jork – complying technical report

UPDATED REVIEW OF THE MINERAL POTENTIAL OF THE PIILOLA GROUP

OF LICENCES, EASTERN FINLAND

Report Prepared for:

Mineral Exploration Network (Finland) ltd

Report Prepared by

SRK Exploration Services Ltd ES7493

Registered Address: 21 Gold Tops, City and County of Newport, NP20 4PG,

Wales, United Kingdom. SRK Exploration Services Ltd Reg No 04929472 (England and Wales)

Group Offices: Africa

Asia Australia

Europe North America South America

UPDATED REVIEW OF THE MINERAL POTENTIAL OF THE PIILOLA GROUP

OF LICENCES, EASTERN FINLAND

Report Prepared for:

Mineral Exploration Network (Finland) Ltd 28 Fidlas ave.,

Cardiff, CF14 0NY,

UK

SRKES ES7493

SRK Exploration Services Ltd. 12 St Andrews Crecsent,

Cardiff, UK

CF10 3DD

Tel: +44 29 20 233 233 Fax: +44 29 20 233 211

[email protected] www.srkexploration.com

FILE REF: MENFin_2013_FINAL_20130221 FEBRUARY 2013

Report Authors Reviewed by:

Bill Kellaway Gareth O’Donovan

SRK Exploration Services Executive Summary Page ii

Executive Summary

This report serves to update previous reports written by SRK ES on the mineral potential of the

Piilola licence group held by Mineral Exploration Network Finland (MEN).

During the 2012 field season the company has significantly increased its land holding

Intensive soil and till sampling, ground geophysical surveys which has formed the bulk of the

exploration to date was augmented by shallow inclined diamond drilling. On one of previously

identified targets a total of 545 m of drilling was carried out from 14 boreholes.

A total of 7 significant intersections were recorded ranging from 1.15g/t over 4.96 m to 5.22

g/t over 0.41 m.

The study area is dominated by a north /south shear and northwest trending cross cutting

faults. Gold anomalies and occurrences are located predominantly at the intersection of these

two structures. It is thought that the mineralisation may plunge towards the north-west. In

addition to the shear zone hosted mineralisation, the influence of the central intrusion with its

hornfels margin on the mineralisation is thought to be significant; indeed the geological model

that is being used in current and future exploration is the Intrusion Related Gold System

(IRGS).

The work conducted in 2012 has enhanced the anomalies already identified in previous

campaigns and the positive drilling results have enhanced the potential of the area.

Results of exploration carried out by Mineral Exploration Network (Finland) demonstrated the

existence of a large scale mineralised system which merits further exploration. The estimation

of the mineral potential of the Piilola group of the licences, made by MEN (Finland) in the

range of 3-5 Moz continues to be considered reasonable.

It is recommended that further drilling is conducted in the coming field seasons in order to

follow up on 13 identified targets. A bigger drill rig will allow deeper holes to be drilled as

well as facilitating the use of orientated core. The latter is important as mineralisation is

obviously structurally controlled. A proposed phased drilling program totalling 27,000 metres

is considered to be adequate to the type and size of targets.

Expected results of the drilling program are:

Fine turning of exploration model;

confirmation of intensity and scale of mineralisation; and,

assessment of inferred/indicated resources on limited number of targets to a depth up

to 100 metres.

SRK Exploration Services Ltd Table of Contents Page iii

Table of Contents

1 Introduction 1 1.1 Scope of work 1 1.2 Qualification of Consultants 2 1.3 Disclaimer 2

2 Finland 3 2.1 General information 3 2.2 Mining Industry 5 2.3 Mining Legislation 5

2.3.1 Pre June 2011 5 2.3.2 Post June 2011 6

2.4 Taxation 7 2.5 Geological overview 8

2.5.1 Archean history of the Karelian craton 9 2.5.2 Early Palaeoproterozoic rifting of the Karelian craton 10 2.5.3 Early Proterozoic Svecofennian domain 11

3 Licence locations 14

4 General Geology of the licence area and Historical Exploration 15 4.1 General Geology of the Kuhmo greenstone belt 15 4.2 Historical Geophysical Work 16 4.3 Historical Geochemical Exploration 20 4.4 Known gold occurrences in the licences extent 21

4.4.1 The Palovara gold occurrence 21 4.4.2 The Timola gold occurrence 23 4.4.3 The Naurispuro gold occurrence 24 4.4.4 The Iso Aittojiirvi gold occurrence 24 4.4.5 The Jousijarvi gold occurrence 25 4.4.6 The Mujesuo gold occurrence 28 4.4.7 The Piilola gold occurrence 28 4.4.8 The Hetteilä gold occurrence 29 4.4.9 The Louhiniemi gold occurrence 29

4.5 Interpretations of the historical exploration drilling results 31

5 Methodology of the MEN (Finland) Ltd. field work 34

6 Results of MEN (Finland) field work in 2010-2012 40

7 Exploration Model and Targets selection 47

8 Mineral potential of the area 53

9 Suggested Exploration Programme 56

10 Conclusions 58

11 Recommendations 59

SRK Exploration Services Report Distribution Record 60

SRK Exploration Services Ltd Table of Contents Page iv

List of Figures

Figure 2-1: Location of the project area 3 Figure 2-2: Simplified geological map of Finland and surrounding areas 8 Figure 2-3: Geological map of Finland and location of the Piilola licences 9 Figure 2-4: Known gold occurrences and deposits in Finland and location of Piilola

licences 13 Figure 3-1: Location of the MEN Finland claims and ore prospecting permits

applications 14 Figure 4-1: Simplified geological map of the Kuhmo greenstone belt 15 Figure 4-2: Aerial Geophysical Survey (Apparent resistivity) 17 Figure 4-3: Aerial Geophysical Survey (Electromagnetic survey – Real

Component) 18 Figure 4-4: Aerial Geophysical Survey (Total magnetic field) 19 Figure 4-5: Results of the geochemical survey carried out by GFS 20 Figure 4-6: Simplified geological map of the licence area and locations of the gold

occurrences (http://geomaps2.gtk.fi/activemap/) 21 Figure 4-7: Gold Concentrations in till and weathered bedrock samples taken in

the Palovaara area 22 Figure 4-8: Drilling profile at Timola gold occurrence 23 Figure 4-9: Gold and arsenic concentrations in till and weathered bedrock samples

taken at a detailed stage of sampling and drill hole sites in the Iso Aittojärvi area, Kuhmo 25

Figure 4-10: Gold and arsenic concentrations in till and weathered bedrock samples taken at a detailed stage of sampling and drill hole sites in the Jousijärvi and Mujesuo areas, Kuhmo. (Arsenic has not been analysed in the area east of Lake Jousijärvi.) 27

Figure 4-11: Gold and arsenic concentrations in till and weathered bedrock samples taken at detailed stage of sampling in the Louhiniemi area. 30

Figure 4-12: Bore holes cross sections on Piilola occurrences (GSF) 32 Figure 5-1: Keenengineering rotary crusher 34 Figure 5-2: Mobile field laboratory 35 Figure 5-3: Generalised soil profile 36 Figure 5-4: Hand held "Cobra” drill 36 Figure 5-5: Man Portable Ingetrol Explorer Drill Rig 38 Figure 5-6: Drill core (Drill hole MEN 037) 38 Figure 5-7 Work done by MEN (Finland) in 210-2012 39 Figure 6-1: Simplified geological model with main prospecting results 40 Figure 6-2: Geochemical anomalies in soil 41 Figure 6-3: Results of ground magnetic survey with As anomalies (>30 ppm) 42 Figure 6-4: Results of ground electro-magnetic survey (IP and resistivity) 43 Figure 6-5: Results of basal till sampling 43 Figure 6-6: Drill Hole Locations 44 Figure 6-7: MEN Finland drill holes logs 45 Figure 6-8: Spatial relation of GSF drill holes and major gold anomaly in basal till 46 Figure 6-9: Simplified model of gold mineralisation studied by drilling. 46 Figure 7-1: Generalised model of Intrusion Related Gold System (IRGS) 48 Figure 7-2: Conceptual Exploration Model of central part of the Piilola project 50 Figure 7-3: Target selections 52 Figure 8-1: Long Section of Pampalo deposit 53 Figure 8-2: Long section of Kittila deposit 54 Figure 8-3: Comparison of geochemical anomalies of Piilola with known deposits 54 Figure 9-1: Suggested drilling programme (stage 1). 57

SRK Exploration Services Ltd Table of Contents Page v

List of Tables

Table 2-1: Operating Mines in Finland 12 Table 6-1: Significant gold intersects in GSF and MEN Fin drillholes 45

Registered Address: 21 Gold Tops, City and County of Newport, NP20 4PG,

Wales, United Kingdom. SRK Exploration Services Ltd Reg No 04929472 (England and Wales)

Group Offices: Africa

Asia Australia

Europe North America South America

MENFin_2013_FINAL_20130221.docx February 2013

UPDATED REVIEW OF THE MINERAL POTENTIAL OF THE PIILOLA GROUP OF LICENCES, EASTERN FINLAND

1 Introduction

SRK Exploration Services Ltd (SRK ES) has been commissioned by Mineral Exploration

Network (Finland) Ltd (MEN (Fin)) to review the gold mineral potential of the Piilola group of

licences and comment on the exploration programme completed to date.

1.1 Scope of work

Based on the results of historical exploration carried out by the Geological Survey of Finland

(GSF) and intensive geochemical and geophysical work executed by MEN (Fin) it is believed

that the Piilola group of licences has significant potential for gold mineralisation and deserves

further exploration.

