Geology

Regional Geology

The coastal range (CR) in the north of Chile is the emerged portion of the extensional fore-arc of the central Andes which is located over the zone of coupling between the Nazca and South American plates (Allmendinger et al, 2005). The nature of the Neogene deformation of the CR, based principally on work carried out in the Antofagasta region (south of 23oS), has been reported as dominantly of an extensional type, accommodated by faults oriented parallel to the plate margin (Armyo & Thiele, 1990; Niemeyer et al, 1996).

The area is predominated by bedrock geology of andesitic volcanics (Jurassic) and lesser continental sediments (Cretaceous) intruded by (Cretaceous) granitoids; Tertiary to Quaternary sands, silts, clays, diatomites and evaporates overly the Mesozoic sequences.

Project Geology

A field reconnaissance review of the Chile Norte project was undertaken by J. Beeson of Jigsaw Geoscience in July 2009. The following geological observations and descriptions are taken from his Chile Norte Reconnaissance Report.

Bedrock geology is dominated by andesitic volcanics (possibly of Jurassic age). These rocks appear to be widely but weakly altered (typically an epidote-carbonate-albite assemblage). In localised areas mineralisation and alteration is more strongly developed with goethite, copper-oxides and cobalt carbonates developed, usually in association with structures. The andesites do not typically show evidence of penetrative structural fabrics unless located within a zone of faulting. Within fault systems the andesites show penetrative breccia textures with highly variable fragment size.

Quartz-lithic wackes (possibly epiclastics) crop out in localised areas in the north-western quadrant of the Chile Norte area (possibly Punta Barranco Formation of Cretaceous era). In outcrop the wackes show well-developed laminar bedding. The wackes do not typically show evidence for penetrative structural fabrics unless cut by fault zones; within faults the wackes show a fine-grained penetrative breccia texture. Where cut by fault zones the wackes contain obvious copper mineralisation present as copper oxides (typically malachite).

Metasomatised granitoids were identified to crop out in an area west of Chile Norte. Possible analogues of uranium-bearing orthoclase, plagioclase, quartz and biotite granitoids located southeast of Chile Norte in Cerro Fortuna and Cerro Morillo Colorado. These rocks are not known to have been documented previously in this area. The granitoids are extensively altered by metasomatic activity and yield elevated scintillometer results (varying from 120-320 counts per second in three outcrops located during traversing). Alteration comprises predominantly K-feldspar (albite) and carbonate alteration. Mafic xenoliths are locally abundant in the granitoids (granitoid magmas sourced from, or modified by transit through, mafic crust). The elevated scintillometer readings from the granitoids show these are ‘hot’ granitoids.

These granitoids are of an unknown extent but are situated between the two main north-south to NW-SE fault systems (locally mineralised) that disrupt the Chile Norte region. Thus these granitoids may have fed uranium (and copper-cobalt) bearing fluids into both of the major fault systems and acted as a heat source during mineralisation. Widespread, albeit generally weak, epidote- carbonate- (sericite-albite)- haematite alteration of the volcanics and epiclastics, attests to presence of a significant hydrothermal alteration system in the Chile Norte region.

Surficial deposits dominate the area (Soledad Formation). These deposits include the following components:

• Fine grained loamy and sandy soils predominate and are of colluvial and Aeolian origin.
• Diatomite is well developed beneath the soil cover as a fine-grained white layer of unknown thickness.
• Salt crust dominates the lake surface and predominantly comprises intergrowth of halite and gypsum. Local occurrences of carnotite, pitchblende and blue halite (the blue colour reflecting radiation damage) are known from various areas of salt crust. The surface of the salt lake is gently undulating and hummocky reflecting the influence of recent faulting. The salt crust is currently being mined by Sal Punta de Lobos Ltd and another small company. In some areas of Chile Norte the salt layer may extend up to 150m depth.

Structural controls

Faults are quite obvious features at surface being evident as both fault scarps, and as fault breccias and fault gouge in areas of good outcrop. The faults described below are part of the Atacama fault system.

There are four major fault systems that cross-cut the Chile Norte region. Large-scale north-south to NW-SE trending fault systems are evident as the Salar Grande and Punta de Lobos fault systems. The Hombre Muerto fault system comprises linking structures, potentially accommodating movements along the longitudinal fault systems. The Chuculay fault system comprises a relatively large number of E-W trending faults with typically north-block down movements; these faults are arguably late features although cross-cutting relationships are equivocal. Several fault jogs, bifurcations and intersections are evident along all fault systems, and these structural features are typically associated with relatively wider damage zones. Such structural features may act to focus potentially-mineralised fluids.

Mineralisation Styles & Controls

Two sources for the halite associated uranium mineralization are postulated. The first theory suggests that uranium was mobilized from Miocene age rhyolitic volcanics and ignimbrites by ground waters which accumulated in fault controlled basins, such as that identified at Chile Norte; where evaporation led to halite and carnotite deposition after sulphate and nitrate deposition. Another plausible source is from the Cretaceous granitoids which underlie some of the area. Cretaceous granitoids and the Atacama Fault Zone are closely associated with IOCG related uranium deposits the Company has studied elsewhere in Chile. This second theory is favoured given the presence of REE suggesting that at least some of the uranium is derived from a primary magmatic source.

Carnotite and schroekingerite were identified as the uranium minerals present in surficial concentrations and they occur as impregnations in montmorillonite and illite occluded in blue halite. Contents of uranium in blue halite typically range from 200ppm to 1000ppm U3O8 (Bobenreith, 1982).

Geological Conclusions

Recent traversing of the Chile Norte region has allowed the following compilation of additional geological information in and around the project area:

• Most rocks show reverse movements along present-day exposures. However, these same faults are likely to have been involved in even more significant normal movements at an earlier stage (also proposed by Carrizo et al, 2008).
• The bedrock sequence is dominated by andesitic volcanics, with discrete domains of sedimentary rocks evident in the north. A granitoid intrusion was located in the west of the project area. Most of the sequence has been weakly altered. Epidote-carbonate alteration is widespread but weak in the andesites.
• The sediments show weak to moderate sericite-haematite alteration, while the granitoids have been albitised.
• Several small copper pits and adits were located along the Salar Grande fault zone, and uranium mineralisation reported within salt crusts by previous explorers was confirmed.
• Mineralisation comprised either copper oxides (mainly malachite), with chalcocite-chalcopyrite mineralisation located within stockpiles immediately west of the CODELCO tenements. Copper grades in excess of 5% (Beeson, 2009) were returned in some samples. There appears to be a weak association between copper, gold and silver. In addition, all copper workings returned weakly elevated scintillometer results suggesting a weak copper-radiation association. Scintillometer sampling demonstrated that the fault network is associated with elevated radiation levels (generally several times above background). Where uranium mineralisation has been located at surface the mineralisation is positioned close to the fault zones. This spatial association between faults and known uranium mineralisation suggests that the fault network has been the main fairway for uranium-bearing