kt 43-101 report - mindoro · table 24- pulang lupa (excluding kay tanda) at >0.5 g/t au cut...

NI 43-101 Report: Mineral Resource Estimate Upgrade on the Kay Tanda Project, Luzon, Philippines

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NI 43-101 REPORT

MINERAL RESOURCE ESTIMATE UPGRADE

ON THE KAY TANDA PROJECT, LUZON, PHILIPPINES

ARCHANGEL PROJECT

BATANGAS PROVINCE

FOR

MINDORO RESOURCES LIMITED SUITE 104, 17707 – 105 AVENUE,

EDMONTON, ALBERTA T5S 1T1

CANADA

15th April, 2010

DALLAS M. COX, BE (MIN)

52 Somerville Street Bendigo Victoria, Australia 3550


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TABLE OF CONTENTS

3. EXECUTIVE SUMMARY ................................................................................................................. 6 4. INTRODUCTION ............................................................................................................................. 11 5. RELIANCE ON OTHER EXPERTS ................................................................................................ 12 6. PROPERTY DESCRIPTION AND LOCATION ............................................................................. 13

6.1 Location................................................................................................................................... 13 6.2 Property Description ............................................................................................................... 14 6.3 Tenement Type ........................................................................................................................ 18

7. ACCESS, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY .. 19 7.1 Accessibility ............................................................................................................................ 19 7.2 Climate .................................................................................................................................... 20 7.3 Local Resources and Infrastructure ......................................................................................... 20 7.4 Physiography ........................................................................................................................... 21

8. HISTORY .......................................................................................................................................... 22 9. GEOLOGICAL SETTING................................................................................................................ 24

9.1 Regional Geology .................................................................................................................... 24 9.2 Local Geology of the Archangel Project Area ........................................................................ 30 9.3 Lithostratigraphy ..................................................................................................................... 31 9.4 Geology of the Kay Tanda and Pulang Lupa Prospect Areas ................................................. 36

10. DEPOSIT TYPES ............................................................................................................................. 37 11. MINERALIZATION......................................................................................................................... 38

11.1 Style of Mineralization and Model for Kay Tanda and Pulang Lupa Prospects ................. 38 11.2 Mineralization in Nearby Areas .......................................................................................... 49

12. EXPLORATION ............................................................................................................................... 51 12.1 Previous Exploration Work by Other Companies ............................................................... 51 12.2 MRL Exploration ................................................................................................................ 52

12.2.1 Data Assessment ......................................................................................................... 52 12.2.2 Reconnaissance Investigations .................................................................................... 52 12.2.3 Assessment of Previous Drilling ................................................................................. 53 12.2.4 Geological Mapping .................................................................................................... 53 12.2.5 Gridding ...................................................................................................................... 54 12.2.6 Geophysical Surveys ................................................................................................... 54 12.2.7 Trenching .................................................................................................................... 56 12.2.8 Initial Metallurgical Testing ........................................................................................ 56 12.2.9 Soil Geochemical Sampling ........................................................................................ 56 12.2.10 Topographic Surveying ............................................................................................. 56 12.2.11 PIMA Surveys ........................................................................................................... 57 12.2.12 Stream Sediment Sampling ....................................................................................... 58

12.3 Avocet Exploration ............................................................................................................. 58 12.3.1 Geological Mapping .................................................................................................... 58 12.3.2 Review of Drill Cores ................................................................................................. 58 12.3.3 Rock Sampling ............................................................................................................ 60 12.3.4 ASD ............................................................................................................................. 61

13. DRILLING ........................................................................................................................................ 64 13.1 Drilling Contractors and Drilling Statistics ......................................................................... 64 13.2 Drilling Equipment .............................................................................................................. 67 13.3 Casing in Drillholes and Drillhole Collars .......................................................................... 68 13.4 Drillhole Surveys ................................................................................................................ 68 13.5 Orientation of Drill Core ..................................................................................................... 68


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13.6 Surveying of Collar Positions ............................................................................................. 68 13.7 Summary Results of Drilling............................................................................................... 69

13.7.1 MRL Drilling .............................................................................................................. 69 13.7.2 Avocet Due Diligence Drilling ................................................................................... 70

14. SAMPLING METHOD AND APPROACH..................................................................................... 71 14.1 Drill Core Sampling ............................................................................................................ 72

14.1.1 Reverse Circulation Percussion Drilling ..................................................................... 72 14.1.2 Diamond Drilling ........................................................................................................ 74

14.2 Location of Drill Samples and Density ............................................................................... 75 14.3 Controls on Selected Drill Sampling Width ........................................................................ 75 14.4 Geological Logging ............................................................................................................. 75 14.5 Calculation of Drill Sample Recovery Data ........................................................................ 77

15. SAMPLING PREPARATION, ANALYSES AND SECURITY ..................................................... 77 15.1 Sample Preparation ............................................................................................................. 77 15.2 Sample Security and Transport ........................................................................................... 79 15.3 Analytical Laboratories ....................................................................................................... 79 15.4 QA-QC Procedures Employed ............................................................................................ 80

15.4.1 Laboratory Protocols ................................................................................................... 83 15.4.2 Blanks and Standards .................................................................................................. 85 15.4.3 McPhar Blanks and Standards ..................................................................................... 89 15.4.4 Results of Repeat Analyses on Sample Solutions ....................................................... 90 15.4.5 Results of Independent Laboratory Checks................................................................. 92

15.5 Measurement of Specific Gravity ....................................................................................... 93 16. DATA VERIFICATION ................................................................................................................... 94

16.1 Avocet Mining PLC ............................................................................................................ 94 16.2 Independent Consultant Data Verification .......................................................................... 94

17. ADJACENT PROPERTIES .............................................................................................................. 96 17.1 El Paso Exploration Permit and El Paso Prospect ............................................................... 96 17.2 Talahib Exploration Permit Application and Talahib Prospect ........................................... 96 17.3 Lobo MPSA 176-02-IV and the SW Breccia Mineral Resource ........................................ 97

18. MINERAL PROCESSING & METALLURGICAL TESTING ....................................................... 97 19. MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES ............................................ 98

19.1 Geological Modelling .......................................................................................................... 98 19.1.1 Geological Interpretation and Modelling .................................................................... 99 19.1.2 Mineralization Domains .............................................................................................. 99

19.2 Mineral Resource Estimation ............................................................................................ 100 19.3 Estimation Block Size, Grade Interpolation and Search Strategies .................................. 105 19.4 Model validation ............................................................................................................... 109 19.5 Resource Reporting ........................................................................................................... 109

20. OTHER RELEVANT DATA AND INFORMATION ................................................................... 120 21. INTERPRETATION AND CONCLUSIONS ................................................................................ 120 22. RECOMMENDATIONS ................................................................................................................ 122 23. REFERENCES ................................................................................................................................ 124 24. DATE AND SIGNATURES ........................................................................................................... 126 25. ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON DEVELOPMENT

PROPERTIES & PRODUCTION PROPERTIES .................................................................................... 128 26. ILLUSTRATIONS .......................................................................................................................... 128


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LIST OF FIGURES

Figure 1: Location of the Archangel Project in Southern Luzon, Philippines. ........................................................... 14 Figure 2: Batangas Project Tenement Map ................................................................................................................. 17 Figure 3: Regional Geologic Map of the SW Luzon area. .......................................................................................... 26 Figure 4: Regional Structures and Volcanic Centers of Batangas, Laguna and Cavite .............................................. 27 Figure 5: Regional Structures in the Southern Batangas Mineral District .................................................................. 29 Figure 6: Geologic Map of Archangel Project ............................................................................................................ 31 Figure 7: Kay Tanda Stratigraphy ............................................................................................................................... 34 Figure 8: Lithological Map of Kay Tanda Showing Drillhole Location. .................................................................... 35 Figure 9: 3-D Geology of the Kay Tanda Area ........................................................................................................... 36 Figure 10: Cross-section 9900 mN at Kay Tanda ....................................................................................................... 37 Figure 11: Middle to Upper Miocene and Early Pliocene Events at Kay Tanda Prospect .......................................... 39 Figure 12: Photographs of Different Mineralization Styles ........................................................................................ 39 Figure 13: Early to Late Pliocene Events at Kay Tanda ............................................................................................. 40 Figure 14: Section along 9900E showing the different alteration and mineralization domains .................................. 46 Figure 15: Au and trace elements analyses using ICP of quartz-base metal (in blue) and quartz vein (red) .............. 47 Figure 16: 3-D Image of the Pulang Lupa Mineralization Wireframes....................................................................... 48 Figure 17: Mineralization Model of Kay Tanda and Pulang Lupa ............................................................................. 49 Figure 18: Alteration Map of Lumbangan Prospect .................................................................................................... 50 Figure 19: IP chargeability data (msecs) in the Archangel Project area plotted at n=4 .............................................. 55 Figure 20: IP resistivity data (ohm-m) in the Archangel Project area plotted at n=4. ................................................. 55 Figure 21: Tensor summary from KTDH04, 11, and 10 ............................................................................................. 59 Figure 22: Outcrop of silicified tuff with quartz veins ................................................................................................ 60 Figure 23: Alteration Map of Kay Tanda Project Area ............................................................................................... 61 Figure 24: Location of Drill Core Samples Scanned by ASD ..................................................................................... 63 Figure 25: Kay Tanda drillhole location map ............................................................................................................. 65 Figure 26: Avocet Drillhole Locations at the Kay Tanda and Pulang Lupa prospects ............................................... 66 Figure 27: Indodrill‟s Man-portable ID-350 Rig at Kay Tanda Project ...................................................................... 67 Figure 28: MRL sampling protocol for the RC percussion drilling program at Kay Tanda. ...................................... 73 Figure 29: MRL Core handling, logging and sampling protocol. ............................................................................... 74 Figure 30: MRL QAQC flowchart .............................................................................................................................. 82 Figure 31: Flowchart of sample preparation process by McPhar Laboratory ............................................................. 83 Figure 32: Flowchart of gold fire assay by McPhar Laboratory ................................................................................. 84 Figure 33: Procedure for Cu, Pb, Zn, Ag by AAS and As by VGA/AAS used by the McPhar Laboratory. .............. 85 Figure.34: Graph of Au assays of blank samples inserted by Avocet ......................................................................... 87 Figure 35: Gold assays of Oreas 15Pa standard .......................................................................................................... 88 Figure 36: Gold assays of Oreas 52Pb standard .......................................................................................................... 88 Figure 37: Gold assays of Oreas 62Pb standard .......................................................................................................... 89 Figure 38: Graphs showing Cu, Pb, Zn and Ag assays of CRM used by McPhar ...................................................... 90 Figure 39: Plot of analytical repeats conducted by McPhar Laboratory on Au, Ag, As, Cu, Pb and Zn .................... 91 Figure 40: Comparison between repeat Fire Assays (AuFA1, AuFA2) conducted by McPhar in log normal plot .... 91 Figure 41: Comparison between Penjom and McPhar Quick Leach Test results (in percent). ................................... 92 Figure 42: Typical set-up for bulk density measurements of drill core ....................................................................... 93 Figure 43: Data validation process flow ..................................................................................................................... 94 Figure 44: Mineralization model of Kay Tanda and Pulang Lupa .............................................................................. 99 Figure 45: Bulk Density Histograms – by REDOX .................................................................................................. 104 Figure 46: Grade-Tonnage curve – Oxide resource (Meas+Ind, Inf) ........................................................................ 119 Figure 47: Grade-Tonnage curve – Transition resource (Meas+Ind, Inf) ................................................................. 119 Figure 48: Grade-Tonnage curve – Fresh resource (Meas+Ind, Inf) ......................................................................... 120


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LIST OF TABLES

Table 1- Significant Dates for Archangel MPSA 177-2002-IV .................................................................................. 15 Table 2- Climatic normals data from nearest weather stations to the project site. ...................................................... 20 Table 3-Vein paragenesis in the Kay Tanda Pulang Lupa area. .................................................................................. 42 Table 4- Drilling Contractors ...................................................................................................................................... 64 Table 5- Survey Control Stations ................................................................................................................................ 69 Table 6- Old and new UTM coordinates of the three control points ........................................................................... 69 Table 7- CRM‟s used by Avocet with the corresponding number of samples ............................................................ 87 Table 8- Independent core and RC samples collected by the author at Mindoro and Avocet samples. ...................... 95 Table 9- Result of heap leach test on each type of mineralization .............................................................................. 98 Table 10- Comparison of gold extraction obtained by heap leaching. ........................................................................ 98 Table 11- Kay Tanda 2009 mineralization wireframes (Pulang Lupa – yellow shading) ......................................... 101 Table 12- Gold and Silver top cut summary ............................................................................................................. 102 Table 13- Block model limits (file prot2009 and protqb) ......................................................................................... 103 Table 14- Summary statistics of Bulk Density by REDOX ...................................................................................... 104 Table 15- Kay Tanda 2009 Search Parameters (Large radius search - kt09_sp and special search kt09_sp2 [ktsv4,

ktqt6, ktqt19, ktqt22] ) .............................................................................................................................................. 107 Table 16- Kay Tanda 2009 Search Parameters (2nd Localised radius search - kt09_sp3)........................................ 108 Table 17- Kay Tanda (excluding Pulang Lupa) (Oxide >0.3 g/t Au cut off, Transition/Fresh >0.5 g/t Au) ............. 110 Table 18- Pulang Lupa (excluding Kay Tanda) (Oxide >0.3 g/t Au cut-off, Transition/Fresh >0.5 g/t Au ) ........... 111 Table 19- Total Resource (KT and PL) (Oxide >0.3 g/t Au cut off, Transition/Fresh >0.5 g/t Au) ......................... 112 Table 20- Kay Tanda (excluding Pulang Lupa) at > 0.3 g/t Au cut off ..................................................................... 113 Table 21- Pulang Lupa (excluding Kay Tanda) at >0.3 g/t Au cut off ...................................................................... 114 Table 22- Total Resource (Kay Tanda and Pulang Lupa) at >0.3 g/t Au cut off ...................................................... 115 Table 23- Kay Tanda (excluding Pulang Lupa) at >0.5 g/t Au cut off ...................................................................... 116 Table 24- Pulang Lupa (excluding Kay Tanda) at >0.5 g/t Au cut off ...................................................................... 117 Table 25- Total Resource (Kay Tanda and Pulang Lupa) at >0.5 g/t Au cut off ...................................................... 118


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3. EXECUTIVE SUMMARY

The Archangel project of Mindoro Resources Ltd. is located approximately 115 km south of Metro-

Manila, in the Batangas Province of southern Luzon, Philippines. The project is situated along the coastal

strip that extends from Balibago village to Marita village, in the municipality of Lobo. The Archangel

property (MPSA 177-2002-IV) is contained within geographic coordinates 13°36‟30”N and 13°39‟30”N

latitude and the geographic coordinates 121°17‟30”E to 121°20‟00”E longitude. The property also

includes parcels 4 and 5 of Exploration Permit No. EP-IVA-010, otherwise known as the Philex EP,

covering an area of 415.59 hectares. Archangel is part of an extensive package of tenements in which

Mindoro Resources Ltd. has an interest. The property comprises an area of 1,011.54 hectares and is

covered by an approved Mineral Production Sharing Agreement denominated as MPSA No. 177-2002-

IV, which is held by Egerton Gold Philippines, Inc.

By way of an option agreement with Egerton Gold Philippines Incorporated signed on October 23, 2000,

Mindoro Resources Ltd., through its wholly owned subsidiary, MRL Gold Philippines Incorporated,

acquired the right to earn a 75 percent interest in the Archangel Property. Under this agreement, Mindoro

had earned a 51 percent direct and indirect interest in the Batangas Projects and had the right to acquire an

additional twenty-four percent indirect interest by taking any one deposit to feasibility stage and issuing

500,000 common shares to Egerton or its assignees. During 2008, Egerton agreed to waive the feasibility

requirement and Mindoro issued the requisite 500,000 common shares, which brought Mindoro‟s total

direct and indirect interest to 75 percent.

Consequently, Mindoro finalized the acquisition of the remaining 25 percent indirect interest in the

projects through the issuing of an additional 7,500,000 common shares to Egerton plus entitlement to a

one-time payment of US$1,000,000 at the start of production, and will be granted a one percent net

smelter royalty on all metals produced from the Batangas Projects. Mindoro now owns 100 percent direct

and indirect interest in the project via a wholly-owned Philippine subsidiary, subject to a one percent net

smelter royalty (NSR) to the original claim holders. The gold silver resource as currently known occurs

100 percent on the MPSA. The EP parcels are subject to a 2 to 4 percent NSR.

A new gold-silver resource estimate for the Kay Tanda Prospect, within the Archangel property was

carried out by gold miner Avocet Mining PLC, and audited and verified on behalf of Mindoro by Dallas

Cox, BE (Min), an independent qualified person as defined by NI 43-101. The new resource estimate and

update on the mineralization delineation is the subject of this Technical Report.

The Archangel project lies at the southern end of the West Luzon Arc, its northern portion is also known

as the Bataan Arc which forms the Bataan peninsula west and northwest of Manila. A series of volcanic

centers of Late Miocene to Recent age form part of this northwest-trending volcanic arc along the western

coastline of southern Luzon. The arc is related to eastward subduction of the South China Sea Plate at the

Manila Trench. Two deeply eroded volcanic centers at the southern end of this arc (Talahib and Lobo

volcanic centers) of Late Miocene to Pliocene lie in the southern Batangas district. A series of NW-

trending, arc-parallel faults transect the Batangas and Cavite provinces. These structures coincide with the

main axis of the West Luzon Arc and may have been responsible for focusing arc magmas during the

Middle Miocene. In the mid- to late Miocene the south end of the West Luzon subduction system was

caught in the Mindoro-Panay collision zone, wherein the Palawan Block of continental Eurasian Plate

derivation collided against the west margin of the Philippine Mobile Belt. The broader Batangas region

was associated with waning subduction and magmatism as a result of this collision, and an evolution to

more highly evolved and explosive magmatism during the dying stages of volcanism. During the

Pliocene, a period of extensional tectonics affected the Batangas Peninsula. NE-trending arc-normal


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structures developed as normal faults across the Cavite, Laguna and Batangas regions. These late

extensional structures focused magmatism along the Macolod Corridor during the late Pliocene and

Pleistocene, and their early formation enabled shallow hydrothermal systems to form along the

mineralized and NE-trending Archangel corridor.

The Archangel Project area lies on the southeast flank of the deeply dissected Lobo volcanic center.

Altered and mineralized volcanic rocks and associated high-level intrusions of diorite, quartz diorite and

dacite have been mapped along an approximate 6 km length of the Archangel MPSA. An extensive

regional zone of argillic alteration coalesces around a series of discrete centers of mineralization that are

clustered around intrusive centers at Balibago, Pulang Lupa, Kay Tanda, Marita and potentially elsewhere

on the property.

The project area is dominated by the Talahib Volcanic Sequence of Middle to possible Upper Miocene

age, a thick volcanic succession of dacite and andesite flows and tuffs. The lower portion of the Talahib

Volcanic Sequence is dominantly dacitic in composition, and comprises intercalated porphyritic dacites,

dacitic tuffs and reworked volcaniclastic rocks. The upper part of the Talahib Volcanic Sequence

comprises intercalated porphyritic andesites, and andesitic ash tuffs. The Talahib Volcanic Sequence is

locally overlain by bedded tuffaceous and calcareous sedimentary rocks and minor limestone of the

Calatagan Formation and is in turn overlain by young porphyritic andesites, tuffs and agglomerates.

Diorite and quartz diorite bodies of the Balibago Diorite Complex intrude the Talahib Volcanic Sequence.

These intrusions of inferred middle to late Miocene age form two dome-like intrusive cores that underlie

the Pulang Lupa and Kay Tanda prospects, and are associated with an early stage of weak porphyry Cu-

Au mineralization, hydrothermal breccias, SCC and phyllic alteration. The Balibago Diorite Complex is

intruded by dacitic intrusions which are coeval with a younger, evolving and multi-stage epithermal

system.

The earliest recorded mining in the region dates back to the pre-Spanish era when Chinese small-scale

miners worked on the Kay Tanda prospect area and in its immediate vicinity. An account of the early

history of mining and exploration at Balibago and at Lobo are found in reports made by the Spaniards

during their colonization of the country. Before World War II (1940-1945), minimal exploitation of

outcropping mineralization was conducted by the Japanese in the Balibago region. In the 1970‟s,

Sumitomo Mining Corporation explored the same region and drilled two holes but were unsuccessful in

searching for porphyry copper deposits. In 1975, the MGB conducted reconnaissance mapping, mineral

resource evaluation and stream-sediment sampling over the southern Batangas Province, including the

area of the Archangel and Lobo Properties. Several Cu prospects were documented and a -80 mesh stream

sediment survey of the region revealed some Cu-anomalous drainages. In 1983, Questor Surveys Limited

flew a 2 to 4 km flight-line spacing aeromagnectic survey over a large part of the country which included

the Archangel area. World Geoscience flew airborne magnetics and radiometrics over Archangel and

Lobo projects in 1996 for BHP, then with joint venture with Chase Resources. Data verification and

ground verification was done by Dr. Greg Corbett.

Modern exploration on the Archangel property commenced with Western Mining Corporation (1987-

1989) who conducted reconnaissance mapping, trenching, rock-chip sampling, surface soil sampling,

ground magnetic surveys and a regional geochemical survey over the Archangel region prior to drilling

seven diamond drill holes at Pulang Lupa and Kay Tanda. Chase Resources, in a joint venture with BHP

Billiton carried out more extensive RC drilling at Kay Tanda (1995-1998). Thirteen (13) RC drill holes

were completed by Chase Resources between January to March 1998 at Kay Tanda and Pulang Lupa

(program meterage of 1,544m). The holes intersected both the upper silicified and argillized zones at Kay

Tanda and Pulang Lupa and also underlying zones of phyllic alteration. Percussion drilling by Chase at

Kay Tanda was wide-spaced, with most holes located over 100 meters apart. The Chase drill holes


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intersected low-grade gold mineralization that averaged about 0.7 grams per tonne (g/t) in an area of

approximately 600 meters by 400 meters. Mineralization was open in several directions. The Chase

drilling data were used in a preliminary independent and non-compliant resource study that was

conducted in 2003. In 1997, Egerton Gold NL of Australia entered into a deal with the claim holder,

Apical Mining, however shortly after the mineral interests of Egerton Gold NL were purchased by private

Philippine and Australian interests and amalgamated as Egerton Gold Philippines Incorporated to hold the

Lobo and Archangel Projects. Billiton purchased aeromagnetic survey data from Chase in 1998 after they

had conducted tenement due diligence work on the Archangel property, and interpreted a clusters of

magnetic responses in the nearby region. These anomalies were interpreted as high-level intrusions with

which porphyry copper-gold mineralization could be associated.

Exploration activity by Mindoro Resources Ltd. on the Archangel property commenced in 2003 and

involved assessment of prior exploration activity by WMC and Chase Resources. Early activity included

reconnaissance investigations and geological mapping. In 2004, Mindoro undertook regional grid

establishment, some trenching and regional ground-based geophysical surveys (IP and magnetics). In

2005, Mindoro continued these geophysical surveys, undertook regional soil sampling and conducted

preliminary metallurgical testing. Between December 2005 and February 2006, MRL conducted further

IP surveying and a regional Pima survey. In 2006 and 2007 Mindoro conducted a major reverse

circulation percussion and diamond drilling program involving 147 reverse circulation percussion holes

and 26 diamond drillholes for a total combined meterage of 23,042.3m. These holes were completed by

Mindoro between the 2nd April 2006 and the 12th July 2007. The initial drill holes by MRL were

designed to test the extent and continuity of epithermal mineralization at shallow levels of the Kay Tanda

prospect and to test at deeper levels for the presence of porphyry Au-Cu mineralization. Between October

2007 to February 2008, a stream sediment sampling was done. Also, in 2007, another round of 18,800

line meters of IP survey was conducted by McPhar.

Exploration activity has traced mineralization in the broader Kay Tanda region over a distance of ~1.5

kilometers from Pulang Lupa in the WSW through to Kay Tanda where extensive Au-Ag mineralization

has been drill-intersected, and to south and north Lumbangan where surface trenching has indicated

additional mineralization.

A National Instrument 43-101-compliant geological and mineral resource estimation report of the Kay

Tanda and Pulang Lupa prospects was prepared for Mindoro by Dr. Bruce D. Rohrlach and Ravensgate

Minerals Industry. The resource estimate of Ravensgate is summarized below:

Metric

Tonnes

Gold Grade

(g/t Au)

Silver Grade

(g/t Ag)

Gold

(ounces)

Silver

(ounces)

Indicated 3,365,000 0.88 8.00 95,000 865,000

Inferred 11,599,000 0.70 3.00 262,000 1,119,000

Avocet commenced due diligence on the Kay Tanda project of MRL Gold Philippines on October 2008.

The due diligence programme is aimed at re-evaluating the gold resources of the project by drilling across

the strike of previous drilling and high-grade epithermal veins; and properly modelling the different

mineralization domains, especially the high grade veins.

The due diligence work comprised a drilling campaign of 14 holes (2,041.8 meters) to determine the

proper projections of the different mineralised structures, particularly the high grade veins. It also

evaluated the potential for near-surface high grade structures.


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The drillholes in the program were designed to be in a different orientation than any previous drilling

campaigns as suspected that previous holes drilled sub-parallel to the NW-SE trend of the high grade

structures. The results verified this because the different mineralized veins were hit by the drillholes at

the appropriate orientation. This enabled the proper interpretation of the different mineralization zones,

especially the quartz-base metal veins, which have not been modeled properly in the past.

The data generated by the program were important in confirming the interpretation of the complex

mineralization found at Kay Tanda. Early mineralization comprising acid-sulphate alteration and quartz

stockworks is interpreted to be related to the upper level of a porphyry system. These were overprinted by

episodes of low sulphidation epithermal veining characterized by quartz±pyrite±chalcopyrite,

pyrite±quartz, and quartz-galena-sphalerite-chalcopyrite.

The complex mineralization characteristics have been simplified into four mineralization domains during

wireframing. Although these domains exhibit overprinting, they were delineated in distinct space relative

to each other. As a result, this also effectively defines the mining and metallurgical domains. The drilling

program confirmed the occurrence of the different mineralization styles and determined their relative

positions and trends. The pyritic stockworks and quartz-pyrite veins were found to be developed at a

certain stratigraphic horizon, along the unconformable contact between the lower dacite and upper

andesite volcanics. Moderate-grade advanced argillic alteration around KTDH-01 may have a hypogene

feeder structure as intersected by KTD176. More importantly, the quartz-base metal veins dominantly

trend NW-SE and extend to near surface level as demonstrated by KTD177.

The drilling program was successful in hitting the targeted quartz-base metal veins at a high angle to core

axis indicating that the drill direction is correct. However, it did not replicate the long stretch of bonanza

grades intersected by MRL holes in the quartz-base metal veins like KTDH-04.

Sufficient exploration information has been collected to estimate preliminary mineral resources for the

Pulang Lupa and Kay Tanda deposits. This information has been collected in accordance with sound

industry best practice and is of sufficient quality and quantity to enable the estimation of the Indicated and

Inferred Mineral Resources in accordance with the guidelines of National Instrument 43-101.

The Kay Tanda Resource estimate is based on 200 drill holes, (160 Reverse Circulation and 40 diamond

drillholes) with a total of 26,628.1 meters and 16,423 assays. High grade gold and silver outliers were top

cut based on a log probability analysis of the individual wireframe flagged data subsets. This resulted in a

variable range of top cuts, from no applied cuts to a maximum of 75 g/t for gold and 250 g/t for silver.

However, top cuts applied for gold were more often in the range 2 to 10 g/t and for silver in the range 10

to 40 g/t.






to 40 g/t. This work has produced Measured, Indicated and Inferred Mineral Resources in accordance

with the definitions outlined in the JORC Code of 2004 (Australasian Joint Ore Reserves Committee) and

is reported in accordance with CIMM National Instrument 43-101, Standards of Disclosure for Mineral

Projects and also the JORC Code.

The Mineral Resources have been reported above a cutoff greater than 0.3 g/t Au for oxide material,

greater than 0.5 g/t Au for transitional and fresh materials. With these cutoff parameters, the combined


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Measured and Indicated Mineral Resources of Kay Tanda and Pulang Lupa amount to 9.879 Mt @ 1.06

g/t Au containing 337,500 ounces gold. The Inferred Mineral Resources amount to 3.741 Mt @ 0.81 g/t

Au containing 97,200 ounces gold. These resources are tabulated below:

Summary of Resource @ cutoffs of > 0.3 g/t Au for oxide material and > 0.5 g/t Au for transition

and fresh materials.

Metric Tonnes

Au g/t Ag g/t Gold (oz)

Silver (oz)

Oxide (> 0.3 g/t Au)

Measured 2,673,000 0.80 7.72 68,900 663,200

Indicated 1,581,000 0.65 4.24 33,000 215,300

Measured + Indicated 4,254,000 0.75 6.42 101,900 878,500

Inferred 680,000 0.57 3.04 12,400 66,400

Transition (> 0.5 g/t Au)

Measured 1,401,000 1.30 4.92 58,700 221,400

Indicated 1,058,000 1.11 2.61 37,900 88,900


Inferred 537,000 0.97 2.57 16,800 44,400

Fresh (> 0.5 g/t Au)

Measured 1,663,000 1.46 2.58 78,000 138,000

Indicated 1,503,000 1.26 2.09 61,000 101,000


Inferred 2,524,000 0.84 1.23 68,000 100,000

Total

Measured 5,737,000 1.11 5.54 205,600 1,022,600

Indicated 4,142,000 0.99 3.04 131,900 405,200

Measured + Indicated 9,879,000 1.06 4.50 337,500 1,427,800

Inferred 3,741,000 0.81 1.75 97,200 210,800

Total metal contents in the reported resources represent metal in the ground and have not been adjusted for metallurgical

recoveries and other factors which will be considered in later study

The gold and silver grades have been rounded off to the nearest 2nd decimal places and the tonnage and contained ounces to

the nearest thousand, which may have resulted in minor discrepancies.

Mineral resources which are not mineral reserves do not have demonstrated economic viability.

The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-

political, marketing, or other relevant issues.

This resource is estimated at a higher level of confidence (being mostly Measured and Indicated) than that

calculated by Ravensgate mainly because the modelling process was afforded significantly more time.

The total gold ounces are higher by 22 percent than the Ravensgate resource. This proves that by

understanding the models of the different mineralization domains, the resources can be upgraded.

The author recommends that additional diamond drilling should be performed to better grasp the controls

on the distribution of the Au-base metal mineralization. The new mineralization model should be utilized


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to create a good drilling plan, which carefully maps out the drilling orientation and direction with respect

to the observed structural features in order to hit the new zones and mark their lateral and vertical extent.

A significant and new quartz-base metal vein zone, located at the eastern edge of the Kay Tanda prospect,

should be further mapped and studied to better delineate the lateral extent of the said zone, with the

possibility of an extension of a similar or the same zone further east towards Lumbangan ridge.

4. INTRODUCTION

This technical report has been prepared for Mindoro Resources Limited [Mindoro] and its wholly owned

subsidiary, MRL Gold Phils., Inc. [MRL]. Mindoro is listed on the Toronto Stock Exchange [TSX-

Venture Exchange] and the Frankfurt Stock Exchange. The author was engaged to audit and verify the

new resource estimate carried out by gold miner Avocet Mining PLC [Avocet], that was submitted to

Mindoro as part of Avocet‟s Due Diligence Report (unpublished).

The Archangel property was originally the subject of an agreement between Mindoro and Egerton Gold

Phils., Inc. [Egerton] whereby Mindoro may earn up to a 75 percent interest in the property. Mindoro

acquired the remaining 25 percent by issuing shares to Egerton in 2008. Mindoro now owns 100 percent

direct and indirect interest in the project via a wholly-owned Philippine subsidiary, subject to a 1 percent

net smelter royalty (NSR) to the original claim holders. The tenements covering the Archangel property

comprise 1,011.54 hectares under MPSA 177-02-IV, and 415.50 hectares under EP-010-IV. The Project

straddles Barangay Balibago within the Municipality of Lobo, Province of Batangas. It is located about

115 aerial kilometers south of Metro Manila.

On September 23, 2008, Mindoro entered into a Memorandum of Understanding (MOU) with Avocet, a

London-based AIM listed gold producer for Mindoro's Archangel Project. Avocet commenced due

diligence on the Kay Tanda project on October 2008 and completed middle of June 2009, to re-evaluate

the gold resources of the project.