MEN (Fin) provided SRKES with historical exploration data and with data collected during

the 2010-2012 field seasons.

The data includes:

GSF reports and open publications

GSF primary data

MEN (Fin) primary data and interpretations

This report reflects the independent opinion of SRK ES on the gold mineral potential of the

Piilola licences and a suggested exploration programme. The opinion is based on a desk top

data review and discussions with the MEN (Fin) representative as well as site visits in 2011

and 2012 field seasons.

SRK Exploration Services Ltd

12 St Andrew’s Crescent

Cardiff

CF10 3DD

Tel : +44 29 20 23 32 33

Fax : +44 29 20 23 3211

[email protected]

www.srkexploration.com

SRK Exploration Piilola Review Page 2

File Ref :P:\ES7493 Piilola Gold Drilling\Reports\MENFin_2013_FINAL_20130221.docx February 2013

1.2 Qualification of Consultants

SRK ES is part of an international group (“the SRK Group”) that comprises over 1600

professional staff offering expertise in a wide range of engineering disciplines.

The SRK Group‟s independence is ensured by the fact that it holds no equity in any project

and that its ownership rests solely with its staff. The SRK Group has a demonstrated track

record in undertaking independent assessments of Mineral Resource and Reserve estimates,

project evaluations and audits, competent person‟s reports and independent feasibility studies

on behalf of exploration and mining companies and financial institutions worldwide. This

report has been prepared by Exploration Geology consultants sourced from the SRK ES office

in Cardiff (United Kingdom).

Neither SRK ES nor any of its employees involved in the preparation of this report has any

beneficial interest in the assets of MEN (Fin). SRK ES will be paid a fee for this work in

accordance with normal professional consulting practice.

The individuals responsible for this report have extensive experience in the minerals industry

and are members in good standing of appropriate professional institutions.

SRK ES‟s project team comprised:

Mr. Gareth O‟Donovan MSc, FIMMM, FGS, CEng. Principal Exploration Geologist,

Mr. Bill Kellaway MCSM, Principal Exploration Geologist.

1.3 Disclaimer

This report is the result of a desk study using data obtained through MEN (Fin) and other

public domain sources. SRK ES‟s opinions within this document are based on the information

available, plus previous experiences of the personnel involved in similar areas and geological

domains in Fenoscandia and around the world. SRK ES does not guarantee the legitimacy or

accuracy of any information utilised in this report that has been obtained from secondary

sources.



2 Finland

2.1 General information

Finland is a mining-friendly country within the European Union that offers the exploration

industry a favourable investment and operating environment. It has significant potential for

new discoveries; many commodities are still under-explored. Finland is also close to major

markets and has processing facilities for a wide range of minerals.

Figure 2-1: Location of the project area

Current activity is concentrated on gold, platinum group metals, base metals, diamonds and

industrial minerals. Finland has excellent geological databases, good infrastructure,

progressive mining legislation and readily available exploration services.

Finland has been a member of the European Union since 1995. It has an advanced industrial

economy based on exports, with the metals, engineering and electronics industries accounting

for 50% of export revenues and the forest products industry for another 30%. As a result of

this industrial base, infrastructure is well developed over the entire country, even though many

areas are only sparsely populated. Finland has 5.2 million inhabitants, but they are spread out

over a country that is the seventh-largest in Europe (338,000km2), giving a population density

of only 17 persons/km2. Some two thirds of the population live in urban areas whilst the other

third reside in the countryside.

Finland is situated in northern Europe between latitudes 60o and 70

o N. However, the climate

is mild and temperate due to the Gulf Stream – there are, for example, no tundra or permafrost



areas in Finland. A quarter of its total area lies north of the Arctic Circle. Finland has common

borders with Sweden, Norway and Russia and faces Estonia across the Gulf of Finland. Forest

covers about 7% of the country‟s surface area, making Finland the most heavily forested

country in Europe, with 23 million hectares of forests. The approximately 190,000 lakes in the

country cover almost another 10% of the land area and include some 180,000 islands.

Finland has one of the best performing economies in the European Union. This has largely

been driven by the demand for mobile telephones (Nokia). Finland has enormous intellectual

capital in this field. The population is highly educated with a western entrepreneurial outlook.

English is now the second language in all Finnish schools and now most people in Finland

speak English, with varying degrees of fluency.

Country risk is minimal as Finland is a modern western country and an active member of the

EU. Finland is a stable democracy and is strongly pro- Europe. It was the only Nordic country

to join the „Euro‟ system on its initiation in 1999. Inflation is low (1.3% in 2004), corporate

tax rate is 26% and GDP is growing at 3.8% p.a. Industrial activity is focussed on

telecommunications, metals manufacturing and timber and paper manufacturing.

Finland is regularly in the top five of surveys of competitiveness of various national

economies. Finland tops global surveys as the world‟s least corrupt country.

Finland has a well developed mining act which is generally pro-mining. Infrastructure is

excellent with sealed roads to all country sectors and an extensive network of well maintained

logging tracks. There are also a number of well serviced regional airports.



2.2 Mining Industry

Finland has a long history of mining activity and metals production. Mining commenced in the

16th century and since then about 270 metal mines have been in operation, the main

commodities being copper, nickel, zinc, cobalt, gold, chromium, iron and vanadium. Mining

has provided the raw material base for the country‟s metal industry. There are major

processing and refining facilities for copper and nickel at Pori and Harjavalta (Boliden AB and

Norilsk), zinc at Kokkola (Boliden AB), cobalt at Kokkola (OMG Inc), stainless steel at

Tornio (Outokumpu Oyj) and at Raahe (Rautaruukki Oyj).

The major industrial minerals mined in Finland are carbonates, apatite and talc with processing

plants for fertilisers, titanium pigments and coating carbonates. Finnish metallurgical

technology and manufacturers of mining equipment, (Larox, Metso, Normet, Outotec,

Sandvik-Tamrock) are well known throughout the international mining community.

Finland has a long history of mining, metal and mineral processing and mining technology

with the geology similar to Canada, Australia and South Africa. Prior to becoming part of the

European Union in 1995, foreign companies were prohibited from holding mineral rights in

Finland and mineral exploration and mining was largely dominated by the State controlled

Outokumpu company. Finland has therefore missed out on much of the competitive

environment of the mineral industry and the increased exploration activity that emerged in the

mid 1980‟s.

Outokumpu‟s withdrawal from mining and the entry of Finland into the EU has only recently

opened the country to foreign companies. The competitive landscape in Finland is now

changing rapidly with numerous international companies active; Inco, BHP Billiton, Anglo

American and Gold Fields. The number of junior Canadian, Australian and UK companies is

also increasing.

2.3 Mining Legislation

2.3.1 Pre June 2011

Piilola North and Piilola South claim applications are processed according to the “old”

Mining Act which was in force until June 10th 2011.

Rights under old Mining Law were granted to every Finnish citizen or corporate body, to any

resident of the European Economic Area (EEA) and to all foreign corporations and

foundations established according to EEA laws and regulations. The Ministry of Trade and

Industry also routinely granted rights under the Mining Law to individuals and corporate

bodies from outside the EEA.

There were three types of mineral licences; these are reservations, claims and mining leases.

Claim Reservations covered an area up to 9km2 where a company has an exclusive right to

peg mineral claims for 12 months. Reservations were not transferable. Once a reservation has

been made over an area, a further reservation could not be made for a period of five years once

that first reservation has lapsed.



Mineral claims may be pegged during the reservation period or in their own right without a

reservation. They run for three years plus two one year extensions and have an annual rental of

16 Euro/ha with another fee of 10 Euro/ha to the land owner. Mineral claims are transferable

and give the holder all access and exploration rights.

Mining Leases could only be applied for and granted if there is an identifiable mineral

resource on the property and run for 10 years before extensions. An application for a mining

lease must be accompanied by an environmental review.

There are no minimum expenditure requirements on mining leases or mineral claims and no

royalties payable to the Finnish government, however a quarrying charge is payable to the

freehold land owner. The amount payable to the land owner is negotiable and may be up to 1%

of the value of the ore extracted though generally does not exceed 50c/t of ore.

2.3.2 Post June 2011

Piilola-2 and all other newer applications in Piilola group were processed according to the

“new” Mining Act came into force on June 10th 2011.

Rights under new Mining Act can be granted only to Finnish legal entity or resident of adult,

legal age who is not declared bankrupt and whose competency has not been restricted under

the Guardianship Services Act (442/1999).

There are three types of mining licenses; Reservation Notification, Ore Prospecting Permit and

Mining Permit.

A Reservation Notification can be granted for a period of 24 months. There is no limit in

terms of area. Reservation Notifications cannot be applied over an Ore Prospecting Areas,

mining or gold panning areas. They also cannot be located at a distance of less than one

kilometre from such an area, belonging to a party other than the applicant. In addition, the

reservation notification cannot cover an area that has previously been a reservation area until

one year has passed since the expiry or cancellation of the reservation decision. Payments for

Reservation Notification are as follows:

1) For areas less than 20 km2 – 700 Euros;

2) For areas 20-100 km2 – 1 200 Euros;

3) For areas more than 100 km2 – 2 000 Euros.

An Ore Prospecting Permit can be granted for a maximum of four years after the decision

has become legally valid. It may be extended for a maximum of three years at a time. In total,

the permit may remain valid for a maximum of 15 years. The Ore Prospecting Permit is

transferable and gives the holder all access and exploration rights.

