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NI 43-101 TECHNICAL REPORT Olza Zinc-Lead Project, Zawiercie, Rokitno, and Chechlo Exploration Permits, Poland
Prepared for: Rathdowney Resources Limited
Effective Date for Mineral Resources; 18 May 2012 Effective Date for Property Titles: 20 September 2012
Report Date: 18 October 2012
Project Number: 112114
Prepared by: Chlumsky, Armbrust & Meyer, LLC
Fred Barnard, Ph.D., CPG Robert L. Sandefur P.E.
12600 W. Colfax Ave., Suite A-140 Lakewood, Colorado 80215 Telephone: (303) 716-1617 Fax: (303) 716-3386 TABLE OF CONTENTS Page No. Section
1.0 SUMMARY ...... 1 1.1 Introduction ...... 1 1.2 Property ...... 1 1.3 Setting and Local Resources ...... 2 1.4 History ...... 2 1.5 Geology and Mineralization ...... 2 1.6 Exploration and Drilling ...... 3 1.7 Sampling and Analysis ...... 4 1.8 Data Verification ...... 5 1.9 Mineral Resource Estimates ...... 5 1.10 Interpretation and Conclusions ...... 7 1.11 Recommendations ...... 8 2.0 INTRODUCTION AND TERMS OF REFERENCE ...... 10 3.0 RELIANCE ON OTHER EXPERTS ...... 12 4.0 PROPERTY DESCRIPTION AND LOCATION ...... 13 4.1 Zawiercie, Rokitno, and Chechlo Exploration Permits ...... 13 4.2 Mineral Exploration and Mining Regulations ...... 19 4.3 Fees and Royalties ...... 22 4.4 Environmental Issues ...... 22 4.4.1 Nature Preserves ...... 22 4.4.2 Cultural Issues ...... 23 4.4.3 Groundwater Issues ...... 23 5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY ...... 24 5.1 Geographic Setting ...... 24 5.2 Infrastructure ...... 24 5.3 Social and Environmental Setting ...... 25 6.0 HISTORY ...... 26 6.1 Previous Property Ownership ...... 26 6.2 Historical Drilling ...... 26 6.2.1 Zawiercie Historical Drilling ...... 27 6.2.2 Rokitno Historical Drilling ...... 31 6.2.3 Chechlo Historical Drilling ...... 32 6.3 Historical Core Recovery ...... 33 6.4 Historical Sample Preparation and Analysis ...... 35 6.5 Historical Exploration Results ...... 36 6.5.1 Zawiercie ...... 36 6.5.2 Rokitno ...... 39 6.5.3 Chechlo ...... 41 6.5.4 Historical Tonnage-Grade Estimates ...... 43 6.5.5 Zawiercie ...... 45 6.5.6 Rodaki-Rokitno Szlacheckie ...... 46 6.5.7 Chechlo ...... 47 7.0 GEOLOGICAL SETTING AND MINERALIZATION ...... 49 7.1 Regional Geological Setting ...... 49 7.2 Regional Stratigraphy ...... 50 7.3 Local Stratigraphy ...... 51 7.4 Zawiercie Concession ...... 53
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7.4.1 Zawiercie Geology ...... 53 7.5 Rokitno - Property Geology and Mineralization ...... 56 7.5.1 Rokitno Geology...... 57 7.5.2 Rokitno Mineralization ...... 62 7.6 Chechlo - Property Geology and Mineralization ...... 63 7.6.1 Chechlo Geology ...... 63 7.6.2 Chechlo Mineralization ...... 65 7.7 Silver Content of Olza Project Mineralization ...... 66 8.0 DEPOSIT TYPES ...... 69 9.0 EXPLORATION ...... 71 9.1 Exploration methods ...... 71 9.1.1 IP-Resistivity Surveys ...... 71 9.1.2 Gravity Surveys ...... 72 9.2 Exploration Potential ...... 73 10.0 DRILLING ...... 76 10.1 Drilling Program ...... 76 10.2 Drilling Procedures ...... 78 10.3 Core Processing by Rathdowney ...... 79 10.4 Drilling Results ...... 81 10.5 Bulk Density ...... 86 10.5.1 Definitions ...... 86 10.5.2 Methodology ...... 86 10.5.3 Results ...... 88 11.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY ...... 90 11.1 Security ...... 91 11.2 Sample Preparation ...... 91 11.3 Analyses ...... 91 11.4 Quality Assurance/Quality Control ...... 92 11.4.1 Methodology ...... 92 11.4.2 Standards ...... 93 11.4.3 Blanks ...... 96 11.4.4 Duplicates ...... 98 11.5 CAM Statement of Opinion ...... 100 12.0 DATA VERIFICATION...... 101 12.1 Verification of Historical Data ...... 101 12.1.1 Review of Historical Drill Samples ...... 101 12.1.2 Re-Survey of Historical Drill Collars ...... 101 12.1.3 Recovery and Transcription of Historical Data ...... 102 12.1.4 Validation of Historical Database ...... 105 12.1.5 Comparison of Historical and Rathdowney Drill Intercepts ...... 112 13.0 MINERAL PROCESSING AND METALLURGICAL TESTING ...... 113 14.0 MINERAL RESOURCE ESTIMATION ...... 114 14.1 Verification of Historical Data ...... 114 14.2 Methodology of Resource Estimation ...... 114 14.3 Database ...... 114 14.4 Modeling of the Deposit ...... 115 14.5 Assay Composites ...... 116 14.6 Variography ...... 117
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14.7 Resource Block Model ...... 118 14.8 Interpolation Plan ...... 119 14.9 Mineral Resource Classification ...... 119 14.10 Mineral Resource Tabulation ...... 122 14.11 Block Model Validation ...... 123 14.12 Additional Model Validation by CAM ...... 125 14.13 Comparison of Historical and Current Estimates...... 126 15.0 MINERAL RESERVE ESTIMATES ...... 127 16.0 MINING METHODS ...... 127 17.0 RECOVERY METHODS ...... 127 18.0 PROJECT INFRASTRUCTURE ...... 127 19.0 MARKET STUDIES AND CONTRACTS ...... 127 20.0 ENVIRONMENTAL STUDIES, PERMITTING & SOCIAL OR COMMUNITY IMPACT ...... 127 21.0 CAPITAL AND OPERATING COSTS ...... 128 22.0 ECONOMIC ANALYSIS...... 128 23.0 ADJACENT PROPERTIES ...... 128 24.0 OTHER RELEVANT DATA AND INFORMATION ...... 128 25.0 INTERPRETATION AND CONCLUSIONS ...... 129 25.1 General ...... 129 25.2 Zawiercie and Rokitno Concessions ...... 129 25.3 Chechlo Concession ...... 130 25.4 Mineral Resource Estimation ...... 131 26.0 RECOMMENDATIONS ...... 132 26.1 Proposed Work Program ...... 132 26.1.1 Objectives ...... 132 26.1.2 Investigation of Mineral Potential ...... 133 26.1.3 Work Program Components and Budget for 2012-2013 ...... 135 26.2 Drilling, Sampling, and Analysis ...... 135 27.0 REFERENCES ...... 137 27.1 Published Geological-Technical Reports ...... 137 27.2 Internal and Consulting Reports ...... 138 27.3 Legal Documents ...... 139 28.0 DATE AND SIGNATURE PAGE ...... 140 28.1 Fred Barnard ...... 140 28.2 Robert Sandefur ...... 142
Tables
1-1 Inferred Mineral Resources ...... 6 4-1 Exploration Permit Data for Olza Project ...... 15 6-1 Historical Drilling - Zawiercie I Deposit ...... 30 6-2 Historical Drilling - Zawiercie II Deposit ...... 30 6-3 Historical Drilling - Rodaki-Rokitno Szlacheckie deposit ...... 32 6-4 Historical drilling at the Chechlo deposit...... 32 6-5 Analytical Laboratories Used Historically ...... 35 6-6 Historical Drilling at the Chechlo Deposit ...... 39
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6-7 Historical Drilling at the Chechlo Deposit ...... 41 6-8 Zawiercie Historical Estimates by PGI ...... 45 6-9 Rodaki-Rokitno Szlacheckie Historical Estimates by PGI ...... 46 6-10 Chechlo Historical Estimates by PGI ...... 47 10-1 Statistical Summary of Bulk Density Measurements ...... 88 11-1 Summary of Sample Types ...... 93 11-2 External QA/QC Frequency Summary ...... 93 11-3 Standards Used in 2011-2012 Drill Programs ...... 93 12-1 Estimation Parameters...... 111 12-2 Estimation Results in First Test Area ...... 111 12-3 Estimation Results in Second Test Area ...... 112 14-1 Block Model Geometric Parameters ...... 119 14-2 Inferred Mineral Resources ...... 123 14-3 Comparison of Historical and Current Estimates for Zawiercie I Deposit ...... 126 26-1 Proposed Work Program for 2012-2013 (CAD$) ...... 135
Figures
4-1 Location of Olza Project ...... 13 4-2 Locations of Rathdowney Concessions ...... 14 4-3 Location of Zawiercie Concession ...... 16 4-4 Location of Rokitno Concession ...... 17 4-5 Location of Chechlo Concession ...... 18 6-1 Historical Drilling of Zawiercie I Deposit ...... 28 6-2 Historical Drilling of Zawiercie II Deposit ...... 29 6-3 Historical Drilling of Rodaki-Rokitno Szlacheckie Deposit ...... 31 6-4 Historical Drilling of Chechlo Deposit ...... 33 6-5 Historical Drill Holes at Zawiercie I Red Color Indicates Significant Zn-Pb Intercept 37 6-6 Diamond Drill Holes at Zawiercie II Red color indicates significant Zn-Pb intercept 38 6-7 Historical Drill Holes at Rokitno Red color indicates significant Zn-Pb intercept .. 40 6-8 Historical Drilling at Chechlo Red color indicates significant Zn-Pb intercept...... 42 6-9 Deposits Defined by Historical Drilling ...... 43 6-10 Comparison of Pre-2000 Polish Resource Terminology with CIM Definitions ...... 44 7-1 Tectonic Setting of the Olza Project (Adapted from Leach, 2007) ...... 49 7-2 Stratigraphy of the Olza Region (Adapted from Osika, 1990) ...... 50 7-3 Cross-section through the Olza Region Drawn Along Line A-A’ in Figure 7-1 ..... 52 7-4 Geology of the Zawiercie Concession Area (Source: Rathdowney Compilation) ... 54 7-5 Location of Cross-sections in Figure 7-6 in Relation to the Zawiercie I Deposit Outline ...... 54 7-6 Detailed Geological Cross-Sections of the Zawiercie I Zn-Pb Deposit Area ...... 55 7-7 Geology of Rokitno Permit Area (Source: Rathdowney Compilation) ...... 58 7-8 Location of Cross-Sections in Figure 7-9 in Relation to Rodaki-Rokitno Szlacheckie Deposit Outline ...... 59 7-9 Geological Cross-sections Through the Rodaki-Rokitno Szlacheckie Zn-Pb Deposit Area ...... 60 7-10 Stratigraphic Legend for Figure 7-9 (Source: Blajda, et al., 2000) ...... 61 7-11 Geology of Chechlo Permit Area (Source: Rathdowney Compilation) ...... 64
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7-12 Ag-Pb Plot for 179 Samples...... 66 7-13 Ag-Zn Plot for 179 Samples ...... 67 7-14 Locations of 685 Samples Investigated. UTM coordinates are shown...... 67 7-15 Ag-Zn Plot for South Domain. N = 155 Assays ...... 68 7-16 Ag-Zn Plot for North Domain. N = 530 Assays ...... 68 9-1 Grade Times Thickness Map, Based on a Combination of Historical and Rathdowney Drilling ...... 74 10-1 Drilling on Zawiercie and Rokitno Concessions ...... 77 10-2 Drill Site OLZ-046 at Zawiercie, with Rathdowney Geologist Reviewing HQ Core 80 10-3 Drill Core with Mineralization in Hole OLZ-045 (Photo by CAM, November 2011) 80 10-4 Reference Core Library in Logging Building. Skeletal Reference Core and Stratigraphic Column Are Shown...... 80 10-5 Core Racks in Logging Building. Summaries of Core-Processing Protocols on the White-Board ...... 80 10-6 Cross-section A-A’ Showing Drilling Results ...... 82 10-7 Cross-section B-B’ Showing Drilling Results ...... 83 10-8 Cross-section C-C’ Showing Drilling Results ...... 84 10-9 Drill Plan showing East Mineralized Corridor...... 85 10-10 Standard Aluminum and Titanium Cylinders (Photo by CAM, November, 2011) . 87 10-11 Measurements of Standard Aluminum Cylinder of Bulk Density 2.70 ...... 87 11-1 Flow Chart for 2011-2012 Core Processing and Analysis ...... 90 11-2 Zn Quality Control Chart for 2011-2012 Drill Program ...... 94 11-3 Pb Quality Control Chart for 2011-2012 Drill Program ...... 95 11-4 Silver Quality Control Chart for 2011-2012 Drill Program ...... 95 11-5 Zn Monitoring Chart of Blanks for 2011-2012 Drill Program...... 96 11-6 Pb Monitoring Chart of Blanks for 2011-2012 Drill Program ...... 97 11-7 Ag Monitoring Chart of Blanks for 2011-2012 Drill Program ...... 97 11-8 Zn Scatter Plot of Inline Duplicates for 2011-2012 Drill Program ...... 98 11-9 Pb Scatter Plot of Inline Duplicates for 2011-2012 Drill Program ...... 98 11-10 Ag Scatter Plot of Inline Duplicates for 2011-2012 Drill Program ...... 99 11-11 Zn Scatter Plot of Inter-lab Duplicates for 2011-2012 Drill Program ...... 99 11-12 Pb Scatter Plot of Inter-lab Duplicates for 2011-2012 Drill Program...... 99 11-13 Ag Scatter Plot of Inter-lab Duplicates for 2011-2012 Drill Program ...... 99 12-1 Casing of Historical Drill Hole ZO 4-16. Photo by CAM, November, 2011 ...... 102 12-2 Monument of Historical Drill Hole ZN 6-5. Photo by Rathdowney, 2012 ...... 102 12-3 Plan View of Historical Drilling and Mineralized Volume ...... 107 12-4 Plan View of Current Drilling and Mineralized Volume ...... 108 12-5 Historical Drilling Descriptive Statistics ...... 109 12-6 Current Drilling Descriptive Statistics ...... 110 14-1 Plan view of Drill Holes and Modeled Mineralized Horizon ...... 116 14-2 Log-Log Cumulative Frequency Plot for Zn Assays of Composites ...... 117 14-3 Downhole Normal-Scores Variogram ...... 118 14-4 Omnidirectional Normal-Scores Variogram ...... 118 14-5 Locations of Estimated Blocks ...... 121 14-6 Inferred Resource Footprint ...... 122 14-7 Swath Plot for % Pb...... 124 14-8 Swath Plot for % Zn ...... 124 14-9 Swath Plot for Bulk Density ...... 125
CAM 112114 v Rathdowney Olza Zinc-Lead Project 18 October 2012 TABLE OF CONTENTS Page No. Figures
26-1 Olza Concessions and Deposits ...... 133
CAM 112114 vi Rathdowney Olza Zinc-Lead Project 18 October 2012
1.0 SUMMARY
1.1 Introduction
Chlumsky, Armbrust and Meyer, LLC (herein “CAM”) prepared this Technical Report on the Olza zinc- lead project in Poland at the request of Rathdowney Resources Ltd. (herein “Rathdowney”), a publicly- listed company in Canada. Purpose of the report is to disclose the first post-1977 drilling program carried out on the property, and the mineral resources defined, in compliance with National Instrument 43-101 Standards of Disclosure (“NI 43-101”).
This report contains data from drilling carried out by Rathdowney to 18 May 2012 (drill hole OLZ-178), which is the Effective Date for mineral resource estimation. The mineral resources were disclosed in a Rathdowney news release dated September 11, 2012. Drilling continues through the publication date of this report in October 2012. Mineral property data are current to 20 September 2012, the date of issuance of the Exploration Permit (“concession”) for Chechlo.
CAM’s Qualified Persons, Fred Barnard Ph.D., CPG (geologist) and Robert L. Sandefur, P.E. (geostatistician) visited the Olza project during November 2, 4, and 5, 2011, while drilling was in progress. Mr. Sandefur also visited the project during March 22-26, 2011, and again during March 27-29, 2012, to discuss drill hole density, core recovery, and related drilling issues.
The information in this report is from CAM’s direct field examinations in Poland, data supplied by Rathdowney, and information in a 2010 Technical Report by CSA, which was written prior to any drilling on the property by Rathdowney. CAM reviewed and analyzed this data and has drawn its own conclusions therefrom.
The discussion of Polish mining law in this report was prepared by Rathdowney Polska, as no official English translation was available of the Polish Geological and Mining Law of 2011. Information about the validity of exploration and environmental permits was provided directly to CAM in a letter from Marekwia and Plawny, Attorneys at Law, in Katowice, Poland, dated 17 October, 2012.
1.2 Property
The property comprises three adjoining Exploration Permits (“concessions”) for the prospecting & exploration for zinc and lead ores, named Zawiercie, Rokitno, and Chechlo. They are approximately 60 kilometres northwest of the city of Krakow in southern Poland, and have a total surface area of 152.65 square kilometres. All were issued for 5 years, starting in May 2010 for Rokitno, July 2010 for Zawiercie, and September 2012 for Chechlo. The fees for issuance of the permits have been paid by Rathdowney,
CAM 112114 1 Rathdowney Olza Zinc-Lead Project 18 October 2012
and Rathdowney has all the necessary permits in place to conduct its ongoing drilling and ground geophysics program. Rathdowney does not hold any surface title within the Olza project area.
1.3 Setting and Local Resources
The Olza project is within the North European Plain, a relatively flat area with an average elevation between 300-350 metres above sea level. Within the project area, there is ample open land available for potential tailings storage areas, potential waste disposal areas, and potential processing plant sites. Exploration and mining activities can be carried out all year.
The proximity of the properties to historic Silesian mining centres, including the large underground Pomorzany zinc-lead mine and the Boleslaw zinc smelter complex, located some 20km to the south, provide a well-established infrastructure and access to modern mining expertise and skilled workforce. The Pomorzany mine, one of several historical zinc-lead mines in the area, is the only mine remaining in operation and the major feed source for the Boleslaw zinc refinery. It is due to close in 2014 due to depletion of ore reserves, but the proximity of the its concentrator and tailings ponds, which still have a large storage capacity available, is of potential interest to the Olza project.
1.4 History
The region has long been known for its mineral occurrences, with considerable ancient production from the shallow zinc-lead sulfide deposits in the region, but none from the current property. During 1953- 1988, several Polish state organizations explored for zinc-lead on the Olza property in the area and drilled over 180,000 metres, using Soviet-era practices. Until award of the permits to Rathdowney, the zinc-lead deposits of these areas were never subject to modern exploration by private-sector companies.
Historical tonnage-grade estimates were carried out on several occasions by the Polish Geological Institute on the Zawiercie I and II, Rodaki-Rokitno Szlacheckie, Chechlo, and Marciszow Zn-Pb deposits, largely using the same source data, but utilizing varying economic parameters at different times. The Soviet-style mineral resource classification system was used. Results are tabulated in Section 6 of this report. The historical estimates are not treated by Rathdowney as current mineral resources. Validation of historical drill results may allow some of the historical data to be used in conjunction with Rathdowney results to estimate mineral resources.
1.5 Geology and Mineralization
Zinc and lead mineralization of Mississippi Valley Type (MVT) occur at the Olza project, as elsewhere in the Upper Silesian region. MVT deposits are well-known world-wide, and are described in numerous published articles: major examples include Lisheen and Navan (Ireland), Pine Point (Canada), and Tri-
CAM 112114 2 Rathdowney Olza Zinc-Lead Project 18 October 2012
State/Joplin and Viburnum/Buick (USA). Olza mineralization clearly fits the MTV model, with deposit mineralogy dominated by sphalerite and galena, plus associated marcasite, and subordinate calcite, dolomite and locally barite.
The Olza project mineralization is principally hosted by dolomites of the Middle Triassic Muschelkalk Formation. Beneath the Triassic are Carboniferous and Devonian sedimentary strata. The Triassic is overlain by Jurassic limestone, and glacial debris, and outcrops of the strata of interest do not occur within the project area. The pre-glacial strata dip very gently (3-5°) towards the NE and regionally are broken into a series of horsts and grabens by steeply-dipping faults.
Within the Lower Muschelkalk, the original stratigraphic units have been intensively dolomitized, and the resultant unit has historically been called the “Ore-Bearing Dolomite”, or “OBD”, since it is difficult to distinguish the original beds. The OBD, which is 30 to 80 metres thick, is an epigenetic/diagenetic alteration, which, although mostly restricted to the above strata, is still somewhat discordant.
The most common zinc-lead deposits at Olza are the stratiform to podiform bodies, such as those in the Zawiercie I deposit, which is the deposit drilled recently by Rathdowney. The thickness of the stratiform deposits is quite irregular, reaching 13 metres, while the lateral extent of individual pods or lenses making up the deposit is typically 150-200 metres. Breccia-pipe mineralization consisting of discordant, subvertical bodies of dissolution collapse breccias, is also important in the project area, as shown by historical drilling in the Chechlo area, but Rathdowney has not yet drilled any such bodies.
Analysis of 685 early Rathdowney-drilled assay intervals with detectable Ag values from the Zawiercie I deposit shows no significant correlation of Ag with Pb, but an obvious positive correlation with Zn. The issue of silver in the Olza mineralization should be kept in mind during further evaluation of the project.
1.6 Exploration and Drilling
As the Olza area lacks exposures of mineralized rock, the bulk of work conducted to date on the properties by Rathdowney was diamond drilling. Two localized Induced Polarization/Resistivity surveys were also carried out, but the results were deemed unsatisfactory for continuing such work.
The Rathdowney drilling program reported herein extended from June 2011 to May 18, 2012. Drilling was carried out on the Zawiercie and Rokitno concessions, but not on the Chechlo concession, which had not been granted to Rathdowney as of May. Drilling has continued since May.
The initial mineralized trend investigated on the Rokitno and Zawiercie concessions (the East Mineralized Corridor) follows a curvilinear pattern. Total strike length of this mineralization is approximately 10 km
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and it is up to 1 km wide. Zinc and lead values are generally restricted to the flat-lying dolomitic unit, the OBD, at depths ranging from 100 to 250 metres below surface. Almost all the mineralization encountered is in fresh sulfides, with minimal oxidation.
Drilling of 178 core holes totaling 21,974 metres was carried out by wireline equipment. The smallest core was NQ size (47.6 mm diameter), and over half was HQ (63.5 mm diameter). The deepest hole was 199 metres, while the average depth was 123 metres. All were drilled vertically. The mean core recovery was 86.4%.
Core was processed by Rathdowney geological staff in the project area, near Rokitno, Poland. CAM reviewed the core-processing facility and procedures, and is satisfied that processing was carried out using standardized procedures, to industry standard.
Rathdowney staff made numerous bulk-density measurements on core. Cores were air-dried overnight or longer, but were not oven-dried, prior to weighing and immersion. The film-coated core results were used in resource estimation, each measurement being placed into the database for use in resource estimation. CAM recommends that a trial be carried out, wherein fifty or so core samples are air-dried overnight, then also dried for 8 hours or more at 105 degrees C.
1.7 Sampling and Analysis
Sample preparation and chemical analysis were undertaken at OMAC Laboratories Ltd. in Ireland, an ISO/IEC-accredited laboratory totally independent of Rathdowney. Rathdowney submitted 4,944 Olza project core samples for preparation. Samples from the mineralized-type analytical stream were assayed for Zn, Pb, and Ag by multi-acid digestion with ICP-AES finish (ALS/Omac code: ICPORE). In addition, all host (wall rock) samples and mineralized samples were assayed by four-acid digestion with ICP-AES finish for Pb, Zn, and Ag. Multi-element analyses were variously for 16, 33, or 45 elements. Rathdowney instituted a QA/QC program consistent with industry best practices, over and above the QA/QC programs of the laboratories involved.
Based on CAM’s site visits to the Rokitno core processing facility, review of core-processing protocols, and review of QA/QC procedures and control charts, CAM is satisfied that the analyses of Zn and Pb are sufficiently representative accurate for use in mineral resource estimation. After review of procedures, CAM is also convinced that security of samples is satisfactory on the Olza project.
