2. NI 43-101 Technical Report, Santo Domingo Silver-Gold Exploration Project, Jalisco, México
January 25, 2010
2.0 TABLE OF CONTENTS
3.0 SUMMARY ..................................................................................................................................... 1
3.1 LOCATION ........................................................................................................................ 1
3.2 MINERAL CONCESSIONS .............................................................................................. 1
3.3 SURFACE RIGHTS ........................................................................................................... 1
3.4 ENVIRONMENTAL EXPLORATION PERMITTING .................................................... 1
3.5 GEOLOGY ......................................................................................................................... 2
3.6 MINERALIZATION .......................................................................................................... 2
3.7 EXPLORATION ................................................................................................................ 2
3.8 MINERAL RESERVES AND RESOURCES.................................................................... 3
3.9 CONCLUSIONS AND RECOMMENDATIONS ............................................................. 4
4.0 INTRODUCTION ........................................................................................................................... 7
5.0 RELIANCE ON OTHER EXPERTS .............................................................................................. 9
6.0 PROPERTY DESCRIPTION AND LOCATION ......................................................................... 10
6.1 COMPANY RIGHTS TO MINING CONCESSIONS ..................................................... 10
6.2 COMPANY OWNERSHIP .............................................................................................. 14
6.3 SURFACE RIGHTS ......................................................................................................... 14
6.4 ENVIRONMENTAL PERMITTING FOR EXPLORATION ACTIVITIES .................. 14
7.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE,
AND PHYSIOGRAPHY ............................................................................................................... 16
8.0 HISTORY ...................................................................................................................................... 20
9.0 GEOLOGICAL SETTING ............................................................................................................ 27
9.1 REGIONAL GEOLOGY .................................................................................................. 27
9.2 LOCAL GEOLOGY ......................................................................................................... 30
9.2.1 Lithology.............................................................................................................. 30
9.2.2 Structure ............................................................................................................... 33
9.2.3 Mineralized zones ................................................................................................ 34
10.0 DEPOSIT TYPES .......................................................................................................................... 35
11.0 MINERALIZATION AND MINERALIZATION CONTROL .................................................... 38
12.0 EXPLORATION ........................................................................................................................... 41
12.1 HISTORIC EXPLORATION ........................................................................................... 41
12.2 STROUD RESOURCES EXPLORATION ..................................................................... 41
13.0 DRILLING..................................................................................................................................... 43
13.1 DRILLING SUMMARY .................................................................................................. 43
13.2 DRILLING RESULTS SUMMARY ................................................................................ 43
14.0 SAMPLING METHOD AND APPROACH ................................................................................. 59
14.1 SAMPLING PROGRAMS ............................................................................................... 59
14.2 CORE HANDLING AND SAMPLING ........................................................................... 59
14.3 CORE RECOVERIES ...................................................................................................... 62
14.4 DRILL HOLE SURVEYING ........................................................................................... 63
15.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY ..................................................... 65
15.1 ALS CHEMEX LABS QUALITY ASSURANCE/QUALITY
CONTROL (QA/QC) ....................................................................................................... 65
15.2 STROUD SAMPLE PREPARATION PROCEDURES .................................................. 65
16.0 DATA VERIFICATION ............................................................................................................... 67
16.1 STROUD QUALITY CONTROL .................................................................................... 67
16.2 BEHRE DOLBEAR DATA VERIFICATION ................................................................ 67
16.3 BEHRE DOLBEAR CHECK SAMPLING...................................................................... 69
Project 09-070 i BEHRE DOLBEAR
3. NI 43-101 Technical Report, Santo Domingo Silver-Gold Exploration Project, Jalisco, México
January 25, 2010
2.0 TABLE OF CONTENTS
(CONTINUED)
17.0 ADJACENT PROPERTIES .......................................................................................................... 78
18.0 MINERAL PROCESSING AND METALLURGICAL TESTING .............................................. 79
19.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES ......................................... 80
19.1 GENERAL INFORMATION ........................................................................................... 80
19.2 MINERAL RESOURCE DEFINITIONS ......................................................................... 80
19.2.1 Mineral Resource (CIM, 2005) ............................................................................ 81
19.2.1.1 Inferred Mineral Resource ................................................................... 81
19.2.1.2 Indicated Mineral Resource ................................................................. 81
19.2.1.3 Measured Mineral Resource ................................................................ 81
19.2.2 Mineral Reserve (CIM, 2005) .............................................................................. 81
19.3 STROUD MINERAL RESOURCES ............................................................................... 82
19.3.1 Method of Resource Estimation .......................................................................... 82
19.3.2 Mineral Resources ............................................................................................... 83
20.0 OTHER RELEVANT DATA AND INFORMATION ................................................................. 98
21.0 INTERPRETATION AND CONCLUSIONS ............................................................................... 99
21.1 INTERPRETATION OF RESULTS ................................................................................ 99
21.2 OTHER RELEVANT INFORMATION ........................................................................ 100
21.2.1 Mineral Concessions .......................................................................................... 100
21.2.2 Surface Rights .................................................................................................... 100