The holder shall pay an annual compensation payment (ore prospecting fee) to the owners of

land included in the Ore Prospecting Area. The annual amount of the ore prospecting fee per

property shall be:



1) 20 Euros per hectare for each of the first four years of validity of the permit;

2) 30 Euros per hectare per year for the fifth, sixth, and seventh year of validity of the permit;

3) 40 Euros per hectare per year for the eighth, ninth, and tenth year of validity of the permit;

4) 50 Euros per hectare for the eleventh and for further years of validity of the permit.

A Mining Permit after being granted remains valid until further notice. Such a permit can also

be granted for a fixed term, if this is justified in view of the quality and extent of the deposit,

the applicant‟s ability to meet the conditions for ensuring the commencement of mining

activities, and other factors that have emerged during processing of the application. A fixed-

term mining permit may remain valid for a maximum of 10 years after the decision has

become legally valid. It can also be extended for a further period, until further notice, or for a

maximum of 10 years at a time, insofar as it is still necessary in order to exploit the deposit,

and in consideration of other factors that have emerged in connection with handling of the

application. The Mining Permit holder shall pay annual compensation (excavation fee) to the

owners of land included in the mining area.

The annual amount of the excavation fee per property is 50 Euros per hectare. In addition, the

following shall be paid as an excavation fee:

1) 0.15 per cent of the calculated value of mining minerals included in the metallic mineral,

excavated and exploited during the year; considering the average price of the exploited metals

included in the ore during the year, and the average value of other products exploited from the

ore during the year;

2) Grounds influencing the financial value of the mining mineral, taking into consideration

reasonable compensation for excavated and exploited mining mineral other than metallic

mineral in accordance with:

a) An agreement between the property owner and holder of mining permit; or

b) Confirmation by the mining authority as applied for by the property owner or holder of the

mining permit.

2.4 Taxation

The Finnish tax system as it concerns MEN (Fin) is concerned with three types of tax:

1. Corporation taxes: The corporate income tax rate is 24.5%.

2. Value Added Tax (VAT) is levied at a standard rate of 23% (July 2010).

3. Dividend and Capital Gain Taxes: The income from dividends, rents, and capital gains

are taxed with investment income tax. The investment income is taxed at fixed rate of

30% or 32% for income that exceeds 50 000 Euros. The effective dividend tax rate

from publicly listed companies is 21% - 22.4% because of a tax credit of 30% for

dividends from listed companies. The tax credit for dividends from non-listed

companies varies depending on the corporate taxes paid. by the companies



themselves and equity in the company. Part of the dividends may be taxed as earned

income in case the equity in a non-listed company is not sufficient.

2.5 Geological overview

Finland occupies the central part of the predominantly Neoarchaean and Palaeoproterozoic

Fennoscandian Shield, which is exposed over an area of more than 1 million km2. The bedrock

can be subdivided into three broad domains that have shared a common history since about 1.8

Ga. These three crustal units essentially comprise a Neoarchaean cratonic nucleus flanked on

both sides by Palaeoproterozoic mobile belts. The Kola–Lapland domain, to the NE of the

Karelian craton, records the amalgamation at around 1.9 Ga of several distinct crustal units of

both Proterozoic and Archean age, and is more characteristic of collisional tectonic processes.

In contrast, the Svecofennian domain, to the SW of the Karelian craton, is entirely

Palaeoproterozoic in age, and indicates relatively rapid formation and accretion of new crust

between about 1.97–1.80 Ga.

Figure 2-2: Simplified geological map of Finland and surrounding areas



Figure 2-3: Geological map of Finland and location of the Piilola licences

2.5.1 Archean history of the Karelian craton

The Karelian craton is characterized by narrow northerly trending greenstone belts surrounded

by more extensive granitoids and higher grade gneiss domains. Although rocks up to 3.6 Ga



are present throughout the craton, the earliest well-documented magmatic and metamorphic

event seems to have taken place at around 2.84 Ga. The lower metamorphic grade greenstone

sequences formed after this event, and were variably deformed and intruded by tonalitic to

granitic magmas between 2.75–2.69 Ga. The Kuhmo and Suomussalmi greenstone belts are

the most extensive and well preserved supracrustal units in the Archean of Finland, cropping

out over a strike length of nearly 200 km, though seldom exceeding 10 km in width. They both

contain abundant tholeiitic and komatiitic volcanic rocks, together with related intrusive and

subvolcanic cumulates, and lesser felsic volcanic and volcaniclastic units. In spite of complex

deformation, primary textures and stratigraphic relationships are widely preserved, permitting

detailed mapping and analysis of volcanic facies and hence providing a conceptual basis for

regional komatiite-hosted nickel exploration. The structures formed during and soon after the

ca. 2.70 Ga peak of the Neoarchaean orogeny host a number of orogenic gold occurrences in

all greenstone belts in Finland.

The Hattu schist belt, near the southwestern margin of the craton, in easternmost Finland,

represents a rather different kind of supracrustal sequence (compared to Kuhmo and

Suomussalmi) that records rapid crustal growth and deformation between 2.75–2.72 Ga. Felsic

volcaniclastic sediments in this belt, and lithofacies, as well as geochemistry of granitoids and

some basalts are consistent with a collision arc setting. Extensive, structurally controlled,

alteration systems have been delineated in the belt and found to contain numerous encouraging

gold targets.

Some indications have also been found for the presence of Zn and Ag mineralization within

felsic sequences, including the Taivaljärvi prospect in the Tipasjärvi greenstone belt,

immediately to the south of the Kuhmo greenstone belt. The overall potential for base metal

mineralization in late Archean supracrustal rocks of the shield has however, not yet been

adequately assessed. Soapstone deposits developed in ultramafic rocks also represent a

volumetrically minor but economically significant resource in several greenstone belts,

whereas the 2.6 Ga Siilinjärvi carbonatite, intruding the western edge of the craton, currently

represents Finland‟s second largest mining operation in terms of annual tonnage.

2.5.2 Early Palaeoproterozoic rifting of the Karelian craton

The northern part of the Karelian craton, particularly in Finnish Lapland, records a prolonged

and episodic history of sedimentation, rifting and magmatism throughout the Early

Palaeoproterozoic. The Lapland greenstone belt is the largest mafic-dominated province

preserved in the entire shield. A sequence of bimodal komatiitic and felsic volcanics dated at

around 2.5 Ga unconformably overlie the Archean basement and represent the onset of rifting.

Continued rifting of the Archean crust resulted in the widespread emplacement of gabbro-

norite layered intrusions between 2.45–2.39 Ga. These intrusions host the important Kemi

chromite mine, and also contain widespread PGE-Ni-Cu enrichment, which now are under

extensive feasibility studies. Terrigenous clastic sediments discordantly overlie these layered

intrusions, with further episodes of mafic magmatism recorded as sporadic lavas and sills

dated at around 2.2 Ga, 2.10 Ga, and 2.05 Ga. The latest stage includes the Keivitsa Ni-Cu-

PGE deposit and coincided with rifting and subsidence of the Karelian craton margin, recorded

by coarse clastic turbidites, carbonates, iron formations and finer-grained graphitic schists, the



latter hosting the extensive, low grade Talvivaara nickel deposits. Mining started at Talvivaara

in 2007, and by ore tonnage it is now the largest mine in Finland. Rifting culminated in

extensive mafic and ultramafic volcanism within the Lapland greenstone belt and the

formation of oceanic crust at 1.97 Ga, fragments of which were subsequently thrust back onto

the Karelian craton as the Jormua and Outokumpu ophiolites, the latter being best known for

its Cu-Co-Zn deposits and chromian skarns.

2.5.3 Early Proterozoic Svecofennian domain

The plate tectonic paradigm has been widely applied in interpreting crustal growth,

deformation and metallogenesis in the Svecofennian domain. Northeast-vergent emplacement

of the Outokumpu ophiolite onto the Karelian craton foreland is inferred to record the initial

collision with Palaeoproterozoic micro continents and oceanic island arc(s), generating

primitive tonalites from a low-K tholeiitic source. Continued volcanism within the arc(s) at

1.92–1.90 Ga led to the formation of volcanic- hosted massive sulfide deposits, including the

Pyhäsalmi Zn-Cu mine, with hydrothermally altered host-rocks subsequently being

metamorphosed to distinctive cordierite-orthoamphibole lithologies. Reversal of subduction

polarity following collision, or a further arc-arc collision is invoked to explain the most

extensive phase of volcanism, magmatism and deformation in southern and western Finland

between 1.89–1.86 Ga. Ultramafic intrusions within reduced sedimentary sequences provided

an important setting for nickel mineralization, including the Vammala and Kotalahti nickel

belts. The gold potential of this region is also being increasingly recognized, with the currently

operating Orivesi mine possibly representing a metamorphosed high-sulfidation epithermal

deposit, whereas other, vein-hosted gold occurrences go into the orogenic category, and are

closely associated with major shear zones in the region.



2.6 Gold in Finland

The main Au provinces in Finland are the Archaean greenstones in the east of Finland, Palaeo-

proterozoic Karelian greenstone belts in Lapland, and the Palaeo-proterozoic Svecofennian

schist belts in central and southern Finland. Refer to Figure 2-4

About 200 hard-rock gold occurrences are presently known. The currently operational mines

and deposits close to production shown at the Table 2-1 below.

