High Sulphidation Gold Deposits; Key Attributes of Select Discoveries

From Yanacocha, Pueblo Viejo, Veladero-Pascua-Lama, Pierina,

Alturas, Lagunas Norte, El Sauzal, Chinkuashih, and Chah-e-Zard

By Michael B. Thomsen
November 2016 ©

Abstract

One third of the largest producing gold deposits in the world today are of the high
sulphidation (HS) type. In terms of geologic target models utilized by most international
gold exploration programs, the volcanic-hosted high sulphidation gold model is applied
as frequently as greenstone belt targets, porphyry copper-gold systems and others.

Considering that some high sulphidation gold deposits can occur in settings with only
minor historic mining activity and with few or no associated placer gold occurrences,
these high sulphidation gold systems may be easily overlooked. Discovery outcrops of
the oxide portions of these deposits can be quite nondescript in their appearance.

Pueblo Viejo is a classic example where sulphide mineralization was first mined 500
years ago, but the most profitable oxide portion of this gold deposit was not recognized
until 1969. Even the largest gold company in the world had an outcropping high
sulphidation gold deposit on one of its concessions for over a decade before it was
sampled, targeted and drilled as a discovery in 2015 at Alturas in Chile.

The following select discovery histories exemplify how many of these high sulphidation
deposits were recognized as major gold mineralized systems.

Photo: Extensive advanced argillic alteration in an arid setting; Pascua-Lama.

Yanacocha, Peru

Historic mining in the district included very minor pre-Colombian workings for mercury,
hematite and native sulfur. Porphyry copper targets identified in the 1960’s
topographically below the ‘barren looking’ silicified breccias and breccia pipes of the
Cerro Yanacocha complex were drilled but did not discover any porphyry systems of
interest. In the 1970’s, regional stream sediment surveys identified strong +10 ppm
silver anomalies but gold was not assayed in that work. Drilling in 1985 defined a small
bulk tonnage silver deposit of three million tons at 90 g/t Ag and 0.4 g/t Au but it was
considered uneconomic at that time. It is interesting to note that in that program the best
gold intercept was 7 meters of 9.6 g/t Au.

From 1985 to 1993 the exploration concept evolved recognizing an 18 km by 6 km wide

altered and mineralized belt of gold bearing high sulphidation deposits exemplified by
silica-hematite outcrops. A 1986 drill program intercepted 122m at 1.36 g/t Au and 29m
of 2.76 Au which was considered the discovery of the Yanacocha district. Initial
production began in 1993.

It is interesting to note the multiple exploration efforts by numerous major companies in

the district (Asarco, Nippon Mining, British Geological Survey, St. Joe Minerals, BRGM,
Buenaventura and finally Newmont) and the exploration evolution of commodity targets;
from porphyry copper to bulk silver to high sulphidation gold.

Photo: Discovery outcrop of vuggy silica from the Antonio gold deposit, one of
many individual deposits within the Yanacocha high sulphidation gold district.

Keys to discovery: Persistence in evaluating a strong alteration/mineral system

Recognition of high sulphidation gold targets in ‘barren’ silica
Pueblo Viejo, Dominican Republic

The presence of gold at Pueblo Viejo was noted as early as the 1520’s. Coarse
sulphide mineralization was seen in outcrops exposed in incised drainages cutting
through the district. The refractory nature of the gold mineralization in sulphides
prohibited any significant development in the district.

In 1969 the State mining company, Rosario Dominicana, initiated another phase of
exploration and as part of that program drilled through a barren-looking silica cap to
explore the extent of the sulphides beneath it. Possibly the greatest discovery at
Pueblo Viejo was made when a certain individual within Rosario suggested that the
barren leached silica zone be assayed for gold and silver. That simple yet insightful
recommendation discovered a high grade oxide gold orebody in the silica cap that
became one of the largest and most profitable gold mines at that time anywhere in the
world. Production started in 1975 and by 1991 the leachable oxide and transitional ore
zone was depleted. A total of 5 million ounces of gold and 22 million ounces of silver
were recovered from this silica zone which was up to 80 meters thick. During this
period, gold production from the oxide varied from 200,000 to 400,000 oz Au per year.

More recently, delineation and development of the overall sulphide zones at Pueblo
Viejo encompassed a $4 billion capital development program starting in 2009. The
Pueblo Viejo district hosts resources of approximately 40 million ounces of gold making
this the second largest high sulphidation gold district in the world after Yanacocha.

Photo: Silicified sulphide breccia from the Pueblo Viejo gold deposit.

Keys to discovery: Obvious outcropping mineralization (noted 500 years ago!)

Visible pyrite/sphalerite, veins, breccias and disseminations
Discovery of oxide gold in ‘leached silica’ was noteworthy
Veladero, Argentina; Pascua-Lama, Chile

A detailed description of the history and discovery of the Verldero-Pascua-Lama high

sulphidation gold district is beyond the scope of this paper. The geologic aspects to this
1997 discovery are as straightforward as most other high sulphidation gold systems in
the high Andes. A careful examination of the alteration map below easily identifies the
strongest centers of silica and silica-alunite alteration of the district. It can be said with
confidence that the dozens of companies and individuals who observed the Veladero-
Pascua-Lama alteration and mineralization over the years saw the vast potential of this
mineralized system. It was only through persistent sampling, leasing, land consolidation
and drilling that the significant discoveries were eventually confirmed.