21.2.3 Environmental Exploration Permitting .............................................................. 100
21.3 CONCLUSIONS ............................................................................................................ 100
22.0 RECOMMENDATIONS ............................................................................................................. 103
23.0 REFERENCES ............................................................................................................................ 106
24.0 DATE AND SIGNATURE PAGE .............................................................................................. 107
25.0 ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON
DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES ................................... 110
APPENDIX 1.0 TITLE OPINION ............................................................................................. A1-1
APPENDIX 2.0 ASSAY TECHNIQUES .................................................................................. A2-1
APPENDIX 3.0 CHECK ASSAYS............................................................................................ A3-1
Project 09-070 ii BEHRE DOLBEAR
4. NI 43-101 Technical Report, Santo Domingo Silver-Gold Exploration Project, Jalisco, México
January 25, 2010
LIST OF TABLES
Table 3.1 Santo Domingo Project, Mineral Resource Estimate.......................................................... 4
Table 3.2 Phase 1 – Stroud Recommended Program and Budget....................................................... 5
Table 3.3 Phase 2 – Stroud Recommended Program and Budget....................................................... 6
Table 6.1 San Diego y La Española, S.A. de C.V Mining Rights (duties) of SDLE’s
Concessions for 2009 ........................................................................................................ 12
Table 7.1 Summary of Meteorological Information and Climate Classification .............................. 18
Table 8.1 Existing Mine Workings on Santo Domingo Project........................................................ 21
Table 8.2 Noranda Drill Program Results ......................................................................................... 25
Table 8.3 Dump Sampling Program ................................................................................................. 26
Table 12.1 SDLE Core Drilling, 1999 – Selected Intervals................................................................ 41
Table 13.1 Drill Hole Record 1999-2008 ........................................................................................... 44
Table 13.2 Summary of Significant Intersections ............................................................................... 54
Table 14.1 Core Recoveries of Mineralized Intersections Verified by Behre Dolbear’s
Qualified Person ............................................................................................................... 63
Table 16.1 Behre Dolbear Sample Verification .................................................................................. 70
Table 16.2 Behre Dolbear Sample Verification Assay Results – ALS Chemex Certificate
of Analysis ........................................................................................................................ 71
Table 16.3 Behre Dolbear Verification – Assay Comparison Between Stroud and BDM
Reports of ALS Chemex Labs .......................................................................................... 72
Table 19.1 Mineral Resources Estimate ............................................................................................. 83
Table 19.2 Mineral Resource Block Calculation ................................................................................ 86
Table 19.3 Mineral Resource Block Calculation ................................................................................ 87
Table 21.1 Mineral Resources Estimate ............................................................................................. 99
Table 22.1 Phase 1 – Stroud Recommended Program and Budget................................................... 104
Table 22.2 Phase 2 – Stroud Recommended Program and Budget................................................... 105
Project 09-070 iii BEHRE DOLBEAR
5. NI 43-101 Technical Report, Santo Domingo Silver-Gold Exploration Project, Jalisco, México
January 25, 2010
LIST OF FIGURES
Figure 4.1. Location map ...................................................................................................................... 7
Figure 6.1. SDLE Mine concessions map ........................................................................................... 10
Figure 7.1. Location and property access map .................................................................................... 16
Figure 7.2. Santo Domingo – Topographic relief and project infrastructure – Vein
Structures pass under the hill and parallel to the main valley in the background –
Trees on hill in centre of Photo mark a Shaft on the Guadalupe System.......................... 17
Figure 7.3. Rio Grande de Santiago Valley, looking Northwest ......................................................... 18
Figure 8.1. Nombre de Dios open stope .............................................................................................. 22
Figure 8.2. Rayas Vein System in the Bellavista tunnel: timbering extends for 10 meters
across the vein system....................................................................................................... 23
Figure 8.3. Timber wall holding up rock fill in 6 meter-wide stope – Socavón Intermedio ............... 23
Figure 8.4. View of the fortified compound that was probably the control center for the
mining operations – Opening in wall is for a road to El Zopilote Mine ........................... 24
Figure 9.1. Sierra Madre Occidental Province and associated Mineral Districts ................................ 27
Figure 9.2. Regional tectonic map of the southwestern part of the Sierra Madre Occidental –
Shaded area is the late Miocene to Quaternary Trans-Mexican Volcanic Belt ................ 28
Figure 9.3. Regional mineralized zones .............................................................................................. 29
Figure 9.4. Regional geologic map of the late Miocene to Quaternary Mexican Volcanic
Belt .................................................................................................................................... 31
Figure 9.5. Local geology and drill hole location map – Rayas, Guadalupe, La Española,
and Jasmine veins traces ................................................................................................... 32
Figure 9.6. Cliff southwest of camp showing the thick capping rhyolite volcanic ash –
El Zopilote Abajo is at bottom of cliff at center of photo ................................................. 33
Figure 10.1. Spatial relationship of the Gran Cabrera, Santo Domingo, and Cinco Minas
mineralized zones ............................................................................................................. 36
Figure 11.1. Boulder from La Raya showing brecciation of quartz in calcite ...................................... 38
Figure 11.2. Core showing a breccia with fragments of andesite and galena-sphalerite
mineralization in white quartz .......................................................................................... 39
Figure 13.1. Section 5275N – Drill hole mineral intersections and lithology ....................................... 45
Figure 13.2. Section 5345N – Drill hole mineral intersections and lithology ....................................... 46
Figure 13.3. Section 5365N – Drill hole mineral intersections and lithology ....................................... 47
Figure 13.4. Section 5375N – Drill hole mineral intersections and lithology ....................................... 48
