PROJECT UPDATE

Karouni Project - (Troy 100%)

Recent Quarterly Results

  • In mid–May, Diamond Core drilling with 2 rigs recommenced focused on Resource Infill at the Smarts Underground Inferred Resource. A limited number of assays have been received from the 12 holes completed including: 3m at 6.11g/t gold; 4m at 5.52g/t gold; 2m at 4.05g/t gold and 5m at 2.86g/t gold. Drilling is continuing.

Smarts Deeps Resource Infill Drill Collar Plan

  • Initial brownfields drilling will focus on nearby structures parallel to the Smarts-Hicks Corridor. The first two targets include:
    • coincident magnetic and soil anomalies with a best channel sample of 2m at 3.2g/t gold and reconnaissance RC drill intercept of 3m at 5.08g/t gold; and
    • a structural target that had limited reconnaissance drilling completed by Azimuth that included 2m at 185.66g/t gold; 1m at 12.82g/t gold; 1m at 9.78g/t gold and 1m at 7.08g/t gold.
  • Both targets will be drilled during the September quarter.

Introduction

The Karouni Project formally known as the West Omai Project is centred at 5º37’N and 59º05’W in the central-northern portion of Guyana.  The Project lies approximately 180km south-southwest of Georgetown.  The Karouni Project covers an aggregate area of 113,581 hectares; comprising granted small, medium and large scale tenements west of the Essequibo River

The Karouni Project is dominated by gently undulating terrain at elevations ranging from 50m to 100m above sea level.  The area is drained by a dendritic network of moderately incised small streams and creeks.  The Project area is veneered entirely by tropical lowland forest with the canopy height ranging from approximately 20m to 50m.  Aside from logging tracks, the forest cover has essentially been preserved by very selective logging practices.

Tenements
The Karouni Project tenements cover an aggregate area of 270,706 acres (113,581ha), granting the holders the right to explore for gold or gold and diamonds. The tenements have been acquired by either direct grant to the Company (Pharsalus Gold) (25,990 acres/10,517ha) or by contractual agreements with tenement holders (254,668 acres/103,064ha). Apart from the Kaburi Agreement (29,143 acres/11,794ha), which provides for the Company to earn a 90% interest, all other vendor agreements provide the Company with the right to obtain an ultimate interest of 100%.

The Karouni Project comprises a single (large scale) mining licence, 94 (small scale) claim licences, 220 (medium scale) prospecting and mining permits, and 6 (large scale) Prospecting Licences. All licences, permits and claims are granted for either gold or gold and diamonds. The (large scale) prospecting licences include three licences won by the Company (Pharsalus Gold) at open auction on 22 November 2007 (GS14: P-18, P-19 and P-20) which are owned 100% by the Company.

Property Geology
Although partially obscured by a veneer of Tertiary to Holocene sedimentary cover, the basement geology of the Karouni Project is dominated by west-northwest trending greenstone belts of the Palaeoproterozoic Barama-Mazaruni Supergroup, interspersed with extensive granitoid batholiths also of Trans-Amazonian age.

The northern tenements straddle the northeast limb of an interpreted shallowly plunging, northwest trending anticline (see Figure below).  The core of the anticline is occupied by relatively undeformed syntectonic granitoids, notably granodiorite and monzonite, around which is wrapped greenstone stratigraphy.  The greenstones locally comprise a basal succession of high magnesian basalts, tholeiitic basalts and andesites, which are locally intruded by a felsic to intermediate porphyry, overlain by a succession of intermediate volcanoclastics and sediments, incorporating more persistent carbonaceous shale horizons.  This stratigraphy reasonably is consistent with that recorded at the Omai Mine, 35km to the southeast.

The greenstone succession is variously metamorphosed to upper greenschist facies, increasing to amphibolite facies along the granite contact. The basement is intruded by a series of northeast trending dolerite dykes of the Avanero Suite, one of which intersects mineralisation associated with the Hicks Zone immediately east of Blackwater Creek.

Much of the southwest portion of the northern tenement block, which incorporates the Hicks, Eldorado and Whitehall (Kaburi) mineralised zones, is veneered by Tertiary to Holocene sediments.  The lower cover sequence mantling the basement is less persistent and comprises a cream coloured, poorly sorted, oligomictic conglomerate of angular quartz fragments cemented by quartzose sand or arkose.  This conglomerate is un-named, but is presumed to be of Tertiary age.  It is mildly silica indurated and frequently strongly mineralised with gold where proximal to basement mineralisation.  Where exposed, the unit appears to be up to 8m in thickness.

