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Margarita

Overview

The Margarita Iron-Oxide-Copper-Gold (IOCG) project is located in Chile, 65 kilometres (km) north of the city of Copiapo with excellent access to infrastructure. The property is located within the prolific Coastal Cordillera belt that hosts the world-class Candelaria (Lundin Mining Corp.) and Manto Verde (Mantos Copper Holding) IOCG mines, and porphyry-skarn deposits such as Santo Domingo (Capstone Mining Corp.) and Inca de Oro (PanAust/Codelco).

The Margarita project is comprised of approximately 1,045 hectares and is flanked by secondary copper oxide mineralization on the southwestern boundary of the property. This copper oxide mineralization is defined by 39 drill holes totaling 3,984 metres (m) and represents an exploration target of approximately 20 - 35 million tonnes at 0.2 - 0.5% copper¹ (non NI 43-101 compliant). The presence of the oxide mineralization is important as it demonstrates the potential for the primary copper sulphide source to occur within the Margarita property as no copper sulphide mineralization has been found on the property to-date. The geological and geophysical characteristics of the project suggest the potential for a large-scale copper sulphide target within the property boundaries.

1 The exploration target is conceptual in nature and insufficient exploration has been undertaken in the areas that this exploration target relates to estimate a mineral resource. The exploration target therefore does not represent, and should not be construed to be, an estimate of a mineral resource or mineral reserve. It is uncertain if further exploration will result in the estimation of a mineral resource.

Underexplored Parcel in a World-Class Belt

The property has a set of geological characteristics that suggest high potential to discover a large-scale IOCG or porphyry copper deposit. This includes a strong argillic–silica hydrothermal alteration system over 15 square kilometres, numerous specular hematite-silica hydrothermal breccia structures, silica–pyrite altered monzonite porphyry bodies, a subparallel system of andesite porphyry dikes and several north-northwest to northeast trending fault zones that are parallel to the Atacama and Chivato crustal scale fault zones, which are important regional controls on copper mineralization.

Geophysics

A magnetic survey over the Margarita project shows a circular magnetic low surrounded by magnetic highs beneath the hydrothermal alteration system. The magnetic highs are associated with less altered, andesitic to rhyodacitic rock units that may correspond to dome structures, which are considered to be part of the mineralizing intrusive hydrothermal system that characterizes the property. The lower magnetic responses correspond to strongly altered units that include various porphyritic and breccia bodies as well as andesitic dykes and provide a clear large-scale 1.5 km by 1.5 km geophysical target within the property boundaries.

An IP survey at the Margarita project consisted of a total of 49-line km with lines spaced every 250 m. The results of the program have demonstrated two north-northwest trending chargeability anomalies that are approximately 3 km by 500 m in dimension at a threshold of 30 millivolts, which is consistent with the presence of sulphide minerals. Importantly, these chargeability anomalies spatially overlap with resistivity lows that are consistent with hydrothermal alteration and form the basis of geophysical targeting at the project.

Recent Exploration/Drill Targeting

Torq has identified three primary target areas across the project area based on the completion of 1:2000 scale geological mapping, soil (pXRF) and rock geochemical sampling programs, and ground-based induced polarization and magnetic geophysical surveys. Geologically, the property can be broadly defined by a large-scale intrusive complex that is interpreted to be directly associated with copper-gold mineralization and by an overlying volcanic sequence that is mineralized along discrete north-northwest structural trends

Southern Targets:

The southern Margarita – Cototuda target area is characterized by a large scale 1.5 kilometre (km) by 500 m copper in soils (pXRF) geochemical anomaly that is hosted within a largely dioritic to dacitic intrusive complex. Copper oxide mineralization is observed both within various intrusive phases as disseminated stockwork vein zones and concentrated along the north-northwest trending Margarita and Cototuda structural trends, where shallow historical drilling has reported copper oxide mineralization within 100 m of surface (historical drilling not compliant with National Instrument 43-101). Alteration associated with the broad zone of mineralization is characterized by strong sericitic-hematite alteration with lesser potassic alteration observed within the Cototuda area.