Figure 13.5. Section 5475N – Drill hole mineral intersections and lithology ....................................... 49
Figure 13.6. Section 5530N – Drill hole mineral intersections and lithology ....................................... 50
Figure 13.7. Section 5555N – Drill hole mineral intersections and lithology ....................................... 51
Figure 13.8. Section 5640N – Drill hole mineral intersections and lithology ....................................... 52
Figure 13.9. Section 5835N – Drill hole mineral intersections and lithology ....................................... 53
Figure 13.10. Drilling Flat Hole SD-08-22 at entrance to Nombre de Dios Mine .................................. 56
Figure 13.11. Drilling Hole SD-08-23 .................................................................................................... 57
Figure 14.1. Core splitting facilities – Diamond saw ............................................................................ 60
Figure 14.2. Half core sample split ....................................................................................................... 60
Figure 14.3. Stroud’s core storage facilities at Labor de Guadalupe .................................................... 62
Figure 16.1. Drill hole location monument ........................................................................................... 68
Figure 16.2. Drill hole location monument partially covered with dirt................................................. 68
Figure 16.3. Behre Dolbear check sampling ......................................................................................... 69
Figure 16.4. BD Check Sampling (g/t Au)............................................................................................ 73
Project 09-070 iv BEHRE DOLBEAR
6. NI 43-101 Technical Report, Santo Domingo Silver-Gold Exploration Project, Jalisco, México
January 25, 2010
LIST OF FIGURES
(CONTINUED)
Figure 16.5. BD Check Sampling (Au) ................................................................................................. 74
Figure 16.6. BD Check Sampling (g/t Ag)............................................................................................ 74
Figure 16.7. BD Checking Sampling (Ag) ............................................................................................ 75
Figure 16.8. BD Check Sampling Pb (%) ............................................................................................. 75
Figure 16.9. BD Check Sampling Pb (%) ............................................................................................. 76
Figure 16.10. BD Check Sampling Zn (%) ............................................................................................. 76
Figure 16.11. BD Check Sampling Zn (%) ............................................................................................. 77
Figure 19.1. Longitudinal Section Indicating Mineral Resources ......................................................... 85
Figure 19.2. Cross Section 5275 showing blocks for mineral resources estimation ............................. 88
Figure 19.3. Cross Section 5345 showing blocks for mineral resources estimation ............................. 89
Figure 19.4. Cross Section 5365 showing block for mineral resources estimation............................... 90
Figure 19.5. Cross Section 5375 showing blocks for mineral resources estimation ............................. 91
Figure 19.6. Cross Section 5475 showing block for mineral resources estimation............................... 92
Figure 19.7. Cross Section 5530 showing blocks for mineral resources estimation ............................. 93
Figure 19.8. Cross Section 5555 showing block for mineral resources estimation............................... 94
Figure 19.9. Cross Section 5595 showing blocks for mineral resources estimation ............................. 95
Figure 19.10. Cross Section 5640 showing block for mineral resources estimation............................... 96
Figure 19.11. Cross Section 5835 showing blocks for mineral resources estimation ............................. 97
Project 09-070 v BEHRE DOLBEAR
7. NI 43-101 Technical Report, Santo Domingo Silver-Gold Exploration Project, Jalisco, México
January 25, 2010
3.0 SUMMARY
Stroud Resources Ltd. (Stroud) owns 100% of the private Mexican company, Compañía Minera San
Diego y La Española, S.A. de C.V. (SDLE). SDLE holds titles rights to the Santo Domingo II and
Nombre de Dios mining concessions, comprising 40 hectares and 95 hectares, respectively.
3.1 LOCATION
The concessions occur in the Hostotipaquillo Mining District which includes a number of established
silver-gold epithermal mineral occurrences including the well known Monte del Favor, La Cabrera and
Cinco Minas mines with a pre-twentieth century mining production history, reportedly most prolific in the
seventeenth and eighteenth centuries. They are located approximately 80 kilometers (km) N53°W of
Guadalajara, capital city of the State of Jalisco. The coordinates for the Santo Domingo II claim
monument near the approximate center of the concessions, as reported in the assessment works and
survey, are 21° 06’ 21” North latitude; 103° 58’ 43” West longitude. The corresponding UTM coordinates
for the same location are Zone 13Q – 606,023.21 East, 2,334,200.76 North.
3.2 MINERAL CONCESSIONS
Behre Dolbear has reviewed the Titles Opinion (Creel, García – Cuellar, Aiza y Enríquez Law Firm, Nov.
27, 2009), legal status and agreements, and technical data supplied to it by Stroud, SDLE and its agents,
as well as other public technical information sources. Behre Dolbear has conducted a review and appraisal
of the information used in the preparation of its report, and believes the information included in the
preparation of the report, and in its conclusions and recommendations, is valid and appropriate
considering the status of the project and the purpose for which the report is prepared. According to the
Title Opinions for the Santo Domingo II and Nombre de Dios Concessions held by SDLE, “the said
mining concessions (a) Are valid, enforceable and in good standing; and (b) Such mining concessions and
the rights derived thereunder are free and clear of all liens, mortgages, claims, encumbrances, and security
interests of any kind or nature.”
3.3 SURFACE RIGHTS
Stroud has leased surface rights from the Community Ejido de Santo Domingo de Guzman to cover these
mining concessions and the surrounding area, granted by a general meeting held November 3, 2002 in
accord with Méxican regulations, and a lease agreement ratified before a Notary Public. The agreement
has been extended to 2013. Copies of the Ejido agreements are in the files of SDLE and Stroud for
consultation, if required.
3.4 ENVIRONMENTAL EXPLORATION PERMITTING
In 1999, Stroud, then known as Stroud Resources de México, S.A. de C.V., carried out the first drilling
campaign from then existing roads and mine patios. The second drilling campaign of 2003 was permitted
by submitting an Environmental Permitting Notice report, according to Regulation NOM 120 ECOL
1997, which included the construction of 2,400 meters of access roads and drill pads (BDM, November
2002). Drill holes for the last drilling campaign between 2005 and 2008 were carried out from the access
road permitted in 2002. Copies of the environmental report are in the files of SDLE and SDR for consult,
if required.
Project 09-070 1 BEHRE DOLBEAR
8. NI 43-101 Technical Report, Santo Domingo Silver-Gold Exploration Project, Jalisco, México
January 25, 2010
3.5 GEOLOGY
The oldest rocks in the western part of México are sedimentary and volcano-sedimentary units of the
Guerrero Terrain overlain by Cretaceous volcano-sedimentary rocks locally affected by the Eocene Puerto
Vallarta batholith (54 Ma). The region of interest presents a stratigraphic succession which includes a
Cordilleran-equivalent basement, Oligocene-to-middle-Miocene Sierra Madre Occidental (SMO) volcanic
rocks, and a Late Miocene-to-Quaternary Mexican Volcanic Belt (MVB) sequence.