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1.8 Data Verification
A key component of the Olza project is the existence of over 1,600 historical diamond-drill holes on the property. Location and assay data are available for the great majority of these, but no core. Rathdowney comprehensively identified, recovered, and digitized data from the historical drilling. The steps included recovery and transcription of historical records, re-survey of historical drill collars, digital data entry, and validation by CAM of the data entry. As a result, 1,679 historical drill holes were recorded, of which 1,055 had location and assay records.
The validity of the historical data for resource estimation was determined by estimating resources in two trial areas within the Zawiercie I deposit, once using only historical data, and again separately using only Rathdowney data from each of the same two areas. The tonnage and grade estimates from both areas checked closely between the two data sets indicating that the new and historical drilling are consistent enough that both may be used in the calculation of an inferred resource, when used in conjunction with Rathdowney drilling.
1.9 Mineral Resource Estimates
The resource model for Olza was done under the supervision and is the responsibility of Robert L Sandefur PE, CAM Principal Geostatistician and qualified person under NI 43-101. Based on a review of the geology and mineralization at Olza, CAM and Hunter Dickinson Inc. (HDI) agreed that a block model constrained within a wireframe of the mineralized horizon was suitable for characterizing the deposit. Under the supervision of CAM, HDI personnel interpolated values for bulk density, Zn, and Pb using inverse distance squared into the blocks using Vulcan™ v.8.1.4 software package and CAM classified the result. The Olza estimate has been validated by CAM by various methods including an independent Nearest Neighbor estimate. As discussed in Section 28.2, Mr. Sandefur visited the Olza project three times in 2011-2012 for purposes of the review.
The mineral resource for the portion of the Zawiercie I deposit drilled by Rathdowney was estimated using analytical information from drilling by Rathdowney and by several previous historical (pre-2000) operators. A total of 955 drill holes were used in estimation.
An un-rotated block model was constructed, using all relevant drilling data, and constrained by a wireframe of the mineralized horizon. The parent block size was 25 metres x 25 metres x 1 metre, with a sub-blocking size of 12.5 metres x 12.5 metres x 0.5 metres. The hanging wall and footwall of the mineralization were described using a threshold of 0.5% Zn + Pb, and the resulting solid was used as a hard boundary in the resource estimate.
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Values for bulk density, Zn and Pb were interpolated into the blocks using Inverse Distance Squared weighting (ID2), as it was felt that this estimator effectively characterized the mineralization at Olza. Interpolation was carried out in a single pass using a search ellipse with a radius of 150 metres in the major and semi-major axes as per the modeled ranges from the variogram. Zn and Pb were interpolated using a minimum of three samples from a minimum of two drill holes. Bulk density measurements were estimated into the block using much the same approach as the metal grades, but with an expanded search radius of 175 metres, and with only one data point required to estimate a block
Based on the geostatistical analysis of the Olza Zn-Pb data, a classification of Inferred Resource can be assigned to blocks estimated from samples with an average distance of 130 metres or less. Given the uncertainties associated with the compilation of the historical drill data from multiple sources and campaigns, this classification has been assigned to the entire resource base, even in those areas of closer spaced drilling.
A minimum cut-off of 2% Zn was used in the resource tabulation; this cutoff is the preferred scenario. The results of the estimate at a range of cutoffs are tabulated below in Table 1-1. The effective date of the Mineral Resources disclosed herein is May 18, 2012, the date of recovery of the last drill samples used in estimation.
Table 1-1 Inferred Mineral Resources
Cutoff Tonnes Contained Zn Contained Pb Zn % Pb % Zn+Pb % Zn % (millions) (million lb) (million lb) 2.0 21.2 5.88 1.54 7.42 2,750 720 3.0 16.1 6.97 1.66 8.63 2,467 588 4.0 12.3 8.04 1.74 9.78 2,181 472 5.0 9.6 9.04 1.79 10.83 1,912 379
Results may not add exactly due to reporting precision and rounding. Tonnes are reported to nearest 0.1 million tonnes, and metal grades to the nearest 0.01%. This does not imply this degree of accuracy in the estimate.
No metallurgical or economic studies have been performed with respect to the mineral resources disclosed herein. CAM believes that the potential development of these Inferred Mineral Resources is not likely to be materially affected by any known environmental, permitting, legal, title, taxation, socio- economic, marketing, political, or other relevant risk factors, other than as set forth in this Technical Report and the preceding Technical Report (CSA, 2010).
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1.10 Interpretation and Conclusions
Rathdowney’s three Exploration Permits (“concessions”), Zawiercie, Rokitno, and Chechlo, have historical drilling (1950’s to 1980’s) totaling over 1,600 core holes which clearly demonstrate that significant zinc-lead mineralization of Mississippi-Valley Type is present in nearly flat-lying Triassic marine carbonate rocks at moderate depths, with sphalerite and galena as the principal minerals.
Interpretations and conclusions follow.
1. Historical drilling identified the Markiszow, Zawiercie I, Zawiercie II, Rodaki-Rokitno Szlacheckie, and Chechlo zinc-lead deposits, for which historical mineral tonnage and grade estimates were made. These estimates were prepared using Soviet-style procedures and definitions pre-dating NI 43-101. 2. CAM believes that good potential exists in the Olza project area for delineating additional mineral resources which are compliant with CIM definitions. 3. Rathdowney’s work to compile the historical exploration results, and to edit and re-format this information, was carried out to a high standard, and resulted in a historical database suitable for comparison with recent Rathdowney drilling. 4. From mid-2011 to May 2012, Rathdowney drilled 178 diamond core holes, totaling 21,974 metres on the Zawiercie I deposit on the Zawiercie and Rokitno concessions, to confirm and expand the deposits identified earlier. This drilling was closely-controlled in order to achieve acceptable core recoveries within the mineralized horizons. No drilling was done by Rathdowney at Chechlo, as this concession was acquired by Rathdowney in September, 2012. 5. The validity of the historical data for resource estimation was determined by estimating resources in two areas within the Zawiercie I deposit, using only historical data, and again separately using only Rathdowney drill data from each of the same two areas. The tonnage and grade estimates from both areas checked closely between the two data sets indicating that the new and historical drilling are consistent enough that both may be used in the calculation of an inferred resource, when used in conjunction with Rathdowney drilling. 6. Mineral resource estimation was carried out using the validated historical data and Rathdowney drill results. An inferred mineral resource was estimated for that portion of the Zawiercie I deposit drilled by Rathdowney. 7. Drilling, sampling, assaying and resource estimation were carried out in compliance with CIM standards, resulting in Inferred Mineral Resource estimates which are suitable for disclosure under NI 43-101. 8. Preliminary analysis indicates that the silver content of the mineralization is related to zinc minerals, rather than lead minerals. The Ag:Zn ratio appears to be higher toward the north in the Zawiercie I deposit.
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9. The region around the concessions is well-suited to modern industrial-scale mining and mineral processing, with highly-developed infrastructure and availability of mining expertise. 10. The density of industrial activity and population near the concessions creates some identified social and environments issues, mainly surface usage, infrastructure in a densely-inhabited region, groundwater quality, and proximity to protected natural areas. These will be addressed as the project proceeds, and will not likely preclude mining. Rathdowney has initiated studies of the issues.
1.11 Recommendations
The steps below are recommended to carry the Olza project forward toward defining increased mineral resources, including some in higher categories than Inferred, and to advance the project toward eventual development.
1. Upgrade the Inferred Resources in the East Mineralized Corridor to higher resource categories through closer drill hole spacing. 2. Enlarge the resource by drilling open areas with stratiform Triassic carbonate-hosted mineralization. 3. Test other deposits identified by historical drilling but not yet drill-tested by Rathdowney. 4. Test the underlying Devonian target strata, which could likely contain karstic collapse breccia- pipe deposits. 5. Undertake environmental baseline studies and social studies.
The proposed Work Program includes additional 11,500 metres of drilling, including drilling completed from May to October, and a budget of CAD$ 3,150,000.
The technical recommendations below should be implemented during the Work Program.
1. Drilling should include twinning of about 10 historical holes among the 86 holes within the wireframe for which original assay sheets have not been found. 2. Measurements should be made of the residual water content of air-dried core samples when they are measured for bulk density, through a test program of oven-drying about 50 mineralized core samples. 3. The mean and standard deviation of the certified standard reference materials should match the primary laboratory (Omac) mean and standard deviation, rather than the parameters from the reference materials suppliers. 4. The reason for the lower lead contents in Rathdowney’s resource estimates, as compared to the historical estimates, needs to be further investigated.
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5. Further study should be done on the distribution of silver values, with respect to both the mineralogical residence of silver within the zinc-lead mineralization, and geographic trends in the abundance of silver.
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2.0 INTRODUCTION AND TERMS OF REFERENCE
Chlumsky, Armbrust and Meyer, LLC (herein “CAM”) prepared this Technical Report on the Olza zinc- lead project in Poland at the request of Rathdowney Resources Ltd., a publicly-listed company in Canada. Purpose of the report is to disclose the first post-1977 drilling program carried out on the property, and the mineral resources defined, in compliance with Canada National Instrument 43-101. The mineral resources were disclosed in a Rathdowney news release dated September 11, 2012.
In this report, “Rathdowney” may refer variously to Rathdowney Resources Ltd., or its wholly-owned subsidiary Rathdowney Luxemburg S.A.R.L., or Rathdowney Polska Sp. z.o.o., which is wholly-owned by the Luxemburg company. Rathdowney’s work also included participation by individuals seconded from Hunter Dickinson Inc. of Vancouver. Rathdowney is associated with HDI, a private company.
CAM’s Qualified Persons, Fred Barnard Ph.D., CPG (geologist) and Robert L. Sandefur, P.E. (geostatistician) visited the Olza project during November 2, 4, and 5, 2011, while drilling was in progress. They visited active drilling sites on the Rokitno and Zawiercie exploration concessions, and also visited the area of the Chechlo concession, which is not yet drilled by Rathdowney. In addition, they witnessed handling of drill core from the core tube through logging, density determination, sawing, sampling, and packing for shipment to a commercial laboratory. They were hosted by Michael Mlynarczyk, Chief Geologist, and others based in Rathdowney’s project office located in Olkusz, Poland, and field office at Rokitno Szlacheckie near the Olza project. Mr. Sandefur also visited the project during March 22-26, 2011, and again during March 27-29, 2012, to discuss drill hole density, core recovery, and related drilling issues.
In March, 2011, Mr. Sandefur also visited the nearby Pomorzany underground zinc-lead mine operated by Zaklady Gorniczo-Hutnicze Boleslaw (ZGHB). Mineralization at Pomorzany occurs in the same stratigraphic horizon hosting mineralization of similar styles to that of the Olza project.
This report is based on technical data, documents, reports and information supplied by Rathdowney, including copies of permit application and award documents; historical reports on exploration and drilling; historical estimates and internal reports by Rathdowney staff and consultants/contractors. The specific reports referred to are listed in Section 22 of this report, plus other reports listed in the References section of CSA (2011) and incorporated by reference in this report. A legal opinion of the status of the Exploration Permits was obtained from a law firm in Poland, as cited in Sections 3, 4, and 27 of this report.
This report contains data from drilling carried out by Rathdowney to 18 May 2012 (drill hole OLZ-178), which is considered the Effective Date for mineral resource estimation. Assays and QA/QC data for the
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latest drilling were received in through August, 2012. Drilling continues through the publication date of this report in October 2012.
Significant parts of the text of this report are taken from the 43-101 report by CSA (2010), with modifications and updates as necessary. The CSA report had been written prior to any drilling on the property by Rathdowney.
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3.0 RELIANCE ON OTHER EXPERTS
In preparation of this report, CAM has reviewed and analyzed data provided by Rathdowney and others, and has drawn its own conclusions therefrom, augmented by its direct field examinations. CAM did not carry out any independent exploration work, drill any holes, or sample or assay any material from the properties. The maps, and some of the other illustrations in this report, were prepared by Rathdowney and its affiliate companies unless otherwise noted.
This discussion of Polish mining law in this report was prepared by Rathdowney Polska. The Polish Geological and Mining Law of 2011 became enforceable on January 1, 2012, but no official English translation is available yet.
Information about the validity of exploration licenses and environmental permits was provided directly to CAM in a letter from Marekwia and Plawny, Attorneys at Law, in Katowice, Poland, as described in Section 27. These matters are discussed in Section 4 of this report. The cited legal firm is registered in Poland and is independent of Rathdowney.
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4.0 PROPERTY DESCRIPTION AND LOCATION
The material in this section was supplied by Rathdowney. CAM have viewed some of the title documents (which are in Polish language), and have relied on a letter from Rathdowney’s lawyers in Poland which affirms concession titles, as discussed in Section 3 of this report.
4.1 Zawiercie, Rokitno, and Chechlo Exploration Permits
The property comprises three adjoining Exploration Permits (“concessions”) for the prospecting & exploration for zinc and lead ores, named Rokitno, Zawiercie, and Chechlo (Figures 4-1 and 4-2). They are located in the Upper Silesian zinc-lead district of southern Poland, between the towns of Zawiercie and Olkusz, approximately 60km northwest of the city of Krakow.
Figure 4-1 Location of Olza Project
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Figure 4-2 Locations of Rathdowney Concessions (Red names and outlines indicate historical deposit footprints.)
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Essential data about the three permits is shown in Table 4-1. Maps of each are shown in Figures 4-3, 4-4, and 4-5.
Table 4-1 Exploration Permit Data for Olza Project
Concession Number Area, ha. Issue Date Minerals Life Rokitno 26/2010/p 55.59 12 May 2010 Zn, Pb 5 years Zawiercie 34/2010/p 46.25 02 July 2010 Zn, Pb 5 years Chechlo 27/2012/p 50.81 20 Sept 2012 Zn, Pb 5 years
The Zawiercie permit (No. 34/2010/p) covering 46.25km2 was issued to Rathdowney Polska Sp. z.o.o. by the Ministry for the Environment on 02 July 2010 covering prospecting and exploration for zinc and lead for a period of five years. The Polish Ministry for the Environment (the permit granting authority) issued a final decision on 29 October 2010, wherein the Minister removed a very small (approximately 0.005415 km2 or 0.5415 ha), non-material portion of the permit land package which was originally granted.
On 22nd March 2011, Rathdowney Polska Sp. z.o.o. applied for an amendment to the Zawiercie permit, which was then granted by the Ministry for the Environment on 7th November 2011. This amendment consisted of a substantial increase of the amount of diamond drill holes and geophysical survey plots permitted, as well as a very minor change in the location of one of the permit’s boundary points (point B), which reduced the surface area by approximately 0.05km2. The duration of the permit remain unchanged.
The coordinates of the corner points of the Zawiercie permit area, as issued by the Polish Ministry for the Environment, are shown in Figure 4-3, in the "2000/21" system Polish State coordinate system.
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Figure 4-3 Location of Zawiercie Concession
The Zawiercie concession document and the accompanying usufruct agreement specify each a one-off fee of PLN 10,082 (approximately CAD$ 3,048), based on the permit’s surface area, both of which were paid to the State Treasury.
The Rokitno permit (No. 26/2010/p) covering an area of 55.59 km2 was issued together with the accompanying Mining Usufruct Agreement to Rathdowney Polska Sp. z.o.o. by the Ministry for the Environment on 12th May 2010, covering prospecting and exploration for zinc and lead for a period of five years. The coordinates of the corner points of the permit area as issued by the Polish Ministry for the Environment are shown in Figure 4-4, in the official "2000/21" Polish State coordinate system.
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Figure 4-4 Location of Rokitno Concession
The Rokitno concession document and the accompanying usufruct agreement specify each a one-off fee of PLN 12,105 (approximately CAD$ 3,660), based on the permit’s surface area, both of which were paid to the State Treasury. The Zawiercie permit (No. 34/2010/p) covering 46.25km2 was issued to Rathdowney Polska Sp. z.o.o. by the Ministry for the Environment on 2 July 2010 covering prospecting and exploration for zinc and lead for a period of five years. The Polish Ministry for the Environment (the permit granting authority) issued a final decision on 29 October 2010, wherein the Minister removed a very small (approximately 0.005415 km2 or 0.5415 ha), non-material portion of the permit land package which was originally granted.
The Chechlo permit (No 27 /2012/p) covering an area of 50.81 km2 was applied for on 24th June 2010 and was issued together with the accompanying Mining Usufruct Agreement to Rathdowney Polska Sp. z.o.o. by the Ministry for the Environment on 20 September 2012, covering prospecting and exploration for zinc and lead for a period of five years. Figure 4-5 shows permit area as issued, using the official "2000/21" Polish State coordinate system.
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Figure 4-5 Location of Chechlo Concession
The Chechlo concession document specifies an annual fee of PLN 10,753 (approximately CAD$ 3,330). This was paid by Rathdowney on 3 October, 2012, to the three communes involved and the Ministry of Environment as confirmed by the four bank payment receipts were examined by CAM. The usufruct fee of PLN 20,000 for the year 2012 is payable by end February 2013, but cannot be paid until the nominal amount is adjusted for 2012 inflation which is calculated at the end of 2012.
All of the fees associated with the Rokitno, Zawiercie, and Chechlo permits have been paid. Copies of confirmatory payment receipts have been supplied to CAM by Rathdowney. These permits allow Rathdowney Polska to conduct an extensive ground geophysics and drilling program, as per the submitted Geological Works Plan proposal. The location of the proposed IP surveying and the drill hole locations have been approved by the Ministry of Environment and the relevant landowners have already been notified.
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Rathdowney does not hold any surface title within the Olza project area. The permits and the associated usufruct agreements grant right of surface access to the permit holder, but this must be undertaken by arrangement with individual landowners, who must be informed in writing in advance of any drilling activity on their land.
At the time of starting the field program and when new batches of drill holes are being permitted, some small nominal fees and formal arrangements have to be made with the forestry and mining authorities, which are notified of Rathdowney’s exploration program. These arrangements generally involve short, standard procedures, and to date have all had positive results. The remaining permits required for the implementation of the technical program are in the possession of the contractors conducting the program. Therefore, Rathdowney Polska has all the necessary permits in place to conduct its ongoing drilling and ground geophysics program in the Rokitno, Zawiercie and Chechlo permit areas. The relevant regulations and economic terms relating to exploration and mining in Poland are more fully covered in Section 5.2 of this report.
During the site visit by CAM in November 2011, the locations of the three prospecting and exploration permits were confirmed by CAM with reference to detailed government topographic maps which show numerous reference points in relation to local infrastructure, such as roads, railways, towns, housing and woodland boundaries.
There has been a long history of mining for zinc and lead in the general region. No previous industrial- scale mining activity is known within the three concessions, although extensive past exploration has taken place. Various studies by different Polish Institutes and State organizations have identified substantial sub-surface zinc-lead mineral deposits for which historical estimates were made, based on diamond drilling within all three properties.
4.2 Mineral Exploration and Mining Regulations
This discussion of Polish mining law was prepared by Rathdowney. The recently-amended Polish Geological and Mining Law of 2011 became enforceable on January 1, 2012, but no official English translation is available yet. In addition, a number of specific regulations and government notices that complement the Law (some translated into English) are being published in official State bulletins and posted online at http://www.mos.gov.pl and http://www.mos.gov.pl./?j=en.
The application of the Geological and Mining Law, including the granting of exploration permits (also referred to as “concessions”) is administered by the Department of Geology and Geological Concessions of the Ministry for the Environment, located in Warsaw. The map of current mineral exploration permits, updated monthly, is posted on the Ministry’s website.
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Most mineral resources in Poland are owned by the Polish State. Metallic ores are included in the category of “basic minerals” and are classified in the “Mining Ownership” group, i.e., their ownership is not associated with any surface rights. In contrast, “common minerals”, such as sand and gravel, are in the “Surface Ownership” group.
“Prospecting” and “Exploration” for mineral deposits are defined separately, the latter term involving work on mineral resources for which a geological documentation already exists, i.e., more advanced projects. The Law allows for Prospecting and/or Exploration Permits, as well as for Exploitation (i.e., Mining) Permits.
The permit grants an exclusive right to the exploration permit holder to apply for a mining permit within five years of the completion of the mineral exploration program, provided the permit holder documents the deposit to a degree deemed sufficient for the preparation of a”Deposit Development Plan” to a level enabling mining the resource, and successfully filed this geological documentation to the Ministry for the Environment. The Law allows for a transfer of permits from a permit holder to a third party, together with the transfer of all inherent rights and obligations.
In addition to applying for a Permit, the investor is required to conclude a “Mining Usufruct Agreement” with the State. This is a contract defining the rights and obligations of both the mineral party and the surface owner, when the exploration/mining company undertakes any activity dealing with the sub-soil, such as drilling, trenching, mining, etc.
If access to a third party property is required in order to carry out exploration, the permit holder has right of access, subject to compensation. A permit may be refused if the intended activity is considered detrimental to environmental protection, the rational management of mineral deposits (including accompanying minerals) or prevents the use of land in accordance with its designation.
In addition to granting mineral permits on application, the Ministry has also offered exploration blocks for tender in the past. At the present time, however, this is largely limited to oil and gas.
The application for a Prospecting/Exploration Permit is a complex document, the core of which is a Geological Works Plan giving a very detailed outline of the planned exploration program. Once received by the Ministry, this document is normally reviewed by external experts from the Committee for Mineral Resources (KZK or Komisja Zasobów Kopalin). Upon receipt of the written review, the Ministry may decide that an oral hearing with a panel of experts is required to answer some additional questions before the application can be processed further.
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In the case of Exploitation (Mining) permits, their granting requires the consent of both the Ministry for the Environment and the Ministry of the Economy, as well as the consent of the aforementioned local authorities, which should be based on the local land use plan. The granting of an exploitation permit may also be subject to establishing a fund to secure any claims that may arise as a result of the mining activity carried out, in order to protect the interest of the State or public interest, including the protection of the environment.
The size of individual Prospecting/Exploration Permits can be up to 1,200 km2, and several of them can be included in a single Usufruct Agreement. The Ministry typically grants to the exploration company a permit only for an area that closely corresponds to the areal extent of the proposed exploration program. The duration of Prospecting/Exploration Permits depends on the work program proposed, and is usually limited to a maximum of six years (with possible extensions). Exploitation Permits are usually granted for 25-30 years, and can be extended by mutual agreement.
There are no minimum expenditure requirements to be fulfilled in order for the Exploration permits to be in good standing, and only an annual activity report needs to be filed to the Ministry for the Environment by the end of January of the year following the reporting calendar year. Such a report for 2011 was successfully filed for both the Rokitno and Zawiercie permits, which were in the possession of Rathdowney at that time.
The holder of an exploitation permit is required to set aside in advance a fund for mine closure. The achievements of the exploration program (which do not need to include specific results) have to be presented in concise annual activity reports, filed to the Ministry for the Environment. Where a mineral deposit has been discovered, the geological documentation needs to take into account the economic viability criteria for mineral resources which have to be approved by the competent geological administration authority.
The most recent (2011) regulation on the definition of economic zinc-lead ores specified the following criteria:
• The minimal (cut-off) grade of Zn+Pb in sulfide form, assuming the mining depth is no greater than 500 metres, is set at 2% for definition of the boundary of a deposit and for defining internal sub-grade zones. • The maximum state of oxidation of the economic Zn+Pb sulfide ore is set as 35%. • The minimum magnitude of a mineralized interval is set as 5 metres % (thickness times grade).
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4.3 Fees and Royalties
According to the Mining Law, Prospection and Exploration Fees are charged to the permit holder per square kilometre of the area held, and cover the entire period for which the permit is granted. The exact amount, payment dates, and manner are set out in the permit document.
The 2011 permit fees for zinc-lead Prospecting (only) Permits were 105.81 PLN (Polish Zloty) per km2, (ca. CAD$ 31.99). The 2011 rates for zinc-lead Prospecting and Exploration Permits were 211.62 PLN per km2 (ca. CAD$ 63.98). Sixty percent (60%) of permit fees and royalties go to the local community and 40% to the National Fund for Environmental Protection and Water Management.
An exploration permit holder is also liable to pay the State Treasury for acquisition of historical geological information (e.g., historical drilling data) from the State geological archive.
Royalty rates for particular commodities are now defined by the Mining Law. For 2012, the royalty fees for zinc and lead ores have been set at 1.12 PLN (ca. CAD$ 0.34) per metric tonne of ore. In addition to royalties on mined ore, mines also have to pay to the government ‘ecological fees’, as well as fees for processing waste storage & the release of contaminated water.
