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| Head Office: EcuaGold Resources Ltd. 1400 - 355 Burrard Street Vancouver, BC, V6G 2G8 Canada Contact (in the US): Anthony F. Ciali President & CEO Tel: (609) 844-7746 Contact (Investor Relations) Anthony Srdanovic Tel: (604) 684-4743 ext 242 Toll Free: (866) 684-4743 | | Location, Access, Physiography And Climate The Molleturo Project is located in the Azuay Province, Ecuador, some 70 kilometres west of the city of Cuenca, the country's third largest city, and approximately 300 kilometres southwest of the capital city of Quito. The town and parish of Molleturo and its surrounding communities have a population of approximately 5,000 people. Water, electricity, and roads are available in the sector. From the city of Cuenca, access takes about 1.5 hours by vehicle along a mountainous paved highway to Molleturo. The port city of Guayaquil is located approximately 130 road kilometres northwest of Molleturo. There is substantial topograhic relief in the Molleturo Project area with elevations ranging between 1,400 metres and 3,000 metres. The climate type is semi-humid mesothermic, which is mild with minimum and maximum average temperatures ranging from 0° to 18°C. Mean annual precipitation for the region is in the order of 920 mm. The project area topography is rugged with substantial sub-crop on the steeper slopes and drainage inscissions. Project History The earliest known work on the Ariel mining concessions was done by local companies and an American company Farmland International Energy Company ("Farmland"). Exploration programs that included stream sediment, soil and rock geochemistry, ground geophysics (magnetometer survey) and tunneling were completed between 1970 and 1976. Associated geological surveys located polymetallic sulphide bearing quartz veins known as the Roman and Isabel Veins. Four adits were driven on five levels along with a total of approximately 770 metres of underground development. Mapping and channel sampling activities were carried out in the tunnels. Unsubstantiated average grades for the Roman and Isabel veins reported by Farmland were: 450 g/t Ag, 4.3 g/t Au, 2.2% Cu, 8.1% Pb and 8.0% Znz In 1991, a local entrepreneur Señor Antonio Granda Centeno contracted the Universidad Central del Ecuador, Faculty of Geology, Mining & Petroleum, School of Mines ("UCE") to conduct detailed underground geological mapping and sampling of the five levels of tunnels along the Roman and Isabel Veins. This work was conducted on an earlier concession known as the Molleturo Concession owned by Granda Centeno. The mean grade for the samples taken along the Roman and Isabel Veins as reported by UCE was as follows: 392.0 g/t Ag, 3.4 g/t Au, 0.69% Cu, 2.3% Pb and 4.2% Zn UCE also completed soil geochemistry and a ground magnetometer survey covering approximately 25% of the former Molleturo concession area along the strike extensions of the known veins. The soil samples were analysed for Cu, Pb, Zn, Ni, Cr and Co but not for other key elements such as Au, Ag, As, Sb, Bi, etc. Semi-coincident Cu-Pb-Zn anomalies were noted downslope from the Roman and Isabel Veins and in other untested locations covered by the survey. Ascendant Exploration S.A. made an application to the Ministry of Energy and Mines ("MEM") and acquired the Ariel concession, where the Roman and Isabel Veins are located, on August 18, 2004. The property was subsequently transferred to Ecuador Gold S.A. on February 14, 2006. Ecuador Gold S.A. made additional applications to the MEM and acquired additional concessions during 2006 and in early 2007 enlarging the Molleturo Project area in all directions up to 48,059 hectares (approxiamtely118,706 acres) based principally on regional geochemical anomalies, tectonic setting and direct field geological observations. Geology Ecuador is made up of five tectono-stratigraphic sub-divisions or terranes. These terranes are separated from each other by major north-northeast striking fault zones that follow the Andean trend. These terranes are briefly described, from west to east, as follows:
The Molleturo Project is near a major regional fault, the north-northeast trending Pujili Fault, that juxtaposes the Piñon-Macuchi Terrane oceanic crust and the Chaucha Terrane continental crust. The oldest rocks in the Molleturo region lie to the south of the Molleturo mining concessions, where a fault bounded inlier of upper Paleozoic basement is exposed. These rocks are Devonian semi-pelitic schists and gneissic rocks of the La Victoria Unit (PZV). These rocks correspond to the oldest lithologies outcropping in the Ecuadorian Sierra. The north-western sector of the Project and region adjacent to the Pujili Fault is underlain by Cretaceous submarine basaltic lavas, tuffs and breccias intercalated with occasional ultramafic (ophiolitic) units of the Piñon Formation (KP). These rocks are the basal units of the Piñon Terrane and the Western Cordillera in Ecuador. To the west of the Piñon Formation in the extreme northwest corner of the Project is a fault bounded belt of Cretaceous (Cenomanian) volcano-sedimentary deposits composed of lutites, cherts and sandstone rocks of the Cayo Formation (KK). Regionally this formation overlies the Piñon Formation. To the west of the Cayo Formation there are outcropping Paleocene-Eocene rocks of the Macuchi Unit (PCEM) composed of volcanogenic lithologies of calc-alkaline affinity possibly related to an emerging island arc. These rocks are mainly represented by tuff sandstone, andesite, basalt and volcanic breccias. Younger granodiorite and quartz diorite bodies have intruded the Macuchi volcanic assemblage. Small rhyolitic stocks are mineralized in several places. The island arc sequences culminate with the deposition of the turbiditic rocks of the Medium to Upper Eocene Apagua Unit (EA) composed of lutites and greywackes. These rocks overlain transitionally the Macuchi Formation described previously. Most of the mining concession areas of the Molleturo Project are covered by the regionally prospective Oligocene Saraguro Formation (OS) which correspond to andesitic