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Overview of El Guayabo Gold Project area – Ecuador

Ecuador

The Andean Copper Belt contains multiple Tier 1 copper/gold projects and half the worlds copper resources. Ecuador is emerging as host to world class copper and gold deposits and one of the most prospective and under-explored portions of the Andean Copper Belt. A number of majors have made significant commitments to invest in Ecuador including BHP, Anglo, FMG, Hancock and Newcrest.

El Guayabo Gold Project area

The El Guayabo Project is located in El Oro Provence, southern Ecuador, and comprises seven contiguous tenements, the El Guaybo, El Guaybo 2, Colorado V, and Cerro Pelado 1, 2, and 3 tenements. The Company has drilled thirteen of fifteen regionally significant Au-soil anomalies with over 500 metres of mineralisation intersected in 7 anomalies, confirming the potential for a major bulk gold system at the El Guayabo Project.

The greater El Guayabo Gold Project area comprises the following concessions:

  • El Guayabo concession (281 Ha) – 100% owned:
    Prior to CEL the project was last drilled by Newmont Mining in 1995 and 1997 targeting gold in hydrothermal breccias which demonstrated potential to host significant gold and associated copper and silver mineralisation. Results from CEL’s maiden drill program included 257.8m at 1.4 g/t AuEq including 53.7m at 5.3 g/t AuEq and 309.8m at 0.7 g/t AuEq including 202.1m at 0.8 g/t AuEq and confirmed continuous mineralisation over 900 metres strike.
  • Colorado V concession (2331 Ha) – earning 50%:
    adjoins and has the same geology as the El Guayabo Project. The Geology comprises a metamorphic basement intruded by intermediate alkaline intrusives which range in age from 40 – 10 Ma (million years age). The intrusions are commonly overprinted by late porphyry dykes and intrusion breccia suggesting deeper, evolving magmatic systems are feeding shallower systems. The first drill holes by the Company at Colorado V, confirmed two significant Au-Cu-Ag-Mo discoveries. Results included 528.7m at 0.5 g/t AuEq from surface to the end of the hole including 397.1m at 0.6 g/t AuEq and 570.0m at 0.4 g/t AuEq from surface to the end of the hole including 306.0m at 0.5 g/t AuEq.
  • El Guayabo 2 concession (957 Ha) – earning 80% with option to move to 100%:
    has the same and continuous geology as CEL’s adjoining El Guayabo and Colorado V tenements which are believed to contain a “Low Sulphide” porphyry gold copper system.” Limited historical exploration has been undertaken on the tenement, with the work that has been done undertaken by local groups that targeted high-grade gold. Historical exploration reports record gold mineralisation in intrusive rocks in outcrop.
  • Cerro Pelado 1, 2 and 3 concessions (64 Ha combined) – earning 80% with option to move to 100%

Figure 1 – Showing the Company’s concessions which comprise the El Guayabo Project, Ecuador

Initial Mineral Resource Estimate (“MRE”)

The Company has reported a first MRE, in accordance with the JORC (2012), of 4.5 million ounce gold-equivalent. The MRE is located almost entirely on the Company’s 100% owned El Guayabo concession with less than 10% of the MRE located on the Cerro Pelado concession

The MRE was based on 34 drill holes, for 22,572 metres, from the Company’s Phase 1 and 2 diamond core drill program at its 100% owned El Guayabo concession. It contains a discrete higher-grade component comprising:

  • 1.5 Moz at 1.0 g/t AuEq1 – 45.1 Mt at 0.8 g/t Au, 3.8 g/t Ag, 0.12% Cu, 8.0ppm Mo (0.65 g/t AuEq cut-off)
  • 1.0 Moz at 1.2 g/t AuEq1 – 26.4 Mt at 0.9 g/t Au, 4.6 g/t Ag, 0.16% Cu, 7.0ppm Mo (0.8 g/t AuEq cut-off)
  • 0.6 Moz at 1.5 g/t AuEq1 – 13.1 Mt at 1.1 g/t Au, 6.2 g/t Ag, 0.23% Cu, 6.5ppm Mo (1.0 g/t AuEq cut-off)

The initial resource drilling program, and resultant MRE, focused primarily on the GY-A and GY-B anomalies on the Company’s 100% owned El Guayabo concession. Mineralisation remains open in both directions along strike and at depth at both GY-A and GY-B and there is clear potential for the MRE to grow significantly via additional drilling on these two anomalies.

Table 1 – El Guayabo Interim MRE

Domain Category Mt Au
(g/t)		 Ag
(g/t)		 Cu
(%)		 Mo
(ppm)		 AuEq1
(g/t)		 AuEq1
(Mozs)
US$1800 optimised shell
> 0.3 g/t AuEq1		 Inferred 212.2 0.36 2.8 0.07 6.5 0.5 3.4
Below US$1800 shell >0.4 g/t AuEq1 Inferred 56.5 0.46 1.8 0.07 7.5 0.59 1.1
Total Inferred 268.7 0.38 2.6 0.07 7.2 0.52 4.5

Note: Some rounding errors may be present

1 Gold Equivalent (AuEq) values – Requirements under the JORC Code

  • Assumed commodity prices for the calculation of AuEq is Au US$1800 Oz, Ag US$22 Oz, Cu US$9,000/t, Mo US$44,080/t
  • Metallurgical recoveries are estimated to be Au (85%), Ag (60%), Cu (85%) Mo (50%) across all ore types (see JORC Table 1 Section 3 Metallurgical assumptions) based on metallurgical test work.
  • The formula used: AuEq (g/t) = Au (g/t) + [Ag (g/t) x 0.012222] + [Cu (%) x 1.555] + [Mo (%) x 4.480026]
  • CEL confirms that it is the Company’s opinion that all the elements included in the metal equivalents calculation have a reasonable potential to be recovered and sold.

