Ortiz Gold Project


The Ortiz gold project consists of 170 contiguous square kilometres of the Ortiz Land Grant in Santa Fe County, New Mexico. Historical production exceeded 350,000 ounces of gold.  Drilling by several companies up to the early 1990’s indicated significant gold contained in several deposits across the extensive project area.  

Santa Fe confirmed a JORC Compliant Measured and Indicated Resource on two of the deposit areas at Ortiz totalling 0.973 million oz gold (plus 62,760 oz gold inferred resource) and 18,416 tonnes (40.6Mlb) copper estimated at Santa Fe’s Ortiz Project (refer ASX announcement dated 16 November 2012 for full details). The resource report noted that significant exploration upside exists on Carache and Lukas deposits, as well as other areas within the project which have existing historic resource estimates.

Ortiz Project, JORC Compliant Mineral Resource Estimate:

The two deposits; the Carache gold deposit and the Lukas gold-copper deposit are located 2.5km apart.  The Carache resource is 11.7 million tonnes at 1.58g/t gold, and has historical metallurgical work indicating low cost gravity recovery highly effective for the mineralisation style.  The Lukas gold-copper resource is lower grade, with 13 million tonnes at 0.91g/t gold, however with extremely low strip ratios with a significant portion of the mineralised stratigraphic unit outcropping.  Lukas deposit suggests similar low cost recovery options are available and currently being optimised to include copper recoveries from the Lukas deposit. The historic studies to date include optimisation with improved pay-back from commencing operations on the Lukas deposit, and also suggest the attractive economic viability of a high tonnage (2.7 million tpa), low cost gold operation.

The JORC Resource is based on 109,355m (358,684 ft) of core and reverse circulation drilling. The resource estimation has been prepared by Independent Mining Consultants, Inc. (IMC) and is reported in accordance with the JORC Code (2004).

In 2005, an independent, though not JORC Compliant, study based on the 1992 historic resource estimation, evaluated the open pit mining of approximately 1.0 million ounces of gold from the Carache and Lukas gold deposits. This study, together with other historical independent evaluations and studies (including metallurgical test work) suggested that low cost recovery options may be available for the deposits. Previous studies are currently being re-evaluated and optimised to include copper recoveries from the Lukas deposit.

The JORC Resource will be incorporated into a Scoping Study to be completed by mid-year 2013, with Environmental permitting studies to commence in 2013.

Project Location and Tenure

The Ortiz Gold-Copper Project consists of 171 contiguous square kilometres of the Ortiz Land Grant in Santa Fe County, New Mexico (Figure 1). Santa Fe’s land tenure is based on a lease agreement with Ortiz Mines, Inc. whereby Santa Fe has exclusive rights for exploration, development and mining of gold, silver, copper and other minerals on the area of the Ortiz Land Grant. The initial term of the lease extends until 2015 (in certain circumstances until 2022) and continues year-to-year thereafter for so long as gold or other leased minerals are produced in commercial quantities. The agreement provides for annual lease payments of US$130,000; a sliding-scale production royalty varying from 3% to 5% depending on the price of gold; the requirement that Santa Fe comply with governmental permitting and other regulations; and other terms common in mining leases of this type. The mineral and surface rights have been severed so Santa Fe also will have to reach agreements with current surface right owners for further development of the project.

The Ortiz Gold Project is located 48 kilometres (30 miles) by road northeast of Albuquerque, New Mexico. The villages of Golden, Madrid and Cerrillos, with a combined population of less than 1,000 people, lie in and adjacent to the project. Paved New Mexico Highway 14 traverses the western portion of the Project. The main line of the Santa Fe Railway crosses the northeast corner of the Project. A network of unimproved ranch roads provides access to the various land holdings. High-voltage electric power lines cross the southern part of the Project.

History of Mining and Exploration

Historic mining was conducted within the Project by Consolidated Gold Fields, which in 1973 leased the eastern portion of the Land Grant from Ortiz Mines, Inc. and developed and mined the Cunningham Hill deposit (Ortiz Mine). In the period 1980-1986, Gold Fields produced approximately 250,000 ounces of gold from an open-pit, heap-leach operation. Historical production exceeded 350,000 ounces of gold.

Drilling by several companies up to the early 1990’s resulted in historical resource estimations as part of a 1990 pre-feasibility study completed by Pegasus Gold Corporation in Joint Venture with LAC Minerals (USA) Inc. The sampling database and resource estimate was audited by Independent Mining Consultants, Inc. (IMC) in 1992. IMC subsequently updated the mineral resource estimate in 2006 for AZCO Mining Inc. (now Santa Fe Gold) to allow for higher prevalent commodity prices and evolving reporting standards such as Canada’s NI 43-101 standards.

Geology and Mineralization

The Ortiz Gold Project is underlain by mid-Tertiary monzonite and latite porphyry stocks, plugs, dikes and sills that have intruded Paleozoic to early-Tertiary sedimentary rocks. The intrusive rocks are part of the Ortiz Porphyry Belt. Structurally, the Grant straddles the Tijeras-Canoncito fault system, a northeast trending zone of a deep-seated crustal break. The fault zone has been active intermittently since Precambrian time and has provided a zone of weakness for the emplacement of granitic magmas and associated mineralization. Late-stage volcanism resulted in the formation of breccia pipes and zones of intense fracturing that provided access for hydrothermal fluids carrying gold, silver, tungsten, molybdenum and base metals.

The Ortiz Porphyry Belt exhibits a number of styles of mineralisation that occur in a variety of geologic settings:

  • Gold mineralisation is associated with a collapse breccia at Carache Canyon.
    • The Carache gold deposit, relatively coarse-grained free gold is contained in open space fractures developed in four gently dipping andesite porphyry sills and a sandstone unit around the collapsed margins of a breccia pipe (see figure below).

  • Copper – gold skarns in calcareous rocks at Lukas Canyon and San Pedro.
    • At the Lucas gold-copper deposit, mineralisation occurs in garnet skarn developed in a limestone unit, the outcropping portion of which forms a dip slope at the surface (see figure below).

  • Gold-tungsten mineralisation in a breccia pipe at Cunningham Hill adjacent to a volcanic vent, the Ortiz diatreme.
  • Copper and gold disseminated in stockworks and fractures in monzonite at the Cunningham Gulch (gold) and Cerrillos (copper-gold) deposits (bulk tonnage low-grade “porphyry”-type deposits).
  • Lead – zinc – silver veins at the Cash Entry and other old mines north of Cerrillos.
  • Lead – zinc – silver pipe-like mantos in limestone at the Carnahan mine, San Pedro area.
  • Molybdenite in stockworks and fractures in the San Lazarus monzonite stock, San Pedro area.
  • Placer gold deposits on Cunningham Mesa, on the northern pediment of the San Pedro Mountains, and in most of the arroyos draining the Ortiz and San Pedro Mountains.

 

Competent Person Statement

The information included in this release that relates to Santa Fe Gold resources for the Ortiz Project is based on information compiled by Michael G. Hester, FAusIMM. Mr. Hester is employed as Vice President and Principal Mining Engineer by Independent Mining Consultants, Inc. (IMC) of Tucson, Arizona, USA, and has worked as a consultant in resource modeling, mine evaluation and mine development for 33 years in precious and base metal deposits.  Mr. Hester has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person.  Mr. Hester consents to the inclusion in the release of the matters based on his information in the form and context in which it appears.