Independent Technical Report on the Geology and Recommended Exploration of the Ikutawara Gold Project, Northeast Hokkaido, Japan
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Independent Technical Report on the Geology and Recommended Exploration of the Ikutawara Gold Project, Northeast Hokkaido, Japan Prepared by Campbell & Associates for Sky Ridge Resources Ltd Written by: H.J. Campbell, B.Sc., FAusIMM 3rd Floor, Graha Krama Yudha, Jl. Warung Jati Barat No.43, Jakarta 12760, Indonesia Effective Date: 15 July 2016 1 TABLE OF CONTENTS SECTION DESCRIPTION PAGE 1.0 SUMMARY..................................................................................... 1 2.0 INTRODUCTION……………………………………......................... 6 2.1 Issuer……………………..…………………………………… 6 2.2 Terms of Reference………………………..………..…..…… 6 2.3 Information Used……………………..…………………….… 6 2.4 Site Visit by Qualified Persons…..……..…………..…..…… 7 3.0 RELIANCE ON OTHER EXPERTS……………………..………… 7 4.0 PROPERTY LOCATION AND DESCRIPTION…….…………..… 7 4.1 Area of Property………..…………………………………..… 7 4.2 Property Location………………………..………..…..……… 7 4.3 Tenure……………………..………………………….……..… 8 4.4 Property Ownership………………………..………..…..…… 11 4.5 Royalties and Other Agreements…………………………… 12 4.6 Environmental Liabilities………………..………..…..……… 13 4.7 Permits and Obligations………………..…………………… 13 4.8 Other Significant Factors…..……..…………….…..…..…… 13 5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY…………………..… 15 5.1 Topography, Elevation and Vegetation……………………. 15 5.2 Access……………………..………………..………..…..…… 15 5.3 Population and Transport……………..…..………………… 16 5.4 Climate…..……..……………………………………..…..…… 16 5.5 Surface Rights, Power, Water, Personnel & Potential Infrastructure Sites…………………………………………….17 6.0 HISTORY………………………………………….…………………… 17 6.1 Prior Ownership………..…………………………………..… 17 6.2 Previous Exploration…………………..………..…..……… 17 6.3 Historical Resource and Reserve Estimates…….……..… 20 6.4 Historical Production……………………..………..…..….… 20 7.0 GEOLOGICAL SETTING AND MINERALISATION……………… 22 7.1 Regional Geology…..…………………………………..……. 22 7.2 Local Geology…………………..………..…..……………..… 23 7.3 Property Geology…………………………………….……..… 25 7.4 Mineralisation……………………..………..……………….… 25 8.0 DEPOSIT TYPES……………………………………………..……… 31 8.1 Classification…..…………………………………..…………. 31 8.2 Rift Low Sulphidation Deposit Type – Main Features…..… 32 8.3 Ikutawara Mineralization Types…………………….……..… 35 9.0 EXPLORATION…………………………………………….……….… 35 9.1 Literature Searches………………………………..…………. 35 9.2 Ground Magnetic Survey…………………………………..… 36 2 10.0 DRILLING…………………………………..…………………….….. 36 11.0 SAMPLE PREPARATION, ANALYSES AND SECURITY ........... 36 12.0 DATA VERIFICATION ................................................................... 36 13.0 MINERAL PROCESSING AND METALLURGICAL TESTING .... 37 14.0 MINERAL RESOURCE ESTIMATES ............................................ 37 15.0 - 22.0 SECTIONS NOT RELEVANT TO THIS REPORT 23.0 ADJACENT PROPERTIES…………………………………………...37 24.0 OTHER RELEVANT DATA AND INFORMATION ………………...38 25.0 INTERPRETATION AND CONCLUSIONS ................................... 38 26.0 RECOMMENDATIONS……………………………………………… 39 27.0 REFERENCES…………………………………………………..…… 41 28.0 DATE AND SIGNATURE PAGE………………………………..…… 43 29.0 CERTIFICATE OF QUALIFIED PERSONS…………………..…… 44 LIST OF FIGURES FIGURE NO. DESCRIPTION PAGE Figure 1 General location of Ikutawara Prospecting Licenses ...................... 8 Figure 2 License application flowsheet (SAMI, 2016) ................................... 10 Figure 3 Ikutawara Prospecting License Applications .................................. 11 Figure 4 Tectonic setting, earthquake and volcanic map .............................. 14 Figure 5 Sakinzawa/Maruyama prospect showing NICAM exploration highlights 1992-93 (Austpac, 1993) ................................................ 19 Figure 6a Regional metallogenic districts and historical mine locations ......... 21 Figure 6b Ikutawara historical mine locations and simplified geology............. 21 Figure 7 Geology and structural setting of Hokkaido Island ......................... 24 Figure 8 Ikutawara simplified geology ........................................................... 26 Figure 9 Ikutawara district stratigraphy ......................................................... 26 Figure 10 Derivation of low and high sulphidation fluids including arc and rift low sulphidation (Corbett, 2004) ................................................ 33 Figure 11 Schematic cross-section of a typical rift related epithermal low- sulphidation system (after Corbett, 2004) ....................................... 34 Figure 12 TMI images from ground magnetic surveys over the Ryuo- Maruyama-Akebono prospect areas .................................................... 37 3 LIST OF TABLES TABLE NO. DESCRIPTION PAGE Table 1 Historical Production within the Ikutawara Prospecting License Areas ....... 