The basal conglomerate is overlain by more persistent cover of the Corentyne Group, more specifically, the Pleistocene to Oligocene White Sand (or Berbice) Formation.  As the name suggests, the White Sand Formation comprises distinctively unconsolidated clean white sand of littoral or shallow marine origin that veneers much of the coastal plain of Guyana.  The unmineralised White Sand Formation ranges up to 40m in thickness and obscures much of the basement geology.

All surface “bedrock” in the area is typically altered to saprolite to depths of several metres to several tens of metres (see Photo below).  The stratigraphy is locally overlain by unconsolidated marine and deltaic sands plus clays of the Cretaceous-Tertiary Berbice Formation.

   


Mineralisation

Primary gold mineralisation is exposed at several localities within the Karouni Project, the most notable being the Hicks, Smarts and Larken Zones along the northern extremity of the Project (see Figures below).  Here the White Sand Formation cover has been removed by erosion to expose the underlying mineralised Palaeoproterozoic Greenstone successions of the Trans-Amazonian Barama-Mazaruni Group.  Extensive superficial cover of White Sand Formation within the central and south portions of the project tenements masks the basement lithology and would conceal any gold mineralisation.  The acquisition and evaluation of airborne geophysical data has however indicated that the Barama-Mazaruni Greenstone Belts and associated syntectonic intrusives persist at shallow depth beneath this cover.

 

Karouni Project Geophysics

Hicks Deposit
The Hicks Deposit is the southernmost deposit defined to date along Omai – Hicks – Smarts – Whitehall (Kaburi) Corridor.  Gold is hosted by a northwest trending, sub-vertical to steeply southwest dipping shear zone some 2,900m in strike length and up to 60m wide in places with average grade mineralisation of approximately 2g/t gold. Gold mineralisation at the Hicks Deposit is hosted by a northwest trending, sub-vertical to steeply southwest dipping shear zone some 2,500m in strike length and up to 60m wide in places. 

The shear has developed within basalts and andesites comprising the footwall greenstone succession along the northeast limb of a shallowly northwest plunging anticline.  Auriferous mineralisation is also noted at the contacts of porphyry-granite intrusives.  The shear is comprised of semi-continuous zones of quartz lenses and quartz-carbonate veining or brecciating.

Numerous, moderately well-defined gold-rich lenses, up to 15m wide, occur within the shear and are characterized by anomalous quartz veining, quartz flooding, shearing; chloritization, seritisation and pyritisation.  Visible gold and the majority of gold values typically occur within and along margins of quartz veins, in silicified granitic dykes, and in adjacent, pyritic, often sheared meta-andesite.  Pyrite is common at up to 3% by volume, with local, trace amounts of molybdenite, galena and sphalerite, associated with auriferous quartz veins.  Mineralisation is variously accompanied by silica-sericite-chlorite-carbonate-pyrite-tourmaline alteration, while fuchsite is developed within porphyry intrusives in contact with high magnesian basalts and along shear zones.

In general, the northwest trending mineralised shear has developed within a steeply inclined sequence of metamorphosed andesitic to basaltic volcanics, adjacent to the northwest margin of the Eldorado (granodiorite) Batholith.  The volcanic stratigraphy is cut by a multiple series of andesitic to felsic intrusive phases that precede and post-date the introduction of gold.

In 2013 Troy Infill DC drilling at the Hicks Deposit was focused on the higher grade central and southern parts of the deposit as well as a limited number of holes on the northwest extension. All of this drilling was completed within the existing Resource model and was targeted to upgrade the drilling density from 100m by 100m spacing to 50m by 50m spacing. Significant assay intervals are as shown in the figure below:

The next planned phase of work at Hicks will involve a systematic re-logging of all RC chips and Diamond Core with special attention to structural elements and lithologies particuliarly the felsic intrusive units. The re-clogging will be followed by an update of the geolopgical model and a revised estimate of the Mineral Resource.

Smarts Deposit
The Smarts Deposit was discovered in January 2011 when Azimuth used RC drilling to follow-up earlier encouraging trench results around the local workings known as ‘Smarts Pit’.  The prospect is located 4km to the northwest of the Hicks Zone.  Gold is hosted by a northwest trending, sub-vertical to steeply southwest dipping shear zone, that has been observed in drill holes for some 2,800m of strike length and up to 200m wide in places with average grade mineralisation of approximately 4g/t gold - 5g/t gold.

