The ANCAL Project is located within the Middle Cauca Gold Belt, a highly prospective area with potential for porphyry-related gold-copper and epithermal precious metal deposits. The area is being explored by numerous companies including Anglo Gold Ashanti (La Colosa), Gran Colombia Gold (Marmato), Continental Gold (Buriticá), Sunward Resources (Titiribí), Colombia Crest (Arabia) and Bellhaven Copper and Gold (La Mina). The geology of the properties includes Paleozoic metamorphic rocks and Tertiary sedimentary and volcano-sedimentary rocks which have been intruded by igneous rocks of recent ages with the potential for two types of mineralization: porphyry-related gold-copper and epithermal gold-silver vein mineralization within the metamorphic, volcanic and intrusive rocks.
The Company completed its phase one induced polarization (“IP”) geophysical program on its Orofino property (within the 28,000 ha ANCAL property package), located in the Middle Cauca Gold Belt in the Antioquia department of Colombia.
Over 3,000 geochemical samples gathered in the Orofino property by previous owners have outlined gold-copper anomalies indicating potential for porphyry Au-Cu type mineralization. To allow for better targeting, Tolima conducted a preliminary geophysical survey (IP-3D model), which has confirmed the coincidence of the geochemical anomaly with an IP anomaly. Tolima has now successfully intercepted mineralized areas corresponding to the geophysical anomaly, with the first two drill holes (DDH-01 and DDH-02) of its drilling campaign in the property.
Drilling Program at Orofino area
The Company conducted 4 diamond drill holes; this completes 2,245 meters of 10,000 meters in its current campaign within the Orofino property.
Vertical drill hole Orofino DDH-01 was drilled to a depth of 536 meters, of which 510 meters were mineralized with pyrite and hydrothermally altered. The dominant rock throughout the drill hole is black schist cut by 3 dacite porphyry dikes from 180 to 212 meters, 253 to 263 meters, and 342 to 351 meters.
Assays received from DDH-01 show both the schist and porphyries to host anomalous gold along with the pyrite dominant mineralization. Gold values tend to be elevated adjacent to the porphyry dykes indicating, along with alteration, that the gold mineralization is porphyry related.
Joint Venture with Solvista Gold Corporation
On July 30, 2012, Tolima and Solvista Gold Corporation ("Solvista") entered into a definitive agreement to consolidate a portion of their properties in the Middle Cauca Gold Belt of Colombia, in accordance with a binding letter of intent dated April 29, 2012. Under the agreement, Solvista will acquire a 50% ownership interest in five Tolima properties in the Caramanta district which is part of the Marmato (ANCAL) properties (H6455005, HHVN-07 (6418), H6455B005, DI5-151 and H6170005) with an aggregate surface area of 2,365 hectares, and Tolima will acquire 100% of two Solvista properties in the same district (FGS-14002X and JIT-08301) with an aggregate surface area of 2,064 hectares, and also receive three million common shares of Solvista over a two year period: 1.8 million shares at closing and 600,000 shares on each of the first and the second anniversary of closing.
Solvista is funding all exploration expenditures for three years on the five Tolima properties in which it has earned an interest and will commission an independent NI 43-101 compliant technical report. At the end of such term, Solvista will have an option for three months to acquire the remaining 50% interest in such five properties for a consideration consisting of one million common shares of Solvista and a payment on resources/reserves of gold and gold equivalent, as follows:
- 10 USD/Oz of Inferred Resources
- 20 USD/Oz of Indicated Resources
- 40 USD/Oz of Measured Resources
- 60 USD/Oz of Probable Reserves; and
- 100 USD/Oz of as Proven Reserves
Tolima has the right to elect to receive this payment in cash or Solvista common shares priced at a 10 day volume weighted average trading price. If this option is not exercised by Solvista, the parties will advance and develop the properties as a joint venture. The parties will continue to explore further opportunities where they can consolidate their areas of interest and maximize their exploration potential.
In addition to the above, Solvista shall have a right of first refusal in case of any disposition by Tolima of the Solvista shares paid in consideration of this transaction. On its part, Tolima will have an option to participate in any equity financings or any issuance of securities of Solvista, as to maintain its equity participation in Solvista. In conjunction, the Company signed an amendment to the Marmato properties royalty agreement with the original vendor. The parties agreed to remove the properties in the Solvista agreement from the royalty agreement for consideration as follows: 36,000 of the 3 million Solvista shares upon closing, 20,000 additional Solvista shares of the 1,000,000 additional shares, if such option was exercised, plus 2% of any payment on resources/reserves of gold and gold equivalent on the properties.
Subsequent to the closing, Solvista announced a discovery during its preliminary drilling campaign with the following less than 1,000 meters away from Tolima’s Properties.
El Retén is the southernmost target along the three kilometre strike length of the Caramanta porphyry cluster and is less than 1,000 m away from Tolima’s properties.
Joint Venture with IAMGOLD Corporation
In October 2012, the Company entered into a binding letter agreement (the “Agreement”) with IAMGOLD Corporation (TSX:IMG; NYSE:IAG), as amended by an amending agreement (the “Amending Agreement”) dated June 27, 2013, whereby IAMGOLD will have the option to acquire up to a 70% interest in 26 mining properties comprising Tolima’s ANCAL project and for further joint development of these properties.
As consideration for the granting of the option, IAMGOLD has agreed to pay Tolima USD$1,000,000 in two equal installments of USD$500,000, the first one upon received upon signing of the Agreement, and the second received on or about March 29, 2013.
IAMGOLD may earn up to a 70% interest in the Properties as follows:
- IAMGOLD may earn a 51% interest in the properties by, within 30 months of the date of the Agreement, incurring at least USD$6,000,000 of exploration investment, or caused to be drilled not less than 12,000 meters of qualifying drilling;
- IAMGOLD may earn a further 9% interest in the properties by, within two (2) years of the exercise of the 51% option, incurring at least USD$6,000,000 of additional exploration investment, including no less than 12,000 meters of additional qualifying drilling; and
- IAMGOLD may earn a further 10% interest in the properties by, within three (3) years of the exercise of the 9% option, completing a feasibility study prepared in accordance with National Instrument 43-101.
As consideration for the entering into of the Amending Agreement, IAMGOLD advanced Tolima US$354,600, which has been accounted for as a reduction in the property cost, upon signing of the Amending Agreement to cover current liabilities in Marmato Gold S.A. Sucursal S.A. The advance was considered Qualifying Expenses under the Amending Agreement.
IAMGOLD is the operator of the Properties with the oversight of a Management Committee appointed by both parties.