The SMO is a large Middle Tertiary volcanic province, which extends from the southwestern United
States to central México. Regionally, the SMO Province shows two differentiated volcanic Groups
according to its composition and age: the Lower Volcanic Group (LVG), forming the lowest part of the
volcanic sequence of SMO, exhibits more intermediate to mafic composition; and the Upper Volcanic
Group (UVG), which is more felsic than the LVG. The contact between these two units is commonly
erosional with the local presence of red conglomerates filling ancient topography. The importance of the
SMO Province is due to its being the host to one of the largest epithermal precious metal metallogenic
provinces in the world, which encompasses well-known silver-gold (Ag-Au) producing mining districts in
Mexico including active mines and advanced projects like Mulatos, Dolores, Palmarejo, Ocampo, Moris,
Batopilas, El Sauzal, Guadalupe y Calvo, San Julián, San Dimas-Tayoltita, Bacis, Topia, La Ciénega,
Guanaceví, and Metates. Closer to the subject area, the Hostotipaquillo District historic mines, Cinco
Minas, Bolaños and San Martin de Bolaños are also enclosed in LVG rocks.
Mineral zones in the Hostotipaquillo Mining District include the Casados, Mololoa, Salomón, Gran
Cabrera, and other mines in the Monte del Favor area and the Santo Domingo, San Pedro Analco, and
Cinco Minas in the Southeastern part of the District (R. Munroe, 2006). All of these deposits are related
to silver-gold epithermal mineralization events associated with veins of quartz, quartz-calcite and quartz-
calcite-adularia-sericite.
At Santo Domingo, the two most important mineralized structures, Rayas and Guadalupe, have been
identified over lengths of 500 and 900 meters, respectively, with intersections in the order of 10 to
50 meters in width and to a depth of 775 meters above sea level (masl) at the DH 06-11 intersection of the
Guadalupe vein. Surface mapping, trenching, historic workings and 30 drill holes by SDR have defined
the main silver-bearing veins, with associated gold structures, as a series of North West-trending veins
and veinlets showing local brecciation and strong silicification and/or propilitization of the enclosing host
rock, typical of epithermal vein systems.
3.6 MINERALIZATION
Disseminated and veinlet-controlled mineralization at Santo Domingo includes argentite, sphalerite,
galena, and minor native gold observed in the silicified rock matrix and quartz veins and veinlets. The
sulphide mineralization content is low, and is estimated to be below 1% to 2% (vol.). In the near-surface
environment, secondary oxide phases of the sulphide minerals, including malachite, are common.
3.7 EXPLORATION
Stroud optioned the property in 1989 and conducted a limited program of check chip sampling in the
accessible adits and surface mineralized zones. The early program was designed to substantiate the
mineralization potential of the concessions. Stroud undertook an initial core drilling program of four holes
in 1999 followed, in 2003, by an attempted drill program. Between 2005 and 2008, a successful drilling
campaign was waged. In this 20 year time period, a total of 30 core holes have been drilled, of which
Project 09-070 2 BEHRE DOLBEAR
9. NI 43-101 Technical Report, Santo Domingo Silver-Gold Exploration Project, Jalisco, México
January 25, 2010
three were abandoned due to loose material, broken ground and/or mechanical problems. Over all,
5,335.60 meters have been drilled including the 169.5 meters lost in the three holes previously mentioned.
Behre Dolbear has undertaken an independent review of the technical information related to the project,
including check sampling and an independent analysis of 18 samples from the mineralized structures
exhibited in recent drill core, by quartering split core. The results of the Behre Dolbear check assay
program found that Au, Pb, and Zn analyses show good correlation values, however the correlation of
silver assay results was not very good; it was concluded that the variations are probably caused by the
irregular distribution of silver mineralization and that silver mineralization is possibly associated with
high-grade oxide minerals or native silver since most of the higher Ag values are within the oxidation
zone, close to surface. Future sampling campaigns should consider larger samples, in size and number.
Also, higher assays, above 300 g/t, should be verified in a third laboratory until mineral graphic studies
define the silver mineralogy and a better sample attack and analysis is deciphered. Behre Dolbear believes
that the results reported are acceptable and therefore sampling by Stroud Resources is considered reliable.
Behre Dolbear found that in general, mineralized intersections of drill holes show good core recovery, in
the order of 96%, although varying from 87% to 100% depending upon the degree of fracturing exhibited
by the intersections. Based on these estimates, it is considered that core recoveries are adequate for use in
Mineral Resource calculation and reporting.
Behre Dolbear made a review of Stroud’s sampling procedures. Sampling procedures and sample
preparation procedures developed in 1999 by Stroud were followed during the first drilling campaign,
with slight variations in the following campaigns. A total of 30 drill holes were sampled at variable
intervals, depending on the geologic characteristics of the intersection and where the structure was found.
Samples were taken of half-core splits of lengths varying from 0.3 to 2.0 meters although core sample
lengths were in the order of 1.0 meters for the 1999 campaign and 1.5 meters for the 2003 and 2005-2008
campaigns.
Behre Dolbear believes that Stroud’s sampling, sample preparation and assay procedures were within
industry standards and were adequately followed through the sampling campaigns. Data collection
improvements, mainly to the recording of the information, are recommended throughout this report. It is,
therefore, estimated that samples and assay results are adequate for Mineral Resource estimation and
reporting in accordance with NI 43-101 guidelines.
3.8 MINERAL RESERVES AND RESOURCES
Mineral Reserves, as established by NI 43-101 guidelines and CIM definitions, have not been defined at
Santo Domingo.
According to Stroud estimates, Measured Resources total 1.85 million tonnes (Mt) grading 0.46 g/t
Au and 90.0 g/t Ag and Indicated Resources total 2.50 Mt grading 0.39 g/t Au and 88.0 g/t Ag
(Table 3.1).