Exploration has identified extensive gold mineralisation at the Smarts Deposit.  Gold is hosted by a northwest trending, sub-vertical to steeply southwest dipping shear zone 2,800m in strike length and up to 60m wide.  The shear zone has developed within basalts and andesites comprising the footwall greenstone succession along the northeast limb of a shallowly northwest plunging anticline.  Auriferous mineralisation is also noted at the contacts of porphyry-granite intrusives.  The shear zone is comprised of semi-continuous zones of quartz lenses and quartz-carbonate veining or brecciation.  

Numerous, moderately well-defined gold-rich lenses, up to 15m wide, occur within the shear zone and are characterized by anomalous quartz veining, quartz flooding, shearing, chloritization, seritisation and pyritisation (see Figures and Photos below).  

Visible gold and the majority of gold values typically occur within and along margins of quartz veins, in silicified granitic dykes, and in adjacent, pyritic, often sheared meta-andesite.  Pyrite is common at up to 3% by volume associated with auriferous quartz veins.  Mineralisation is variously accompanied by silica-sericite-chlorite-carbonate-pyrite-tourmaline alteration.  In general, the northwest trending mineralised shear zone has developed within a steeply inclined sequence of metamorphosed andesitic to basaltic volcanics, adjacent to the northwest margin of the Eldorado (granodiorite) Batholith.  The volcanic stratigraphy is cut by a multiple series of andesitic to felsic intrusive phases that precede and post-date the introduction of gold.

    

All of the 2013 drilling at the Smarts Deposit was infill within the existing 2013 Azimuth Inferred Resource wireframes. The Smarts Deposit was the focus of three phases of infill drilling during 2013 that included:

  • Phase 1:  Initial Infill of 100m spaced lines to 50m drill density which allowed for the conversion of a postion of the Inferred Resource.
  • Phase 2:  A second phase of shallow RC and DC infill drilling targeting the “starter pits” Indicated Resource where drillhole density was increased to about a 25m by 25m grid.
  • Phase 3:  The last phase of infill drilling targeted the higher grade shoots identified within the Inferred Resource at depth as a potential Underground target. This drilling was a first attempt to increase drillhole density from 100m spacings to 50m spacing. This last phase of drilling was completed in late February 2014.
  • In addition, 20 Geotechnical holes (3,717m) to aid in pit design plus 6 holes (574m) for samples for Metallurgical testwork were drilled.

Phase 1 Smarts Deposit Resource infill drilling targeted the upper part of the Azimuth Inferred Resource. This drilling focussed on about 1km of the 2.5km strike length of Smarts Deposit.  The program consisted of 62 holes for a total of 8777m of drilling and included both Reverse Circulation (RC) drilling (18 Holes / 1867m) and Diamond Core (DC) drilling (44 holes / 6910m). The drilling was focussed on improving drill density and better defining the mineralisation within the main zone of the Smarts Deposit. Drilling has confirmed the grade and continuity of the mineralisation in the central portion of the deposit. Significant Diamond Core Intercepts include (See Figures below):

Significant Reverse Circulation Intercepts included:

Phase 2 Infill: RC and DC infill drilling at Smarts was focused on increasing the drill density from the existing 50m by 50m Indicated Resource grid to 25m by 25m hole spacing. Drilling was targeted shallow mineralisation with all intercepts less than 100m vertical depth. This drilling has further confirmed the continuity of mineralisation within the Smarts Deposit. Significant Results included (see Figure below):

Phase 3 Infill Drilling consisted of a series of DC holes targeted the higher grade mineralisation at depth within the Central part of the Smarts Deposit currently classified as part of the Inferred Resource. This drilling was planned to increase the drillhole density to better define continuity of the mineralisation within this interpreted shoot structure. Results to date have yielded a number of encouraging intercepts including (see Figures below):

Mineral Resource Estimates
Resource outlines were constructed using cross sectional interpretations prepared using logged geology, in particular the shear zone, and a nominal 0.25 to 0.35g/t gold cut-off grade, however, some lower grade intersections are included.  A minimum down hole intersection of 2m was used with no edge dilution and minor zones of internal dilution were included to maintain continuity of the Resource wireframes.

The LiDAR survey was used to create a topographic surface.  Geological logging was used to create weathering surfaces for the top of fresh (TOFR) and base of oxidation (BOCO) surfaces as well as a base of transported overburden surface.  A cross-cutting dolerite dyke at the Hicks Prospect was also interpreted.