The purpose of this technical report is to provide a summary of the geology and mineralization of the Kay

Tanda and Pulang Lupa prospects under the Archangel property in the Batangas property group, present

Avocet‟s results on their re-evaluation of the precious metal resource estimate and show the remodeling

of the different mineralization domains especially the high grade veins as part of the delineation

exploration activity in this area. This report also aims to give recommendations regarding future

exploration activities and exploration strategies on the property.

This report utilizes information contained within technical reports that have been written by MRL

geologists and their consultants, Due Diligence report by Avocet Mining PLC, and information contained

from reports held by the Mines and Geosciences Bureau (Philippines), relevant information contained

within published technical papers, and reviews by Dallas Cox, MRL Gold's consultant. All sources of

data used in this report are cited under References, in Section 23.

This technical report was prepared by Dallas M. Cox, BE (Min), a mining engineer employed as an

independent consultant under a sole trader business registered under Crystal Sun Consulting, who is a

qualified person as defined by National Instrument 43-101. The resource estimates was initially

conducted by Mr. John Milovanovic, the Group Resource Geologist of Avocet who is also a qualified

person as defined by National Instrument 43-101. The results of the resource estimation was then audited

and verified by Mr. Cox.


12

All work conducted by Mindoro at the Archangel property was carried out under the supervision of James

A. Climie, P. Geol., who is also a qualified person and who has carried out frequent and extensive site

visits. The Avocet due diligence work was likewise under the close supervision of a qualified person, Mr.

Peter Flindell, B.Sc (Hons) of Avocet.

All information presented in this report was prepared in accordance with the requirements of National

Instrument 43-101F1, Standards of Disclosure for Mineral Projects and is in the format prescribed by that

instrument.

5. RELIANCE ON OTHER EXPERTS

The Author of this report is a Qualified Person, and relied on various data and reports provided by

Mindoro to support the interpretation of exploration results discussed in this Technical Report. This data

consists of surface geochemical samples (soil samples, stream sediment samples, rock-chip samples and

trench samples) plus drillhole samples (diamond core and RC percussion chip samples). The results and

conclusions that are discussed in this report are dependent on the accuracy of the geological and legal

information that was provided by Mindoro. These are believed to be up to date and complete at the time

of publication of this report. The Author is satisfied, based on his knowledge of the area, that the

geographic, topographic and geologic information used in this report is correct, in good stead, and is

considered reliable. The Author is not aware of any critical data that has been omitted so as to be

detrimental to the objectives of this report. There was sufficient data provided to enable credible

interpretations to be made in respect of the data. The Author believes that no information that might

influence the conclusion of the present report was withheld from the study. The Author asserts the right,

but not the obligation, to modify this report and its conclusions if new information is presented after the

date of publication. The Author does not take responsibility for the quality of the data that was provided

or produced by Mindoro, other than the routine verification work that was undertaken by the Author prior

to preparation of this report, and which is documented in this report. The Author assumes no

responsibility for the actions of Mindoro in the distribution of this report.

The legal status of the property in respect of the joint venture with Egerton has been verified by Avocet‟s

legal counsel, but not by the Author. All details in this report pertaining to ownership arrangements,

royalty agreements, Memorandum of Agreements and other legally binding contracts between Egerton,

Mindoro, MRL and local landowners, as provided by Mindoro are taken as true. The Author is not aware

of any external claim on the property by other parties due to financial grievances, nor are they aware of

any liabilities or responsibilities due to environmental regulations that might impede the development of

the Kay Tanda project.

Section 18 of this report presents the results of initial metallurgical testing, the procedures and results of

which were undertaken and documented by Peter J. Lewis and Associates and Metcon Laboratories, a

division of Ammtec Ltd located at 16 Ethyl Avenue, Brookvale NSW 2100, Australia [ABN 40 396 637

856]. The author of this report do not take responsibility for the representative nature of the metallurgical

samples sent for study nor for results obtained by P.Lewis and Metcon.

The author, Mr. Dallas Cox is responsible for compiling all sections of this NI 43-101 technical report.

Mr. Cox is responsible for the verification of the ore resource calculations done by Avocet, the

methodologies used in the resource estimate as documented in Section 19 of this report and the category

to which the ore resource has been assigned. The author is responsible for the compilation and

verification of the enhanced resource estimation based on the original data supplied by Avocet and MRL.


13

This report was prepared in accordance with the requirements of National Instrument 43-101F1,

Standards of Disclosure for Mineral Projects and is in the format prescribed by that instrument.

The author is not aware of any additional exploration activity or data acquisition on the property since

that date. Once further exploration on the Archangel property commences, the acquisition of new data

may result in changes in interpretations, conclusions and subsequent recommendations.

The Author is not in any way an affiliate of Mindoro Resources Limited or its subsidiary company, and

the interpretations in this NI 43-101 Technical Report are not dependant on any prior agreement

concerning the conclusions reached.

6. PROPERTY DESCRIPTION AND LOCATION

6.1 Location

The Archangel Property (MPSA 177-2002-IV) is located ~115 km south of Metro-Manila, in Barangay

Balibago, municipality of Lobo, Batangas Province of southern Luzon, Philippines; within geographic

latitude coordinates 13°36‟30”N and 13°39‟30”N and the geographic longitude co-ordinates 121°17‟30”E

to 121°20‟00”E (Figure 1). The 1,011.54-hectare area is on a coastal strip that extends from Balibago

village to Marita village, in Lobo, near the major commercial port of Batangas City. The project is

bounded by the municipality of Taysan to the north and San Juan to the east. Access to the project area

from Manila is via the South Super Highway and National Highway to Batangas City (110 km), then a

further 33 km by sealed road east of Batangas City to Lobo. After by-passing the Taysan turn-off in Lobo,

is by a 15-km unsealed coastal road that runs through barangays Mabilog, Sawang, Sulok and Malabrigo

to Barangay Balibago (Figure 1).

The project area is classified as timberland. No indigenous groups live within the MPSA area, and most

of the population is comprised of Christian settlers who live within the coastal settlements. The author is

not aware of any environmental liabilities to which the property is subject other than those that fall under

the auspices of the Philippine Mining Act of 1995. It is approximately three to four hours drive from

Manila, and within one kilometer to the ocean.


14

Figure 1: Location of the Archangel Project in Southern Luzon, Philippines.

The Kay Tanda and Pulang Lupa mineralized zones lie almost entirely within the Archangel MPSA

(Figure 2), although the southeast margin of the Kay Tanda zone likely extends beyond the boundary of

the Archangel MPSA and onto the Philex EP which lies due east of Kay Tanda (Figure 2). The locations

of small-scale historical workings on the Archangel MPSA are also shown in Figure 2. One area of

historical workings lies within the central portion of the Kay Tanda mineralized zone whilst the other lies

midway between Kay Tanda and Balibago. There are no existing mineral reserves, tailings ponds, waste

deposits nor other mine infrastructure within or near the property boundaries.

A preliminary mineral resource estimate of inferred but non-compliant resource by Bailey in 2003 for

both oxide and sulfide material resulted to about 17,000,000 tonnes of mineralized material at 0.68 g/t

gold and 2.48 g/t silver for Kay Tanda and Pulang Lupa Prospects. The estimate utilized a total of 13

drillholes that were drilled by Chase Resources. This estimate was not accepted by the TSX due to a

limited understanding of geological controls on the mineralization at that stage.

6.2 Property Description

Mindoro has a cluster of projects known as the Batangas Projects. It totals 29,117.58 hectares and

includes the Archangel Project, Lobo Project, and several areas that have been recently acquired from

Philex Gold, and other tenements that are the result of separate agreements with individual claimants. Of

these 14 properties, two (2) of them are approved Mineral Production Sharing Agreements – MPSA 177-

2002-IV [Archangel Project; subject of this report] and MPSA 176-2002-IV. Six (6) of the 14 properties

are approved Exploration Permits (EP‟s) while the six (6) remaining properties are Exploration Permit


15

Applications (EPA‟s). Table 1 and Figure 2 show this information with the boundaries of the approved

properties, and properties for which applications have been submitted (Figure 2).

Date / Period Status

November 21, 2002 Initial two-year exploration term granted

January 22, 2003 MPSA and DENR Registration

December 16, 2004 Application for the first 2-year renewal

February 2005 Financial and Technical Assistance Agreement (FTTA)* was made May 26, 2005 First 2-year renewal was granted

March 20, 2007 Application for the second 2-year renewal

July 27, 2007 First 2-year renewal was granted

July 27, 2007 to July 26, 2009 5th and 6

th year of Exploration Period of MPSA

July 24, 2009 Application for 3rd

renewal of Exploration Period of MPSA (7

th and 8

th year) January 19, 2010 to January 18, 2012 7

th and 8

th year of Exploration Period of MPSA

Table 1- Significant Dates for Archangel MPSA 177-2002-IV

The total area of the two (2) MPSA properties that have been granted to date (Lobo and Archangel) is

2,175.16 hectares. The boundaries of MPSA 177-2002-IV [Archangel] were purportedly surveyed by

Chase prior to Mindoro‟s involvement in the project. Mindoro used the coordinates that were provided by

the issuer of the permit, the Mines and Geosciences Bureau of the DENR, as the MPSA boundary when

plotting tenement boundaries relative to the location of exploration activities that are surveyed by EDM

survey equipment. The surveyed coordinates of drillholes are tied to a local grid. The local grid was set-

up with the Chase drill-hole CA-05 as a reference or origin point, and this local grid is also tied to a

Bureau of Lands Location Monument (BLLM). The BLLM is a concrete benchmark that is located at the

Malabrigo lighthouse and which is used to establish land parcel boundaries in the region.

The tenements covering the Archangel property comprise 1,011.54 hectares under MPSA 177-02-IV, and

415.59 hectares under EP-IVA-010.The Archangel MPSA is held by Egerton Gold Phils., Inc., a private

Philippine company. It originally consisted of 18 mineral claims that were filed by four individuals. After

many stages of transfers, a Deed of Assignment was executed by Manuel Arteficio on May 4, 2000 in

favor of Egerton, and was approved by MGB-IV on October 4, 2000. By way of an option agreement

with Egerton signed on October 23, 2000, Mindoro, through its wholly owned subsidiary, MRL, acquired

the right to earn a 75 percent interest in the Batangas Projects, including Archangel Property through

phased exploration expenditures, issues of shares, and by taking one of the projects (either Lobo or

Archangel) to the feasibility stage. Parcels 4 and 5 of EP-IVA-010 are held by Philex

Parcels 4 and 5 of the EP-IVA-010 adjoins the Archangel MPSA (Figure 2) and may be utilized should

any future mine infrastructure be built at Kay Tanda and Pulang Lupa. This is held by Philex Mining

Corporation [Philex], and was approved on September 13, 2007. On June 3, 2003, Philex executed a Deed

of Assignment with Royalty Agreement covering the EP area in favor of Egerton. Egerton may earn a

100% interest by taking the project to production within a ten-year period [extendable for five years]. The

Philex EP is subject to a 2 to 4 percent NSR. Depending on developments, the EP may be converted into

a Financial or Technical Assistance Agreement (FTAA).

Under the original October 2000 agreement with Egerton, Mindoro had earned a 51 percent direct and

indirect interest in the Batangas Projects and had the right to acquire an additional twenty-four percent

indirect interest by taking any one deposit to feasibility stage and issuing 500,000 common shares to

Egerton or its assignees. During 2008, Egerton agreed to waive the feasibility requirement and Mindoro

issued the requisite 500,000 common shares, which brought Mindoro‟s total direct and indirect interest to

75 percent.


16

Mindoro finalized the acquisition of the remaining 25 percent indirect interest in the projects through the

issuing of an additional 7,500,000 common shares to Egerton. These shares were subject to a hold period

with 1,500,000 shares restricted from trading for six months, two million shares restricted for 12 months,

two million restricted for 18 months and two million restricted for 24 months. Egerton is also entitled to

receive a one-time payment of US$1,000,000 at the start of production – applicable to the first deposit to

start production only, and will be granted a one percent net smelter royalty on all metals produced from

the Batangas Projects. Canadian regulatory approval for the transaction has been received.

The Archangel property contains updated inferred and indicated mineral resource at Kay Tanda and

Pulang Lupa and which is the subject of this Technical Report. There are no mine workings on the

property other than some historical small-scale workings. There are no tailings ponds nor waste dumps

within the property boundary. An unsealed coastal road is the only natural improvement of significance in

the area and it runs close to if not within the southeast boundary of the property. The Author is not aware

of any pre-existing environmental liabilities to which the property is subject. The company is however

required to rehabilitate areas of significant surface disturbance should these be created during the course

of exploration activities.

Figure 2: Batangas Project Tenement Map

6.3 Tenement Type

An MPSA is an exploration and mining license granted by the Philippine Government for small projects

with a capitalization of less than US$50 million. It is designed for Filipino companies with foreign

ownership limited to a maximum of 40%. The contractor has the exclusive right to conduct mining

operations within, but not title over, the contract area during a defined period. Under the agreement, the

Government shares in the production of the Contractor, in kind or in value, as owner of the minerals while

the Contractor provides the necessary financing technology, management and personnel for the mining

operation.

The MPSA provides a maximum eight-year period for exploration through an initial two-year period and

three allowable two-year extensions. The final extension is the feasibility period. Mining is conducted

during a 25-year mining phase that has one allowable 25-year extension. Allowable mining operations

include exploration, development and utilization of mineral resources.

Importantly, the Philippines has a strong mining law with well-defined and reasonable terms and

conditions. In addition to the mandatory documentary requirements for MPSA applications, a National

Commission on Indigenous Peoples (NCIP) Certification that the area does not overlap any certified or

claimed ancestral land/domain is required. Where the area overlaps any certified or claimed ancestral

domain, the Free and Prior Informed Consent of the concerned Indigenous Cultural Community

(ICC)/s/Indigenous People (IP)/s and the pertinent Memorandum of Agreement executed by and between

the MPSA applicant, the concerned ICCs/IPs and the NCIP, in a form and substance consistent with

Section 8 of Part III, Rule IV of NCIP Administrative Order No. 1, Series of 1998.

Mindoro has the NCIP Certification that there is no ICC/IP presence in the Archangel area. Archangel

refers to the group of tenements encompassing Kay Tanda, Pulang Lupa, Lumbangan, Balibago, and

Marita prospects.

The Contractor is required to strictly comply with the approved Exploration and Environmental Work

Programs together with their corresponding budgets. These work programs are prepared by the Contractor

as requirements in securing the renewal of the Exploration Period within the MPSA term. The Contractor

is likewise required to submit quarterly and annual accomplishment reports under oath on all activities

conducted in the Contract Area. The Contractor is further required to pay at the same date every year

reckoned from the date of the first payment, to the concerned Municipality an occupation fee over the

Contract Area amounting to PhP75.00 per hectare. If the fee is not paid on the date specified, the

Contractor shall pay a surcharge of 25% of the amount due in addition to the occupation fees.

The MPSA may be suspended for failure of the Contractor to comply with any provision of the Act and to

pay taxes, fees and/or other charges demandable and due the Government. In addition, the said

Agreement may be terminated for the following causes: (a) expiration of its term whether original or

renewal; (b) withdrawal from the Agreement by the Contractor; (c) violation by the Contractor of the

MPSA‟s terms and conditions; (d) failure to pay taxes, fees or financial obligations for two consecutive

years; (e) false statement or omission of facts by the Contractor; and (f) any other cause or reason

provided under the Act and its IRR, or any other relevant laws and regulations.

If the results of exploration reveal the presence of mineral deposits economically and technically feasible

for mining operations, the Contractor, during the exploration period, shall submit to the Mines and

Geosciences Bureau a Declaration of Mining Project Feasibility together with a Mining Project

Feasibility Study, a Three Year Development and Construction or Commercial Operation Work Program,


19

a complete Geologic Report of the area and an Environmental Compliance Certificate (ECC). Failure to

do so during the Exploration Period shall be considered a substantial breach of the MPSA.

Once the ECC is secured, the Contractor shall complete the development of the mine including

construction of production facilities within 36 months from the submission of the Declaration of Mining

Project Feasibility, subject to such extension based on justifiable reasons as the DENR Secretary may

approve, upon the recommendation of the Regional Director of the MGB, through the Director.

Any portion of the contract area, which shall not be utilized for mining operations shall be relinquished to

the Government. The Contractor shall also show proof of its financial and technical competence in mining

operations and environmental management.

The Contractor shall commence commercial utilization immediately upon approval of the Three Year

Work Program. Failure of the Contractor to commence commercial production within the period shall be

considered a substantial breach of the MPSA.

The Archangel Project [MPSA 177-2002-IV] was approved on the 21st November 2002 and was

registered on the 22nd January 2003 with the Department of Environment and Natural Resources. The

tenement is in good standing. Mindoro and Egerton have subsequently made application for, or acquired

through agreement, additional tenements including those acquired from Philex Gold (Figure 2).

The Financial and Technical Assistance Agreement (FTAA) legislation caters for larger projects and

provides a mechanism for 100 percent foreign ownership. FTAA is a tenement title that came out of the

1995 Mining Law. A decision of the Philippine Supreme Court in respect of the status of FTAA‟s

(Financial and Technical Assistance Agreement) was made in February 2005 and allows, with finality,

100% foreign ownership of the mineral tenement under the FTAA. An MPSA may be converted to an

FTAA if the project exceeds the US$ 50 million threshold.

If economic resources are established for the Kay Tanda-Pulang Lupa prospect, then Mindoro will

consider converting the MPSA into an FTAA.

An Exploration Permit (EP) is the preliminary mechanism in the FTAA process that allows for two years

of exploration. Depending on developments, the EP may be converted into a Financial or Technical

Assistance Agreement (FTAA).

7. ACCESS, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND

PHYSIOGRAPHY

7.1 Accessibility

The Kay Tanda prospect is located 115 aerial kilometers south of Metro Manila (Figure 1). It is situated at

Sitio (village) Malagundi, Barangay Balibago, Municipality of Lobo, Batangas province. Access is via the

National Highway south from Manila to Batangas City (110 km), then a further 33 kilometers by a mostly

sealed road that leads to the Municipality of Lobo, and finally, a further 8 kilometers along an all-weather

road and 7 kilometers of poorly maintained tracks to Barangay Balibago. Sitio Malagundi is a small

village located along the coast east of Lobo. The Archangel Project area extends about 1.9 km landwards

and runs parallel to the northeast-trending coastal strip. The total travel time by land from Manila to

Balibago is approximately 4 hours.


20

7.2 Climate

The climate of the Archangel area is tropical characterized by relatively pronounced dry season (from

December to May) and wet season (June to November). During the wet season, rainfalls are related to the

monsoon and to the remnants of typhoons that pass through the area as tropical depressions. The property

lies within the 17 percent frequency occurrence zone for typhoon passages through the Philippines and

experiences about 3-4 typhoon-related weather disturbances a year. An analysis of rainfall in the nearby

Laiya, San Juan area (Vinluan, 2007) indicated that precipitation occurs mostly in short duration and high

intensity storms rather than as long-lasting low intensity rainfall. On the other hand, Avocet, collected

climatic normals date from stations that is about 100 kilometers away from the project area as displayed

in Table 2. An average annual rainfall, over a 30-year period (1951-1985) at Sangley point, is 1683 mm,

while the highest monthly average rainfall is in August, which registers 417 mm for the Manila airport

and 460 mm for Sangley point over an 11-year period (1974-1985) (Table 2).

Table 2- Climatic normals data from nearest weather stations to the project site.

Rainfall data for a limited period (January to May 2009) from one rain gauge on the project site is also

available. It recorded two unusually rainy months in April and May.

7.3 Local Resources and Infrastructure

The Archangel project is located along the shoreline facing the Verde Island Passage and has access to the

local port in transporting equipment. The project is connected to a local power station at San Juan,

Batangas, and draws power though the provincial electric cooperative called Batelec (Batangas Electric

Cooperative), which is connected to the national power grid. Also, the Ilijan Natural Gas Power Plant lies

approximately 20 km southwest of the property and a transit storage facility for the Malampaya natural


21

gas deposit is nearby (i.e. at Batangas City). The latter may be a cheaper option as a power source in the

future.

The access roads from the town of Lobo to San Juan and from Sitio Malagundi to Lobo, are largely

unpaved and prone to erosion. However, it is currently being upgraded by the government. An access

road from Sitio Malagundi to the Kay Tanda and Pulang Lupa prospects is maintained by Mindoro.

Lobo and the regional centre, Batangas City, have large populations that could provide a substantial

skilled labor force should any mining operation commence in the region, while the locals at Sitio

Malagundi lives on subsistence agriculture, garden-to-market agriculture and fishing.

Most of the land in the project area is planted with both fruit bearing (e.g. tamarind, atis or custard apple,

coconut) and non-fruit bearing (e.g. ipil or merbau) trees. The fruits are harvested and sold to Manila

while the leaves of merbau are locally used as livestock feed.

If a mineral deposit is delineated with potential for economic mineral extraction, then an assessment of

the terrain would be conducted by mining engineering consultants to identify land availability for mine

infrastructure, such as tailings storage areas, waste disposal areas, heap leach pad areas and potential

processing sites.

7.4 Physiography

The Archangel Property is situated at the southeastern flank of the deeply eroded (extinct) Mt. Lobo

volcanic centre (969m ASL) with a maximum elevation of 840 meters above sea level (ASL), located at

the northwestern part of the Archangel MPSA (Figure 4). The central and southeastern parts vary from

near sea-level to 500 meters ASL. In the Kay Tanda prospect area, it varies from 260m to 430m ASL and

the area described as deeply incised by numerous southeast-draining creeks that shed from the high-lands

in the northwest.

The Kay Tanda and Pulang Lupa prospect areas are divided by Malagundi (draining to the south), the

Malagundi Creek 1 (draining to the northeast), Kaliwa Creek at the northeast and the Lumbangan Creek

(draining to the east)

View of the project area, looking north, showing moderate to rugged topography.


22

8. HISTORY

The earliest record of mining at Kay Tanda and the region is contained in a book “The History of the

Philippine Islands”, a series of volumes translated into English from Spanish and Filipino archives. It

mentions mining by the Spaniards that post-dates earlier work by Chinese miners on the Kay Tanda

prospect and its immediate vicinity. Evidence of some early activities such as adits and old pits exist at

the Kay Tanda area and along Ahit Ridge.

Before World War II (1940-1945) exploration for base-metals was conducted in the Balibago region by

the Japanese followed by minimal exploitation of outcropping mineralization. In the 1970‟s, Sumitomo

Mining Corporation explored the Balibago region and drilled two holes in search for porphyry copper

deposits. These holes were thought to be unsuccessful in locating significant copper mineralization.

The Philippine Mines and Geosciences Bureau, as part of its inventory of the mineral resources and

prospects, conducted reconnaissance surveys in 1975 in the Batangas province, which included the areas

of the Archangel and Lobo properties. The work included geological mapping, mineral resources

evaluation and stream-sediment sampling. Several copper prospects were documented, including old

mines and workings and abandoned prospects. The -80 mesh stream sediment survey of the Bureau

revealed some copper-anomalous drainage channels, which include the catchment area of the Lobo Mine

(Sampson Vein) to the west of Kay Tanda.

In 1983, Questor Surveys Limited flew an aeromagnetic survey over a large part of the Philippines

including the Archangel area. A variable flight-line spacing of 2 to 4 km was applied.

The first modern exploration covering the Archangel Project area was conducted in 1987 to 1989 by

Western Mining Corporation (WMC) of Australia. WMC carried out a regional exploration program

involving geological mapping, collection of reconnaissance rock-chip samples, surface soil sampling,

trenching, and ground magnetic surveys that recognized Kay Tanda as a significant target.

The reconnaissance rock-chip samples gave several values in the 0.3 to 0.5 g/t Au range from Marita

Creek and at Ahit (Buenavista 1991). A sample from Malagundi River, which drains the area between

Kay Tanda and Pulang Lupa yielded the best rock-chip value of 2.05 g/t Au. The samples from these

areas indicated a strong Au-Ag-As-Hg association, which is a signature of epithermal mineralization.

These results warranted a detailed follow-up wherein WMC sampled on a 100 m x 100 m grid, which

indicated that the Au, Ag, As and Hg at Kay Tanda tended to occur in silicified rocks and breccias,

especially those containing chalcedonic quartz vein stockworks. The best result is from a sample in

Pulang Lupa that yielded 12.53 g/t Au and 68.9 ppm Ag.

A total of 664 soil samples were collected on the Kay Tanda-Pulang Lupa grid in 1988. This resulted to

identification of geochemical anomalism in the area. Sampling was then closed-in to 50 m x 50 m grid in

Kay Tanda and Balibago. The survey identified geochemical signatures of an epithermal system (Au-Ag-

As-Hg) and signatures a porphyry copper system in Balibago.

Seven diamond drillholes comprising 1,002 meters were subsequently drilled in the Kay Tanda and

Pulang Lupa epithermal gold prospects. Significant gold values were intersected in the drilling, and

several of the holes passed the epithermal gold zone and into an inferred porphyry copper related phyllic

alteration zone.

In the 1990‟s, WMC, Chase Resources of Canada (Chase), BHP Billiton, Lepanto Mining and Philex

Mining were all unable to conclude an agreement on the nearby Lobo property. Chase, in a joint venture


23

with BHP, followed-up on the results of the WMC program. Chase drilled 13 reverse circulation

drillholes (nine at Kay Tanda and four at the adjacent Pulang Lupa prospect) in 1998. Chase intersected

both the upper silicified and the argillic zones, and also the deeper phyllic alteration zones. The holes

were wide-spaced, with most holes located over 100 meters apart. The Chase holes intersected low-grade

gold mineralization averaging 0.7 g/t Au in an area of approximately 600 m by 400 m. Mindoro retained

the services of Bailey Geological Consultants in 2002 to conduct a preliminary resource estimation using

Chase‟s drill data.

World Geoscience flew a heli-borne magnetic and radiometric survey for BHP Minerals over the

Archangel and Lobo projects in 1996. The survey employed a regular flight line spacing of 200 m and tie

lines of 1000 m with a mean terrain clearance of about 40 m. Survey instrumentation included a split

beam Cesium Scintrex magnetometer and a 256-channel PGAM–1000 spectrometer. Aeromagnetic data

interpretation and ground verification was undertaken by Dr. Greg Corbett. His report highlighted a large

aeromagnetic anomaly that lay close to the coastline at Archangel. This anomaly coincided with a wide

potassic anomaly which has turned out to be related to illite-sericite alteration (predominantly argillic

alteration) alteration. A circular feature in the Malabrigo region was interpreted as a caldera-like feature

by Dr G. Corbett. The magnetic highs that lay around the circular feature coincided with topographic

highs and are probably related to the cliffs of Lobo Agglomerate that cap the altered Talahib Volcanic

Sequence. (Rohrlach 2008)

Chase did not do any further serious work at Archangel and Lobo, and instead they remained occupied

with their Taysan porphyry copper-gold resource-definition drilling project (13 km north of Lobo).

In 1997, Egerton Gold NL of Australia entered into a deal with the claim holder, Apical Mining. Shortly

after that, the minerals market collapsed and Egerton withdrew from the Philippines. The mineral interests

of Egerton Gold NL were purchased by private Philippine and Australian interests, and amalgamated as

Egerton Gold Phils., Inc. (Egerton) to hold the Lobo and Archangel Projects.

Billiton purchased the aeromagnetic survey data from Chase in 1998, after they had conducted tenement

due diligence work and technical data evaluation of the Archangel and Lobo Projects (Tebar 1998).

During early 1999, Billiton processed and analyzed the aeromagnetic data wherein they interpreted a

cluster of six distinct magnetic responses within the Lobo tenement, and one just outside the tenement on

ground that was also controlled by MRL Gold / Egerton. These anomalies were interpreted as high-level

intrusions with which porphyry copper-gold mineralization could be associated. (Rohrlach 2008)

In 2000, MRL Gold entered into a deal with Egerton to acquire a 75% interest in both projects. Thereafter

Mindoro proceeded to expand their ground holding in the region. Through the acquisition of the Philex

property and adjacent lands, Mindoro was the first company to put most of the gold-copper prospective

areas in the region together into one set of contiguous land packages under a single company ownership

structure (Mindoro-Egerton).

Mindoro Resources have since conducted a systematic programme of geological mapping, soil grid

sampling, channel sampling, Induced Polarization survey, and reverse circulation as well as diamond

drilling to delineate further resources at Kay Tanda and Pulang Lupa. The programme was largely

successful in identifying targets and significantly increasing the gold resource of the project.

Mindoro commenced reconnaissance work in July 2002 and outlined the 1.5 kilometer wide and 5

kilometer long gold and copper anomalous zone at Archangel. Rockchip sampling indicated that high

gold-copper-silver values are widely distributed along the Archangel trend.


24

An independent resource study was commissioned in 2002 by Mindoro. This was restricted to Kay Tanda,

where WMC and Chase Minerals had conducted drilling activity. The drilling was confined to a limited

area within a much larger area of Cu and Au anomalous soils.

A non-compliant and inferred mineral resource of the oxide zone was estimated at 6,300,000 tonnes at a

grade of 0.48 g/t gold and 4.4 g/t silver. The underlying unoxidized mineralization had a noncompliant

and inferred mineral resource of about 10,700,000 tonnes at 0.79 g/t gold and 1.3 g/t silver. The total

inferred resource of both oxide and sulfide material (non-compliant) was estimated to be about

17,000,000 tonnes of mineralized material at 0.68 g/t gold and 2.48 g/t silver. This equates to 370,000

ounces gold and 1,300,000 ounces silver contained in the total non-compliant inferred resource. This

initial estimate was later deemed inadequate by the TSX due to a limited understanding of geological

controls on the mineralization at that stage, and thus required further exploration work.

More detailed exploration activity by Mindoro commenced immediately after Mindoro had registered the

Archangel MPSA with the DENR on the January 22, 2003.

Mindoro conducted semi-detailed and detailed geological mapping at the Kay Tanda, Pulang Lupa and

Lumbangan prospects in 2003. Mindoro decided to commence an evaluation of the open-pit, heap-leach

potential of Kay Tanda and its extensions since the epithermal gold mineralization is near-surface, and is

within the grade ranges of mineralization being heap-leached elsewhere in the world. Mindoro carried out

metallurgical test work on large diameter (PQ) core samples from oxide, transition and sulphide zones in

2004. Other exploration activities followed, which led to the percussion drilling from March 2006 to

April 2007 and diamond drilling from August 2006 to July 2007.

On September 23, 2008, Mindoro entered into a Memorandum of Understanding (MOU) with Avocet

Mining PLC, a London-based AIM listed gold producer for Mindoro's Archangel Project. Avocet

commenced due diligence on the Kay Tanda project on October 2008 to re-evaluate the gold resources of

the project by drilling across the strike of previous drilling and high-grade epithermal veins; and re-

modelling the different mineralization domains, especially the high grade veins. The due diligence work

comprised a drilling campaign of 14 holes (2,041.8 meters). The subsequent sections discuss the results of

the due diligence work.

There has been no substantial production from the Archangel property in recent times. Only small scale

historical surface workings and limited construction of adits is identified from the historical accounts.

9. GEOLOGICAL SETTING

9.1 Regional Geology

There are two main events in the tectonic history of this region: Compressional (Middle to Late Miocene)

and Extensional (Pliocene to Pleistocene).

Extending from Central Mindoro to Zambales and along the western coastline of southern Luzon is a

series of Late Miocene to Recent northwest-trending volcanic centers called the West Luzon Arc (Figure

3). The arc is related to eastward subduction of the South China Sea Plate at the Manila Trench. The

volcanic centers that comprise this arc, from north to south, include Mt. Pinatubo, Mt Natib and Mt

Mariveles (4.1 Ma and younger) on the Bataan Peninsula, the Maatas Na Gulod Complex (4.9 Ma and

younger) in western Cavite, a series of small volcanic centers (Palay Palay, Caluya, Cariliao and Batulao),

and the Talahib and Lobo volcanic centers (6.14 Ma and 5.15 Ma) in the southern Batangas district.


25

From Middle to Late Miocene, the North Palawan Continental Terrane collided against the Philippine

Mobile Belt and was propagated southward to the Mindoro-Panay collision zone (Figure 3) and then

further south to the west Mindanao collision zone (Pubellier et al. 1991, 1996). The Mindoro-Panay

collision resulted to an intense crustal compression around the collision front, and affected the southwest

Luzon (Batangas region) and northwest Visayas (Panay, Mindoro). This event also resulted to the former

South China Sea crust, which was subducting ahead of the converging continental fragment of the

Palawan Block, to slow down and eventually be consumed. Volcanism along the West Luzon Arc

progressively decreased from the south towards the north, as the Panay-Mindoro collision advanced.

