Our Verneuil Project consists of three individual properties - "Verneuil Central", "Verneuil East" and "Verneuil West". These properties are located approximately 15 kilometres east of Lebel-sur-Quevillon, 210 kilometres northeast of Val D'or, and can be accessed through logging roads 101 and 105. Secondary logging roads allow one to reach practically all parts of the Project.
On May 17, 2011, we signed a Property Sale Agreement with Freewest Resources Canada Inc. (“Freewest”), a wholly owned subsidiary of Cliffs Natural Resources Inc. (NYSE: CLF), in which we agreed to acquire a 70% interest in Verneuil Central and a 100% undivided interest in Larose, in exchange for a combined share-based payment of 1,000,000 common shares and a 0.5% NSR on each property. Freewest is now "Cliffs Chromite Ontario Inc."
Verneuil Central is comprised of 44 claims in Verneuil Township in the Abitibi region of Quebec. The 30% interest in Verneuil Central is held by Golden Tag Resources Ltd. (“Golden Tag”). Larose is comprised of 16 claims in Moss Township, west of Thunder Bay, Ontario. Verneuil Central is subject to an existing 1% NSR and Larose to an existing 3% NSR. The NSR's described herein apply to all minerals in perpetuity. We have forwarded a joint venture agreement to Golden Tag for execution.
We allocated the consideration paid – 60% to Verneuil Central and 40% to Larose. The TSX-V approved the Verneuil Central/Larose transaction on May 27, 2011. The transaction closed on June 28, 2011.
On June 7, 2011, we announced that we had signed a Letter Agreement with other parties in which we agreed to acquire Verneuil East, a 100% undivided interest in 10 mining claims located immediately east of Verneuil Central, in exchange for cash of $20,000, a share-based payment of 200,000 common shares and a 2% NSR in perpetuity. We may re-purchase half of the 2% NSR for $1,000,000 at any time.
The TSX-V approved the Verneuil East transaction on June 21, 2011. The transaction closed on July 20, 2011.
On June 13, 2011, we announced that we had signed a Letter Agreement with other parties in which we agreed to acquire Verneuil West, a 100% undivided interest in 19 mining claims located immediately west of Verneuil Central, in exchange for cash of $30,000, a share-based payment of 300,000 common shares and 150,000 warrants (exercisable at a price of $0.30 for 2 years), and a 2% NSR in perpetuity. We may re-purchase half of the 2% NSR for $1,000,000 at any time.
The TSX-V approved the Verneuil West transaction on June 21, 2011. The transaction closed on June 29, 2011.
See map #1 under Maps & Geology for the local setting of the various claim blocks.
The area is covered by a basic to intermediate volcanic (intrusive and volcaniclastic) sequence, affected in some areas by a shear zone. The general trend is southwest. The rocks are slightly metamorphosed as shown by the presence of sericite and chlorite.
To date, a total of 7 mineralized zones have been identified on the three properties, as follows:
These zones are discussed below in greater detail. Currently, our exploration focus is on the Toussaint Shear Zone Area ("TSZ") and the new JD Showing. See maps #1 and #2 to see the zone locations and underlying geology.
Located in the south central part of the object, the mineralised zone consists of gold distributed in a silcified and carbonated slated (sheared) structure that occurs at the contact between a mafic volcanite and an intermediary volcanite (usely referred to as Gabbro and intermediate tuff). The gabbro is medium grained and the tuff is very fine and paler in color. The structure is running WSW to W with a high dip to the NNW. The slated zones appear to form sub hectometric pitch and swell structures. Crenulation dipping with a low angle to the WNW can be observed. The zone goes up from 6m wide and it is visible on surface and in drilling over 600m.
This mineralization is associated with an area of intense slatering with, oxidation, bleaching and presence of sericite, fe-carbonate and mm low pyrite dissemination in the foliation and sometimes as mm masses. A pale rusty color is characteristic. From the old drilling and trenches, gold does not appear to be related to quartz veins.
As seen in surface and supported in the drilling, the mineralized zone seems to form a chain of decametric ovoid lamination zones distributed en echelon that shift to the SE as the zone progresses to the NE. This structural observation is probably appearing in the vertical extension of the zone, thus forming ore shoot. The ore shoot might follow the crenulation trend observed in surface thus giving a WNW low angle rake to the mineralisation. The ovoid pitch and swell character are also characteristic of most quartz veining.
In the Verneuil area, documented exploration work for gold began in the late 1940's, with prospecting and trenching, followed by some drilling in the late 1950's. From the late 1970's through the 1980's, exploration work resumed with ground and airborne geophysics, geological mapping, soil sampling and drilling. These programs did not return significant results.
From 1991 to 1995, extensive exploration was carried out by Freewest Resources and Golden Tag Resources, resulting in the discovery of several gold-bearing shear-type structures. The exploration programs consisted of line cutting, prospecting for finding new and old showings, extensive stripping, trenching, sampling and mapping, ground geophysics (Mag, VLF and I.P.) and drilling.
Surface work revealed that the gold-bearing structures are shear zones within felsic to intermediate tuffs, near or at the contact with intermediate (diorite) to mafic (gabbro) instrusions. The best results of the Freewest Resources - Golden Tag Resources programs were obtained from the following six mineralized zones of Verneuil Central:
Toussaint Zone (Ref GM 52145, GM 52557)
Moneta Porcupine North Zone (Ref GM 52145)
Moneta Porcupone South Zone (Ref GM 52145)
Midrim Zone (Ref GM 55006)
T&M Zone (Ref 52145)
Benoist Zone (Ref GM 52145)
From 10 holes intersecting the Toussaint Zone, drilled in 1993 and 1994, geological reserves were estimated at 187,706 t of material with an average grade of 7.1 g/t Au.
Please see map #8 for showings and results from previous work.
Note: A Qualified Person has not done sufficient work to classify the historical estimate as current mineral resources; accordingly, we are not treating the historical estimate as current mineral resources and the historical estimate should not be relied upon.
Exploration Plans and Cost Allocations
We plan to actively explore our three Verneuil properties. Where exploration work benefits all three properties, actual costs are allocated to each property on an appropriate basis, by our CFO working in conjunction with our Q.P. For example, the % of metres drilled on each property to total program meters drilled for the program is used to allocate geologist fees as well as drilling invoices.
In the case of amounts allocated to the Verneuil Central, 30% recoveries from Golden Tag are accrued as a receivable and recorded as a reduction of gross expenditures incurred on that specific property. When reimbursement funds are received, the related receivable is reduced.
Cumulative costs for each of the three Verneuil properties are separately disclosed in our quarterly and annual financials and MD&A.