EXPLORATION 1999 – Maracote seeking gold in Peru — Due diligence wrapped, follow-up drilling planned

Junior Maracote International Resource (MCE-V) has completed a 5-hole diamond drilling program at the Halley gold-silver property in south-central Peru, with follow-up work expected to begin soon.

The property is 140 km southwest of the town of Cuzco, and one hour by air southeast of Lima. An all-weather road provides access to the southern portion of the property, while other zones are accessible by horseback.

Maracote can earn a 65% interest in both the Halley and the nearby Leoncocha properties from Ulysses International Resources (URI-V) in return for US$280,000 and maintenance of the underlying Ulysses option. Ulysses is earning an 85% interest in the two properties by paying the original vendors US$1.4 million and spending US$5 million in exploration and development before July 2000. Once these obligations are fulfilled, the Halley and Leoncocha properties will be owned 65% by Maracote, 20% by Ulysses and 15% by the original vendors.

The two properties comprise 3,900 ha within seven mining claims. The claims are situated at high elevations that range between 3,000 and 4,000 metres above sea level.

Gold and silver mineralization is hosted within a structurally complex sedimentary package that is dominantly composed of quartzite. The quartzite exhibits extensive brecciation with associated silicification, sericitization and pyritization.

Maracote’s primary target is the Quilca breccia, which represents one of a series of extensive breccia bodies that trend in a northeasterly direction along a 600-metre linear structural zone. To date, six breccia zones have been discovered in addition to the Quilca breccia. They are: Quilca Oeste, Quilca Norte, Angasmarca, Laqui, Pachapata and Llamakensa. The Llamakensa and Pachapata breccias are in a river valley, 2 km southeast of the main group.

All the known breccia bodies on the Halley property have been exploited by underground and glory-hole mining activity, which dates back to pre-colonial times.

The Quilca breccia has an exposed surface expression that measures 150 by 160 metres and can be traced to a minimum vertical extent of 80 metres.

As part of its due diligence program in April 1998, Maracote collected 64 samples of the altered and mineralized Quilca breccia system from surface and underground exposures. About 60% of the samples assayed in excess of 1 gram gold per tonne, and collectively the samples averaged 3.1 grams per tonne. The highest individual sample — a chip sample from an audit — returned 33.7 grams gold over 1.5 metres.

The recently completed 5-hole program was focused on the previously undrilled Quilca breccia.

The five holes, totalling 840 metres, were drilled from two drill pads at the top of the Quilca breccia. Holes 1, 2 and 3 were collared from the same pad. Hole 1 was drilled vertically, whereas hole 2 was drilled toward the south at an angle of minus 60 and hole 3 was drilled due west at minus 50. Holes 4 and 5 were collared at a second drill pad, 40 metres south and 20 metres lower in elevation than the initial three holes. Hole 4 was lost prior to reaching its target depth and was re-drilled, as hole 5, toward the north at minus 55.

The most significant assay results from the program are as follows:

• Hole 1 intersected 67.5 metres averaging 2 grams gold and 3.7 grams silver per tonne, starting at a down-hole depth of 9.1 metres. Included in this intercept was a 16.5-metre interval that assayed 5 grams gold and 7.6 grams silver. At a depth of 144.6 metres down-hole, a 4.5-metre interval averaged 2.7 grams gold and 0.8 gram silver. At 173.9 metres down-hole, the drill cut 4.8 metres of 1.9 grams gold and 0.6 gram silver.
• Hole 2 intersected 63.9 metres of 1.6 grams gold and 8 grams silver, starting 3.1 metres down-hole. Included in this intercept was a 5.2-metre section that assayed 4.6 grams gold and 0.9 gram silver. At a depth of 85.2 metres down-hole, a 2.9-metre interval graded 1.3 grams gold and 1 gram silver. Farther down-hole at a depth of 109.1 metres, the drill cut 10.5 metres averaging 1 gram gold and 1 gram silver.
• Hole 3 cut 68 metres of 2.1 grams gold and 7.5 grams silver, starting at a down-hole depth of 8.2 metres. This included a 15.3-metre section that graded 4.1 grams gold and 31.9 grams silver, followed by 15 metres of 3.3 grams gold and 0.3 gram silver. At a down-hole depth of 84.4 metres, a 7.8-metre interval averaged 1.4 grams gold and 0.2 gram silver. This was followed by a 21-metre section that assayed 3.5 grams gold and 0.3 gram silver, starting at a depth of 123 metres down-hole.
• Hole 5 returned 63.6 metres averaging 1.5 grams gold and 3.9 grams silver, starting at a down-hole depth of 19.2 metres. This included a 6.1-metre interval that assayed 2.7 grams gold and 2 grams silver, followed by a 11.2-metre section of 6.5 grams gold and 6.7 grams silver. At a depth of 99.1 metres down-hole, a 1.5 metre interval assayed 9 grams gold and 5.6 grams silver. Farther down-hole at a depth of 139.6 metres, the drill cut 4.3 metres averaging 2.1 grams gold.

Maracote says follow-up drilling will test gold mineralization at the bottom of hole 1, which ended in a breccia horizon. The company also plans to re-test a feldspar porphyry dyke that assayed 3.5 grams gold over 21 metres in hole 3.

The main body of breccia mineralization appears to dip gently toward the northeast, beneath a glory-hole open cut, and Maracote says this indicates that the vertical extent of mineralization increases toward the northeast.

In addition to the preliminary drilling at the Quilca breccia, Maracote has been evaluating the Llamakensa gold-silver target, southeast of Quilca.

The company collected 175 chip and grab samples from an area measuring 500 by 600 metres. Assay results from 150 of these samples indicate that 88 carry values greater than 1 gram gold per tonne, and that 47 of those have values higher than 3 grams; moreover, 33 of the 47 returned in excess of 5 grams gold. The highest individual sample assayed 42.09 grams gold and 5.6 grams silver over a chip sample

length of 1.3 metres. Overall, the assays averaged 3 grams gold, similar to those recovered from the Quilca breccia target.