The Talahib and Lobo volcanic centers (pink circles) on the Batangas properties of Mindoro lie near a

promontory of the Palawan Continental Terrane where evidence of thrusting, like arcuate landforms, are

observed in the northeast side of the Batangas mineral district (Figure 4).

An increasingly juvenile and youthful character of the volcanic landforms farther north on the Bataan

Peninsula (Mariveles and Natib; Figure 4) suggest that andesitic volcanism waned substantially at

Talahib, Lobo and Maatas Na Gulod soon after the regional Late Miocene collision, as magma supply to

the upper crust became increasingly hindered in the compressional southern segment of the West Luzon

Arc. Prolonged episodes of crustal compression in collision zones generally reduce the volume of surface

volcanism, as lower-crustal ponding and storage of magmas is promoted (Rohrlach et al. 2005, Rohrlach

2008). Evidence from the Lobo volcanic center (Figure 4) in the southern sector of the West Luzon Arc,

adjacent to the Panay-Mindoro collision zone, suggest that magmatism became less frequent over time,

and that the volcanic center went through several alternating cycles of andesitic and dacitic magmatism,

with a significant component of evolved dacitic magmas. Farther north along the Bataan Peninsula,

beyond the margins of the Mindoro collision zone, andesitic magmatism continued more-or-less unabated

into the Quaternary. In this region, magma ascent was not impeded by crustal compression, and magma

generation along the subduction zone continued to the present.

The close proximity of the Mindoro-Panay collision zone to the Batangas province implies that high

crustal stresses in the collision zone may be ultimately responsible for the high metallogenic fertility of

magmas in the district, and the resultant high metallogenic prospectivity (Rohrlach, 2008).


26

Figure 3: Regional Geologic Map of the SW Luzon area.

(from Rohrlach, 2008)

During the Pliocene, a period of extensional tectonics affected the Batangas Peninsula. To the north of the

project area, an ENE-WSW trending topographic depression corresponds to the axis of recent and active

volcanoes known as the Macolod corridor (MC).The MC comprises of a NE-trending series of

extensional structures associated with horsts and grabens that has localized Late Pliocene to Recent

volcanism and these structure are perpendicular to the Manila Trench to the west. These are considered as

transfer structures that tapped deep-seated magmas forming the line of volcanoes along the MC. The

projects area sits on the southern flank of Mt. Lobo located east of Mt. Pinamucan, dated to be about 5

Ma. These extensional structures focused magmatism (e.g. along the Macolod Corridor) and controlled

hydrothermal systems. Subsequently during and after the Late Pliocene, extension was more focused

along the Macolod Corridor (Figure 4). Later pulses of magmatism (especially the andesitic intrusions)

appear to be associated with gold mineralization at Kay Tanda and the northeast trend is a major control

on mineralization and alteration in the Archangel Project.


27

Figure 4: Regional Structures and Volcanic Centers of Batangas, Laguna and Cavite


A series of northwest-trending arc-parallel structures coincide with the main axis of the West Luzon Arc.

These structures transect the Batangas and Cavite provinces including the Talahib and Lobo volcanic

centers (Figure 4). The extensional structures focused magmatism (e.g. along the Macolod Corridor) and

controlled hydrothermal systems.

There are significant mineral prospects in the broader southern Batangas region and the Archangel Project

area, This includes the Taysan porphyry Cu deposit of Freeport McMoRan, which lies ~8 km north of

Calo, the Calo, Pica, Balibago and El Paso porphyry prospects of Mindoro Resources, the high-

sulfidation epithermal resource at Lobo on the Lobo MPSA, plus the Kay Tanda and Pulang Lupa

epithermal prospects, the Bootin high-sulfidation epithermal prospect and the Marita porphyry prospect

that lie on the Archangel MPSA. Other mineral occurrences and smaller prospects are scattered through

the region.

There are two (2) major structural grains in the southern Batangas region, northwest and northeast. The

northwest-trending structures are arc-parallel in orientation, and several lie sub-parallel to splays of the

Philippine Fault, so they may have been partly reactivated as part of the young Philippine Fault system.

The main structure of this orientation is the WNW-trending Laiya Fault, a major terrain suture that may

be related to accretion tectonics (Corbett 1996) and hence related to the Mindoro-Panay collision zone (?).

The Laiya Fault (Avila 1980) is coincident with a large curvilinear magnetic low defined in regional

magnetic data, and which may result from alteration along the Laiya Fault Zone. The northeast trending

structures (Figure 5) are arc-normal faults that likely initiated as extensional normal faults related to the

present extension along the Macolod Corridor. Elements of these early extensional structures can be seen


28

passing near the Taysan porphyry Cu deposit, a second separating the Talahib and Lobo volcanic centers,

and a third zone of northeast-trending structures defining the Archangel trend (Figure 5).

Regional structures in the Southern Batangas Mineral District interpreted from SRTM (shuttle radar

topographic mission) topographic data. The deeply eroded terrain to the northeast comprises the San Juan

Batholith of Early Miocene age. The batholith is bound on its southern side by the Laiya Fault Zone, a

major crustal discontinuity that separates older terrain to the north from younger volcanic sequences to

the south. Two (2) deeply eroded stratovolcanic centers lie south of the Laiya Fault Zone, the Mt Talahib

volcanic center and the Mt. Lobo volcanic center. The Archangel property (top, heavy white outline) lies

on the southeast margin of the Lobo Volcanic center. A major ENE-trending structural lineament (C-1)

separates the Talahib and Lobo volcanic centers and passes near the southern edge of the Calo and El

Paso prospects. Other sub-parallel structural lineaments observed in the topographic data pass along the

edge of the Taysan porphyry deposit and also define the Archangel trend along which the Balibago,

Pulang Lupa, Kay Tanda, Lumbangan, Marita and Bootin prospects are arrayed. The Archangel trend also

controls the linear northeast-trending section of coastline at Archangel. Importantly, these northeast

trends, at the scale of the Batangas district, are parallel to structures that comprise the extensional

Macolod Corridor (Figure 5).


29

Figure 5: Regional Structures in the Southern Batangas Mineral District

Interpreted from Shuttle Radar Topographic Mission (SRTM) Data (from Rohrlach, 2008).


30

9.2 Local Geology of the Archangel Project Area

The Archangel Project area is located some 4 to 5 km southwest of the Laiya Fault and lies on the

southeast flank of the deeply dissected Lobo volcanic center (Figure 5). The project area is dominated by

the Talahib Volcanic Sequence of Middle and possible Upper Miocene age (Figure 6). The Talahib

Volcanic Sequence comprises a thick volcanic succession of dacite and andesite flows and tuffs. The

lower portion of the Talahib Volcanic Sequence is dominantly dacitic in composition, and comprises

intercalated porphyritic dacites, dacitic tuffs and reworked volcaniclastic rocks. They are well exposed

around the Kay Tanda prospect area, near the Balibago prospect and in the Lumbangan prospect area

(Rohrlach, 2008).

The upper part of the Talahib Volcanic Sequence is much more widely exposed in the Archangel Project

area and comprises intercalated porphyritic andesites, and andesitic ash tuffs (Figure 6). The Talahib

Volcanic Sequence is locally overlain in the Kay Tanda prospect area by bedded tuffaceous and

calcareous sedimentary rocks and minor limestone of the Calatagan Formation. These sedimentary rocks

are locally unconformably overlain by young porphyritic andesites and. The Talahib Volcanic Sequence

and the Calatagan Formation are both overlain by extensive andesitic volcanic breccias known as the

Lobo Agglomerate. The agglomerate occupies the high-ground further up the Lobo volcanic edifice,

along the northwestern margin of the Archangel MPSA (Figure 6). The Lobo Agglomerate is described in

Aurelio and Peña (2002) as being part of the Upper Pinamucan Formation of Pliocene age. (Rohrlach,

2008)

The Talahib was intruded by several phases of dioritic intrusions and a later dacite sometime during the

Late Miocene to Early Pliocene (Figure 6). The diorite intrusions are encountered predominantly in the

lower half of the drill sections at Kay Tanda where they form a broad and crudely domal intrusive

complex. (Rohrlach, 2008)

A late-stage and inferred syn-mineral dacite porphyry stock is mapped along the southeast margin of the

Pulang Lupa prospect and is contiguous with dacite porphyry bodies encountered in drilling at the Kay

Tanda prospect.

The volcanic and intrusive geology of the Archangel project and its surrounding area is consistent with a

complex polygenetic andesitic and dacitic volcanic center that evolved in a calc-alkaline island arc

setting. The presence of sedimentary sequences that must have formed near palaeo-sea level due to the

presence of limestones, but which are presently preserved at high elevations (~400 meters ASL) indicate

that in the past, there was likely to have been substantial vertical movement on some structures, which

affected the flanking portion of the older Middle to Upper Miocene volcanic center. These vertical

movements were likely to have been caused by the extensional tectonic regime that affected the area in

the Pliocene following the late Miocene collision event, and which formed the north-east trending

structural fabric that is strongly evident in the Archangel MPSA area. (Rohrlach, 2008)

The stratigraphic units are described in more detail in Section 9.3.

From a regional perspective, the Archangel Project lies along a trend of closely spaced northeast-trending

lineaments which demarcate and trend parallel to the coastline at Archangel. A strong NE-trending

structural fabric was also noted at Kay Tanda and probably caused by the extensional tectonic regime that

affected the area in the Pliocene following the late Miocene collision event. Evidence include quartz veins

and veinlets observed to strike predominantly in the 045 to 090 degree sector and to dip steeply to very

steeply (60°-90o

) to the NW and SE. A lesser set of orthogonal quartz veins, veinlets and stringers were

observed to strike NW-SE with steep dips to the NE and SW. On the basis of the dominant NE orientation


31

of quartz veins and veinlets observed at surface, a strong northeast-southwest structural fabric was

indicated and is developed within a dominantly argillic alteration zone that runs through the Kay Tanda

prospect. (Rohrlach, 2008)

Altered and mineralized volcanic rocks and associated high-level intrusions of diorite, quartz diorite and

dacite have been mapped along an approximate 6 km length of the Archangel MPSA. An extensive

regional zone of argillic alteration coalesces around a series of discrete centers of mineralization that are

clustered around inferred intrusive centers at Balibago, Pulang Lupa, Kay Tanda, Marita and potentially

elsewhere on the property. (Rohrlach, 2008)

Figure 6: Geologic Map of Archangel Project

(from Rohrlach, 2008).

9.3 Lithostratigraphy

The stratigraphy of the Archangel Project (Figure 7) is established from a combination of field mappings,

drillings and previous regional geological research. The best constraints on the stratigraphy of the

Archangel Project area come from deep diamond drilling in the Kay Tanda epithermal deposit in

combination with surface mapping. The major volcano-stratigraphic groups are well-defined regionally

and the contacts between the major stratigraphic packages can be located with reasonable confidence in

the project area.

The oldest rocks in the southern Batangas district are Lower Tertiary (Oligocene) arc-basement sequences

comprising inliers of massive metavolcanics and metasedimentary rocks (Avila 1980) known as the San

Juan Formation. It is not exposed on the Archangel MPSA but occurs on the northern side of the Lobo

volcanic center, around the margins of the San Juan Batholith. The metavolcanic rocks comprise fine- to

medium-grained basalt and andesite, with local exposures having a porphyritic texture. The metavolcanics


32

are associated with some indurated graywacke and fine grained ferruginous shale. The San Juan

Formation includes hornfels, slates, paraschists and marbles that developed by contact metamorphism

around quartz diorite intrusions that are primarily related to the San Juan Batholith.

The Early Miocene San Juan Batholith intrudes the San Juan Metavolcanics to the northeast of the Lobo

and Archangel tenements. The batholith was previously named the Tolos Batholith by Wolfe et al,

(1980). This intrusive complex is dominated by coarse-grained and equigranular quartz hornblende

diorites, which occurs along the northern side of the Laiya Fault Zone in the San Juan and Taysan regions.

The Taysan porphyry copper deposit lies near the northwest margin of the San Juan Batholith (Figure 7).

A post-mineral dacite dike is recorded intruding the San Juan Batholith. Dating of this dacite dyke

yielded a whole-rock 40K-39Ar age of 14.8 ± 0.9 Ma, equivalent to an early Middle Miocene age.

Several late-stage (post San Juan) intrusives are also recorded by Mindoro in the vicinity of the El Paso

prospect, although these have not been dated. (Rohrlach, 2008)

Kay Tanda Prospect is underlain by Middle Miocene andesitic to dacitic volcanics called the Talahib

Volcanic Sequence (TVS) which is unconformably overlain by carbonates and tuffaceous sedimentary

rocks with intercalated volcanic flows (Calatagan Formation). The TVS comprises a thick volcanic

succession of dacite and andesite flows and tuffs. The lower section is dominantly dacitic in composition

while the upper part is dominated by andesites. Andesites in the TVS have been described to be of

variable composition, consisting of basaltic andesite, pyroxene andesite, hornblende andesite and

hornblende dacite that reflect many episodes of volcanic eruption from a composite volcanic complex.

The Talahib hosts bulk of the gold mineralization in the Kay Tanda project area (Figures 7 and 8). The

thickness of the Talahib has exceeded 300 metres in some drill sections but a majority of the drill holes

intersected the units at 100 to 200m. The volcanic sequence also forms the principal component of the

Lobo Volcanic center.

A series of diorite intrusions are abundant in the lower portions of many, if not most, of the Kay Tanda

drill holes. The Balibago Diorite Complex comprises a number of generations of diorite stocks and

dykes, the main variants being coarse equigranular diorite, diorite porphyry and quartz diorite amongst

others. The diorite bodies are encountered predominantly in the lower half of the drill sections at Kay

Tanda where they form a broad and crudely domal intrusive complex that has intruded the Talahib

Volcanic Sequence, and has caused the uplift of the Kay Tanda block (Figure 10).

Rohrlach (2008) placed this as Middle to Late Miocene based on the intrusive relationship, meaning it as

syn-to-post Talahib and that they cannot be equivalent to the San Juan Batholith whose age is Lower

Miocene. The Talahib Volcanic Sequence in the Archangel region comprises near equal volumes of

andesitic and dacitic volcanic rocks. The Balibago Diorite Complex comprises intrusions of diorite/diorite

porphyry and quartz diorite, so it is likely to be a cogenetic intrusive suite whose regional members

sourced the various flows and pyroclastic deposits of the Talahib dacite/andesite sequence.

Intrusives of the Balibago Diorite Complex outcrop at the Bootin, Ahit and Balibago prospects. A quartz

diorite body is exposed in the southwest part of the Archangel Project and is associated with copper oxide

staining and phyllosilicate alteration that may reflect an underlying porphyry system.

The Dagatan Wacke of Middle Miocene age comprises feldspathic and volcanic wackes and has a

thickness of around 20 meters. It is recorded from Taysan, Batangas, and along some road-cuts between

Dagatan and Lobo. It is uncertain if it occurs in the Archangel property or in the Kay Tanda prospect.

Drilling has encountered a mixed sedimentary package that unconformably overlies the Talahib Volcanic

Sequence. It is still uncertain whether the lowermost subunits of this sedimentary package are equivalent


33

to the Dagatan Wacke or whether they are entirely part of younger sedimentary packages (the Calatagan

Formation and the Pinamucan Formation).

The Calatagan Formation is described by Aurelio and Peña (2002) as comprising soft tuffaceous marine

siltstone and coralline limestone of Late Miocene to Early Pliocene age, which overlies the Talahib

Volcanic Sequence. It is described as massive, white to buff colored, soft and porous with abundant coral

fingers. It has previously been named the Calatagan Marl. The formation is equivalent to the Mapulo

Limestone (Avila 1980) that outcrops in barangay Mapulo in Taysan. (Rohrlach, 2008)

This sedimentary package has been encountered in the upper portions of the northwestern drillholes in

Kay Tanda and comprises a complexly interlayered series of sandstones, siltstones and shales (variably

tuffaceous), limestone, conglomerate and andesitic lithic and ash tuffs. This package is in turn

unconformably overlain by the younger and relatively fresh Balibago Andesite. The abundance of

tuffaceous shale and siltstones together with limestone lenses, indicative of a shallow marine setting,

suggest that most of the sediment sequence on the Kay Tanda prospect comprises the Calatagan

Formation. (Rohrlach, 2008)

A series of later dacite porphyry intrusions occur within members of the Balibago Diorite Complex on

most drillholes at the Kay Tanda prospect. These tend to be dyke-like bodies of variable width and which

have an apophysis-like form. The dacitic porphyry intrusions also locally penetrate most of the Talahib

Volcanic Sequence. At one locality, hydrothermal breccias associated with one of these late-stage dacite

dykes penetrate the overlying Calatagan Formation where associated pyrite, arsenopyrite and chalcopyrite

mineralization is observed in the sediment cover. The dacite intrusions are distinguished from earlier

members of the Balibago Diorite Complex by the presence of coarse quartz-eye phenocrysts. It differs

from the porphyritic dacite member of the Talahib Volcanic Sequence by a higher percentage of clustered

phenocrysts and resorbed quartz as well as a relict felsophyric groundmass. (Rohrlach, 2008)

The porphyritic andesite that unconformably overlies the Calatagan Formation at Kay Tanda comprises a

relatively unaltered porphyritic andesite unit that is here called the Balibago Andesite. On drill sections

where it is present, it commonly occurs as erosional relics that are exposed at the surface and which are

up to ~50 meters thick. It consists of porphyritic andesite flows, volcanic flow breccias, ash and lapilli

tuffs, and base surge deposits. Whilst the correlation of this young andesite unit with other documented

stratigraphic units is not definitive, this unit is tentatively considered to be coeval with other volcanics

that are of similar age to the Pliocene to Pleistocene Mataas na Gulod Complex (Figure 4), as described

by Aurelio and Peña (2002) in Western Cavite. (Rohrlach, 2008)

The Pliocene Pinamucan Formation was named by Avila (1980) for the interbedded sequence of

conglomerate, sandstone and shale that crop out in the vicinity of upper Pinamucan, upper Calumpit and

middle Lobo rivers (Aurelio and Peña, 2002). There is no limestone in this unit as opposed to the

Calatagan Formation. It lies at higher elevations of the Lobo volcanic center, along the northwestern

margin of the Archangel MPSA (Figure 6). The clastic members of the Lower Pinamucan Formation

rarely occur at the Archangel MPSA area, whilst the upper part of the Pinamucan is extensively

developed as a young cover in the northwest portion of the area. (Rohrlach, 2008)

The Pleistocene Taysan Tuff overlies all other volcanic rocks in the district. It is a horizon of sub-aerial

ash-fall vitric tuff that is up to 20 meters thick. It is probably part of the widely-distributed Taal Tuff. Pre-

historic ignimbrite-forming eruptions sourced from the Lake Taal volcanic center have breached the

Tagatay Ridge and have spread pyroclastic flows over an area exceeding 2000 km2 towards Manila Bay

in the north and Balayan and Batangas bays in the south. (Rohrlach, 2008)


34

A Pleistocene to Recent reefal limestone with a conglomeratic base, overlies all the previous units and

fringes the coast in the southwest portion of the project area.

Figure 7: Kay Tanda Stratigraphy

(Adapted from Rohrlach, 2008) shows the distribution of the different lithological units. The darker shade of green

represents andesitic flows and tuff (Upper Talahib Volcanic Sequence). The light pink colour represents the dacitic

intrusive exposed in the southwest corner of the prospect area. Grey dotted areas are sedimentary rocks and andesitic

volcanics of the Calatagan Formation which unconformably overlies the Upper Talahib Volcanic Sequence. The

youngest units are the post-mineral agglomerates and hornblende andesite flows shown in light yellow and green,

respectively. The main host rocks of gold mineralization are the Lower and Upper Talahib andesitic to dacitic

volcanics and partly the sedimentary units of the Calatagan formation.


35

The outcrop pattern in Figure 8 and the 3D image (Figure 9) indicate folding or doming up of the Talahib

and Calatagan Formations because of the emplacement of the diorite intrusions. This marks an important

geological event where magmatic fluids are introduced into the country rock causing widespread

hydrothermal alteration. A later dacitic intrusion that appears to be coaxial with the diorite intrusions

contributes further to the introduction of mineralizing fluids. (Bautista, et al, 2009)

Figure 8: Lithological Map of Kay Tanda Showing Drillhole Location.

(from Bautista et.al. 2009) Siltstone/sandstone (Lower Pinamucan Formation), reefal limestone (Pleistocene

Limestone), agglomerates (Upper Pinamucan Formation or Lobo Agglomerates), young andesite flows (Balibago

Andesite), hydrothermal breccias (Balibago Diorite Complex), dacitic porphyry (Dacitic Lower Talahib Volcanic

Sequence or TVS), massive to porous limestone (Calatagan Formation), andesitic tuffs/sedimentary rocks,

intercalated (Calatagan Formation), multi-phase diorite (TVS), quartz diorite (TVS) and porphyritic dacite and

andesite flows/tuffs (TVS).


36

Figure 9: 3-D Geology of the Kay Tanda Area

Indicates folding or doming up of the Talahib Volcanic Sequence and Calatagan Formations because of the

emplacement of the diorite intrusions. Magmatic fluids were introduced into the country rock causing widespread

hydrothermal alteration. A later dacitic intrusion that appears to be coaxial with the diorite intrusions contributes

further to the introduction of mineralizing fluids (Bautista et al 2009).

9.4 Geology of the Kay Tanda and Pulang Lupa Prospect Areas

Figure 10 below shows a representative drill cross-section through the Kay Tanda deposit and illustrates

the distribution of the main stratigraphic units and mineralized zones. As shown in this cross-section, the

Talahib Volcanic Sequence is the dominant rock type in the Kay Tanda prospect area. It is intruded by a

series of diorites, hornblende diorites and quartz diorites that comprise the Balibago Diorite Complex.

The Balibago Diorite Complex is significantly older and unrelated to the younger Balibago Andesite that

caps some portions of the Kay Tanda deposit. The Balibago Diorite Complex is in turn intruded by bodies

of dacite porphyry. The unconformably overlying volcano-sedimentary sequence that comprises the

Calatagan Formation occurs mostly on the northwest side of the cross-sections because these areas are at

higher elevations where the younger sediments are preserved.

From a regional perspective, the Archangel Project lies along a trend of closely spaced northeast-trending

lineaments which demarcate and trend parallel to the coastline at Archangel. The Kay Tanda-Pulang Lupa

prospects and the Marita prospect are both located where these northeast-trending (arc-normal) structures

are cross-cut by an orthogonal set of northwest-trending (arc-parallel) structures


37

Figure 10: Cross-section 9900 mN at Kay Tanda

Section shows the principal stratigraphic units and their relationship to zones of mineralization at Kay Tanda

(Rohrlach 2008).

10. DEPOSIT TYPES

Gold mineralization observed at Kay Tanda is a combination of the upper part of a porphyry Cu-Au

system that was overprinted by several stages of epithermal veining. This consists of the low grade

advanced argillic alteration of vuggy silica with quartz stockworks, pyrite±quartz stockworks, and the

higher grade quartz-base metal veins. The different mineralization styles are outlined and described in

Section 11.

The porphyry and epithermal mineralization in the Lobo District is believed to be related to the Plio-

Pleistocene magmatism at the western section of Luzon island, otherwise known as the West Luzon arc.

The arc is a product of the eastward subduction of the South China Sea Plate at the Manila Trench.

Known deposits in the magmatic arc include the Dizon porphyry Cu-Au deposit (~4 M ounces Au) in

Zambales and the Taysan porphyry Cu deposit in Batangas.

Arc-parallel extension faults as well as arc-normal ENE-WSW structures localize the occurrences of

volcanoes in the arc. The general younging of volcanoes from east to west along the ENE-WSW

structures indicate retreat of the subducting slab along the Manila trench. This phenomenon is empirically

associated with the generation of fertile magmas for copper and gold.

Previous studies by Rohrlach (2008) reported that the shallow portions of the Kay Tanda and Pulang

Lupa prospects display features typical of low-grade, bulk tonnage, low-sulphidation, epithermal, Au-Ag

stockwork systems. These types of deposits often comprise the shallow levels of structurally-controlled

epithermal systems, where confining pressures are released in proximity to the surface and extensive and

widespread fracture systems and stockworks are formed. Low temperature epithermal quartz stockworks

and fracture arrays at Kay Tanda overprint early and possibly porphyry-related hydrothermal breccias,


38

and are themselves overprinted at depth by anhydrite-gypsum veins that are typical of both porphyry

systems in the Philippines and of retrograde bi-carbonate fluids in epithermal systems.

According to the same study, there are two main styles of epithermal mineralization at Kay Tanda - an

early and widely spaced stockwork of low temperature epithermal quartz veins that are associated with

Au-Ag mineralization and a later event comprising narrow but locally bonanza grade quartz-Au-base

metal (Zn>Pb>Cu) veins, narrow hydrothermal breccias and mineralized pebble dykes that occur at

deeper levels in the system.

11. MINERALIZATION

11.1 Style of Mineralization and Model for Kay Tanda and Pulang Lupa Prospects

Avocet‟s due diligence drilling resulted to a new zonation of the mineralization and alteration zones at the

Kay Tanda Prospect (Figures 11, 12 and 13). Also, the outcome showed a complex combination of

porphyry style with attendant propylitic, illite-chlorite±sericite (intermediate argillic to phyllic) and

advanced argillic (acid sulphate) alteration overprinted by several stages of epithermal veining.

During Middle to Late Miocene, the Balibago Diorite complex was emplaced into the volcanic carapace

of andesitic rocks and pyroclastics of the Andesitic Upper Talahib Volcanic Sequence which resulted into

the doming of the country rocks that caused extensive fracturing and facilitated the spread of

hydrothermal fluids, giving rise to extensive propylitic and clay alteration. Some quartz-molybdenite-

chalcopyrite veins formed during this stage. The second diagram in Figure 11 illustrates the continued

degassing of the different intrusive phases in the complex and the development of acid-sulphate (or

advanced argillic) alteration as well as quartz vein stockworks with sericite-illite haloes. The quartz

stockworks have an attendant low grade mineralization whilst the acid-sulphate alteration is either low

grade or barren. The events outlined in Figure 13 are controlled by extensional 060-070 trending

structures parallel to the Macolod Corridor, a line of active volcanoes within a graben-like depression.

The emplacement of dacite as shallow level dyke-like intrusions during Early to Late Pliocene generally

follows a NW-SE orientation similar to the trend of younger structures in the Kay Tanda area. Cross-

cutting relationships of the different veins show older pyrite±quartz veins that occur as stockworks

followed by the gold-bearing quartz-base metal±carbonate veins. The latest veining event is represented

by anhydrite-gypsum that appears to be co-axial with the quartz-base metal veins. The anhydrite-gypsum

veins are barren of gold mineralization.


39

Figure 11: Middle to Upper Miocene and Early Pliocene Events at Kay Tanda Prospect

(Adapted from Rohrlach, 2008)

The quartz-base metal veins are believed to be controlled by NW-SE structures. These are the active

structures during the time of emplacement of the dacite intrusions and hence may have been utilized by

the ascending fluids containing base metals.

Figure 12: Photographs of Different Mineralization Styles

A – gold mineralization in advanced argillic zone, B – pyritic stockworks in intermediate argillic altered rock, C –

quartz-pyrite vein in silicified zone, and D – quartz-base metals as breccia in-fill.

Middle to Upper Miocene – emplacement of the Balibago Diorite Complex causing doming of volcanics and sedimentary units, chlorite-clay alteration and early hydrothermal breccias.

Early Pliocene – Intrusion of high level dacite porphyry generated acid-sulphate alteration and low-grade banded quartz vein stockworks with sericite-illite haloes on 060-070 trending structural corridor.


40

The base metal content of the veins indicates that fluids are hotter and more saline than normal epithermal

fluids, which is probably a reflection of a high magmatic component to the fluid. Boiling of these fluids

during ascent instigated multiple episodes of hydrothermal brecciation with associated high-grade gold

mineralization as evidenced in KTDH-04. Spectroscopic scans of clay minerals adjacent to the high-

grade quartz-base metal veins indicate the presence of high-crystallinity illites suggesting that the veins

were a product of an upflow hydrothermal event.

Continued intrusion of dacites (Figure 13, second diagram) led to more uplift and erosion that exposed the

quartz and pyrite stockworks. The quartz-base metal veins were also brought to shallower levels and are

in fact exposed at the Lumbangan area. Weathering of the pyrite in these veins promoted the generation of

acid fluids that remobilized gold in the supergene zone. The areas around KTDH020 are a good example

of the supergene-enriched gold zone at Kay Tanda.

Figure 13: Early to Late Pliocene Events at Kay Tanda

(Adapted from Rohrlach, 2008)

The identified paragenetic stages of veins at the Kay Tanda and Pulang Lupa are listed in the following

order (Table 3):

1. The Stage 1a breccias are extensively over-printed by Stages 1b (20 occurrences), 3a, 3b, 4a, 4b

and 5, but rarely if ever overprint any of these features. This suggests that the breccias are the

earliest paragenetic stage.

2. Stage 1b clay-chlorite fractures extensively overprint the Stage 1a breccias (35 occurrences in total)

but only on one occasion is observed to be overprinted by a coarse mosaic hydrothermal breccia of

Stage 1a. This confirms that the clay-chlorite fractures post-date Stage 1a breccias.

3. Stage 3a and Stage 3b features clearly post-date Stage 1a and Stage 1b events at numerous localities

whereas the reverse is rarely true.

Early to Middle Pliocene – continued uplift and erosion with emplacement of late dacite dikes. The event is associated with pyrite-quartz stockworks, carbonate veins, quartz-basemetal veins, and anhydrite veins. The high grade quartz-basemetal veins are believed to be formed along NW-SE fractures.

Upper Pliocene – uplift and erosion continue with renewed volcanism depositing post-mineral andesites and agglomerates. Erosion exposed the quartz and pyrite stockworks giving rise to extensive weathering and remobilized gold in the supergene zone.


41

4. Within the Stage 3a and 3b group of events, (Qtz-Py + Qtz) veins collectively overprint Py stringers

at 32 localities while in the reverse, Py stringers overprint (Qtz-Py + Qtz) veins at 30 localities. This

suggests that these veins are broadly synonymous in timing. Furthermore, Stage 3b veins (Qtz, Qtz-

Py and Py) collectively overprint Stage 3a Sericite-Qtz fractures at 26 localities whilst Sericite-Qtz

fractures are not observed to overprint Qtz and Qtz-Py veins and only overprint Py stringers at 2

logged localities, suggesting that the Sercite-Quartz ± Py fractures (Stage 3a) are an earlier stage

than the Qtz, Qtz-Py and Py veins (Stage 3b).

5. Carbonate veins (Stage 4a) are observed to overprint Stages 1b, 3a and 3b consistently and rarely

vice-versa.

6. There are not many instances of observed over-printing relationships between Stage 4a carbonate

veins and Stage 4b base-metal veins. Some of these carbonate veins however contain sphalerite and

galena, and so are thought to be related to this latter stage of epithermal mineralization.

7. Base-metal veins (Stage 4b) extensively overprint Stage 3a and Stage 3b fractures, veins and

alteration with 60 documented occurrences, whilst on only 4 occasions are quartz veins of „apparent

Stage 3b‟ observed to overprint the base-metal suite (red outline). These data provide good

evidence for the base-metal mineralization being distinct and younger than the low-sulfidation Au-

Ag epithermal event of Stage 3a-3b.

8. While anhydrite-gypsum veins are common in some diamond drill-holes at depth, there are only 3

documented instances of overprinting relationships between anhydrite-gypsum veins and base-

metal veins. In all 3 instances the anhydrite-gypsum veins (Stage 5) overprint and so are younger

than the quartz-basemetal veins (Stage 4b).


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Table 3-Vein paragenesis in the Kay Tanda Pulang Lupa area.



43

Please refer to the NI-43-101 Technical Report entitled, Independent Geological Report on the Epithermal

Gold-Silver Resource at Kay Tanda Prospect Area, Southern Luzon, Philippines – Archangel Project,

Batangas Project by Bruce D. Rohrlach (February 2008), for a detailed discussion on this topic.

Kay Tanda and Pulang Lupa comprise numerous generations of veins and fractures, and in many intervals

of rock several of these generations are present. In order to better understand which generations of

fractures and veins are associated with gold mineralization at Kay Tanda, a separate subset database was

generated which comprised only those intervals in which only one generation of veining was observed to

occur, and then normal probability plots of the assays for each generation of vein were plotted. In this

manner, grade from a particular interval could be assigned to a particular vein type, without the

complications of multiple vein generations contributing to a single Au assay (Rohrlach, 2008).