Photo: Alteration map of the Pascua Lama-Veladero district on the border of Chile
and Argentina. Intense alunite alteration at the core of the system is shown in red
to magenta grading outward to argillic alteration in cyan and yellow. Silicification
is shown in a dark red hatch pattern.

Keys to discovery: Extensive advanced argillic alteration over an area of 10 X

15 kilometers; similar in size to the Yanacocha gold district
Sampling of areas of significant silica and silica-alunite
alteration zones led to the multiple discoveries.
Pierina, Peru

A belt of favorable volcanics extending southeastward from the world-class Yanacocha

high sulphidation gold district was considered as potentially prospective by a junior
exploration group out of Vancouver who went out and claimed a number of the larger
alteration systems in this volcanic belt. Various sample efforts and a regional BLEG
survey didn’t find anything of significance. Sampling of yet another alteration system in
this belt and collecting wide-spaced samples led to the first anomalous gold results at
the Pierina discovery.

Examination of the discovery outcrops displayed “nondescript looking, gray, gnarly,

siliceous rock with a vuggy texture.” No historic mining or prospect pits were in
evidence in the area of this discovery. The initial samples returned gold values of a
gram and a half per ton. Subsequent sampling of shallow pits dug over the area of
interest returned values averaging 7 g/t Au and 32 g/t Ag.

With the driving of two adits into the hillside and subsequent drilling programs (first hole:
88 meters of 6.58 g/t Au), the discovery of this six million ounce high sulphidation gold
deposit was confirmed.

Interestingly, 90% of the ore at Pierina is oxide, which compared with Pueblo Viejo
where 90% of the deposit is sulphide, suggests that nearly the entire Pierina
mineralized system was oxidized.

Photos: Left: Leached vuggy silica with alunite at the discovery outcrop.
Right: Original exploration adit into a vuggy silica talus slope.

Keys to discovery: On trend with the Yanacocha high sulphidation gold district
Country rock of favorable porous volcanics and breccias
Targeted areas of strong advanced argillic alteration
Under-explored due to security issues (Sendero Luminosa)
No historic prospecting/mining/placers in the discovery area
Alturas, Chile

In 2010 a reevaluation of the El Indio district concession holdings, which had been
controlled by Barrick for many years, was initiated for deep porphyry copper systems.
Interestingly, that company began the new exploration effort due to the strong interest
by other companies in their attempts to farm into this belt. This effort eventually led to
the identification of the Alturas target as the use of the high sulphidation gold model was
included as part of their exploration program in this belt in addition to deep porphyry
target models.

A small outcrop of strong silicification within a breccia host unit was sampled and
returned +2 g/t Au which is considered the discovery outcrop. This target was located
within a broad zone of favorable alteration and in a regional mercury anomaly.
Subsequent drilling located a multi-million ounce high sulphidation gold deposit.

Photo: Outcrops of vuggy silica in the central part of this oblique photo returned
geochem values of +2 g/t Au at Alturas which represent the western lateral edge
of this high sulphidation gold deposit.

Keys to discovery: Mineral concession held long-term by the company

Re-evaluation of area using the high sulphidation gold model
Targeted areas of strong advanced argillic alteration
Geochem of vuggy silica outcrops contained ore grade gold
Lagunas Norte, Alto Chicama, Peru

Barrick started grassroots exploration in the district of La Libertad in 1998 and identified
Alto Chicama as a target area based on the results of a regional BLEG geochemical
sampling program which was done in conjunction with stream-sediment sampling. The
regional geology of the area is dominated by a thick sequence of Mesozoic marine
clastic and carbonate sedimentary rocks unconformably overlain by andesitic and
dacitic volcanic rocks of the Tertiary Calipuy group. This sequence is cut by numerous
small intrusive bodies.

Barrick acquired the mining rights to the Alto Chicama property in January 2001,
following a privatization auction held by state-owned Centromin and began field work in
March 2001, identifying three drill target areas during a program of geological mapping,
channel sampling and ground geophysics. Field crews uncovered altered tuff and
anomalous gold-bearing breccias containing quartzite and vuggy silica clasts. By the
time Barrick announced the discovery of Lagunas Norte in April 2002, 45 holes totaling
14,500 meters had defined a 3.5-million oz. inferred resource of 55 million tons grading
1.95 grams.

The flat-lying mineralization outcrops and extends over an area of 1,600 by 750 meters
and to depths of up to 300 meters. Alteration and mineralization is hosted in quartzites
and a pyroclastic sequence with diatreme breccias cutting the country rocks. It displays
the classic high sulphidation alteration zonation of vuggy silica, quartz-alunite, and
quartz-alunite-kaolinite.