volcanic lavas, rhyolitic flows and pyroclastic rocks of sub-aerial continental origin. In the Miocene-Pliocene the volcanic activity evolves to more acidic giving origin to the Pisayambo Volcanics (MPLP) which cover the eastern sector of the region. The above stratigraphic units are intruded by Eocene granodiorite, diorite, and related porphyries of the Chaucha Batholith (CZ) and related stocks. The batholith has been dated at 12 Ma (Serravallian) on the basis of K-Ar dating. These porphyritic intrusions gave place to copper-molybdenum deposits such as Chaucha Project (Ascendant Copper Corporation). Mineralization Historic work on the Molleturo Property identified two polymetallic veins, termed the Roman and Isabel Veins. Both veins are approximately east-west striking, with the Roman Vein dipping at 45-50o to the northeast and the Isabel Vein about 70o in the same direction. Average true width of the veins is 55 centimetres. The veins have been traced over a minimum strike length of approximately 200 metres and a vertical extent of 40 metres by means of underground drifts (4 levels) and raises (2) following the actual veins. The exposures of vein material are sulphide rich with metallic minerals often predominating over the quartz-chlorite-carbonate gangue minerals. Locally, the veins are semi-massive sulphide with minor quartz. The following ore minerals have been identified in Roman and Isabel Vein material: native silver, electrum, pyrite, sphalerite, galena, pyrrhotite, arsenopyrite, tetrahedrite, chalcocite and covellite. Potential extensions to the mineralization at the Molleturo Project remain open, especially with the recent discovery of a new vein (the "Paola Vein"), located 3.5 kilometres to the North-West of the Roman and Isabel Veins. The Paola Vein was sampled on two separate occasions, and the rock chip samples were forwarded to the ALS Chemex Lab in Lima Peru, with the following assays results reported by the lab:
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SAMPLE #1 SAMPLE #2
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SILVER (g/t) 1,235 1,120
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GOLD (g/t) 2.78 5.05
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COPPER (%) 1.38 2.36
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LEAD (%) 11.1 11.1
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ZINC (%) 39.7 18.85
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Additionally, several outcrops of granodiorite/diorite, intruded by younger porphyritic rocks, have been mapped in several locations within the Molleturo Project mining concessions. A mineralized stockwork structure, with propylitic alteration, has also been observed near the Paola Vein. Land Status The Molleturo Project area consists of three mining concessions (3,594 hectares) granted to the Company by the MEM and 14 mining concessions (44,465 hectares), which the Company has applied for to the MEM. In total, the Molleturo Project covers an area consisting of 48,059 hectares (approximately 118,706 acres). Potential The main known target on the Molleturo Project is related to the horizontal and vertical extensions of the high-grade polymetallic Isabel & Roman Veins. Historic geochemical/geophysical anomalies in other sectors of the project (Caridad and Rio Miguir) increase the overall geological potential of the project. In addition, the discovery of a new similar polymetallic vein in the North-West sector of the project area is encouraging for the potential of finding additional similar vein targets, as is the observation of mineralized porphyritic intrusive rock outcrops in several locations on the mining concessions. Planned Exploration The 2007 exploration program for the Molleturo Project is based principally on the recommendations contained in the NI 43-101 Report (the "Report") prepared by ACA Howe International for the purpose of EGR's listing on the TSX Venture Exchange in early January 2007. The recommended program concentrated firstly on the evaluation of the economic potential of Roman and Isabel polymetallic veins and secondly, the general systematic exploration of the remainder of the Molleturo Project area. ECONOMIC EVALUATION OF THE ROMAN & ISABEL
POLYMETALLIC VEIN DEPOSITS For the Roman and Isabel Veins, including the Rio Miguir East and Caridad anomalies, the Report recommended a program of focussed geological investigation; detailed multi-element soil geochemistry; a high resolution magnetometer survey; and more sophisticated geophysical test surveys such as TDEM and/or IP/Resistivity surveying to map the structural and lithological setting of the central portion of the Ariel concession; and diamond drilling/trenching. Previous work only tested the Roman and Isabel Veins within a small area, and the veins are considered open-ended in all directions. Therefore, the Report recommended adit rehabilitation plus resampling and a minimum of 3,000 metres of diamond drilling to test the Roman and Isabel Veins for additional mineralization along strike and at depth, with the intent of delineating the necessary grades and tonnage to support a narrow vein mining operation. The Report also recommended that preliminary metallurgical and mineralogical studies be carried out to determine specific gravities, milling requirements, and potential recoveries. Provision has also been made for exploration trenching and drilling to evaluate the Rio Miguir East and Caridad anomalies. REGIONAL EXPLORATION PROGRAM For the remaining concession areas, where no historic exploration is known, a first pass basic systematic exploration program is planned. This would include reconnaissance geological mapping/prospecting and multi-element soil geochemistry. Provision has been made for limited follow-up detailed surveys and some initial trenching and diamond drilling. It is expected that the overall work program would be completed over approximately a one year time frame. The Report recommended an exploration budget of US$ 1.346 million to achieve the above objectives. Maps & Figures | | | |
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