The dominant alteration minerals identified by the Pima analyses were illite, chlorite and carbonate. Illite

is the dominant hydrous phyllo-silicate phase, having the strongest spectral signature in the majority of

samples, consistent with observations in drill core and RC chips that argillic, phyllic and sericite-chlorite

alteration are the dominant alteration types at Kay Tanda. The illite-chlorite-carbonate signature that

dominates this cross-section is a neutral alteration assemblage that is typical of low-sulfidation epithermal

systems. Areas of very low temperature clays (montmorillonite, nontronite and kaolinite) occur within the

younger post-mineralization cover rocks which have not been hydrothermally altered. The area of acid

alteration (pyrophyllite, alunite and diaspore) occupies a very small part of the section and occurs as a

flat-lying zone located just below the post-mineral Balibago Andesite which is exposed in the upper parts

of holes KT-61, KT-02 and KT-12. Thus the acid-mineral assemblage appears to lie just below an old

palaeo-surface, thus leaving open the possibility that the acidic alteration assemblage formed by acidic

supergene waters through the oxidation of sulfide.

According to Rohrlach (2008), the epithermal event involved a transition from early and barren acid-

sulfate alteration (barren HS event) to superimposed and underlying quartz-Au-Ag stockworks with

weakly-acidic argillic alteration (LS) and then to underlying carbonate-quartz-sulfate-basemetal

mineralization with neutral mineral assemblages (LS). The progression from acidic to intermediate to

neutral fluids over time is interpreted to reflect the decreasing component of magmatic fluids available to

the hydrothermal system as the intrusions cool. The progressive deepening of mineralization within the

sequence with time is likely a function of both erosion and collapsing geotherms, such that the critical

temperature interval for Au deposition like-wise migrates downward with time.

Two main mineralization events on the Kay Tanda Prospect and surrounding region by Rohrlach (2008):

1) The earliest event is a middle to late Miocene (associated with the Balibago Intrusive Complex)

porphyry Cu-related alteration assemblages [sericite-chlorite-clay (SCC) and phyllic] and very weak

(trace to minor) quartz ± chalcopyrite ± bornite ± molybdenite ± anhydrite mineralization and coeval

hydrothermal breccias. These formed at depth in the Balibago area where extensive Cu anomalism is

observed in association with pyritic fractures in SCC-altered rocks, at depth below and marginal to Kay

Tanda within the diorites of the Balibago Intrusive Complex, and potentially in the North Lumbangan

area. The coeval epithermal environment has been largely removed by erosion.

2) A younger evolving and multi-stage epithermal event of probably middle Pliocene age is associated

with younger dacite porphyry intrusions (predominantly small stocks and dykes). These northeast-

trending structures is a much younger, unrelated, overprinting epithermal system that evolved through

three (3) main stages - from acid, to intermediate to neutral fluid composition over time and interpreted to

be due to the decreasing magmatic input into the geothermal system over time as the dacite porphyry

stocks cooled.


44

i) Early Strongly Acidic Fluids: An initial stage of blanketing acid-sulfate alteration which is

presently either substantially removed by erosion from above Kay Tanda, with only basal relics preserved

at surface in the eastern portion of the deposit, or alternatively, had a very limited extent and preserved in

earlier porphyry-stage hydrothermal breccias and in some permeable tuff horizons within the TVS. The

alteration comprises silica plus pyrophyllite-kaolinite ± diaspore ± alunite. No HS mineralization is

recorded in association with this initial stage, most probably because the magmatic vapors expanded to

very low pressures at shallow levels prior to their condensation in the groundwater system. It is still

contentious if the acid alteration formed from early primary or late secondary fluids.

ii) Subsequent Weakly Acidic Fluids: Subsequent extensive low-sulfidation Au-Ag epithermal

stockworks associated with low-temperature chalcedonic, banded and colloform quartz veins and pyrite

stringers formed within the carapace over the Balibago Intrusive Complex. This occurred as northeast-

trending extensional faults controlled a regional geothermal system over the cooling stocks and dykes of

younger Pliocene age dacite porphyry intrusions and localized dacite porphyry intrusions and provided

fracture permeability and was associated with intense argillic alteration dominated by quartz and illite

plus less smectite, chlorite and carbonate and was further imposed as a result of the waning thermal

structure in the region. Collapsing isotherms allowed surface-derived meteoric waters to circulate through

the system. The fluids that formed the LS epithermal quartz-Au-Ag stockwork veins were likely to have

been moderately saline (substantial Ag), neutral to weakly acidic (extensive illite-sericite alteration) and

cool (low temperature silica textures) and may have comprised a substantial component of primary

entrained magmatic fluid to account for the modest acidity and high intensity of argillic alteration. Local

boiling (as evidenced by abundant vapor-rich fluid inclusions) can also act to drive down fluid Ph by loss

of CO2.

iii) Late Neutral Chloride Fluids: Young overprinting quartz-carbonate-base metal mineralization is

locally associated with bonanza Au deposited from fluids that were mostly neutral in composition (lack of

strong argillic vein haloes), though of higher temperature and deeper levels (crustiform quartz) and quite

saline (abundant base-metals). This late-stage event is associated with the most reduced and neutral

alteration assemblages, suggesting even lower components of magmatic fluid. The geothermal fluids were

well-equilibrated with the deeper and hotter portions of the sequence at a late stage in the evolution of the

hydrothermal system. The presence of carbonate within carbonate-basemetal and quartz-carbonate-

basemetal veins suggests the involvement of surface-derived secondary bicarbonate waters that were

allowed to percolate downward by the further collapsing thermal regime, and mix with the hot ascendant

neutral chloride liquids. The latter stages of the base-metal mineralization event saw downward

encroachment of surface derived acid-sulfate waters which mixed with neutral chloride liquids to form

late anhydrite-basemetal veins and gypsum veins at lower temperatures.

The stepwise deepening of the mineralization through time from early shallow acid-sulfate (barren) to

underlying argillic alteration and Qtz-Au-Ag stockworks and then to deeper neutral assemblages with

carbonate-quartz-basemetal mineralization, is here interpreted to reflect the downward migration of

geotherms as the system cooled and collapsed on itself, resulting in the critical temperature range for Au

deposition falling to lower levels over time. The porphyry source(s) associated with the evolving mid-

Pliocene epithermal event may lie at substantial depth beneath and lateral to the Kay Tanda region.

According to Rohrlach, 2008, there are two main styles of epithermal mineralization, extending over a

surface distance of ~1.5 kilometers at Kay Tanda and Pulang Lupa Projects, as evidenced from geological

mapping, reconnaissance rock sampling, surface trenching and drilling and described below:

1) Low sulfidation quartz-Au-Ag mineralization occurs within veins, stockworks and hydrothermal


45

breccias within the fractured Talahib Volcanic Sequence (TVS) which is arched over the two connected

intrusive centers, one below Pulang Lupa and the other below Kay Tanda. This forms the volcanic

carapace over the Balibago Intrusive Complex.

2) Younger low-sulfidation quartz-carbonate-basemetal (Au-Ag-Zn-Pb-Cu) mineralization with local

bonanza Au grades forming brittle vein and breccia systems that cross-cut the TVS and the underlying

Balibago Intrusive Complex. It also forms minor replacement mineralization within limestone units of the

otherwise barren overlying Calatagan Formation.

The mineralization at Kay Tanda has previously been described as being of high-sulfidation (HS)

epithermal character (Palomaria, 1997). However, many fundamental characteristics of the mineralization

are consistent with the system being a variant of a low-sulfidation (LS) epithermal system as suggested by

the features listed below (Rohrlach, 2008). Open-space vein fills and stockwork ores are dominant while

disseminated ore is typically minor. Sphalerite, chalcedony and carbonates are common and widely

identified by Pima analyses throughout the cross-sections at Kay Tanda, but do not typically contain Cu-

As-sulfides such as enargite and luzonite. Deposits show banded and crustiform quartz and chalcedony

veins, druse-lined cavities and spectacular multiple-episode vein breccias. The wall-rock assemblages of

veins and stockwork systems comprise, in addition to quartz, adularia and calcite, K-mica (i.e. sericite-

illite), chlorite, albite, epidote, zeolites, pyrite and base-metal sulfides. This reflects a reduced ore fluid of

near-neutral Ph. Lastly, free gold is quite common. It is likely that the workers who classified Kay Tanda

in the early stages of its development where influenced by the occurrence of acid minerals at surface

(minor alunite, pyrophyllite, diaspore and kaolinite) and so classified the prospect as being a high-

sulfidation epithermal system. However most alteration and mineralization features encountered by the

MRL drilling are more consistent with a low-sulfidation system.

In contrast, Avocet wireframed the area for the resource estimation exercise and simplified the complex

mineralization into four mineralization styles and domains (Figures 14 and 16).

1. A near-surface advanced argillic alteration,

2. Pyrite stockworks located beneath the advanced argillic alteration and mostly distributed at the

eastern part of the Kay Tanda deposit,

3. The widespread quartz veins and stockworks with or without sulphides (commonly pyrite and

chalcopyrite) commonly found overprinting the advanced argillic and argillic alterations, and

4. Quartz-base metal sulphides, mostly interpreted to be striking NW-SE and found throughout the Kay

Tanda deposit.

According to Avocet‟s unpublished due diligence report (Bautista, et al, 2009) Figure 14 below shows the

relative position of the different alteration and mineralization domains in section along 9900E. The

advanced argillic alteration is exposed on hill tops and right beneath it are pyritic stockworks and quartz

veins/stockworks, usually hosted in intermediate altered (illite-chlorite±silica±pyrite) rocks. The quartz

veins and pyritic stockworks essentially cut through the advanced argillic zones but they are obscured by

oxidation. For purposes of wireframing, the quartz veins and pyritic stockworks are separated from the

advanced argillic mineralised zone where they are un-oxidised.

Quartz-base metal veins are in discrete zones that cut through all the alteration styles. They occur late in

the gold mineralization paragenesis, although pyritic stockworks have been observed to cut the quartz-

base metal veins locally.


46

Figure 14: Section along 9900E showing the different alteration and mineralization domains

(Bautista, et al, 2009)

The possibility that quartz-base metal veins are essentially the equivalent of the quartz veins nearer to the

surface was investigated by sending samples for ICP analysis to determine if there are distinct

geochemical differences between the two.

The results, illustrated in Figure 15 below, show that there is a marked difference in the trace elements

composition of the veins aside from the difference in the metal contents. As, Ba, and Sr are much higher

in quartz-base metal veins while Cd, Cr, Mn, and V are higher in the quartz vein. This suggests that the

quartz-base metal veins are a product of a different pulse of hydrothermal fluids than the quartz veins.

Separating them in the resource modelling is then justified.

Gold mineralization at Kay Tanda can be classified as a product of an intermediate sulphidation system

with mineralization in the form of pyrite stockworks, quartz-pyrite veins and the quartz-base metal veins

(Angeles, 2009). Furthermore, he surmised that the best targets in the system are the hydrothermal

breccias, such as in KTDH-04, which embodied boiling zones where the saline fluids precipitated gold.

A further scope for expansion of gold resources by finding more of these hydrothermal breccias was

proposed. The tight spacing of the drill holes mean that only small breccias may be discovered and may

also present an underground mining target rather than an open pittable target.

While high-grade underground mineable resources most likely exist, there is limited potential for these to

host a significant reserve (Bautista, et al, 2009). Avocet concluded that while the characterization of

mineralizing fluids may be correct, it cannot account for the highly acidic clays such as pyrophyllite,

dickite, and alunite as well as the formation of the vuggy silica. This may only form from acid clays

sourced from a porphyry intrusion.


47

Figure 15: Au and trace elements analyses using ICP of quartz-base metal (in blue) and quartz vein (red)

Avocet generated wireframes for the lithology, alteration, mineralization and gold grade from MRL

drillhole data to re-evaluate the resources in the Pulang Lupa prospect.

The mineralization at Pulang Lupa has a largely NE-SW trend similar to the broad argillic alteration that

defines the corridor of gold occurrences in the district. Gold mineralization is in quartz stockwork veins

with or without pyrite-chalcopyrite and overprinted by a silica-pyrophyllite±alunite alteration assemblage.

A good continuity of > 0.5 g/t Au mineralization can be traced from section to section and the zones form

tabular bodies that dip gently to the northwest. The sub-horizontal control on the gold grade in quartz

stockwork veins may be due to the precipitation of gold at a certain horizon such as a boiling horizon or

zone of mixing. Alternatively, it may be an oxidation horizon where gold is enriched by supergene

process.

Although not consistent, Ag values in Pulang Lupa are sometimes uncharacteristically high. Values of

hundreds of ppm Ag and even thousands have been recorded. The Ag:Au ratio of mineralised rocks here

are usually > 10 compared to the Kay Tanda deposit where Ag:Au ratio is usually < 10. As these deposits

are of magmatic origin, we can interpret that Pulang Lupa is at the distal part of the hydrothermal system.


48

Figure 16: 3-D Image of the Pulang Lupa Mineralization Wireframes

The image shows gentle dip to the northwest (Bautista, et al, 2009).

Figure 17 shows the different mineralization wireframes. Red signifies areas of quartz±pyrite veins and

stockworks, blue for pyrite stockworks, yellow for quartz stockworks and magenta for quartz-base metal

veins. The advanced argillic wireframe, which generally drapes the surface, is not shown as it obscures

the other mineralization wireframes.


49

Figure 17: Mineralization Model of Kay Tanda and Pulang Lupa

The figure is looking north, red-quartz veins, yellow – quartz stockworks, blue – pyrite stockworks, magenta –

quartz-base metal veins (Bautista, et al, 2009).

11.2 Mineralization in Nearby Areas

In the Archangel property, there are six main epithermal prospects (Kay Tanda, Pulang Lupa, Ahit-

Balibago, Lumbangan, Marita and Bootin) plus several minor prospects that are spatially arrayed along a

regional NE- to ENE-trending structural and argillic alteration zone that extends for over 4 km. The area

of altered and mineralized rocks in the southern portion of the Archangel property averages about 1 km

wide.

The Ahit-Balibago prospect area (southwest of Pulang Lupa, near the southwest end of the Archangel

property) has an 800 m by 600 m IP chargeability anomaly, coincident with an IP resistivity anomaly.

Ahit Hill exhibits intense argillic alteration showing extensive and strong Cu anomalies in soil samples

and a presence of high-temperature potassic white mica (high-temperature illite) relative to the

surrounding areas by PIMA analyses. Reconnaissance diamond drill holes, 500 meters apart, were drilled

in 2006 and intersected dacite porphyry, diorite and quartz diorite stocks that intruded the Talahib

Volcanic Sequence. Possible porphyry-related alteration comprising SCC (sericite-chlorite-clay) and

phyllic (quartz-pyrite-clay) alteration which overprint propylitic alteration, were intersected in these

holes. Minor sulfides were encountered (pyrite, minor chalcopyrite, covellite, bornite, galena and

sphalerite). The holes ended at close to 500 meters depth within zones of extensive anhydrite-gypsum

veining (Rohrlach, 2008).

Geological mapping and sampling of altered rocks including veins was done at Lumbangan prospect as

part of the due diligence programme aimed to delineate the extent of hydrothermal alteration to the

northeast of Kay Tanda and help demonstrate the potential of the prospect. Several samples have been

collected by previous workers and the campaign was to validate the previous results.


50

Results show that the argillic alteration broadly strikes NE-SW and is traceable to about 600 m along

strike (Figure 18). Within the argillic zone, silica-rich zones, occupying ridge tops were observed and

mapped as advanced argillic zones because of the presence of vuggy texture and possible alunite. These

advanced argillic altered pods are also aligned along a NE-SW trend.

Figure 18: Alteration Map of Lumbangan Prospect

(Bautista, et al, 2009)

East-west trends (WNW and ENE) especially with the thicker quartz veins (~1 m), some with base-metal

sulphides, were mapped along the creeks. Two NW-SE trending quartz-base metal veins were mapped at

Gitna creek which yielded results of 1m @ 5.52 g/t Au and 2m @ 0.74 g/t Au with a wall rock gold value

of 0.39 g/t. E-W trending quartz-base metal veins in the same location returned 1m @ 5.87 g/t Au and 1

m @ 2.48 g/t Au. In other areas, veins and silica-altered fractures usually return results of +0.1 g/t Au

indicating the background mineralization tenor of the Lumbangan mineral system.

The extent of hydrothermal alteration (600 m strike by 200 m wide) and grade tenor at Lumbangan

indicate that a mineralised system similar to Kay Tanda exists. Based on the relative size, Lumbangan

has the potential to host a third of the Kay Tanda resource tonnage. Previous studies by Rohrlach infer

that the Lumbangan area is likely to represent a substantial ENE-ward continuation of the Kay Tanda

mineralizing system (Rohrlach, 2008).

The Marita area, ~2 km northeast of Kay Tanda, covers an area of 300 m by 500 m of hydrothermal

alteration and centered on a 1 km by 700 m zone of high IP chargeability. The area is associated with a

very distinctive 1-km diameter circular zone of sericite alteration. Within this illite alteration lies an

arcuate zone where illite occurs in association with jarosite. A broadly northeast-trending argillic

alteration zone is characterized by pervasive silica-clay-pyrite alteration which is interpreted to reflect

hydrothermal activity along structurally-controlled quartz vein breccias. The Marita prospect is


51

interpreted as a dominantly low-sulfidation epithermal system that likely developed at late stages over an

underlying porphyry copper-gold system. One of two veins that were channel sampled at Marita assayed

13.5 g/t Au and 4.4 g/t Ag while the altered andesite footwall sequence − characterized by sub-parallel

quartz veins up to 7 cm wide − assayed 0.7-0.9 g/t Au and 1.2-2.5 g/t Ag. These veins formed within the

intensely argillized and brecciated rocks which outcrop along the ridge west of Marita Creek. On the basis

of soil geochemical sampling along cross lines 12000N and 12200N, >200 ppm Pb and >400 ppm Zn

anomalies characterize the upper drainage catchment of Marita Creek (Rohrlach, 2008).

The Bootin prospect, located ~1.5 km north of Marita, is associated with high chargeability IP anomalies.

The area is largely covered by younger volcanics, with windows of phyllic-altered andesite, andesite

porphyry and diorite. A hydrothermal breccia with a matrix of fine pyrite and clay has been identified by

MRL geologists on the northwest side of the prospect. Zones of argillic to advanced argillic alteration

have been mapped and localized copper showings identified. A grab sample from a NNE-trending zone of

fault gouge assayed 27.61 g/t gold. High-temperature illite alteration was identified by Pima mapping in

the Bootin prospect area. The Bootin area represents a deep porphyry Cu-Au target associated with the

magnetic anomaly and a high-sulfidation epithermal target associated with the surface zones of acid-

alteration (Rohrlach, 2008).

12. EXPLORATION

12.1 Previous Exploration Work by Other Companies

In 1983, Questor Surveys Limited flew an aeromagnetic survey over a large part of the Philippines

including Archangel at variable wide spacing of 2-4 line kilometers. World Geoscience flew airborne

magnetics and radiometrics over Archangel and Lobo projects in 1996 for BHP, then with joint venture

with Chase Resources. The helicopter-borne aeromagnetic survey used regular flight spacing of 200 m

and tie lines of 1,000 m. The mean terrain clearance was about 40m. Instrumentation included a split

beam cesium Scintrex magnetometer and a 256-channel PGAM –1000 spectrometer (2005 Annual

Report, Mindoro). Encouraging results from both sources show distinct magnetic responses over the

Balibago Volcanics in Archangel and Pica-Nagtoctoc (Apical) at Lobo. (Tebar, 1998).

Data interpretation and ground verification was done by Dr. Greg Corbett, a world renowned economic

geologist. His report highlighted the large aeromagnetic anomaly close to coast in Archangel. This also

coincides with the wide potassic anomaly, which may reflect potassium enrichment possibly due to

potassic alteration. The Malabrigo Circular Feature (caldera?) is clearly outlined on the map as magnetic

low rimmed by magnetic spot highs. The magnetic highs are coincident with the topographic highs and

appear to have been formed by cliffs of the Lobo Agglomerate, which cap the altered andesite. While the

magnetic highs do not represent a target, the magnetite depleted andesite constitutes exciting porphyry

copper –gold targets.

WMC did ground magnetic survey in 1989 using two Barringer Proton Magnetometers with readings

every five meters along the east-west lines that are 100 meter apart. Results showed the sharp contact

between the magnetite bearing Quaternary andesite agglomerate and the altered basement. The altered

basement (low magnetic signature was due to magnetite destruction) makes excellent targets. A magnetic

dike (?) was outlined along the northwest trending Balibago River, which is within the inferred target

area. A wide northeast trending magnetic anomaly coinciding with anomalous radiometric (potassic)

signature is interpreted as reflecting the porphyry copper-gold mineralization at depth.


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In 1987, WMC conducted geochemical survey over the Archangel area on a regional grid at 100 m x 100

m with a total of 664 samples collected. The program identified geochemical anomalism at Kay Tanda

and Balibago. Follow-up sampling was done on 50 m x 50 m infill grids at Pulang Lupa and Balibago.

The zones are associated with high copper and zinc. The geochemical survey identified two types of

mineralization in Archangel. Kay Tanda and Pulang Lupa had geochemical signatures of an epithermal

system while Balibago gave indications of porphyry copper-gold system. Gold anomalism with associated

silver in both Kay Tanda and Pulang Lupa zones tends to be spotty with high silver gold ratio >5:1 typical

of many Philippine low sulfidation epithermal systems. It corresponds to the silicified zone in Kay Tanda

and Pulang Lupa. Low gold values in rock may be due to leaching of gold in surface. In rock chips in

massive and silicified breccia with chalcedonic/ milky white veinlets, anomalous gold coincides with high

arsenic and mercury values. The said prospects stood out as a broad arsenic anomaly. In general, mercury

did not give any prominent geochemical signature. Copper, like lead and zinc, are low forming peripheral

haloes to high gold and silver. A minor elevated base metal in massive quartz was also noted (2005

Annual Report, Mindoro).

At Pulang Lupa area, arsenic values trend east-west towards Kay Tanda becoming broader on the eastern

edge of the grid reflecting the silica breccia zone on the western slope. The low arsenic in the middle of

Kay Tanda corresponds to the unaltered tuff cover. The Pulang Lupa Hill is defined by a prominent high

silver values up to 3.1 ppm. At Kay Tanda, high silver values are centered at the northern central part of

the ridge. High silver at Pulang Lupa coincide well with high arsenic (Buenavista, 1989). Thirteen (13)

RC drill holes were completed by Chase Resources (January to March 1998), while WMC finished 6

diamond drill holes (1988 - 1991). Four holes drilled by WMC and three holes by Chase intersected the

upper silicified and argillized zone. Between 70-120 m, these holes intersected the argillic (quartz-illite-

pyrite) to phyllic zone (quartz-sericite-chlorite± pyrite+ sulfides). At 150 meters, massive anhydrite was

intersected indicating higher pH and increase in temperature. CA 11 intersected phyllic zone at 70 m with

elevated gold (>1.0 g/t), copper (as much as 0.7%), zinc (1.2% zinc) and lead (0.5%). This suggests that

the porphyry copper-gold system is not too deep and the values could represent the roof or the carapace of

the system.

12.2 MRL Exploration

12.2.1 Data Assessment

In January 2003, MRL evaluated the exploration data from Western Mining Corporation, Chase

Resources, BHP and Billiton over the Archangel Project. During this assessment of past exploration

effectiveness, several interesting geologic targets were identified. The principal targets that were

identified by MRL were Talon, Piit, Japanese Tunnel, Ahit, Malagundi, Pulang Lupa, Kay Tanda and Lumbangan Prospects.

12.2.2 Reconnaissance Investigations

Reconnaissance geologic investigations were carried out in these areas and both outcrop and float samples

were collected. A reconnaissance geological investigation was also carried out in the northern portion of

the MPSA in Mahangin Creek, in the Kalabasa and Bootin rivers and east of Kay Tanda. Earlier field

investigations defined a large alteration system in the Balibago to Kay Tanda region that is characteristic

of porphyry related magmatic hydrothermal systems. Silica-chlorite-sericite alteration was identified over

an area 3 km long by 1 to 1.5 km wide and which was overlain by younger rocks in the north and west.

Showings of copper oxide minerals (malachite and azurite) were observed in several widely distributed

locations at Balibago. Extensive and strong copper soil anomalies were previously defined by Western


53

Mining, BHP and Chase Resources however these were not drill tested since these companies focused

their exploration effort on the Kay Tanda Gold Prospect.

David Bailey of Bailey Geological Consultants (Canada) Ltd. North Vancouver, B.C., Canada, conducted

field verification of the Kay Tanda prospect and the Balibago porphyry prospect of the Archangel Project.

His observations from his field visit on Aug 12-13, 2003 were articulated in a memorandum on

Archangel/Lobo Projects dated Aug 29, 2003. Bailey reported that the prospects within the Archangel

Project area are probably part of a single mineralizing system. He also noted that Pulang Lupa, Kay

Tanda and extensions into Philex ground are high level manifestations of the underlying porphyry deposit

inferred to exist at Balibago.

12.2.3 Assessment of Previous Drilling

While MRL had the analytical results of the thirteen (13) Chase drill holes on file, there was no record of

the QA-QC procedures employed by Chase Minerals for their percussion holes. Consequently, MRL

decided to further investigate the reliability of the Chase assays. In 2003, an attempt was made to locate

all the old reverse circulation (RC) drill holes of Chase Minerals at the Kay Tanda gold prospect, to clean

up the drill sites and to retrieve and re-bag the old RC samples. Nine (9) drill sites of Chase Minerals

were subsequently located and all the RC samples found in the drill sites were re-bagged and stored at the

Lobo office. Under the guidance and direction of Mr. Stephen Carty, consultant to MRL, a total of

seventy-five (75) samples from Chase RC drilling (CA-1 to CA-7, and CA-9) were re-sampled to check

the original Chase analytical results. Appropriate handling and sampling procedures were carried out for

these old Chase drill samples. A series of blanks and certified standards were also submitted together with

the Chase samples. The assay results from this re-sampling activity confirmed the reliability of the Chase

data.

12.2.4 Geological Mapping

During 2003, MRL conducted semi-detailed and detailed geological mapping at the Kay Tanda, Pulang

Lupa and Lumbangan prospects. Mapping at Kay Tanda identified moderate to intense quartz stockwork

Au-Ag mineralization. At Pulang Lupa, an outcrop of hematitic vuggy quartz was identified in addition to

quartz stockwork zones that appeared to be contiguous with those to the east at Kay Tanda. Float and

outcrop sampling was also conducted. Exploration activity on the Archangel Project during 2004 included

reconnaissance geological mapping, and semi-detailed and detailed geological mapping.

During 2007, MRL conducted detailed geological/structural mapping within the Kay Tanda prospect area.

The activity aimed to upgrade the comprehension of geological, structural and mineralization controls of

the prospect area. Traverses were made along segments of creeks in the prospect area and access

roads/trails around the drill sites.

The immediate vicinities of the drilled-out areas were given special attention. This was aimed to delineate

possible extensions of the ore body and as a tool in planning additional drillholes. The mapping covered

the adjacent Lumbangan, Comonales, Ahit-Balibago and Bagnasan areas. Lumbangan represents the

narrow ridge and the wide valley located east of the drilling area. Along the main Kanan Creek in

Lumbangan, major fault zones, riedel shear zones and low-angle thrust faulting were identified. This area

also displays evidences of alteration related to possible mineralization in the vicinity. Patches of

argillized, silicified, highly pyritic zones were observed along this creek and some extending to

approximately more than forty (40) line meters length. The Comonales area, on the other hand, is the

topographic high in the northern portion of the tenement. Traverses were made along the ridge, creeks and

foot trails. Geological mapping and prospecting along the Ahit-Balibago prospect area was started on

September 2007 and continued near its dry tributaries, gulleys, and ridge sections, as well in the Bagnasan

area.


54

Mapping at the marginal vicinity of present drill targets is explored to identify possible extension of

drilling to these areas with the hope of increasing the tonnage of indicated resource blocked in the Kay

Tanda mineralization. A more detailed mapping at 1:1000m scale was conducted in Gitna and Kaliwa

creeks, with results confirming the northeast continuity of the mineralization defined in Kay Tanda hill.

Rock chip and channel samples were collected and subjected to chemical analysis in McPhar laboratories.

12.2.5 Gridding

A gridline survey commenced in January 2004 and covered the Balibago, Ahit, Kay Tanda, Pulang Lupa,

Lumbangan, Marita and Bootin prospects. A baseline was established along 10,000mE and was oriented

at N050°E. 200-meter spaced crosslines were oriented at 320°-140°.

During 2005, the gridline survey was further extended to complete the Archangel Project grid. Cross lines

were surveyed at 200m-spaced intervals along the baseline.

12.2.6 Geophysical Surveys

Geophysical surveys comprising dipole-dipole induced polarization (IP), gradient array and ground

magnetic surveys were conducted by McPhar Geophysics along the gridlines. The IP survey was

undertaken using a Scintrex IPR-12 time domain system configured in a conventional 2-D dipole-dipole

array. The potential electrode spacing was 100 meters and separation factors of n=1 to n=5 were used.

Ground magnetic surveying was conducted at the same time. Magnetic data were gathered using a GEM

Systems GSM-19 proton precession magnetometer and were collected on the same grid lines that were

used for the IP survey, at a nominal station spacing of 12.5 meters.

The initial phase of geophysical surveying that had commenced at Archangel in 2004 was completed on

the April 23, 2005. This program comprised over 70 km of combined induced polarization and magnetic

surveys. Geophysical surveys were completed on 32 lines between 8000mN and 14200mN and between

9000mE and 10500mE. Interpretation of this IP data was conducted by E. Trent Pezzot of S.J.V.

Consultants Ltd. He concluded that the induced polarization survey has delineated a northeasterly striking

band of moderate (> 300 ohm-m) resistivity that crosses the entire survey grid and is open in both

directions. The strike and structures within this band conform to the geological mapping of the area. This

band includes 4 clusters of higher (> 700 ohm-m) resistivity centers that might be reflecting buried silica

caps to porphyry bodies. Scattered indications of elevated chargeability support this interpretation

however; these chargeability anomalies are typically at the limits of the depth of investigation of this

survey. Character and amplitude changes in the total magnetic field data appear to be mapping a layer of

young volcanic rocks located at higher elevations along the northwestern side of the survey grid. A

similar magnetic signature appears to be associated with a hornblende andesite porphyry and propylitic

alteration zone at the northeastern end of the grid. Magnetic data also appears to be indicating the

presence of easterly trending faults. Following Pezzot‟s recommendations, an additional phase of

surveying was contracted to Elliot Geophysics International Pty. Ltd. (Elliot) and commenced in August

2005 and ended in early 2006 with a total of 29.70 line kilometers surveyed. The advantage of this later

survey by Elliot was that the more-powerful Elliot IP system was capable of detecting IP responses at

substantially greater depths.

The summary of results is better illustrated in the following two figures below.


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Figure 19: IP chargeability data (msecs) in the Archangel Project area plotted at n=4

Figure 20: IP resistivity data (ohm-m) in the Archangel Project area plotted at n=4.

From January 13 to February 15, 2007, another round of IP survey was conducted by McPhar. The infill

lines closed in the grid-north spacing to 100-m. A total 0f 18,800 line meters for the 50 m spread and

5100 line meters for the 150 m spread was completed.


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12.2.7 Trenching

Trenching was undertaken at Pulang Lupa (5 trenches) and at North Lumbangan (2 trenches). At Pulang

Lupa, five (5) trenches were excavated thirty meters apart within the silica cap. A grab chip sample

collected from a narrow quartz sulfide vein with pyrite-chalcopyrite-galena-sphalerite about 600 m

northeast of Kay Tanda assayed 9.9 g/t gold, 4.0 g/t silver and 1.02% lead.

The results are as follows:

Pulang Lupa

PL TR-1: 2.67 g/t Au, 49.2 g/t Ag over 18 m





North Lumbangan

NL TR-1: 0.65 g/t Au, 153.2 g/t Ag over 14 m - Silica & silicified Breccias

NL TR-1: 0.62 g/t Au, 99.7 g/t Ag over 4 m

12.2.8 Initial Metallurgical Testing

Initial metallurgical testing of material from the Kay Tanda prospect was conducted by Metcon

Laboratories in October 2005. The studies were conducted on material from a trench from the Kay Tanda

prospect which had assayed head grades of 3.58 g/t Au and 51 g/t Ag. An initial carbon-in-leach test was

completed at a grind size of 80% passing 75_m to provide an indication of maximum recoveries

achievable. The gold and silver dissolutions were 94% and 37% respectively. Column leach tests were

then conducted to simulate heap-leaching at two different crush sizes of 100percent passing 12.7 mm and

100% passing 50 mm. The gold dissolutions were 88.1% for the 12.7 mm crush size (after 30 days) and

81.7% for the 50 mm crush size (after 88 days). These gold recoveries were considered high given the

early stage of metallurgical testing.