22 Table 2 Survey specifications of 2015 ground magnetic survey .............................. 36 Table 3 Proposed Phase 1 Ikutawara Budget .......................................................... 39 Table 4 Proposed Phase 2 Ikutawara Budget .......................................................... 40 LIST OF PHOTOGRAPHS PHOTO NO. DESCRIPTION Photo 1 Logged coniferous and broad-leaved deciduous tree species ...... 15 Photo 2 Prolific bamboo grass development in immature forestry stands...16 Photo 3 Collapsed exploration drive at Ryuo mine workings ...................... 27 Photo 4 Opaline-amorphous silica sinter with incipient micro-hydraulic fracturing and cross-cutting chalcedonic veinlets; Kitano-o Geopark ......................................................................................... 28 Photo 5 Platy, lattice-textured quartz after calcite, indicative of boiling zones and potential metal deposition – Ryuo lode ........................ 29 Photo 6 Chalcedonic quartz vein with aggregates of pyrite, marcasite, chalcopyrite, galena & tetrahedrite – Ryuo mine workings ............ 29 Photo 7 Banded drusy fissure-filling quartz vein breccia, with basement black shale wallrock inclusions – Saroma mine workings .............. 30 LIST OF APPENDICES APPENDIX NO. DESCRIPTION Appendix I Ikutawara Prospecting License Application Coordinates 4 1.0 SUMMARY At the request of Sky Ridge Resources Ltd (“SRRL”), Campbell & Associates (“CA”) was commissioned to prepare a National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI43-101”) technical report on SRRL’s Ikutawara Gold Project (the “Ikutawara Project” or the “Property”) in Japan. CA has based this report on information provided by SRRL, third-party technical reports and other general website information, and a site visit. Property Location The Ikutawara Project comprises 38 contiguous Prospecting License application blocks (totaling 13,286 Ha) over historical gold-silver mineral occurrences. These are located in the Okhotsk district or Subprefecture in the Hokkaido regional administrative area or Prefecture (Province), Japan. Ownership In December 2014 Southern Arc Minerals Japan KK (“SAMJ”), a Japanese domiciled foreign investment corporation 100% owned by TSX-V (TSX Venture Exchange) listed Southern Arc Minerals Inc. (“SAMI”), applied for 38 prospecting licenses in the Ikutawara area of Northeastern Japan covering a region of known gold occurrences with a history of mining. On July 4, 2016, SRRL entered into an agreement with SAMI pursuant to which SRRL will acquire all of the issued and outstanding shares of SAMJ. In exchange for its ownership in SAMJ, Southern Arc will receive 50,000,000 pre- Consolidation common shares of SRRL. SRLL intends to complete a concurrent private placement financing, followed by a one-for-two basis share consolidation, with SAMI then holding approximately 49% of SRLL on a fully diluted basis. The transaction, which is a reverse takeover for Sky Ridge as that term is defined in the policies of the TSX Venture Exchange, is subject to a number of conditions, including shareholder and stock exchange approval. Tenure The 38 Prospecting License applications were submitted to the Japanese Ministry of Economy, Trade and Industry (“METI”) by SAMJ on December 4, 2014 and passed an advanced stage of examination and acceptance by METI on August 18, 2015. With this approval SAMJ has the ground reserved and is able to undertake low impact ground work such as geologic mapping and sampling in order to rank and prioritize its application areas. For more invasive exploration such as trenching and drilling, SAMJ must pass through a stakeholder consultation and review process, with METI in an intermediary role. Once approved this will lead to the issuing of Prospecting Rights which are valid for two (2) years and can be extended for two further two-year periods. Prospecting Rights can be converted into mining rights at any time should exploration results warrant advancing the Property to production. Accessibility, Climate, Local Resources, Infrastructure and Physiography The Property is situated primarily over government or privately managed forestry concessions and lesser privately owned dairy farms. Coniferous forestry concessions are located on moderate to step hill ranges, ranging in elevations from 190 m to 707.8 m, whilst dairy farms occupy lower river valley areas. The Property is easily accessed by good quality sealed roads from the regional cities of Abashiri and Monbetsu, about 1.0 hour’s vehicle drive. Alternatively, the area can be reached by railway with the Sekihoku trunk line running along the south and west edges of the Property. Within the Property, access is by sealed roads which terminate into a network of gravel and dirt forestry access roads. 1 Located in a