Table 2 – El Guayabo Interim MRE at various cut-off grades

Cut-off
(g/t AuEq1)		 t Au
(g/t)		 Ag
(g/t)		 Cu
(%)		 Mo
(%)		 AuEq1
(g/t)		 AuEq1
(oz)
0.2 450,477,303 0.3 2.2 0.06 6.3 0.42 6,011,670
0.25 361,372,832 0.33 2.4 0.07 6.3 0.46 5,384,520
0.3 268,733,011 0.38 2.6 0.07 7.2 0.52 4,483,435
0.35 203,701,681 0.43 2.7 0.08 7.3 0.58 3,816,672
0.4 163,925,581 0.48 2.8 0.08 6.7 0.64 3,351,283
0.45 119,827,891 0.53 3.1 0.09 7.4 0.71 2,721,294
0.5 91,356,720 0.59 3.3 0.1 7.3 0.78 2,288,199
0.55 70,319,340 0.65 3.4 0.11 7.6 0.86 1,934,466
0.6 55,271,580 0.72 3.6 0.12 8 0.93 1,649,860
0.65 45,088,680 0.77 3.8 0.12 8 1 1,452,225
0.7 37,690,380 0.82 4 0.13 7.8 1.1 1,281,627
0.75 31,747,170 0.86 4.3 0.14 7.8 1.1 1,149,427
0.8 26,434,590 0.91 4.6 0.16 7 1.2 1,013,656
0.85 21,924,630 0.95 4.9 0.17 7 1.3 891,349
0.9 18,555,810 0.99 5.3 0.19 7.2 1.3 796,251
0.95 15,631,980 1.03 5.8 0.21 6.5 1.4 711,302
1 13,150,410 1.08 6.2 0.23 6.5 1.5 631,332

Location and Access

The El Guayabo Project is located within the El Oro Province of southern Ecuador, 35 Kilometers southeast of the port city of Machala, Ecuador´s fourth largest city and the capital of El Oro Province. Machala city lies on the Pan-American Highway linking Guayaquil to Lima in Peru. The port of Puerto Bolivar, a deepwater commercial port, Is located 9 km to the west of Machala.

Access to the project is via paved roads 30 kilometres from Machala to Torata, a town of approximately 2000 people where the Company has its exploration office and accommodation for all staff. Then approximately 5 kilometres by gravel roads. The project is coastal at an elevation of less than 1000 metres and is covered by a mix of pasture with some secondary regrowth forest. Exploration conditions are excellent with field exploration possible all year round as is exploration drilling 24 hours a day. The project has power, water and internet coverage to site.

Geology and Mineralisation

The El Guayabo project geology comprises a metamorphic basement (El Oro Metamorphic Complex) of Cretaceous age intruded by nested intermediate alkaline intrusives which are Tertiary in age from 40 – 10 Ma (million years). The nested intrusions are commonly intruded by later mineralized intrusions, porphyry dykes and intrusive breccias of late Oligocene to Miocene age, suggesting deeper, evolving magmatic systems are feeding shallower systems.

The Project contains a “Low Sulphide” porphyry gold copper system. The Au-Ag-Cu-Mo mineralisation in the El Guayabo concession is associated with mineralized diorite intrusions exhibiting local porphyry stock work veining and associated intrusive breccias that are structurally controlled on a dominant NE/SW trend and many times on the intersection of NW/SE secondary trend. The Colorado V concession which is approximately 750 metres deeper in the system contains typical porphyry style mineralisation and potassic alteration.

Gold and Copper soil geochemistry vectors the subsurface mineralisation in El Guayabo favourably as it has at the Cangrejos deposit. Soil geochemistry conducted by the Company produced 15 regionally significant Au-Cu soil anomalies. Exploration drilling of 13 of the soil anomalies has been completed to date, all holes intersecting mineralisation. Seven of these 13 anomalies drill tested have produced significant intercepts with six of these providing mineralised intercepts of over 500 metres.

Results from these other anomalies not included in the MRE hat have produced significant drill intercepts to be targeted with a resource drilling program:

  • GY-C (450 x 450m): 805.3m at 0.6 g/t AuEq including 231.2m at 1.5 g/t AuEq
  • CV-A (900 x 450m): 528.7m at 0.5 g/t AuEq including 397.1m at 0.6 g/t AuEq
  • CV-B (800 x 400m): 570.0m at 0.4 g/t AuEq including 307.0m at 0.5 g/t AuEq
  • CP-A (300 x 300m): 778.2m at 0.3 g/t AuEq including 171.3m & 150.8m at 0.5 g/t AuEq
  • GY-D (400 x 300m): 311.7m at 0.3 g/t AuEq including 56.0m at 0.6 g/t AuEq