FLAMENCO PROJECT

REGION III, CHILE

UTM 7.056.778 AND 342.497

TECHNICAL REPORT

For

LOS APIRES MINING CORPORATION

Prepared by:

José Pablo Astudillo Rodríguez

Flamenco 2020

2

Summary

The Flamenco project corresponds to an exploration project that has 2,377 hectares of mining property located 42 kilometers

southeast of the city of Chañaral. The area of interest does not have field work and this is the first geological report that

considers terrain geological information and grades geochemistry.

The district geological area where the Flamenco project is located is made up of the Chañaral Metamorphic Complex and the

Flamenco Intrusive. The first presents meta-sedimentary rocks made up of metaturbidites, slates and phyllites on the coastal

edge and metawackas in the eastern sector, the Flamenco Intrusive corresponds to a group of intrusives aligned in a north-

south direction belonging to the Batolith of the Cordillera de la Costa in the north From Chile.

The local geological framework shows that within the project the Chañaral Metamorphic Complex emerges, which covers 80%

of the outcrops and the Flamenco Intrusive covers 20% of the outcrops. District structures follow a NS, NE and NW trend which

limits a Hydrothermal Alteration Zone 600 meters long by 200 meters wide (on average) with strong silicification in the box

rock plus wide quartz veins with North South orientations and NE-SW, stockwork of multidirectional quartz veinlets and

andesitic-diorite dykes. The quartz veins are presented with thicknesses ranging from 10 cm to 20 meters, internally they

present another hydrothermal event with two phases of quartz crystallization, in which milky white sinuous quartz veins and

straight quartz veins are recognized crystalline. For the author of this report, the Hydrothermal Alteration Zone is the main

exploration target of the Flamenco Project.

A study of remote sensors was carried out in the Flamenco project, iron mineralization (ferric-hematite and ferrous-magnetite

ion), carbonate, silica, advanced and intermediate argilic and propylitic alterations were determined and confirmed in the field.

The areas of mineralization with a ferrous index that agree with intrusive bodies rich in magnetite and iron oxides (limonite,

magnetite and hematite) were also checked.

A surface geochemistry where 27 samples were obtained from the Hydrothermal Alteration Zone shows that there are

anomalies of Gold, Copper, Lead, Zinc, Titanium, Arsenic, Mercury and Antimony. The last three together with the Gold confirm

the auriferous potential of the Flamenco Project.

An IOCG type model is proposed for the Flamenco Project for the following reasons: Existence of red hematite confirmed by

the ferrous index (study of remote sensors), iron oxides and surface magnetite. Existence of veins, veinlets and stockwork of

quartz and carbonate on the surface. Existence of leached sulfides in veins, veinlets and hydrothermal alterat ion zones with

hematite-sericite-carbonate-quartz in the box rocks (Chañaral Metamorphic Complex). These are all characteristics that

coincide with the IOCG model proposed by Hirtzman 1992 and that is applied to several Chilean deposits.

In the surroundings of the Flamenco Project there are Mining Districts with quartz veins with hematite, goethite, jarosite, gold

and gold-copper contents. These veins are located in rocks of the Chañaral Metamorphic Complex and intrusive rocks of the

Flamenco Intrusive. The most important district is the La Coqueta District which has different sectors with quartz-hematite

veins with exploitation of ancient gold (Coqueta Este, Coqueta Norte, Coqueta Sur). The main exploitation occurred in two

gold veins of quartz with hematite and limonite, with 0.5 meters of power and an estimated length of 100 meters that present

a course between N20 ° W and N40 ° W and with vertical arrangement. Currently, within the La Coqueta District, the company

Tesoro Resources is executing an exploration drilling campaign in the El Zorro Project, where 16 drillings have been carried

out with attractive gold intercepts associated with quartz veins and veins with grades of up to 46.2 gr / ton Au. The geology

described in the El Zorro Project is similar to that observed in the Flamenco Project, that is, a Hydrothermal Alteration Zone

with quartz-hematite veins and veins located in the contact area between the Chañaral Metamorphic Complex and Jurassic

intrusives (Flamenco Intrusive and Relincho Intrusive) therefore the gold potential of the Flamenco Project is very attractive

and should be evaluated in the following exploration campaigns.

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Table of Contents

1. Introduction ..................................................................................................... 4

1.1. Project history and information context ............................................................... 4

1.2. Location and access roads ...................................................................................... 4

1.3. Work Methodology .................................................................................................... 5

2. District Geological Framework ...................................................................... 9

3. Local Geological Framework ....................................................................... 12

3.1. Chañaral Metamorphic Complex (Devonian) ...................................................... 12

3.2. Flamenco Intrusive (Lower Jurassic)................................................................... 15

3.3. Structural Geology .................................................................................................. 17

3.3.1. Main structures ................................................................................................. 18

3.3.2. Veins, veinlets and stockwork of Quartz ..................................................... 20

3.3.3. Carbonate Veins ............................................................................................... 21