12.2.9 Soil Geochemical Sampling

Soil geochemical sampling was undertaken in 2005. The aim of the survey was to identify anomalous

zones of gold, copper, silver and other elements in the soil profile of the Archangel project. The soil

sampling program covered cross lines 9600N to 13000N, 13800N and 14200N. A total of 925 samples

from the 2005 program that were submitted to McPhar Laboratory for Au, Ag, Cu, Pb, Zn and As

analysis. Substantial Au anomalies in soil samples were generated in the Kay Tanda and Pulang Lupa

prospect areas while Cu anomalies tended to occur in the Balibago prospect area. The results of the soil

geochemical sampling in the Kay Tanda area (high Au and low Cu) reflect the low- to intermediate-

sulfidation epithermal character of the mineralization in the region. The lack of substantial Cu anomalies

at the surface of Kay Tanda is consistent with low Cu values identified in drilling, and suggests that the

negative Cu anomaly is not due to leaching of a Cu-rich high sulfidation epithermal system, but rather,

that the primary epithermal mineralization is low- to intermediate sulfidation in character. These

observations support the concept that the Kay Tanda prospect is at high levels within the epithermal

environment and may be located lateral to rather than directly over a porphyry Cu position.

12.2.10 Topographic Surveying

As a preparation for detailed geologic mapping and prospecting activities, and possible future drilling in

the Archangel Project area, Electronic Distance Meter (Total Station) surveying was done in the areas of

Talon-Ahit-Balibago, Salaguntingan, Marita, Agas-Bootin, Pajo, and Haliging–Bato areas.


57

Topographic surveying was completed in the Talon, Ahit, Balibago, Bagnasan and Ahit (Lumbangan)

areas. Setting up of control points and prospecting points (along Creeks) were done in the Marita, Agas,

Bootin, and Pajo Areas using two EDM units: NTS 320 and Nikon Total Station survey equipment.

In 2006 to 2007, drill collars were surveyed using these two EDM units. Grid lines (parallel to the base

line) along proposed drill holes were established and surveyed for actual topo-profiling. Computer

generated topo-profiles along the surveyed grid lines were compared with the profiles generated by the

actual ground surveying. The ground survey was done through compass and tape by competent geologic

aides with many years of experience in geological mapping, grid line surveying and grid-line mapping. A

total of 3 km of grid lines was surveyed. Grid lines (trending 050º azimuth) crossing through the proposed

drill holes were surveyed, mapped and established to compare topo-profiles generated by actual ground

survey against that of computer generated topo. The survey was done through compass and tape, covering

a total of 3 line km.

12.2.11 PIMA Surveys

Between December 2005 and February 2006, MRL collected 582 regional samples from across much of

the Archangel MPSA area for PIMA (Portable Infrared Mineral Analyzer) analysis. The samples were

taken from outcrops along creeks, ridges, ridge spurs, trails, and roads. The PIMA II instrument is a field-

portable spectrometer that operates in the Short Wave Infrared range of the electromagnetic spectrum and

measures the spectral absorption of mineral species. One of the primary applications of the PIMA

instrument is the identification and characterization of alteration minerals. Many alteration minerals have

bonded hydroxyl groups that are amenable to excitation by electromagnetic radiation in the short-wave

infrared region. The PIMA samples at Archangel were collected mostly along southeast-flowing drainage

systems at variable spacing though commonly at distances of around 50 meters distances, in order to more

accurately map alteration zones within the project area.

The principal conclusions from this Pima survey in respect of regional alteration zones as interpreted by

Bruce Rohrlach (2008) are:

1) The clays within the overlying cover sequence along the northwest side of the project region are

dominated by montmorillonite, a product of low-temperature weathering. The samples from this

younger sequence lack chlorite because they are not propylitic altered.

2) A combination of montmorillonite + chlorite forms a contiguous region west of Marita and which

extends along the western side of Bootin and the northern side of Lumbangan. The presence of

chlorite suggests a precursor propylitic alteration assemblage which has been partially weathered to

montmorillonite.

3) Another alteration facies comprises chlorite, chlorite + carbonate, chlorite + epidote, and together

with weathering-related clays in minor proportions (kaolinite, montmorillonite and nontronite. These

are propyllitic-altered, like the region discussed in 2) above, with the exception that the abundance

of weathering clays is less.

4) The areas characterized by illite + chlorite alteration are relatively widespread in distribution west of

Balibago, south of Kay Tanda and Lumbangan and on the eastern side of the Bootin-to-Marita

drainage system. In many areas, the illite-chlorite facies envelope small pockets of chlorite and/or

epidote alteration. This facies may broadly represent a zone that is transitional between propylitic

alteration and illite-dominated argillic alteration, resulting in assemblages that are a mixture of

chlorite and illite.

5) Alteration zones that are dominated by illite + kaolinite occur invariably in proximity to and

adjoining areas that are dominated by illite alteration. For example, illite+kaolinite lies along a

north-south ridge that joins the two illite-altered regions at Marita and Bootin, and is associated with


58

relicts of illite alteration further to the northeast. Areas of illite+kaolinite encapsulate islands of illite

alteration southwest of Marita, and southeast of Kay Tanda and in the Balibago region.

6) Further evidence supporting the interpretation that kaolinite formation is related to acidic

groundwater lies in the distribution of the zones of kaolinite-dominant alteration. The two identified

areas of kaolin-dominated alteration lie along the northwest margin of Bootin and along the eastern

margin of Marita. Both of these areas occur in close proximity to areas of acidic alteration

assemblages.

7) Zones of illite-dominated alteration appear to be a strong northeast alignment in the distribution of

this alteration facies, which run from Marita through Lumbangan, Kay Tanda, Pulang Lupa and

Talon before disappearing under the cover of the overlying Lobo Agglomerate further to the WSW.

It is likely that a fundamental underlying structure is the cause of the linear distribution in the illite-

dominant alteration zones. Two parallel structures that are expressed in the surface topography that

run along the northern side of the Lumbangan Ridge are parallel to this linear illite alteration trend

and provide tentative evidence for some underlying structural control on this alteration facies.

8) The second observation in respect of the illite-dominant alteration zones is that they occur in all of

the 6 main prospect areas. For example, illite alteration occurs at Balibago where it is coincident

with IP anomalism, it occurs at Talon where silica and jarosite occur in two Pima samples in an area

of Cu staining, it occurs along the Pulang Lupa to Kay Tanda trend and also further northeast along

the prospective northeastern side of Kay Tanda, it occurs as a large alteration zone at Marita and it is

also present as a structurally-controlled zone at Bootin where IP responses are evident.

9) Although alteration assemblages that can be considered as acidic in character, such as alunite,

pyrophyllite and dickite are identified in three broad areas, their expression is weak.

10) The most pronounced area of jarosite development was observed at Marita where a semi-circular

zone of illite + jarosite alteration occurs in an area that is approximately 1km by 500 metres in

dimension. Extensive Fe-oxide development on fracture networks have been mapped along the

drainages in this region, and may account for the strong jarosite signature in the Pima data.

12.2.12 Stream Sediment Sampling

Twenty two stream sediment samples were collected from strategic locations along Punas Creek, which

yielded generally low values except for two samples with slightly higher copper content (104 and 302

ppm Cu). A total of sixty-one (61) stream sediment samples were collected at 50-meter spacing interval at

the headwaters of the main Kanan, Gitna and Punas creeks to check possible mineralization exposed as

“windows” in the main drainage systems of Lumbangan prospect area. The stream sediment sampling

was done from October 2007 to February 2008.

12.3 Avocet Exploration

12.3.1 Geological Mapping

The main objective of the geological mapping work done from November 2008 to January 2009 on the

Kay Tanda prospect was to get familiarized with the prospect prior to drilling. This work resulted to an

updated geologic map (Figure 8). Selected traverses were conducted along the drill access roads and

creeks to confirm occurrences of mineralised outcrops and obtain samples for mineral assays.

12.3.2 Review of Drill Cores

A review on the drill cores from previous MRL drilling campaigns was done on the same period. Drill

cores were selected to review the different host rocks, mineralization occurrences and structural controls.

Particular importance is given to structures because of the planning for the drill hole design (orientation

and dip) to be adapted in the due diligence programme.


59

Figure 8 displays the interpreted structures derived from mapping and drill core logging. They are

interpreted to be largely post-mineral because they form thick gouge and fault breccia with mineralised

vein fragments. They also often show displacement of lithological units and veins.

A pattern of N-S, NE-SW, and NW-SE faults dominates the Kay Tanda area. The N-S faults appear to be

oldest as they are displaced by NE-SW faults. The N-S faults have steep dips, both to the west and east,

and exhibit dextral movement.

The NE-SW faults are the most dominant structural feature. They essentially define the distribution of

the hydrothermal alteration and appear to control the emplacement of the intrusions. These faults may

have had a protracted history as they not only control the broad distribution of alteration and

mineralization but also displace the same alteration and mineralization. Dextral movements in these

faults indicate a stress field that is oriented E-W which is consistent with the subduction direction along

the Manila trench, west of the area.

NW-SE faults were mapped along the valley that separates the Kay Tanda deposit from Pulang Lupa. A

dextral movement on this fault is apparent given the relative positions of the Kay Tanda and Pulang Lupa

mineralised bodies.

A structural study by Aurelio (2006) of drill cores from KTDH04, 11, and 10 indicates a broadly similar

structural pattern. Early ENE to NE trending structures formed by NW-SE directed extension control the

advanced argillic zone and the early mineralization stage and N-S structures due to E-W directed

extension. The quartz-sulphide stockwork veining is believed to be related to this event. Figure 22

demonstrates the cross-cutting relationship between the early ENE veins and later N-S to NNE trending

quartz veins. The last event (black tensor plots) is a post-mineral compression phase that caused strike-

slip displacements of early-formed structures, manifested in the displacement of mineralised veins.

Dextral movement on NW-SE faults may result from this stress field.

Figure 21: Tensor summary from KTDH04, 11, and 10

(from Aurelio, 2006)


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Figure 22: Outcrop of silicified tuff with quartz veins

The veins are in two orientations, an early ENE trending quartz vein cut by N-S to NNE striking veins exhibiting

open-space fill textures (Rohrlach, 2008).

The structural study by Aurelio was largely conducted on mineralised fractures while the current

interpretation highlights post-mineral structures. As they are broadly similar, this means that the stress

fields operating during the time of mineralization existed for a protracted period that outlived the

mineralization. The structures observed at the scale of the drill core and Kay Tanda geological map are

also known to exist on a regional scale as that shown by the NE-SW extensional tectonics at the Macolod

corridor (Figure 7).

12.3.3 Rock Sampling

Limited rock sampling was conducted over the Kay Tanda area, mainly to confirm the gold grades

obtained by MRL in selective sections. A total of 31 samples were collected in this program.

Two rock chip samples from quartz-base metal veins in the northeast part of Kay Tanda (Figure 23)

returned results of 5.60 g/t Au and 6.90 g/t Au. They exhibit NW-SE strike with moderate dips to the

southwest.

Another set of samples were taken from an outcrop along a road-cut east of the KTD174 drill site. The

outcrop exhibits sheeted NW-SE trending chalcedonic quartz veinlets. Most of the samples were

anomalous (> 0.1 g/t Au) in gold with the highest at 4.88 g/t Au over 2 meters.

The rock sampling in the Kay Tanda area demonstrated that quartz and quartz-base metal veins are

exposed on surface and sometimes exhibit ore grade gold values.


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Figure 23: Alteration Map of Kay Tanda Project Area

12.3.4 ASD

Avocet geologists collected 1,344 core samples from 25 drill holes (both from MRL and Avocet) to

conduct an Analytical Spectral Device (ASD) scan to determine the clay mineralogy and give us an idea

of their nature and origin. The ASD Terraspec is a field spectrophotometer that scans clay minerals much

faster than a PIMA with 6 to 7nm resolution and capable of reading a wider wavelength range from Very

Near Infrared (VNIR) to Short Wavelength Infrared (SWIR). Samples were chosen selectively from a

wide variety of alteration styles in the drill cores and RC chips.


62

The results of the ASD study confirm the presence of different alteration styles that support the theory of

overprinting porphyry and epithermal events at Kay Tanda (Figure 24). Clay minerals identified include

high temperature acidic clays such as pyrophyllite, dickite, diaspore and alunite in a broad clay alteration

envelope of illite, illite-smectite and kaolinite of varying crystallinity. Because of the wide range of

wavelength the ASD can read, carbonates such as ankerite, rhodocrosite and dolomite were detected as

well as gypsum, chlorite and iron oxide.

Vuggy silicification, locally hosting chalcedonic quartz veins, is observed near surface in several drill

core samples (e.g. KTDH01, KTDH20 and KTD176). The spectra from these samples show dominant

pyrophyllite and occasional alunite which is correlated with a low to medium (0.5 to 1.5 g/t Au) gold

grade.

The most widely distributed clay is illite, usually found below the advanced argillic alteration. Illite,

together with chlorite, defines the intermediate argillic alteration. The illites display varying degrees of

crystallinity that indicates differing temperatures of formation. The high temperature, strongly crystallline

illite is associated with high grade gold mineralization in the quartz and quartz-base metal veins as

demonstrated in KTDH-04, KTDH-01, and KTDH-06. They are found in the deep and shallow sections

of the veins suggesting that the fracture that hosts the vein is an upflow zone.

Gold is also associated with aluminum-rich illite such as in KTD174 and KTD176. Aluminum in illite is

detected by the absorption at the AlOH wavelength (2196 – 2000nm). The high grade gold zone at

KTD176 (46.5 g/t Au) contains aluminum-rich illite.

Strongly crystalline kaolinite was found with pyrophyllite at KTD175 and KTD176. It is also observed in

KT-22 (16.0m-28.0m), KT-23 (8.0m-26.0m) and in KTDH-07 (17.0m-21.0m and 35.0m-44.0m). These

represent hypogene advanced argillic zones with low grade mineralization.

Alunite is detected in only a few samples at KTDH-20 and at KTDH-07, associated with kaolinite. This

may be due to the supergene weathering that transforms most of the alunite to kaolinite. Another

possibility is that the exposed advanced argillic alteration represents the root zone and that the alunite-

dominant part of the system has been eroded. This is substantiated by the dominance of pyrophyllite over

other advanced argillic clays and the narrow zones of vuggy silica.


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Figure 24: Location of Drill Core Samples Scanned by ASD


64

13. DRILLING

Mindoro conducted a major RC and diamond drilling program on the Kay Tanda Prospect and the

adjacent Pulang Lupa Prospect in 2006 and 2007. A total of 147 reverse circulation percussion holes and

26 diamond drillhole were completed by Mindoro between April 2, 2006 and July 12, 2007, yielding a

total of 173 drillholes for a total program meterage of 23,042.30 m. Details of the drilling program are

outlined below. An earlier drilling program was conducted by Chase Resources where 13 RC holes were

drilled for a total meterage of 1,544 m.

The initial drillholes by Mindoro were designed to test the extent and continuity of epithermal

mineralization at shallow levels of the Kay Tanda prospect and to test at deeper levels for the presence of

porphyry Au-Cu mineralization. In positioning the initial series of drill holes, Mindoro reviewed all

existing data, including surface alteration data, previous drilling results by WMC (7 holes) and by Chase

(13 holes), chargeability and resistivity anomalies from a regional IP survey, grid soil anomalies, and

rock-chip plus trench geochemical results.

Avocet conducted drilling on the Kay Tanda Prospect from February 2009 to June 2009 as a part of their

due diligence program in the area. The drilling was comprised of 14 holes (2,041.80 m) and was designed

to determine the proper projections of the different mineralized structures, particularly the high grade

veins encountered by previous drilling. It also evaluated the potential for near-surface high grade

structures.

Figures 25 and 26 show the location of drillholes.

13.1 Drilling Contractors and Drilling Statistics

Four (4) drilling contractors were used in drilling the project, two for the RC drilling and two for the

diamond drilling. Table 4 summarizes the drilling which was undertaken by each of the contractors.

Contractor Type of Drilling

KT # holes

PL # holes

Total Meterage

Start Date

End Date

East-West Drilling RC 13 13 3206.0 Apr-06 Jun-06

DrillCorp Phils., Inc. RC 93 28 13542.0 Jul-06 Apr-07

United Philippines Drilling Diamond 24 2 6294.3 Aug-06 Jul-07

Indodrill Philippines Diamond 14 0 2041.8 Feb-09 Jun-09

Total 144 43 25084.1

Table 4- Drilling Contractors

East-West Drilling Inc. (East-West) was the first contractor to drill at Kay Tanda and Pulang Lupa area.

East-West drilled 26 RC percussion holes for a total meterage of 3,206 m. The depths of the drill holes

ranged between 46 and 187 meters, with an average depth of 123.31 m. East-West was afterwards sold to

DrillCorp of 16 South Coast Industrial Estate, Barangay Bancal, Carmona, Cavite, Philippines who

completed the remainder of the RC percussion drilling program. DrillCorp drilled 121 RC percussion

holes for a total meterage of 13,542 m. Drillhole depths ranged between 50 and 252 meters with an

average drillhole depth of 111.92 m.

All of the 26 diamond drill holes in the Mindoro drilling program in 2006 and 2007 were done by United

Philippines Drilling Company, Incorporated (UPD) of Pioneer Highlands South Condominium, Unit 818,


65

Pioneer corner Madison Streets, Mandaluyong City 1552, Manila, Philippines. Two (2) diamond holes

were completed at Pulang Lupa and 24 diamond holes were completed at Kay Tanda. Diamond drilling

was conducted between August 26, 2006 and July 12, 2007. The depths of the diamond holes ranged

between 83 m and 519.3 m with an average depth of 242.09 m.

For the Avocet due diligence program, the drilling was carried out by one rig from Indodrill Philippines

(Indodrill) of Building 7268 IE 1, Jose Topacio St., Clark Freeport Zone, Clarkfield, Pampanga. Indodrill

drilled a total of 14 holes (KTD 174 to KTD187) with a total meterage of 2,041.8. Drillhole depths

ranged between 89 m and 175 m with an average depth of 146 m.

Figure 25: Kay Tanda drillhole location map

10,100E

10,100E

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9,700E

9,500E

10,300N

10,400N

10,500N

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00E

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2000 100

meters

Historical workings

Creek

4wd road

Diamond Drill hole location (AMP)

Drill hole location (Diamond)

Drill hole location (RC)

Historical drill hole

KTD174

KTDH-1

CA-03

KT-2

KTDH-21

KTDH-23

KT-37

KTDH-24

KTDH-01

KT-105

KTDH-20

KT-68

KT-22

KT-106

KT-13

KT-104

KTDH-15KTDH-17

KTDH-19

KT-103KTDH-03

KTDH-04KT-54

KT-71

KT-70

KT-92

KT-90

KT-91

KT-95

KT-93

KT-86

CA-01

CA-02

CA-03CA-04

CA-05

CA-06

CA-07

CA-08

CA-09

CA-10

CA-11

CA-12

CA-13

KT-01

KT-02

KT-03

KT-04

KT-05

KT-06

KT-07

KT-08

KT-09

KT-10

KT-100

KT-101

KT-102

KT-11KT-12

KT-14

KT-15

KT-16

KT-17

KT-18

KT-19

KT-20

KT-21

KT-23

KT-24KT-25

KT-26

KT-27

KT-28

KT-29

KT-30

KT-31

KT-32

KT-33

KT-34

KT-35

KT-36 KT-38

KT-39

KT-40

KT-41

KT-42

KT-43

KT-44

KT-45

KT-46

KT-47

KT-48

KT-49

KT-50

KT-51

KT-52

KT-53

KT-55

KT-56

KT-57

KT-58

KT-59

KT-60

KT-61

KT-62

KT-63

KT-64

KT-65

KT-66

KT-67

KT-69

KT-72

KT-73

KT-74

KT-75

KT-76

KT-77

KT-78

KT-79

KT-80

KT-81

KT-82

KT-83

KT-84

KT-85

KT-87

KT-88

KT-89

KT-94

KT-96KT-97

KT-98

KT-99

KTDH-02

KTDH-05KTDH-06

KTDH-07

KTDH-08KTDH-09

KTDH-10

KTDH-11

KTDH-12

KTDH-13

KTDH-14

KTDH-16

KTDH-18

KTDH-22

PL-01

PL-02

PL-03

PL-04

PL-05

PL-06

PL-07

PL-08

PL-09

PL-10

PL-11

PL-12PL-13

PL-14

PL-15

PL-16

PL-17

PL-18

PL-19

PL-20

PL-21PL-22

PL-23

PL-24

PL-25

PL-26

PL-27

PL-28

PL-29

PL-30

PL-31

PL-32PL-33

PL-34

PL-35

PL-36

PL-37

PL-38

PL-39

PL-40PL-41

PLDH-01

PLDH-02KTD174

KTD179

KTD175

KTD176

KTD177

KTD178

KTD180

KTD182

KTD181KTD184

KTD183

KTD185

KTD186KTD187

KAY TANDA DRILL HOLE LOCATION


66

Figure 26: Avocet Drillhole Locations at the Kay Tanda and Pulang Lupa prospects


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13.2 Drilling Equipment

East-West and later, DrillCorp, used a truck-mounted GEMCODRIL from Western Australia for the

reverse circulation drilling. The GEMCO drill rig was supported by a truck-mounted ELGI compressor

from ELGI Equipment Limited (ELGI DZ 23036) of Coimbatore, India. This drill rig drilled KTRC-1

through 67 and PLRC-1 through 29. In 2007, the rig was replaced by Gempak 2000, a larger drill rig that

is capable of penetrating down to a depth of approximately 250 meters. The Gempak 2000 was used in

drilling KTRC-68 to 106 and PLRC-30 to 41. The RC drilling was comprised of 147 holes and an

aggregate meterage of 16,748.

Diamond drilling at Kay Tanda and Pulang Lupa in 2006-2007 was conducted by UPD using two (2)

man-portable diamond drilling rigs (Drill Technics DT500P and Atlas Copco CS500). The cores were

retrieved using triple-tube sampling and core sizes drilled were PQ-3 (83 mm diameter) from surface,

with reduction to HQ-3 (61.7 mm) and NQ-3 (45 mm) at depth. Core drilling was undertaken to generate

more reliable geological information on the mineralization at Kay Tanda and Pulang Lupa and the man-

portable rigs were also employed in areas where access was difficult, and where the company wished to

minimize environmental disturbance in order to gain access.

For the Avocet drilling program, Indodrill Philippines used a man-portable diamond drill with wireline

core barrel extraction called an ID-350 that was custom-built by the contractor (Figure 27). Triple-tube

rod sets were used for all the holes. PQ rods are used to collar the holes and were drilled to an average

depth of 31.4 m while the average depth for HQ is 114.5 m.

Figure 27: Indodrill‟s Man-portable ID-350 Rig at Kay Tanda Project


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13.3 Casing in Drillholes and Drillhole Collars

The drill collars are capped by a square concrete block approximately 30 cm x 30 cm in dimension, which

encases a 30-50 cm length of PVC tubing that protrudes from the drillhole. The PVC collar is capped by a

folded metal sheet. For the Mindoro holes, the drillhole number and the local grid coordinates are

inscribed into the concrete base while only the drillhole number were inscribed on the concrete base for

the Avocet holes. Likewise, the drillhole number is written onto the metal plate by permanent marker pen

for all the drill collars.

13.4 Drillhole Surveys

Down-hole surveys during the MRL drilling were conducted on 21 of the 26 diamond drillholes.

Diamond holes KTDH-01 to KTDH-04 and KTDH-13 were not surveyed. Holes KTDH-03 and KTDH-

04 were vertical holes. No surveys were conducted on the RC holes as these do not typically deflect

much. A total of 109 downhole surveys were conducted in the diamond drillholes, and 100 of these are

valid surveys. The surveys were taken mostly at 50 meter intervals down-hole as well as at the bottom of

the hole. The down-hole surveys were conducted using an Eastman single-shot survey camera (Eastman-

US Mine).

Likewise, Avocet carried out downhole survey on all of the 14 holes using an Eastman single shot camera

and the same method as the previous drilling. The downhole camera is inserted inside a non-magnetic

brass case that is attached to an aluminum survey rod which is lowered into the hole up to the desired

depth where the camera shot is taken. Extra precautions are taken to ensure that the survey rod protrudes

outside the drill rod strings to avoid the magnetic effect of the drill rods.

13.5 Orientation of Drill Core

The majority of diamond drill cores during the MRL drilling were oriented. Core orientations were done

on inclined holes using the spear method. Spear orientations were conducted in areas where the core was

deemed sufficiently coherent to allow successful implementation of a spear mark on the core stub and

extrapolation of the oriented line along the core within the split tube assembly. Avocet also carried out

core orientation using spear method.

As soon as the oriented core comes out of the core barrel, the field assistant mounts the core on an angular

bar and aligns the bottom of the core along the edge of the angular where a straight line can be drawn.

This straight line becomes the basis for structural orientation readings (alpha and beta), during

geotechnical logging. The core orientation mark is preserved by covering with transparent plastic for

later checking by the geologists.

13.6 Surveying of Collar Positions

During the MRL drilling program, all drillhole collar positions and elevations at Kay Tanda and at Pulang

Lupa were surveyed using a Nikon Total Station EDM Instrument (model DTM-322). A Bureau of Lands

Location Monument (BLLM) located at the Malabrigo lighthouse has a set of official coordinates that

were defined by the land survey department of the Department of Environment and Natural Resources

(DENR).

The government survey coordinates for the Malabrigo lighthouse were probably generated from a

differential GPS survey. MRL surveyors used a South Total Station EDM Instrument (model NTS-325) to


69

survey from the Malabrigo lighthouse BLLM to a nearby Government Cadastral Survey Point located at

Archangel in order to establish its coordinates.

MRL established nine (9) survey control points in the Archangel project by surveying from the

Government Cadastral Survey Point at Archangel. The survey control points that were established in the

vicinity of the Kay Tanda and Pulang Lupa drill-grids are listed in Table 5 below.

Area Station North UTM East UTM Local North

Local East

Elevation (m)

Kay Tanda-1 S-1 1507131.61 316868.96 10096.82 10002.00 246.26

Kay Tanda-2 S-2 1506827.50 316683.88 9755.20 10104.10 329.00

Pulang Lupa S-3 1506957.43 316153.34 9447.88 9652.54 321.04

Shoreline S-4 1506703.79 317537.28 10306.63 10767.06 9.92

Malagundi Point S-5 1505758.35 317238.91 9452.27 11270.02 21.76

Lumbangan-1 S-6 1507178.15 317990.12 10960.56 10717.56 12.09

Lumbangan-2 S-8 1507188.77 317438.93 10558.05 10340.85 199.91

Table 5- Survey Control Stations

During the Avocet due diligence program, Mindoro commissioned independent surveyors to tie-up the

existing local grid to three survey stations with Universal Transverse Mercator (UTM) coordinates

thereby tying-up all existing data into real space. The three control points were established by a

contractor using a differential GPS. The movement of data is based on the movement of these three

control points as shown in the table below:

FROM (old coordinates) TO (true UTM coordinates)

CONTROL_ID UTM_EAST UTM_NORTH UTM_EAST UTM_NORTH

1 315830.7168 1507114.771 315987.4044 1506957.743

2 316987.4686 1507303.443 317147.5617 1507124.169

2 316745.1315 1506755.524 316894.7523 1506581.01

Table 6- Old and new UTM coordinates of the three control points

The drillholes in the Avocet program were surveyed by means of compass and tape traverses from the

nearest drillhole. As there are several old drill collars spread-out all over the Kay Tanda area, the

traverses from a known drill collar to the new holes are often less than 10 meters, thus errors in surveying

the new holes are minimal.

13.7 Summary Results of Drilling

13.7.1 MRL Drilling

Reverse circulation percussion drilling and diamond drilling conducted by MRL during the 2006-2007

cover an area of approximately 500 m x 500 m at Kay Tanda and 200 m x 300 m at Pulang Lupa. Drill

sections are 50 meters apart and drill spacing is at 50-meter centers on most sections, although some infill

to 25 meter spaced centers has been conducted in local areas at Kay Tanda and Pulang Lupa.

Mineralization that has been encountered at Kay Tanda comprises 2 main styles:

1) Extensive and widely dispersed low-grade stockwork vein systems.

2) Narrow and discrete high grade high-grade veins and narrow hydrothermal breccias.


70

Pulang Lupa

Drilling at Pulang Lupa has revealed a coherent and contiguous sheet of quartz-Au-Ag stock-work

mineralization that varies mostly from 20 to 60 meters in thickness and which has a component of dip to

the northwest. Drill holes along sections at Pulang Lupa with hole-spacings of around 20-30 m reveal that

the mineralized zone at Pulang Lupa shows good coherency between and along sections, and is

continuous between the drillholes. The mineralization forms a tabular zone that is exposed at surface over

the main part of Pulang Lupa hill and dips gently under unmineralized cover to at the northwest. The

uppermost part of the tabular mineralized sheet at Pulang Lupa appears to have been lost to erosion. The

mineralized horizon is hosted primarily by volcanics in the lower part of the Talahib Volcanic Sequence

and in a zone that broadly overlies the intrusive bodies at depth. Like Kay Tanda, there are sporadic

though fewer and narrow zones of higher grade mineralization at Pulang Lupa. (Rohrlach, 2008)

Kay Tanda

Drilling at Kay Tanda has likewise intersected similar styles of quartz-Au-Ag stockwork mineralization

as were encountered at Pulang Lupa. They lie as a thick carapace over and around the flanks of the dome-

like intrusive rocks which lie at depth. Collectively the zones of stockworking and associated intense

argillic alteration crudely define a zone that drapes in an arcuate manner over the intrusives. The true

thickness of the collectively zone of weakly mineralized stock-work veining varies mostly from 20 to 80

meters. The „zone‟ of stocking broadly dips to the northwest on the northwestern side of the intrusive

dome, and dips to the southeast on the southeastern side of the dome. Drillholes along sections at Kay

Tanda mostly have spacings of between 25 m and 50 m. (Rohrlach, 2008)

The overall geometry of the shallow stockwork veined zones is relatively well understood. Drill core

orientations have suggested that there is a strong bias to northeast and ENE for the strike of individual

veins within the zone of intense stockworking, despite large variations in dips of the veins that comprise

the stockwork zones. The mineralized portions of these stockworks (where veining and fracture density is

likely greater) define a broad carapace hosted by the Talahib Volcanic Sequence that lies over the diorite

intrusives of the Balibago Diorite Complex at depth. (Rohrlach, 2008)

At deeper levels of the Kay Tanda deposit there are sporadic and narrow zones of much higher grade

mineralization. These are commonly associated with bonanza gold grades and tend to occur at deeper

levels than the shallow carapace of extensive stockworking and fracturing. Where these have been

intersected in drill core, e.g. in hole KTDH-04, they typically comprise steeply-oriented zones of

hydrothermal breccia and veining, and commonly occur in close-spaced sets.

The orientations of these sets of deeper and higher-grade structures are not well constrained by drilling as

they have only been encountered in isolated drill holes. Difficulty in intersecting the multiple bonanza-

grade intersections in drillhole KTDH-04 during follow-up scissor drilling on section may suggest that

the younger lodes that comprise quartz-basemetal-Au stockworking and breccia veins may trend at a low-

angle to the drill sections. (Rohrlach, 2008)

13.7.2 Avocet Due Diligence Drilling

Avocet aimed to delineate high grade zones to augment the Kay Tanda resources. The primary targets for

the drilling were the quartz base-metal veins and possible structural feeders to the advanced argillic

alteration.


71

Avocet‟s drilling program attempted to understand the gold grade distribution and orientation of the

epithermal vein zones by drilling across (azimuth 050°) the previous drilling pattern. They completed 14

diamond drill holes with total meterage of 2,041.8 m from February to June 2009.

The holes are spread-out over the Kay Tanda area to test and delineate the various occurrences of quartz-

base metal veins, some of which were previously intersected by MRL holes.