All modelling and wireframing were completed using Surpac Software Version 6.3. Statistical analysis and variography were completed using Supervisor software. The estimates for the deposits used standard Surpac block models with Ordinary Kriging (OK) grade interpolation within wireframes and the models have been reported at a 1.0g/t gold cut-off.  The Mineral Resource for the Karouni Project is summarised in Table below:
 

Smarts Deposit
Karouni Project Mineral Resource Estimate (Effective Date: 29 August 2013)
Mineral Resource Estimate
  Indicated Inferred
  Tonnes Gold Gold Tonnes Gold Gold
Cut-off (t) (g/t) Au Ounces (t) (g/t) Au Ounces
0.5g/t 3,040,000 4.6 446,800 6,261,000 3.2 638,900
1.0g/t 2,914,000 4.7 442,000 5,538,000 3.5 621,000
2.0g/t 2,507,000 5.2 423,000 3,773,000 4.4 537,100
Hicks Deposit
Mineral Resource Estimate
  Indicated Inferred
  Tonnes Gold Gold Tonnes Gold Gold
Cut-off (t) (g/t) Au Ounces (t) (g/t) Au Ounces
0.5g/t       11,500,000 1.7 640,000
1.0g/t       8,652,000 2.1 571,000
2.0g/t       3,100,000 3.2 320,000
Karouni Project
Mineral Resource Estimate Summary
  Indicated Inferred
  Tonnes Gold Gold Tonnes Gold Gold
Cut-off (t) (g/t) Au Ounces (t) (g/t) Au Ounces
0.5g/t 3,040,000 4.6 446,800 17,761,000 2.2 1,278,900
1.0g/t 2,914,000 4.7 442,000 14,190,000 2.6 1,192,000
2.0g/t 2,507,000 5.2 423,000 6,873,000 3.9 857,100

Note:  Rounding errors may occur in compiled totals.

There are no known environmental, permitting, legal, title, taxation, socio-economic, marketing, political or other factors that could materially affect the Mineral Resource estimates. However, there is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the determination of additional Indicated or Measured Mineral Resources.

EAST BLOCK PROJECT SUMMARY

  • Covered Area Exploration Play 80km strike by 60km wide zone along Main Guiana Shield Regional Structure
  • This Project encompasses a massive greenfields area – virtually unexplored
  • Target Development - Early Stage Exploration
  • Aeromagnetics & Radiometrics Survey Completed
  • Limited Mapping - Sampling to date focussed  along main east-west striking regional shear
  • Limited Shallow Aircore/RC Drilling Late 2012
  • Key will be to use maganetics and existing geological and geochemical data to focus future exploration

The East Block Project is centred at 5º13’47”N and 57º42’22”W in the northern portion of Guyana 130km south of the capital, Georgetown.  The Project is presently confined by the Berbice and Demerara rivers to the east and west respectively, however application has been made to extend the permit further west, such that the western boundary will lie 4km east of, and parallel to, the Demerara River.

The East Block Project is dominated by gently undulating terrain veneered entirely by tropical forest.  Aside from logging tracks, the forest cover has essentially been preserved by very selective logging practices. The population within the Project area is limited to small Ameridian communities at Kurupukari and Orella, along with forestry workers compounds at Mabura and Kwakwani. Aside from road, river and aircraft access described above, infrastructure within the Project area is extremely limited.

Tenements
The East Block Project comprises a single Reconnaissance Permit (No.PGGS 04/07) as shown in the Table below. The Reconnaissance Permit is held 100% by Guyanese registered company, Pharsalus Inc (Pharsalus), which is a wholly-owned subsidiary of Takatu Minerals Limited. The Reconnaissance Permit, which is understood to cover the rights to precious metals and base metals only, was granted for a period of 3 years on 14 February 2007, but may be extended at the discretion of the Minister for Mines.  At anytime prior to the expiry of the Reconnaissance Permit, Pharsalus has the exclusive right to file up to 20 applications for Prospecting Permits within the existing permit area. The permit has been renewed annually and the Company has lodged an application to extend the licence for another 12 months.

The Reconnaissance Permit boundaries are defined in UTM coordinates (zones 20N and 21N 1956 Provisional South American Spheroid) and none have been surveyed or defined on the ground.  However, any of the possible 20 Prospecting Permits which may be granted subsequently will be surveyed and defined on the ground in accordance with the Mining Act.