Poland also levies corporate tax on profits, currently set at a rate of 19%.
4.4 Environmental Issues
The salient points of the social and environmental aspects of Project Olza are mentioned here. They are discussed in great length in Section 19 of the previous Technical Report (CSA, 2010). In common with most mineral projects world-wide, there is potential for social and environmental risks
4.4.1 Nature Preserves
The Rokitno and Chechlo permits partially overlap with two zones designated as ‘Natura 2000’ areas, encompassing part of the Orlich Gniazd Krajobrazowy Park. These areas are generally wooded and have certain restrictions as to the activities that can take place there, including the felling of trees. Exploration and mining activity is permitted within such areas, however, where this is likely to significantly impact on the environment, an environmental impact assessment is required. The currently active Pomorzany zinc- lead underground mine lies just outside the same park. Given the depth to the target mineralized horizon on the three Rathdowney permits, any future mining is most likely to be from underground which will reduce the surface impact of such an operation.
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4.4.2 Cultural Issues
The permit boundaries have generally been drawn so as to minimize urban areas occurring within the permits, but some limited outlying suburban development and ‘ribbon’ housing development along roads occur within the properties.
4.4.3 Groundwater Issues
In 2010, Rathdowney commissioned a hydrological study (Schlumberger, 2010) to evaluate existing groundwater data and advise the company on a course of action to ensure water resources are not impacted by drilling activities. A preliminary overview of the hydrogeology of the Zawiercie area was carried out, as discussed by CSA (2010, Section 19.2.2). Rathdowney has retained hydrogeological experts to advise the company on an ongoing basis in order to ensure protection of water sources.
Four major aquifers occur in the project area, in Quaternary, Jurassic, Triassic, and Devonian units. The lead-zinc deposits at Olza are hosted mainly within Triassic carbonates, which also act as the main groundwater aquifer for the town of Zawiercie.
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5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY
5.1 Geographic Setting
The Rokitno, Zawiercie, and Chechlo properties are located within the North European Plain, which in this area is relatively flat-lying with an average elevation between 300-350 metres above sea level. The project area is partly forested, mainly by mature coniferous trees, along with lesser deciduous vegetation, including immature beech. Much of the remainder of the ground is represented by moderate- to poor- quality grassland, which is used for animal grazing in summer. There also a few small farms.
Within the project area, there is ample open land available for potential tailings storage areas, potential waste disposal areas, and potential processing plant sites.
The climate displays features of both European marine influence and the more severe continental conditions of Eastern Europe. Daytime temperature highs average around 20°C from Spring to Autumn, with occasional highs in excess of 30°C. Typical winter temperatures range from 0°C to below minus 20°C.
Precipitation averages 475 mm per year, ranging from 24 mm/month in February to 69 mm in July. The ground is usually snow-covered from mid-December to mid-March. Outdoor exploration and mining activities can be carried out all year.
5.2 Infrastructure
Local infrastructure is very well established, as shown in Figures 4-1 and 4-2, with an excellent network of paved roads linking the area to the major population centres of Krakow (pop. 750,000) and Katowice (pop. 2,750,000) in less than one hour’s drive. Both cities are located on main railway lines to Poland’s capital of Warsaw and both are served by international airports. There are a number of small towns on the fringes of the permit areas, the most significant of which is Zawiercie, an industrial hub situated on the main Warsaw-Vienna railway line. The Olza project office is in Olkusz, an industrial town (see Figure 4-1).
Within the properties, vehicular access is by paved roads and unsealed farm/forestry tracks. Access is possible all year round, although snow clearance of secondary tracks is required during winter months.
Numerous high tension power lines traverse the properties and there is no shortage of water, with the rivers of Warta and Czarna Przemsza straddling the property area.
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The proximity of the properties to historic Silesian mining centres, including the large underground Pomorzany zinc-lead mine and the Boleslaw zinc smelter complex, located some 20km to the south, near the town of Olkusz (pop. 38,000), provide a well-established infrastructure and access to modern mining expertise and skilled workforce. The Pomorzany mine, one of several historical zinc-lead mines in the area (together with Boleslaw, Olkusz, and Trzebionka) is the only mine remaining in operation and the major feed source for the local zinc refinery. It is due to close in 2014 due to depletion of ore reserves, but, the proximity of the its concentrator and tailings ponds, which still have a large storage capacity available, is of potential interest to the Olza project.
5.3 Social and Environmental Setting
This is discussed at length in the previous Technical Report (CSA, 2010). The issues discussed include protection of groundwater aquifers, land use, historic cultural features, and protection of natural biota. Rathdowney have concentrated on exploration drilling since the CSA report, and have not yet applied for definitive mining permits. Drilling permits are discussed in Section 10 of this report.
The zinc-lead deposit historically known as Zawiercie I, is adjacent to the southwestern side of Zawiercie town (pop. 52,000). The areas of the Rokitno, Zawiercie, and Chechlo exploration permits straddle five different communes (local administration units) - Poreba, Zawiercie, Ogrodzieniec, Lazy, and Klucze (see Figures 4-3, 4-4, and 4-5). The Rokitno license area is split between two of these communes (Lazy and Ogrodzieniec), the Zawiercie license area is split between four communes (Zawiercie, Poreba, Ogrodzieniec, and Lazy, of which Zawiercie and Poreba predominate in terms of the surface area), and the Chechlo license area is split between three communes (Klucze, Ogrodzieniec, and Lazy, of which Klucze predominates in terms of surface area).
The Poreba, Zawiercie, Ogrodzieniec, and Lazy communes are part of the Silesian Province, whereas the Klucze commune is part of the Lesser Poland Province (a larger administrative unit). The subdivision of the area of interest into discrete administrative units may have implications for future mine planning.
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6.0 HISTORY
This discussion is modified in large part from the 2010 Technical Report (CSA, 2010, Section 7).
6.1 Previous Property Ownership
The region has long been known for its mineral occurrences, with considerable ancient production from the shallow zinc-lead sulfide deposits of the Olkusz and Chrzanow areas (about 20-40 km to the south) and the near-surface oxidized zinc-lead deposits of the Bytom area (about 50 km to the west). However, the mineral deposits in the north-eastern part of the Silesian ore field, such as at Zawiercie and Rokitno, occur below cover of clay and barren limestone, and have not therefore been subject to oxidation and ancient near-surface exploitation, as were the deposits further west and south.
Beginning in the 1950’s, Polish state organizations, as identified below, undertook exploration for zinc- lead in the area using Soviet-era practices. Until award of the permits to Rathdowney, the zinc-lead deposits of these areas were never subject to modern exploration by private-sector companies.
6.2 Historical Drilling
In general, the historical drilling described in this section is partly but not fully documented by contemporary reports (see References in Section 27).
Due to the near-absence of exposures of the mineralized strata, nearly all exploration was undertaken by drilling. Various Polish State organizations drilled over 180,000 metres, in the Project Olza area from the 1950's through 1980's exploring the Rokitno, Zawiercie and Chechlo properties using Soviet-era practices and procedures. Assay records have been recovered for approximately 1,055 holes.
Rathdowney personnel and consultants conducted extensive research in the archives of the Polish state organizations. Documents accessed in these repositories were scanned wherever possible as a first step in creating a digital compilation for the project. This summary of historical (pre-2011) drilling has been compiled from these data, particularly information from the archives of the Polish Geological Institute, (also referred to as the Geological Survey) and the 2010 NI 43-101 Technical Report by CSA Global.
The means by which Rathdowney validated the historical data are described in Section 12 of this report.
Historical holes were drilled vertically to depths ranging from 100 to 425 m, with an average depth of 225 metres. Core sizes were typically 93 mm and 76 mm, and less commonly 59 mm in diameter. Upon completion, all boreholes were filled with concrete throughout their entire length to seal them.
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The historical programs employed non-wireline (standard) drilling and core recovery methods. In a few cases, holes were intentionally or unintentionally wedged down-hole (“zb” or “zbaczenie”, meaning “deviation” in the logs), or they were redrilled from the surface from the same or nearby collar location. Wedges or re-drills are typically identified with a suffix “A” or “B” if a third attempt was made. Each deviated hole has a distinct hole identification, and separate downhole information in the database if they significantly differ from the original. In some cases, where core was successfully recovered in the “deviation”, results were combined into a single hole for the purposes of geological and resource modeling (e.g. BM-32A into BM-32).
A uniform hole numbering system was adopted by Rathdowney to establish consistency of Hole-IDs in the digital compilation. For example, drill hole “Otw.Nr.255-TN” in the original log became “TN-255” in the new header table. Similar labeling was applied to all other “TN” series holes in the database. If dashes or spaces dominate in the original hole names in the logs for a series of drill holes, they were maintained, (e.g. “ZK 8-3”). To ensure recognition by software programs, drill hole names with the Polish character “Ł”, such as in the series with the prefix “ZŁ”, were changed to “ZX”, in the same manner as was done in historical Polish computer print-outs.
Starting in the late 1970’s, some of the historical logs in the archives were generated as computer print- outs. However, none of the historical digital data was located by Rathdowney, and it is believed that this information is no longer available in digital format.
6.2.1 Zawiercie Historical Drilling
The Zawiercie zinc-lead deposit, located to the north-northwest of Rokitno, was sub-divided into two zones based on a structural dislocation between them. Both of these zones have seen extensive exploration drilling, most of it dating from the early 1970s (Figures 6-1 and 6-2).
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Figure 6-1 Historical Drilling of Zawiercie I Deposit
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Figure 6-2 Historical Drilling of Zawiercie II Deposit
Approximately 648 diamond drill holes were drilled at Zawiercie I, 541 of which were drilled prior to 1975, on a grid spacing ranging from 100 to 150 metres and 200 to 240 metres to delineate C-1 category mineral resources under the Soviet/Polish classification system. Hole depths ranged from 75 to 360 metres, with an average depth of 150 metres.
The Cracow Geological Company conducted the first exploration of Zawiercie in 1953 and 1954. Of the five holes drilled at the time, three intersected zinc-lead mineralization.
The Warsaw Geological Institute conducted further work in this area from 1956. A total of 195 holes were drilled as part of prospecting work to define C-2 category ‘reserves’ to 1967. The results of drilling operations and studies were reported in 1968.
During 1968-1969, the Geological Institute drilled 39 holes, which enabled the expansion of the deposit limits and documentation of additional mineralization. The results of that work are presented in a 1970 report.
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The Cracow Geological Company drilled 302 holes during 1970 through 1974. This northeastern part of the deposit was called “Zawiercie I”, as a deposit separate from other zinc-lead occurrences in the area. At that time a second, smaller, deposit was recognized, called Zawiercie II.
Table 6-1 Historical Drilling - Zawiercie I Deposit
Drill Drilling Drilling Entity Type of Work Holes Years Cracow Geological Company 5 1953-1954 Searching for Zn-Pb ores Warsaw Geological Institute 195 1956-1957 Definition of C-2 category "reserves" Warsaw Geological Institute 39 1968-1969 Searching for additional "reserves" Cracow Geological Company 302 1970-1974 Definition of C-1 category "reserves" Cracow Geological Company 107 1975-1988 Definition of further C-1 category "reserves" TOTAL 648 1953-1988 Note: Some of the early drill holes listed above are located in Zawiercie II, since prior to 1975 the Zawiercie deposit was not yet subdivided into Zawiercie I and Zawiercie II.
As there is some overlap in numbering between Zawiercie I and Zawiercie II study areas; the number of holes in each is not precise. A relatively small amount of work on Zawiercie II was conducted from 1977 to 1980, with just 132 new holes drilled. During 1975 through 1988, 108 further holes were drilled and the data obtained were included in the “Addendum to the geological documentation of the ‘Zawiercie I’ Zn-Pb ore deposit in category C-1”, prepared in 1991 by the Cracow Geological Company. The addendum was examined by the Mineral Reserves Commission in 1993 and was not approved, due to changes in economic criteria introduced in the meantime. Less drilling took place at Zawiercie II than at Zawiercie I, generally at a wider spacing (for C-2 category "reserves"), except for the southeastern part of the deposit which was drilled in more detail. Drill hole depths at Zawiercie II range from 80 to 335 metres with an average depth of 21 metres.
Table 6-2 Historical Drilling - Zawiercie II Deposit
Drill Drilling Entity Drilling Years Type of Work Holes Cracow Geological Company 108 Pre-1977 Searching for Zn-Pb ores Cracow Geological Company 132 1977-1980 Definition of C-2 category "reserves" TOTAL 240 Pre-1977 to 1980 Note: Some of the early drill holes listed above are located in Zawiercie II, since prior to 1975 the Zawiercie deposit was not yet subdivided into Zawiercie I and Zawiercie II.
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6.2.2 Rokitno Historical Drilling
The Rodaki-Rokitno Szlacheckie zinc-lead deposit occurs within the Rokitno permit and covers an area of 17.9 square kilometres. The deposit was the subject of geological exploration from 1958 to 1977. Polish archival records indicate discovery and exploration of the deposit during several phases of diamond drilling, as summarized in Table 6-3. Drilling consisted of 236 large diameter boreholes with a total length of 40,763 metres. The drill grid spacing was typically 250 to 400 metres (to outline C-2 category mineral resources under the Soviet/Polish classification system), except for the less prospective northeast part of the area, where the spacing was 600 to 800 metres. Drill depths at Rokitno range from 115 to 425 metres, with an average depth of 280 metres. The locations of the drill holes are shown in Figures 6-3.
Figure 6-3 Historical Drilling of Rodaki-Rokitno Szlacheckie Deposit
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Table 6-3 Historical Drilling - Rodaki-Rokitno Szlacheckie deposit
Hole Drill Drilling Drilling Entity Total (m) Type of Work Prefix Holes Years Cracow Geological Company E 3 1958-1959 912.9 Searching for Zn-Pb ores Warsaw Geological Institute TN & ZA 101 1962-1970 2,699.5 Searching for Zn-Pb ores Cracow Geological Research Institute WB 6 1971-1972 1,592.3 Searching for Zn-Pb ores (now PG Cracow) Cracow Geological Research Institute RR 126 1974-1977 35,558.3 Searching for Zn-Pb ores of C-2 category TOTAL 236 1958-1977 40,763.0
6.2.3 Chechlo Historical Drilling
The Chechlo zinc-lead deposit occurring within the Chechlo permit area has been significantly less explored than the Zawiercie and Rodaki-Rokitno Szlacheckie deposits. Exploration work took place in several phases of diamond drilling from 1957 to 1977 and principally focused on a high-grade area of 1.14 km2 out of an established prospective footprint of >18 km2. The history of drilling at Chechlo is summarized in Table 6-4 and shown on Figure 6-4. It should be noted that the historical, pre-2000, boundaries of the Chechlo concession were somewhat different than the current boundaries.
About 140 diamond drill holes (core diameter 93 or 76 millimetres, rarely 59 millimetres), with a total length of 36,787 metres, were drilled at Chechlo, mainly during the period 1963-1967. All, or nearly all, were located within the current boundaries of Rathdowney’s Chechlo concession. Depths varied from c. 200 to 500 metres. The drill grid spacing was typically 200-400m (to outline C-2 category mineral resources under the Soviet/Polish classification system), but the drilling focused only on the south-central, western and north-eastern parts of the prospective footprint, with virtually no drilling in the other parts.
Half-core samples, 0.2-0.5 metre long were cut by saw and assayed. The results of drilling operations and studies of the time are presented in the various government reports which have been reviewed by Rathdowney staff.
Table 6-4 Historical drilling at the Chechlo deposit
Number of Years of Drilling Entity Type of Work Holes Drilling Cracow Geological Company 5 1957 Exploration for Zn-Pb Cracow Geological Company 3 1961 Exploration for Zn-Pb Cracow Geological Company 70 1963-1967 Definition of C-2 category ‘reserves’ Cracow Geological Company (now PG Krakow) 47 1969-1977 Definition of C-2 category ‘reserves’ Total 125 1957-1977 --
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The locations of the drill holes are shown in Figure 6-4.
Figure 6-4 Historical Drilling of Chechlo Deposit
6.3 Historical Core Recovery
Core recovery was recorded in most of historical drill logs as measured core per unit depth, or as a percentage of footage drilled over a geologic or assay interval. The geologic descriptions in the historical logs generally provide a reasonable accounting for the highly variable nature of the historical recovery, based on the in-situ ground conditions. Other factors, particularly non-wireline core retrieval methods, also had some influence on the recovery.
Good recoveries, in the 85 to 100% range, are encountered in both unmineralized wall rocks and within most of the mineralized zones. Low recovery values in the 30% to 40% range or less, typically occur in areas where strongly karstified, vuggy and fractured dolomite was encountered. These areas are more prevalent within and adjacent to areas of zinc and lead mineralization, but can also occur in unmineralized wall rock.
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In 2012, Rathdowney compared core recovery data from 1,479 historical intervals with the historical assay grades. In general, the best core recoveries were in rock with either <1% or >10% Zn+Pb combined metal grades. For these intervals, average core recovery was 86%, with over half of intervals having 100% recovery. Intervals with poorer recoveries, tended to be in the >1% to <10% combined Zn+Pb range. In this range, the calculated mean recovery values are lower, from 82 to 83%, with half of the intervals showing 96% or higher.
The presence of fractured rock and open or debris-filled voids in some areas resulted in poor drilling conditions and low core recovery in a few historical drill holes. Non-wireline drilling techniques were employed at the time. As the entire rod string was pulled to retrieve the core barrel for each drill run, the hole was left open while the rods were in transit until they returned to the bottom. Material which fell into the open hole during this time was recovered upon re-entry. Standard practice was to sample this material, known as “zasyp” (rubble or charge), with a special downhole tool, quarter it and assay it separately. This was done if geologic review of the overlying strata intersected in the hole and inspection of the material itself, indicated that the rubble was derived from an immediately adjacent zone of poor recovery.
The Polish authorities developed a protocol to factor the grade of this material and combine it with actual core recovered over corresponding intervals. The correction coefficient formula used at Rokitno and Zawiercie was based on data from the Chechło deposit, as follows:
ZnFinal = (ZnCore x Core Recovery) + (ZnZasyp x ZnZasyp Correction Coefficient) PbFinal = (PbCore x Core Recovery) + (PbZasyp x PbZasyp Correction Coefficient)
The correction coefficients vary depending on the actual core recovered; they are 0.55 for Zn and 0.40 for Pb for 0% core recovery (100% zasyp) decreasing to 0.01 for Zn and Pb, for 99% core recovery (1% zasyp). Correction coefficient values for zasyp were developed based on experience at nearby Zn-Pb mines in the region and the factored results were deemed fit for use in Polish resource calculations. This protocol for the calculation of historical assay intervals containing “zasyp” was adapted for the Rathdowney digital compilation and resource estimation. The use of modern drilling techniques by Rathdowney in 2011 and 2012 precluded the need to recover and sample material in this way in the OLZ series of holes. Therefore, the data from the Rathdowney drilling makes no use of coefficients or factors.
On average, 70 core samples were taken for analysis from each drill hole sampled, or about 35 metres per hole. In some instances, the entire cored stratigraphic section was sampled and submitted for assay. Core samples were taken by sawing the core in half lengthwise. In total, 30% of the historical samples are 0.5 metre in length and 90% are in the range of 0.3 to 1.0 metres long. It is apparent from the logs that the
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sample length was varied to accommodate geological features and zones of differing core recovery. No drill core, other than a small number of specimens in core libraries, was retained. No coarse rejects or assay pulps remain from these programs.
6.4 Historical Sample Preparation and Analysis
No reference to the sample preparation methods or site security measures of the historical drilling programs is made in the available reports, as these details were typically not reported in that era.
Polish historical reports provide little or no detail on the sample preparation methods, analytical procedures or security considerations of the Olza project prior to 2011 when Rathdowney became project operator. However, the analytical laboratories used are listed in many of the historical drill logs.
Table 6-5 Analytical Laboratories Used Historically
Drill Sample Preparation Laboratory Primary Analytical Laboratory Check Analytical Laboratory Program 1956-1962 Unknown Unknown Unknown 1963-1967 Cracow Geological Company, Poland Cracow Geological Company, Poland Cracow Geological Company, Poland 1968 Unknown Unknown Unknown 1969-1974 PG Cracow, Poland PG Cracow, Poland PG Cracow, Poland 1975-1976 PG Cracow & ZBG Cracow, Poland PG Cracow & ZBG Cracow, Poland PG Cracow & ZBG Cracow, Poland 1977-1978 ZBG Cracow & ZPiDG O/Cracow, Poland ZBG Cracow & ZPiDG O/Cracow, Poland ZBG Cracow & ZPiDG O/Cracow, Poland 1979-1980 ZPiDG O/Cracow, Poland ZPiDG O/Cracow, Poland ZPiDG O/Cracow, Poland 1986 Unknown Unknown Unknown
Certificates of analysis reports are included for most of the historical drill holes listing the: laboratory name and location, report date and laboratory manager name. Most historical assay reports list wet chemical analysis (“na mokro” in Polish, often abbreviated "m") as the analysis performed, implying acid digestion followed by an instrumental or titration finish, although no specific details on the digestion or finish are provided. These laboratories were, for the most part, government-affiliated institutions that, in all likelihood, used appropriate analytical methods consistent with conventional practice of the Polish state mining organizations in the Silesian zinc-lead district of the time. The analytical institutions listed include the laboratory of Cracow Geological Company, PG Cracow, ZBG Cracow, and ZPiDG O/Cracow.
All samples were analyzed for Zn and Pb, which are reported in percent concentration, usually to a lower detection limit of 0.01%. The maximum value recorded for Zn was 43.3% and 68.8% for Pb in the historical records. In addition, about 5% of all samples were analyzed for zinc and lead oxides (ZnO and
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PbO). Less often, Cu, Ba and B were also analyzed, and in rare instances, multi-element analyses were performed.
There is no record of external QAQC standard reference materials inserted along with core samples for the historical drilling. Information on the historical assay duplicate “control” samples keypunched during the May through June 2012 data entry program, had not been compiled at the time of this report. It is recommended that this be done prior to the next resource estimation.
As discussed in Section 12 of this report, the historical drilling was subjected to a verification program by Rathdowney in 2011-2012, by drilling of additional holes in the historically-drilled areas at Rokitno and Zawiercie.
6.5 Historical Exploration Results
6.5.1 Zawiercie
The Zawiercie zinc-lead deposit lies north-northwest of Rokitno, from which it was separated on the basis of a structural dislocation between them. The results of drilling operations and studies are presented in various reports referenced in CSA (2011), and in Section 27 of this report. Historical drill results at Zawiercie I are shown in Figure 6-5, and those from Zawiercie II in Figure 6-6.
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Figure 6-5 Historical Drill Holes at Zawiercie I Red Color Indicates Significant Zn-Pb Intercept (Source: Panstwowy Instytut Geologiczny)
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Figure 6-6 Diamond Drill Holes at Zawiercie II Red color indicates significant Zn-Pb intercept (Source: Panstwowy Instytut Geologiczny)
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6.5.2 Rokitno
Half-core samples, 0.2-0.5 metre long were cut by saw and assayed. The results of drilling operations and studies of the time are presented in a report “Geological documentation of the zinc-lead Rodaki-Rokitno Szlacheckie ore deposit in the C-2 category”, approved by the country’s Central Geological Office in 1978, as well as a more recent summary report “Addendum to the geological documentation of the zinc- lead Rodaki-Rokitno Szlacheckie ore deposit in the C-2 + D category”, approved in 2008 by the Ministry of Environment. Results are shown graphically in Figure 6-7.
Table 6-6 Historical Drilling at the Chechlo Deposit
Number of Years of Drilling Entity Type of Work Holes Drilling Cracow Geological Company 5 1957 Exploration for Zn-Pb Cracow Geological Company 3 1961 Exploration for Zn-Pb Cracow Geological Company 70 1963-1967 Definition of C-2 category ‘reserves’ Cracow Geological Company (now PG Krakow) 47 1969-1977 Definition of C-2 category ‘reserves’ Total 125 1957-1977 --
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Figure 6-7 Historical Drill Holes at Rokitno Red color indicates significant Zn-Pb intercept (source: Panstwowy Instytut Geologiczny)
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6.5.3 Chechlo
Half-core samples, 0.2-0.5 metre long were cut by saw and assayed. The results of drilling operations and studies of the time are presented in the reports: “Geological documentation of the zinc-lead Chechlo ore deposit in the C-2 category”, approved by the country’s Central Geological Office in 1967, and “Geological documentation of the zinc-lead Chechlo ore deposit in the C-1+C-2 category”, approved by the country’s Central Geological Office in 1979; as well as a more recent summary report “Addendum No.1 to the geological documentation of the zinc-lead Chechlo ore deposit in the C-2 + D category”, approved in 2008 by the Ministry of Environment. Results are shown graphically in Figure 6-8.