Table 2-1: Operating Mines in Finland

Deposit (alternative name

in brackets) Ton

Au

g/t Other metals

Status of

development

Hannukainen 4.5 Mt*

166.2

Mt**

0.95

0.065

0.88 % Cu

35.1 % Fe, 0.17 % Cu

Mine, closed

Under exploration

Haveri 1.56

Mt*,

7 Mt***

2.8

1.47

0.39 % Cu Mine, closed

Deposit area under

exploration

Hosko (Valkeasuo) 0.13 Mt 9.9 Under exploration

Jokisivu 1.85 Mt 5.7 Mine, active

Juomasuo 0.86 Mt 5.2 0.15 % Co Test pit, under

exploration

Kivimaa 0.022

Mt 5.3 1.87 % Cu

Mine, closed; Under

exploration

Kopsa 25 Mt 0.57 0.18 % Cu Preliminary

feasibility study

Kuotko 0.29 Mt 3.6 Under exploration

Kutemajärvi (Orivesi) 1.2 Mt 5.7 Mine, active

Kaapelinkulma 0.18 Mt 4.1 Under exploration

Kutuvuoma 0.068

Mt 7.3 0.1 % Cu

Mine, closed, under

exploration

Laivakangas 16.9 Mt 1.6 Mine, active

Muurinsuo 0.923

Mt 1.4 Under exploration

Osikonmäki 2.2 Mt 3.1 Preliminary

feasibility study

Pahtavaara 3.5 Mt 2.92 Mine, active

Pampalo (Ilomantsi) 1.3 Mt 2.9 Mine, active

Pirilä 0.3 Mt 6.6 Under exploration

Saattopora 2.163

Mt* 3.3 0.24 % Cu Mine, closed

Kiitilä 35 Mt 4.7 Mine, active



Large parts of Finland are still under explored, and new deposits are being discovered every

year. Essentially, many areas, both in the Archaean and Proterozoic domains of the country,

are still practically virgin regarding gold exploration.

Until 1990, only 40 gold deposits had been discovered. For example, the first signs of gold

mineralisation in the Oijärvi Greenstone Belt were discovered as recently as 1996.

Orogenic mesothermal mineralisation is the dominant type of gold occurrence in Finland.

Other genetic types include: 1) skarn or FeOx-Cu-Au, 2) metamorphosed epithermal, 3)

intrusion-related (non-skarn), 4) palaeoplacer, and 5) placer deposits. Orogenic lode-gold,

skarn or FeOx-Cu-Au and metamorphosed epithermal deposits have been mined. In addition,

placer occurrences are undergoing very small-scale exploitation activities.

Investment in gold exploration in Finland was very modest in the past. Increased exploration

activity since the 1990's has led to the discovery of more than 200 occurrences and the opening

of three mines. In addition, several deposits currently already in production, the most notable

of these being Kittila (Suurikuusikko) in central Lapland.

Presently, some of the gold deposits and prospects are held by mining and exploration

companies. However, there also are number of prospects and large prospective areas without

any licence holder.

Figure 2-4: Known gold occurrences and deposits in Finland and location of Piilola licences



3 Licence locations

MEN (Finland) had applied for the Mineral Claims called Piilola-North and Piilola-South and

Ore Prospecting Permits called Piilola 2, Palovaara, Naurispuro, Yala-Vieksi and Teerisuo.

Refer Figure 3-1.

Figure 3-1: Location of the MEN Finland claims and ore prospecting permits applications



4 General Geology of the licence area and Historical Exploration

4.1 General Geology of the Kuhmo greenstone belt

The Kuhmo greenstone belt is the largest Archean greenstone belt in Finland, being up to 10

km in width and more than 100 km from north to south, within the rural municipalities of

Suomususalmi, Hyrynsalmi and the city of Kuhmo.

Figure 4-1: Simplified geological map of the Kuhmo greenstone belt



Based on isotopic and structural evidence, the felsic, intermediate and mafic volcanic rock

units at the margins of the Kuhmo greenstone belt may correlate with the 3 000 - 2 800 Ma

Luoma Group of the Suomussalmi greenstone belt. In contrast to the Suomussalmi greenstone

belt however, the oldest rocks in the Kuhmo succession are predominantly tholeiitic basalts

that have been metamorphosed to banded amphibolites (Figure 2-1). Felsic and intermediate

volcanics are associated with these early stage volcanics in the Ruokojrirvi and Vuosanka

areas. Contacts with surrounding granitoids and younger units of the greenstone belt are

tectonic or intrusive.

The central part of the Kuhmo greenstone belt consists of 2 800 - 2 750 Ma tholeiitic basalts,

tholeiitic layered sills, komatiitic olivine (+ pyroxene) cumulates and lavas, komatiitic basalts

and Cr-basalts. The most complete and best-preserved stratigraphic sequence is in the

Siivikkovaara and Ronkaperri area; elsewhere it is more difficult to correlate rock sequences

due to the effects of intense deformation.

Homogeneous, massive, NW-SE trending mafic dykes transect the Archean rocks of the

Kuhmo greenstone belt with sharply discordant contacts, which thus constrain the deformation

of the greenstones to late Archean time.

One of the most significant outcomes of the latest investigations was the recognition and

delineation of a major deformation zone transecting the greenstone belt from north to south,

accompanied by hydrothermal alteration and associated with numerous gold prospects

including, from north to south, Tammasuo, Palovaara, Timola, Iso Aittojiirvi, Pieni Aittojerui,

Jousijiirui, Mujesuo and Louhiniemi. In addition to the occurrences listed above, extensive

carbonation and disseminated sulfide mineralization is observed within a NW-SE trending

deformation zone passing through Petajaniemi, Poukama, Katajalahti and Hietaperri indicating

significant structurally focused fluid flow and gold mineralization potential.

4.2 Historical Geophysical Work

Various types of geophysical techniques have been effective in delineating rock units,

structures and hydrothermal alteration associated with mineralization. Airborne geophysical

data has been particularly important in defining the major N/S trending deformation zone

transecting the Kuhmo greenstone belt, which has a distinct spatial association with gold

(Figure 4-2 to Figure 4-4).



Figure 4-2: Aerial Geophysical Survey (Apparent resistivity)



Figure 4-3: Aerial Geophysical Survey (Electromagnetic survey – Real Component)



Figure 4-4: Aerial Geophysical Survey (Total magnetic field)



4.3 Historical Geochemical Exploration

Systematic geochemical surveys conducted by GFS in the Kuhmo greenstone belt delineated a

conspicuous, sharply defined anomalous zone for arsenic and more diffuse and discontinuous

gold anomalies which can be traced from north to south along the entire greenstone belt. This

anomalous trend was previously recognized in several places. Geochemical mapping showed

the continuity of this anomalous zone along the entire Kuhmo greenstone belt (Figure 4-5).

The detailed till geochemical surveys in the Kuhmo greenstone belt revealed numerous areas

that are potentially prospective for gold which deserve further exploration.

Figure 4-5: Results of the geochemical survey carried out by GFS



4.4 Known gold occurrences in the licences extent

There are nine known gold occurrences in the licences extent; these are shown in the Figure

4-6 below. According to the Geological Survey of Finland, to be called an occurrence gold

mineralisation should be established in at least one borehole with intersection of 1g/t or more

for not less than 1 m or 0.5 g/t over 5 m.

Figure 4-6: Simplified geological map of the licence area and locations of the gold occurrences (http://geomaps2.gtk.fi/activemap/)

4.4.1 The Palovara gold occurrence

The Palovara gold occurrence was discovered during zinc exploration. The first indications of

zinc potential in the Palovaara area were found in 1987, when disseminated sphalerite was

noted in felsic volcanic intercalations within a predominantly mafic volcanic sequence. At the

same time, compact pyritic horizons with elevated gold concentrations were discovered within

banded iron formations in the same general area. Regional till geochemical surveys were

http://geomaps2.gtk.fi/activemap/



undertaken from 1987 - 1989 after which, in 1990 and 1991, more detailed sampling was

carried out at Hannankyla and in the area between Palovaara and Kelosuo, as shown on the

map of gold distribution in till (Figure 4-7). The zone is represented by number of gold

anomalies. In 1990, four holes were drilled, with a total length of 289.1 m, with the aim of

determining the extent of anomalous gold contents in banded iron formations (BIF). The

highest gold contents analyzed from drill core (4.6 g/t and 3.1 g/t) were within the banded iron

formation. The BIF horizon can be traced by its geophysical signatures for a distance of more

than 10 km.

Figure 4-7: Gold Concentrations in till and weathered bedrock samples taken in the Palovaara area



4.4.2 The Timola gold occurrence

The Timola gold occurrence is situated northwest of the city of Kuhmo, a kilometer south of

Harmankyla, to the east of the main road from Kuhmo to Hyrynsalmi. Tholeiitic volcanics

dominate in this area and are strongly deformed, commonly mylonitic, with a foliation trend

almost N-S (010° - 190°), which is sub-parallel to the general trend of the greenstone belt.

Nine diamond drill holes were drilled in 1995, totalling 582.50 m in length. A further twelve

holes (R374 - R385), totalling 915 m were drilled with the RC technique in 1997.

The dominant rock type hosting the mineralization is a mylonitic tholeiitic basalt which

usually shows evidence of intense hydrothermal alteration in the form of biotite, chlorite,

quartz, carbonate, sericite and less commonly, epidote. The more highly strained rocks tend

also to be more strongly altered, containing abundant biotite. Tourmaline is very common

within fracture networks and at the margins of quartz veins but also within the tholeiitic

basalts. Scheelite and fuchsite also occur sporadically within the altered rocks, though have

not been observed in direct association with gold.

