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 | |   Itetemia Property Projects | Summary & Overview | Prior Ownership & Tanzanian Royalty Exploration Interest | Tanzanian Royalty Exploration/Staminco Agreement | Tanzanian Royalty Exploration/Barrick Agreement | Geology | Metallurgical Testing | Photo Gallery Itetemia Property Summary & Overview The Itetemia property is located in the Mwanza region of the Lake Victoria Archean Greenstone Belt, some 90 kilometers southwest of Mwanza, Tanzania. The Itetemia property adjoins Barrick's Bulyanhulu Mine property that hosts a 10.7 million ounce gold deposit at a grade of 13g/t. When Barrick acquired the Bulyanhulu deposit, the gold reserves were stated at 3.6 million ounces. The Itetemia property hosts the Golden Horseshoe Reef ("GHR"). The GHR has been traced by diamond drilling to a vertical depth of approximately 440 meters. The gold mineralization occurs primarily within two discrete gold zones, the South and North zones, and plunges 55 degrees to the northwest. Itetemia Property Ownership In January 2007 the Company concluded an option royalty agreement with Sloane Developments for its Itetemia gold project. Under the option agreement, the Company granted Sloane the right to earn a beneficial interest in licenses constituting the Itetemia Project. (See news release dated January 30, 2007). Prior Ownership Only two of the prospecting licenses comprising the Itetemia Property, namely, Itetemia and Itetemia North, were previously held by third parties. With respect to the Itetemia prospecting license, the interest of the Company was acquired from State Mining Corporation of Tanzania ("Stamico") pursuant to a joint venture agreement dated July 12, 1994 (the "Stamico Venture Agreement"). The Stamico Venture Agreement obligated the Company to make two initial payments of Tsh1,000,000 and US$7,200, both of which were satisfied. With respect to the Itetemia North prospecting license, the interest of the Company was acquired from RSR (Tanzania) Limited by agreement dated April 20, 1995 (the "RSR Royalty Agreement"). The RSR Royalty Agreement obligated the Company to pay a sum of US$35,000, which payment was made. The Company's Interest Prior to the Barrick Venture Agreement (defined below), four of the prospecting licenses comprising the Itetemia Property, namely, Itetemia Village, Mwingilo, Ngula and Itetemia East, were indirectly 100% held by the Company; in the case of the Itetemia North prospecting license, the Company held an indirect 100% interest therein, through Tancan, subject only to the 2% NSR Royalty payable pursuant to the RSR Royalty Agreement. In the case of the Itetemia prospecting license, Tancan acquired its interest pursuant to the Stamico Venture Agreement, as amended June 18, 2001 and July 2005, which provides, among other things, that: 1. Tancan had to pay Stamico, on execution of the Stamico Venture Agreement, the sum of US$7,200 (as an advance against the 2% gross revenue royalty) and TS1,000,000. 2. Tancan and Stamico were to form a joint venture company for the purpose of holding the prospecting license that shall be held 10% by Stamico (with no obligation to contribute) and 90% by Tancan, which was effected through the formation of Itetemia Mining Co. 3. Stamico is entitled to acquire an additional 20% interest in the joint venture company by paying a sum equal to 20% of the cost of placing the property into commercial production based on the feasibility study submitted to the Government of Tanzania for such purpose. 4. Tancan shall assist Stamico in raising the required capital to exercise the right referred to in (3) above. 5. Tancan was to expend the sum of US$25,000 in the first year and US$50,000 annually thereafter in relation to the training of Tanzanian personnel. 6. Upon commencement of commercial production, Stamico shall receive a 2% gross revenue royalty, which shall be increased to a 2.5% gross revenue royalty should a mine on the Itetemia prospecting license produce recoverable gold in excess of 12 grams per tonne. 7. Tancan shall pay to Stamico, as an advance against the 2% gross revenue royalty, the sum of US$7,200 on or before every anniversary of the Stamico Venture Agreement up until the development phase, upon and after which the annual sum of US$10,000 shall be paid as an advance against such royalty. 8. Tancan shall show preference to Stamico for the provision of local materials and services during the period of mining operations. 9. As amended July 2005, Tancan shall pay to Stamico the sum of US$15,000 on or before July 12 of 2006 and 2007 and ending upon commercial production, provided that commercial production commences by December 31, 2007, failing which the aforementioned payment shall be revisited. As expected, commercial production did not commence by December 31, 2007. The annual option fee was renegotiated to $25,000 per annum until commercial production. 