3.3.4. Foliation of the Chañaral Metamorphic Complex ...................................... 22

4. Hydrothermal alteration zone .................................................................................... 23

5. Study of Remote Sensors ............................................................................ 26

6. Chemical Analysis of samples .................................................................... 28

7. Geological environment and type of deposit ............................................. 35

8. Nearby mining districts ................................................................................ 36

8.1. La Isla District ........................................................................................................... 37

8.1.1. La Isla Deposit .................................................................................................. 37

8.1.2. Las Flores Deposit ........................................................................................... 38

8.1.3. Pamela Deposit ................................................................................................. 38

8.2. La Coqueta District .................................................................................................. 40

8.3 El Zorro Project ........................................................................................................ 40

9. Conclusions .................................................................................................. 43

10. Recommendations ........................................................................................ 46

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1. Introduction

1.1. Project history and information context

The Flamenco project is located in an attractive and privileged area with a vestige of

old deposits and gold mining operations located south east of the Puerto Flamenco

Town. The Geologist José Pablo Astudillo in 2019 made the first geological report

(First Geological Report) for Apires Mining Corporation, this report had the

purpose of reviewing geological information of the environment and determining a

prospective area that was named “Red Alteration Area” and that it corresponds to

a zone of alteration with veins and veins of polydirectional quartz and possibly

subordinate carbonate.

1.2. Location and access roads

The project is located in the Atacama Region between UTM coordinates 338,794 to

345,122 east orientations and 7,059,622 to 7,052,620 north orientations, it presents

an easy and expedited access through the Pan-American 5 North route from Caldera

and Chañaral. The project is located 42 kilometers southeast of the city of Chañaral

and 72 kilometers from the city of Caldera.

From the Panamericana route 5 North, you must follow the C-261 route, which is

paved and well maintained. This route should be followed until kilometer 11, a place

close to the north end of the Flamenco project mining property, from this point the

interior of the mining property is accessed to the south through a moderately

maintained dirt road through which the recommends the use of a four-wheel drive

vehicle (photograph 1).

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Photograph 1: Location of the Flamenco project, Chile.

1.3. Work Methodology

For this geological report, two terrain campaigns of two days each were carried out,

53 geological mapping points were raised and different types of rock, mineralization,

alteration and present structures were recognized (photograph 2). With this, it was

possible to define an area with greater advanced exploration potential that has

approximately 28 hectares, which contains most of the structures, veins, quartz veins

and alteration of silica in the box rock.

Subsequently, in the Geomaq laboratory (Santiago), a mechanical preparation and

X-ray Fluorescence analysis were performed on the 27 samples obtained in the field

with the aim of determining the concentrations of elements present in the area and

projecting the mineralized zones in depth.

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Photograph 2: Geological mapping points taken on site.

1.4. Relationship between an IOCG deposit and the presence of Cobalt

In Chile, Cobalt exploration is just beginning and there are four sources of research.

The first corresponds to a study carried out by Professor of the University of Chile

Brian Townley who made a compilation of all the cobalt deposits (table 1) that exist

in Chile from the historical records of laws and exploitations. This study concludes

that Cobalt in Chile is located in the Coastal Strip between the Third and Fourth

Region associated with IOCG-type iron deposits (Iron, Copper, Gold, Cobalt). The

second source corresponds to the advanced exploration works carried out by the

American company Genlith in the La Cobaltera Project, where they drilled several

veins with iron, copper, gold and cobalt distributed in a 10 square kilometer area

(they are currently evaluating the construction of a plant to recover these minerals).

The third source corresponds to a private listed carried out by the author of this

report, where I have recognized several IOCG-type projects with Cobalt, some with

drilling and others only with surface information (Table 2). Therefore, in Chile we do

have Cobalt presence in the IOCG Deposits and their grades increase in surface

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along with copper and iron. The fourth source corresponds to the incorporation of

cobalt in the business model of Capstone Mining's Santo Domingo Project, where it

achieved a better valuation and increased profits as a result of the cobalt content

mixed with iron and copper (Table 3 and Map 1).

Table 1: Laws of Iron, Copper, Gold and Cobalt in deposits registered by Brian Townley.

Table 2: Laws of Iron, Copper, Gold and Cobalt in prospectuses registered by José Pablo Astudillo

(III and IV Region).

Proyecto Tipo de muestra Au (g/t) CuT (%) FeT (%) Co (ppm)

Canaleta 1,20 1,3 18.6 1100Rock chip 0,70 3,8 10,2 1229

Rock chip 0,20 1,6 38,3 2040

Rock chip 0,10 2,6 52,3 678Rock chip 0,40 2,4 31,4 2760

Canaleta (trinchera 3) 0,02 1,3 9,43 761Canaleta (trinchera 3) 0,01 1,1 10,52 714

Canaleta (trinchera 3) 0,53 7,2 15,85 1175Canaleta (trinchera 3) 0,05 0,6 13,92 1967

Canaleta 0,11 3,5 18,82 1008

Sondaje (92 a 94 m) 1,6 > 15 867Sondaje (94 a 96 m) 0,3 > 15 1497

Sondaje (374 a 376) 1,1 > 12,5 192Sondaje (376 a 378) 0,3 > 12,5 248

Copiapó

Copiapó

Punitaqui

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Table 3: Estimate of resources for the Santo Domingo Project with content of Iron, Copper, Gold

and Cobalt.