Photo: Massive vuggy silica of the Lagunas Norte area, Alto Chicama district.

Keys to discovery: Favorable country rocks with strong alteration centers

Regional geochem anomalies
Recognition for the potential of high sulphidation gold
El Sauzal, Mexico

The El Sauzal deposit is a classic, high sulphidation gold system located in

southwestern Chihuahua State, Mexico. The prospect was discovered by Francisco
Gold Corporation in1995. El Sauzal was encountered as a result of an extensive grass-
root exploration program in the rugged, dissected volcanic terrains of the Sierra Madre
Occidental, near the historical Batopilas silver camp.

At El Sauzal, high grade gold is hosted within a series of permeable, flat lying, lithic and
fine-grained dacitic rocks of early Tertiary age. The mineralization appears to be both
structurally and lithologically controlled. The alteration characteristics are typical of a
high sulfidation system including kaolinite, illite, alunite, dickite and pyrophyllite. The
estimated geologic resource in 1998 was 3 million ounces of gold at a grade of 2.03 g/t.

Photo: Cliffs of resistant vuggy silica in the central part of El Sauzal.

Keys to discovery: Favorable porous volcanics and breccias

Classic high sulphidation alteration sequence
Regional geochem program applying the HS model
Chinkuashih, Taiwan

Obvious gold mineralization was first noted in the Chinkuashih district in 1898. The
district has been intermittently mined from the early 1900’s through World War II by the
Japanese, with minor subsequent efforts through to today. The total cumulative gold
resource for the district is estimated to be six million ounces.

Outcropping high grade silicified breccias and veins were present in a setting of
subvolcanic intrusives and intermediate volcanic flows and breccias. The Chinkuashih
district also hosts significant enargite mineralization which is a classic sulphide
constituent of high sulphidation gold systems.

Zones of vuggy silica are intimately associated with high grade gold zones. Resistivity
surveys in the district suggest that there are significant silicified bodies and veins
remaining to be explored at depth in addition to large deep porphyry copper targets.

Images: Left: Geologic map of the Chinkuashsih gold district.

Right: Silicified mineralized tectonic breccia from the Buffalo pit

Keys to discovery: Discovery in 1898 of obvious outcropping mineralization

Widespread sulphide mineralization with visible pyrite,
enargite and sphalerite in silicified veins, breccias and
disseminations
Chah-e-Zard, Iran

While the world-class Sarcheshmeh and Sungun porphyry copper-gold districts were
known since the 1960’s and subsequent exploration efforts by various State entities
identified multiple other porphyry deposits in the Central Volcanic Belt, the application of
the high sulphidation gold model to this belt was only first utilized by Persian Gold plc
(AIM listed, London Stock Exchange) in 2005 which focused its program on areas of
silica and advanced argillic alteration centers.

Outcropping ore grade gold mineralization was sampled and a follow-up trenching and
drilling program defined a zone of multi-gram gold values hosted in hydrothermal
breccias from the surface extending into a transitional zone and then into a sulphide
zone. This was the first pure high sulphidation gold discovery made in this belt.

Photo: Outcrop of silicified porous volcanics and breccias at Chah-e-Zard

Photo: Drill core of oxide gold mineralization in silicified hydrothermal breccia at

the Chah-e-Zard discovery.

Keys to discovery: Located in proven porphyry copper belt

Exploration application of the high sulphidation gold model
Country rock of favorable porous volcanics and breccias
Areas of strong silicification and advanced argillic alteration
No historic mining or gold placers in the immediate area
Conclusions

High sulphidation gold districts can be considered either ‘easy to find’ as evidenced by
the fact that Pueblo Viejo was discovered 500 years ago and Chinkuashih was
discovered over 100 years ago, or ‘difficult to find’ as shown by the recent Alturas
discovery which was located on a concession held for decades by the world’s largest
gold company before the discovery was made. This author ascribes to the theory that
new high sulphidation gold deposits will be discovered by the application of the known
alteration model to underexplored areas.

Primary References:

Yanacocha: L. Teal, 2010

Pueblo Viejo: Barrick, 2014
Veladero: F. Roberts, 2016
Pierina: D. Lowell, 2014
Alturas: R. Krcmarov, 2015, 2016
Lagunas Norte: R. Cerpa, 2013
El Sauzal: A. Charest, 2004
Chinkuashih: L. P. Tan, 2004
Chah-e-Zard: M. Thomsen, 2006

About the Author:

Michael Thomsen has directed gold exploration programs with Newmont Mining
Corporation, Freeport-McMoRan Inc. and Gold Fields Mining Company for over 25 years
where his teams were responsible for discoveries in the Ertsberg-Grasberg copper-gold
district in Indonesia, the Yanacocha high sulphidation gold district in Peru, and
elsewhere. He is currently pursuing exploration targets for major high sulphidation gold
systems in one of the last truly underexplored volcanic belts in the world through the
company, Caucasus Resources Ltd (formerly Persian Gold plc) and other AIM London
listed junior companies.

Michael Thomsen’s profile can be found on his LinkedIn page.