The first 6 holes (KTD174 to KTD179) are located along a NE-SW fence trending 050° azimuth to scan

for NW-SE trending veins across the whole width of Kay Tanda. These holes were successful in

intersecting a number of quartz base metal veins at high angle to core axis which validates the

interpretation that these veins strike NW-SE. KTD 179 also intersected a significant quartz-base metal

vein zone averaging 4.5m @ 2.40 g/t Au. This is a new zone at the eastern edge of the Kay Tanda

prospect. This opens the possibility for similar occurrences further east towards Lumbangan ridge.

Another interesting feature intersected by the fence of holes is the silicified zone at KTD176. This

mineralised zone yielded 6.5m @ 8.70 g/t Au, including 1m @ 46.5 g/t Au. The zone lacks veining, but

free gold was observed in microfractures within the silica replacement alteration. It is interpreted that this

hypogene zone is the feeder structure of the high grade, advanced argillic altered rocks around the

KTDH-01 area.

KTD180 to KTD182 targeted the northwest strike projection of the veins intersected by the first 6 holes.

Although the veins were intersected as projected, the assay results are lower than projected. This may

mean that a secondary structure or feature controls the localisation of high grade ore shoots within the

quartz-base metal veins. KTD183 and KTD184 intersected fault zones with associated quartz veins.

KTD183 straddled the fault zone with disseminated pyrite through most of its length. Two zones of

quartz-pyrite veins were intersected.

At the northwest end of the deposit, KTD187 was quite successful in intersecting +1 g/t gold

mineralization over a significant width (21.1m @ 1.64 g/t Au). It validates the up-dip projection of the

mineralization intersected by KT44 and provides evidence for the strike orientation of these veins. The

interpretation derived from this hole is important in expanding the resource in this northern area.

In summary, the holes drilled in the program mostly intersected the projected quartz-base metal veins

making it a technical success. However, because of drill intersections on mineralised structures (e.g.

quartz-base metal veins), Avocet were able to project the mineralization over reasonable strike lengths

that augment previously declared resources at Kay Tanda.

14. SAMPLING METHOD AND APPROACH

Both RC percussion drilling and diamond drilling were conducted at the Kay Tanda and Pulang Lupa

Prospects during Mindoro‟s drilling program. Different drillhole sampling protocols were established for

the RC percussion drilling program and for the diamond drilling program. During the Avocet due

diligence program, only diamond drilling was conducted.


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14.1 Drill Core Sampling

14.1.1 Reverse Circulation Percussion Drilling

The sampling procedures for the RC percussion drilling program at Kay Tanda were established by Mr.

Gary Powell, an independent consultant, and demonstrated to the relevant geologists, drillers and

samplers at the commencement of the MRL drilling program in 2006.

Figure 28 illustrates the sampling protocol that was employed during the RC percussion drilling program

at Kay Tanda and at Pulang Lupa. This protocol is also discussed in Section 15.1.1 of this report. The

details of the drilling program are presented in Section 13 of this report.

Figure 28: MRL sampling protocol for the RC percussion drilling program at Kay Tanda.

14.1.2 Diamond Drilling

The diamond drilling conducted at Kay Tanda and Pulang Lupa is described in Sections 13.1, 13.2, 13.6,

13.7 and 15.1.2. The core handling, logging and sampling procedure employed by MRL during the

diamond drilling program is illustrated in Figure 29.

Figure 29: MRL Core handling, logging and sampling protocol.

(Rohrlach, 2008)


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For the Avocet drilling program, sampling of diamond core was carried out in accordance with Avocet‟s

Standard Operating Procedure for Diamond Core Sampling which will be discussed in the following

sections.

14.2 Location of Drill Samples and Density

The location of the drill samples at Kay Tanda and Pulang Lupa and the density of sampling are covered

in Section 13 of this report.

14.3 Controls on Selected Drill Sampling Width

The sampling interval was initially set at one (1) meter but was later changed to two (2) meters for the

Mindoro drilling program. The change from 1-meter sampling to 2-meter sampling was implemented

following an early assessment of high continuity of gold grade from meter to meter down-hole. This

vertical and horizontal consistency in grade within the mineralized zones is consistent with the style of

mineralization whereby fine dense networks of fractures and veinlets, which host the gold mineralization,

are pervasively distributed through the rock at the meter scale. A total of 31.09 percent of the RC

percussion samples (n=3,069) were sampled at 1-meter intervals while a total of 68.91 percent of the RC

percussion samples (n=6,803) were sampled at 2-meter intervals.

For the Avocet drilling program, the standard sample interval was 2 meters, but this varied depending on

the geology, which was the primary sample control. If mineralised veins are noted or if the core is

potentially high-grade, one meter sample cuts are usually taken. Sub-meter cuts at a minimum of 0.2

meter are allowed if potential high grade veins of less than one meter are noted. For long intervals of

potentially waste materials, sampling is sometimes carried out over 3 meter intervals.

14.4 Geological Logging

MRL Drilling Program

Preliminary field logs for the RC percussion drill-holes were conducted on site by MRL geologists during

the course of drilling to monitor lithologies as an aid to determining when to continue or terminate each

drill-hole. Two versions of preliminary log sheets were used. The data captured in the preliminary logs

included depth (from and to), lithology and comments.

Additional data was captured onto a Sample Description Form that was maintained by MRL‟s on-site

engineer at each drill site. This form captured the drill-hole number, depth from, depth to, sample

condition (i.e. moisture level), sample weight, sample volume and comments.

The data from both these forms were key-punched into digital databases. The preliminary geological

logging were conducted on washed and sieved RC chips which were placed sequentially in core trays,

with each interval separated by wooden blocks.

Following preliminary logging, the core boxes with RC chips were transported to the Archangel field

camp where the sample trays were then photographed prior to transfer of the washed chips into 20-cell

plastic chip holders for photography and detailed RC logging. The excess washed chips were stored in

labeled snap-seal plastic bags for future retrieval from the Lobo sample storage facility if required.


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During the detailed geological logging of the RC chips the following geological criteria were recorded

onto paper log sheets and subsequently entered into a digital database:

General Data: Hole number; drill-rig; logger; date logged; date hole started and completed; local grid

northing and easting; collar elevation; hole azimuth and inclination; total depth; inner rod diameter.

Geological Data: Depth (from and to); Lithology; Phenocryst (percent); Groundmass (percent);

Oxidation; Host Alteration percent (silica, sericite, clay, chlorite, epidote, calcite, hematite, limonite,

magnetite); Mineralization percent (pyrite, chalcopyrite, bornite, covellite, enargite, molybdenite,

sphalerite, galena); Veining (From, To, Type, percent veining); Minerals in Vein percent (quartz,

anhydrite, calcite, pyrite, chalcopyrite, sphalerite, galena, molybdenite); Description (comments).

The same format of geological logging sheets was used for the logging of diamond drill core. A detailed

graphical log for each diamond drill hole was drawn on site or at MRL‟s core storage facility at the Lobo

office to visually convey the down-hole geology to MRL management. In addition to detailed geological

logging of the core, each core box was photographed as a permanent photographic record of the core

before it was sampled. During the logging of diamond drill core, intervals of core which had undergone

spear orientations were oriented to enable measurement of the orientation of faults, veins and fractures.

The orientation data for various types of veins were entered into an Excel database.

Avocet Due Diligence

For the Avocet drilling program, three log forms were used to capture the geological features observable

in the cores. The log forms consist of a Summary Log, a Geotechnical Log, and a Geological Log .The

Geotechnical logging was carried out at the rig by trained field assistants who man the rigs on the same

shifts as the drillers. They log the core as soon as it is withdrawn from the core barrel and before it is

taken from the splits. They measure the core recovery and RQD; and record the lithology, alteration,

degree of weathering, as well as characterize rock discontinuities (e.g. fractures, joints). A standard set of

abbreviations is used in coding the Geotechnical log sheet.

When the core reaches the core shed, the geologists log the core using the main Geological Log form.

This A3-sized form is used to document geological details such as lithology and structure, alteration and

mineralization, as well as graphically represent zones of alteration and presence of ore-forming minerals.

The header section of the logging form documents general information about the drill hole (down hole

surveys, hole depth, metres of different core sizes drilled, logger, driller, etc). The log form provides

space for both long-hand and graphical presentation of the geological information. Standard abbreviations

are also used, particularly for lithology and alteration, to facilitate easy data entry in the computer. These

abbreviations are standardized in the Avocet field handbook.

If the core is oriented, the geologist evaluates the spear mark in the core and the BOH (bottom of hole)

line drawn by the field assistant. If he is satisfied with the line, he will measure the alpha and beta angles

of relevant structures useful in the structural analysis of the core. The data is then logged onto another

form called the Core Orientation Log. The data is encoded in a standard excel spreadsheet that forms the

data input for the GEOCALC software to convert the alpha and beta readings to dip and dip direction.

The Drillhole Summary Log is completed either earlier or later than the main Geological Log, depending

on the project requirements. This is a single A4-page summary of the entire drill hole, so the scale

changes as required. The form has graphic columns (that use standard colors and symbols) and descriptive

columns (for long-hand description). This form is filed together with the other completed forms in a

folder stored in a filing cabinet.


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14.5 Calculation of Drill Sample Recovery Data

RC Percussion Drilling

The sample recoveries for the RC percussion program were calculated by two different methods.

During sampling at the drill rig the weight of samples were measured on a pair of scales and the weights

recorded to the nearest kilogram. The volumes of the samples were also recorded in a cylindrical bucket

of known volume. The latter method (sample recovery by volume) turned out to be unreliable in

determining absolute recoveries due to the variable degree of aeration of the sample within the sample

bucket, leading to measured recoveries in excess of 100percent. However, it nevertheless was an indicator

of relative recoveries between samples. The more accurate method of estimating recoveries was by the

former method (sample recovery by weight). Using the known surface area of the RC hammer face and

sampling interval, the actual volume sampled at the hammer-face can be calculated. Combining this

theoretical volume data with the average measured specific gravity for each different lithology type

encountered in the drilling, the theoretical weight of sample required for a 100percent recovery can be

calculated. Comparing this value with the actual measured weight of the sample yielded the recovery.

The recoveries were within acceptable limits for RC drilling programs. The recoveries from the Gempak

2000 drill rig were better than the Gemco rig, and tended to rise slowly in the deeper parts of the hole. In

comparison, the recoveries of the Gemco rig tended to fall slowly beyond depths of around 60 metres.

Nevertheless the recoveries are within acceptable limits for percussion drill programs. The calculated

average recoveries across all depths for each drill rig were 84.36 percent for the Gempak 200 rig, 73.75

percent for the Gemcodril rig and 77.06 percent, for the entire RC percussion program.

Diamond Drilling

The sample recoveries for the diamond drilling program were calculated by measuring the retrieved core

lengths and comparing them to the run length. The data were recorded by MRL in a Core Recovery

database. The average core recovery of the entire MRL drilling program was 97.91 percent. Some 88.2

percent of the core runs had 100 percent recovery. The average recoveries of all diamond holes are above

90 percent, with only four holes near the start of the program with recoveries of just under 95 percent. In

summary the recovery data for the diamond core are good.

For the Avocet drilling program, core recoveries are measured as soon as the core is withdrawn from the

core barrel and is part of the Geotechnical Logging. Recovery data shows an average core recovery of 98

percent for all the drill cores. PQ size core has slightly lower recoveries at 94 percent and possibly reflects

slight difficulty in recovering near surface, highly oxidised materials. All of the holes in this program

have recoveries that are greater than 90 percent and are thus considered very good.

15. SAMPLING PREPARATION, ANALYSES AND SECURITY

15.1 Sample Preparation

MRL Drilling Program - RC Percussion Drilling

All intervals drilled by percussion drilling were sampled for assay except those that contained soil

overburden or back-fill material generated by drill-site preparation. The RC samples from each sampling

interval were directed through a cyclone and into pre-labeled high-density polyethylene plastic sample

bags (750 mm x 500 mm). The samples were then weighed on a calibrated scale, with sample weights


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recorded to the nearest kilogram onto a Sample Description Form for later computation of sample

recovery. The samples were then emptied into a bucket of known diameter, and the height of the sample

in the bucket was measured for later computation of sample volume. The bucket was then emptied into a

Jones Splitter. The samples were split down to 1/8 volume by the Jones Splitter, and these reduced

samples were bagged for analysis. The remaining 7/8‟s portions of the split samples were retained as field

duplicates. The samples for analysis were split directly into pre-labeled, high-density, polyethylene plastic

bags (400 mm x 250 mm) which were sealed with plastic-coated metal twist ties. The bags had masking

tape labels on their outside which recorded the hole number and the sample depth. The large plastic bags

used to capture the samples from the base of the cyclone were re-used at the base of the Jones Splitter to

capture the large field duplicate split. These duplicates are stored in the Lobo sample storage facility.

The large field duplicate sample bags and the smaller assay sample bags were arranged in rows of 20 onto

a canvas sheet away from the drill rig. To obtain rock chips for geological logging, the residual 7/8‟s

samples (field duplicate) were speared-sampled using a 2” PVC tube to yield a representative and

unbiased sample. These samples were dry-sieved with a metal sieve and then any remaining dust and clay

was washed by wet-sieving of the chips. The washed chips were then placed in a HQ core tray with

wooden blocks between the sample intervals ready for preliminary logging at the drill site. After

preliminary logging, a fraction of the washed chips was inserted into labeled 20-cell plastic chip-trays

while the remaining washed chips were stored in labeled plastic snap-seal bags. The samples in the

compartmented chip trays were logged in detail and photographed in the Lobo office.

MRL Drilling Program - Diamond Drilling

During logging, MRL geologists marked up sections of the core for splitting, and they also supervised

and/or performed the sampling of the cut core. Sampling was conducted to geological boundaries.

Sampling boundaries were selected to coincide with alteration boundaries, boundaries of quartz vein

stockworks or quartz + base-metal vein stockworks, hydrothermal breccias boundaries, and to areas of

varying sulphide content.

Diamond drill core was cut using an electric-powered, water-cooled diamond-bladed Dembicon Core

Cutter at the Lobo office. PQ and HQ core were quartered for assay while NQ core were halved for assay.

During the cutting of core, where intersections of high grade or visible gold were known to occur, each

individual piece of core was initially wrapped in plastic or aluminum foil and sealed with tape prior to

cutting on the core saw to prevent breakage or contamination, and to prevent parts of the sample being

washed away during core cutting. Broken or soft sections of the core were sampled by the geologists

using a spatula and spoon before being placed in labeled plastic sample bags. Diamond drill core was

sampled and assayed at predominantly at 1 meter and 2 meter intervals. Some portions of diamond holes

near the surface were not assayed due to the presence of younger unmineralized stratigraphy. Local

portions of core were assayed at intervals of more than 2 meters however these comprised only 2.58

percent of the diamond core samples (n=108) that were sent for assay. (Rohrlach, 2008)

Avocet Due Diligence - Diamond Drilling

As part of the core documentation, the drill core is photographed in both wet and dry states before

sampling. Two core trays are usually stacked, one on top of the other, for photographic documentation.

All core sampling was completed using a diamond saw, with half core samples submitted for assay

analysis. The logging geologist also decided on the location of the cut, taking into account the geological

fabric and proper representation of the sample. The default for the diamond saw cut is adjacent (about

0.5cm) to the orientation line and the half core with the orientation line is retained for reference.


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15.2 Sample Security and Transport


The Kay Tanda – Pulang Lupa drilling was conducted under the supervision of Mr. James A. Climie, P.

Geol., President of MRL. To ensure drill site quality control an MRL geologist was assigned permanently

on site during all of the reverse circulation drilling. A site-supervisor/mining engineer was assigned

permanently on site for each day and night shift for the diamond drilling. The geologist acted as overall

supervisor of the drilling operation, including the sampling protocol from splitting to bagging in pre-

labeled plastic sample bags. The geologist also supervised transport of samples for assaying, as well as

field duplicates, from the drill site to the Lobo Office where the samples were received by MRL

personnel. MRL personnel were also assigned to manage the sample preparation and dispatch to McPhar

Laboratories, and the archiving of field duplicates.

The prepared samples were then placed into empty rice-sacks and transported to McPhar Laboratories in

Manila using a company-owned vehicle and accompanied by MRL personnel, together with McPhar

Sample Submission Forms. All samples were delivered by MRL directly to the McPhar Laboratory in

Manila without the use of third parties. Counting and cross-checking of samples as listed on the McPhar

Submission Forms was done by McPhar supervisors and witnessed by MRL personnel. Secured sample

bags were opened by McPhar supervisors only, at their laboratory in Makati City, Metro Manila. All

written instructions for sample preparation and analyses accompanying the samples submission forms are

received in their laboratory. A sample tracking, quality control, and reporting system is maintained

between MRL Gold and McPhar.

A more detailed discussion on sample preparation, analyses and security procedures applied during the

MRL exploration program can be read at Bruce Rohrlach‟s Kay Tanda NI 43-101 report dated February

12, 2008 which can be accessed at Mindoro‟s website, Technical Report section.


For the Avocet drilling program, the samples were bagged and tagged using McPhar‟s standard sampling

ticket. All samples are given a unique number with a prefix of “D”, signifying diamond drill core and

suffix of KTA indicating the project code.

The individual bags with unique sample numbers were then packed inside a jute sack (about 40 kg

capacity) to facilitate easier delivery to the laboratory. A batch of samples delivered to the laboratory

usually consisted of between 10 to 20 sacks of samples and was delivered from the Lobo field office to

the laboratory using the company vehicle.

The sample deliveries were covered by a sample delivery form in triplicate. The laboratory technician

confirmed receipt of the sample by checking the sample numbers in the receipt against the sample

numbers in the bags and signing-off on the form. One copy went to the laboratory while the remaining

two were returned by the driver to Lobo office for proper filing.

15.3 Analytical Laboratories


Two analytical laboratories were used for analysis of samples generated by the Kay Tanda drilling

program. The principal laboratory was: McPhar Geoservices (Philippines) Inc. McPhar is an ISO-


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9001:2000 accredited laboratory and has been servicing the Philippines Mining Industry since 1971. The

address of this laboratory is:

Head Office:

3/F P & L Bldg., 116 Legaspi St., Legaspi Village, Makati City

(tel: 8158191 to 94).

Assay Laboratory:

1869 P.Domingo St, Makati City, Manila

(tel: 8961656, -1681, -7973).

Postal Address: PO

BOX 7356, Domestic Airport Post Office, Domestic Rd, Pasay City 1300

Metro-Manila, Philippines

Fax: 8158195.

Web Address: http://www.mcphar.com.ph

A secondary laboratory was used as an independent check on the McPhar laboratory for the RC

Percussion drilling sample assays. This laboratory was Intertek in Jakarta. Samples were sent to Intertek‟s

office in Manila from where they were forwarded to Jakarta. The addresses of the two Intertek offices are:

Manila: Intertek Testing Services Phils. Inc.

3/F ITS Building, 2310 Pasong Tamo EXT, Makati City,

Philippines [GPO Box 2999].

Tel: (632) 819-5841 to 48.

Contact – Ms Becky Torre.

Jakarta: Intertek. Cilandak Commercial Estate

103E, JI Cilandak KKO, Jakarta 12560.

Tel: (632) 819-5841 to 48.

Contact – Ms Becky Torre.


All the samples during the Avocet due diligence program were likewise prepared and analyzed by

McPhar Geoservices (Philippines) Inc. For the Independent check on the Mcphar laboratory, Penjom

Gold Mine Laboratory in Malaysia was used. The address of this laboratory is:

Penjom Gold Mine Laboratory

Empang Jalih, P.O. Box 49, 27207 Kuala Lipis.

Pahang Darul Makmur. Malaysia.

Tel:+60 (09) 322 7288

Fax :+60 (09) 322 7292

15.4 QA-QC Procedures Employed


The principal QA-QC procedures employed by MRL, in addition to those employed independently within

each laboratory, are summarized in Figure 30. A total of 9,873 RC samples and 4,192 core samples were

submitted to the McPhar Laboratory for analysis.

http://www.mcphar.com.ph/


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Listed below are the number of check samples that were submitted by MRL, the QAQC test rationale and

their respective results. These samples that serve as independent checks on the sampling, sample

preparation and analytical procedures during the drilling program.

1) 121 field duplicates. These duplicates were taken to test the efficacy of the splitting procedure at the

drill site. Samples were submitted with MRL standards and blanks. Good correlations are observed for all

the field duplicate samples. The correlations of determination values for all the elements tested ranges

from 0.920 t0 0.997.

2) 144 coarse rejects (125 RC samples and 219 core samples). They were designed to test the

reliability and representivity of the McPhar sub-sampling of the coarse-crushed sample. The duplicates

pairs of the coarse reject samples showed good correlations.

3) 148 pulp duplicates. The pulp duplicates were resubmitted to McPhar laboratory. They were taken

to test the degree of homogeneity of the McPhar pulps. Good reproducibility is observed for the precious

metals and the base metals. Agreement between assays of duplicates of the pulp indicate that the McPhar

milling procedure was efficient and generated a suitably homogeneous pulp.

4) 443 McPhar pulp samples, representing 3.15% of the 14,065 core and RC samples for the Kay

Tanda drill program (2006-2007), were submitted to Intertek (Jakarta) for analysis. They were taken to

further check on the degree of homogeneity of the McPhar pulps as well as to independently check on the

accuracy of the McPhar analyses. The analytical procedure requested for Intertek was the same as that

used by McPhar (fire assay). The results show a high correlation between McPhar‟s original assay and

that of Intertek for the pulps.

5) A series of analytical certified standards and in-house blanks were routinely submitted by MRL to

the McPhar laboratory as well as doing submission of the sets of samples 1) to 4) above.

These are discussed in Section 15.4.2 below.


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Figure 30: MRL QAQC flowchart

(Rohrlach, 2008)


Avocet submitted a series of analytical certified standards and in-house blanks to the McPhar laboratory

throughout the whole drilling program. These were also discussed in section 15.6.3.


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15.4.1 Laboratory Protocols

McPhar Laboratories follows a set of standard procedure in preparing the samples for assaying. The flow-

chart below outlines the sample preparation procedures by McPhar. Three sets of reject samples are

generated by McPhar, coarse rejects, fine rejects (bulk pulp) and the final sub-sampled pulp. Following

initial storage of rejects on the McPhar premises, the coarse and fine rejects are returned to MRL and

stored at the Lobo sample-storage facility.

Figure 31: Flowchart of sample preparation process by McPhar Laboratory


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Sample analyses were carried out on the same premises as the sample preparation, at the same address as

given above. All samples were analyzed for gold using fire assay in AAS finish on 50g samples. The

analytical protocol for fire assay follows industry standard procedures shown in the diagram below.

Figure 32: Flowchart of gold fire assay by McPhar Laboratory


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Samples reporting fire assays greater than 0.3g/t Au were analyzed for gold using a cyanide “shaker” test

or QLT (quick leach test) to determine the cyanide soluble gold content of the samples. In McPhar‟s

assay reports, this comes under the column “Au*, ppm”. This involves leaching of gold from a 6-gram

pulp sample with NaCN solution. The results of this method reflect the leachability of gold in cyanide

and is a good quick guide to gold recoveries.

In addition, the samples from this program were analyzed for Cu, Pb, Zn, and As. The base metals (Cu,

Pb, Zn) and Ag were analyzed by AAS following aqua regia digestion. Analysis of As is by vapour

generation and AAS from an acid leach. Figure 33 illustrate these methods.

Figure 33: Procedure for Cu, Pb, Zn, Ag by AAS and As by VGA/AAS used by the McPhar Laboratory.

15.4.2 Blanks and Standards

MRL External Blanks

Mindoro used two different samples as external blanks during the analysis of core samples and RC

percussion samples. An unaltered andesite in slab form for the core samples while pulverized coralline

limestone were inserted in the batches of RC percussion samples. Both types of blanks were initially

submitted for bulk assaying to an umpire laboratory (Intertek Laboratory) in Jakarta, Indonesia. They


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returned Au values of <0.005 g/t or below the detection limit for both of these blanks. The external blanks

were submitted as a check on levels of possible contamination within the McPhar laboratory.

A total of 575 external blanks were submitted during the course of the drilling program, result in an

average submission rate of 1 per 24.45 unknown samples. The external limestones blanks submitted by

MRL with the RC samples were all consistently at or below the detection limit of 0.005 g/t Au with the

exception of five (5) blanks that were submitted with samples from hole KTRC-13.

The external andesite blanks submitted by MRL with the diamond core samples were mostly at or below

the detection limit of 0.005 g/t Au. 19 anomalous samples had Au values that were close to detection limit

and within the range of analytical variance at the limits of detection. Given that the McPhar internal

blanks yielded values that were consistently at or below detection limit, it is concluded that the external

MRL andesite blank may not have been an ideal blank.

MRL External Standards

As an independent check on the analytical procedures of the McPhar Laboratory, MRL submitted a series

of certified gold standards, one standard being inserted for every 20-25 samples on average. Twelve

certified standards were purchased from Geostats Pty. Ltd of Australia. Their grade range from 0.03 g/t

Au to 0.85 g/t Au are typical of the low to medium range in Au grades found in low-grade stock-work

related epithermal gold deposits such as Kay Tanda.

A total of 587 external standards were submitted during the course of the drilling program, resulting in an

average submission rate of one per 23.95 unknown samples. Each sample standard weighed 100 grams.

In general the external standards that were submitted by MRL indicated that the results of McPhar were

reliable, with only the odd analytical outlier in some standards. The only standard that persistently

analyzed outside of the recommended accepted range was G905-2 (0.52 ± 0.08 [2�]). The generally

excellent behavior of all other external standards submitted by MRL suggests that the G905-2 certified

standard is itself problematic. Thus disregarding standard G905-2, only 8 out of 567 external standards

feel beyond two (2) standard deviations from the accepted mean. In summary, the external standards

suggest that the McPhar analyses are suitably precise.

Graphs that illustrate the assay results of the standards and comparison to acceptable limits are discussed

in B. Rohrlach‟s 43-101 report for Kay Tanda dated February 12, 2008. It is accessible in Mindoro‟s

website.


Regular checks of the standards and blank results were implemented during the program to see if there are

any anomalous results that would trigger to a request to the laboratory to repeat the analysis. The results

all fall within the acceptable limits thus there was no need to advise the laboratory except for a reminder

early in the program.

Avocet External Blanks

For the Avocet drilling program, blank samples from barren volcanic rocks were inserted into the sample

batches at a frequency of one every 40 drill core samples. These checks for contamination of samples

especially during sample preparation. A total of 36 blank samples were used in the program. The results

are displayed in the graph below:


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Figure.34: Graph of Au assays of blank samples inserted by Avocet

The results are mostly at the detection limit of 0.005 ppm Au, but there are a few blank samples that

returned > 0.01 ppm Au. Although they are all considered unmineralized, the few which are higher than

the detection values may have been caused by some form of minor sample contamination. Just like on the

previous drilling, where all Mcphar blanks returned as below detection limit, it can be concluded that the

blank samples submitted to McPhar are not ideal blanks.

Avocet External Standards

Throughout the drilling program, Avocet consistently inserted one certified sample standard for every 20

drill core samples which makes up about 5percent of the total samples analyzed. Standards used were

from Ore Research Exploration of Australia which is a widely accepted source of CRMs called Oreas

Standards. The CRMs used in the program are spread over three different grades at 0.31 ppm Au (Oreas

52Pb), 1.02 ppm Au (Oreas 15Pa), and 11.33 ppm Au (Oreas 62Pb) that reflect the potential grade ranges

that can be encountered in the drilling program. They are also compatible with the host rocks and style of

mineralization found at Kay Tanda. Tabulated below is the number of samples of each standard used in

the drilling program.

CRM Code No. of samples

Oreas 15Pa 38

Oreas 52Pb 25

Oreas 62Pb 13

Oreas 15Pb 3

Total 79 Table 7- CRM‟s used by Avocet with the corresponding number of samples

Assay results of the standards reflect the precision of the laboratory. The results, shown in the succeeding

graphs below, demonstrate that McPhar has a high degree of precision with their gold fire assays. All of

the CRMs returned values that are within the acceptable 2SD limits of the standards with Oreas 52Pb and

62Pb being in a tighter range than the acceptable limits.


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Figure 35: Gold assays of Oreas 15Pa standard

During the early phase of the program, Avocet noticed that there is a bias for Oreas 15 Pa to be above the

standard value of 1.02 ppm Au (Figure 35), but still within the acceptable limit of 2SD (two-standard

deviation). The laboratory was advised of such observation and the laboratory adapted extra precautions

to obtain more precise analyses of elements. The early batch was not repeated because the assays are still

within the 2SD limits for the CRM. Succeeding batches showed closer values of gold results to 1.02 ppm

Au, with some lying slightly above and below this value. The mean value of the 37 Oreas 15Pa samples

is 1.026 ppm Au.

Figure 36: Gold assays of Oreas 52Pb standard

Oreas 52 Pb returned an average result of 0.309 ppm Au, which is equal to the standard value of 0.31 ppm

Au. Similar to Oreas 15Pa, there was a slight bias for higher results above the green line in Figure 36

during the early phase of the program. Succeeding assays, however, showed closer values to 0.31 ppm

Au.


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Figure 37: Gold assays of Oreas 62Pb standard

Oreas 62Pb (Figure 37) shows a tighter range of values from 11.12 ppm Au to 11.53 ppm Au and are then

quite close to the standard value of 11.33 ppm Au. The mean value for 13 Oreas 62Pb samples is 11.34

ppm Au, again practically equal to the theoretical value. This highlights the homogeneity of the CRM

that in spite of the high gold grade, the assays have been quite repeatable. It also reflects the high degree

of precision of the laboratory.

15.4.3 McPhar Blanks and Standards

The McPhar Laboratory conducted 1,238 analyses of internal standards (Au, Ag and base metals) and 365

analyses of Au blanks in the course of analyzing the samples from the Kay Tanda and Pulang Lupa

drilling programs during 2006 and 2007.

McPhars‟ practice during analysis has been to repeat the entire batch of samples whenever an internal

standard has assayed beyond its recommended range, and to only report the assay of unknown samples to

the client whenever a suspect analytical batch has been corrected by a second run. Any repeat analyses are

conducted on new aliquots of sample and a second set of digests. The reported McPhar internal standards

are consistently well behaved, as would be expected with such a process.

A more detailed discussion of the assay results of the blanks and standards and comparison to acceptable

limits are discussed in B. Rohrlach‟s 43-101 report for Kay Tanda dated February 12, 2008. It is

accessible in Mindoro‟s website.

For the Avocet drilling program, standards inserted by McPhar have all performed well. They plot within

the 2SD limits of the standards (Figure 38). Shown below is the graph of CRM (OREAS 44P) assays

used by McPhar as standard for Cu, Pb, Zn, and Ag.


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Figure 38: Graphs showing Cu, Pb, Zn and Ag assays of CRM used by McPhar

15.4.4 Results of Repeat Analyses on Sample Solutions

The McPhar laboratory routinely conducts duplicate analysis of Au and other elements as a check on

analytical reproducibility. Repeats are routinely conducted on all elements being analyzed and are

typically on every 10th sample solution. In addition to these regular repeats, samples with high gold,

precious metal or base-metal values are usually re-analyzed. The result of the repeat analysis was

excellent with correlation being 0.9996 for gold and 0.9979 for silver (Figure 39). The laboratory repeats

are based on 1,800 to 1,802 repeat analyses that are spread evenly throughout the entire database during

the Mindoro drilling program.

For the Avocet drilling program, a total of 194 samples or 10 percent of the total drill core samples were

re-analyzed. The results for gold assays have correlation of 0.9985 and are shown in the graph below

(Figure 40).


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Figure 39: Plot of analytical repeats conducted by McPhar Laboratory on Au, Ag, As, Cu, Pb and Zn

(Rohrlach, 2008)

Figure 40: Comparison between repeat Fire Assays (AuFA1, AuFA2) conducted by McPhar in log normal plot


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15.4.5 Results of Independent Laboratory Checks

A subset of 443 McPhar pulp samples, representing 3.15 percent of the 14,065 core and RC samples for

the Kay Tanda drill program, were submitted to Intertek (Jakarta) for analysis. The submitted pulps were

chosen to cover the full natural range of gold assays at Kay Tanda and were sampled from all prior

batches of submissions to McPhar. MRL also submitted certified reference standards and blanks with the

batch of pulps that was sent to the 2nd external laboratory. These samples were sent as a test of the

accuracy of analyses at the McPhar laboratory. The analytical procedure requested for Intertek was the

same as that used by McPhar (fire assay). The results show a high correlation between McPhar‟s original

assay and that of Intertek for the pulps.

The average Au grade for the 441 samples analyzed by McPhar (excluding two samples where assays

were below detection limit) was 1.13 g/t Au whilst the average grade of the same 441 duplicate pulp

samples analyzed by Intertek was 1.15 g/t Au, equivalent to a percentage difference of just 1.53%.