Table 6-7 Historical Drilling at the Chechlo Deposit
Drilling Entity Number of Holes Years of Drilling Type of Work Exploration for Cracow Geological Company 5 1957 Zn-Pb Exploration for Cracow Geological Company 3 1961 Zn-Pb Cracow Geological Company 70 1963-1967 Definition of C-2 category ‘reserves’ Cracow Geological Company (now PG 47 1969-1977 Definition of C-2 category ‘reserves’ Krakow) Total 125 1957-1977 --
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Figure 6-8 Historical Drilling at Chechlo Red color indicates significant Zn-Pb intercept (source: Panstwowy Instytut Geologiczny)
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6.5.4 Historical Tonnage-Grade Estimates
Many tonnage and grade estimates were carried out by the Polish Geological Institute (“PGI”) on the Rodaki-Rokitno Szlacheckie , Zawiercie, Chechlo, and Marciszow Zn-Pb deposits, largely using the same source diamond drill hole data, but utilizing varying economic parameters at different times. The impact of these variations is explained below. Most of these were carried out prior to NI 43-101, and are thus considered “historical”, while the latest Polish estimates (in 2007) relied entirely on drilling and assaying done in earlier decades, and are thus essentially “historical” as well. The extent of what was considered “economic mineralization” in the pre-2000 period is shown in Figure 6-9.
The process by which Rathdowney recently validated some of these historical estimates is described in Section 12 of this report.
Figure 6-9 Deposits Defined by Historical Drilling
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All of the areas estimated historically for the Zawiercie I and II, Rodaki-Rokitno Szlacheckie, and Chechlo deposits lie within the current Rathdowney permits. A small part of the Marciszow deposit is outside the current Rathdowney permits.
It should be emphasized that the basic manual system of data handling, calculation and record keeping appears to have been of a high standard. However, drill core and assay sample reject material which could have facilitated independent re-checking of the drill assays, were not kept. Also, it should be borne in mind that core recoveries in the older drill holes within the vuggy Ore-Bearing Dolomite unit were quite variable and sometimes poor.
The historical Polish estimates were generally based on a standard polygonal method, with a sphere of influence mid-way to the nearest adjoining drill hole. The cut-off grade used was generally 2% combined Zn+Pb, within mineralized intervals of at least 7 metres percent (width x grade). These estimates allowed a more liberal inclusion of lower-grade mineralization within the mineralized shell which resulted in a substantially larger tonnage at a lower grade.
Prior to 2007, the estimates were categorized, based on distance from a drill hole or mine working as follows: • A - exploitation stage, i.e., resource estimated by underground workings; • B - very detailed: drill holes spaced 75-150m; • C-1 - detailed: drill holes spaced 150-200m; • C-2 - moderately detailed: drill holes spaced 200-300m; and • P1, P2, and P3 - least detailed: drill holes spaced ~ 500m.
A comparison between Russian/Polish resource classification terminology and CIM terminology is shown in Figure 6-10, taken from the previous Technical Report (Figure 7 in CSA, 2010).
Figure 6-10 Comparison of Pre-2000 Polish Resource Terminology with CIM Definitions (From Henley, 2004)
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6.5.5 Zawiercie
At Zawiercie, the pre-2007 PGI estimates used the same general categorization parameters as detailed above for Rodaki-Rokitno Szlacheckie. The various historical estimates are summarized in Table 6-8, divided between Zawiercie I (the main deposit) and the smaller Zawiercie II deposit. Records in the Polish State database suggest that the Zawiercie I deposit represents the best undeveloped Zn-Pb sulfide deposit in the Cracow-Silesian district. However it should be borne in mind that some of the higher mineral grades lie beneath the outer part of Zawiercie town and beneath important road and rail infrastructure. Provisions will need to be made for mining beneath the outskirts of the town which might impact on the ultimate conversion of mineral resources to mining reserves. The smaller Zawiercie II deposit is less well explored.
Table 6-8 Zawiercie Historical Estimates by PGI
No. of Metres Deposit Year Period of drilling Category Mt % Zn % Pb holes drilled Zawiercie I 2008 C-1 + C-2 17.0 5.80 2.32 Zawiercie I 1994 C-1 16.3 6.00 2.50 Zawiercie I 1990 510 Unknown Most pre-1975 C-1 34.5 4.92 1.98 Zawiercie I 1977 C-1 24.7 4.27 1.58 Zawiercie I 1975 C-2 34.5 4.92 1.98
Zawiercie II 2008 C-2 2.9 6.98 2.48 Zawiercie II 1992 C-2 35.5 2.07 2.05 240 Unknown Most pre-1975 Zawiercie II 1990 C-2 42.6 2.56 2.99 Zawiercie II 1975 C-2/D 21.0 2.26 2.96
It should be noted that the preceding estimates are historical in nature and as such are based on prior data and reports prepared by previous operators. A qualified person has not done sufficient work to classify the historical estimates as current mineral resources, and Rathdowney is not treating the historical estimate as current mineral resources. The steps undertaken to validate some of the historical drilling for use in current mineral resource estimation are described in Section 12 of this report.
In addition to the historical estimates tabulated above, more recent estimates were undertaken in 2008 for the Zawiercie I deposit and for the Zawiercie II deposit by the PGI. The same conservative parameters were applied for the most recent 2008 estimates at Zawiercie as for the 2008 Rodaki-Rokitno Szlacheckie estimate. For the Zawiercie I deposit the reduction in size of the 2008 estimate compared to some of the earlier historical estimates is not so substantial because the drill holes were more closely spaced and this allowed for continuity in the C-1 and C-2 categories between holes. At the Zawiercie II deposit however,
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the 2008 estimate resulted in a substantial reduction of deposit size compared to earlier historical estimates due to the wider drill hole spacing at that deposit.
The past drilling programs carried out and the various historical and non-historical estimates undertaken by the PGI confirm the presence of extensive zinc-lead mineralization within the Zawiercie exploration permit area. Considerable variation in these estimates reflects different parameters applied to the estimates. Confirmatory and infill drilling by Rathdowney will be required to demonstrate continuity of mineralization at Zawiercie in order to delineate and define mineral resources to CIM Definition Standards.
6.5.6 Rodaki-Rokitno Szlacheckie
The Rodaki-Rokitno Szlacheckie deposit has been the subject of several resource estimates over the years, specifically in 1978, 1990, 1994, and 2007 (Table 6-9). In addition, the official 2008 data of the Polish Geological Institute for the Rodaki-Rokitno Szlacheckie deposit lists a figure close to the original 1978 estimate. Many of these estimates are substantially different, primarily due to the different estimation parameters used. Because of the lensoid nature of the Silesian zinc-lead deposits, there can be considerable variance in mineral grade and thickness from hole to hole. Experience at the underground mines operated in the district, however, shows that there is usually overall continuity within a zone, even if there is local variability. Indeed, it should be noted that, historically, reserve/resource estimations for the Cracow-Silesian ore field commonly under-estimate the size of the deposits - for example, the mined reserves of the Trzebionka and Pomorzany deposits have proved to be substantially more than those originally estimated.
Table 6-9 Rodaki-Rokitno Szlacheckie Historical Estimates by PGI
No. of Total metres Period of Year Category Mt % Zn % Pb holes drilled drilling 2007 C-2 + D 2.6 4.22 1.03 1994 C-2 10.9 4.70 1.30 146 40,963 1974-77 1990 C-2 30.9 3.52 0.94 1978 C-2 30.9 3.52 0.94
It should be noted that the preceding resource estimates for Rodaki-Rokitno Szlacheckie are historical in nature and as such are based on prior data and reports prepared by previous operators. A qualified person has not done sufficient work to classify the historical estimates as current mineral resources, and Rathdowney is not treating the historical estimate as current mineral resources. The steps undertaken to validate some of the historical drilling for use in current mineral resource estimation are described in Section 12 of this report.
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The 1994 estimate was based on a standard polygonal method, with a sphere of influence mid-way to the nearest adjoining drill hole. The cut-off grade used was 2% combined Zn+Pb within mineralized intervals of at least 7 metres percent (width x grade).
In 2007, the PGI undertook a more recent estimate, based on a conservative extrapolation distance of 37.5 metres around each hole for C-1 category and 75 metres for C-2 category. Given a typical minimum drill hole spacing of 250 metres this meant that there was little or no resource continuity, even between adjoining mineralized holes. The restricted sphere of influence around the drill holes was apparently based on a geostatistical study carried out at the Pomorzany mine by an academic geologist. The parameters on which this study was based are not currently known to Rathdowney but are assumed to have included studies of variography.
The application of the new criteria resulted in a substantial reduction in tonnage compared to the earlier estimates which appear to have placed more reliance on empirical evidence of mineral continuity based on experience at existing mines in the Silesian ore field.
6.5.7 Chechlo
The pre-2008 PGI estimates for the Chechlo deposit used the same general categorization parameters as detailed above for Zawiercie and Rodaki-Rokitno Szlacheckie. The Chechlo historical estimates are summarized in Table 6-10. In contrast, the 2008 estimate resulted in a substantial reduction of deposit size compared to earlier historical estimates due to the very wide drill hole spacing at Chechlo, which largely impacted on the resource estimation approach used. Unlike at the other deposits, mineralization at Chechlo is hosted both in the Middle-Triassic Ore-Bearing Dolomites and in the underlying Devonian dolomites, i.e., in two discrete horizons. The predominant style of mineralization is also different, as it largely occurs as vertically-extensive, high-grade breccia pipes, discussed in more detail in Sections 7 and 8.
Table 6-10 Chechlo Historical Estimates by PGI
No. of Total Metres Period of Year Category Mt % Zn % Pb Holes Drilled Drilling 2008 C-2 + D 1.6 4.74 3.05 1993 C-1+C-2 3.5 4.80 4.11 125 36,787 1957-77 1977 C-1+C-2 10.1 4.20 3.09 1967 C-2 12 4.40 0.90
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It should be noted that the preceding estimates are historical in nature and as such are based on prior data and reports prepared by previous operators. A qualified person has not done sufficient work to classify the historical estimates as current mineral resources, and Rathdowney is not treating the historical estimate as current mineral resources.
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7.0 GEOLOGICAL SETTING AND MINERALIZATION
7.1 Regional Geological Setting
The Olza project is within the Upper Silesian district, near the boundary between the Caledonian Krakow- Myszkow structural zone and the Varisican Upper Silesian coal basin. Economic zinc and lead ores in Upper Silesia are principally hosted by dolomites of the Middle Triassic Muschelkalk Formation. South of the ore district, the Triassic rocks are overlain by Miocene molasse and flysch of the Carpathian foredeep (Figures 7-1, 7-2, and 7-3) deposited during Alpine orogenic phases in the Cretaceous to Tertiary periods. One of the most important ore controls for the district are steep faults and fractures in the nearly flat-lying Mesozoic rocks that mainly reflect reactivation of faults and fractures in the structurally complex basement.
Figure 7-1 Tectonic Setting of the Olza Project (Adapted from Leach, 2007)
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7.2 Regional Stratigraphy
The stratigraphic column in the project region is shown in Figure 7-2. In the southwestern part of the district, the Triassic host rocks overlie Upper Carboniferous Coal Measures. However, in the northeastern part of the district, where the Olza project is located, the Triassic rocks transgressively overlap the erosional paleo-relief of the Lower Carboniferous and Devonian carbonates, and the Permo- Carboniferous strata are missing. The oldest rocks that host ores in the district are medium- to fine- grained Devonian limestone and dolomite. Below these rocks are Lower Paleozoic sedimentary, metamorphic, and igneous rocks that comprise the strongly folded Varisican-Caledonian basement.
Figure 7-2 Stratigraphy of the Olza Region (Adapted from Osika, 1990)
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The first sediments deposited on the Paleozoic basement rocks consist of the Bunter Sandstone of Triassic age, which is locally red, plus up to 50m of argillaceous dolomite and gypsum-bearing beds.
The overlying Muschelkalk consists of mostly limestone, with lesser amounts of claystone, sandstone, and diagenetic dolomite that total about 300 to 400m in thickness. Within the Lower Muschelkalk, the Gorazdze, Terebratula, and Karchowice beds are the proper stratigraphic names for what has historically been called the “Ore-Bearing Dolomite”, or “OBD”, since it is difficult to distinguish the original stratigraphic units, which were intensely dolomitized. The OBD is, strictly speaking, an epigenetic/diagenetic alteration, which, although mostly restricted to the above strata, is still somewhat discordant. The OBD is thus a recognizable logging unit, referred to in Polish-language logs as DK, or “Dolomit Kruszconosny”.
Following deposition of the Muschelkalk, weathering produced a paleo-karst system in the Muschelkalk that is believed to have played an important role in pre-mineralization ground preparation.
Above the Muschelkalk Formation is up to 150 metres of non-marine claystone of the Upper Triassic Keuper-Rhaetian Formation. These strata dip very gently (3-5°) towards the NE and are shaped into a series of horsts and grabens by a system of basement-controlled faults. These faults are steeply-dipping, WNW-trending, 3- to 5-km long structures which down-drop the strata towards the NE. Subordinate NNE-trending faults also exist.
During Early to Middle Jurassic time, the region remained above sea level and another widespread karstification occurred. In the Middle to Upper Jurassic, as much as 400 metres of limestone were deposited. Up to 300 metres of Cretaceous sandstone were then deposited in the eastern part of the district, marking the onset of early Alpine tectonism in the Carpathians.
South of the zinc-lead district, the Triassic rocks are overlain by Miocene molasse and flysch of the Carpathian foredeep, which were deposited during Alpine orogenic phases in the Cretaceous to Tertiary periods. Glacial deposits of both ice-contact and periglacial outwash types (gravels, sands, and clays), deposited during early Pleistocene glacial stages, limit the amount of outcrop in the district.
7.3 Local Stratigraphy
Economic zinc and lead mineralization in Upper Silesia is principally hosted by dolomites of the Middle Triassic Muschelkalk Formation, which overlies the Bunter Sandstone. One of the most important ore controls for the district consists of steep faults and fractures in the nearly flat-lying Mesozoic rocks. These faults mainly reflect reactivation of faults and fractures in the structurally complex basement (Figure 7-2).
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The bulk of Zn-Pb mineralization in the district is hosted by the 30-80 metres thick so-called Ore-Bearing Dolomite unit (“OBD”), a zone of epigenetic hydrothermal alteration largely overlapping with the Middle Triassic Muschelkalk beds and distinct from the earlier, regional-scale, diagenetic dolomitization. Although this zone of dolomitization is largely restricted to the strata of the Lower Muschelkalk Formation (mainly the OBD), it locally extends into the underlying Devonian carbonates and the overlying Middle-Upper Muschelkalk dolomites.
Figure 7-3 Cross-section through the Olza Region Drawn Along Line A-A’ in Figure 7-1 (From Leach, 2007)
All of the Zawiercie I/II, Rodaki-Rokitno Szlacheckie, and Chechlo deposits lie within Olza project concessions, along with the majority of the Marciszow deposit.
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7.4 Zawiercie Concession
7.4.1 Zawiercie Geology
Most of the Zawiercie concession is covered by Quaternary clays, sands, and gravel, so knowledge of the geology is mainly derived from subsurface data.
The basement rocks are strongly folded Lower Paleozoic formations (Ordovician/Silurian), which are locally cut by dykes of rhyolitic porphyries. Some of the porphyries are associated regionally with minor copper- molybdenum skarn mineralization, which has not been investigated on the Olza project, and is not further discussed in this report.
Above the basement is a thick series of Devonian carbonates (limestone, dolomite) and Carboniferous clastics that were only gently folded and subjected to block tectonics. These units are in turn unconformably overlain by the Permian to Jurassic formations, which include the mineralized Triassic carbonates that have undergone extensive but irregular dolomitization. These strata dip very gently (3-5°) towards the northeast. The mineral bodies are broadly stratiform, with one or more mineralized horizons present, but the bulk of mineralization is typically hosted by the lower horizon, at the contact between the dolomite and underlying limestone.
The Mesozoic rocks are broken into a series of horsts and grabens by a principal system of west- northwest faults, 3 to 5 km in length, that down-throw the strata towards the northeast, as well as a subordinate system of north-northeast faults (Figures 7-4, 7-5, and 7-6).
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Figure 7-4 Geology of the Zawiercie Concession Area (Source: Rathdowney Compilation)
Figure 7-5 Location of Cross-sections in Figure 7-6 in Relation to the Zawiercie I Deposit Outline (Source: Rathdowney, 2012)
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Figure 7-6 Detailed Geological Cross-Sections of the Zawiercie I Zn-Pb Deposit Area (Source: Blajda, et al., 2000)
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7.4.2 Zawiercie Mineralization
The Zn-Pb deposits at Zawiercie are of two types, principally hosted by the Triassic OBD. The most common are the stratiform to podiform bodies, which host replacement, karstic cavity infill and collapse breccia mineralization. The thickness of the stratiform deposits is quite irregular and attains 13 metres maximum, while the lateral extent of individual pods or lenses making up the deposit is typically 150-200 metres. It should be noted that these deposits are irregularly distributed within the region and their grades vary significantly.
The other deposit types reported are podiform and vein-type fracture zone infill, which are neither common nor laterally extensive.
A major fault zone divides the broad Zawiercie deposit into two parts: Zawiercie I, which saw most of the historical and recent drilling and hosts the current resource estimate, is also referred to as the ‘upthrown block’ (~13.5 km2), and the less-explored Zawiercie II, is referred to as the ‘downthrown block’ (~15.8 km2). The Marciszow deposit is directly adjacent to Zawiercie deposit to the north and the Rodaki-Rokitno Szlacheckie deposit is to the south (Figure 6-7). It is clear from historical documentation that the various deposits are parts of a much larger, discontinuous mineralized trend.
Deposit mineralogy is dominated by sphalerite and galena, with associated marcasite, and subordinate calcite, dolomite and locally barite. Average mineral grades reported range 4.8-5.9% Zn and 1.6-2.5% Pb (Zawiercie I deposit), and 3.2% Zn, 0.6% Pb (Zawiercie II). As discussed later in this section, silver is generally associated with the sphalerite, and average values in the range 30-40 ppm Ag are recorded. Cadmium content is reported to range from 586-615 ppm. Trace elements include Ga, Ge, Tl, Ni, Cu, Co, Mo, Sb, As, Ba and Sr.
Mineralization occurs at shallow depths, typically between 66–150m for Zawiercie I, and 80–220m for Zawiercie II. There are commonly one or two mineralized horizons ranging in thickness from 2.0–7.5 metres (average 3.9 metres). In addition, lower-grade mineralization is hosted by the underlying Devonian strata, where these form buried inliers.
7.5 Rokitno - Property Geology and Mineralization
The Rokitno concession lies directly south of the Zawiercie concession, and shares many features with it.
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7.5.1 Rokitno Geology
The geology of the Rokitno concession is broadly similar to that of the adjoining Zawiercie permit. The principal features, as shown in Figures 7-7, are: 1. Strongly folded Lower Paleozoic basement is overlain by Upper Paleozoic strata that have been gently folded and subjected to block tectonics. The overlying unit consists of sub-horizontal Permian, Triassic and Jurassic strata that lie unconformably on top of the Devonian and are cross-cut by numerous faults. 2. In the Lower Paleozoic, two major fold structures are present: a wide anticline with its axis oriented west-northwest extends between the Rokitno and Chechlo towns in the southwest part of the area of interest, whereas in the northwest part of the area a large, asymmetric syncline forms the continuation of the Siewierz syncline. The above two fold structures are separated by a laterally extensive, west-northwest oriented, en-echelon thrust zone (amplitude 20-70m). This thrust zone is paralleled by several subordinate faults with throws between 10-100 metres. 3. Additional normal faulting occurs. North-northeast faulting with a throw of 10-60 metres crosscuts folding in the western part of the area. West-northwest and north-northeast faulting is also present.
Porphyritic intrusions occur in the eastern part of the deposit area, and west-northwest elongated Devonian inliers are also mapped.
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Figure 7-7 Geology of Rokitno Permit Area (Source: Rathdowney Compilation)
Due to extensive Quaternary overburden cover, there is only limited geological information available from surface mapping. Most of the information on the geology and structure of the Rokitno permit area has been obtained from historical grid drilling across the property. The Permian-Mesozoic strata unconformably overlie the Paleozoic basement. On a regional scale the rock units have a very shallow dip to the northeast (0-5°), but on the scale of the Rodaki-Rokitno Szlacheckie deposit they plunge towards the southwest through a combination of folding and step faulting – the top of the OBD lies at approximately 100m depth below surface in the northeast of the Rokitno permit but is found at a depth of about 250m in the southwest (Figure 7-11). The units are cross-cut by a number of laterally extensive normal and strike-slip faults, forming several tectonic blocks. The principal fault directions are west- northwest and north-northeast, and most faults are steep (80-90°), with throws between several metres and 100m. The dominant structure is a major graben about 1km wide, that extends through the central part of the area in a west-northwest direction.
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Figure 7-8 Location of Cross-Sections in Figure 7-9 in Relation to Rodaki-Rokitno Szlacheckie Deposit Outline (Source: Rathdowney compilation)
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Figure 7-9 Geological Cross-sections Through the Rodaki-Rokitno Szlacheckie Zn-Pb Deposit Area (Source: Blajda, et.al.,2000)
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Figure 7-10 Stratigraphic Legend for Figure 7-9 (Source: Blajda, et al., 2000)
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7.5.2 Rokitno Mineralization
The bulk of mineralization is hosted by the Triassic OBD horizon, with lesser amounts occurring in the underlying Devonian strata and in the overlying Triassic Diplopora Dolomite. Minor mineralization has also been observed in the Gogolin beds and Roeth (Rot) beds (Lower Triassic). Mineralization is shown on historical exploration plans as being rather irregular in occurrence, forming lenses or nests of variable thickness and outline.
The host OBD is grey to dark-grey, fine-crystalline, generally poorly-bedded and commonly fractured, brecciated and cavernous. The thickness of the dolomitized carbonate horizon increases towards the southwest, from <25 metres to >80 metres (average 52 metres) and the base of the mineralized horizon lies at a depth varying from 110 to 351 metres, i.e., clearly deeper than at the Zawiercie deposit. This is related to the block tectonics of this area and downfaulting of parts of the deposit.
Reports on historical drilling by Polish state agencies confirm that mineralization occurs predominantly in sulfide form, and has the same mineralogy as the other deposits from the district (sphalerite-galena- marcasite). In the Triassic dolomite, mineralization occurs as replacement, crusts and bands of generally pale cream-brown sphalerite, in breccias, and also as fracture and vug-infill. In the Devonian dolomite, replacement mineralization, crusts and veins predominate. The Zn:Pb ratio of the mineralization is approximately 3-4:1, and the grain size of sphalerite is finest in the northeast part of the area (0.01-0.3 millimetres) and larger in the southwest and southeast, where bands of sphalerite up to 7 millimetres thick occur.
The most interesting part of the deposit appears to be in the east, where the Rathdowney drilling shows mineralized horizons range from 2 to 5 metres thickness, at depths of 100 to 300 metres, covering an area of approximately 4km2. Grades are often in the range 2 to 4% % Zn, and lower in Pb but occasionally up to 3%.
In the west, the second largest mineralized zone occurs in both Devonian and Triassic strata. In the Devonian, mineralization is recorded over widths ranging from 2 to 13 m, at depths from 250 to 300m. Grades are often in the range 2% to 5% Zn, and up to 1.5% Pb. In the Triassic strata, only one hole was drilled through the mineralized horizon, where the thickness is recorded as 2 metres and the depth 221 metres.
In the northern part of the permit area, the mineralized horizons vary from 2 to over 8 metres in thickness, at depths from 100 to 350 metres, covering an area of about 0.6 km2. Grades there range about 2 to 5% Zn, and up to 0.4% Pb.
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A small mineralized zone is also reported in the northwest of the Rokitno property, occurring in bands 2.0-2.5 metres thick at depths from 193 to 278 metres. Grades in historical drilling are reported as 2.4- 3.4% Zn and 0.1-2.0% Pb.