Map 1: Concentration of Cobalt in Region III and location of Advanced and Early Projects in

exploration.

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2. District Geological Framework

The district geological site where the Flamenco project is located has been described

by Godoy and Lara in 1998. This is made up of the Chañaral Metamorphic Complex

(Godoy and Lara, 1998) and the Flamenco Intrusive (figure 1). The first one presents

meta-sedimentary rocks made up of metaturbidites, shales and phyllites on the

coastal edge and metawackas in the eastern sector. This complex would have been

formed as part of a Paleozoic accretion prism, which suggests the presence of

malange facies and the tight folding with west-southwest vergence (Bell, 1982,

1984).

The Flamenco Intrusive corresponds to a set of Intrusive aligned in a North-South

direction belonging to the so-called Batolith of the Cordillera de la Costa in northern

Chile. This is located from the town of Puerto Flamenco to the south of the city of

Chañaral between 26 ° 29’S and 26 ° 38’S. In its northern part, it is mainly made up

of granodiorite to tonalitic rocks, to a lesser extent diorites and quart diorites. It has

been assigned a Lower Jurassic age between 20 and 186 Ma. (Berg and Breitkreuz,

1983; Brook et al., 1986; Dallmeyer et al., 1996).

This body is located and cut to meta-sedimentary rocks belonging to the Chañaral

Metamorphic Complex, in its northern and central zone it is composed mainly of

clinopyroxene, amphibole and biotite granodiorites, as the mafic bodies are partially

chloritized (photographs 4 and 5) . Tonalites, monzodiorites and quart diorites are

present on the edges of Intrusive, presenting a light gray color and a medium to

coarse grain.

In previous works by Grocott and Taylor (2002), they propose two stages of intrusion

for the Flamenco Intrusive, in which the granulitic texture of the rock in its northern

area confirms the presence of several pulses or site stages. The first intrusive bodies

are subjected to a thermal input from the new pulses, generating a self-granulation

of some of the magmatic facies that make up the Flamenco Intrusive.

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At the edges of intrusive body, metamorphism haloes are observed and associated

with the box rock, they can host veined gold deposits, as is the case in the different

districts near the Flamenco project.

Figure N ° 1: District geological map in which the Flamenco Project is located.

The contact between the Chañaral Metamorphic Complex with the intrusive bodies

of the Lower Jurassic, generated an intermediate grade metamorphic aureole, in

which the metapelites have reduced migratory sectors which contain Andalusite and

Cordierite. Around the Flamenco Intrusive, the horn rocks present Andalusia

oriented in the foliation plane and the biotite in this area is fully chloritized.

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Photograph 4: Phyllites of the Chañaral Metamorphic Complex with foliation and veins of quartz-

limonites.

Photograph N ° 5: Flamenco Intrusive cut by black andesitic dikes.

The Chañaral Metamorphic Complex is of vital importance both for the location of

quartz-limonite veins and for its excellent behavior as a receptor rock for alteration

and possible deep mineralization due to its high porosity, enough foliation that allows

the circulation and trapping of mineralization of economic interest, it is expected that

at depth it can host copper, cobalt and gold mineralization.

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3. Local Geological Framework

In the Flamenco Project 2 lithological types are recognized, these correspond to the

Chañaral Metamorphic Complex and intrusive bodies belonging to the Flamenco

Intrusive.

3.1. Chañaral Metamorphic Complex (Devonian)

It corresponds to a set of meta-sedimentary rocks composed of metaresnisca,

quartzite, slate, philites and subordinately by schists, metabasites and marbles

(photograph 6). These rocks generally have a low grade metamorphism and are

moderately folded. Within the study area, many folds were not recognized for these

rocks, which are poorly recrystallized and in some cases it was possible to recognize

the stratification. This unit covers 80% of the Flamenco Project, on the ground it was

recognized as cut by numerous intrusive bodies associated with the Flamenco

Intrusive and areas with contact metamorphism expressed by biotite and

subordinate actinolite are recognized. Furthermore, within this unit, a moderate to

intense Hydrothermal Alteration Zone was recognized, characterized by silicification

of the phyllite matrix and by a series of polydirectional veins and veins of quartz and

subordinate carbonate. All these veins and veins have variable thicknesses of

millimeters up to 10 meters. These veinlets contain iron oxides such as limonite and

scarcely copper oxides. Finally, the presence of red hematite and subordinate

magnetite can be highlighted, which is very scarce (photograph 7).

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Photograph 6: Outcrops of the Chañaral Metamorphic Complex within the Flamenco Project.

14

Photograph 7: Detail of phyllites and slates with recrystallization and alteration of silica-quartz-

limonite veinlets in the Chañaral Metamorphic Complex.