Project 09-070 3 BEHRE DOLBEAR
10. NI 43-101 Technical Report, Santo Domingo Silver-Gold Exploration Project, Jalisco, México
January 25, 2010
TABLE 3.1
SANTO DOMINGO PROJECT, MINERAL RESOURCE ESTIMATE
(D. MCBRIDE, 2009)
Gold Silver Gold Silver
Classification Tonnes
(g/t) (g/t) (ounces) (ounces)
Measured 1,846,352 0.46 90 27,306 5,342,557
Indicated 2,501,382 0.39 88 31,364 7,077,092
Measured and Indicated 4,347,734 0.42 89 58,671 12,419,649
Indicated 3,424,622 0.33 83 36,817 9,135,864
Inferred Resources are estimated at 3.42 Mt grading 0.33 g/t Au and 83.0 g/t Ag.
Behre Dolbear believes that the manual polygon method of mineral resource calculation utilized by
Stroud in the estimation of Resources is adequate as a first attempt to define Resources, and was properly
applied. This method has been in use in the industry for many years and has been considered standard for
tabular deposits.
3.9 CONCLUSIONS AND RECOMMENDATIONS
Stroud’s exploration program on the Santo Domingo Property has included the compilation of old reports
and maps, geological reconnaissance and mapping along the main structures outcropping in the area,
alteration and mineralization mapping, surface and underground chip sampling of main structures, and
diamond drilling of 30 core holes at the Rayas and Guadalupe structures. A total 5,335.60 meters of
drilling was completed, including 169.5 meters in three holes lost. Core recoveries of mineralized sections
were acceptable, exceeding 95%.
As a result of exploration activities, Stroud estimates the combined Measured and Indicated Resources
in the order of 4.35 Mt averaging 0.42 g/t Au and 89 g/t Ag or an estimated 58,671 ounces of gold and
12.4 million ounces of silver.
Based on these results, Stroud is proposing an accelerated drill program to trace the vein systems on the
Santo Domingo II and Nombre de Dios properties. In the opinion of Behre Dolbear based on this review
of Stroud’s Santo Domingo Silver-Gold Exploration Project, the mineralized structures warrant the
further exploration proposed by SDLE.
The proposed program has been divided in two phases, accounting for 11,000 meters and 22,000 meters,
respectively as described below and shown in Table 3.2 (Phase 1) and Table 3.3 (Phase 2).
Most of the future exploration should be used to expand the resource by drilling. Three holes should be
drilled at the road level (approximately 980 masl) on Section 5470; the initial hole, SD-08-30, has been
partially completed. To the north, drilling cannot be carried out on the road level and three holes should
be drilled from the road bend at the 1,010 meter level on section 5720N. A second tier of holes on
50 meter centres are proposed for the “Pileta” or 1,040 meter level. A road is proposed from the pileta to
Section 5450 N. A second road at his elevation will be pushed up from the site of holes 6, 14, 15, and
17 to drill sections 5300N to 5400N. To complete this program will require drill holes and approximately
1,000 meters per section or a total of 11,000 meters of drilling.
Project 09-070 4 BEHRE DOLBEAR
11. NI 43-101 Technical Report, Santo Domingo Silver-Gold Exploration Project, Jalisco, México
January 25, 2010
Contingent on the results of this program, a second program is recommended to explore further into the
hill. Old roads will be upgraded to provide access up the hill and to construct drill platforms.
Stroud estimates that the budget required for the development of Phase 1 and Phase 2 exploration
programs is in the order of CA$3.0 million (US$2.8 million) and CA$5.7 million (US$5.4 million),
respectively.
TABLE 3.2
PHASE 1 – STROUD RECOMMENDED PROGRAM AND BUDGET
(SANTO DOMINGO SILVER-GOLD PROJECT)
Item Essential Services Cost CAD Cost USD
1 Access and site roads (500 meters) 50,000 47,000
Pumps and Electrics, including electricity 10,000 9,400
2 Personnel
Project Manager and Senior Geologist 160,000 150,400
Assistant Geologist 75,000 70,500
Trucks (3) – Operating Costs 35,000 32,900
3 Drilling Program
11,000 meters at $150.00 per meter 1,650,000 1,551,000
core boxes racks and storage 50,000 47,000
4 Analyses
Core Assays: gold, silver, lead, and zinc 120,000 112,800
Analyses b.m. assays, petrographic, and microscopic 10,000 9,400
5 Support Facilities
Project Vehicle 30,000 28,200
Travel Canada – Mexico 25,000 23,500
Accommodation, Telecommunication 80,000 75,200
Field Support, Land Rental, etc. 50,000 47,000
6 Environmental, Consultants 20,000 18,800
7 Surveying 20,000 18,800
8 Office Overhead ~10% 240,000 225,600
9 Contingency ~15% 390,000 366,600
Total Technical Program Phase 1 3,015,000 2,834,100
Project 09-070 5 BEHRE DOLBEAR
12. NI 43-101 Technical Report, Santo Domingo Silver-Gold Exploration Project, Jalisco, México
January 25, 2010
TABLE 3.3
PHASE 2 – STROUD RECOMMENDED PROGRAM AND BUDGET
(SANTO DOMINGO SILVER-GOLD PROJECT)
Item Essential services Cost CDN Cost US
1 Access and site roads (100 meters) 40,000 37,600
Pumps and Electrics, including electricity 50,000 47,000
2 Personnel
Project Manager and Senior Geologist 270,000 253,800
Assistant Geologist 100,000 94,000
Trucks (3) – Operating Costs 70,000 65,800
3 Drilling Program
22,000 meters at $150.00 per meter 3,300,000 3,102,000
core boxes racks and storage 20,000 18,800
4 Analyses
Core Assays: gold, silver, lead, and zinc 240,000 225,600
Analyses b.m. assays, petrographic, and microscopic 20,000 18,800
5 Support Facilities
Project Vehicle 30,000 28,200
Travel Canada – Mexico 50,000 47,000
Accomodation, Telecommunication 160,000 150,400
Field Support Labour, Land Rental, etc. 110,000 103,400
6 Environmental, Consultants 50,000 47,000
7 Surveying 30,000 28,200
8 Office Overhead ~10% 450,000 423,000
9 Contingency ~15% 750,000 705,000
Total Technical Program Phase 2 5,740,000 5,395,600
Project 09-070 6 BEHRE DOLBEAR
13. NI 43-101 Technical Report, Santo Domingo Silver-Gold Exploration Project, Jalisco, México
January 25, 2010
4.0 INTRODUCTION
Stroud is an exploration company based in Toronto, Canada. It is the controlling – shareholder of
Compañía Minera San Diego y La Española S.A. de C.V. (SDLE), a private Mexican company, which in
turn holds encumbered title rights, as later described, to the Santo Domingo II and Nombre de Dios
mining concessions, located approximately 80 km northwest of Guadalajara, the capital city of the State
of Jalisco, Mexico (Figure 4.1). The concessions occur in the Hostotipaquillo Mining District, which
includes a number of established silver-gold epithermal mineral occurrences, including the well known
Monte del Favor, La Cabrera and Cinco Minas mines. The region has a pre-twentieth century mining
history, reportedly most prolific in the seventeenth and eighteenth centuries. Stroud has undertaken
diamond drilling, geological studies and underground mapping to establish the mineral potential.