7.6 Chechlo - Property Geology and Mineralization
The Chechlo concession lies directly south of the Rokitno concession, and shares many geological features with it.
7.6.1 Chechlo Geology
The geology of the Chechlo property is broadly similar to that of the Zawiercie and Rokitno permits, with strongly folded Lower Paleozoic strata and gently folded Upper Paleozoic strata, unconformably overlain by a nearly sub-horizontal Permian-Mesozoic cover, itself subjected to block faulting following a predominant WNW direction.
The Chechlo deposit is associated with the Chechlo-Golczowice graben and the Klucze-Niegowonice horst, both being part of the broader Klucze-Niegowonice anticline. To the north, this anticline is bordered by the Zarzecze-Rodaki syncline and to the south by the Pomorzany-Okradzionow syncline. The west, south-west and southern parts of the Chechlo deposit lies a topographic low filled by Quaternary sands of the Bledow ‘desert’, underlain by Upper-Triassic clays, whereas the north and north- eastern part of the deposit have a slightly higher elevation and are underlain by upper Jurassic limestone.
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Figure 7-11 Geology of Chechlo Permit Area (Source: Rathdowney Compilation)
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7.6.2 Chechlo Mineralization
Three areas of mineralization have been identified to date at Chechlo by historical drilling. These include a Western zone, and apparently better-developed Northern and Central zones, which possibly join at depth. In all three zones, the Middle Triassic Ore-Bearing Dolomite beds host stratiform zinc-lead mineralization of the type present in the Rokitno and Zawiercie properties. In addition, the Devonian carbonates underlying the Central zone host mineralization that has localized by one or several sub- vertical breccia pipes, inferred to be broad dissolution collapse features. Historical drilling intersected some higher-grade material, e.g. 18% Zn+Pb over 30 metres, in these structures.
The Middle Triassic dolomite sequence which is host to stratiform mineralization has an average thickness of 40 metres, and consists of either massive micrite or sparite, commonly strongly fractured and brecciated, with breccias cemented by dolomite, calcite or Zn-Pb sulfides. Unusually for this district, the intensity of the dolomitization appears to decrease towards the bottom of the stratigraphic sequence.
Stratiform mineralization in the Triassic strata is up to 3 metres in thickness and can grade over 4% Zn+Pb. It occurs at a depth of ~160 metres in the Western zone, 160-210 metres in the Northern zone, and 130-185 metres in the Central zone, where stacked horizons were identified in historical drilling. Mineralization in the deeper Devonian carbonates is of generally higher grades and thicknesses.
Mineralization is commonly disseminated and occurs in the footwall of the dolomite horizon, as stratiform pods, irregular in shape. The mineralization is dominated by beige- to brown-colored sphalerite occurring as individual grains, veinlets, vug-infill, breccia cement, dolomite replacement.or thin “schalenblende” crusts. Schalenblende (“shell ore” in German language) is a banded, mammillary, assemblage of sulfide minerals, usually alternating layers of galena, sphalerite, wurtzite, and iron sulfides (marcasite, pyrite, and/or pyrrhotite). Banded sphalerite crusts are relatively more common in the Central zone, whereas sphalerite-cemented breccias are more abundant in the Northern Zone. The paragenesis also includes galena (nests, veinlets), marcasite, and calcite.
Mineralization hosted by the Devonian carbonates of the Central zone forms sub-circular breccia bodies, with a vertical extent exceeding 30m and significant Zn+Pb values, with a Zn:Pb ratio of 1:1 (i.e., enriched in lead, compared to the Triassic-hosted mineralization). The mineralized bodies are located at a depth of ~270-290 m, but in some holes were shown to extend a further 100m down. At Pine Point, Canada and elsewhere, these breccia-hosted bodies are often referred to as “prismatic” deposits.
As in the Triassic strata, they almost exclusively consist of sulfides, but here bands of schalenblende and sulfide-cemented breccias predominate. The bulk of the mineralization is hosted by dolomite (rarely by
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limestone), which typically is grey, medium-crystalline and locally organo-detritic. It is commonly crossed by veins of white or pink hydrothermal dolomite. The prismatic pods of breccia mineralization are inferred to represent the infill of collapsed karstic cavities, a common feature reported from many MVT districts.
7.7 Silver Content of Olza Project Mineralization
Rathdowney and CAM each undertook exploratory data analysis of Olza Ag:Zn ratios. The initial database examined by CAM contained 180 Rathdowney-drilled intervals (generally 0.5 metres each) from Zawiercie and Rokitno concessions, which were assayed for Ag as well as Zn and Pb, and which yielded positive Ag values (greater than the detection level of approx. 0.2 ppm).
Figure 7-12 shows a high degree of scatter and no significant correlation of Ag with Pb in the initial database. Therefore, no further analysis of the silver-lead relationship was undertaken by CAM. Figure 7-13 shows the relationship of Ag with Zn in the same initial database. There is an obvious positive correlation, so the relationship was analyzed again by CAM when more assay data were available.
Figure 7-12 Ag-Pb Plot for 179 Samples
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Figure 7-13 Ag-Zn Plot for 179 Samples
Figure 7-14 below shows the locations of the drill holes in the database used for the follow-up analysis, which included 685 mineralized samples from Rathdowney drill holes. The “North Domain” largely coincides with the northern and western part of the Zawiercie I deposit, whereas the “South Domain” includes the southeastern portion of Zawiercie I which lies on the Rokitno concession.
Figure 7-14 Locations of 685 Samples Investigated. UTM coordinates are shown.
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Figures 7-15 and 7-16 show Ag vs. Zn for the southern and northern subsets of data, which are divided arbitrarily at UTM northing 5,593,000. (This is near, but not exactly on, the Rokitno-Zawiercie concession boundary.)
Figure 7-15 Figure 7-16 Ag-Zn Plot for South Domain. N = 155 Assays Ag-Zn Plot for North Domain. N = 530 Assays
Both the North and South domains show good correlations between Ag and Zn. However, the slope of the correlation varies from 2.3 to 3.4. This means that for a given zinc content, the North Domain (i.e. Zawiercie I contains about 50% more silver than the South domain. It could be supposed that this is due to some original depositional factor.
The correlation of silver with zinc rather than with lead is quite possibly due to the occurrence of silver- bearing wurtzite in the samples. Wurtzite is the hexagonal ZnS polymorph of sphalerite, which is isometric, and can accommodate silver in its lattice. Wurtzite is a documented component of some ores from the nearby Pomorzany mine, where it occurs in mammillary schalenblende specimens.
Schalenblende containing wurtzite is reported from many localities in Europe, including Upper Silesia (Osika, 1990, page 181), and elsewhere world-wide (see internet site http://www.mindat.org/min- 3556.html, accessed on June 15, 2012). Many of these localities have documented wurtzite present. According to Polish geologist W. Retman, a former mine geologist at Pomorzany (personal communication to CAM, November 2011), layers of “colloidal” sphalerite and wurtzite are common in schalenblende at Pomorzany. The possibility exists that any originally-formed Olza wurtzite has reverted to sphalerite post-depositionally. Only X-ray or thin-section analysis can distinguish between the two minerals, and visual identification is not reliable.
While the silver values in core samples are low (below 40 ppm Ag in most samples), this preliminary analysis suggests that zinc concentrates could have interesting recoverable silver values. The issue of silver in the Olza mineralization should be kept in mind during further sampling and evaluation of the Olza project.
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8.0 DEPOSIT TYPES
The Olza project mineralization described in the preceding section is mostly stratabound, mainly stratiform, but locally (in the Chechlo area) is also hosted by discordant, subvertical bodies of dissolution collapse breccias. These two styles of mineralization are closely related and are classical examples of Mississippi-Valley Type (MVT).
MVT deposits are well-known world-wide, and are described in numerous published articles (e.g., Leach, et al, 2010; Sangster, 1995). Examples include Lisheen and Navan (Ireland); Bleiberg (Austria); Reocin (Spain); Nanisivik, Pine Point, and Gays River (Canada); Tri-State/Joplin, Viburnum/Buick, and Central Tennessee (USA); San Vicente (Peru); Elura (Australia); Touissit (Morocco); Bougrine (Tunisia); Mehdiabad (Iran); and many others. According to Leach, et al., (2010):
“Mississippi Valley-Type (MVT) lead-zinc deposits are found throughout the world but the largest, and more intensely researched deposits occur in North America. The ores consist mainly of sphalerite, galena, and generally lesser amounts of iron sulfides. Silver is commonly an important commodity, whereas Cu is generally low, but is economically important in some deposits. Gangue minerals may include carbonates (dolomite, siderite, ankerite, calcite), and typically minor barite. Silicification of the host rocks (or quartz gangue) is generally minor, but may be abundant in a few deposits. The deposits have a broad range of relationships with their host rocks that includes stratabound, and discordant ores; in some deposits, stratiform and vein ore are important.
The most important characteristics of MVT ore deposits are that they are hosted mainly by dolostone and limestone in platform carbonate sequences and usually located at flanks of basins, orogenic forelands, or foreland thrust belts inboard of the clastic rock-dominated passive margin sequences. They have no spatial or temporal relation to igneous rocks, which distinguishes them from skarn or other intrusive rock-related Pb-Zn ores. Abundant evidence has shown that the ore fluids were derived mainly from evaporated seawater and were driven within platform carbonates by large-scale tectonic events.”
MVT deposits are contrasted to other types of lead-zinc deposits such as skarns, and epithermal veins, which are typically closely associated with igneous sources of heat and fluids. The association of MVT deposits with sedimentary-exhalative (SEDEX) deposits is rather closer, and it is possible that a continuum may exist between these two types. However, the Olza mineralization clearly fits the MTV model, as shown in publications by Leach (2007), CSA (2010), Sass-Gustkiewicz (2007), Paradis, et al., (2007), and Sangster (1995).
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MVT deposits in a cratonic environment are usually broadly flat-lying and relatively shallow. Exploration is typically based on surface geochemistry, geophysics, and drilling. Because the project area in Poland was glaciated, surface geochemistry and geology are of limited value, and geophysics with follow-up drilling are the basis of Rathdowney’s exploration.
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9.0 EXPLORATION
9.1 Exploration methods
As the Rokitno and Zawiercie properties essentially involve brownfield, exploration in an area without exposures of mineralized rock, the bulk of work conducted to date on the properties by Rathdowney has consisted of diamond drilling, described in detail in Section 10.
The field work other than drilling involved a localized Induced Polarization/Resistivity survey, discussed below, as well as numerous site visits, field mapping, development of a detailed inventory and survey of historical drill hole markers, as well as social and environmental appraisals. A considerable effort has also been made to complete the acquisition of extensive historical records, which were digitized, compiled and validated using GIS. The historical drilling database assembled information for 1,161 historical holes, with their associated lithological, stratigraphic, core recovery, and assay data, which were then used to generate accurate bedrock geology maps of the properties and geological cross-sections.
9.1.1 IP-Resistivity Surveys
Two localized IP/Resistivity surveys were conducted on the properties. The first one was run by Cardiff- based TerraDat Geophysics in December 2010 and involved gradient array IP, using an Elrec Pro Receiver combined with a VIP 4000 Transmitter manufactured by Iris Instruments of Orleans, France. Two representative areas of pasture land / forest were surveyed, namely a ~0.6 km2 area on the Rokitno property and a ~0.4 km2 area on the Zawiercie property. The spacing of the survey lines and the distance between stations was 50m and currents as high as 4 amps were employed. Despite the closely-spaced lines and overlapping electrodes, high electrical noise levels of cultural origin (i.e., associated with man- made sources, such as power lines, gas lines, telephone cables, railway, electrical transformers, etc.) precluded gathering any reliable chargeability data, which showed no sign of repeatability. On the other hand, the resistivity data, which ranged from 65 to 305 ohm metres (avg. ~200 ohm m) were reliable and repeatable, but consistently low, implying high porosity and high water content of the host carbonate rocks. Although some correlation was established between resistivity contours and the location of ore- grade historical drill intercepts, the results of the method were deemed unsatisfactory for continuing the survey.
A second IP/Resistivity survey was carried out in late November 2011 by Vancouver-based Peter Walcott & Associates Ltd., and used the pole-dipole array variant, in order to increase the signal-to-noise ratio in an area of widespread ambient electrical noise. The survey was conducted using a pulse type system, the principal components of which were manufactured by Instrumentation GDD Inc. of Quebec, Canada, and which consisted of three units: a transmitter providing a maximum of 5.0 kw d.c. (GDD), a receiver
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(GDD), and a motor generator. A 100 metre dipole and stainless steel rods were employed on most traversing, and first to sixth separation readings were obtained. For interpretation of the data, a two- dimensional smooth model inversion of the resistivity was carried out, using the Geotomo RES2DINV Algorithm, developed by Loke-et-al. The survey was carried in the form of several parallel lines 700- 1500 metre long, on each of the Rokitno and Zawiercie properties and aimed to examine the pole-dipole IP response, over known mineralization, so as to possibly use this response to extend the search for additional mineralization. The results of the resistivity survey suggested the presence of generally flat lying stratigraphy with no conductivity associated with known mineralization. On the other hand, chargeability decays confirmed the presence of intense cultural noise on both properties. In summary, using the specified variant of IP, no meaningful conductivity could be correlated with known mineralization, something partly caused by the widespread man-made electrical interference in the property area, and partly being the result of the zinc-dominant mineralogy of the sulfides present (sphalerite, the dominant zinc-bearing mineral, is not a conductive mineral).
9.1.2 Gravity Surveys
Mlynarczyk (2012) suggested that a sensitive gravity gradiometry survey could possibly detect “prismatic” breccia pipes, especially in the sparsely-drilled Chechlo deposit, where such breccia pipes are more likely to occur.
The stratiform (OBD) deposits tend to occur in host dolomites which are more porous than the enclosing rocks. The density of the sphalerite and the less-common galena and iron sulfides are largely offset by the vuggy nature of the host dolomites. Thus, they are expected to have a very small density anomaly, compared to barren dolomites.
On the other hand, the breccia structures have locally very high porosities, and extend to some depth. The very low densities of barren breccia, perhaps as low as specific gravity 2.0, are expected to be much larger than the more dense mineralized central portion of the breccia. Therefore, they might appear as gravity lows, which would become obvious drill targets. There is also a possibility that mineralization rich in sulfides of lead (galena) and iron (pyrite, etc.), but with lower porosity, could appear as gravity highs.
In summary, a sensitive gravity gradiometry survey could be a valuable tool to locate karstic breccias with associated mineralization, as well as to map the bedrock structures which likely control mineralization.
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9.2 Exploration Potential
At Rokitno and Zawiercie, the bulk of extensive historical drilling was focused on the shallower parts of the system and specifically what became the footprint of the Zawiercie I deposit, which was the subject of several historical estimates. More than half of the 1,500 holes drilled on the two properties were concentrated within only 10-15% of the total concession area. As a result, the remaining deposit footprints, especially the northern part of Zawiercie II and Marciszow, were drilled on an irregular and very widely spaced grid, typically 500 metres by 500 metres or so, with very little drilling being conducted between and adjacent to the historical footprints. It is also important to note that the historical deposit footprints were established somewhat arbitrarily and are not based on ‘hard’ geological boundaries. As such, they do not establish definitive limits to the mineralization, which effectively remains open in most directions.
Figure 9-1 is a “heat map”, or grade X thickness map, based on a combination of historical and Rathdowney drilling. It is clear from this plot that the Rathdowney drilling to date has not tested some large areas of high grade times thickness, as determined by historical drilling. Nevertheless, the East Mineralized Corridor is visible on Figure 9-1 as the arcuate trend of concentrated drilling and high grade- times-thickness values, in the central portion of the Figure.
Mississippi-Valley-Type (MVT) mineralizing systems require high-density drilling on a grid that is an order of magnitude greater than that conducted over the major parts of the project area, (i.e. a 50 metres by 50 metres grid vs. the typical 500 metre x 500 metre spacing noted above. The property is thus still under-drilled, and it is clear from pre-mine exploration drilling at Pomorzany that drilling from surface can easily miss significant zones of economic mineralization literally by metres. Evidence from Pomorzany (Retman, 2006; Wnuk, 1999) suggests that resources based on surface drilling were historically underestimated, compared to the resource that was ultimately mined.
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Figure 9-1 Grade Times Thickness Map, Based on a Combination of Historical and Rathdowney Drilling
In addition to the strong zinc potential associated with the extension of the middle-Triassic Muschelkalk carbonate strata, the Zawiercie and Rokitno properties also host an additional, stratigraphically lower, sequence of favorable carbonate host rocks, which locally contain potentially economic zinc mineralization. These are the Devonian age carbonates which, on average, occur some 20-80 metres below the Triassic mineralized horizon, i.e., at depths ranging from 110-170 metres and remain largely
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untested by drilling. In contrast to the ‘stratiform’ Triassic carbonate-hosted mineralization, known mineralization in the Devonian carbonates typically occurs in the form of karstic-collapse breccia pipes, which can have a vertical extent exceeding 400 metres.
This style of mineralization, which is known in some other Mississippi-Valley-Type districts such as Pine Point, Canada, usually has much higher grades than the ‘stratiform’ variety. Mines in the Upper Silesian district (e.g. Klucze), are known to have formed discrete orebodies ranging up to five million tonnes in size (Blajda, et al., 2000). Significantly, these breccia pipes are known to occur in the vicinity of Chechlo and Klucze, immediately south of the Rokitno property and along the same geological trend. Due to their small areal footprint and the fact that most historical drilling stopped short of the Devonian strata, these mineralized breccia pipes represent a major exploration target for Rathdowney.
The nearby Pomorzany mine started exploitation in 1974 within a 16 million tonne breccia zone grading 4.3% Zn and 0.5% Pb (Central Geological Office, 1975). Although Zawiercie and Rokitno occur at similar depths relative to Pomorzany, they are perched structurally within a horst, whereas Pomorzany lies in a graben. To date, significant breccia bodies have not been encountered in either historical or recent drilling at the Olza property.
Because of the potential for higher grades, the discovery of such breccias could greatly enhance the potential value of the Olza project. In this regard, the Chechlo concession, which has recently been granted to Rathdowney, is known to contain sizeable breccia bodies and these should be particularly responsive to gravity surveys. In addition, such surveys should be an effective tool to explore the slightly deeper and sparsely drilled southwest and southern parts of the Olza concessions, where graben structures have been identified.
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10.0 DRILLING
10.1 Drilling Program
Rathdowney’s drilling program from June 2011 to May 18, 2012 is reported herein. Drilling was carried out on the Zawiercie and Rokitno concessions, but not on the Chechlo concession, which had not been granted to Rathdowney as of May. Drilling which has continued since May 18, the effective date - the completion of the last drill hole used to estimate the mineral resources in this Technical Report, is not reported herein. Results of the later drilling are posted from time to time on Rathdowney’s website at www.rathdowneyresources.com.
The drilling program was designed to confirm and expand the known zinc-lead deposits and to establish mineral resources in compliance with CIM guidelines and National Instrument 43-101, as required under securities legislation for Canadian-listed companies. The program was successful in meeting these objectives.
The initial mineralized trend investigated on the Rokitno and Zawiercie concessions (called the East Corridor) follows a curvilinear pattern, with the wings oriented at azimuth 300° in the northwest, and azimuth 190° in the southeast (Figure 10-1). Total strike length of this mineralization is approximately 10 km and it is up to 1 km wide.
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Figure 10-1 Drilling on Zawiercie and Rokitno Concessions (The Labeled Lines Indicate Locations of the Cross-sections in Section 10.4)
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Within this mineralized trend, zinc and lead values are generally restricted to a flat-lying dolomitic unit, the OBD, located at depths ranging from 100 to 250 metres below surface. Mineralized zones are also flat-lying, and occur in thicknesses ranging from less than 1 metre to up to 10 metres, with 3 metres as the average thickness in the mineral resource area.
The drill hole collar locations were surveyed by the Zawiercie-based geodetic survey company GEODIMETR to Polish government technical standards using the ASG EUPOS satellite positioning system and a Topcon GRS-1 GPS receiver. Measurements in forested areas were performed using Leica TS02 and Geodimeter total station equipment. Drill hole collar coordinates in the Rathdowney database are recorded in the ETRS89/Poland CS2000 Polish Coordinate System.
10.2 Drilling Procedures
In June 2011, two diamond drill rigs were mobilized to site and Rathdowney commenced drilling in the northern part of the Zawiercie exploration concession. Up to six rigs were used during the program, variously supplied by five European diamond-drilling contractors: Rock Drilling Services (RDS), Boart Longyear Poland (BLP), Geofizyka Toruń (GT), HydroEłpol (HYD), Drilling2000 (D2), and DALBIS Śląskie Towarzystwo Wiertnicze Spółka (DALBIS). More than half of the holes were completed by RDS.
Drilling was carried out by wireline equipment, with the various contractors using several core sizes, the smallest being NQ size (47.6 mm diameter), and over half being HQ (63.5 mm diameter).
Selection of core samples is based on the following criteria: 1. Sample limits do not cross geological boundaries. 2. Alteration boundaries are usually respected, but the various types of dolomitization (fine- crystalline, porous-crystalline, spotty, and wavy) are not always readily distinguishable. 3. Minimum sample size is 30 centimetres. For mineralization less than 30 centimetres thick, wall rock on either side is included, to satisfy the 30 centimetre length. 4. Maximum sample size is 1.0 metre drill hole length in mineralized rock. Sometimes, 1.2-metre intervals are chosen because the rock is barren and the sample is lengthened to decrease the number of samples submitted. 5. Samples containing mineralization greater than 0.5% total sulfides are automatically chosen for analysis by the ICPORE method, described in Section 11.3. Samples that may appear barren but are located in the anticipated mineralized zone are chosen for analysis by MA/ES (see Section 11.3). 6. Generally, 4 metre shoulders are also submitted on either side of the main sample interval. 7. Barren intervals less than 4 metres between mineralized intervals are usually also submitted for analysis.
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During June 2011 to May 18, 2012, 178 core holes were completed, totaling 21,974 metres. The deepest hole was 199 metres, while the average depth was 123 metres. All were drilled vertically. No downhole surveys were made, due to the short hole length and the vertical hole orientation in essentially horizontal sedimentary strata. The 2011 holes were numbered OLZ-001 through OLZ-070 while in 2012 the numbering continued from OLZ-071 to OLZ-178.
During the 2011-2012 program, 60 of the holes had no significant mineralized intersection, including two holes (OLZ-052 and OLZ-86) which failed to reach target depth. Eleven holes were abandoned and re- drilled by offset holes.
A total of 7,424 core recovery measurements averaging 1.5 metres per drill run were taken for these drill holes. A median core recovery of 95% and a mean recovery of 86.4% was calculated for these intervals, 32% of which have 100% recovery. About 6% of the drill runs have some sections of zero core recovery marked with corresponding lengths of white PVC pipe in the core boxes. About 0.4% of the drill runs had zero recovery, and 1% had less than 10% recovery. The distribution of holes is shown on Figure 10- 1.
10.3 Core Processing by Rathdowney
Core was processed by company geological staff in the project area, at a logging and storage building near Rokitno, Poland. Processing includes geological and geotechnical logging, density measurements, core photography, sawing, and sampling. No comminution or other sample processing was carried out by Rathdowney. Figures 10-2 to 10-5 illustrate various aspects of the Rathdowney drilling and core processing.
CAM reviewed the core-processing facility and procedures, and is satisfied that processing was carried out using standardized procedures, with written protocols, to industry standard.
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Figure 10-3 Drill Core with Mineralization in Hole OLZ-045 (Photo by CAM, November 2011)
Figure 10-2 Drill Site OLZ-046 at Zawiercie, with Rathdowney Geologist Reviewing HQ Core (Photo by CAM, November 2011)
Figure 10-4 Figure 10-5 Reference Core Library in Logging Building. Core Racks in Logging Building. Skeletal Reference Core and Stratigraphic Column Are Summaries of Core-Processing Protocols on Shown. (Photo by CAM, November 2011) the White-Board. (Photo by CAM, November 2011)
Rathdowney separated the core sample processing and analytical protocols into two streams, based on the visible degree of mineralization. The valuable minerals galena and sphalerite are readily visible in core, against the matrix of host carbonate minerals and yellow iron sulfides.