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3.2. Flamenco Intrusive (Lower Jurassic)

The Flamenco Intrusive covers 20% of the Project. It presents as diorites and dioritic

porphyries with a high presence of iron oxides (photograph 8). To a lesser extent,

small dykes of andesitic composition and diorites appear, the mafic of which are

chloritized. In the area with the greatest exploration potential, a dioritic porphyry body

with a North - South orientation, dark green with intense chlorite, biotite, actinolite

(scarce) and magnetite in contact with the Chañaral Metamorphic Complex (photo

9) was recognized. According to what was observed in the field and given the

presence of magnetite in this intrusive, it can be concluded that it is responsible for

the heat that the Hydrothermal Alteration Zone may have generated within the

Chañaral Metamorphic Complex.

Photograph 8: Flamenco Intrusive represented by Dioritic Porphyries cutting the Chañaral Metamorphic Complex.

The numerous minor intrusive bodies and andesitic-microdioritic dike that belong to

the Chañaral intrusive and are presented with NE-SW and NW-SE orientations.

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Photograph 9: Flamenco Intrusive with biotite and magnetite in the ground mass.

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3.3. Structural Geology

The structural characteristics of the Flamenco Project are the result of different

overlapping deformation events. The oldest structures are observed in the Chañaral

Metamorphic Complex where parallel slate foliations were observed (photograph

10). All of these structures were formed under a semi-ductile regime compatible with

accretion prisms. These deformations would have been contemporaneous or

subsequent to the sedimentation of the area in the Devonian - Carboniferous (Bell,

1984). These foliations are a very good trap for harboring deep copper-gold-cobalt

mineralization. For the Flamenco Intrusive, subvertical magmatic foliation (60 ° - 80

° E) was observed in the field, parallel to the contact with the rocks of the Chañaral

Metamorphic Complex. The parallelism between magmatic foliation and ductile

foliation of the rocks of the Chañaral Metamorphic Complex implies a syntectonic

location of the Flamenco Intrusive in the Lower Jurassic (photograph 11).

Photograph 10: Ductile foliation observed in the Chañaral Metamorphic Complex.

Photograph 11: Subvertical magmatic foliation observed on the Flamenco Intrusive.

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3.3.1. Main structures

The structures present in the Flamenco project follow NW, NE and EW trends (photo

12) which limit the Hydrothermal Alteration Zone (photos 13 and 14), model the

morphology of the area and possible channeling of the mineralization of gold, copper

and cobalt in depth.

Minor structures follow a preferential trend N-S and E-W, this trend is also followed

by intrusive bodies.

Photograph 12: Map of recognized structures in the Flamenco Project (blue lines).

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Photograph 13: Map of structures observed in the area of interest.

Photograph 14: Fault that limits the hydrothermal alteration zone.

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3.3.2. Veins, veinlets and stockwork of Quartz

The quartz veins and veins are concentrated in the Hydrothermal Alteration Zone

detected in the terrain mapping. These present a preferential North-South orientation

and variable thicknesses from a few centimeters to metric (photograph 15 with

veinlets stocwork). These veins show quartz, scattered limonite carbonates, pyrite

box and in some cases brecciation is observed with fragments of the box rock

immersed in the vein.

Photograph 15: Stockwork of quartz-limonite veins and carbonate veins.

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At the southern end of the alteration zone, an intense stockwork of quartz vetilla was

recognized, cutting a strongly silicified rock in which 2 cutting stages are recognized.

In a first stage the system is found with a higher degree of temperature giving way

to sinuous veins and with a whitish quartz, secondly straight quartz veins (milky) are

observed that cut the box rock and the previous ones, it is postulated that for these

veinlets the system was at a low temperature (photograph 16).

Photograph 16: Quartz veinlets and quartz warp with limonite and carbonate with brecciation of the

box rock.

3.3.3. Carbonate Veins

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In different sectors of the Flamenco Project, carbonate veins and veins are

presented, which are parallel to the quartz veins and veins, these have a thickness

of 10 centimeters to 2 meters, generally follow a North South trend and cut at

Chañaral Metamorphic Complex (photograph 17). Finally, it is important to note that

the author of this report has identified carbonate veins with grades of up to 4,000

ppm of cobalt and attractive copper and gold credits in other projects with similar

characteristics than the Flamenco Project.

Photograph 17: Veins and veins of carbonate-quartz with brecciation of the box rock.

3.3.4. Foliation of the Chañaral Metamorphic Complex

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The rocks belonging to the Chañaral Metamorphic Complex are presented with

foliation within the Flamenco Project, this foliation has a preferential North South

orientation, various dykes and / or intrusive bodies, veins and veins of quartz take

advantage of these areas of weakness to cross the layers and generate zones of

geological interest (photograph 18). Larger structures such as local faults in turn

follow this North-South trend and N20 ° - 30 ° E.

Photograph 18: Foliation in phyllites with dykes and overlapping veinlets.

4. Hydrothermal alteration zone

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Based on the information collected such as the study of remote sensors, satellite

images, geological mapping, the author of this report has managed to define a

Hydrothermal Alteration Zone whose characteristics are presented below:

It is 600 meters long by 200 meters wide (on average), it is located in the central

west area of the project. It corresponds to an alteration zone with strong silicification

in the box rock plus a strong quartz vetilleo with North-South and NE-SW

orientations, stockwork of multidirectional quartz veinlets, andesitic and dioritic dikes

and intense silicification in the box rock. The quartz veins are presented with

thicknesses ranging from 10 cm to 20 meters, internally they present another

hydrothermal event with two phases of quartz crystallization, in which milky white

sinuous quartz veins and straight quartz veins are recognized crystalline.