The highest gold content analysed from drill core was 2.82 g/t and five one meter intervals had

Au concentrations >1.0 g/t. There was no obvious visible correlation between gold

concentration and rock type, intensity of deformation or degree of alteration. Arsenopyrite is

almost always present where gold is anomalous although because of its fine grain size it often

remains unnoticed. Arsenic also forms a distinct geochemical halo around the mineralization

and the Timola area is clearly anomalous with respect to arsenic in the regional till

geochemical survey data. Even economical gold mineralisation was not discovered yet there is

still potential for exploration within the cataclastic and mylonitic deformation zone, both to the

north and south of Timola.

Figure 4-8: Drilling profile at Timola gold occurrence



4.4.3 The Naurispuro gold occurrence

During detailed geochemical surveying in 1996, 344 samples were obtained from the

Naurispuro area, including l22 samples from till, 210 samples of weathered bedrock and 12

samples of weathered material in till. The highest metal abundances analyzed were Ni = 1 580

ppm, Cr = 2 760 ppm, Zn = 1 390 ppm and Au = 956 ppb. A number of other samples yielded

Au concentrations of several hundreds of ppb or more, suggesting that the Timola anomalous

zone may indeed continue for several kilometres southwards to Naurispuro. The five holes

drilled at Naurispuro (total length 355.5 m) intersected mafic volcanics for the most part, with

sporadic intercalations of sulfidic and graphitic phyllites and cherts. The phyllitic units are

generally less than 5 m thick, with one exceptional unit at the bottom of one hole being 15 m.

Thin felsic units, possibly volcanic in origin, were also locally present. A single 2 m interval of

carbonated ultramafic rock was present in the upper part of one hole. The entire rock sequence

is dipping steeply eastwards (85°) or vertical. The prominent EM anomalies and the western

magnetic anomaly trend may both be attributed to sulfidic and graphitic phyllites. Sampling of

drill holes had returned following grades 3.73 g/t, 2.8 g/t, 1.9 g/t 1.9 g/t of gold for 1 metre

samples.

4.4.4 The Iso Aittojiirvi gold occurrence

Investigations into the gold potential of the Iso Aittojiirvi began in the early 1990's, when a

mylonitic deformation zone was found on the eastern shores of the lake, characterized by

quartz tourmaline breccias in strongly sheared chloritic schists, with local abundant

arsenopyrite. Two exploration trenches were excavated by GSF across this zone, with detailed

sampling. Three holes were drilled at the northeastern end of the lake and a further two to the

southeast of the nearby lake Pieni Aittojiirvi (Tenhola and Niskanen 2001).

Till geochemical surveys were conducted in 1994: out of a total of 233 samples, 112

represented till and 119 were from weathered bedrock and weathered till material. Anomalous

gold values were distributed extremely erratically and the highest value obtained was 174 ppb.

In contrast, arsenic abundances defined a distinct, sharply defined anomaly, along the eastern

shore of Lake Iso Aittojiirvi (Figure 4-7). Arsenic contents exceeded 80 ppm in many samples,

the highest value being 10800 ppm.

Six deep diamond holes were drilled in 1993 and demonstrated the extensive nature of the

hydrothermal alteration, characterized by biotite, chlorite and tremolite in mafic volcanic rocks

and an abundance of talc-carbonate veins typically 1-5 cm wide. Tourmaline was present in the

mafic volcanics as well as in the quartz breccias. Arsenopyrite was found both erratically and

abundantly in almost all rock types intersected. The drilling to the southeast of Pieni Aittojrirvi

revealed that felsic volcaniclastic rocks predominate in that area, alternating with carbonated

ultramafic rock intercalations. Arsenopyrite and tourmaline were also relatively common. Gold

and tellurium contents in drill core were however generally low, the highest values being Au:

395 ppb and Te: 262 ppb. Arsenic concentrations were high throughout the entire section

drilled; the highest value obtained being 26400 ppm. The highest Cu value analyzed, of 4580

ppm also occurred within this anomalous arsenic zone.



Figure 4-9: Gold and arsenic concentrations in till and weathered bedrock samples taken at a detailed stage of sampling and drill hole sites in the Iso Aittojärvi area, Kuhmo

4.4.5 The Jousijarvi gold occurrence

The Jousijarvi area seems likely to represent a continuation of the Iso-Aittojarvi As and Au

anomalous zone, especially given the similarities in rock types and the nature of geophysical

anomalies between the two areas. A single hole was drilled beneath the lake (Pajunen 1990)

and intersected chlorite-biotite schists, amphibolites and more felsic schists and gneisses. As at

Iso-Aittojervi, intervals several meters thick of carbonated ultramafic rocks, and talc schists

were present. Tourmaline was widespread in quartz breccias as well as in both felsic and mafic

rocks. It is therefore apparent that a continuous anomalous zone extends from Iso Aittojiirvi

through Pieni Aittojdrvi to Jousijdrvi. The drilling was originally planned for clarifying

lithological relationships so no analytical data is available.

Geochemical sampling was done in two stages, to the east of Jousijarvi in 1991 and to the west

in 1994.The total number of samples obtained was 254, of which 172 were till samples, 58

were from fresh and weathered bedrock and the remaining 16 from weathered till material.

Metal abundances were abnormally low, which is partly due to the relatively small proportions

of bedrock and weathered bedrock and till material (only 22.8 % of the total number of

samples). This in turn was due to the stony and compact nature of the till in this area, which

made drilling to and sampling from the bedrock interface technically demanding. Despite this,

there is a clearly discernible N-S trending arsenic anomaly between Iso Aittojiirvi and

Jousijrirvi. The highest arsenic concentration analyzed was 6180 ppb. Gold abundances also

define a distinct anomaly to the east of Jousijarvi, with the highest value measured being 1020

ppb (Figure 4-8).



During 1993, five holes were drilled and in 1996, four holes, making a total drilled length of

382 m. The holes were sited to the east of the main arsenic anomaly that passes through

Jousijzirvi, with the aim of intersecting the gold anomalies identified in till sampling. The

main rock types intersected were tonalite and felsic to intermediate volcanics, with occasional

garnet-bearing mica schist intercalations. Disseminated iron sulfides are common, but compact

sulfide bands are also present. Arsenopyrite is however, only occasionally present.

In one drill hole there was a 3 m intersection, in garnet-bearing intermediate volcaniclastic

rocks with a weak sulfide dissemination, in which gold abundances varied from 1 440 - 3 820

ppb. The highest arsenic content in this interval was 1 300 ppm.



Figure 4-10: Gold and arsenic concentrations in till and weathered bedrock samples taken at a detailed stage of sampling and drill hole sites in the Jousijärvi and Mujesuo areas, Kuhmo. (Arsenic has not been analysed in the area east of Lake Jousijärvi.)



4.4.6 The Mujesuo gold occurrence

The impetus for gold investigations in the Mujesuo area came from a mineralized sample

submitted to the GSF by Viljo Heikura in early 1993. The rock was a tremolitic quartz vein

which not only had an exceptionally high Au content of 850 ppm, but also anomalous Ag (25.4

ppm), Cu (1 500 ppm) and Pb (911 ppm). Visible gold was present in the sample, especially

along fractures.

Geochemical surveys were made in 1993 and 1994, with a total of 381 samples collected, of

which 204 represented till and 58 were from bedrock and weathered bedrock. Till stratigraphy

and clast transport and provenance was studied in detail in 1994, concluding that the till was

particularly sandy, and extremely compacted, and in places was formed as ablation moraines.

Gold abundances were very low, the maximum value being only 51.7 ppb. Arsenic values

were also low (Figure 4-8). Nickel abundances define a prominent and continuous anomaly

trend along the eastern edge of the survey area, with a maximum value obtained of 2050 ppm.

During 1994 and 1995, 77 holes were drilled at Mujesuo with a total length of 996.7 m. The

main rock types intersected were intensely chloritized mafic volcanics and amphibolites, and

some granitoids in the western parts of the area. Talc-carbonate schist intercalations within the

mafic volcanics were common, especially in the eastern part of the area. Tremolitic chlorite

schists were present in many drill holes, but no tremolitic quartz rock, equivalent to the gold-

bearing sample which had originally been submitted to GSF, was found. Both pyrite and

pyrhotite were abundant and chalcopyrite was sporadically present; arsenopyrite was however

absent.

Gold abundances in drill core at Mujesuo were generally low, although a single one metre

interval in one hole had a value of 9.06 g/t. This mineralized section consisting of radiating

crystal of tremolite and actinolite with chlorite and disseminated iron sulfide and chalcopyrite,

as well as rare grains (0.1 x 0.5 mm) of visible gold. Arsenic and tellurium abundances were

low throughout; the deformation zone containing abundant arsenopyrite and tourmaline that

can be traced from Iso Aittojiirvi to Jousijdrvi does not pass through Mujesuo itself, but is

located some 700 m to the east.

4.4.7 The Piilola gold occurrence

The study area is located in late archaean Kuhmo greenstone belt, 40 km NW of Kuhmo town.