Rock sampling within the alteration zone from this area has identified copper oxide mineralization with values up to 1.68% copper and up to 0.99 g/t gold within silica-hematite breccia bodies that occur parallel to the strong north-northwest structural trends observed within the target area. Rock sampling highlights are presented below in Table 1. Finally, the southern target areas are characterized by chargeability highs indicating the presence of sulphide, resistivity lows indicating hydrothermal alteration and magnetic anomalies that may be related to magnetite-copper sulphide mineralization.

Northern Targets:

The northern target areas are situated along the extensions of the Margarita and Cototuda north-northwest trending structures and are defined by copper in soils (pXRF) geochemical anomalies. The Cototuda North anomaly is hosted entirely within the volcanic sequence that overlies the mineralized intrusive bodies observed in the southern target area. Torq’s technical team believes that there is strong potential to encounter mineralized intrusive bodies within this structural corridor based on the presence of chargeability highs, indicating the potential for sulphide mineralization, and resistivity lows, indicating the presence of hydrothermal alteration at shallow depths of approximately 150 – 300 m. The Margarita North anomaly is hosted at the sub-horizontal contact between the volcanic sequence and underlying rhyodacitic and diorite intrusions. Strong sericite-clay-tourmaline alteration has been observed at the base of the intrusive bodies, passing upward to silica-hematite-pyrite alteration located within the volcanic sequence. In addition, strong resistivity lows, indicating intense alteration, are situated at shallow depths of approximately 150 m.

Table 1: Margarita – Cototuda target area selective rock sampling highlights

Sample IDCu (%)Sample IDCu (%)Sample IDAu (g/t)Sample IDAu (g/t)
14241.6814650.2514390.9914400.16
14231.5814690.2214490.9015040.15
14200.895746660.2114630.8914290.15
5746540.7513990.2014320.6914350.14
14220.75100090.1914430.6114510.12
14120.7314730.1614470.4914880.12
14210.7314310.1613990.4615530.12
5746560.5514670.1514330.2714640.12
14980.3815110.1414570.2415080.11
14030.34100020.1414800.2215710.10
15750.3314960.1214090.20
15080.2814750.1115700.18
14680.2815700.1014380.17
15690.2614760.1014460.17

Historical Copper Oxide Drilling

Out of the 39 drill holes with known assay results available that define the copper oxide mineralization, 13 are within the land package of the Margarita - Cototuda agreements, totaling approximately 1500 m. The historical drill holes are located in the southwestern corner of the property in a zone of strong hydrothermal alteration. Copper oxide mineralization with reported grades of 0.2 – 0.6% copper were encountered to 210 m vertical depth with drilled widths ranging between 30 – 120 m. Importantly, none of these drill holes encountered primary copper sulphide mineralization.

Ownership

The Company acquired the rights that constitute the Margarita project through two option agreements: 1) The Margarita claims with Minera Viento Norte (MVN), a local Chilean company, and 2) The La Cototuda claims with a small-scale mining company (Figure 2). Under these option agreements the Company can acquire 100% interest in the project, subject to a net smelter royalty (NSR) through combined cash payments and work expenditures as detailed below in Tables 1 & 2.

Table 1. Margarita Claims: Minera Viento Norte

Period from Signing Definitive Agreement and Initial Payment Cash Payments (USD) Work Expenditure Requirement Until $6,200,000 is paid
Within 60 days of signing the Definitive Agreement$50,000 (Initial Payment)
within 6 months50,000400,000
within 18 months100,0001,150,000
within 30 months300,0001,500,000
within 42 months1,200,000
within 54 months2,000,000
within 66 months2,500,000
Total$6,200,000$3,050,000

The Margarita NSR is 1% with 50% (being 0.5%) buyable for $2,000,000.

Table 2: La Cototuda Claims: Small-scale mining company

Period from Signing Definitive Agreement and Initial PaymentCash Payments (USD) No Expenditure Requirement
Upon signing the Agreement$50,000 (Initial Payment)
within 12 months250,000
within 24 months250,000
within 36 months350,000
Total$900,000

There is no NSR relating to the La Cototuda claims.

In relation to the option arrangement of the Margarita project, a finders fee of 466,666 shares of the Company will be issued, subject to customary TSX Venture Exchange acceptance.

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