On September 29, 2011 Consolidated Goldfields signed an Exploration and Earn-In Agreement with Teras Resources on the Cahuilla Project.
The Cahuilla Project is a large epithermal, paleo-hot springs system hosting multiple high grade veins that occur within an extensive body of disseminated gold-silver mineralization. For further information on the Cahuilla project refer to the NI 43-101 technical report entitled “Cahuilla Property 43-101 Technical Report,” dated October 25, 2007 prepared by Todd Wakefield, MAusIMM of AMEC E&C Services filed on Sedar on November 15, 2007.
The terms of the agreement specify that Teras will have a 24 month Option to earn the 35% balance of the Cahuilla gold project and 100% interest in four other high ranking gold projects. Teras can exercise the option at any time within the 24 month period by issuing 10 Million common shares of the company to Consolidated and spending $1,000,000 in work commitment on the Cahuilla project within that period.
Further to press releases dated October 8, 2009 and February 8, 2010, respectively, Consolidated Goldfields has entered into an earn-in agreement with Teras Resources, providing Teras with the exclusive option to earn a 65% undivided interest in their Cahuilla project. Pursuant to the terms of the Earn-In Agreement and subject to certain conditions being met in accordance with the Earn-In Agreement, Teras has issued 4,000,000 common shares to Consolidated and has deposited US$1,000,000 into an account for the exclusive use of exploration, development and maintenance expenditures on the Property. In addition, in order to exercise the option and earn its 65% interest in the Cahuilla project Teras must issue an additional 10,300,000 common shares to Consolidated and put an additional US$800,000 into the Account on or before the first anniversary date of February 8, 2010. The exercise of the option by the issuance of the additional common shares and the additional expenditure payment is at the sole discretion of Teras.
The Cahuilla Gold Property is located in northwest Imperial County, California. The Cahuilla Project is an epithermal, sediment-hosted, hot springs vein, stockwork and disseminated gold-silver system hosted along a major east-west striking structural zone. In 1996, Kennecott engaged Mine Development Associates to perform an independent resource estimate on the project. Calculations based on a 0.010 ounce per ton gold cut-off-grade indicate that the Cahuilla deposit currently contains an indicated mineral resource of approximately 750,100 ounces of gold mineralization, and an inferred mineral resource of approximately 106,000 ounces of gold mineralization. The majority of the deposit is hosted on the Torres Martinez Indian Reservation. It is management’s intention to expand mineral resources by additional exploration and development drilling since mineralization is completely open in all directions along strike and at depth.
The Cahuilla project is localized along the western edge of the Salton Trough, which is characterized by active crustal extension and spreading center within the San Andres-San Jacinto fault system. The Modoc Fault, the most important geologic feature at Cahuilla, represents an antithetic, pull-a-part, fault zone within the regional San Andres-San Jacinto strike-slip structural zone. A Jurassic quartz monzonite stock comprises the footwall block to the Modoc Fault zone which strikes generally east-west to north 70 east, dipping to the south in the project area. The hanging wall is composed of the Quaternary Palm Springs Formation, a succession of fine- to coarse-grained, rhyolitic-clastic sediments, and siliceous sinter and fanglomerates adjacent to the Modoc Fault zone.
Along the Modoc Fault zone, both the quartz monzonite and Palms Springs Formation host ore-grade mineralization. A recent 25-foot channel sample across the brecciated and banded vein exposed at the surface returned 0.85 opt Au and 8.88 opt Ag and selective sampling of a portion of the vein hosting copper mineralization assayed 5.65 opt Au and 11.21 opt Ag. In 1988, Homestake collected an 80-foot sample that assayed 0.31 opt discovering the High Grade Hill vein mineralization along the Modoc Fault zone. Although the east-west trending Modoc Fault zones controls and hosts the majority of the high-grade veins and stockwork, mapping, sampling and drill hole intercepts indicate gold-silver mineralization is also hosted along north-south trending sub-vertical, poorly exposed faults. An extensive, disseminated lower-grade halo surrounds the higher-grade gold veins. Mineralization is known to extend over two miles along the strike of the Modoc Fault and more than one-half mile in width extending south under pediment cover and is open in all directions.
Two dominant styles of gold mineralization are recognized at Cahuilla and include:
- Structurally-controlled, bonanza-grade, crustiform banded, sheeted and brecciated, gold-silver veins and stockwork zones hosting cutting disseminated gold mineralized sediments; Gold occurs as high-silver electrum and native gold.
- Flat, tabular, extensive disseminated mineralization hosted in the Palm Springs sediments and volcanics; Intense, widespread silicification commonly accompanies precious metal mineralization. Argillization occurs along the Modoc fault zone, which resulted from both paleo-hot springs activity and younger supergene alteration of unsilicified material.
Alteration consists of intense silicification replacing the Palm Springs sediments and weak to intense argillization adjacent to the veins and upper fanglomerates along the Modoc Fault zone.
Historically, gold was produced from several mines located in the vicinity of Cahuilla beginning in 1897. Prospecting and mining activities are believed to have originated in the Cahuilla project area as early as 1912. These consist of five small prospect pits that were constructed in the project area, however no significant quantities of gold were produced from these workings. Since the late 1980’s, an estimated $5 million has been spent on gold exploration in the Cahuilla area, with work performed by companies including Homestake, Newmont and Kennecott. A total of 112,168 feet of drilling in 214 RC and core holes have been completed on the Cahuilla property in four drill campaigns.
In 1990, the Torres Martinez Desert Cahuilla Indians obtained Federal funding through the Bureau of Indian Affairs to undertake a gold mineral assessment. In 1991 and 1992, a total of 57 holes were drilled on Tribal lands, which resulted in a major gold discovery. Drill hole TM-28, the discovery hole, intersected 240 feet of 0.112 ounce per ton gold from 85 to 325 feet, including 45 feet of 0.359 ounces per ton gold from 160 to 205 feet and 15 feet of 0.315 ounces per ton gold from 230 to 245 feet. In 1994 the Torres Martinez Tribe offered the Cahuilla gold project to the minerals industry for lease, and in 1995, Kennecott was successful in obtaining exploration/mining rights to the property.
Between 1995 and 1996, Kennecott drilled a total of 114 exploration holes and developed a significant gold/silver resource. However, in late 1996 Kennecott Corporation was acquired by Rio Tinto LLC which closed Kennecott’s gold exploration division; and as a result, the exploration/mining lease was relinquished.