The Alteration Zone is adjacent to the Flamenco Intrusive which has a dioritic

composition, is reddish in tone and has a preferential North South orientation to NE-

SW (photograph 19). In the contact between this intrusive unit and the box rock,

there are a series of faults which present a preferential orientation NE-SW, NS and

subordinate EW, a clear district trend that partly controls the deformation style of the

box rock and zones of weakness allowing these bodies and structures to locate

themselves.

The veins and veins are presented in this same orientation and are located in a

corridor approximately 600 meters long within the Hydrothermal Alteration Zone

(map figure 2).

For the author of this report, the Hydrothermal Alteration Zone is the main

exploration target of the Flamenco Project.

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Photograph 19: Hydrothermal Alteration Zone and Flamenco Intrusive, North view.

Figure 2: Map of Hydrothermal Alteration Zone containing corridor with Quartz Veins.

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5. Study of Remote Sensors

A study of remote sensors (photograph 20) was carried out in the Flamenco project,

mineralization and types of alterations existing in the study area were determined

such as: calcium carbonate, silica, ferric index (hematite), ferrous index (magnetite),

alterations advanced and intermediate argillic and propylitic.

This study of remote sensors allows the processing and interpretation of satellite

images through the capture of the physical characteristics of the Earth's surface,

based on measurements of reflected and emitted radiation of each component of the

studied surface. In turn, the images and multispectral data are processed, which

provides very useful information to establish the differences in the soil and rock

based on their composition.

Photograph 20: Map of remote sensors with alteration and mineralization identified by the study of

remote sensors, Flamenco Project.

In the terrain the mineralization zones with ferrous index were identified (photograph

21), this mineralization zone agrees with intrusive bodies (Flamenco Intrusive) rich

in magnetite and iron oxides (limonite, magnetite and hematite) which is highly

27

oxidized. Adjacent to these intrusive bodies a Hydrothermal Alteration Zone was

recognized with a high concentration of structures, veins and veins of both quartz

and carbonate, which follow a clear North-South trend, these veins, veins and

stockwork have an association with limonite, These structures follow the trend of

intrusive bodies (North-South) and are an important antecedent for future exploration

campaigns.

Photograph 21: Map of remote sensors with: ferrous index, Flamenco Project.

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6. Chemical Analysis of samples

The 27 samples were collected within the Hydrothermal Alteration Zone that has

better prospects for advanced exploration, and were subsequently sent to the

Geomaq Laboratory located in the city of Santiago. There they were crushed and

pulverized to a size of 150 meshes, then they were deposited in capsules so that

they could be analyzed by a Bruker brand X-ray Fluorescence team, model Titan

S1, where an analysis of 35 elements was obtained. Finally they were sent to F.G.

F. Mining Analysis located in the city of Coquimbo where its Gold contents were

analyzed.

The laboratory results show the following conclusions:

a) There are 2 samples with very anomalous calcium grades which coincide with

areas of Calcium Carbonate (Calcite) veins on the surface. This is very

important since the author of this report has detected important Cobalt

contents in old mines located in the San Juan District (Freirina) and whose

most important alteration mineral is Calcium Carbonate.

b) 98% of all the samples have very anomalous laws in Titanium (over 700 ppm

Ti reaching 2,180 ppm) which clearly shows that there is a significant

concentration of Titanium throughout the Alteration Zone that was sampled in

surface. The author of this report has studied IOCG Projects with deep

drillings with similar contents of Titanium on the surface and that in depth

increase to concentrations of up to 6,000 ppm associated with Cobalt -

Vanadium in areas with magnetite, therefore, Titanium will enhance the

Flamenco Project and must be incorporated as an important credit.

c) 90% of the samples have more than 1% of Fierro, which coincides with the

presence of limonites and hematites in fractures observed in the field.

d) All the samples did not show anomalous Cobalt contents, this element will be

found in association with concentrations of magnetite in depth according to

the IOCG Model proposed by the author of this report. It is noted that none of

29

the samples obtained in the field showed visible magnetite, but rather enough

quartz in veinlets and replacing the box rock.

e) 98% of the samples obtained anomalous grades in copper (greater than 25

ppm, reaching grades over 100 ppm) which shelters the possibility of

recognizing areas with more attractive grades in depth. On the surface, only

traces of copper oxides were detected in a couple of outcrops, therefore the

geochemistry performed confirms these observations.

f) There is a moderate presence of Zinc in the alteration zone since several

samples obtained grades greater than 20 ppm, even reaching 60. Their

presence confirms the existence of concentrations of polymetallic ores in the

Hydrothermal Alteration Zone.

g) 50% of the samples presented anomalies of Arsenic, this is very important

since in the Deposit the Island there are great anomalies of Arsenic

associated with high gold grades.

h) More than 1/3 of the samples show Antimony anomalies, this chemical

element is associated with attractive Gold grades in the La Coqueta deposit

that is being drilled by the company Tesoro Resources with excellent results

for Gold.

i) Three samples show anomalous Mercury laws (average 4 ppm), this is very

important since the author of this report worked three years in the Carmen De

Andacollo Mine where he was able to demonstrate that the Gold veins were

associated with Mercury areas . Therefore, Mercury is a good guide element

for prospecting for Gold in Flamenco.

j) Eight samples were abnormal in Gold and are distributed throughout the

entire hydrothermal alteration zone, which is very good news since it confirms

the gold potential of the Flamenco Project. The most anomalous laws are

located in the north central portion of the alteration zone, this also coincides

with the anomalies of Arsenic, Gold, Lead, Antimony, Titanium and Zinc.