Geophysical measurements were performed and a total 2741m were drilled in 34 POKA-drill

(combination of percussion and diamond drilling) holes during the years 2003-2005. The

bedrock of the study area consists mainly of graywackes, mica schists, mafic volcanics and

muscovite granite and dolerite dykes. The tectonics of the area is characterized by at least two

folding phases and prominent N-S shearing. The mineralized zone, associated with the shear

zone, is altered, silicified and sericitized. It contains arsenopyrite, tourmaline and iron

sulphides. The highest gold content were 17.3 g/t (exceptionally 0.5 m), 7.5 g/t, 6.6 g/t, 4.3 g/t

and 3.8 g/t in split drill cores 1 m in length. Gold content > 0.5 g/t was observed in 12 drill

cores. Some visible gold was observed in two drill holes. In northern part of the area, Likasuo,

a 20 m thick skarn horizon, consisting of quartz, wollastonite, grossularite and vesuvianite,

was found by drilling. Arsenopyrite bearing mica schist, in contact with the skarn, contains

sporadic gold 1-5 g/t.



4.4.8 The Hetteilä gold occurrence

Hetteilä gold occurrence had been found as a by-product of the nickel exploration in 2006.

Gold mineralisation is controlled by a 5-9 m thick BIF unit and banded amphibolite in a

sequence of metasedimentary and tholeiitic to komatiitic metavolcanic rocks of the Vuosanka

area. The best gold grade was established at the BIF contact returning 1.6 g/t over 1 metre

4.4.9 The Louhiniemi gold occurrence

The prospecting studies at Louhiniemi gold occurrence began because of gold bearing

boulders (Au 2.800-5.06 g/t) were found on the western bank of the lake Kuivajärvi. Arsenic

values were also highly anomalous, corresponding concentrations being 16 000 ppm, 15 900

ppm and 42 000 ppm. These boulders were highly deformed and silicified amphibolites with

disseminated arsenopyrite, pyrrhotite and pyrite. All samples were located along the same

trend that controls the Iso Aittojarvi, Jousijarvi and Mujesuo gold occurrences. Ground

geophysical measurements, electromagnetic and IP, were carried out in the area. Till,

weathered bedrock and bedrock samples were collected from. 459 points by percussion drills.

Gold concentrations were low throughout, although a weak NW-SE trending anomaly was

discernible to the north of the Korkealehto farm, extending as far as the adjacent lake (Figure

3.2.1.8a). In contrast, arsenic abundances were highly anomalous, the maximum value being

1680 ppm and a prominent anomaly trend was defined along the eastern shores of the lake

Kuivajarvi. Seven drill holes were drilled in the area. Main rock types intersected by drill holes

were granite rich mica schists, metavolcanics and in the most eastern part serpentinites. N-S

trending arsenopyrite bearing zone was noticed to exist “under” the eastern part of the lake

Kuivajärvi. The highest gold concentration, of 6 200 ppb, with As 16 600 ppm in the same

sample interval, was in intensely sheared mafic volcanics, containing disseminated

arsenopyrite and chalcopyrite as well as pyrrhotite. The next highest anomalous value, of

0.938 g/t (with As = 11 200 ppm) was in a quartz porphyry dyke impregnated with pyrrhotite

and arsenopyrite. Elevated gold abundances were found throughout the drill core, in many

places being in the range 20 -100 ppb. On the basis of drilling, it is evident that the rock units

that can be traced through Kuivajarvi are consistently enriched in arsenic, and sporadically

contain high gold concentrations. The occurrence at Louhiniemi can be regarded as the

southwards extension and continuity of the anomalous Au and As zone at Jousijarvi and

Mujesuo gold occurences. The limited amount of drilling did not allow adequate assessment of

the significant magnetic and IP anomalies that can be traced as far as Kuivajarvi. It was

recommended to focus the follow up investigations on the south eastern part of the complex

geophysical abomalies.



Figure 4-11: Gold and arsenic concentrations in till and weathered bedrock samples taken at detailed stage of sampling in the Louhiniemi area.



4.5 Interpretations of the historical exploration drilling results

The Geological Survey of Finland (GSF) placed drill holes based on the results of geophysical

and geochemical surveys. Core diameter was 46 mm or less and half core was used for the

samples In most cases drill holes intersected mineralisation zones and occasionally returning

gold grade 1-5 g/t . It can be seen that almost all gold anomalies are well correlated in space

with arsenic anomalies. Arsenic anomalies are the same width as the gold anomalies or wider

and not all arsenic anomalies are correlated to gold anomalies. On the following diagrams

Figure 4-12 the spatial relation of the gold and arsenic grade is shown.



Figure 4-12: Bore holes cross sections on Piilola occurrences (GSF)



The absence of gold in some arsenic anomalies could be interpreted as absence of gold or poor

sampling quality due to lack of material. However the arsenic anomalies are highly

informative as indicators for the gold mineralisation and could be used to trace gold bearing

zones.

Unfortunately not all drill holes were sampled and a few drill holes were not sampled for the

full length.

The limited amount of surface geochemical sampling and drilling may not have fully assessed

the mineral potential of the area but it has provided enough information to warrant further

exploration.



5 Methodology of the MEN (Finland) Ltd. field work

In May 2010 MEN (Finland) carried out a reconnaissance visit and general landscape

assessment of the Piilola group of licences and test sampling on the known gold occurrences.

Test sampling included boulder sampling and soil sampling the different soil horizons.

Test boulder samples have been sent to the Labtium laboratory (Kuopio, Finland) for gold

assays. Samples returned anomalous gold grade around the Piilola gold occurrences. Almost

50% of known gold occurrences in Finland were found by boulder and outcrop sampling. Thus

boulder sampling was accepted as a first pass prospecting method in the locations considered

to be prospective based on the exploration model, to prioritise detailed geophysical and

geochemical work. Boulder samples were crushed by a Keenengineering rotary crusher

(Figure 5-1) and analysed by portable XRF in the mobile field laboratory (Figure 5-2).

Figure 5-1: Keenengineering rotary crusher



Figure 5-2: Mobile field laboratory

Test soil sampling was conducted over the gold occurrences at Pillola and Jousijarvi on

different soil profiles. Sampling was done on A, B and C horizons. Based on the results of the

orientation work a decision was made to use B horizon sampling (Figure 5-3)



Figure 5-3: Generalised soil profile

After a reconnaissance visit and test sampling on the known gold occurrences and due to poor

outcrop, a decision was made to sample the “B” horizon with soil sampling followed by Basal

till sampling with a hand held “Cobra”drill.

Figure 5-4: Hand held "Cobra” drill



Soil sampling was done on a grid 50-100 x 10 metres, basal till sampling on a grid 50-100 x 5-

10 metres. The high density of sampling is a function of high dispersion of the elements in the

glacier sediments and locates anomalies with a higher degree of reliability. Boulder sampling

was also conducted when they were encountered.

The results of previous exploration work concluded that arsenic is a very good indicator of the

gold mineralisation in the area although it is known that gold mineralisation does occur

without arsenic anomalies on the Mujesuo gold occurrence. All soill samples had been

analyzed in the field using a portable XRF analyzer INOVEX-ALFA.

All basal till samples after been analyzed in the field using a portable XRF analyzer were send

to external laboratory (LABTIUM) to analyze Au, Bi, Sb and Te.

The locations of samples were recorded with hand held GPS units (GARMIN 60CSX and

GARMIN 62). Based on control measurements, the sample location accuracy is approximately

5-12 metres. All information was transferred into data bases at the end of each day. Results

from XRF analyses were also ready the next day. All data was visualized using the desktop

mapping system MapInfo.

Geochemical surveys have been supplemented by ground magnetic surveys on grids 50 x 5

metres. Ground magnetic surveys significantly improve the resolution of the aerial magnetic

survey.

The most prospective areas selected as combination of soil geochemical anomalies and

interpretations of ground magnetic survey were covered with ground IP and resistivity surveys

with line spacing 50 metres.

Selected anomalies were tested with inclined diamond drill holes up to depth a of 60 metres.

MEN (Finland) used INGETROL EXPLORE portable drill rig (Figure 5-5) with core diameter

36 mm (Figure 5-6). Despite the small core diameter the decision was made to sample only

half core so that the other half core is available for futurel reviews by interested parties. Due to

the small samples size the results of gold assaying should only be considered as an indication

of gold mineralisation and may not be used for quantitative resource estimation.

Field work carried out during 2010-2012 seasons included:

Geological and landscape mapping

Boulders and outcrop sampling - 752 samples

Soil sampling at grid 50-100 x 10 metres– 50412 samples (including control samples)

Ground magnetic survey at grid 50 x 5 metres – 523 line kilometres

Ground electro-magnetic survey -97 line kilometres

Till sampling with handheld percussion drill “Cobra” with aim to test soil anomalies –

2038 samples



Inclined diamond drilling (545 metres) with man portable drill rig Ingetrol Explorer

Figure 5-5: Man Portable Ingetrol Explorer Drill Rig

Figure 5-6: Drill core (Drill hole MEN 037)

The following figure (Figure 5-7) shows the distribution of the work done by MEN (Fin) in the

Piilola group of licences.

All basal till samples and selected soil samples have been analysed in the former GSF

laboratory “Labtium” (Kupio, Finland). Core cutting, core sample preparation and analysis has

been carried out in the ALS Geochemistry laboratory (Outokumpo, Finland). All analysis were

are subject to repeats and included the insertions Certified Reference Materials or standards.



Figure 5-7 Work done by MEN (Finland) in 210-2012



6 Results of MEN (Finland) field work in 2010-2012

The main output of the field work carried out was the delineation of complex geochemical

anomalies (Figure 6-1) in the subsoil horizon “B”. It is controlled by the fault zone on the

boundary of the greenstone belt and crosscutting structures NW orientations (Figure 6-1).