Figure 4.1. Location map
Behre Dolbear de México, S.A. de C.V. (BDM), the Mexican subsidiary of the Behre Dolbear Group Inc.
of Denver, Colorado, USA, prepared, in January 2003, a Technical Qualifying Report of the Santo
Domingo II and Nombre de Dios Concessions. BDM has now been requested to prepare a technical report
with an update of the exploration work conducted by Stroud through 2009. The main purpose of the
report is to provide with a review of Stroud´s mineral resource estimate and to ensure the data presented
conforms to the requirements of report filing of public companies to Canadian regulatory authorities,
following NI 43-101 Guidelines.
BDM has examined the project site on several occasions and has undertaken an independent review of the
project technical information. The Behre Dolbear study includes check sampling and analysis of:
(1) samples from the mineralized structure exhibited in several of the adits, (2) from the two drilling
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campaigns and drill core by quartering split core, and (3) by reanalysis of laboratory-filed Stroud core
sample reject portions. The BDM site examination and report were undertaken by senior, experienced
Qualified Persons. In the opinion of Behre Dolbear, based on its review of the SDLE – Santo Domingo
Silver-Gold Exploration Project, the identified mineralized structure of the concessions illustrate the
scope of structure and indicated mineralizing events in the appropriate geological setting to warrant the
further exploration proposed herein by SDLE (Table 3.1, Table 3.2, and Table 3.3).
Behre Dolbear’s Qualified Person for the Santo Domingo Project, Mr. Baltazar Solano-Rico, prepared
Santo Domingo’s 2003 Technical Qualifying Report, having visited the property several times in 2002
and 2003. Extensive discussions regarding recent drilling results and knowledge of the geology and
mineralization of Santo Domingo were held with Dr. McBride and George Coburn earlier in 2009. Later
in the year Mr. Solano spent three days at the property between July 2 and July 4, 2009, reviewing some
of the advances in the geological knowledge of the property and reviewing all vein intersections of the
second drilling campaign from drill hole number 6 through drill hole number 30. The drill logs were
analyzed and the mineralized intersections verified against existing core in Stroud´s core house and at
Santo Domingo. A spot check of drill hole locations was also made while at the property. Finally,
18 check samples were taken and sent to a separate laboratory for analysis verification. The samples were
taken from remaining drill core half-splits and selected to cover a wide spectrum of values from low-
grade to high-grade silver values.
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5.0 RELIANCE ON OTHER EXPERTS
BDM has drawn the information presented herein from a series of documents, reports and
communications provided by Stroud and SDLE, public information, and BDM’s own records, and
technical publications. Most of the information used for the report has been derived from:
• Stroud Resources, Ltd., through Dr. Derek McBride, P.Eng., prepared an update of Behre
Dolbear’s 2003 technical report using the additional information collected since the
original report dated January 17, 2003;
• Stroud Resources, Ltd., several internal reports by Dr. Derek McBride, P.Eng., including
geology, mineralization history of the Santo Domingo mines and proposed exploration
programs;
• Stroud Resources, Ltd., concessions status and general information;
• Stroud Resources, Ltd., geological maps and sections drill logs, surveys, assays and
general information;
• Dr. Derek McBride, P.Eng., 2009, Santo Domingo Mineral Resource calculations. Stroud
Resources internal reports and tables;
• ALS Chemex assay certificates;
• Behre Dolbear de México, S.A. de C.V. , 2003, Technical Qualifying Report;
• Ferrari Luca et al., several papers on the geology of the region; and
• Servicio Geológico Mexicano, geological mapping information at 1:50,000 and
1:250,000 scales and geological descriptions.
A comprehensive list of sources of information is included in Section 23.0 – References.
Behre Dolbear has reviewed the Titles Opinion (Creel, García-Cuellar, Aiza y Enríquez Law Firm,
November 27, 2009), legal status and agreements and the technical data supplied to it by Stroud, SDLE
and its agents, as well as other public technical information sources. Behre Dolbear has conducted a
review and appraisal of the information used in the preparation of its report, and believes the information
included in the preparation of the report and in its conclusions and recommendations is valid and
appropriate considering the status of the project and the purpose for which the report is prepared.
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16. NI 43-101 Technical Report, Santo Domingo Silver-Gold Exploration Project, Jalisco, México
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6.0 PROPERTY DESCRIPTION AND LOCATION
SDLE mineral concessions are located approximately 80 km N53°W of Guadalajara, Capital City of the
State of Jalisco, México within the Hostotipaquillo Mining District. The co-ordinates for the Santo
Domingo II claim monument, as reported in the assessment works and survey, shows the approximate
center of the concessions being located at 21° 06’ 21” North Latitude; 103° 58’ 43” West Longitude
(Figure 6.1). The corresponding UTM coordinates for the same location are Zone 13Q – 606,023.21 East,
2,334,200.76 North.
Figure 6.1. SDLE Mine concessions map
The mining concessions are located along the south side of the Rio Grande de Santiago valley and cover
mine workings that date from Colonial times. The concessions are held in the name of San Diego y La
Española S.A. de C.V. (SDLE).