During the Avocet drilling program, Penjom lab was used as an umpire laboratory. A check of AuCN or

quick leach test (QLT) assays of McPhar as well as fire assay results were conducted by sending 31 pulp

reject samples. The results show (Figure 41) that the McPhar results are, in general, similar to the results

at Penjom. There is a marked difference, however, with the AuCN results of very low grade and very

high grade samples. McPhar is getting higher QLT recoveries for very low grade samples, but lower QLT

recoveries for very high grade samples. The Penjom lab suspects that McPhar is not measuring the solid

gold residue in the calculation of the QLT recoveries. Meanwhile, the same tests show that the fire assays

from McPhar are very close to the Penjom results.

Figure 41: Comparison between Penjom and McPhar Quick Leach Test results (in percent).

The samples are arranged from lowest to highest fire assay gold grades


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15.5 Measurement of Specific Gravity

During the Mindoro drilling program, a series of 345 core samples were sent to the McPhar Laboratory

for specific gravity analysis. The samples comprised mostly 15-25 cm long sticks of quarter or half core.

The method used for SG calculation was the volume-displacement method. The samples for SG

measurement were collected from all over the area to ensure as much spatial representivity as possible

across the deposit.

For the Avocet drilling program, bulk density measurements were carried-out in the core yard at the Lobo

camp where a beam balance is set-up according to the illustration below (Figure 42). A hole is cut into

the table to give way to the string that attaches the core to the weighing scale.

Figure 42: Typical set-up for bulk density measurements of drill core

The procedure followed in measuring bulk densities of drill cores is as follows:

A 20 cm long sections of whole core were selected at 4 meter intervals. The sample should

represent the interval but it is important that the bulk density is measured whenever veins or

potential mineralization occurs. The selection should be 20 cm for every 2 meters in the potential

ore zone.

It is important that the core selected reflects typical rock and not the most competent portions of

the deposit. The samples should also reflect the variety and amount of various alteration and

oxidation types in the deposit. In this regard, supervision by a geologist in the choice of the core

to be measured is required.

It is critical that core is clean of drilling additives and that the scales are “zeroed” prior to taking

all weight measurements listed below.

The core lab technician measures the dry weight (W1) of the sample.

Then the sample was wrapped in plastic film and wholly submerged in a bucket of water and

reweighed (W2a).

The sample was then unwrapped, submerged again in water and reweighed (W2b).

Finally, the wet sample was weighed out of the water (W3).

Bulk density calculations are tabulated in a spreadsheet based on the formula:

W1/(W1-W2a) and W1/(W3-W2b).

This technique allows for determination of pore spaces and the creation of a 3D bulk density model.


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16. DATA VERIFICATION

16.1 Avocet Mining PLC

MRL provided all drill holes and trenches database in Microsoft Office Excel 97-2003 format. Individual

drillhole logs were kept in separate Excel worksheets. The available data includes collar, survey,

lithology, multi-element assays, oxidation level, specific gravity from selected samples and topography

data. Geology codes (lithology, alteration, mineralization and oxidation) were amended into the standard

Avocet Geological Codes.

Information from all drill holes was then combined in CSV (Microsoft Office Excel Comma Separated

Value files) into COLLAR, SURVEY, LITHOLOGY, ASSAYS, OXIDATION and SG files. These data

were then imported into Datamine format for further validation and de-surveying.

Database Validation

Database validation was carried out with Datamine Studio 2 and using original assay result certificates

from labs and the hardcopies of the field geologists‟ drill logs for references, which are available at

MRL‟s Lobo office. Data validation was conducted to ensure that only valid data is kept to the database.

The usual errors found and corrected in the database are sample intervals, assays, geology code, which

includes lithology, alteration, mineralization and oxidation data entries. These errors can easily be

detected and corrected using the Datamine Studio 2 software. When incorrect data was found, all the

previous data were also corrected, including the source data.

The validation process is illustrated in the following diagram:

Figure 43: Data validation process flow

16.2 Independent Consultant Data Verification

The writer, in his visits to the field, drill sites, MRL Gold Lobo Office and Makati Office of Mindoro

carried out data verification. Initial field visits were carried out between July 23-25, 2007, August 13-14,

2007 and October 18, 2008 wherein actual drilling, core handling and sampling activities were observed.


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Selected core trays were visually inspected against the logs. Further, selected drillhole collars were sited

and the locations of selected holes were verified against topographic plans and GPS coordinates. The

location and general topography of the area were inspected during the visits.

The actual drilling, core handling and sampling activities were observed during two visits on March 13,

2009 and March 21, 2009. During these observations, the author observed how the Avocet staff used the

Drilling Activity, Borehole Recovery and Sample Preparation sheets. The author was also able to evaluate

the security of the cores/core boxes in the storage facility at MRL Gold Lobo Core Yard during and after

the drilling activities in 2009.

The datasets provided by Mindoro, including the data from Avocet drilling, were checked and verified by

comparing a random portion against original field sheets and the digital copies. More importantly, a

random portion of the assays database was compared to the official Certificates of Analytical Results.

The random checks made in the field corroborate the acceptable quality of the data. The author collected

twelve field duplicate samples in February 2010 and sent them to the McPhar Laboratory where they were

originally assayed.

Of the twelve samples, seven samples come from drill core and five were from rock chip samples. The

following table shows the results and the correlation vis-à-vis original MRL assay values.

McPhar Hole From To Interval MRL DC MRL DC DC DC DC DC

New Sample

No. TYPE No. (m) (m) (m)

AU g/t

AU g/t

AG g/t

AG g/t

CU %

ZN %

AS ppm

Mo ppm

10976 DDH KTDH 07 63 64 1.00 0.26 0.27 1.20 1.20 0.00 0.01 34 5

10977 DDH KTDH 15 218 219 1.00 0.17 0.17 0.25 0.50 0.00 0.01 4 5

10978 DDH PLDH 01 26 27 1.00 2.08 1.05 33.90 12.50 0.03 0.03 46 8

10979 DDH PLDH 02 98 99 1.00 4.21 2.94 6.80 8.45 0.13 0.32 18 5

10980 DDH KTD 180 33 34 1.00 0.36 0.36 0.80 0.60 0.00 0.02 14 5

10981 DDH KTD 183 100 101 1.00 0.31 0.27 0.70 0.90 0.00 0.01 37 5

10982 DDH KTD 187 22 23 1.00 0.81 0.87 2.50 1.90 0.06 0.02 70 8

10983 RC KTRC 17 46 48 2.00 0.41 0.32 0.60 0.50 0.01 0.01 14 5

10984 RC KTRC 22 26 28 2.00 0.72 0.74 2.10 1.55 0.02 0.00 50 5

10985 RC KT RC 46 30 32 2.00 0.55 0.66 1.00 1.70 0.00 0.00 135 31

10986 RC PLRC 01 108 109 1.00 0.03 0.01 0.25 0.50 0.01 0.02 6 5

10987 RC PLRC 22 32 34 2.00 0.10 0.10 0.25 0.50 0.00 0.04 6 5

Table 8- Independent core and RC samples collected by the author at Mindoro and Avocet samples.

DC – Dallas Cox

Database validation was carried out with MineSight® Data Analyst using original assay result certificates

from labs and the drill logs for references, which are available at MRL‟s Makati office.

The writer has verified drillhole locations, sampling and assay procedures, examined mineralized material

in the field and in drill core, as well as the geological and assay databases during his various site visits in

the Archangel Project and meetings with MRL staff. With these factors, as well as the evaluation of the

results of assay rechecking, the writer is satisfied that all data can be relied upon.


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17. ADJACENT PROPERTIES

The properties that surround the Archangel MPSA are all part of the tenements package of Mindoro.

17.1 El Paso Exploration Permit and El Paso Prospect

The El Paso prospect is located 7 km north of the Lobo Project and 12 km from the Taysan porphyry Cu-

Au deposit. The El Paso exploration permit (EP-009-IVA [6,314.76 ha]; comprises two main

noncontiguous blocks. The main block of immediate interest lies ~10 km NNW of the Archangel MPSA.

El Paso is immediately north of the major west-northwest-trending structural boundary that separates

older northeastern batholithic terrain (San Juan Diorite), and the younger southern volcanic terrain. This

major boundary is an especially favorable structural setting, which served to localize mineralizing

intrusions, including Taysan. The area is underlain largely by San Juan Diorite with islands of

metavolcanics, intruded by younger hornblende quartz diorite to hornblende diorite and andesite porphyry

intrusions, and overlain in places by younger Quaternary volcanic tuff. Extensive porphyry-related phyllic

and intermediate argillic alteration has been mapped, as well as potassic alteration in places.

Widespread copper-gold mineralization occurs associated with andesite porphyry and hornblende quartz

diorite to hornblende diorite intrusions, as well as the older, more-eroded San Juan Diorite. The

mineralisation associated with the former is the principal target. In the southwest part of the El Paso

prospect, copper-gold mineralisation had been known historically and was tested with shallow drill holes

by a previous operator in the mid-nineties. Results are unknown. However, the area tested by drilling is

not associated with significant IP chargeability anomalies and is considered to represent mineralization

peripheral to the porphyry copper-gold system. El Paso has been drill-tested by Gold Fields Australia,

Mindoro‟s Joint Venture partner, in 2009. As sourced from the Mindoro Press Release (February 1,

2010), significant drill results include Hole EPDD001, which intersected 42.2 meters of 0.5 percent

copper. The mineralization is related to a 10.5 meter highly altered diorite porphyry dike with

disseminated bornite and chalcopyrite, quartz veinlets, magnetite and anomalous molybdenum. The dike

may be derived from a proximal porphyry copper-gold system.

17.2 Talahib Exploration Permit Application and Talahib Prospect

The Talahib Project consists of one Exploration Permit (EP) covering 872 hectares, and one EP

application covering 831 hectares. It is located ~8 km west of the Lobo Project and ~11 km southwest of

the Taysan porphyry Cu-Au deposit. Mindoro owns the Talahib EP 100 percent via a wholly-owned

Philippine subsidiary, subject to a 2 to 4 percent NSR.

Reconnaissance work has located significant copper and gold mineralization at Talahib. The prospect area

is underlain by andesitic volcanics intruded by a series of strongly altered diorite and microdiorite

intrusions, and capped in places with younger Quaternary tuff. Stream sediment sampling yielded strong

anomalies to 650 parts per million (ppm) copper, 468 parts per billion (ppb) gold, 100 ppm lead and 327

ppm zinc. Reconnaissance rock channel sampling of heavily mineralized hydrothermal breccia assayed

3.33 percent copper and 0.10 g/t gold over 20 meters, which included 6.55 percent copper and 0.16 g/t

gold over ten meters. About 200 meters south of this, an outcrop of altered diorite gave 0.74 percent

copper and 0.15 g/t gold over 30 meters. Another channel sample from altered diorite outcrop 500 meters

north of the hydrothermal breccia, assayed 1.04 percent copper and 0.09 g/t gold over 20 meters.


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17.3 Lobo MPSA 176-02-IV and the SW Breccia Mineral Resource

Previous work by Mindoro on the Lobo Project has outlined approximately 5-7 km of integrated strike

length of northeast-trending epithermal vein-breccia trends. Mineralization along these epithermal trends

occurs as both low-sulfidation gold and high-sulfidation copper-silver. Two highly mineralized shoots

along these vein systems are the SW Breccia and the old Lobo mine. A National Instrument 43-101

compliant resource estimate was prepared by David Bailey at SW Breccia prospect under Lobo Project in

2004, based on 25 shallow drill holes. An indicated resource was established to a depth of 130 meters,

and comprised 270,000 tonnes at a grade of 6.49 g/t gold, containing 56,380 ounces of gold. Additional

inferred resources are 61,000 tonnes at a grade of 5.35 g/t gold, containing 10,540 ounces of gold.

A geophysical survey in late 2004 defined chargeability anomalies in the Pica region, under Lobo Project

which extended over an area of ~1.5 km by 2.5 km. The Pica IP anomalies were tested by four diamond

drill holes. The second drill hole intersected 213 meters at a grade of 0.18 percent copper, 0.30 g/t gold

and 1.91 g/t silver from 22 to 235 meters, associated with phyllic alteration. The Pica porphyry system is

interpreted to be associated some high-level intrusions which may lie off the eastern edge of a deep

porphyry system that is being targeted in the Calo region beneath the cover rocks in the Lobo River

Valley. A follow up drilling program is scheduled to commence at Lobo project this year.

18. MINERAL PROCESSING & METALLURGICAL TESTING

Three metallurgical studies were commissioned by MRL on the Kay Tanda mineralization. The first

work was conducted by Metcon Laboratories in Australia in October 2005. A surface sample of earthy,

oxide material with a grade of 3.5 g/t Au and 51 g/t Ag was submitted for this work. The sample

responded well to leaching with 94 percent gold dissolution by grinding and agitation leaching, 88 percent

gold dissolution at 12.7mm crushed size, and 82 percent gold dissolution at 50mm crushed size.

In the second study (2006), MRL sent two metallurgical samples from half PQ size drill core from

KTDH01 and 02 representing oxide and transition materials to the same laboratory. Both samples

assayed around 1 g/t Au and consisted of competent but highly fractured hard rock.

A third study that was reported in 2008 presents heap leaching and other testwork completed on a

composite sample of the sulphide mineralization. Two 200L drums of sample were sent to Metcon on

July 2007. The drums contained samples of quarter NQ, HQ & PQ core from 15 different drill holes,

weighing a total of 246 kg.

For all three types of mineralization, heap leaching tests were completed at two crush sizes of minus 12.7

mm and minus 50 mm. The metallurgical testing program was designed and supervised by an

independent metallurgical consultant, Peter J. Lewis and Associates of Australia. Complimentary to these

were agitation leach tests at a grind size of 80 percent passing 75 µm to indicate the maximum gold

extractions that might be achieved from each type of mineralization.

The results of the heap leach tests on each type of mineralization are summarized below, where it can be

seen that gold extractions from the sulphide mineralization were significantly lower at both crush sizes,

and also much slower at the minus 12.7 mm crush size.


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Composite Oxide Transition Sulphide

Crush size -

50mm -

12.7mm -50mm -

12.7mm -50mm -12.7mm

Leach time (days) 70 29 70 23 77 151

Calculated head grade (g/t Au) 1.09 1.14 0.95 1.06 1.43 1.96

Residue grade (g/t Au) 0.21 0.20 0.19 0.23 0.66 0.66

Final percent Gold extraction 80.7 82.4 80.1 78.3 53.8 66.4 percent Gold extraction after 10 days 69.8 80.3 62.6 76.6 44.9 51.8

Table 9- Result of heap leach test on each type of mineralization

The table below compares the gold extractions obtained by heap leaching at the minus 12.7mm crush size

with the indicated maximums achievable by agitation leaching.

Composite Oxide Transition Primary

Heap Agitation Heap Agitation Heap Agitation Leach leach Leach leach Leach leach

Calc Head (g/t Au) 1.14 1.14 1.06 1.05 1.96 2.44

Residue (g/t Au) 0.20 0.08 0.23 0.12 0.66 0.25

percent Gold extraction 82.4 93.4 78.3 88.6 66.4 89.7

Decreased residue (g/t) 0.12 0.11 0.41

Increased extraction (%) 11.0 10.3 23.3

Table 10- Comparison of gold extraction obtained by heap leaching.

The gold extractions obtained by heap leaching of the oxide and transition mineralization were within 10

to 11percent of the indicated maximums achievable, which indicates that both types of mineralization

should be highly amenable to heap leaching. However, for the sulphide mineralization the difference in

the gold extractions by heap leaching and agitation leaching was significantly higher. This suggests that

agitation leaching might be the preferred option for processing the sulphide mineralization.

19. MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

This section is based on the data that were produced and compiled by Mindoro and Avocet Mining PLC.

Data verification performed by the author found no discrepancies. Hence the database is considered

adequate to meet industry standards to estimate mineral resources. The resource estimate was carried out

by Avocet, and audited and verified by the author on behalf of Mindoro.

19.1 Geological Modelling

The previous NI-43-101 compliant resource estimate on the Kay Tanda project done by Ravensgate

Minerals Industry Consultants (February 2008) did not separate the different mineralisation styles in the

area. Thus, the high grade veins were not properly modeled.

Given the new drilling data in which the holes are in a different orientation than the previous drilling

pattern, there is now a better understanding of the trend of the high grade vein zones. The different

mineralisation styles, as well as low- and high-grade shapes, were wireframed for this model.


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19.1.1 Geological Interpretation and Modelling

The geological interpretation was developed using hard copy cross-sections produced in Micromine.

Cross-sections were developed at various spacings and orientations (NS and EW) that were determined by

the original drillhole coverage, thus ensuring optimal data usage and interpretation. The cross-sectional

interpretations were digitized in Micromine and the resultant strings transferred into Datamine where the

interpretations were modified to ensure the strings were snapped to the actual drillholes. The wireframes

were then developed and further refinements made to the interpretations by slicing them at nominal 5-10

meter intervals to generate a series of new strings in plan view. This new set was smoothed and checked

against abutting interpretations of other domains, and then re-wireframed to generate the final 3D

representations.

Interpretations were developed for various lithologies, alteration, structure and mineralization domains,

and are described in the sections below.

19.1.2 Mineralization Domains

Figure 44 shows the different mineralization wireframes. Red signifies areas of quartz±pyrite veins and

stockworks, blue for pyrite stockworks, yellow for quartz stockworks and magenta for quartz-base metal

veins. The advanced argillic wireframe, which generally drapes the surface, is not shown as it obscures

the other mineralization wireframes.

Figure 44: Mineralization model of Kay Tanda and Pulang Lupa

(Looking north, red-quartz veins, yellow – quartz stockworks, blue – pyrite stockworks, magenta – quartz-base

metal veins)

Lithogical Domains

Lithology, alteration, and structure were interpreted on section and plan to generate wireframes. This was

done prior to the generation of mineralization wireframes in order to have a better grasp on possible


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lithological, alteration and structural controls on mineralization. The result is a well-thought-out 3D

view of the mineralization and grade wireframes that forms the basis for a reliable resource estimate.

Weathering Domains

Two weathering profiles were modeled as Datamine wireframes and represented both the base of

oxidation (ktoxpt/tr) and the top of fresh material (ktfrspt/tr). These wireframes were based on geological

logging data stored in the drillhole database. The wireframes were subsequently used for assigning bulk

density values in the model.

Topography

The topographic data was supplied as a Datamine DTM file and was based on 7,842 data points. These

included several minor “adjustment” points at drillhole collar positions where small elevation mismatches

were resolved by including the collar coordinates as extra points during the triangulation process. The

small errors are considered to be of insignificant risk to the final resource estimate.

Topographic coverage is:

Easting Minimum 9,170E Maximum 10,322E

Northing Minimum 9,166N Maximum 10,606N

Elevation Minimum 71.2mRL Maximum 446.2mRL

19.2 Mineral Resource Estimation

Descriptive Statistics

The mineralization wireframes were allocated a code (field WFCODE) that was used for flagging

drillhole data and model cells. A complete list of codes assigned to these wireframes is presented in

Table 11. Drillhole coding was carried out by extracting the data using the wireframes and individually

flagging the drillhole data sets with the identical wireframe code.

A total of 76 wireframes were developed to accurately reflect the zones of mineralization. The number of

wireframes within the various mineralization styles modeled is as follows:

Advanced Argillic - 3 individual + 1 consolidation (all_aatr/pt)

Silica Vuggy - 4 individual + 1 consolidation (all_svtr/pt)

Quartz Stockwork - 22 individual + 1 consolidation (all_qttr/pt)

Pyrite Stockwork - 3 individual + 1 consolidation (all_pstr/pt)

Qtz Vein - 8 individual + 1 consolidation (all_qvtr/pt)

Qtz Base Metal Vein - 36 individual + 1 consolidation (all_qbtr/pt)

Wireframe

(tr/pt) WF

CODE Wireframe

(tr/pt) WF

CODE

ADVANCED ARGILLIC

ktaa1 1

ktaa2 2

ktaa3 3

SILICA VUGGY

ktsv1 5

ktsv2 6

ktsv3 7


101

ktsv4 8

QUARTZ STOCKWORK

ktqt1 10 ktqt12 21

ktqt2 11 ktqt13 22

ktqt3 12 ktqt14 23

ktqt4 13 ktqt15 24

ktqt5 14 ktqt16 25

ktqt6 15 ktqt9 26

ktqt7 16 ktqt11 27

ktqt8 17 ktqt20 28

ktqt19 18 ktqt10 29

ktqt21 19 ktqt18 30

ktqt22 20 ktqt17 31

PYRITE STOCKWORK

ktps1 40

ktps2 41

ktps3 42

QUARTZ VEIN

ktqv1 50 ktqv5 54

ktqv2 51 ktqv6 55

ktqv3 52 ktqv7 56

ktqv4 53 ktqv8 57

QUARTZ BASE METAL VEIN

ktqb1 60 ktqb19 78

ktqb2 61 ktqb20 79

ktqb3 62 ktqb21 80

ktqb4 63 ktqb22 81

ktqb5 64 ktqb23 82

ktqb6 65 ktqb24 83

ktqb7 66 ktqb25 84

ktqb30 67 ktqb36 85

ktqb9 68 ktqb27 86

ktqb10 69 ktqb28 87

ktqb31 70 ktqb29 88

ktqb32 71 ktqb12 89

ktqb13 72 ktqb8 90

ktqb14 73 ktqb11 91

ktqb15 74 ktqb34 92

ktqb16 75 ktqb33 93

ktqb17 76 ktqb26 94

ktqb18 77 ktqb35 95

Table 11- Kay Tanda 2009 mineralization wireframes (Pulang Lupa – yellow shading)

High Grade Assay Cuts

The determination of grade top cuts was based primarily on the log probability analysis of each individual

wireframe coded dataset for both gold and silver. The flagged datasets were loaded into

GeoAccessPro2000, a professional statistical and graphing software package, and individual datasets

were extracted and plotted using the unique WFCODE. In the majority of cases only one or two samples

were top cut as these demonstrated significant outlier characteristics relative to the main data population.

Table 12 summarizes the final top cuts for each wireframe code (WFCODE).

WFCODE AU Top cut

(g/t) AG Top cut

(g/t) WFCODE

AU Top cut (g/t)

AG Top cut (g/t)

1 - 15 56 - -


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2 - 20 57 - - 3 - 80 60 10 - 5 10 40 61 - - 6 - - 62 - - 7 2 20 63 - - 8 2 20 64 - -

10 2 20 65 4 - 11 2 20 66 6 - 12 - - 67 20 - 13 - - 68 - - 14 - - 69 5 - 15 - - 70 - - 16 - - 71 - - 17 - - 72 - 5 18 - - 73 - - 19 - 5 74 - - 20 - - 75 - - 21 - - 76 5 - 22 - - 77 - - 23 - - 78 75 - 24 5 - 79 20 - 25 - 3 80 5 20 26 - 10 81 - - 27 8 75 82 2 - 28 - - 83 3 - 29 - - 84 - - 30 3 - 85 - 5 31 5 20 86 4 - 40 - - 87 4 - 41 - - 88 - 5 42 - 42 89 - - 50 - - 90 - - 51 30 250 91 - 75 52 - 100 92 - - 53 - 20 93 4 10 54 - - 94 - 5 55 3 - 95 25 15

Table 12- Gold and Silver top cut summary

Stationarity and Variography

No study of variography was undertaken during the due diligence phase. However, a review of Dean

Fredericksen‟s variography and neighborhood analysis (Item 3.7) of Kay Tanda and Pulang Lupa Mineral

Resource Estimate in 2008, aided in the selection of search directions.

Block Modelling

The wide range in thicknesses and orientations of the wireframes, especially those representing the thin

quartz base-metal vein systems, required two model prototypes (prot2009.dm and protqb.dm) to ensure

appropriate cell filling. Parameters for the prototypes are summarized in Table 13. Furthermore, to ensure

block fill resolution, the parent cells could be split up to 3 times. The slightly different model prototypes

required a re-blocking of the quartz base-metal vein model prior to the final amalgamation of the entire


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set of grade-estimated models. This was achieved using DATAMINE‟s SLIMOD process controlled by

prot2009, but retaining the WFCODEs for validation processes.

Entities modeled Model Prototype Wireframe (tr/pt) Values

Advanced Argillic

Silica Vuggy

Quartz Stockwork

Pyrite Stockwork

Quartz Veins

prot2009

Model Easting origin (X) 9200

Model Northing origin (Y) 9200

Model Elevation origin (Z) -50

Parent Block Size (X) 10m E

Parent Block Size (Y) 5m N

Parent Block Size (Z) 5m RL

Number of Blocks (X) 110

Number of Blocks (Y) 230

Number of Blocks (Z) 100

Quartz Base Metal Veins

protqb

Model Easting origin (X) 9200

Model Northing origin (Y) 9200

Model Elevation origin (Z) -50

Parent Block Size (X) 5m E

Parent Block Size (Y) 10m N

Parent Block Size (Z) 5m RL

Number of Blocks (X) 220

Number of Blocks (Y) 120

Number of Blocks (Z) 100

Table 13- Block model limits (file prot2009 and protqb)

Density and Oxidation

Redox coding was assigned using geologically-defined wireframes representing the base of oxidation

(ktoxpt/tr) and top of fresh material (ktfrspt/tr). Oxide, transition and fresh material were assigned

REDOX codes of 1, 2 and 3 respectively. Bulk density values were subsequently assigned on the basis of

oxidation state.

Specific Gravity

The bulk density factors used in the modelling are based on the results of 591 bulk density measurements

from the 14 due diligence diamond drill holes (KTD174 – 187). Oxidation flagging from drill core

logging was used as the criteria to categories oxidation level. Summary statistics are presented in Table

14 and histogram distributions for the oxidation coded bulk density data are presented in Figure 45. The

redox data shows a strong trend from strongly oxidised to fresh material with relatively well separated

unimodal distributions.

OXIDE TRANSITION FRESH

Number Samples 68 154 424

Minimum 1.95 1.05 1.6

Maximum 2.49 2.74 3.41


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Mean 2.273 2.439 2.545

Median 2.28 2.47 2.57

Standard Deviation 0.117 0.185 0.152

Variance 0.014 0.034 0.023

Standard Error 0.002 0.001 0

Coefficient of Variation 0.052 0.076 0.06

Table 14- Summary statistics of Bulk Density by REDOX

Bulk density values for resource estimation are based on a review of the individual oxide, transition and

fresh data subsets. The statistical parameters, as summarized in Table 14, are affected by the negatively

skewed distributions for each category, resulting in a lowering of the mean values. The bulk density

histograms represented in Figure 45, clearly show the development of strong uni-modal behaviour, with a

very large proportion of data falling into either one or two bins only. The selection of bulk density values

for estimation work is based on the modal characteristics, and is summarized as follows:

Oxide material - 2.35 t/m3

Transition material - 2.55 t/m3

Primary material - 2.65 t/m3

Figure 45: Bulk Density Histograms – by REDOX


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19.3 Estimation Block Size, Grade Interpolation and Search Strategies

The estimation parameters controlling the September 2009 resource estimate are contained in the

following DATAMINE control files:

Search parameter file (wireframes) -kt09_sp, kt09_sp2, kt09_sp3

Estimation parameter file (wireframes) -kt09_ep, kt09_ep2, kt09_ep3

A summary of the search parameters is presented in Tables 15 and 16.

The resource estimation process was based on the length-weighted inverse distance squared technique

within constrained grade wireframes. High grade Au and Ag outliers were top cut based on a log

probability analysis of the individual wireframe flagged data subsets. This resulted in a variable range of

top cuts, from no applied cuts to a maximum of 75 g/t for gold and 250 g/t for Ag. However, top cuts

applied for gold were more often in the range 2 – 10 g/t and for silver in the range 10 – 40 g/t. Details are

presented in Section 19.2 above.

Time constraints precluded the evaluation of other estimation techniques (e.g., kriging, different inverse

distance weightings). This report recommends a review of different interpolation techniques as part of a

sensitivity analysis; however, all techniques should be applied within the volume constraints of the

wireframes.

The large variability in both grade and thickness between the different portions of the same mineralised

zone suggested that a “reef” composite sample was not appropriate and, instead of compositing, the data

was length-weighted during the estimation phase.

Grade interpolation was restricted to parent cells only, but was refined further by applying point

discretisation. Parameters for discretisation were set to 2, 3 and 1 in the easting, northing and RL

directions, respectively. To minimize potential local grade biases, an 8 contiguous sample restriction from

any single drill hole was imposed within the large search ellipse phase, to ensure no single drill hole could

overly influence the local grade behaviour. For the shorter ellipses used in the more local estimates, the

restriction was set to a 4 sample maximum from any single drill hole.

Further restrictions were placed on the minimum and maximum number of samples available as part of

the search ellipse strategy. Due to the erratic data density distributions, it was decided not to adopt octant

searches. Search ellipses were optimized to ensure honouring of geological and structural trends; and

interpolation parameters were selected to provide appropriate sample information. Search ellipses were

sized and oriented individually for each wireframe. Search parameters were derived following an

assessment of the drill density, geological continuity, and broad variogram data from a range of earlier

studies. Due to the wide drill hole spacing, the search radii for the ellipses were generally set in the range

50 – 75 meters. However, a more localized search strategy was also adopted in which the search ellipses

were reduced in their dimensions to 20 m by 20 m by 5m to reflect local grade influences. The

orientations of the search ellipses for each wireframe are summarized in Table 17.5. In those cases where

the search ellipse was unable to capture sufficient data, the dimensions of the ellipse were increased by 50

per cent in all directions to ensure adequate data capture.

Three small quartz stockwork zones (ktqt6, ktqt19, ktqt22) and one small silica vuggy zone (ktsv4) had

limited associated data and were informed by a single drill hole only.


106

The complex inter-relationship between the various mineralization styles required a very strict order of

super-position of individual models to ensure correct grade distribution within the final model, and which

was consistent with the initial grade interpretations. Prioritization was set as follows:

Silica vuggy > qtz basemetal veins > advanced argillic > qtz veins > pyrite stockwork > qtz stockwork

The final stage in coding the resource model was for resource category (RESCATN). Details are provided

in Section 19.5.

The final model (kt0909.m) has been checked in relation to the topographic surface (to1108tr).

Table 15- Kay Tanda 2009 Search Parameters (Large radius search - kt09_sp and special search kt09_sp2 [ktsv4, ktqt6, ktqt19, ktqt22] )

Wireframes Search

Reference Number

Search Method

Search Distance (SDIST1)



Search Angle

(SANGLE1)

Search Angle

(SANGLE2)

Search Angle

(SANGLE3)

Search Axis

(SAXIS1)

Search Axis

(SAXIS2)

Search Axis

(SAXIS3)

Max Samples per dh

ktqt18 1 2 75 75 50 -25 0 0 1 2 3 8

ktqt [2, 8] 2 2 75 75 50 -20 0 0 2 1 3 8

ktqt [5, 9] 3 2 75 75 50 -10 20 0 1 2 3 8

ktsv2 4 2 75 75 50 0 -10 0 3 1 3 8

ktqt [1,3, 4, 6, 7, 10,12-16, 21, 22] ktps [1, 2,3]

5 2 75 75 50 0 0 0 3 1 3 8

ktsv [1, 3,4] 6 2 75 75 50 0 20 0 3 1 3 8

ktqv [1, 2,3, 4, 5, 6, 7,8]

7 2 75 75 50 0 20 0 3 2 3 8

ktqt [11,20] 8 2 75 75 50 20 15 0 3 1 3 8

ktqt17 9 2 75 75 50 20 20 0 1 2 3 8

ktqt19 10 2 75 75 50 30 0 0 2 1 3 8

ktqb [3, 4, 5, 6, 9, 14, 16, 18, 20] ktqb [ 21, 22, 23, 26, 31, 33]

11 2 75 75 50 55 90 0 3 2 3 8

ktqb17 12 2 75 75 50 90 -70 0 3 2 3 8

ktaa3 13 2 75 75 50 90 0 0 3 2 3 8

ktaa2 14 2 75 75 50 90 15 0 3 2 3 8

ktaa1 15 2 75 75 50 90 30 0 3 2 3 8

ktqb [7, 8, 10, 11,12, 13, 15,19, 24] ktqb [25, 27, 28, 29, 30, 32, 34, 36]

16 2 75 75 50 90 90 0 3 2 3 8

ktqb [1 2, 35]

17 2 75 75 50 110 90 0 3 2 3 8


108

Wireframes Search

Reference Number

Search Method




Search Angle

(SANGLE1)

Search Angle

(SANGLE2)

Search Angle

(SANGLE3)

Search Axis

(SAXIS1)

Search Axis

(SAXIS2)

Search Axis

(SAXIS3)

Max Samples per dh

ktqt18 1 2 20 20 5 -25 0 0 1 2 3 4 ktqt [2, 8] 2 2 20 20 5 -20 0 0 2 1 3 4 ktqt [5, 9] 3 2 20 20 5 -10 20 0 1 2 3 4 ktsv2 4 2 20 20 5 0 -10 0 3 1 3 4 ktqt [1, 3,4, 6, 7, 10,12-16, 21, 22] ktps [1, 2, 3]

5 2 20 20 5 0 0 0 3 1 3 4

ktsv [1, 3, 4] 6 2 20 20 5 0 20 0 3 1 3 4 ktqv [1,2, 3, 4, 5, 6, 7, 8]

7 2 20 20 5 0 20 0 3 2 3 4

ktqt [11, 20] 8 2 20 20 5 20 15 0 3 1 3 4

ktqt17 9 2 20 20 5 20 20 0 1 2 3 4

ktqt19 10 2 20 20 5 30 0 0 2 1 3 4 ktqb [3, 4, 5, 6, 9, 14, 16, 18, 20] ktqb [21, 22, 23, 26, 31, 33]

11 2 20 20 5 55 90 0 3 2 3 4

ktqb17 12 2 20 20 5 90 -70 0 3 2 3 4

ktaa3 13 2 20 20 5 90 0 0 3 2 3 4

ktaa2 14 2 20 20 5 90 15 0 3 2 3 4

ktaa1 15 2 20 20 5 90 30 0 3 2 3 4 ktqb [7, 8, 10, 11, 12, 13, 15, 19, 24] ktqb [25, 27, 28, 29, 30, 32, 34, 36]

16 2 20 20 5 90 90 0 3 2 3 4

ktqb [1, 2, 35]

17 2 20 20 5 110 90 0 3 2 3 4

Table 16- Kay Tanda 2009 Search Parameters (2nd Localised radius search - kt09_sp3)

Note: (Search volume is ellipse, parameters refer to DATAMINE software

19.4 Model validation

Validation of the block model was conducted by visual inspection of each drill section against the block

model. No statistical validation was conducted.