Next, maps are included that represent the metallic elements that have an affinity

for gold and that are distributed in the different structures sampled in the field

(Map 2).

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Map 2: Distribution of Gold grades, Flamenco Project.

Map 3: Distribution of Arsenic grades, Flamenco Project.

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Map 4: Distribution of Copper grades, Flamenco Project.

Map 5: Distribution of Mercury grades, Flamenco Project.

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Map 6: Distribution of Lead grades, Flamenco Project.

Map 7: Distribution of Antimony grades, Flamenco Project.

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Map 8: Distribution of Titanium grades, Flamenco Project.

Map 9: Distribution of Zinc grades, Flamenco Project.

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Next, a table with the grade results of the samples obtained in the Flamenco Project

is presented (table 4).

Table 4: Detail laws of samples taken in the Flamenco Project

Name Ti (ppm) Fe (%) Cu (ppm) Zn (ppm) As (ppm) Sb (ppm) Hg (ppm) Pb (ppm) Au (gr/ton)

N-1 1.118 1,5 103 60 22 9 0,07

N-2 2.198 3,9 74 28 18 30 12 0,02

N-3 999 0,9 34 28 5 23 0,03

N-4 1.224 1,4 36 15 24 11 0,03

N-5 721 1,3 37 5 21 0,04

N-6 1.535 3,3 49 38 5 0,01

N-7 1.263 1,3 28 17 24 0,05

N-8 0,4 50 52 13 35 15 0,02

N-9 926 1,6 31 22 7 0,02

N-10 1.146 1,2 152 11 0,02

N-11 1.313 1,3 41 25 0,10

N-12 1.222 0,9 18 0,09

N-13 1.322 1,4 36 12 4 0,05

N-14 964 0,9 36 5 6 0,02

N-15 1.576 1,8 39 10 36 0,04

N-16 1.223 1,1 31 25 28 0,05

N-17 962 1,2 27 12 4 3 0,01

N-18 1.792 1,5 26 10 27 28 0,01

N-19 1.871 1,9 91 9 15 0,01

N-20 1.227 0,9 35 6 0,01

N-21 1.042 1,2 16 7 9 0,01

N-22 1.100 1,1 51 13 0,01

N-23 889 1,4 33 38 7 25 10 0,01

N-24 730 1,2 42 57 16 0,03

N-25 1.617 1,2 36 19 4 28 0,01

F-11 1.768 1,5 19 14 9 0,01

F-12 1.329 1,1 25 16 0,02

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7. Geological environment and type of deposit

The Flamenco project presents a series of evidences and conditions to estimate that

it corresponds to an exploration project of the IOCG type (photograph 22).

• Existence of red hematite confirmed by the ferrous index (study of remote

sensors), iron oxides and surface magnetite.

• Existence of veins and stockwork of quartz and calcium carbonate on the

surface, which coincides with the model proposed by Hirtzman 1992.

• Existence of leached sulfides in veins, veinlets and Hydrothermal Alteration

Zone with hematite-sericite-carbonate-quartz in the box rocks (Chañaral

Metamorphic Complex) that coincides with the model proposed by Hirtzman

1992.

Photograph 22: IOCG model defined by Hirtzman 1992 postulated for the Flamenco Project.

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8. Nearby mining districts

In the surroundings of the Flamenco Project there are Mining Districts with quartz

veins, with hematite, goethite, jarosite and contents of gold, gold-copper, and only

one of them with copper. These veins are located in rocks of the Chañaral

Metamorphic Complex and intrusive rocks of the Flamenco Intrusive (figure 3).

Figure 3: Location of the Flamenco Project with respect to other Mining Districts.

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8.1. La Isla District

This is a Gold Mining District that is located approximately 13 km southeast of the

town of Puerto Flamenco. It is accessed through a track that runs through the Aspera

gorge in the direction of the town of La Isla. This mining district is made up of three

small-sized gold deposits: La Isla, Las Flores and Pamela which correspond to veins

of quartz and hematite with variable gold contents, they show a general NW-SE

heading and are located on metamorphic rocks belonging to the Chañaral

Metamorphic Complex and on intrusive rocks of the Lower Jurassic (Stock La Isla),

(Photograph 23).