Property Geology
Although largely obscured by Quaternary to Recent sedimentary cover, the northern portion of the East Block Project is underlain by Palaeoproterozoic basement gneisses of the Bartica Assemblage.  The central portion of the Project is dominated by east-west trending greenstone belts of the marginally younger Barama-Mazaruni Supergroup, interspersed with extensive batholiths also of Trans-Amazonian age.

Rocks of the Barama-Mazaruni Supergroup are unconformably overlain to the south by an extensive belt of clastic sediments comprising the Muruwa Formation, which represents the oldest sedimentary succession of the Mesoproterozoic Uatama Supergroup.  These are in turn overlain to the south by volcanics and associated intrusives of the Iwokrama Formation, also representing part of the Uatama Supergroup, Much of the north-eastern portion of the Project is veneered by Quaternary to Recent littoral and shallow marine sediments of the Berbice (or White Sand) Formation and the Demerara Formation, comprising part of the Corentyne Group.


Exploration History
The western portion of the property includes isolated exposures of the Barama-Mazaruni greenstone stratigraphy of Trans-Amazonian age that host extensive gold mineralization to the west and northwest of the Project area. The apparent absence of gold mineralisation within the Project itself is due to the extensive superficial cover of White Sand Formation that masks the basement.  Irrespective of this, evaluation of airborne geophysical data clearly indicates that the Barama-Mazaruni greenstone belts persist eastwards beneath cover, extending right across the northern portion of the project into Surinam and beyond.

  • Cominco is understood to have held the central portion of the present Muruwa Project between 1969 and 1970.  The Cominco work was centred on the uranium potential of the Muruwa Formation itself.
  • The northern portion of the East Block Project was held by BHP Limited under a joint venture agreement with Gold Star Resources Inc in 1996.  Work was focussed on the gold exploration potential of a basement ridge exposed through superficial cover sequences, extending eastwards from the Omai Gold Mine, located approximately 50km west of the extreme northwest corner of the Project.
  • BHP Limited (now BHP Billiton Limited), in joint venture with Gold Star Resources Inc, explored an east-west trending strip through the central portion of the East Block Project for gold in 1996.  Exploration focussed on a basement ridge exposed through superficial cover extending eastwards from the Omai Gold Mine. The consortium completed routine bulk leach extractable gold (BLEG) stream sediment sampling, along with multi-element ICP scans on selected samples screened to -80#. Anomalous gold results (including sample values of 189ppb gold, 101ppb gold, 36ppb gold, 152ppb gold, 13.5ppb gold and 15.8ppb gold) were recorded along the western boundary of the surveyed area and along an east-trending basement high exposed through superficial cover of the White Sand Formation. Elsewhere the White Sand Formation masked any basement geochemical response, with remaining values all being <0.5ppb gold.
  • The Guyana Geological Survey “GGMC” completed two separate (yet systematic) investigative programs covering the western margin of the current East Block Project, within the permit extension application, between 2000 and 2003.  These programs involved GIS database compilation, geological mapping, stream sediment sampling, rock chip sampling and petrology.
  • A sampling density of one site per 6.5km² was adopted, with -30# BLEG and panned concentrate samples collected from each site.  Unlike the BHP sampling, the GGMC BLEG samples were collected using a flocculent in order to retain the ultra fine fraction, considerably enhancing the tenor of gold results.  A -80# fraction was also subsequently screened from BLEG samples in the laboratory.   The BLEG samples were analysed for gold, silver, platinum and palladium following cyanide leaching, while the -80# and rock chip samples were assayed by neutron activation and ICP.
  • The results more or less mimicked those of BHP, but at a considerably higher tenor due to the application of a flocculent in the sampling process.  Values >500ppb gold (to a peak value of 1,570ppb gold) were recorded from the Berbice River and tributaries near the south- western boundary of the project, draining an extensive area of Iwokrama Volcanics and Roraima Formation.
  • A further cluster of values >500ppb gold (to a peak value of 1,750ppb gold) was recorded along the Demerara River, associated with a series of known gold occurrences located immediately outside the north-western Project boundary.  Several results >50ppb gold (including one value of 230ppb gold) were also recorded from the central-western portion of the Project, associated with a partially exposed greenstone belt of the Trans-Amazonian Barama-Mazaruni Supergroup. Elsewhere the results were considerably lower, again reflecting the extensive cover of White Sand Formation.

Airborne Magnetics/Radiometrics 2012 Survey & Drilling