6.1 COMPANY RIGHTS TO MINING CONCESSIONS
SDLE, the subsidiary of Stroud in Mexico, owns 100% of the title rights to the Santo Domingo II
(Title 186,469) and Nombre de Dios (Title 187,901) mining concessions located in the mining district of
Hostotipaquillo in Jalisco State, Mexico. Hostotipaquillo is located approximately 100 km by road west
of Guadalajara. The two mining concessions cover an area of 135 hectares and are described, as follows.
Santo Domingo II – The mining concession for exploitation number 186,469, covering the
mining claim named “Santo Domingo II”, with surface area of 40 hectares, located in the
Municipality of Hostotipaquillo, State of Jalisco, México, registered under entry number 349,
page 88, volume 255, of the Book of Mining Concessions of the Public Registry of Mining. The
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Santo Domingo II claim was staked under the name of Salvador Rodriguez López, for the
production of gold, silver, lead, copper, and zinc. The Santo Domingo II exploitation concession
terminates on April 1, 2015 and requires a payment in the order of $5,149.00 Pesos per semester
for the year 2010, as shown in Table 6.1. (The mining duty varies according to a table published
by the Mines Directorship every year.)
Nombre de Dios – The mining concession for exploitation number 187,901, covering the mining
claim named “Nombre de Dios”, with surface area of 95 hectares, located in the Municipality of
Hostotipaquillo, State of Jalisco, México, registered under entry number 301, page 76, volume
257, of the Book of Mining Concessions of the Public Registry of Mining. The Nombre de Dios
claim was staked under the name of José Manuel Rodríguez Cabrales, for the production of gold,
silver, lead, copper, and zinc. The Nombre de Dios exploitation concession terminates on
November 21, 2015 and requires a payment of $12,227.00 Pesos per semester for the year 2010,
as shown in Table 6.1. (The mining duty varies according to a table published by the Mines
Directorship every year.)
Table 6.1 shows a summary of the status and obligations for the SDLE concessions.
Behre Dolbear notices that the Mexican Mining Law was amended by a Congress Decree dated
February 22, 2005, published at the Official Daily of the Federation on April 28, 2005. According to said
amendment, exploitation mining concessions are now only valid for 50 years and all existing exploration
mining concessions are automatically converted into exploitation mining concessions from January 1,
2006.
Figure 6.1 shows the boundaries of SDLE’s concessions at Santo Domingo and the relative position of the
main mineralized structures within the claims.
Mining concessions in Mexico are granted after a series of steps, which include the submittal of an
application for mining rights at the nearest mining agency and the payment of corresponding fees. The
Dirección de Minas, through the Regional Mining Delegations, controls the location and validity of
claims; however, as a part of the process, it is the concession holder’s responsibility to submit proof of
assessment works that must include surveying of claim monuments by a registered professional land man.
The Dirección de Minas will verify and register the correctness and validity of this work. Once the due
diligence of the request for concession is approved, a Title is issued to the applicant and biannual fees and
annual assessment obligations are initiated.
A titles opinion and the present status of the property titles was prepared by the Creel, García-Cuellar,
Aiza y Enríquez Law Firm in México City on behalf of Stroud and was provided to BDM (Appendix 1.0).
The normal investigation behind a Title Opinion includes a review of records existing in the Dirección de
Minas (DM) including title status, annual assessment works submitted, bi-annual rights payments, and a
search of the actual title rights holder in the Public Mining Registry to verify possible title encumbrances
and/or sales, etc.
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TABLE 6.1
SAN DIEGO Y LA ESPAÑOLA, S.A. DE C.V MINING RIGHTS (DUTIES) OF SDLE’S CONCESSIONS FOR 2009
Title Mining Rights (Duties)
Title Actual Owner Type of
Name Hectares Granting Granted To Expiration Date 2nd Semester 2008 1st Semester 2009 2nd Semester 2009
Number (100%) Concession
Date Paid (Pesos) Paid (Pesos) Paid (Pesos)
Santo Domingo II 40.0000 186,469 Salvador Rodríguez López San Diego y la Española, S.A. de C.V. Exploitation April 1, 2015 $5,642.00 $5,189.00 $5,149.00
Nombre de Dios 95.0000 187,901 Jose Manuel Rodríguez Cabrales San Diego y la Española, S.A. de C.V. Exploitation November 21, 2015 $13,397.00 $12,323.00 $12,227.00
Total Hectares 135.0000
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According to the Title Opinions dated November 27, 2009 for the Santo Domingo II and Nombre de Dios
Concessions held by SDLE, quoted below:
Therefore, the said mining concessions (a) are valid, enforceable and in good standing; and (b) such
mining concessions and the rights derived, thereunder, are free and clear of all liens, mortgages, claims,
encumbrances and security interests of any kind or nature.
Behre Dolbear reviewed the subject information by Creel and Associates but is not qualified to express
any legal opinion with respect to the property titles and current ownership and the status of possible
encumbrances.
Behre Dolbear has no reason to infer that the information used in the preparation of the report is invalid or
contains misrepresentations.
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6.2 COMPANY OWNERSHIP
The following paragraph, written by Stroud (D. McBride, October 2009, G. Coburn, November 2009)
provides a summary of the property of the Santo Domingo concessions, liens and obligations and their
current status:
“Stroud Resources Ltd. and equal and joint venture partner New Bullet Group Inc. by agreement dated
April 18, 2002 and as amended September 27, 2002 purchased 91.3% ownership of Compañía Minera
San Diego y La Española, S.A. de C.V. (SDLE). Stroud Resources Ltd. (SDR) entered into an option
agreement with the New Bullet Group Inc. (NBG) whereby NBG could earn a 50% interest in all of
SDR’s interest in SDLE by matching SDR’s $1,000,000 investment in the property. In their January 17,
2003 technical qualifying report, Behre Dolbear and Company describe a lien against the property by
Fideicomiso de Fomento Minero (FIFOMI) respectively. On March 8, 2004, an agreement was reached
with FIFOMI in which SDLE paid FIFOMI a $200,000 settlement, which resulted in dismissal and
removal of a lien and a claim against the property. Later, the New Bullet Group became Amerix Precious
Metals Corporation (Amerix). Stroud and Amerix paid the original shareholders $200,000 each and each
company granted them a 0.5% NSR, which is capped at $2.45 million. Subject to these interests, Stroud
Resources Ltd. owns 100% of San Diego y La Española S.A. de C.V.” On August 8, 2006, Stroud paid
Amerix $1.8 million for their interest in the property, subject to a 5% Net Smelter Return (NSR) from the
sale of minerals. This interest is capped at $1 million.