19.5 Resource Reporting

Resource Classification

The resource classification is based on the data support for the individual block estimates and is a

function of the search and the number of drill holes available. The search volume fields (SVOL1 and

SVOL2) flag whether the blocks had adequate data for grade estimation during the first search, or

whether an increased volume was triggered in order to capture more data for the grade estimate. The

number of drill holes used in the estimate is recoded in field N-BHID. After a number of tests and visual

examination of the resource categorization, the following parameters were established for the resource

categorization:

Measured - 1st Search Volume of kt09_sp3 (SVOL2 = 1)

Indicated - 2nd

Pass of kt09_sp3 (SVOL2 = 2)

1st Search Volume of kt09_sp (SVOL1 = 1) and N-BHID >= 4

Inferred 1st Search Volume of kt09_sp (SVOL1 = 1) and N-BHID <= 3

2nd

Pass of kt09_sp (SVOL2 = 2)

Resource Reporting


drillholes) with a total of 26,628.1 meters and 16,423 assays. The database was frozen in mid-August

2009. This work has produced Measured, Indicated and Inferred Mineral Resources in accordance with

the definitions outlined in the JORC Code of 2004 (Australasian Joint Ore Reserves Committee) and is

reported in accordance with CIM National Instrument 43-101.

Resources have been tabulated at a 0.3 g/t Au cut off and a 0.5 g/t Au cut off for the combined properties

as well as for the individual portions of Pulang Lupa and Kay Tanda. Furthermore, as mentioned earlier in

this report, metallurgical characteristics suggest that different cut offs be applied for the oxide and the

transition/fresh material. This has resulted in a separate tabulation to reflect the different ore behaviour.

Refer to Tables 17 to 25 for details.

In terms of the resource categorizations at the oxide 0.3 g/t Au and the transition/fresh 0.5 g/t Au cut offs,

72.5 percent of tonnes and 77.6 percent of ounces are combined Measured and Indicated; and 27.5

percent of tonnes and 22.4 percent of ounces are Inferred.

Within the combined Measured and Indicated portion of the resource, oxide material accounts for 31.2

percent of the total tonnes, transition for 18.1 percent and fresh for 23.2 percent. Similarly, the oxide

material accounts for 23.4 percent of all ounces, the transition for 22.2 percent and the fresh for 32.0

percent.

Three quarters (75.3 percent) of the total resource tonnage is represented by the Kay Tanda portion and

just under a quarter (24.7 percent) by the Pulang Lupa portion. In terms of combined Measured and


110

Indicated tonnes, just over half (50.1 percent) of the tonnes occur within the Kay Tanda portion and 22.5

percent within Pulang Lupa.

Some 65.3 percent of the total resource ounces is within Kay Tanda portion and just over a third (34.7

percent) by the Pulang Lupa portion. In terms of combined Measured and Indicated tonnes, 45.1 percent

of the ounces occur within the Kay Tanda portion and 32.6 percent within Pulang Lupa.

Within the Kay Tanda portion of the combined Measured and Indicated resource, 30.0 percent of tonnes

are oxide, 13.8 percent are transitional and 22.6 percent are fresh. With regards to ounces, 19.7 percent

are oxide, 16.1 percent are transitional and 33.2 percent are fresh.

At Pulang Lupa, the oxide, transition and fresh tonnes represent roughly a third each, 34.9 percent, 31.0

percent and 25.1 percent respectively. A similar distribution occurs for the ounces, with 30.4 percent

being oxide ounces, 33.7 percent transitional and 29.6 percent fresh.

Figures 46, 47 and 48 are grade-tonnage curves for the resource model.

KAY TANDA (Excl Pulang Lupa) Resource Estimate

(OXIDE>0.3 g/t Au, TRANS+SULPH >0.5 g/t Au)

Metric

Tonnes

Gold Grade

(g/t Au)

Silver Grade

(g/t Au)

Gold (ounces)

Silver (ounces)

Oxide (>0.3 g/t Au)

Measured 1,802,000 0.61 2.32 35,200 134,600

Indicated 1,277,000 0.51 2.13 20,800 87,600


Inferred 527,000 0.56 2.40 9,500 40,700

Transition (>0.5 g/t Au)

Measured 728,000 1.07 2.20 25,100 51,400

Indicated 688,000 0.93 2.16 20,600 47,800


Inferred 426,000 0.88 2.77 12,100 37,900

Fresh (>0.5 g/t Au)

Measured 1,162,000 1.40 2.18 52,400 81,400

Indicated 1,160,000 1.12 1.67 41,900 62,300


Inferred 2,485,000 0.83 1.22 66,400 97,200

Total

Measured 3,692,000 0.95 2.25 112,700 267,400

Indicated 3,125,000 0.83 1.97 83,300 197,700


Inferred 3,438,000 0.80 1.59 88,000 175,800

Table 17- Kay Tanda (excluding Pulang Lupa) (Oxide >0.3 g/t Au cut off, Transition/Fresh >0.5 g/t Au)


111

PULANG LUPA (Excl Kay Tanda) Resource Estimate


Metric

Tonnes

Gold Grade

(g/t Au)

Silver Grade

(g/t Au)

Gold (ounces)

Silver (ounces)

Oxide (>0.3 g/t Au)

Measured 871,000 1.20 18.88 33,700 528,700

Indicated 304,000 1.25 13.07 12,200 127,700


Inferred 153,000 0.59 5.22 2,900 25,700


Measured 673,000 1.55 7.86 33,600 170,100

Indicated 370,000 1.46 3.46 17,300 41,100


Inferred 111,000 1.31 1.83 4,700 6,500

Fresh (>0.5 g/t Au)

Measured 501,000 1.60 3.54 25,800 57,000

Indicated 344,000 1.72 3.52 19,000 38,900

Measured + Indicated 845,000 1.65 3.53 44,800 95,900

Inferred 40,000 1.45 2.34 1,900 3,000

Total

Measured 2,045,000 1.42 11.50 93,100 755,800

Indicated 1,018,000 1.48 6.35 48,500 207,700


Inferred 304,000 0.97 3.60 9,500 35,200

Table 18- Pulang Lupa (excluding Kay Tanda) (Oxide >0.3 g/t Au cut-off, Transition/Fresh >0.5 g/t Au )


112

KAY TANDA + PULANG LUPA Resource Estimate


Metric

Tonnes

Gold Grade

(g/t Au)

Silver Grade

(g/t Au)

Gold (ounces)

Silver (ounces)

Oxide (>0.3 g/t Au)

Measured 2,673,000 0.80 7.72 68,900 663,200

Indicated 1,581,000 0.65 4.24 33,000 215,300


Inferred 680,000 0.57 3.04 12,400 66,400


Measured 1,401,000 1.30 4.92 58,700 221,400

Indicated 1,058,000 1.11 2.61 37,900 88,900


Inferred 537,000 0.97 2.57 16,800 44,400

Fresh (>0.5 g/t Au)

Measured 1,663,000 1.46 2.59 78,100 138,400

Indicated 1,503,000 1.26 2.09 60,900 101,200


Inferred 2,524,000 0.84 1.23 68,300 100,200

Total

Measured 5,737,000 1.12 5.55 205,700 1,023,000

Indicated 4,142,000 0.99 3.04 131,800 405,400


Inferred 3,741,000 0.81 1.75 97,500 211,000

Table 19- Total Resource (KT and PL) (Oxide >0.3 g/t Au cut off, Transition/Fresh >0.5 g/t Au)


113

KAY TANDA (Excluding Pulang Lupa) Resource Estimate (>0.3 g/t Au)

Metric

Tonnes

Gold Grade

(g/t Au)

Silver Grade

(g/t Au)

Gold (ounces)

Silver (ounces)

Oxide (>0.3 g/t Au)

Measured 1,802,000 0.61 2.32 35,200 134,600

Indicated 1,277,000 0.51 2.13 20,800 87,600


Inferred 527,000 0.56 2.40 9,500 40,700


Measured 1,376,000 0.75 2.48 33,300 109,800

Indicated 1,668,000 0.61 2.13 32,700 114,200


Inferred 865,000 0.64 2.70 17,700 75,100

Fresh (>0.3 g/t Au)

Measured 2,007,000 0.97 1.92 62,900 124,200

Indicated 2,715,000 0.70 1.77 61,500 154,800


Inferred 4,199,000 0.65 1.80 87,500 243,000

Total (>0.3 g/t Au)

Measured 5,185,000 0.79 2.21 131,400 368,600

Indicated 5,660,000 0.63 1.96 115,000 356,600


Inferred 5,591,000 0.64 2.00 114,700 358,800

Table 20- Kay Tanda (excluding Pulang Lupa) at > 0.3 g/t Au cut off


114

PULANG LUPA (Excluding Kay Tanda) Resource Estimate (>0.3 g/t Au)

Metric

Tonnes

Gold Grade

(g/t Au)

Silver Grade

(g/t Au)

Gold (ounces)

Silver (ounces)

Oxide (>0.3 g/t Au)

Measured 871,000 1.20 18.88 33,700 528,700

Indicated 304,000 1.25 13.07 12,200 127,700


Inferred 153,000 0.59 5.22 2,900 25,700


Measured 821,000 1.34 7.24 35,500 191,100

Indicated 446,000 1.28 3.24 18,300 46,400


Inferred 188,000 0.91 2.85 5,500 17,200

Fresh (>0.3 g/t Au)

Measured 664,000 1.31 3.71 27,900 79,100

Indicated 402,000 1.52 3.32 19,700 42,900


Inferred 88,000 0.88 1.94 2,500 5,500

Total (>0.3 g/t Au)

Measured 2,356,000 1.28 10.55 97,100 798,900

Indicated 1,152,000 1.36 5.86 50,200 217,000


Inferred 429,000 0.79 3.51 10,900 48,400

Table 21- Pulang Lupa (excluding Kay Tanda) at >0.3 g/t Au cut off


115

KAY TANDA + PULANG LUPA Resource Estimate (>0.3 g/t Au)

Metric

Tonnes

Gold Grade

(g/t Au)

Silver Grade

(g/t Au)

Gold (ounces)

Silver (ounces)

Oxide (>0.3 g/t Au)

Measured 2,673,000 0.80 7.72 68,900 663,200

Indicated 1,581,000 0.65 4.24 33,000 215,300


Inferred 680,000 0.57 3.04 12,400 66,400


Measured 2,196,000 0.97 4.26 68,800 300,900

Indicated 2,114,000 0.75 2.36 51,000 160,600


Inferred 1,053,000 0.69 2.73 23,200 92,300

Fresh (>0.3 g/t Au)

Measured 2,671,000 1.06 2.37 90,800 203,300

Indicated 3,117,000 0.81 1.97 81,200 197,700


Inferred 4,287,000 0.65 1.80 90,000 248,500

Total (>0.3 g/t Au)

Measured 7,540,000 0.94 4.82 228,500 1,167,400

Indicated 6,812,000 0.75 2.62 165,200 573,600


Inferred 6,020,000 0.65 2.10 125,600 407,200

Table 22- Total Resource (Kay Tanda and Pulang Lupa) at >0.3 g/t Au cut off


116

KAY TANDA (Excluding Pulang Lupa) Resource Estimate (>0.5 g/t Au)

Metric

Tonnes

Gold Grade

(g/t Au)

Silver Grade

(g/t Au)

Gold (ounces)

Silver (ounces)

Oxide (>0.5 g/t Au)

Measured 718,000 0.93 2.63 21,500 60,800

Indicated 447,000 0.72 2.48 10,300 35,700


Inferred 141,000 1.05 3.32 4,800 15,000


Measured 728,000 1.07 2.20 25,100 51,400

Indicated 688,000 0.93 2.16 20,600 47,800


Inferred 426,000 0.88 2.77 12,100 37,900

Fresh (>0.5 g/t Au)

Measured 1,162,000 1.40 2.18 52,400 81,400

Indicated 1,160,000 1.12 1.67 41,900 62,300


Inferred 2,485,000 0.83 1.22 66,400 97,200

Total (>0.5 g/t Au)

Measured 2,608,000 1.18 2.31 99,000 193,600

Indicated 2,295,000 0.99 1.98 72,800 145,800


Inferred 3,052,000 0.85 1.53 83,300 150,100

Table 23- Kay Tanda (excluding Pulang Lupa) at >0.5 g/t Au cut off


117

PULANG LUPA (Excluding Kay Tanda) Resource Estimate (>0.5 g/t Au)

Metric Tonnes

Gold Grade

(g/t Au)

Silver Grade

(g/t Au)

Gold (ounces)

Silver (ounces)

Oxide (>0.5 g/t Au)

Measured 576,000 1.62 24.26 30,000 449,500

Indicated 223,000 1.55 14.54 11,200 104,400


Inferred 34,000 1.39 12.68 1,500 13,700


Measured 673,000 1.55 7.86 33,600 170,100

Indicated 370,000 1.46 3.46 17,300 41,100


Inferred 111,000 1.31 1.83 4,700 6,500

Fresh (>0.5 g/t Au)

Measured 501,000 1.60 3.54 25,800 57,000

Indicated 344,000 1.72 3.52 19,000 38,900


Inferred 40,000 1.45 2.34 1,900 3,000

Total (>0.5 g/t Au)

Measured 1,750,000 1.59 12.03 89,400 676,600

Indicated 937,000 1.58 6.12 47,500 184,400


Inferred 185,000 1.36 3.90 8,100 23,200

Table 24- Pulang Lupa (excluding Kay Tanda) at >0.5 g/t Au cut off


118

KAY TANDA + PULANG LUPA Resource Estimate (>0.5 g/t Au)

Metric Tonnes

Gold Grade

(g/t Au)

Silver Grade

(g/t Au)

Gold (ounces)

Silver (ounces)

Oxide (>0.5 g/t Au)

Measured 1,295,000 1.24 12.26 51,500 510,200

Indicated 671,000 1.00 6.50 21,500 140,200


Inferred 174,000 1.12 5.13 6,300 28,700


Measured 1,401,000 1.30 4.92 58,700 221,400

Indicated 1,058,000 1.11 2.61 37,900 88,900


Inferred 537,000 0.97 2.57 16,800 44,400

Fresh (>0.5 g/t Au)

Measured 1,663,000 1.46 2.59 78,100 138,400

Indicated 1,503,000 1.26 2.09 60,900 101,200


Inferred 2,524,000 0.84 1.23 68,300 100,200

Total (>0.5 g/t Au)

Measured 4,359,000 1.34 6.21 188,300 870,000

Indicated 3,232,000 1.16 3.18 120,300 330,300


Inferred 3,235,000 0.88 1.67 91,400 173,300

Table 25- Total Resource (Kay Tanda and Pulang Lupa) at >0.5 g/t Au cut off


119

0.0

10.0

20.0

30.0

40.0

50.0

60.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

2.0

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

3.0

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

4.0

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

5.0

Me

an A

u a

nd

Ag

grad

e a

bo

ve c

ut

off

gra

de

(g/

t)

Ton

ne

s (M

t)M

illio

ns

Au cut off grade (g/t)

Kay Tanda August 2009 Resource EstimateGrade - Tonnage Curve (Au and Ag) - OXIDE RESOURCE

Tonnes (Meas + Ind) Tonnes (Inferred)Au grade (g/t) (Meas + Ind) Ag grade (g/t) (Meas + Ind)Au grade (g/t) (Inferred) Ag grade (g/t) (Inferred)

Figure 46: Grade-Tonnage curve – Oxide resource (Meas+Ind, Inf)

0.0

5.0

10.0

15.0

20.0

25.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

2.0

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

3.0

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

4.0

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

5.0

Me

an A

u a

nd

Ag

grad

e a

bo

ve c

ut

off

gra

de

(g/

t)

Ton

ne

s (M

t)M

illio

ns


Kay Tanda August 2009 Resource EstimateGrade - Tonnage Curve (Au and Ag) - TRANSITION RESOURCE


Figure 47: Grade-Tonnage curve – Transition resource (Meas+Ind, Inf)


120

0.0

5.0

10.0

15.0

20.0

25.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

2.0

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

3.0

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

4.0

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

5.0

Me

an A

u a

nd

Ag

grad

e a

bo

ve c

ut

off

gra

de

(g/

t)

Ton

ne

s (M

t)M

illio

ns


Kay Tanda August 2009 Resource EstimateGrade - Tonnage Curve (Au and Ag) - FRESH RESOURCE


Figure 48: Grade-Tonnage curve – Fresh resource (Meas+Ind, Inf)

20. OTHER RELEVANT DATA AND INFORMATION

No other relevant data, nor information, is currently available in respect of the Archangel Property.

21. INTERPRETATION AND CONCLUSIONS

This report is based on the data that were produced and compiled by MRL Gold Phils and Avocet Mining

PLC. Data verification performed by the author found no discrepancies. Hence the database is considered

adequate to meet industry standards to estimate mineral resources.

The holes drilled in the Avocet drilling program mostly intersected the projected quartz-base metal veins

making it a technical success. Furthermore, because of drill intersections on mineralised structures (e.g.

quartz-base metal veins), Avocet were able to project the mineralization over reasonable strike lengths

that augment previously declared resources at Kay Tanda.

Bulk density values for resource estimation are based on a review of the individual oxide, transition and

fresh (primary) data subsets. The selection of bulk density values for estimation work is based on the

modal characteristics, and is has been set at 2.35, 2.55 and 2.65 t/m3 respectively.

The due diligence program of Avocet was effective in assessing the resources at Kay Tanda. The drilling

program, conducted on a different orientation than any previous drilling campaigns, produced results that

enabled interpretation of the different mineralization zones, especially the quartz-base metal veins, which

have not been modeled properly in the past.


121

Current data gathered from this drilling campaign contributed in further understanding the complex

mineralization found at Kay Tanda. The early mineralization is related to the upper level of a porphyry

system that occurs in two styles – mineralization in vuggy silica zones in advanced argillic alteration and

quartz stockworks veining. This was then overprinted by episodes of low sulphidation epithermal veining

namely, quartz±pyrite±chalcopyrite, pyrite±quartz, and quartz-galena-sphalerite-chalcopyrite. The fluids

that form these veins are not purely epithermal in character but are hotter and more saline, as suggested

by the sulphide content of the resulting veins. The interpretation that the mineralizing fluids are

intermediate sulphidation in character is possible but it is mainly a matter of terminology and will not

have much impact on the way we view our targets.

Avocet simplified the complex mineralization characteristics into four mineralization domains during

wireframing. These domains, although exhibiting overprinting, are delineated in distinct space relative to

each other. As a result, this also effectively defines the mining and metallurgical domains.

The drilling program was successful in hitting the targeted quartz-base metal veins at a high angle to core

axis indicating that the drill direction is correct. However, Avocet did not replicate the long stretch of

bonanza grades intersected by MRL holes in the quartz-base metal veins (e.g. KTDH-04). This is

probably because the high grade MRL holes were drilled along the veins thus misrepresenting the true

tenor of mineralization. Avocet holes that cut almost perpendicularly the veins represent better the true

grades and widths of the veins. The other possibility is that the quartz-base metal veins are not always

high in gold and we may have intersected the veins in sections that are not high grade. There may be

other controls on the localization of the high grade ore shoots within quartz-base metal vein zones, a

common phenomenon in epithermal veins.

In this drilling program, Avocet confirmed the occurrence of the different mineralization styles and

determined their relative positions and trends. The pyritic stockworks and quartz-pyrite veins are

developed at a certain stratigraphic horizon, probably due to certain lithological controls. Avocet found

that the high grade advanced argillic alteration around KTDH-01 may have a hypogene feeder structure as

intersected by KTD176. More importantly, Avocet have determined that the quartz-base metal veins

dominantly trend NW-SE and they extend to near surface level as demonstrated by KTD177.

The metallurgical results show that gold extractions obtained by heap leaching of the oxide and transition

mineralization were within 10 to 11percent of the indicated maximums achievable, which indicates that

both types of mineralisation should be highly amenable to heap leaching. However, for the sulphide

mineralisation the difference in the gold extractions by heap leaching and agitation leaching was

significantly higher. This suggests that agitation leaching might be the preferred option for processing the

sulphide mineralisation.






to 40 g/t.

This work has produced Measured, Indicated and Inferred Mineral Resources in accordance with the

definitions outlined in the JORC Code of 2004 (Australasian Joint Ore Reserves Committee) and is

reported in accordance with CIM National Instrument 43-101.


122

The cutoffs are set at 0.3 g/t Au for oxide and 0.5 g/t Au for transition and sulphide. With these cutoff

parameters, the combined Measured and Indicated Mineral Resources of Kay Tanda and Pulang Lupa

amount to 9.879 Mt @ 1.06 g/t Au containing 337,500 ounces gold. The Inferred Mineral Resources

amount to 3.741 Mt @ 0.81 g/t Au containing 97,200 ounces gold. The resources estimated are:

Metric Tonnes

Au g/t Ag g/t Gold (oz)

Silver (oz)

Oxide (> 0.3 g/t Au) Measured 2,673,000 0.80 7.72 68,900 663,200

Indicated 1,581,000 0.65 4.24 33,000 215,300


Inferred 680,000 0.57 3.04 12,400 66,400

Transition (> 0.5 g/t Au) Measured 1,401,000 1.30 4.92 58,700 221,400 Indicated 1,058,000 1.11 2.61 37,900 88,900 Measured + Indicated 2,459,000 1.22 3.92 96,600 310,300 Inferred 537,000 0.97 2.57 16,800 44,400

Fresh (> 0.5 g/t Au)

Measured 1,663,000 1.46 2.58 78,000 138,000

Indicated 1,503,000 1.26 2.09 61,000 101,000 Measured + Indicated 3,166,000 1.37 2.35 139,000 239,000

Inferred 2,524,000 0.84 1.23 68,000 100,000

Total Measured 5,737,000 1.11 5.54 205,600 1,022,600 Indicated 4,142,000 0.99 3.04 131,900 405,200


Inferred 3,741,000 0.81 1.75 97,200 210,800

Total metal contents in the reported resources represent metal in the ground and have not been adjusted for metallurgical

recoveries and other factors which will be considered in later study

The gold and silver grades have been rounded off to the nearest 2nd decimal places and the tonnage and contained ounces to

the nearest thousand, which may have resulted in minor discrepancies.

Mineral resources which are not mineral reserves do not have demonstrated economic viability.

The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-

political, marketing, or other relevant issues.

22. RECOMMENDATIONS

The author recommends that additional diamond drilling should be performed to better grasp the controls

on the distribution of the Au-base metal mineralization. The new mineralization model should be utilized

to create a good drilling plan, which carefully maps out the drilling orientation and direction with respect

to the observed structural features in order to hit the new zones and mark their lateral and vertical extent.

The different mineralization styles of the deposit should also be continuously refined and understood.

Furthermore, Avocet‟s drilling, which intersected a significant and new quartz-base metal vein zone,

located at the eastern edge of the Kay Tanda prospect, should be further mapped and studied to better

delineate the lateral extent of the said zone, with the possibility of an extension of a similar or the same

zone further east towards Lumbangan ridge. The same should be done for the silicified zone interpreted as

the hypogene zone at KTD176, which is considered as the feeder structure of the high grade, advanced

argillic altered rocks around the KTDH-01 area.


123

Lastly, around KTD180 to KTD182, the reason on why the assay results are lower than projected

although the veins were intersected as projected should be answered. The hypothesis of a secondary

structure or feature, which controls the localisation of high grade ore shoots within the quartz-base metal

veins should be modeled and tested during drilling.


124

23. REFERENCES

Angeles, Jun., 2007. Comments on MRL-Avocet‟s Kay Tanda Deposit. Internal Memorandum for

Avocet, Unpublished report.

Archangel Project Lobo, Batangas Province Southern Luzon. Philippines MPSA-177-2002-IVA

Comprehensive Report July 2009. Unpublished Report

Aurelio, M., 2006. Geological Structures of the Archangel Project (Pulang Lupa and Kay Tanda

Deposits), Lobo, Batangas, Leg 1. Report submitted to MRL Gold Philippines, Inc. Unpublished

internal report.

Aurelio, M., 2007. Geological Structures of the Archangel Project (Pulang Lupa and Kay Tanda

Deposits), Lobo, Batangas, Leg 2. Report submitted to MRL Gold Philippines, Inc. Unpublished

internal report.

Aurelio, M.A. and Peña R.E. 2002, Geology and mineral resources of the Philippines, Volume 1:

Geology. Department of Environment and Natural Resources, Mines and Geosciences Bureau,

Philippines. Published report.

Bailey, D. G. 2003. Geology and precious metals resource estimates: Kay Tanda Project, Archangel

Project, Batangas Province, Philippines, Mindoro Resources Limited, January 2, 2003.

Bailey, D.G., 2005. Lobo Prospect, Batangas Province, Philippines, Southwest Breccia Zone Geology and

Mineral Resources. Mindoro Resources Ltd. Internal Report. August 29, 2003. 5 pp.

Bautista, B., Flindell, P., and Umbal, J. Project Evaluation Summary – Kay Tanda Project, Luzon,

Philippines. Internal Memorandum for Avocet, Unpublished report.

Bautista C. et al, 2009. NI43-101 Technical Report on The Kay Tanda Project Luzon, Philippines

Unpublished report for Mindoro.

Buenavista, A.G., 1989: Results of exploration on the Archangel prospect, Lobo, Batangas Province, the

Philippines. WMC Internal Report (unpubl.), 23p.

Buenavista, A. G. 1991. Results of exploration on the Archangel prospect, Lobo, Batangas Province, the

Philippines. A project terminal report presented to the claim owners – Western Mining

Corporation (WMC).

Carty, S., 2003. Geology and Precious Metal Resource Estimates of Kay Tanda Prospect, Batangas,

Philippines. Report by Bailey Geological Consultants for Mindoro Resources Ltd. Unpublished

internal report.

Corbett, G. 1996. Comments on the structural controls to gold-copper mineralization in the Chase

Minerals Batangas Project, Philippines. Internal Company Report, Chase Minerals. 8 pp.

November 1996.


125

Eslake, A. 2008. Leaching Characteristics of Sulphide Mineralization from Kay Tanda Prospect,

Philippines. Report by Consultants Peter J Lewis & Associates for MRL Gold Philippines Inc.

Golder Associates Pty. Ltd, 2007. Draft report on Resource Estimation of Kay Tanda Gold-Silver

Project, Philippines. Report for MRL Gold Philippines, Inc. Unpublished internal report.

Mindoro Resources Limited Annual Report 2005. Published report.

Mindoro Resources Limited Annual Report 2004. Published report.

Rayner, S, and Eslake A, 2007. Heap Leaching of Oxide and Transition Samples from the Kay Tanda

Prospect, Philippines. Metco Report MI374 for MRL Gold Philippines, Inc. Unpublished internal

report.

Rohrlach, B. D. and Fredericksen, D. C., 2008. Independent Geological Report on the Epithermal Gold-

Silver Resource at Kay Tanda Prospect Area, South Luzon, Philippines. Report for MRL Gold

Philippines, Inc. Unpublished internal report.

Tebar, 1998. Tenement due diligence and technical data evaluation of the Lobo Project, Batangas,

Philippines. Unpublished Internal Report

Vinluan, T.S. et al, 2007. Preliminary Environmental Impact Assessment, 120-Hectare Archangel

Project,Barangay Balibago, Lobo, Batangas. Unpublished report for Mindoro


24.0 DATE AND SIGNATURES

CERTIFICATE OF QUALIFICATION

I, Dallas M. Cox, hereby certify that:

1. I am a Professional Mining Engineer and a private consultant under a sole trader business

registered under Crystal Sun Consulting, with Australian Business Number ABN 28 818 090 933

at 52 Somerville Street Bendigo Victoria, Australia 3350.

2. I am responsible for the preparation of the technical report titled “NI 43-101 Report: Mineral Resource Estimate Upgrade on the Kay Tanda Project, Luzon, Philippines " and dated

April 15, 2010.

3. I am a member in good standing of the Australian Institute of Mining and Metallurgy with

membership number 201098.

4. I am a graduate of the University of New South Wales, Kensington with a degree in Mining

Engineering.

5. I have practiced my profession for 29 years including 23 years as a degree qualified Mining

Engineer. I have been operating as an Independent Consultant since July 2004.

7. I certify that by reason of my education, affiliation with a professional association (as defined by

NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified

person” for the purposes of NI 43-101. I am an independent qualified person as defined by NI

43-101 and by the companion policy 43-101CP to National Instrument 43-101.

8. This technical report is based on my review of available published data and company reports,

and personal visits to the property. I have spent in excess of 20 days working on the property and

various off-site meetings/consultations with geologists and mining engineers on the property. My

visits were on the July 2007, August 2007, October 2008, March 2009 and February 2010. It is

my professional opinion that the Kay Tanda Property has development potential and that further

exploration of this property is warranted.

10. I have read N.I. 43-101 and Form 101F1. The technical report has been prepared in compliance

with both of these documents.

11. I, Dallas Cox, do not expect to receive any interest (direct, indirect or contingent) in the properties described herein, nor in the securities of Mindoro Resources or any of their affiliates. I

am independent of the issuer under all criteria of Section 1.5 of National Instrument 43-101.

12. I am not aware of any material fact or material change with respect to the subject matter of this

technical report which is not reflected in this report, the omission to disclose which would make

this report misleading.

13. I consent to the filing of the Technical report with any stock exchange and other regulatory authority and any publication by them for regulatory purposes. I consent to the filing of extracts

NI 43-101 Report on the Mineral Resource Estimate Upgrade on the Kay Tanda Project, Luzon, Philippines

from the technical report in the written disclosure which was filed on March 5, 2010 (the press

release). I also consent to the inclusion of parts of the Technical Report as electronic publication

on the companies’ websites that are accessible to the public.

14. I have read the written disclosure filed on March 5th, 2010, and do not believe that there are any

misinterpretations.

Signed in Manado, Indonesia. Dated 15 April 2010

__________________________

Signature of Qualified Person

Dallas M. Cox, BE (Min). AusIMM __________________________

Name of Qualified Person


128

25. ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON

DEVELOPMENT PROPERTIES & PRODUCTION PROPERTIES

The Archangel property (MPSA 177-2002-IV) is not a development property, nor is it a property which is

under mineral production. Thus no further information is furnished here.

26. ILLUSTRATIONS

All figures of relevance to this report have been inserted into the relevant sections above.

kt 43-101 report - mindoro · table 24- pulang lupa (excluding kay tanda) at >0.5 g/t au cut...

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