WEST LOMBOK GEOLOGY
The island of Lombok is located in the central part of the tectonically active, east-west trending Sunda-Banda magmatic arc that marks the convergence of three major tectonic plates. The geology of the West Lombok property is characterized by an island-arc volcano-sedimentary succession of Late-Oligocene to Quaternary age. A series of eroded, overlapping predominantly andesitic volcanic centers and intermediate intrusives make up the Tertiary arc. Intrusive rocks include diorite, dacite, diatreme breccia and tonalite, the latter related to porphyry mineralization at both Batu Hijau and Elang on the neighboring island of Sumbawa. Hydrothermal alteration is extensive throughout the property. Strong conjugate systems of northwest, northeast and north-south faults are the dominant structural feature and are associated with mineralization throughout the tenement.
Previous structural studies by Newmont of regional mineralized districts suggest that three main structural grains, northwest, north-south and north-east trends, are related to gold and copper mineralization in the region. "NNE to NE trends (extensional or synthetic faults) form the mineralized corridors hosting porphyry Cu-Au mineralization, whilst later through-going NW trending faults, are interpreted as late-stage or post-porphyry. Late-stage epithermal veins and post mineral dykes are developed along the northwest and north-south trending faults..." (Clode, 2002).
The Pelangan prospect covering an approximate 4 km by 5 km area in the northwest part of the property comprises four main epithermal gold targets: Tanjung-Jati, Kayu Putih, Raja and Lala. Surface mapping at Pelangan has defined extensive zones of Au-Ag mineralized structural breccias ("MSBs”) comprising high-sulphidation style silica-ledges which host later cross-cutting epithermal Au-Ag bearing quartz veins. Continuous zones of gold mineralization up to 900 m long have been confirmed by shallow drilling. Deeper drilling has shown that these breccia bodies range in true width between 3 m and 20 m and has also identified three high-grade shoots that will be explored further with additional drilling.
The Mencanggah prospect comprises a large cluster of west-northwest to north-trending, gold-bearing epithermal mineralized structural breccias concentrated in a 6.5 km by 4.5 km area. Channel sampling indicates that these breccia bodies range in true width between 3 m and 66 m. The Bising and Waterfall targets have been drill tested and show encouraging results, especially at the Bising target. Surface channel samples at the Tibu Serai target have returned the highest-grade mineralization on the property to date.
The Selodong prospect in the southeast of the mineralized corridor is known to host significant Cu-Au porphyry mineralization. The Selodong prospect comprises andesitic and rhyodacitic volcanic rocks, intruded by Cu-Au mineralized porphyry stocks overprinted by hypogene acid-sulfate alteration with associated Cu-Au veining and brecciation.
In 2012 the Company completed an airborne geophysical survey of the West Lombok project at 50-metre spacings to define both near-surface and buried copper-gold porphyry targets throughout the property. Industry experts including Dr. Steve Garwin, Southern Arc's Senior Technical Advisor, modelled and interpreted the results of the survey in conjunction with the Company's geological and geochemistry database, and identified 17 porphyry targets on the property. A number of the targets in the Selodong prospect have already had a limited amount of drill testing that demonstrated host zones of high-grade gold-rich porphyry copper mineralization, supporting the outcome of the prospectivity analysis and confirming the methodology for targeting shallow or blind porphyry mineralization throughout the property.
Historical Exploration Activity and Interpreted Geology
Initial drainage sampling by Newmont throughout the property outlined 11 contiguous streams with anomalous Au-Ag, ±Cu and ±As geochemistry covering an area of approximately 50 km2. Newmont's exploration activities focused on the delineation of both precious metal and porphyry copper style mineralization resulting in the definition and partial drill testing of a number of prospect areas. Newmont's exploration of the area confirmed copper porphyry style mineralization with enhanced gold grades in the Selodong area, high sulfidation epithermal gold mineralization in the Mencanggah area as well as other complex epithermal vein targets in the Pelangan area.
Mapping and petrology in the Selodong area defined a 3 km by 7 km zone of alteration with propylitic and phyllic assemblages. Surface rock chip and float samples returned elevated copper values (up to 0.4% Cu), anomalous Mo (up to 400 g/t Mo) and gold grades commonly in excess of 0.4 g/t Au. Trenching reported values as high as 0.88 g/t Au and 0.20% Cu. At least 15 separate geochemical and alteration anomalies, with supporting ground geophysical anomalies, were identified by Newmont within the Selodong area and further drilling by Southern Arc has confirmed gold and copper porphyry of encouraging grades.
Within the Mencanggah area, reconnaissance identified widespread NW and NS trending high sulfidation epithermal quartz veins up to 10 m wide. Regional aeromagnetic and radiometric surveying confirmed conjugate NW to NE structural trends, consistent with mapped alteration and Au-Cu-As soil geochemistry at prospect scale. Sampling returned up to 250 g/t Au in channel samples from the Bising area and 11 g/t Au in rock from the Waterfall area. The recognition of weakly altered and veined intrusive lithologies led Newmont to interpret this high level alteration suite to possibly represent a silica cap over a concealed Cu-Au porphyry target.
The Pelangan area was first identified as a number of low-order Au drainage anomalies W and NW of Mencanggah. Subsequent follow-up work defined a series of three NE trending, en-echelon quartz vein systems associated with acid-sulfate rock alteration, cutting an extensive sequence of argillic and propylitic altered volcanics. Detailed petrology and fluid inclusion studies indicate gold mineralization and alteration facies diagnostic of high sulfidation epithermal mineralization.