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At the Rokitno facility, the core was sawn in half lengthwise with a diamond saw. One half was placed in a sample bag along with the sample tag for that interval and the other half was returned to the core box and placed in long-term storage at Rokitno. Rubbly sections of core were sampled as separate sample intervals from solid core. Assay samples for rubbly core intervals were taken by passing them through a riffle splitter; one half for analysis, the other half returned to the core box. Half core samples for analysis were kept in a locked facility prior to shipment.
The average core length of sample for the both sample streams (visibly mineralized and not visibly mineralized) is 0.75 metres, and 90% of the samples range from 0.3 to 1.1 metres in length, with some exceptions to accommodate structural and lithological changes.
During 2011 and through hole OLZ-178 in May 2012, 4,944 core samples were sampled, of which 1,202 were from the mineralized sample series and 3,742 were from the host rock sample series.
Samples were classified as either “mineralized” or “host” to ensure they were prepared and analyzed appropriately at the analytical laboratory, as discussed in Section 11. “Mineralized” samples were those showing in excess of 0.5% combined Zn+Pb by visual estimate, and those adjacent with some visible mineralization. Analytical results for these samples were used in resource estimation studies. “Host” samples were primarily taken for multi-element geochemical and trace element analysis of the mineralized areas and the surrounding wall rock.
10.4 Drilling Results
Most of the Rathdowney holes encountered interesting Zn-Pb mineralization, as shown in various Rathdowney press releases. Figures 10-6 through 10-8 illustrate typical results across the mineralized trends.
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Figure 10-6 Cross-section A-A’ Showing Drilling Results
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Figure 10-7 Cross-section B-B’ Showing Drilling Results
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Figure 10-8 Cross-section C-C’ Showing Drilling Results
Figure 10-9 shows the area drilled by Rathdowney, within the arcuate East Mineralized Corridor, shown in red. The “2012 Resource” shown in Figure 10-9 is defined in Section 14 of this report.
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Figure 10-9 Drill Plan showing East Mineralized Corridor
In CAM’s opinion, the drilling program by Rathdowney was successful in defining mineralization of interesting thickness and grade.
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10.5 Bulk Density
The measurement of rock densities is discussed here, since the measurements were carried out on drill core as part of the normal core processing on-site.
10.5.1 Definitions
The mass-per-volume of a heterogeneous material such as mineralized rock is referred to as the “bulk density” (BD) expressed as grams per cubic centimetre or equivalent. In contrast, the mass-per-volume of a homogeneous material such as a specific mineral, is expressed as “specific gravity” (SG) a dimensionless term used to compare the densities of different materials relative to water. For purposes of calculating tonnages of mineral resources, the mass is normally calculated when dry of occluded water, but not combined water, and is expressed as “dry bulk density”, or DBD.
Drying of rock samples (e.g. drill core) is normally carried out in an oven at 105 degrees C for several hours, often overnight. This temperature ensures the evaporation of water in pores and on surfaces, but without driving off water of crystallization (H2O) or hydroxyl ions (OH).
If the natural, pre-drying, water content is measured, it may be expressed in either of two ways: “wet basis” or “dry basis”; either one is acceptable, but the basis MUST be stated to avoid ambiguity.
Wet-basis moisture is defined as: weight of water expelled/weight of wet sample, expressed as %.
Dry-basis moisture is defined as: weight of water expelled/weight of dried sample, expressed as %.
In general, geologists and chemists prefer dry-basis statements, whereas mining and mineral-processing specialists often use wet-basis statements. It is possible to uniquely convert between the two expressions.
10.5.2 Methodology
During the 2011-2012 drilling program, 6,046 bulk density measurements were made by site personnel using either the conventional water immersion method, or the coated water immersion method. (The field terminology was “field SG” for uncoated measurements, and “field BD” for coated measurements.)
Core samples were air-dried overnight or longer, but were not oven-dried, prior to weighing and immersion.
The procedures of the uncoated water immersion method (“field SG”) are as follow: • Dry, whole core samples, typical of the surrounding rock selected;
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• Weigh sample in air (Ma) ; • Weight sample suspended in water (Mw); • Read Mw quickly after balance stabilizes to minimize water incursion into rock pores; and • Calculation of the bulk density as per the formula: BD = Ma / (Ma – Mw).
The procedures of the coated water immersion method (“field BD”) are as follows: • Dry core samples, typical of the surrounding rock selected; • Weigh sample in air (MA) ; • Coat the sample with plastic wrap or vacuum-seal bag; • Weigh coated sample in air (MACOATED); • Then weigh coated sample in water (MWCOATED); and • Calculation of the bulk density as per the formula: BD = MA / [(MACOATED – MWCOATED) – (MACOATED - MA)/DC], where DC is the density of the coating material.
As a check on reliability of the process and equipment, a pure aluminum cylinder (depicted in the center in Figure 10-10 with no holes), with a known specific gravity of 2.70, was repeatedly measured by the coated method. Results are shown in Figure 10-11.
Figure 10-10 Figure 10-11 Standard Aluminum and Titanium Cylinders Measurements of Standard Aluminum (Photo by CAM, November, 2011) Cylinder of Bulk Density 2.70
The comparison indicates that coated BD data for the aluminum cylinder are 1% to 2% lower than actual BD values for this aluminum standard. This is presumably due to air entrapment between the core and the coating film during the measuring process. This level of bias is not considered to be material for estimation of mineral resources.
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The other aluminum cylinders, each of which was cleanly drilled with several large holes to effectively reduce the density when coated, were also used as checks, along with pure titanium (specific gravity 4.5) cylinders, both solid and drilled.
10.5.3 Results
A summary of the measured SG or bulk density results is provided in Table 10-1.
Table 10-1 Statistical Summary of Bulk Density Measurements
1st 99th Type Measurements Min. Median Mean Max. Percentile Percentile Uncoated 603 1.00 2.33 2.70 2.70 3.22 6.78 Coated 6,046 1.51 1.97 2.53 2.49 3.15 6.77
CAM reviewed cumulative-frequency plots of the measurement results, and believe that the bell-shaped distribution indicates reliability of results. Values outside the 1st and 99th percentile were cut from the data set.
Both the coated and uncoated measurements yielded values which appear to CAM to be reasonable, both statistically and geologically.
It is logical that the coated BD results approximate the actual in-situ bulk density better than the uncoated results, since porosity of the core sample is maintained during measurement. Even though a few of the largest voids and fractures observed in the core tend to be under-measured during testing, as the coating film is pressed into the larger voids, the net effect appears to be a slight bias toward lower BD’s, compared to uncoated core. Uncoated BD data are relatively simple to obtain, but they are relatively high because in-situ fractures and pore spaces tend to be filled by water during measurement. Therefore the uncoated data were not used in resource estimation.
The individual BD values from the coated measurements were accepted for use in the estimation of bulk density for each resource block, as discussed in Section 14.
CAM believes that the use of the measurements of coated core by Rathdowney are suitable for use in estimation of Inferred Resources.
However, CAM recommends that a trial be carried out, wherein fifty or so core samples are air-dried overnight, then also dried for 8 hours or more at 105 degrees C. Comparison of the results would indicate
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whether air-drying is sufficient to remove nearly all occluded water, or whether systematic air-drying should be instituted, or a small bias factor introduced.
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11.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY
These topics were discussed for the historical work in Section 6 of this report. This section addresses the 2011-2012 program by Rathdowney, including the processing of core prior to sample preparation. Figure 11-1 is a flow chart for 2011-2012 core processing and analysis.
Figure 11-1 Flow Chart for 2011-2012 Core Processing and Analysis
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11.1 Security
Core is boxed at the drill rig and transported by company vehicle to secure core logging facility of Rathdowney at Rokitno, Poland. The facility is locked when not occupied. CAM visited the logging facility in 2011, and is convinced that security of samples there is not an issue.
Half-core samples were placed in plastic sample bags, checked for sample sequence integrity and then shipped along with external QC samples (standards, blanks and duplicates) by commercial carrier to the Omac laboratory at Loughrea, County Galway, Ireland for sample preparation and analysis.
After analysis at Omac, the coarse rejects and mainstream pulp samples were shipped to the secure sample storage facility of Rathdowney at Mountmellick, County Laois, Ireland for long-term storage.
11.2 Sample Preparation
Sample preparation and chemical analysis were undertaken at Omac laboratory at Loughrea, County Galway, Ireland. Omac laboratory is accredited to ISO/IEC17025 for testing laboratories, and is totally independent of Rathdowney. During the course of the 2011-2012 drill programs, the ALS Laboratory Group purchased the Stewart Group, which had owned the Omac laboratory. As a result, some of the analytical codes, detection limits and method descriptions changed to those used by ALS in mid-2012.
Rathdowney submitted for preparation 4,944 core samples for preparation from Rathdowney’s drilling at Olza, in addition to 329 in-line reject duplicate (DX) samples. The in-line reject duplicates were prepared by Omac concurrently with the mainstream samples, and were analyzed in the same batch and reported on the same certificate as the samples they duplicate. At Omac laboratory, the half core split samples were organized into batches, verified against the sample shipment notice, weighed, dried, crushed to 80% passing 10 mesh (2 mm), then 500 g sub-samples were split and pulverized to 90% passing 100 µm. The coarse rejects and mainstream pulp samples after analysis at Omac were shipped to the secure sample storage facility of Rathdowney at Mountmellick, County Laois, Ireland for long-term storage.
11.3 Analyses
As mentioned above, chemical analysis was carried out at Omac laboratory at Loughrea, County Galway, Ireland, and an ISO/IEC accredited facility which is independent of Rathdowney.
In addition to the samples submitted for preparation, assay pulps for 129 inter-lab duplicates (DP), 371 standards (ST or SD) and 336 blanks were submitted by Rathdowney for external QAQC purposes.
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Samples from the mineralized-type analytical stream were assayed for Zn, Pb, Ag and additional 16 elements by multi-acid digestion with ICP-AES finish (ALS/Omac code: ICPORE). The Zn and Pb results are reported in percentage, and Ag in parts per million (ppm). Pb assays greater than 30%, the upper limit for Pb on the ICPORE method, were determined by an oxidizing aqua regia digestion with AAS finish (Omac code: BM2A, ALS code Pb-AAORE). Pb assays greater than 70% were determined by volumetric titration, (ALS method ME-CON02).
In addition to the ICPORE method describe above, all host (wall rock) samples and mineralized samples were assayed by four-acid digestion with ICP-AES finish for Pb, Zn, Ag and additional elements. From hole OLZ-001 through hole OLZ130, this was by Omac 45 element method MA/ES. From hole OLZ- 131 onward, this was for 33 elements by ALS method ICP61.
An analytical hierarchy was established for populating the assay table with results for samples with results by different analytical methods. Prior to the takeover of Omac by the ALS Group (up to drill OLZ- 134), if a sample was analyzed by the ICPORE method, then this result was used for values of: Zn >0.1%, Pb >0.1% and <30%, Ag >200 ppm, otherwise the Omac MA/ES method was used. After the takeover by ALS, if a sample was analyzed by the ICPORE method, then this result was used for values of: Zn >0.1%, Pb >0.1% and <30%, Ag >100 ppm, otherwise the ALS ICP61 method was used. Pb values >30% were analyzed by Omac method BM2AA or ALS method PbAAOre; both methods employ strongly oxidizing digestions followed by an Atomic Absorption (AA) finish.
The inter-laboratory pulp duplicates of mineralized samples were assayed by Acme Analytical Laboratories in Vancouver, BC, which is accredited to ISO/IEC 17025:2005. Acme used four-acid digestion with ICP-AES finish (Acme code: 7TD), with Zn and Pb values reported in percent. The wall rock duplicates were analyzed by Acme using by four-acid analysis with ICP-AES/MS finish (Acme code: 7TX) and the trace element values reported in ppm.
11.4 Quality Assurance/Quality Control
11.4.1 Methodology
Quality assurance (QA) is a set of systems and measures for the purpose of assuring that the results meet the required standards of quality. Quality control (QC) is the use of processes and tools to ensure that the desired level of quality is achieved. Since quality assurance and quality control are closely related they are typically referred as QA/QC.
Rathdowney implemented an effective external QAQC system consistent with industry best practice for 2011 and up to hole OLZ-178 in 2012. This program is in addition to the QAQC procedures used internally by the analytical laboratories. Table 11-1 outlines the types of external QAQC samples used, as
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described in detail below, while the quantities of samples analyzed during the Olza project are summarized in Table 11-2.
Table 11-1 Summary of Sample Types
QC Percent Sample Type Description Code of Total Regular samples submitted for preparation and MS Regular Mainstream ~80% analysis at the primary laboratory. Mineralized material in pulverized form with a known Standard concentration and distribution of element(s) of interest ST (Certified Reference 6% (determined by analysis at several laboratories), and Material or CRM) randomly inserted using pre-numbered sample tags, Standard reference sample submitted with duplicates SD Standard Duplicate <1% and replicates to the check laboratory. DP An additional split taken from the remaining pulp reject Duplicate DX (DP) or coarse reject (DX), randomly submitted using 10% or Replicate pre-numbered sample tags. Geological material with no appreciable grade, used to BL Blank 5% test for contamination.
Table 11-2 External QA/QC Frequency Summary
Drill Program MS DP DX SD ST BL ST % Historical 88,095 ------2011 2,132 129 130 5 154 124 7% 2012 2,812 199 199 0 217 212 8% TOTAL 93,039 328 329 5 371 336 -
11.4.2 Standards
Table 11-3 lists the standards used in the 2011 and 2012 exploration programs. The standards were obtained from sources as shown in Table 11-3. The regular assay results for Zn, Pb, and Ag of the inserted standards were evaluated based on limits determined from round-robin analysis by 14 to 15 laboratories for each standard.
Table 11-3 Standards Used in 2011-2012 Drill Programs
Standard Source Times Used Zn % Pb % Ag g/t ME-7 CDN Labs, Canada 47 4.84 4.95 150.7 ME-8 CDN Labs, Canada 76 1.92 1.94 61.7 ME-11 CDN Labs, Canada 176 0.96 0.86 79.3 ME-12 CDN Labs, Canada 31 0.275 0.222 52.5 131b* ORE, Australia 41 3.03 1.86 32.1
Note: Certified values are those derived from aqua regia digestion
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A standard is deemed to have failed when the result falls outside the control limits of three standard deviations away from the mean for that standard for the element of interest. The laboratory is notified and the affected range of the samples is re-run for that element until the included standard falls within the control limits (passes). Passed data analytical results are imported and supersede any previous assay records in the database.
The regular assay results for Zn, Pb, and Ag were controlled based on a limit mean ± 3 standard deviations, as determined for the inserted standards from round-robin analysis. A standard is deemed to have failed when the result falls outside this limit. The laboratory is then notified, and the affected range of samples is re-run for that element until the included standard passes (falls within the control limits).
Figures 11-2 to Figure 11-4 show the standard control charts after re-runs for the 2011-2012 drill program. The results after re-runs of the inserted Zn, Pb and Ag standards now all fall within the established control limits. In those cases where mainstream samples were selected for re-analysis due to the failure of adjacent control samples, the assays from passing batch analyses were used in the database.
Figure 11-2 Zn Quality Control Chart for 2011-2012 Drill Program
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Figure 11-3 Pb Quality Control Chart for 2011-2012 Drill Program
Figure 11-4 Silver Quality Control Chart for 2011-2012 Drill Program
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11.4.3 Blanks
During the 2011-2012 drill program, a total of 336 external materials with no appreciable Zn, Pb and Ag grade were as inserted blanks. These samples include 173 barren limestone samples devoid of visible Zn, Pb and Ag mineralization from the Czatkowice aggregate quarry south of Olkusz, Poland, and 163 commercial pulp blanks. They were inserted with the regular assay samples to monitor for potential sources of Zn, Pb or Ag contamination. No certified Zn, Pb, Ag pulp blanks were readily available, so precious metal blanks BL-7 and BL-9, certified to <0.01 g/t Au, Pt and Pd were used instead.
The barren rock samples show occasional spikes to 0.10 to 0.15% Pb and Zn. It was assumed that this was likely due to a low level of cross-contamination that occurred during the crushing stage of sample preparation due to inadequate cleaning of equipment between samples. This was not deemed to have a significant effect on the results; however, the laboratory was advised to take better care in this area.
The precious metal pulp blanks generally assayed to a very low level of Zn and Pb content. Results for pulp blank BL-9 indicate that it has Ag up to the 1.0 g/t range, however pulp blank BL-7 is typically much lower. It was assumed that this was due to some Ag content in BL-9, not due to contamination. The assay results (Figure 11-5 to Figure 11-7) for the inserted blanks indicate that no significant levels of contamination occurred during sample preparation and analysis.
Figure 11-5 Zn Monitoring Chart of Blanks for 2011-2012 Drill Program
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Figure 11-6 Pb Monitoring Chart of Blanks for 2011-2012 Drill Program
Figure 11-7 Ag Monitoring Chart of Blanks for 2011-2012 Drill Program
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11.4.4 Duplicates
A total of 329 inline reject duplicates (DX) were assayed along with the regular assay samples during the 2011-2012 drill program. In addition, 272 inter-lab pulp duplicates were check assayed in the Acme Laboratories in Vancouver BC. The results are shown in Figure 11-8 to 11-13.
The results of the inter-laboratory duplicates indicate good agreement in the determination of Zn, Pb and Ag values on the original assay pulps between Omac and Acme. There is also generally good agreement in the analysis of splits taken from the coarse reject that were pulverized and assayed at Omac.
The intra-laboratory, sample preparation duplicates, analyzed in-line on the same work order as the regular mainstream samples, show somewhat greater variability than the inter-laboratory results. It is assumed that this is difference is inherent between the re-split and the original pulp. This implies that the difference in assay results between re-analysis of the same pulp (essentially the same material) by two separate independent laboratories is less than the difference obtained by taking a split from the coarse reject and analyzing it at the same time at the same lab. The pulp verus reject difference, (which is not particularly large), is not surprising, as the coarse reject is not as homogenous as the pulp. In the same way, the other half of core is less homogenous than the coarse reject.
Figure 11-8 Figure 11-9 Zn Scatter Plot of Inline Duplicates Pb Scatter Plot of Inline Duplicates for 2011-2012 Drill Program for 2011-2012 Drill Program
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Figure 11-10 Figure 11-11 Ag Scatter Plot of Inline Duplicates Zn Scatter Plot of Inter-lab Duplicates for 2011-2012 Drill Program for 2011-2012 Drill Program
Figure 11-12 Figure 11-13 Pb Scatter Plot of Inter-lab Duplicates Ag Scatter Plot of Inter-lab Duplicates for 2011-2012 Drill Program for 2011-2012 Drill Program
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11.5 CAM Statement of Opinion
Based on CAM’s site visits to the Rokitno core processing facility, and review of written protocols, CAM is satisfied that security and processing of core were within CIM standards, and that samples submitted for preparation and assaying were representative of the core obtained. Sample preparation and assaying were carried out at ISO-accredited facilities.
Furthermore, CAM reviewed the QA QC information and believes that the frequency of insertion of QA QC materials is better than average industry practice, and that requiring reruns for material beyond the three standard-deviation limit from the accepted value is acceptable engineering practice.
There are typically slight biases among laboratories, as illustrated by the fact that the visual average in figures 11-2 through 11-4 are slightly above the zero line. CAM prefers to adjust the accepted value, which for standard reference materials is the average of several laboratories to match the mean of the primary laboratory. Adjusting the mean may result in slightly fewer reruns without loss of database quality.
CAM believes that the analytical results from Rathdowney’s Olza drilling are suitable for use in estimation of mineral resources.
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12.0 DATA VERIFICATION
12.1 Verification of Historical Data
A key component of the Olza project is the existence of over 1,600 historical diamond-drill holes on the property, with location and assay data available for the great majority of these, but no core.
Rathdowney comprehensively identified, recovered, and digitized data from the historical drilling, as described below. The validity of the historical data for resource estimation was determined by estimating resources in two areas using only historical data, and separately using only Rathdowney drill data from the same areas, as described below. These numbers checked closely, indicating that the new and historical drilling are consistent enough that both may be used in the calculation of an inferred resource.
CAM believes that the historical database is suitable for use in resource estimation, when used in conjunction with Rathdowney drilling. Continuing validation of the historical data is necessary as Rathdowney drilling proceeds.
12.1.1 Review of Historical Drill Samples
Verification of drill core, sample reject or assay pulp materials from the historical core drilling programs prior to 2011 is not possible as essentially no material remains from these programs. Retention of drill core and sample materials for later examination was apparently not part of typical exploration practice in Poland at the time. Only a few isolated specimens were located from the early drilling.
12.1.2 Re-Survey of Historical Drill Collars
In May and June 2012 Rathdowney searched for the locations of 649 historical drill markers on the ground, based on collar coordinates in the compiled database. Preserved drill hole markers, consisting of concrete monuments or drill casings protruding from the ground, were found for 115 of these holes. The drill collars that were not located are typically in areas that have been built up, or are subject to active agricultural or forestry operations in the 30 or 40 years since they were drilled. CAM noted such collars during CAM’s site visit in November, 2011. The photographs in Figures 12-1 and 12-2 show two typical examples of these markers.
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Figure 12-1 Figure 12-2 Casing of Historical Drill Hole ZO 4-16. Monument of Historical Drill Hole ZN 6-5. Photo by CAM, November, 2011 Photo by Rathdowney, 2012
The 115 historical drill holes located by Rathdowney and three OLZ series holes from the current program were resurveyed in June 2012 by local survey company GEODIMETR using the same geodetic survey methods in accordance with Polish technical standards as described in the drilling section of this report. After further review, twelve of the re-surveyed hole markers were deemed unlikely to be in-situ.
The median differences in the re-surveyed coordinates are: 18.7 metres (east), 0.6 metres (north) and 0.0 metres (elevation), compared with the historical locations. Location differences were not consistent enough to establish a uniform transformation. Therefore, the coordinates in the digital compilation of historical coordinates were retained.
CAM believes that the bias in eastings of the historical collars is not material to the estimation of Inferred Resources, given the wide hole spacing.
12.1.3 Recovery and Transcription of Historical Data
The historical drilling, described in Section 6, was carried out by Polish state research bodies in several phases over a 35-year period between 1953 and 1988, and is generally well documented. Reports were located in various Polish geological and technical institute libraries and repositories, mostly in Warsaw and Cracow. Detailed information including: drill geological logs, certificates of assay analysis, strip logs, graphic logs, core recovery data, specific gravity values, location maps, cross-sections, and resource estimation tables, is available in hard copy format.
There is no record of external QA/QC standard reference materials inserted along with core samples for the historical drilling. However, there is some information on the historical duplicate control assay
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samples. In the light of Rathdowney’s verification program described below, it was not deemed necessary to evaluate the duplicate data.
Rathdowney Initial Data-Entry Program
As a first step to creating a digital database of the historical pre-2011 drilling information, Rathdowney conducted extensive research in the Polish archives. Documents from these repositories were scanned wherever possible as a first step in creating a digital compilation and a modern drill hole database. As a second step, critical drill hole data was keypunched so it could be imported into a the new database for exploration planning and resource estimation purposes.
In 2010, a Polish geological researcher, Dr. M. Krzak from AGH University in Cracow, initiated the data entry process by keypunching selected source records into a spreadsheet. The volume of historical data was estimated to be in excess of 160,000 assay interval records from over 1,600 drill holes. Data was entered according to area of interest, beginning with the Zawiercie I and Zawiercie II deposits, then Rodaki-Rokitno Szlacheckie and Marciszow, and finally Chechło-Klucze. This work continued into 2011 and led to the creation of the original Rathdowney database.
After the initial data entry exercise was completed, the following observations were made with respect to the drill hole-ID, collar location and orientation information: 1. Drill hole records are recorded in the metric system. 2. 1,679 drill holes were recorded. 3. Polish Geological Institute (Geological Survey) data were deemed most reliable. 4. Collar coordinates in the original geological records were either missing or obscured. 5. Actual coordinates were obtained separately from the Geological Survey and other sources. 6. Coordinates for 557 holes were obtained by scaling from existing Geological Survey maps. 7. Coordinate data was recorded in several systems, including “1942”, “1965” and “1992”. 8. The “Polkovo 1942 Zone 4” coordinate system was adopted as the one most commonly used. 9. 283 drill holes in “1965/5” coordinates were converted to “Polkovo 1942 Zone 4” using MapInfo. 10. A small number of holes for which coordinates could not be found, or were in local-grid coordinates only, were removed from the database. 11. Collar coordinates were cross-checked against historical plan maps. 12. Where Hole-ID format varied from log to log, a standardized system was used, e.g. “276 TN” to “TN-276”. 13. The Polish character “Ł” (not Roman “L”) in the original records was replaced by “X” for 109 Hole-IDs. 14. Duplicated drill hole records were reviewed, evaluated. those deemed most reliable were used.