Figure 6-1: Simplified geological model with main prospecting results

The individual elemental anomalies are shown in Figure 6-2



Figure 6-2: Geochemical anomalies in soil

The structures are clearly seen on the ground magnetic map (Figure 6-3) and results of IP and

resistivity surveys (Figure 6-4).



Figure 6-3: Results of ground magnetic survey with As anomalies (>30 ppm)



Figure 6-4: Results of ground electro-magnetic survey (IP and resistivity)

Verification of selected anomalies has been done by basal till sampling with the handheld

percussion drill (“Cobra”) (Figure 6-5) on lines across the main N/S trend.

Figure 6-5: Results of basal till sampling



Results of basal till sampling delineated intense gold anomalies. Distribution of pathfinder

elements As, Bi, Sb and Te demonstrate clear zonation that could be related to the plunging of

gold mineralisation in the NW direction.

Figure 6-6: Drill Hole Locations

As MEN Finland had set up drilling department just in July 2012, prospecting drill holes of the

summer 2012 season had been placed to intersect gold mineralisation established by the

Geological Survey of Finland drilling programme with the aim to check quality of MEN

Finland drilling, compare MEN Finland results with GSF results and establish continuation of

gold mineralisation along the strike (Figure 6-6).

Results of the MEN Finland drilling returned encouraging results with gold grade comparable

with previously established by GSF. Each drill hole placed along mineralisation zone returned

gold grade more than 1g/t (Table 6-1) making strike established part of the gold mineralisation

zone about 300 meters (Figure 6-8). Gold mineralisation zone is represented by share zone

over different lithologies (Figure 6-7) with intensive pyrrhotite- arsenopyrite disseminated

mineralisation. Gold mineralisation is pinching out in southern direction. In the northern

direction mineralisation is still open. Mineralisation is open to the dip as well.



Drill hole MEN 040 returned gold grade 3.7 g/t over 1.7 metres outside main mineralisation

zone. Gold mineralisation is associated with quartz veinlets in heavily altered granodiorites.

This mineralisation could be interpreted as sheeted veins similar to the intrusion related gold

systems (IRGS)

Figure 6-7: MEN Finland drill holes logs

Table 6-1: Significant gold intersects in GSF and MEN Fin drill holes

Company HOLE_ID FROM Metres Au g/t GTK R330 31.05 2.55 2.61 GTK R470 66.9 0.50 17.30 GTK R468 19.4 1.00 5.05 GTK R331 11.2 2.00 1.06 MEN MEN034 23.85 0.41 5.22 MEN MEN035 30.02 1.17 1.18 MEN MEN035 50.04 2.70 1.27 MEN MEN036 7.35 4.65 2.26 MEN MEN037 12.35 4.96 1.15 MEN MEN037 37.59 3.64 1.90 MEN MEN040 51.58 1.70 3.24



Figure 6-8: Spatial relation of GSF drill holes and major gold anomaly in basal till

GSF drill holes where placed based on the limited results of basal till sampling but were

successful in the discovering gold mineralisation. The basal till sampling carried out by MEN

Finland in 2010-2012 has demonstrated that the gold anomaly is bigger than the original GSF

drilling showed and therefore presents more drill targets.

Figure 6-9: Simplified model of gold mineralisation studied by drilling.

Indeed further gold mineralisation could be discovered in the relation to the more strong gold

anomalies highlighted in the basal till and in the soil sampling conducted during 2012.



7 Exploration Model and Targets selection

It is suggested that a Intrusion Related Gold System (IRGS) in combination with the

previously applied orogenic share zone hosted exploration model could be applied to the area

of study.

Intrusion-related gold systems (IRGS) are a relatively newly defined class of economically

important gold deposits based largely on well-studied examples in the Tintina Gold Belt of

Yukon/Alaska. Intrusion-related gold deposit models have been attributed to deposits in

Archean orogenic gold camps. These include Wallaby and some of the Golden Mile orebody,

both in the Eastern Goldfields province of the Yilgarn craton. Archean intrusion-related

mineralization is also noted to be associated with syenitic intrusions in the Abitibi belt of

Canada, and has long been considered by some workers to be related to felsic porphyries

throughout the Superior Province.

IRGS systems are characterised by a range of mineralisation styles, both proximal and distal to

the mineralising intrusion, as illustrated on Figures 1. These include:

sheeted veins and stockworks;

breccias;

disseminated structurally controlled deposits;

skarns;

replacements; and

distal base metal bearing fissure veins.

Despite the fact that the IRGS model is still evolving, the following distinguishing

characteristics, derived from well-understood deposits, can be used to differentiate it from

other gold deposit models:

Zoning-thermal gradients surrounding cooling plutons are steep, which results in concentric

metal zones that develop outward for a few kilometres, or just beyond the thermal aureole, of a

central mineralizing pluton. Orogenic gold deposits show little zoning, with the exception of

Hg- and Sb-rich zones in their epizonal parts.

Diverse deposit styles-fluids exsolving from cooling plutons are opportunistic and cool

quickly depositing metals in numerous available geological settings resulting in veins,

stockworks, skarns, replacements etc, characterized by a wide range of gold grades, but with

bulk minable volumes

present at sub-gram grades (e.g., Fort Knox). Sheeted veins-the most distinctive style of gold

mineralization in IRGS are sheeted arrays of parallel, low-sulphide content, single stage quartz

veins found over 10s to 100s of metres preferentially located in the pluton‟s cupola.

Metal associations –significant copper is lacking, associated plutons generate scheelite-rich

hydrothermal systems, but gold doesn‟t correlate with tungsten in the gold deposits.

Associated and gold-correlative Bi and Te geochemical signatures characterize intrusion-relate

mineralization, but are also a feature of numerous hydrothermal deposit types and thus are not

distinctive.



The sheeted vein deposits are generally located on the margins or roof zones of small elongate

equigranular granodioritic to granitic plutons. These intrusions are typically metaluminous to

weakly peraluminous, calcalkalic, and subalkalic with inferred oxidation states straddling the

boundary between ilmenite-series and magnetite series (Lang et al. 2000).

It is suggested that pluton phases likely to exolve mineralizing hydrothermal fluids display a

number of the following characteristics: porphyritic textures, presence of aplite and pegmatite

dykes, quartz and tourmaline veins. Associated dykes of aplite and pegmatite, as well as

numerous mafic phases including lamprophyres, are common. . These deposits do not

commonly have extensive hydrothermal alteration systems surrounding them and are typically

restricted to narrow sericite-carbonate-feldspar alteration halos on the quartz veinlets.

However peripheral deposits and occurrences and hornfels zones in the mesozonal

environment can display a predictable distribution pattern (Figure 7-1). This pattern

significantly expands the exploration footprint of these deposits.

There is considerable, but predictable variation in the styles of mineralization and the

elemental associations of gold occurrences surrounding any individual pluton. These include:

intrusion-hosted sheeted and rarely stockwork auriferous quartz veins

(Au±Bi±W±Te). The intrusion-hosted ore assemblage contains high fineness gold

intergrown with bismuth- and tellurium-bearing phases, which locally are associated

with scheelite.

proximal, thermal aureole-hosted replacement, disseminated, and fracture controlled

mineralization occurs in metasedimentary or metavolcanogenic rocks (Au-As±Sb);

and fissure veins vary outward from Au-As to Au-As-Sb to Pb-Zn-Ag.

Figure 7-1: Generalised model of Intrusion Related Gold System (IRGS)



The largest of IRGS are typically characterized as low grade bulk mineable sheeted vein

deposits such as Fort Knox (8 Moz) and Vasilkovskoe (12 Moz). Gold in these deposits is

generally free milling, non-refractory and associated with bismuth minerals. Tellurium and

tungsten are also common element associations. These sheeted vein deposits are generally

located on the margins or roof zones of small elongate equigranular granodioritic to granitic

plutons. These intrusions are typically metaluminous to weakly peraluminous, calcalkalic, and

subalkalic with inferred oxidation states straddling the boundary between ilmenite-series and

magnetite series(Thompson et al., 1999; Lang et al., 2000; Hart et al., 2000, 2002) .

Results of intensive geochemical exploration on Piilola project demonstrate very close

similarity to IRGS generalised model because of the following features:

a metal assemblage combining Au with Bi, Te, As, Sb with a low sulphide content

(<5%) and reduced ore mineral assemblage typically comprising arsenopyrite,

pyrrhotite and pyrite and lacking magnetite or hematite;

geochemical zoning centred on a central mineralising intrusion (Figure 7-1);

spatial relationship with moderately reduced intrusions;

restricted zones of hydrothermal alteration

Figure 7-2 shows conceptual exploration model of the central part of the Piilola project

demonstrating close similarity to the IRGS model.



Figure 7-2: Conceptual Exploration Model of central part of the Piilola project

Based on the results of field work and conceptual exploration model thirteen individual targets

(Figure 7-3) have been selected for more detailed investigation based on the following criteria.

Gold anomalies in the basal till and soil

Intensive arsenic anomalies in soil and basal till



Greenstone boundary and share zones reflected in the magnetic field

Crosscutting structures reflected in geophysical and geochemical fields

Nearby GSF drill holes with intercepts showing gold mineralisation

Mineralised boulders

Targets 1-7 form central “core” part of the project and selected as first priority targets.