10. Tancan may assign its rights under the agreement, subject to the prior written consent of Stamico. By an option and joint venture agreement dated May 31, 1999 as amended April 24, 2001 between the Company and Barrick (the "Barrick Venture Agreement"), Barrick agreed to provide funding to the Company totalling $4,000,000. On November 23, 2004 Barrick advised that they would return the Itetemia Prospecting Licences (with the exception of one PL which is held under an agreement with Barrick Exploration Africa Limited (the "BEAL") to the Company. Regional Geology The Lake Victoria region (the south shore of Lake Victoria) contains 12 Archean Nyanzian greenstone belts, which are surrounded by and have been interrupted by numerous granitic intrusions. The Nyanzian belts comprise a volcano-sedimentary sequence composed of mafic to felsic volcanics (lavas and tuffs), banded iron formations, and shales. The greenstone belts have been grouped into locally distinct geographic regions. There are five greenstone belts in the Lake Victoria Region, one of which is the Ushirombo belt, an east-west trending greenstone belt. The Bulyanhulu Mine and the Itetemia property are located on the northern trending portion of the Ushirombo greenstone belt. Property Geology & Gold Mineralization The eastern portion of the Ushirombo greenstone belt hosts the Itetemia property. The Nyanzian greenstone account for eighty percent of the Itetemia, Itetemia North and Ngula licences. The remaining twenty percent is underlain by granite. Mbuga cotton soil covers 10 to 40% of the property. Lithology The lithologies encountered on the Itetemia and Itetemia North prospecting licences can be divided into three volcano-sedimentary domains: (1) Northeast Domain, (2) Central Domain and, (3) Southwest Domain. The granite truncates these domains to the east. The Northeast Domain is composed of basalt, felsic flows, thick to thin sequences of argillite and dykes/sill of gabbro. The domain is up to 3 km thick, exhibits a north to north-easterly trend and has numerous extensive Horizontal Loop ElectroMagnetic (HLEM) conductors. The conductors are related to argillite dominantly located in one horizon at the top of the sequence. A massive sulphide unit/zone is situated at the bottom of this horizon. West of the Northeast Domain, the Central Domain is dominantly composed of a thick sequence of basalt. Based on previous reverse circulation (RC) drilling, three mafic cycles can be defined in this domain. The middle cycle, characterized by higher contents in chlorite reflecting probably a magnesium composition, separates the other two cycles. However, it is not clear if the magnesium increase is an alteration product or a primary composition. North-northwest to north trending conductors are associated with and define the trend of this domain. Dykes/sills of gabbro/diabase/pyroxenite are also interpreted in this sequence. The main characteristics of the Southwest Domain are the presence of felsic crystal tuffs and felsic crystal lapilli tuff. Four horizons (cycles) have been identified, which are usually separated by mafic to intermediate flows and the argillite beds. These units exhibit a well-defined northwest to north-northwest trend. The first basal cycle, crystal tuff (tops to the west) is dacitic in composition, exhibiting feldspar crystals and thin interbeds of dacite and argillite. The base of this unit defines the boundary with the Central Domain. The Golden Horseshoe Reef is hosted by a dacitic unit within the first crystal tuff near the contact with the granite. The second cycle commences with a felsic crystal tuff exhibiting quartz crystals. This unit is reported to be more felsic in composition than the first cycle crystal tuff unit. The third cycle felsic crystal tuff is separated from the second cycle by a dacite/basalt sequence. The fourth cycle crystal tuff is a crystal lapilli tuff and is separated from the third by a carbonatized basaltic sequence; the matrix appears to have the same composition as the second and third quartz crystal tuff. This cycle corresponds to the stratigraphic sequence reported in the footwall of the Reefs 1 and 2 at Bulyanhulu. The Bulyanhulu Reef 1 is hosted by an argillite horizon at the top of the sequence. Alteration At the property scale, the main alterations observed are sericitization, carbonatization, silicification and hematization. Weakto strong sericitization affects the felsic volcanic rocks intersected in the drill holes drilled in the southwest corner of the Itetemia prospecting licence. These units are creamy white to yellowish in colour. The carbonatization, mostly observed in the basalt and andesite, has also been observed in certain intermediate/felsic tuffs. The rock appears lighter in colour and has a reaction to a 10% hydrochloric acid solution. The strongest carbonatization is observed in the southwest corner. The silicification and hematization are sporadic and appear in the vicinity of the granite contact. Moderate to strong silicification is observed in mafic units and the hematization appears in the quartz feldspar porphyry and in the granite. Finally, epidotization is locally noted in the pillowed mafic flows. On the Golden Horseshoe Reef, the albitization and the silicification are the dominant forms of alterations. The yellowish to brownish colour and the strong hardness of the dacite giving it an iron ring on tapping suggest albitization in the form of biotite growth resulting from the nearby intrusive granite. The silicification appears along crosscutting fractures in both