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15. Some duplicated drill hole records are actual re-drills, usually designated with suffix “A” or “B”. 16. Elevation (z coordinate) data were lacking for some holes. 17. Missing elevations were obtained using MapInfo interpolation from existing data for 234 holes. 18. Missing elevation data was obtained from the digital terrain model (DTM) for 57 holes. 19. All holes were drilled vertically. 20. No down hole survey records were found. 21. If hole lengths were not recorded specifically, the last logged interval was used.
The following observations were made with respect to the assay data: 1. 1,055 historical drill holes with assay records were entered. 2. There are 624 historical drill holes for which no assay records were located. 3. Only sections of drill holes containing intervals with assays >0.25% Zn+Pb were keypunched. 4. 35,500 historical assay intervals were entered as: Hole-ID, from, to, Zn% and Pb%. 5. Pb and Zn values for sections of drill holes not entered were replaced with a “-1” character. 6. 4,000 “-1” characters were improperly changed to 0.1% Pb and 0.1% Zn in the original database. 7. Some intervals have overlapping “Rdzen” (core) and “Zasyp” (charge or rubble) assay results. 8. Values in the original database were inconsistent as to the use of Rdzen (“R”) or Zasyp (“Z”).
Rathdowney Second-Stage Data-Entry Program
In May and June 2012, Rathdowney completed a second round of data entry of 88,000 assay intervals from 561 historical drill holes. Data entry was prioritized to focus on the Zawiercie I, Zawiercie II and Rodaki-Rokitno Szlacheckie deposit areas as defined by the historical workers. This was done because the complete set of historical records was too great to be keypunched in the time available. Also, some of the data pertained to drill holes outside the concessions held by Rathdowney at the time.
Of the new entries, 64,100 assay intervals were added that had not previously been captured. A further 12,700 assay intervals correspond with ones previously entered by Rathdowney in 2010 and 2011. For these records, double entry verification techniques were employed. Matching records were compared, differences evaluated and corrections made. Records of assay information that matched exactly in both entries were deemed correct and were accepted. Where information did not match, scanned copies of the original source documents were reviewed to determine the correct input value.
The data entry work completed by Rathdowney in 2010-2011 and 2012 generally had a low error rate. A few typing or keypunching errors were also uncovered in the original Polish records, typically minor
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overlapping from-to errors and the like. For the Rathdowney entries, most errors are attributable to the following: 1. Poor legibility on the original scans. 2. Selective entry in 2010-2011. 3. Lower assay grade sections of holes not entered. 4. Control assay results, Pb and Zn oxide assays and other elements not entered. 5. Single entries made for from-to’s intervals containing both core and “zasyp”. 6. Core recoveries necessary for “zasyp” calculations not entered. 7. Re-drills or “deviations” not properly entered. 8. Replacement of “–1” values representing intervals not entered, by 0.1% Pb and 0.1% Zn values. Errors or obvious typos in the original logs (e.g. overlapping from-to’s), that were not corrected.
The data-entry exercise was of value for thoroughly understanding of the historical drill data, adding records to the digital compilation, and accounting for intervals containing “zasyp”.
Double entry verification increased the confidence level, particularly for the higher-grade sections of the “priority area”. Some work was also completed on the “non-priority” records; however, it was not compiled in the final database at the time of this report. It is recommended that this additional data be added prior to the next resource estimation.
CAM Validation of Data Entry
During CAM’s (Robert Sandefur) first visit to Poland in early 2011, he spent a day reviewing historical copies of drill logs and checking these against the database. Except for legibility and judgment issues, no errors were found.
During the 2011 resource update CAM was provided with PDF copies of various drill logs and checked some 200 records. Again there were legibility issues which what appears to be copies of a copy but the disagreement rate between CAM and the provided database was less than 2%, which given its pedigree is probably acceptable. However, CAM recommends that Rathdowney continue to try to obtain the most legible copies possible and if possible the source documents.
12.1.4 Validation of Historical Database
A validation of the historical database was completed prior to its use in the resource estimation. This validation addressed the following areas: 1. Spatial accuracy of collar coordinates. 2. Transcription accuracy of the analytical data from historical records.
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3. Representational accuracy – do the reported intersections correctly characterize the tenor of the mineralization when compared to current drilling?
The validation approach for 1 and 2 above is detailed in subsections 12.1.2 and 12.1.3, above. This subsection describes the approach to assessing the degree of correspondence of intersections from historical holes and those obtained from nearby holes cored during the 2011-2012 drill campaign. A high degree of correspondence would indicate the historical database is suitable for use in resource estimation.
The karstic nature of the Olza mineralized bodies poses significant problems for drilling and core recovery. Very early in the drill campaign, this characteristic made direct comparisons of twinned pairs of drill holes very difficult, because mineralized grade and thickness are, to a degree, a function of core recovery. To better compare the grade of the mineralization from the historical drilling record to the grade obtained in the 2011-2012 program, it was felt that assessing a larger area comprised of several drill holes from both data sets would provide superior results.
Two areas in the northwest part of the project were selected because of a concentration of Rathdowney holes and historical holes. In the first area, two three-dimensional (3D) solids were created to encompass the mineralization (Figures 12-3 and 12-4); the first solid was based solely on the historical drill intercepts, and the second was based solely on the Rathdowney drill intercepts. Two sets of descriptive statistics were generated based on the intercept grade (Pb%+Zn%)* thickness, and the results compared.
First Test Area
The test areas are depicted in Figures 12-3 and 12-4. Both areas are within the Zawiercie concession.
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Figure 12-3 Plan View of Historical Drilling and Mineralized Volume
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Figure 12-4 Plan View of Current Drilling and Mineralized Volume
The results of the analysis show good correspondence between the historical and the new drill datasets, in spite of the large disparity in data populations (16 historical holes vs. 44 new holes). The basic statistics for grade*thickness for (Pb%+Zn%) in the historical holes and new holes are similar: mean (21.9 vs. 19.1); standard deviation (16.0 vs. 15.2 ); coefficient of variation (0.73 vs. 0.77), as shown in Figures 12- 5 and 12-6.
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Figure 12-5 Historical Drilling Descriptive Statistics
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Figure 12-6 Current Drilling Descriptive Statistics
To further compare the performance of the two drill datasets in this area, two block models were estimated: one using the historical drill dataset and its associated modeled wireframe solid, and the second using the current drill dataset and modeled wireframe, with the view that similar grades and tonnages at a given cut-off would indicate that the drill databases are suitable for combining in a resource estimation.
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Continuity analysis suggested that blocks could be estimated into the block models using an ellipse with radii of 100m and 80m for the major and semi-major axes, oriented at 310.
Other estimation parameters employed are presented in Table 12-1.
Table 12-1 Estimation Parameters
Item Value Minimum # of samples 1 Maximum # of samples 12 Estimator ID2 Run Length (m) 0.5 Top Cut none
Using a 4% Zn cut-off the grade/tonnage totals in Table 12-2 were obtained.
Table 12-2 Estimation Results in First Test Area
Drilling Cutoff Metric Average Grade Era Zn % Tonnes Zn % Pb % Ag g/t Current 4 1,480,000 6.2 0.8 33.13 Historic 4 1,560,000 6.8 0.8 N/A
At a 4% Zn cutoff there is good correspondence between the two block models, both in terms of grade and tonnes.
Second Test Area
A similar analysis was undertaken in an area southeast of the one previously described (Figure 12-7), with the results presented In Table 12-3. Screen prints of the area with the new and old data were visually reviewed and found to be qualitatively similar. Because of legibility issues the screen prints are not included in this report. A quantitative comparison of historical and new results in the second test area is given in table 12-3.
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Table 12-3 Estimation Results in Second Test Area
Historical Drilling Rathdowney drilling Cutoff Grade Metric Grade Zn% Metric Tonnes Zn% Pb% Tonnes Zn% Pb% Ag g/t 2 540,000 5.1 0.8 510,000 6.5 0.8 27.7 3 370,000 6.2 0.8 450,000 7.0 0.8 29.8 4 260,000 7.4 0.7 370,000 7.7 0.9 33.0 5 210,000 8.1 0.6 310,000 8.4 0.9 36.0 6 170,000 8.9 0.5 250,000 9.2 0.9 39.4 7 120,000 9.7 0.3 190,000 9.9 1.0 43.2 8 100,000 10.2 0.2 150,000 10.6 1.0 46.1 9 80,000 10.6 0.1 100,000 11.5 1.1 50.2 10 60,000 10.9 0.1 90,000 11.8 1.2 51.7
Table 12-3 shows grade and tonnage tabulations at various cutoffs for both the historical drill dataset and current drill dataset. The results for the current drilling shows increased Zn grades across all cut-offs, indicating that the historical data is conservative in nature. There is a marked difference in the Pb grades in this resource block. This is due to two drill holes in the current drill database which show anomalously good Pb results (OLZ-20, OLZ-11), no such anomalously high results occur in the more widely-spaced historical drill dataset.
12.1.5 Comparison of Historical and Rathdowney Drill Intercepts
In two areas with both historical and Rathdowney drilling, analysis shows that both datasets have similar means, and measures of variance. These similar distributions naturally yield grade-tonnage calculations which also show a high degree of correspondence. On this basis, CAM deems that the historical dataset has been validated and is suitable for inclusion in the Olza resource estimate.
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13.0 MINERAL PROCESSING AND METALLURGICAL TESTING
Rathdowney has not carried out any mineral processing or metallurgical test work at the Olza project.
It should be noted that the Boleslaw zinc smelter of Zaklady Gorniczo-Hutnicze Boleslaw (ZGHB) treats ore from the Pomorzany zinc-lead mine, which is located 10 km southeast of the Rokitno property, is developed within the same stratigraphic horizon, and hosts mineralization of similar mineralogy to that at the Olza project. The Boleslaw smelter processes zinc sulfide concentrates which are calcined in fluid-bed roasters. Zinc is recovered from the calcine by hydrometallurgical processing.
Section 7 of this report contains some comments on the mineralogy of Zawiercie and Rokitno mineralization, which may be relevant to future metallurgical studies.
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14.0 MINERAL RESOURCE ESTIMATION
14.1 Verification of Historical Data
Within the Olza project area there are over 1,600 historical diamond-drill holes, most of which have intact location and assay data available. The historical drilling, described in Section 6, was carried out by Polish state companies 1953 and 1988, and is generally well documented. Rathdowney’s comprehensive program of data capture and validation is described in detail in Section 12 of this report.
14.2 Methodology of Resource Estimation
The resource model for Olza was done under the supervision and is the responsibility of Robert L Sandefur PE, CAM Principal Geostatistician and qualified person under NI 43-101. Based on a review of the geology and mineralization at Olza, CAM and HDI agreed that a block model constrained within a wireframe of the mineralized horizon was suitable for characterizing the deposit. Under the supervision of CAM, HDI personnel interpolated values for bulk density, Zn, and Pb using inverse distance squared into the blocks using Vulcan™ v.8.1.4 software package and CAM classified the result. The Olza estimate has been validated by CAM by various methods including an independent Nearest Neighbor estimate. As discussed in Section 28.2, Mr. Sandefur visited the Olza project three times in 2011-2012 for purposes of the review.
The effective date of the Mineral Resources disclosed herein is May 18, 2012, the date of recovery of the last drill samples used in this estimation.
14.3 Database
The mineral resource for the drilled portion of the Zawiercie I deposit was estimated using analytical information from multiple surface drilling campaigns carried out by Rathdowney and by previous historical (pre-2000) operators. A total of 955 vertical diamond drill holes were in the vicinity of the block model, of which 554 were inside the modeled wireframe of the mineralization and actually used in estimation. The wireframe enclosed 138 Rathdowney holes and 416 historical holes. The remaining 401 holes were outside the wireframe. The drill holes used in estimation are described in Sections 6 and 10 of this report.
Hole lengths generally range from 100 metres to 300 metres in length and encounter the mineralized zone anywhere from 70 metres to 200 metres below surface. The drill grid covers an area approximately 9,000 metres by 9,000 metres, which was fully encompassed by the block model used in estimation. Additional
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historical drilling does exist further outside the block model area, but was not used in this resource estimate, as these holes were too far away to influence the block model grades.
In the vicinity of the block model, there were 86 historical drill holes for which no analytical results were found in the Polish Government records. For the purposes of this estimation, the absence of data for these holes was assumed to be due to the misplacement of official records rather than lack of sampling of the hole due to poor or absent mineralization. These holes were ignored for the purposes of this estimate.
A key assumption in this resource estimate is that the historical holes within the wireframe with missing data had results comparable to results of the recovered historical drill holes. CAM believes this assumption is acceptable since the resources are classified as Inferred. CAM recommends that Rathdowney continue to try to obtain historical records. If they cannot be recovered, CAM recommends that the assumption be validated by drilling approximately 30 holes next to missing historical holes, preferably those with recoverable location monuments.
14.4 Modeling of the Deposit
A three dimensional (3D) solid delineating the mineralized zone was modeled using all relevant drill data. Using a threshold of 0.5% Zn + Pb, points were inserted to mark the hanging wall and footwall of the mineralization. This threshold has no economic significance itself but was chosen to delineate the mineralized system from the barren host rock. The points comprising the hanging wall were then used as input to create a gridded surface honoring the individual points; and then the process repeated using the inserted footwall points. These hanging wall and footwall surfaces were then combined, resulting in a single solid enclosing all mineralized material and excluding barren rock. This solid was used as a hard boundary in the resource estimate. The plan view of the solid is shown in Figure 14-1.
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Figure 14-1 Plan view of Drill Holes and Modeled Mineralized Horizon
The mineralization at Olza is generally flat-lying, but there are areas where the zone undulates up to 100 metres in the vertical direction. Some of these areas may be as a result of normal faulting.
14.5 Assay Composites
Samples were composited in downhole intervals of 0.5 metres starting from the point at which the drill hole pierced the modeled mineralized zone. This point is intended to be at a sample interval boundary. Composites shorter than the standard interval of 0.5 metres were allowed at the footwall of the mineralized zone, but if these composites were less than or equal to 0.2 metres they were merged with the overlying interval. All composites interior to the wireframe solid of the mineralized zone were flagged in the composite database. A log-log cumulative frequency plot for Zn is shown in Figure 14-2.
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Figure 14-2 Log-Log Cumulative Frequency Plot for Zn Assays of Composites
14.6 Variography
Variogram are a standard methodology for determining the distance over which the spatial data correlate. There are several different types of variograms, but in skewed distributions, such as often obtained in mineral deposits, a normal scores variogram generally gives best results. Variograms of the data contained within the modeled mineralized horizon has been generated using SupervisorTM v 8.0.1.2. This
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spatial analysis was conducted using 0.5 metre run length composited values as input. Data was exported directly from VulcanTM and imported as text files into SupervisorTM. A normal- scores downhole variogram using a lag distance equal to the composite length was modeled and variogram structures were derived. Subsequently a normal-scores omnidirectional variogram was created, and the ranges were modeled based on the structures obtained in the downhole variogram. Drill hole spacing in the Olza deposit ranges from 50m to 200m, so a lag of 80m provided the best model of spatial continuity. Variograms are shown in Figures 14-3 and 14-4.
Figure 14-3 Figure 14-4 Downhole Normal-Scores Variogram Omnidirectional Normal-Scores Variogram
14.7 Resource Block Model
An un-rotated block model with parent block size of 25 metres x 25 metres x 1 metre and a sub-blocking size of 12.5 metres x 12.5 metres x 0.5 metres was created using Vulcan™ v8.1.4 mine modeling system . This size was determined to be the best fit given the large areal extent of the mineralized zone coupled with its relatively modest thickness. The model axes are aligned with the ETRS89 / Poland CS2000 zone 7 coordinate system, and the block model uses these coordinates.
The 3D wireframe of the mineralized zone was used to limit block creation. Only those blocks whose centroid fell interior to this wireframe were created and available for grade interpolation. Variables were created to contain estimated Zn%, Pb%, bulk density, the average distance to composites used to estimate each blocks, number of composites used to estimate each block, number of drill holes, and the material type.
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Block model geometry is summarized in Table 14-1.
Table 14-1 Block Model Geometric Parameters
Parameter X Y Z Origin (m) 7385000 5589000 65 Block Size (m) Parent/Sub-blocks 25/12.5 25/12.5 1/0.5 Block Extent (m) 6000 7800 250
14.8 Interpolation Plan
Inverse distance to the power of 2 was chosen as the grade interpolation method for the Olza model, as it is felt that this is the most appropriate estimator for characterizing the distribution of the karstic mineralization at Olza. The interpolation was carried out in a single pass using an isotropic search ellipse with radii of 150 metres as per the modeled ranges from the variogram. The hanging wall and footwall surfaces were used as input in the estimation process to guide unfolding of the mineralized horizon, allowing for a more accurate interpolation of grades in areas where the mineralized horizon undulates.
Zn and Pb were interpolated using a minimum of 3 samples from a minimum of 2 drill holes. In addition to grades, the number of informing drill holes, the number of informing samples and the average distance of these samples were recorded per block.
Bulk density measurements were estimated into the block using much the same approach as the metal grades. To ensure that all blocks with an interpolated grade had an associated bulk density measurement, the search strategy was expanded to a 175 metre radius and the minimum number of samples required to estimate a block value, was set to 1.
14.9 Mineral Resource Classification
The current (2010) CIM definition of Inferred Mineral Resources is quoted below: An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.
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CAM believes that the connectivity of the solid used to define the resource in Figure 14-1, the geological continuity of the OBD (Figure 7-6), and the spatial analysis along with assay drill sections (Figures 10-6 through 10-8) is sufficient to demonstrated grade continuity.
Based on the geostatistical analysis of the Olza assay data, a provisional classification of Inferred Resource was assigned to blocks estimated from samples with an average distance of 130 metres or less. The inferred material was then assessed for continuity and isolated blocks or blocks supported by only a few holes were then eliminated from the Inferred class. Given the uncertainties associated with the compilation of the historical drill dataset from multiple sources and campaigns, this classification has been assigned to the entire resource base, even in those areas of closer spaced drilling.
Although it is common engineering practice to use distances derived from variogram ranges to classify resources, the use of these criteria sometimes results in Measured and Indicated Resources falling in circles around drill holes, which is not entirely consistent with the definitions of grade continuity required under CIM definitions. Geological continuity at Olza appears to be clearly demonstrated by the wireframe containing the mineralization. The polygons used to classify material as Inferred were based on reviewing the block model and the polygons were drawn around blocks with reasonable grade continuity.
Figures 14-5 and 14-6 show the extent of the current Inferred Resources at Olza.
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Figure 14-5 Locations of Estimated Blocks
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Figure 14-6 Inferred Resource Footprint
14.10 Mineral Resource Tabulation
NI 43-101 requires that for a mineralized body to be considered mineral resources, it must be demonstrated that under reasonable technical assumptions that it must have “reasonable prospects for economic extraction”. One part of fulfilling this economic criterion is by the application of a cut-off grade. For deposits with no production history a generally accepted practice is to use a cut-off grade from mines of similar size, grade, geometry and deposit style.
A USGS Open-File Report (Leach and Taylor, 2009) summarizes statistics from 113 Mississippi Valley deposits throughout the world. In this document the median grade of the population is 6% Zn and 1.9% Pb. Cut-off grades of deposits of this type around the world are generally in the 1.5% Zn to 3.0% Zn range. Accordingly a minimum cut-off of 2% Zn was used in the resource tabulation, and this cutoff is considered to be the preferred threshold.
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The results of the estimate at a range of cutoffs are tabulated below in Table 14-2.
Table 14-2 Inferred Mineral Resources
Cutoff Tonnes Contained Zn Contained Pb Zn % Pb % Zn+Pb % Zn % (millions) (millions lb) (millions lb) 2.0 21.2 5.88 1.54 7.42 2,750 720 3.0 16.1 6.97 1.66 8.63 2,467 588 4.0 12.3 8.04 1.74 9.78 2,181 472 5.0 9.6 9.04 1.79 10.83 1,912 379
Results may not check exactly due to reporting precision and rounding. Tonnes are reported to nearest 0.1 million tonnes, metal grades to the nearest 0.01%, and contained to the nearest million pounds. This does not imply this degree of accuracy in the estimate.
The stratabound mineralization within the OBD ranges in thickness from 1 to 20 metres but averages approximately 3 metres in thickness.
CAM believe that the potential development of these Inferred Mineral Resources is not likely to be material affected by any known environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant risk factors, to a degree greater than other metal mining projects worldwide.
14.11 Block Model Validation
Swath plots for Zn, Pb, and bulk density were created to compare the block model grades with the grades of the composite database. The swath plots are visual comparisons of composite grades and block grades, along a line such as easting or northing. The swath plots shown in Figures 14-7, 14-8, and 14-9, are illustrative of those created at 250 metre intervals and oriented vertically.
These plots show good correspondence between the informing samples and the estimated block grades. In some instances deviation between estimated grades and assay composites was noticed. This deviation may be as a result of low numbers of samples in certain swaths.
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Figure 14-7 Swath Plot for % Pb.
Figure 14-8 Swath Plot for % Zn
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Figure 14-9 Swath Plot for Bulk Density
14.12 Additional Model Validation by CAM
The model was prepared using what CAM believes is best engineering practice for deposits of this type, and was done using a known software package and checked by CAM. However, there is always a chance that some error may have occurred during the estimation process. CAM therefore reviewed every row, column, and bench in the model using color-coded grades to validate the model.
The review indicated that because of the fluctuations in the hanging wall and foot wall and the requirement for minimum number of composites and holes, a few blocks were not estimated, which results in a possibly conservative resource estimate. CAM also checked the grade of each composite against the block within which it centroid fell, and found that the model was consistent with the composites used to prepare it.
The final CAM check was to do a nearest-neighbor estimate and compare the nearest neighbor result to the inverse distance model at various cutoffs. The nearest neighbor model indicated that the inverse distance model was a bit conservative.
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On the basis of the modeling methodology used, and the subsequent validation and checks by CAM, CAM believes that the model has been prepared according to accepted engineering practice and meets the usual standards of accuracy for an inferred resource.
14.13 Comparison of Historical and Current Estimates
Preparation of historical tonnage-grade estimates is described in Section 6 of this report, to the extent that details of the methodology are known. Rathdowney’s resource lies entirely within the footprint of the Zawiercie I deposit, as defined historically. Nevertheless, the historical estimates involved some factors which are not known currently. Therefore, the comparison shown below in Table 14-3 is not rigorous.
Table 14-3 Comparison of Historical and Current Estimates for Zawiercie I Deposit Contained Metal Tonnes Estimate Cutoff Category Zn % Pb % Zn+Pb % (millions lb) (millions) Zn Pb PGI, 1994 c. 2.0% Zn+Pb C-1 16.3 6.00 2.50 8.50 2,155 898 Rathdowney, 2012 2.0 % Zn Inferred Resource 21.2 5.88 1.54 7.42 2,750 720 Rathdowney/ PGI -- -- 1.30 0.98 0.62 0.87 1.28 0.80
Agreement of the parameters within the relatively narrow ranges shown, suggests that that the validation of historical drilling described in Section 12 is realistic.
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15.0 MINERAL RESERVE ESTIMATES
This report does not disclose any mineral reserves.
16.0 MINING METHODS
Section 16 is omitted since the Olza project does not meet the CIM definition of an "advanced property" as it does not have any disclosed mineral reserves, nor does it have any mineral resources of which the potential economic viability is supported by a preliminary economic assessment, a pre-feasibility study or a feasibility study.
17.0 RECOVERY METHODS
Section 17 is omitted since the Olza project does not meet the CIM definition of an "advanced property" as it does not have any disclosed mineral reserves, nor does it have any mineral resources of which the potential economic viability is supported by a preliminary economic assessment, a pre-feasibility study or a feasibility study.
18.0 PROJECT INFRASTRUCTURE
Section 18 is omitted since the Olza project does not meet the CIM definition of an "advanced property" as it does not have any disclosed mineral reserves, nor does it have any mineral resources of which the potential economic viability is supported by a preliminary economic assessment, a pre-feasibility study or a feasibility study.
