 2000 at approximately 400 tpd and advanced studies examined the feasibility of increasing expansion to 800-to-1000 tpd. Mining operations closed in 2000 due to the lack of development headings and low commodity prices.
Historic production focused on the Finlandia vein system (Finlandia, Suecia, San Juan veins and their associated splays), as well as the Aurelio, Colqui and Condor Pasa veins (Table 1).
Table 1: Principal historic ore* bodies with approximate mined dimensions
| Mineralized Structure
|| Max Mined Length (m)
|| Vein Width (m)
|| Max Mined Depth (m)
| Finlandia System
| Condor Pasa System
Prior to closure, several reputable third-party geological and engineering consulting companies conducted reserve calculations on Huampar. The most recent study, conducted by MRDI Canada (now AMEC Engineering) in 1999 using a polygonal estimate method based on underground sampling of drifts, cross-cuts and raises, calculated that Huampar contained reserves* (non-NI 43-101 compliant) of 874,412 tonnes grading 209 g/t silver, 1.3 g/t gold, 3.31% lead and 3.63% zinc in addition to minor copper mineralization. Mining ceased in mineralization and the vein-hosted system remains open for expansion at depth and along strike.
*The Company cautions that the reserve estimates were prepared before the introduction of NI 43-101, and are therefore historical in nature. The Company is not treating such reserve as a current reserve or resource under NI 43-101. Investors are further cautioned that a qualified person has not yet completed sufficient work to be able to verify the historical reserve, and therefore they should not be relied upon.
The district contains numerous styles of mineralization many of which have been mined since at least Spanish colonial time, including high-grade polymetallic (precious and base metal) vein systems (Huampar, Constancia-Coricancha, Casapalca, Morococha), polymetallic carbonate replacement and skarn deposits (Poderosa, Felicidad, Casapalca, Morococha) and copper porphyries (Toromocho).
The property is located in the south-central portion of the Central Peruvian Polymetallic Belt and is underlain by a moderately folded, 200-metre-to-1-kilometre thick package of andesitic volcanic rocks of the Calipuy formation. Underlying the volcanics is an approximately 1-km thick package of strongly folded and faulted carbonates and clastic sediments. Included in this package are the Jumasha, Chulec and Santa Formation limestones, proven host sequences throughout Peru, including the Company's Santander Zn-Pb-Ag project as well as many mines within the greater Huampar district (Felicidad and Poderosa mines).
The property is transected by several large scale (plus-5-km long) ENE-trending fracture zones. Structurally controlled mineralization is primarily hosted within sub-vertical, ENE-trending vein-fault systems. Mineralized veins typically have significant strike lengths (plus-1-km) and considerable depth potential (plus-800m).
Previous exploration was limited to drifting on exposed veins and expansion of existing underground cross-cuts designed to test for and intersect (successfully) sub-parallel structures. No exploration in the modern sense has occurred on the property (geophysics, geochemistry, drilling).
The principal Finlandia system is comprised of at least five major veins of variable widths ranging from 0.2-to-2.5 metres and averaging approximately 1-metre wide over an aggregate distance of approximately 5-kilometres strike length. The Aurelio vein system, approximately 2 km north of Finlandia, is a gold and silver-rich vein system with an average width of 1 metre and a length of approximately 400 metres. The Condor Paso vein system is located some 6 km south of the Finlandia and is traceable for 2-km strike. All vein systems remain open for expansion.
Polymetallic precious and base metal mineralization is hosted in steeply dipping lateral and vertically extensive epi-mesothermal vein-fault systems. Veins show multiple (at least 7) stages of mineralization with variable sulphide mineral assemblages and gangue textures (coliform to coarse euhedral quartz). Principle minerals include coarse crystalline galena and sphalerite ± chalcopyrite and tetrahedrite. Gangue minerals are dominantly quartz ± pyrite, siderite with lesser amounts of barite, muscovite and cinnabar. Gold occurs as fine disseminations of free gold within both sulphides and quartz.
Mineralization was exploited using a combination of cut and fill and shrinkage mining methods from surface to depths ranging from 50-to-450 metres. Similar polymetallic mines in the district contain vertically continuous economic mineralization over intervals of 500-to-1000 metres suggesting good-to-excellent additional expansion potential at depth.