Targets 1, 3 and 5 classified as potential share zone hosted (disseminated and fracture

controlled) mineralisation and characterised by intensive As soil anomalies as well as Au, Te,

Sb and Bi anomalies in basal till. Locations of anomalies are controlled by structures clearly

seen in geophysical fields – intersection of share zone on greenstone boundary with

crosscutting structures of NW orientation. Intersection of the structures and areas in close

proximity to intersections could control high grade gold mineralisation. These targets could

represent mineralisation similar to Pampalo and Kittila mines. Presence of gold mineralisation

at Target 1 is confirmed by drilling carried out by GSF and MEN. The fact that gold grade

could reach 3-5 g/t and up 17 g/t highlight potential for high grade mineralisation forming

steep dipping ribbon (pipe) stile mineralised bodies. Such type of high grade mineralisation

(Pampalo and Kiitila mines as example) has relatively small footprint and could be assessed

only by close space drilling. Targets 3 and 5 have geological, geochemical and geophysical

signatures similar to Target 1 making them very prospective for discovery of gold

mineralisation. Spatial extend of geochemical anomalies over Targets 1, 3, and 5 is

compatible with geochemical footprint of Kittila mine making exploration potential of the

targets and the level of several millions ounces of gold.

Targets 2 and 4 classified as potential sheeted veins mineralisation similar to Fort Knox

deposit and characterised by intensive Au-As anomalies in basal till and scheelite in rock and

till heavy minerals samples. Presence of gold mineralisation at Target 2 confirmed MEN

drilling. Drill hole MEN040 had returned gold grade 3.24 g/t over interval 1.7 meters. Gold

analysis for drill holes MEN041-MEN046 are pending. Expected style of mineralisation is

sheeted quartz veins and veinlets. Special attention should be paid to core recovery as gold

bearing veinlets could be subject of selective crushing that could lead to the low gold

recovery. Spatial extend of gold and As anomalies over Targets 2 and 4 is compatible with

footprint of Fort Knox deposit. It makes exploration potential of the targets at the level several

millions ounces of gold.

Targets 6 and 7 are represented by intensive Au, As and Zn anomalies in soil and basal till and

classified as potential Au-Ag-Pb-Zn veins. There were no historical drilling done in the extend

of the Targets 6 and 7. It is early stage to assess potential morphology and intensity of

mineralisation but the fact that area of the geochemical anomalies over targets 6 and 7 are

even larger than over targets 1-5 make its exploration potential very high.

Targets 8-13 are discovered at the end of the 2012 field season and required more geochemical

and geophysical studies that are planned for the beginning of the 2013 field season. The

surface area and intensity of geochemical anomalies in soil allow suggests that exploration

potential of the Targets 8-13 is comparable with potential of the Targets 1-7.



Figure 7-3: Target selections



8 Mineral potential of the area

MEN (Fin) have based their assessment of the gold mineral potential of the Piilola group of

licences by comparison with known gold deposits in Finland and based on the conceptual

exploration model outlined in the previous section.

One of the known orogenic share zone hosted gold deposits in Eastern Finland is Pampolo,

which is located in the central part of the Karelian Gold Line, Ilomantsi Greenstone Belt, and 5

km north of the village Hattuvaara(Figure 8-1).

Outokumpu Mining carried out some test mining in the deposit, first in 1996 as an open pit and

later in 1998-1999 to a limited extent underground, down to a depth of approximately 100

metres. The mined ore was transported 400 km to both Vammala and Pyhäsalmi for

beneficiation. The mining totalled 114,372 t with the average gold content of 15,3 g/t. The

produced amount of gold was 1,755 kg.

The gold anomalies around Pampolo deposit are comparable in size and intensity with

anomalies at the Piilola group of licences.

Figure 8-1: Long Section of Pampalo deposit

An estimate of mineral resources in Pampalo deposit, carried out in 2009, resulted in 225 000

oz measured, indicated and inferred mineral resources with average grade 4.5 g/t of gold.



The biggest known orogenic gold deposit in Finland is Kittila mine. Kittilä mine in northern

Finland achieved commercial production in May 2009. Proven and probable gold reserves

total approximately 4.9 million ounces from 32.7 million tonnes grading 4.6 g/t.

Figure 8-2: Long section of Kittila deposit

Comparing the size of mineralisation of known orgenic gold deposits with the type of

geochemical anomalies of Piilola group of the licences it could be concluded that Piilola

mineral potential is comparable to one „Kittila‟ deposit or to three „Pampalo‟ deposits.

In addition, according to conceptual IRGS model, it is thought that the Fort Knox deposit

could serve as a comparator.

Figure 8-3: Comparison of geochemical anomalies of Piilola with known deposits

The Piilola group of licences could contain disseminated and veining zones of gold

mineralisation with average grades of approximately 1-2 g/t and a limited amount of localised



higher grade mineralisation with gold grades up to 10-15 g/t. Grade assessment is based on

results of drilling performed by GSF and MEN Finlad as well as on analogy with other

deposits with similar genesis.

Thus the preliminary estimated mineral potential of the Piilola is between 3 – 5 Moz, and

could conceivably be much higher. This assessment based on the scale of geochemical

anomalies, compareson with similar known gold deposits and the limited but significant

drilling results.



9 Suggested Exploration Programme

Due to the fact that outcrop is limited and most of the area is covered with glacial sediment the

only way to establish the presence of economic gold mineralisation and therefore properly

assess the gold potential is by drilling.

The exploration programme for the next stage (2013) includes the following. Refer to Figure

9-1.

Conduct ground magnetic and IP/resistivity survey on the Targets 9-13.

Conduct “Cobra” sampling on the Targets 8-13.

Conduct systematic inclined diamond drilling to the depth 100 m along profiles across

the anomalies on the Targets 1-7 with profile spacing of 160 -320 metres. In total it is

planned to drill about 12 000 metres.

Infill incline diamond drilling to bring line spacing to 40 metres in the most

mineralised areas. In total it is planned to drill about 10 000 metres

Drilling to the depths 300-400 metres in selected locations to confirm extension of the

mineralisation. A total of 5000 metres is planned.



Figure 9-1: Suggested drilling programme (stage 1).

All boreholes should be drilled at NQ (63mm) diameter. After core splitting, logging and

photographing half core will be crushed and samples will be sent for fire assay and multi

element analysis. At the same time crushed duplicates will be taken for heavy minerals

analysis and determination of the size of gold particles in order to establish the best sampling

practice.

The requirements of quality assurance and quality control (QA/QC) will necessitate the

permanent presence of geologist supervising the drill rig, logging and sampling The latter

will include the insertion of blanks and standards according to the best international practice.

During drilling and sampling the drill site will be visited by independent consultants.



The outcome of the proposed exploration programme will be the assessment of the mineral

potential of the central part of the Piilola project and if results are positive and can be

correlated, the assessment of inferred mineral resources of selected targets.

The estimated budget for the first stage drilling programme is around 6.000.000 Euros. It

includes contract drilling at 100 Euro per metre, sample preparation and analyses at 40 Euros

per metre, geological support, transport and accommodation.

10 Conclusions

The results of the 2012 field season have been encouraging The applied exploration methods

are considered to have been cost effective and informative.

High density soil sampling has proven to be effective prospecting tool in the terrain found in

the Piilola project area. Soil sampling provided invaluable information on scale of

mineralisation and the structural controls. In 2012 MEN Finland significantly increased licence

holding and hence soil sampling coverage. The increase led to better understanding of the

mineralised system, scale of mineralisation and review of exploration model. The application

of the Intrusive Related Gold System model has highlighted the potential of shallow gold

mineralisation represented by sheeted quartz veins in the central intrusion of in the hornfels

This increases the exploration potential of the project.

High density soil sampling compensated for high variability of distribution of the elements in

the glacier sediments. The key factor in its success in application of soil sampling is quick

turnover in terms of the analytical services. Till sampling with motorised hand held percussion

“Cobra”drill further delineated the mineralised zone. Detailed ground magnetic and electro-

magnetic (IP/Res) surveying provided valuable structural and lithological information. In 2012

shallow incline diamond drilling served to confirm and delineate gold mineralisation. A man

portable drill rig producing 36mm diameter core was used and proved adaptable to the

sometimes difficult ground conditions.

Results of exploration carried out by Mineral Exploration Network (Finland) demonstrated

existence of large scale mineralised system that deserves further exploration. The estimation of

the mineral potential of the Piilola group of the licences, made by MEN (Finland) in the range

of 3-5 Moz continues to be considered reasonable.



11 Recommendations

Exploration should continue at the property.

Further diamond drilling of the 13 targets identified in this report is justified.

Diamond drilling should be done using a bigger, more powerful drill rig producing larger core.

Orientated core and downhole deviation survey should be used in the next drilling stage so

that the structures can be correlated and interpreted better.

For and on behalf of SRK Exploration Services Ltd

William F Kellaway,

Principal Exploration Geologist,


Date: 21/02/2013

Gareth O’Donovan,

Principal Exploration Geologist,


Date: 21/02/2013



SRK Exploration Services Report Distribution Record

Report No. ES7493

Copy No. FINAL

Name/Title Company Copy Date Authorised by

Alexander Mikhailov MEN Finland 1 21/02/2013 G. O‟Donovan

Alexander Luzhin Bamburg 1 21/02/2013 G. O‟Donovan

Approval Signature:

This report is protected by copyright vested in SRK Exploration Services Ltd. It may not be

reproduced or transmitted in any form or by any means whatsoever to any person without the written

permission of the copyright holder, SRKES

jork – complying technical report

Documents