8.1.1. La Isla Deposit

This deposit is made up of three subparallel solid quartz veins and runs between 30

to 50 meters and up to 0.5 meters thick, a depth of no more than 5 meters is

recognized and they have a bearing of N60 ° W and a vertical cape. These veins are

located in shades belonging to the Stock La Isla, these veins are made of quartz with

variable amounts of hematite and limonite, in turn there is a series of minor north-

south veins that cut the main veins and define a Stockwork of veinlets with a

dimension of 100 meters by 50 meters.

The presence of gold (2.1 ppm) and high arsenic contents (1,905 ppm) are

recognized in previous works (W. Vivallo and R. Carrasco, 2017), suggesting the

presence of arsenopyrite in the ore of the Deposit.

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8.1.2. Las Flores Deposit

This deposit is in the form of a solid quartz vein, heading N50 ° W and mantle with

75 ° NE, it is located along a fault of the same orientation and has a length of

approximately 100 meters, its power varies between 0.3 and 1 meter and an

estimated depth of 15 meters.

The quartz vein has little dissemination of hematite and magnetite, which is partially

altered to hematite. The box rock corresponds to slates and phyllites corresponding

to the Chañaral Metamorphic Complex. Adjacent to the vein, intense quartz is

observed with both disseminated quartz and veins along with hematite.

8.1.3. Pamela Deposit

Solid quartz vein with N45 ° W orientation and a variable cape between vertical and

55 ° NE, it has a length of approximately 100 meters and a maximum power of 1

meter. The quartz vein contains little dissemination of pyrite which is normally

replaced by limonite and magnetite altered to hematite. The box rock corresponds

to metareniscas, slates and philites that correspond to the Chañaral Metamorphic

Complex, on the edges of the vein we can see quartz in veinlets, disseminated

quartz and a slight silicification of the box rock. The author of this report was able to

access some samples taken by the owners of this deposit and it can be indicated

that they have attractive gold grades, which confirms the important potential of the

district (table 5):

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Table 5: Gold laws in samples taken from the Pamela deposit (La Isla District).

Photograph 23: Location of the La Isla district (gold district) near the Flamenco Project.

40

8.2. La Coqueta District

This district is located 15 km in a straight line to the East of Port Obispo, its access

is made through a dirt road that starts at the mouth of the El Morado gorge and

enters to the east through the Cuevitas gorge to the town Diamond tip (photograph

24). The district is made up of numerous quartz gold veins, hosted on metamorphic

rocks of the Chañaral Metamorphic Complex. Due to the quantity and lateral

continuity of the veins and reconnaissance works with trenches and drillings, this

district is considered to be the main Gold District between Chañaral and Caldera.

This district has different sectors with quartz-hematite veins with old exploitation

(Coqueta Este, Coqueta Norte, Coqueta Sur) is currently paralyzed, the main

exploitation occurred in two gold-bearing quartz veins with hematite and limonite,

with 0.5 meter power and an estimated length of approximately 100 meters

presenting a bearing between N20 ° W and N40 ° W and with vertical arrangement.

These are located on slates and phyllites of the Chañaral Metamorphic Complex and

close to contact with the Relincho Intrusive.

The cage rock adjacent to the vein shows quartz-sericite alteration with an alteration

halo up to 3 meters wide. Previous geological studies (W. Vivallo and R. Carrasco,

2017) indicate chemical analyzes with contents of 62,000 ppm of arsenic, 50 ppm of

antimony and 42 gr / ton of gold, the high content of arsenic denotes the presence

of arsenopyrite as a companion mineral . Currently in the La Coqueta District, the

company Tesoro Resources is executing an exploration drilling campaign (El Zorro

Project).

8.3 . El Zorro Project

The El Zorro project is located in the La Coqueta mining district, the American

company Tesoro Resource is currently carrying out a series of drilling with excellent

results (photograph 25), for example, in the ZDDH00017 drilling, multiple zones of

gold mineralization have been cut high grade (table 6).

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Table 6: Drill results received to date on drill ZDDH00017.

This drilling makes it possible to clarify that the gold increases in depth, in the core

samples the alteration and quartz vetilleo associated with gold mineralization are

observed, the box rock corresponds to the Tonalita El Zorro.

Photograph 24: ZDDH00017 sounding with Tonalita box rock cut by quartz-gold veinlets.

Tesoro Resource has drilled 16 diamond drill holes, delimiting a gold system that is

still open. Photograph 25 shows the arrangement of the quartz drillings and veins

with hematite with gold grades in each drilling.

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Photograph 25: El Zorro Project with drill holes location and better gold intercepts, red drill holes are

currently being drilled.

The local geological framework described in the El Zorro Project is similar to that

observed in the Flamenco Project, that is, a Hydrothermal Alteration Zone with

quartz-hematite veins and veins located in the contact area between the Chañaral

Metamorphic Complex and intrusives Jurassic (Flamenco Intrusive and Relincho

Intrusive).

The results of the drilling of the El Zorro Project clearly increase the value of the

Flamenco Project since when the discovery of the El Zorro Project is announced, the

projects that surround it immediately acquire strategic importance.

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9. Conclusions

The Flamenco project corresponds to a high-potential exploration project that has

2,377 hectares of mining property located 42 kilometers southeast of the city of

Chañaral.