felsic units. The silicification has also been identified in the basalt located to the north of the Golden Horseshoe Reef. The basalt is dark green and has a very strong hardness. Other types of alteration include epidotization, chloritization, and ankeritization, but this is generally weak. The epidotization is associated with pillowed mafic flows, the chloritization affects some basalt and felsic/intermediate tuffs, and the ankeritization is noted in felsic crystal tuffs located in the southwest corner of the Itetemia licence. Structure The volcanic and sedimentary rocks have a northwest to north-northwest trend and typically dip 85 to 90 degrees to the northeast. The known polarity was to the southwest for all the units but a northeast polarity for the area of the Golden Horseshoe Reef is possible. This change in the polarity may be explained by folding. Evidence of folding has been observed in the field and in the diamond drill holes. Some outcrops showed tight to isoclinal "S" folds in argillite horizons with axial plane parallel to the main schistosity which follows the northwest-north/northeast trend. Also, numerous argillite horizons intersected in the diamond drill holes exhibit micro folding. Two phases of deformation can be identified. On outcrop CB99-05, the first phase (S1) is very well developed and oriented at around 300 degrees/70 degrees to 90 degrees. The second phase schistosity (S2) is less developed and is characterized by crenulations (kink bands) at 320 degrees/40 degrees. Generally, the schistosity S1 is weakly to moderately developed in all the volcanic and sedimentary units. Locally, S1 appears more developed when related to shearing. Mineralization The sulphide mineralization encountered on the Itetemia property is comprised of massive to semi-massive stringers, veins and veinlets, disseminated and nodular mineralization. The types of mineralization are (1) sulphides associated with volcanic activity, (2) remobilized sulphides associated with deformation (shear hosted) and (3) sulphides associated with sedimentation. The gold and metallic contents associated with this mineralization are variable and the relation between the grades and the mineralized type is not well known at this stage. The massive to semi-massive occurrences of sulphide mineralization appear to be related to volcanism. It occurs in two areas on the property. One area is located in the northern part of the licences and has been intersected by the drill hole ITDD-06. More than 30 meters of sulphides were intersected at the contact between a quartz feldspar porphyry and an argillite horizon separating two pillowed basalts. The sulphide content ranges from 10% to 90% pyrrhotite, 2% to 5% pyrite, and trace to 5% sphalerite, trace to 1% chalcopyrite. Five to twenty percent of felsic material (ash tuff/quartz) and less than 3% argillite are associated with and brecciated by the sulphides. The pyrite-sphalerite-chalcopyrite appears in stringers and/or blebs in the pyrrhotite and ash tuff. The massive sulphides have also been intersected by reverse circulation drill holes where the relation with the other units is less evident. Massive to semi-massive sulphides were also mapped in the Golden Horseshoe Reef where a 1 meter to 4 meter thick sulphide zone containing 20% to 80% pyrite-pyrrhotite was intersected in a number of holes. Most of these zones are located close to or at the northeastern contact. Furthermore, hole ITDD-33 intersected a sulphide zone having 15% to 30% pyrite from 204.7 to 205.15 meters. These sulphides, presenting laminations that suggest a possible exhalative environment, are also located near the northeastern contact. Along the southwest contact, drilling has intersected argillite brecciated by sulphide stringers. The stringer, vein and veinlet sulphides may be a result of remobilized syn-volcanic sulphides during shearing and deformation. The sulphides range in intensity trace amounts to 10% to 20%. Pyrite and pyrrhotite are the most common sulphides. Chalcopyrite-sphalerite-arsenopyrite and rare galena are less common, generally less than 1%. This type of mineralization can be found in the felsic volcanic rocks and in argillite. The Golden Horseshoe Reef mineralization occurs as massive sulphide veins locally ranging from 15 cm to 30 cm wide. Sulphides dominantly appear in veins/veinlets less than 5 cm wide in felsic volcanic rocks. Five to thirty percent pyrite-pyrrhotite is common over sections of 1 meter to 15 meters along the drill holes. They are sub-concordant and parallel to the schistosity. The strong shearing at the Golden Horseshoe Reef has resulted in remobilization of the sulphides. Argillite units are more commonly by the deformation associated with at least two folding phases, S1 and S2. Nodular sulphides less than 1 cm in diameter also occur in the stratigraphic package at Itetemia and are related with a sedimentary period dominated by argillite horizons. Up to 5% of the sulphides in the argillites are nodular, and correspond to less than 3% of the total sulphide content in the rock. The nodular sulphides are associated with quartz-carbonate material, which fills in the cavities around the nodules.
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