Santa Teresa Gold Project

THE SANTA TERESA GOLD PROJECT (50%)

The Santa Teresa Gold Project is comprised of two mineral claims totalling 202 hectares located in the gold rich El Alamo district, approximately 100 km southeast of Ensenada, Baja California, Mexico; and 250 km southeast of San Diego, California, USA.

Background

In June 2020, Comet Resources Limited executed a Share Purchase and Joint Venture Agreement with the shareholders of El Alamo Resources Limited (EARL) for the 100% acquisition of the Santa Teresa Gold Project. Stage one of the acquisition was completed in August 2020 and Comet is now 50% owner of the Santa Teresa Gold Project. Comet has the option to increase ownership to 100% within two years. Read more

About the Project

The Project is prospective for high grade gold, with an existing Non-JORC Inferred Mineral Resource of 64,000oz Au at an average grade of 8.7g/t, reported at a cut-off grade of 4g/t. In addition to the two claims of the Project, two additional claims totalling a further 378 hectares in the surrounding El Alamo district are being acquired from EARL. Historical production in the surrounding El Alamo district estimated between 100,000 to 200,000oz gold.

The Project lies between 1,100 metres and 1,200 metres above sea level characterized by gently rolling hills. The climate is dry seasonal arid to semi-arid, with long, warm summers and cool winters. Annual rainfall averages 30 centimetres. Electrical power lines are available approximately 10 kilometres from the Project.

The Project is located within the Central Zone of the Peninsular Ranges Batholith of Baja California. The Central Zone comprises back-arc and slope basin sedimentary rocks that have been intruded by Cretaceous granitoids. Intrusion was accompanied by regional metamorphism, deformation and pervasive foliation development, which records southwest-northeast convergence. Emplacement of a mafic and felsic dyke swarm along the foliation is constrained between 120 and 100 Ma.

The Project is underlain by quartz diorite intrusive cut by older gabbro and hornblende porphyry, and younger diabase dykes. The dykes in part define the trace of the Alamo fault zone, which is host to economically significant, northwest-trending, southwest dipping to near vertical mesothermal lode-gold quartz vein systems. The quartz veins range in width from a few centimetres to 3 metres (m) and commonly occur in sets of 2 or 3 parallel veins that may pinch, swell, bend or split into stringers. The principal surface veins of the Santa Teresa Gold Project from northeast to southwest are the: Princessa, Aurora, Cruda, Borracha, North and South Spider, Quinota, Camion, La Americana, Alamo and Polvorin veins.

Modern exploration at Santa Teresa Gold Project includes the 2008 diamond drilling program of 32 holes totalling 7,025 metres by Premier Gold Mines Limited returning the following high-grade intersections:

  • 2m @ 32.4g/t gold from 19m
  • 1m @ 958.4g/t gold from 239m
  • 2.5m @ 38g/t gold from 174m
  • 3.9m @ 39g/t gold from 121m
  • 3m @ 19.9g/t gold from 214m
  • 1m @ 125.9 g/t gold from 83m
  • 3.1 @ 14.4g/t gold from 59m
  • 3.1m @ 16g/t gold from 101m

1992 trenching by Dakota Mining Corporation; and various prospecting visits, which define 12 gold-bearing quartz vein lodes over a total strike length of 500 m and to a maximum vertical depth off 230 m. Given the limited extent of the drilling, and the complex, multiple narrow vein nature of the deposit, there is necessarily uncertainty associated with the geological model. Quartz veins of the Project are interpreted to range in estimated true-width from 0.7 to 2.0 metres. They occur in sets of two or three sub-parallel veins typically spaced between 3 and 10 metres apart, one of which may be significantly higher grade. Lower grade veins pairs exhibit somewhat greater lateral continuity. Higher grade values may occur where veins are oriented at low acute angles to the majority or where veins intersect. It is unclear whether a shallow south easterly plunge of high grade gold values is a result of shear zone kinematics or geometric “paneling” of the deposit due to post-mineral diabase dykes. There is insufficient structural data available currently to predict the orientation of ore shoots within the host shear zone.

The Santa Teresa Gold Project Inferred Mineral Resource estimate was estimated within three dimensional solids that were created from cross-sectional lode interpretation. The Borracha, Cruda and Aurora veins were cut off between 20 to 40 m below surface due to post-mineral dykes and the presence of historic underground workings. The upper contact of the remaining veins has been cut by the topographic surface. Grade was estimated into a block model with parent block size of 5 m (X) by 5 m (Y) by 5 m (Z) and sub-blocked down to 1 m (X) by 1 m (Y) by 1 m (Z).

No density measurements have been collected to date on this property, and as such a nominal density of 2.79 kg/m3 was assigned to the mineralization. Grade estimation of gold was performed using the Inverse Distance squared (ID2) methodology.

Due to the uncertainty of the position and extent of the post un mineralised dykes within the Santa Teresa deposit a 30% dilution to the resource has been applied.

The Inferred Mineral Resource estimate has been reported at a range of gold cut-offs. No portion of the current Inferred Mineral Resource has been assigned to the ‘Indicated’ or “Measured” category. The Santa Teresa uses a cut-off grade of 4.0g/t Au, which is considered suitable to demonstrate reasonable prospects for economic extraction. The Santa Teresa Gold Project Inferred Mineral Resource has been calculated at 230,000 tonnes at 8.7g/t Au for 64,000 ounces of gold using a 4g/t lower block cut off.

Historical drilling programs at the Project have generated multiple high grade intercepts, highlighting the potential exploration upside to the current resource, which is open at depth and along strike.

Binding Gold Streaming and Royalty Financing

The acquisition is further enhanced by anticipated funding from Raptor Capital International Limited (Raptor) of $US6M (up to US$20M) via a gold stream and royalty facility for which non-binding terms have been concurrently negotiated by Comet management. The use of proceeds is to fund development activities at Santa Teresa and the facility will be secured only against the Santa Teresa Gold Project itself and any further tenements acquired in the region. Comet has made it a condition of the acquisition of the Project that the stream and royalty financing is concluded to its satisfaction.

As of August 2020, documentation of the binding gold streaming and royalty financing (Financing) with Raptor to fund activities at the Project for up to US$20 million (initial minimum of US$6 million) is advanced and is expected to complete in the near-term.

Current Work Programs read more

  • Work to commence on re-assaying of historic drill core and preparation of a JORC compliant Mineral Resource estimate
  • Initial field activity being planned
  • Exploration upside and opportunity to extend current mineralisation due to the under-explored nature of the tenements
Figure 3 – Visible gold in drill core from prior exploration at Santa Teresa.