The district geological area where the Flamenco project is located is made up of the

Chañaral Metamorphic Complex and the Flamenco Intrusive. The first one presents

meta-sedimentary rocks made up of metaturbidites, slates and phyllites, the

Flamenco Intrusive corresponds to a set of intrusives aligned in a North-South

direction belonging to the Batolith of the Cordillera de la Costa in northern Chile.

The local geological framework shows that within the project the Chañaral

Metamorphic Complex emerges, which covers 80% of the outcrops and the

Flamenco Intrusive covers 20% of the outcrops. The district structures follow a NS,

NE and NW trend which limits a Hydrothermal Alteration Zone 600 meters long by

200 meters wide (on average) with strong silicification in the box rock, as well as

wide quartz veins with North orientations. South and NE-SW, stockwork of

multidirectional quartz veinlets and andesitic-diorite dykes. The quartz veins are

presented with thicknesses ranging from 10 cm to 20 meters, internally they present

another hydrothermal event with two phases of quartz crystallization, in which milky

white sinuous quartz veins and straight quartz veins are recognized crystalline. For

the author of this report, the Hydrothermal Alteration Zone is the main exploration

target of the Flamenco Project.

A study of remote sensors was carried out in the Flamenco project, iron

mineralization (ferric-hematite and ferrous-magnetite ion), carbonate, silica,

advanced and intermediate argilic and propylitic alterations were determined and

confirmed in the field. The areas of mineralization with a ferrous index that agree

with intrusive bodies rich in magnetite and iron oxides (limonite, magnetite and

hematite) were also checked.

An IOCG type model is proposed for the Flamenco Project for the following reasons:

Existence of red hematite confirmed by the ferrous index (study of remote sensors),

44

iron oxides and surface magnetite. Existence of veins, veinlets and stockwork of

quartz and carbonate on the surface. Existence of leached sulfides in veins, veinlets

and hydrothermal alteration zones with hematite-sericite-carbonate-quartz in the box

rocks (Chañaral Metamorphic Complex). These are all characteristics that coincide

with the IOCG model proposed by Hirtzman 1992 and that is applied to several

Chilean deposits.

A surface geochemistry where 27 samples were obtained from the Hydrothermal

Alteration Zone shows that there are anomalies of Copper, Zinc and Titanium, in

addition the existence of Arsenic, Antimony and Mercury was verified, which have a

strong affinity with Gold.

In the surroundings of the Flamenco Project there are Mining Districts with quartz

veins with hematite, goethite, jarosite, gold and gold-copper contents. These veins

are located in rocks of the Chañaral Metamorphic Complex and intrusive rocks of

the Flamenco Intrusive. The most important district is the La Coqueta District which

has different sectors with quartz-hematite veins with exploitation of ancient gold

(Coqueta Este, Coqueta Norte, Coqueta Sur). The main exploitation occurred in two

gold veins of quartz with hematite and limonite, with 0.5 meters of power and an

estimated length of 100 meters that present a bearing between N20 ° W and N40 °

W and with vertical arrangement. Currently, within the La Coqueta District, the

company Tesoro Resources is executing an exploration drilling campaign in the El

Zorro Project, where 16 drillings have been carried out with attractive gold intercepts

associated with quartz veins and veins with grades of up to 46.2 gr / ton Au. The

geology described in the El Zorro Project is similar to that observed in the Flamenco

Project, that is, a Hydrothermal Alteration Zone with quartz-hematite veins and veins

located in the contact area between the Chañaral Metamorphic Complex and

Jurassic intrusives (Flamenco Intrusive and Relincho Intrusive) therefore the gold

potential of the Flamenco Project is very attractive and should be evaluated in the

following exploration campaigns.

45

For the author of this report, the results of the exploration campaign were very

positive since a 30-hectare Hydrothermal Alteration Zone was recognized and

described, which can become a Gold deposit similar to the El Zorro Project of

the American Company Tesoro Resources .

In addition, many sectors remained unexplored, which fuels the expectation of

finding other alteration zones that may be even larger than the Alteration Zone that

was described in this report.

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10. Recommendations

The results of the exploration works in the Flamenco Project are attractive for the

demonstration of a copper-gold-cobalt deposit similar to the El Zorro Project,

therefore, the author of this report recommends continuing with the following

advanced exploration works. :

1) 1: 5,000 mapping of all areas that have not been mapped so far. The objective

is to leave 100% of the project with a geological mapping standard since it is

highly probable to recognize other alteration zones with quartz veins that may

have copper and gold mineralization in depth (photograph 26).

Photograph 26: In blue the area mapped in this report, in red the area that remains to be

mapped at a 1: 5,000 scale.

2) 1: 500 mapping of the Hydrothermal Alteration Zone and construction of

trenches for rock sampling and chemical analysis (photograph 27). The

47

objective of this sampling is to make a detailed geochemical map for copper,

gold, cobalt and silver in each of the quartz-Limonite veins that have been

mapped within this area (the main exploration target that the Flamenco

Project has).

Photograph 27: 1: 500 scale mapping area in the Hydrothermal Alteration Zone and the location of

the trenches to perform detailed geochemistry in each of the quartz-Limonite veins.