19.0 MARKET STUDIES AND CONTRACTS
Section 19 is omitted since the Olza project does not meet the CIM definition of an "advanced property" as it does not have any disclosed mineral reserves, nor does it have any mineral resources of which the potential economic viability is supported by a preliminary economic assessment, a pre-feasibility study or a feasibility study.
20.0 ENVIRONMENTAL STUDIES, PERMITTING & SOCIAL OR COMMUNITY IMPACT
Section 20 is omitted since the Olza project does not meet the CIM definition of an "advanced property" as it does not have any disclosed mineral reserves, nor does it have any mineral resources of which the potential economic viability is supported by a preliminary economic assessment, a pre-feasibility study or a feasibility study.
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21.0 CAPITAL AND OPERATING COSTS
Section 21 is omitted since the Olza project does not meet the CIM definition of an "advanced property" as it does not have any disclosed mineral reserves, nor does it have any mineral resources of which the potential economic viability is supported by a preliminary economic assessment, a pre-feasibility study or a feasibility study.
22.0 ECONOMIC ANALYSIS
Section 22 is omitted since the Olza project does not meet the CIM definition of an "advanced property" as it does not have any disclosed mineral reserves, nor does it have any mineral resources of which the potential economic viability is supported by a preliminary economic assessment, a pre-feasibility study or a feasibility study.
23.0 ADJACENT PROPERTIES
The Rathdowney concessions are in part bordered by mineral concessions held by parties unrelated to Rathdowney. However, the mineral resources disclosed in this report are based entirely on samples from within the Rathdowney concessions, and the mineral resources lie entirely within the Rathdowney concessions.
Some geological data from some other properties in the region were used to confirm with Mississippi Valley Type (MVT) mineralization model utilized in this report.
24.0 OTHER RELEVANT DATA AND INFORMATION
The authors of this report are not aware of any additional information, the absence of which could make this report not understandable and misleading.
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25.0 INTERPRETATION AND CONCLUSIONS
25.1 General
a) Rathdowney’s three Exploration Permits (herein “concessions”) have historical drilling (1950’s to 1980’s) which clearly demonstrate that significant zinc-lead mineralization of Mississippi-Valley Type is present in nearly flat-lying Triassic marine carbonate rocks at moderate depths, with sphalerite and galena as the principal minerals. b) The concessions are within the Upper Silesian mining field, which has had cumulative production of over 30 million contained tonnes of zinc + lead metal from Mississippi Valley-Type deposits over several centuries. c) The main Zn-Pb mineralization in the district is hosted by the 30-80 metres thick unit referred to as the Ore-Bearing Dolomite unit (OBD). The OBD contains epigenetic alteration largely overlapping the Middle Triassic Muschelkalk beds and distinct from the earlier regional-scale syngenetic dolomitization. This dolomitization is largely restricted to the Lower Muschelkalk Formation, but extends in places into the underlying Devonian carbonates and into the overlying Middle-Upper Muschelkalk dolomites. d) Rathdowney have compiled the exploration results for over 1,600 historical drill holes, and have edited and re-formatted this information into a form compatible with modern electronic data analysis. e) CAM opines that good potential exists in the Olza project area for the discovery of new deposits, and for delineating additional mineral resources. f) The region around the concessions is well-suited to modern industrial-scale mining and mineral processing, with highly-developed infrastructure and availability of mining expertise. One major zinc-lead mine and a zinc-lead smelter are in operation within a few tens of kilometres of Rathdowney’s concessions. This density of industrial activity and population near the concessions creates some social and environments issues which are well-known, and will be addressed as the project proceeds. These include surface land usage, development of project infrastructure in a densely-inhabited and densely-developed region, preservation of groundwater quality, proximity to protected nature areas. These issues will not likely preclude mining, and Rathdowney has initiated studies of them.
25.2 Zawiercie and Rokitno Concessions
a) Zinc-lead mineralization extends across the boundary between these two concessions, for which reason they are discussed together. b) Historical drilling (1953-1988) on these concessions resulted in identification of the Zawiercie I, Zawiercie II, and Rodaki-Rokitno Szlacheckie, zinc-lead deposits, for which mineral tonnage and
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grade estimates were made. These estimates were prepared under Soviet-style procedures and definitions, and pre-dated the institution of Canada National Instrument 43-101. c) Rathdowney undertook exploration core drilling in late 2011 and early 2012, to confirm and expand the deposits identified earlier. This drilling was closely-controlled in order to achieve acceptable core recoveries within the mineralized horizons. Drilling confirmed the previous geological model, showing that zinc-lead mineralization is mainly confined to the OBD horizons, with only subsidiary mineralization in adjacent units, and that sphalerite, galena, and possibly wurtzite are the only economically-significant minerals. d) The drilling by Rathdowney was successful in largely confirming the validity of the historical estimates for Zawiercie I and II deposits, showing 7% more mineralized tonnes, and 5% more zinc metal tonnes, but 30% fewer lead metal tonnes. The reason for the difference in lead content needs to be further investigated. e) Rathdowney’s program was, in CAM’s opinion, carried out in compliance with CIM standards, resulting in Inferred Mineral Resource estimates which are suitable for disclosure under NI 43- 101. f) Preliminary analysis indicates that the silver content of the mineralization is related to zinc minerals, rather than lead minerals. The Ag:Zn ratio appears to be higher toward the north in the Zawiercie I deposit. Further study of the silver content is warranted. g) Further drilling at Rokitno and Zawiercie is underway, in order to: ▬ upgrade the Inferred Resources to higher categories through closer drill hole spacing; ▬ enlarge the deposit by offsetting areas with open mineralization, especially in the Zawiercie II deposit; and ▬ test other deposit on the concession, which were identified by historical drilling but have not yet been drill-tested by Rathdowney: the Marciszow to the north, and the Rodaki-Rokitno Szlacheckie deposit to the southeast.
25.3 Chechlo Concession
a) The Chechlo concession, which adjoins Rokitno on the south, was granted to Rathdowney on September 20, 2012, after completion of the drilling and resource estimation reported herein. Therefore no drilling has been undertaken by Rathdowney at Chechlo. b) Historical drilling on the Chechlo concession showed similar Mississippi Valley Type mineralization as at Zawiercie and Rokitno. c) CAM concludes that drilling by Rathdowney is warranted on the Chechlo concession.
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25.4 Mineral Resource Estimation
a) CAM have reviewed the procedures used by Rathdowney and others, and believe that the geological model and the drilling, sampling, and assaying procedures yielded a database conforming to CIM guidelines for use in mineral resource estimation. A few adjustments to procedures would likely result in increased precision of the database. b) CAM’s review of the estimation of Inferred Resources for the Zawiercie I deposit indicates that the methods employed are appropriate to the Zawiercie case, and yielded estimates suitable for disclosure under NI 43-101.
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26.0 RECOMMENDATIONS
CAM believes that the work done by Rathdowney to date has yielded mineral resource estimates suitable for public disclosure under NI 43-101. The steps below are recommended to carry the Olza project forward toward defining increased mineral resources, including some in higher categories than Inferred.
26.1 Proposed Work Program
Drilling and other work at Olza has been underway continuously since the May 2012 cutoff date for the mineral resource estimates in this report. The post-May drilling of 2,500 metres is thus included in the estimates below.
26.1.1 Objectives
It is recommended that Rathdowney’s ongoing drilling campaign will focus on the topics below during 2012-2013, in particular the proposed drilling within the Zawiercie I deposit. The areas discussed are shown in Figure 26-1.
1. Upgrade the Inferred Resources in the East Mineralized Corridor (which largely coincides with historical Zawiercie I deposit) to higher resource categories through closer drill hole spacing. 2. Enlarge the resource by drilling open areas with stratiform Triassic carbonate-hosted mineralization, especially in the area of the historical Zawiercie II deposit, concomitant with validation studies of the historical drilling. 3. Test other deposits which were identified by historical drilling but have not yet been drill-tested by Rathdowney: the Marciszow deposit to the north, the Rodaki-Rokitno Szlacheckie (“Rokitno”) deposit to the southeast, and the Chechlo deposit to the south. 4. Test the Devonian target strata, as further discussed in the next section.
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Figure 26-1 Olza Concessions and Deposits
26.1.2 Investigation of Mineral Potential
Some background about the mineral potential is given in Section 9.2 of this report.
On the Zawiercie property, the areas of highest potential for increasing the size of the current mineral resource include the central part of the Zawiercie II footprint in the southwest quarter of the Zawiercie concession, as well as the extension of the East Mineralized Corridor towards the northwest. Drill testing of Zawiercie II is particularly favored, as the permissive stratigraphy encountered within Zawiercie I is merely down-dropped by a regional NW-trending fault zone which corresponding more or less to the
CAM 112114 133 Rathdowney Olza Zinc-Lead Project 18 October 2012
western limit of the Zawiercie I deposit footprint. Furthermore, the throw on this fault is modest (c.80 metres) and significant resources may occur at relatively shallow depths.
On the Rokitno property, limited historical drilling highlighted good mineralization intercepts in the southwest quarter of the property, as well as on the open southeast end of the Rodaki-Rokitno Szlacheckie deposit trend (see Figure 26-1).
In addition to the zinc potential associated with the extension of the middle-Triassic Muschelkalk carbonate strata, the Olza concessions also host an additional, stratigraphically lower, sequence of the Devonian age carbonates on the Zawiercie and Rokitno concessions. These strata lie 110 to 170 metres below surface (20-80 metres below the Triassic mineralized horizon), and remain largely untested by drilling.
In contrast to the stratiform Triassic carbonate-hosted mineralization, the Devonian mineralization in the region typically occurs in the form of karstic-collapse breccia pipes, which can have a vertical extent exceeding 400 metres (e.g. Blajda, et al., 2000). This style of mineralization usually has much higher grades than the stratiform variety, and at mines in the district is known to have formed discrete orebodies ranging up to five million tonnes in size (Blajda, et al., 2000). Significantly, these breccia pipes are known to occur in the Chechlo deposit, immediately south of the Rokitno property and along the same geological trend. An initial confirmation drilling campaign in areas of known breccia targets should also take place at Chechlo.
Because of their small areal footprint and the fact that most historical drilling stopped short of the Devonian strata, these mineralized breccia pipes represent a major exploration target for Rathdowney (see Section 7.6).
Rathdowney’s next drilling campaign should be preceded by a thorough structural analysis of the three concessions, as well as carbonate facies analysis, with the objective of developing a better understanding of the regional structural controls on the extensive mineralized system and, in particular, to establish the location of the major faults, which likely channeled the mineralizing fluids. Further unraveling of the fault kinematics could help identify places where brittle tectonics, superimposed on earlier extensive karstic development, led to the creation of open space and brecciation, favorable for mixing of mineralizing fluids, as well as provided space for mineralization to accumulate.
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26.1.3 Work Program Components and Budget for 2012-2013
Based on the above discussions, the work program and budget in Table 26-1 below are recommended. Once this work is complete, a more detailed program to upgrade mineral resource categories to support engineering studies should be done in a later phase.
Table 26-1 Proposed Work Program for 2012-2013 (CAD$)
Item Description Basis Amount Chechlo program 5,000 m @ $200/m $ 1,000,000 Drilling Initial confirmation, completed May-October, Zawiercie I 5,000 m @ $200/m $ 1,000,000 Resource infill 1,500m @ $200/m $ 300,000 Environmental Data Collection Baseline Environmental Studies Project costs $ 700,000 Community Outreach Social surveys, etc. Project costs $ 150,000 Total $3,150,000
The authors of this report believe that the program shown in Table 26-1 is warranted to advance the Olza project toward eventual development.
26.2 Drilling, Sampling, and Analysis
The recommendations below should be implemented during on-going work at the Olza project.
a) There are 86 historical holes within the wireframe for which original assay sheets have not been found, and it is assumed that these data simply missing, rather than preferentially being of low or zero grade. Approximately 10 holes should be drilled within the wireframed area, to validate this key assumption. These holes should be preferentially drilled next to missing historical holes which have locatable collar monuments.
b) Measurement is needed of the residual water content of air-dried core samples when they are measured for bulk density. The porous dolomite host rocks may well contain several percent of water which does not readily evaporate at ambient temperatures. The industry standard is oven drying at 105 degrees C for at least 8 hours. Rathdowney should carry out a test on 50 mineralized core samples, which are air-dried as per current practice, weighed, and then subsequently oven-dried for 8 hours, and re-weighed. The results of this test should determine whether: i. Air-drying is sufficient for bulk-density determination, or ii. All samples need to be oven-dried before bulk-density measurement, or
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iii. A correction factor of several percent needs to be applied to air-dried measurements.
The tests described above can be carried out in a standard kitchen oven, and should be undertaken by Rathdowney’s technical staff. Seconding this type of work to a commercial laboratory invariably results in loss of definition of the objective, and loss of control over test conditions, with resultant loss of credibility of results.
c) The mean and standard deviation of the certified standard reference materials should match the primary laboratory (Omac) mean and standard deviation, as opposed to using the mean and standard deviation recommended by the reference materials suppliers. Because of slight systematic differences almost always observed between laboratories in the means and standard deviations, use of the primary laboratory parameters should result in closer matches and fewer failed batches.
d) The reason for the lower lead contents in Rathdowney’s resource estimates, as compared to the historical estimates, needs to be further investigated.
e) Further data analysis should be undertaken on the distribution of silver values, with respect to both the mineralogical residence of silver within the zinc-lead mineralization, and geographic trends in the abundance of silver.
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27.0 REFERENCES
In addition to the documents referenced below, the reader is referred to additional documents listed in Section 22 of the Technical Report by CSA (2010).
27.1 Published Geological-Technical Reports
CSA, 2010, 43-101 Technical Report, Rokitno & Zawiercie Zinc-Lead Projects, Poland: consulting report dated 21 December, 2010, prepared by Ed Slowey of CSA Global Pty, Ltd. (West Perth, Australia), for Coreland Capital Inc. and Rathdowney Resources Limited, 74 pages in .pdf format. Filed on SEDAR on 3 March, 2011.
Gorecka, E, Leach, D., and Kozlowski, A., eds., 1996, Carbonate-hosted lead-zinc deposits in the Silesian-Cracow area, Poland: Polish Geological Institute, Work no. 154, 182 pages.
Henley, S., 2004, Russian mineral reporting: Mining Journal, issue of August 20, 2004, pages 18-21.
Leach, D.L. and Sangster, D.F., 1993, Mississippi Valley-type lead-zinc deposits. in Kirkham, R.V., Sinclair, W.D., Thorpe, R.I., and Duke, J.M., eds., Mineral Deposit Modeling: Geological Association of Canada Special Paper 40, p. 289-314.
Leach, D.L., et al., 2003, Triassic-hosted MVT Zn-Pb ores of Poland, Austria, Slovenia and Italy, in Kelly, J.G., et al., eds., Europe’s Major Base Metal Deposits: Irish Association for Economic Geology, p. 169–214.
Leach D. L., 2007, Overview of the Upper Silesia Mississippi Valley-Type Zn-Pb district: in Sass- Gustkiewicz M, Sawlowicz Z (eds) Digging Deeper, Fore-Sudetic Cu-Ag ore deposits & Upper Silesian Zn-Pb deposits, Post Conference Field Trip 7 Guide – Poland. 9th Biennial SGA meeting, Dublin, Ireland, pp. 49-63.
Leach, D.L., Taylor, R.D., Fey, D.L., Diehl, S.F., and Saltus, R.W., 2010, A deposit model for Mississippi Valley-Type lead-zinc ores: Chapter A of Mineral deposit models for resource assessment: U.S. Geological Survey Scientific Investigations Report 2010-5070-A, 52 pages.
Leach, D.L., and Taylor, R.D., 2009, Mississippi Valley-type lead-zinc deposit model: U.S. Geological Survey Open-File Report 2009-1213, 5 pages.
Osika, R., ed., 1990, Mineral Deposits of Poland, vol. VI of Geology of Poland: pub. Wydawnictwa Geologiczne (Warsaw), 314 pp. The chapter on zinc-lead ores is in pages 172-185.
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Paradis, S., Hannigan, P., and Dewing, K., 2007, Mississippi Valley-Type lead-zinc deposits, in Goodfellow, W.D., ed., Mineral deposits of Canada: A synthesis of major deposit-types, district metallogeny, the evolution of geological provinces, and exploration methods: Geological Association of Canada, Mineral Deposits Division, Special Publication no. 5, p. 185–203.
Paszkowski, M., 2007, The Upper Paleozoic rocks of the Variscan structural stage along the Upper Silesia-Małopolska terrane borderland: in Sass-Gustkiewicz M, Sawlowicz Z (eds) Digging Deeper, Fore- Sudetic Cu-Ag ore deposits & Upper Silesian Zn-Pb deposits, Post Conference Field Trip 7 Guide – Poland. 9th Biennial SGA meeting, Dublin, Ireland, pp. 49-63.
Retman, W., 2006, Aktualny stan bazy zasobowej ZGH “Boleslaw” SA oraz mozliwosci jego poszerzenia. In: Mozliwosc zagospodarowania zloz peryferyjnych rud Zn-Pb, Conference Proceedings of ZGH “Boleslaw” S.A., Bukowno, 75 p., in Polish.
Sangster, D.F., 1995, Mississippi Valley-Type Lead-Zinc, in Eckstrand, O.R., Sinclair, W.D., and Thorpe, R.I., eds., Geology of Canadian Mineral Deposit Types: Geological Survey of Canada, Geology of Canada, no.8, pages 253-261.
Sass-Gustkiewicz, M., 2007, Ore-forming processes in the Upper Silesian Zn-Pb ore deposits: pages 49- 63 in Sass-Gustkiewicz and M, Sawlowicz, Z., eds., Fore-Sudetic Cu-Ag ore deposits & Upper Silesian Zn-Pb deposits, Post Conference Field Trip 7 Guide – Poland. 9th Biennial SGA meeting, “Digging Deeper”, Dublin, Ireland, 106 pages.
Wnuk, R., and Socha, J., 1999, Uwarunkowania geologiczno-górnicze ruchu zasobów w kop. Pomorzany. in Stan aktualny i perspektywy górnictwa rud Zn-Pb w Polsce, Zn-Pb, Conference Proceedings of ZGH “Boleslaw” S.A., Bukowno, 92 pages, in Polish.
27.2 Internal and Consulting Reports
Blajda R., Kurek S., Sass-Gustkiewicz M., 2000, Dodatek nr 2 do dokumentacji geologicznej złoża rud cynku i ołowiu "Klucze" w kat. C1+C2. Przedsiebiorstwo Geologiczne S.A. w Krakowie, Krakow.
Central Geological Office of Poland (1975), Decision of the Head of the Central Geological Office (KZK /012/S/3618/3819/78/79 ) on the Pomorzany deposit resource in the B+C1 category (in Polish), as per gazette of 31.05.1975.
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Mlynarczyk, M, 2012, Density modeling of Chechlo and Klucze highgrade Zn‐Pb breccia ores, with the purpose of evaluating gravity methods as an exploration tool Internal File Note 270812, 7 pages in .pdf format.
Rathdowney Resources Limited, November, 2011, Mineral potential of the Upper Silesian carbonate- hosted Zn-Pb district, Poland, Technical Overview: PowerPoint presentation, 26 slides.
Retman W., 2006, Aktualny stan bazy zasobowej ZGH “Boleslaw” SA oraz mozliwosci jego poszerzenia. In: Mozliwosc zagospodarowania zloz peryferyjnych rud Zn-Pb, Conference Proceedings of ZGH “Boleslaw” S.A., Bukowno, 75 pages, in Polish..
Schlumberger, 2010, Poland 43-101 and hydrogeology: consulting report dated July 2010, prepared for Rathdowney by M. Boland of Schlumberger Water Services (UK) Ltd. 21 pages.
27.3 Legal Documents
Marekwia and Plawny, 2012, Letter of Confirmation prepared for CAM, dated 17 October, 2012, by Attorney Sobieslaw Suslik of Marekwia & Plawny, Attorneys at Law (Katowice, Poland), relating to validity of titles of exploration licenses held by Rathdowney Polska, 2 pages.
Many additional legal documents pre-dating 2011 are referenced in the Technical Report by CSA (2011).
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28.0 DATE AND SIGNATURE PAGE
28.1 Fred Barnard
Fred Barnard 1835 Alkire Street Golden, Colorado 80401, USA
I, Fred Barnard, do hereby certify that:
1. I am a Consulting Geologist, affiliated with Chlumsky, Armbrust and Meyer, LLC. 2. I graduated from the University of California at Berkeley in 1963 with a B.A. degree in Geology, and from the University of Colorado at Boulder in 1968 with a Ph.D. in Geology. 3. I have practiced my profession continuously since 1968. 4. I am a Certified Professional Geologist # CPG-11046 of the American Institute of Professional Geologists. I am a Fellow of the Society of Economic Geologists, and Emeritus Certified Member # 2006-2 of the American Institute of Mineral Appraisers. 5. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43- 101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101. 6. I am the author of sections 2 to 9, 13, 23 to 27, and the relevant parts of sections 1, 10, and 11, of the report entitled “Olza Zinc-Lead Project, Zawiercie, Rokitno, and Chechlo concessions, Poland” (the “Technical Report”). The Technical Report has an effective date of 18 May 2012 with respect to mineral resources, and an Effective Date of 20 September 2012 with respect to mineral titles. The Technical Report is based on my knowledge of the Project Area and resource database covered by the Technical Report, and on review of published and unpublished information on the property and surrounding areas. I conducted a site visit of the Zawiercie, Rokitno, and Chechlo concessions during 3 to 5 November, 2011, in addition to time spent in Rathdowney’s offices in Olkusz, Poland. 7. I am not aware of any material fact or material change with respect to the subject matter of the Technical Report that is not reflected in the Technical Report, for which the omission to disclose would makes the Technical Report misleading. 8. I am independent of Rathdowney and any of its related companies, applying all of the tests in section 1.5 of National Instrument 43-101. 9. I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that Instrument and Form.
CAM 112114 140 Rathdowney Olza Zinc-Lead Project 18 October 2012 10. I consent to the filing of the Technical Report with any Canadian stock exchange and other regulatory authority and any publication by them, including electronic publication in the public company files on their website accessible by the public, of the Technical Report.
Dated this 18th day of October, 2012,
Fred Barnard
Fred Barnard, CPG
CAM 112114 141 Rathdowney Olza Zinc-Lead Project 18 October 2012
28.2 Robert Sandefur
Robert L. Sandefur 5377 Flatrock Ct. Morrison CO 80465 Phone (303) 472-3240 [email protected]
I, Robert L. Sandefur, do hereby certify that:
1. I am an Independent Consulting Geostatistician, at the above address. 2. I graduated from the Colorado School of Mines with a Professional (BS) degree in engineering physics (geophysics minor) in 1966 and subsequently obtained a Master of Science degree in physics from the Colorado School of Mines in 1973. 3. I have practiced my profession continuously since 1969. 4. I am a Certified Professional Engineer (Number 11370) in the state of Colorado, USA, and a member of the Society for Mining, Metallurgy, and Exploration (SME). 5. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43- 101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101. 6. I am the author of sections 12, 14, and 15, and parts of sections 1, 10 and 11, of the report entitled “Olza Zinc-Lead Project, Zawiercie, Rokitno, and Chechlo concessions, Poland” (the “Technical Report”). The Technical Report has an effective date of 18 May 2012 with respect to mineral resources, and an Effective Date of 20 September 2012 with respect to mineral titles. The Technical Report is based on my knowledge of the Project Area and drilling database included in the Technical Report, and on review of published and unpublished information on the property and surrounding areas. I conducted site visits of the Zawiercie, Rokitno and Chechlo concessions during 3 to 5 November, 2011, and spent additional time on the project site during 22-26 April, 2011, and 27-29 March, 2012. 7. I am not aware of any material fact or material change with respect to the subject matter of the Technical Report that is not reflected in the Technical Report, for which the omission to disclose would makes the Technical Report misleading. 8. I am independent of Rathdowney and any affiliated companies applying all of the tests in section 1.5 of National Instrument 43-101. 9. I have read I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that Instrument and Form.
CAM 112114 142 Rathdowney Olza Zinc-Lead Project 18 October 2012 10. I consent to the filing of the Technical Report with any Canadian stock exchange and other regulatory authority and any publication by them, including electronic publication in the public company files on their website accessible by the public, of the Technical Report.
Dated this 18th day of October, 2012,
Robert L. Sandefur
Robert L. Sandefur, P.E.
CAM 112114 143 Rathdowney Olza Zinc-Lead Project 18 October 2012