Historic mill feed is reported to have a moderate work index of 12-to-14. Historical metallurgical recoveries were excellent, producing quality concentrates in part due to the coarse nature of the mineralization and low pyrite content.
Huampar produced three concentrates - a gravity concentrate to recover gold, a lead-silver concentrate and a zinc concentrate. The most recently available metallurgical data may be summarized as follows (Table 2):
Table 2: Historic metallurgical recoveries - Huampar
|| Au g/t
|| Ag g/t
| ROM - 67,734 t mined
| Pb Concentrate
| Zn Concentrate
| Gravity Concentrate
| Plant Recoveries
Existing mine infrastructure includes a 600-person camp and a previously permitted 400-tonne-per-day (tpd) mineral processing plant. The 1,450-hectare land package has seen limited historic exploration and Trevali believes that there is potential to discover additional mineralization with the ultimate aim of recommencing mining operations.*
The deepest levels of the former workings are not readily accessible at present. Trevali's due diligence and assessment sampling predominately focused on surface exposures of the known vein systems and other exploration targets. Samples were collected from outcropping vein mineralization, former mineral stock-piles, tailings material, various gangue alteration assemblages and host-wallrock (Fig. 3). Assay results ranged from below detection limits to very high grade, and support the validity of historic reports and production records in addition to identifying several high priority exploration targets.
Table 3: Summary Results
N superscript indicates number of sample
|| Channel ID N
|| Width (m)
|| Ag g/t - (oz/t)
|| Au (g/t)
|| Cu (%)
|| Pb (%)
|| Zn (%)
| Aurelio Vein
|| 448.2 - (13.1)
|| Vein and wall rock
|| 88.2 - (2.6)
|| Vein and wall rock
| Aurelio Disseminated
|| 40.2 - (1.2)
|| Altered volcanics
| Aurelio Tailings
|| 307.6 - (9.0)
| Colqui Vein
|| 158.6 - (4.6)
|| Partial vein exposed in old mine working
| Finlandia Vein System
|| 154.9 - (4.5)
|| Vein exposed in old mine workings
|| 488.6 - (14.2)
|| Vein exposed in old mine workings
|| 27.1 - (0.8)
|| Veinlets and altered volcanics above workings
|| 39.8 - (1.2)
|| 92.6 - (2.7)
| Finlandia Total
|| 163.9 - (4.8)
|| 1.7 km length
|| 163.6 - (4.8)
|| 3.5 km length
| Finlandia Tailings
|| 197.9 - (5.8)
| Condor Pasa V-1
|| 75.3 - (2.2)
|| Narrow vein. Not principle structure
| Condor Pasa V-2
|| 91.7 - (2.7)
|| Vein exposed at surface
| Condor Pasa Tailings
|| 264.0 - (7.7)
Finlandia surface samples HPR-C-1 and 2 are located 1.7 kilometres east of channels HPR-C-4 and 5. Including the Colqui - Finlandia systems and channel samples HPR-C-1 through 5 and HPR-C-21 the results define an approximately 3.5-km wide zone of structurally-controlled zone of mineralization.
Aurelio surface channel sampling covered approximately 250 metres of vein strike length. The Aurelio lineament is traceable for approximately 4 km and is hosted within a large zone of strong albite-sericite-quartz-pyrite alteration that is approximately +7-km long and 1-km wide. Aurelio sampling confirmed high-grade polymetallic mineralization within the structure and further identified the potential for disseminated mineralization within the strongly altered volcanics. Based on surface mapping and historic data review the Company believes that the Aurelio vein has excellent potential for resource expansion.
Structures at Condor Pasa are not well exposed on surface consequently samples were collected from waste dumps and two smaller veins adjacent to the principal mineralized structure (Fig. 3).
Based on due diligence review of historic data and surface sampling and mapping, all mineralized structures (Finlandia, Colqui, Aurelio, Condor Pasa) are considered to have good-to-excellent potential for near term resource definition and expansion, particularly down-dip along structures.
*Where Trevali discusses exploration/expansion potential, any potential quantity and grade is conceptual in nature and there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource.
Figure 3: Simplified geological map showing the Huampar property and location of due diligence samples.