6.3 SURFACE RIGHTS
Mining concessions in Mexico do not include surface property; therefore, the surface rights must be
obtained through purchase, rental, or other means, in order to make use of it.
Surface rights for the SDLE claims belong to the Ejido Santo Domingo de Guzmán, a duly approved and
registered communal property. Since 2003, negotiations were carried out by SDLE to obtain permission
to carry out exploration activities, including access road, drilling and trenching.
SDLE has leased surface rights from the Ejido of Santo Domingo de Guzman to cover these mining
concessions and the surrounding area, granted by a general meeting held November 3, 2002 in accordance
with Méxican regulations, and a lease agreement ratified before Notary Public number 1 Lic. Juan Peña
Razo de Magdalena, Jal.
The agreement extends to 2013 and requires an escalating annual rent of US$1,771.56 in 2008, rising at
10% per year to US$2,593.72 in 2013. Copies of the Ejido agreements are in the files of SDLE and
Stroud Resources for consult if required.
6.4 ENVIRONMENTAL PERMITTING FOR EXPLORATION ACTIVITIES
In 1999, Stroud Resources de México, S.A. de C.V. another subsidiary of Stroud, carried out the first
drilling campaign which consisted of five holes of which two were lost and repeated. These holes were
drilled from then existing roads and mine patios.
The second drilling campaign of 2003 was permitted by submitting an Environmental Permitting Notice
report, according to Regulation NOM 120 ECOL 1997, which included the construction of 2,400 meters
of access roads and drill pads (BDM, November 2002).
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21. NI 43-101 Technical Report, Santo Domingo Silver-Gold Exploration Project, Jalisco, México
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However, the second drilling campaign in 2003 was terminated prior to the completion of a single hole
due to drilling problems. Drilling was resumed in 2005 and has continued intermittently ever since. To
date 25 holes have been completed in this program and the Rayas Vein System has been outlined for a
length of 500 meters.
The drill holes for the second drilling campaign between 2003 and 2009 were carried out from the access
road permitted in 2002. Copies of the environmental report are in the files of SDLE and SDR for
consultation, if required.
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7.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE,
AND PHYSIOGRAPHY
The project site access from the State Capital of Guadalajara is, for the first 72 km, a toll, multi-lane
paved highway to Magdalena, with a population of some 10,000, requiring approximately one hour travel
(Figure 7.1). Hotel, communications, school and health services facilities exist at Magdalena. From
Magdalena to the village of Santo Domingo de Guzmán, the paved highway to Hostotipaquillo can be
followed or, at 80 km of highway to Tepic, an all-weather gravel road passing through San Simón and
Labor de Guadalupe can be followed for approximately 27 km to Santo Domingo. Santo Domingo is a
village of some 1,000 inhabitants with only basic services. The property is approximately 5 km from
Santo Domingo de Guzman via a locally steep, narrow back country road that leaves from the local
school and winds down into the valley of the Rio Grande de Santiago, just across the old San Pedro
Analco mining zone.
Figure 7.1. Location and property access map
There are no public transportation services from Santo Domingo to Magdalena or Hostotipaquillo; private
vehicles or rental vehicles are used for this purpose.
The road condition from Santo Domingo to the site has been adequately up-graded to accommodate the
present technical program recommended in this report, but will require minor refurbishment.
The property is characterized by mature to youthful physiography that varies from gently rolling hills in
the heights of the plateau to steep, abrupt topography in the slopes of the Rio Grande just below and
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including the eastern part of the concessions. Drainage near the concessions is to the Rio Grande de
Santiago northward to join the Rio Bolaños (Figure 7.2).
Figure 7.2. Santo Domingo – Topographic relief and project infrastructure – Vein Structures
pass under the hill and parallel to the main valley in the background – Trees on hill
in centre of Photo mark a Shaft on the Guadalupe System
(D. McBride, 2009)
Elevations vary in the district from a maximum at Cerro Magistral of approximately 2,200 meters above
sea level (masl) to minimums, in the canyons of the Rio Grande de Santiago and Rio Bolaños, in the order
of 400 to 350 masl. In the vicinity of the concessions, the topographic relief varies from 1,200 masl at the
top of the La Española mountain just above the mine areas, to slightly less than 500 masl at the base of
Rio Grande, near the bridge connecting with San Pedro Analco. The average elevation of the project is in
the order of 900 masl.
The valley slopes range from 30 degrees to vertical and locally average 45 to 50 degrees. Vertical cliffs
up to 200 meters high are not uncommon (Figure 7.3).
The project district climate is temporal and is made up of a dry season and a wet season which extends
from June to October. Annual precipitation is in the order of 900 millimeters. The November to May
period is dry and hot. Temperatures average 32°C in the day time, with the highest day time temperatures
as much as 47°C, which was recorded at the Santo Domingo camp in 2008. During the winter months,
December through March, frost may occur at higher elevations, but it is rare.
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Figure 7.3. Rio Grande de Santiago Valley, looking Northwest
(B. Solano, 2009)
Hostotipaquillo, the closest weather station and 11.0 km to the SW, shares a similar climate, although
400 meters higher than Santo Domingo, that can be classified as: Warm, sub-humid with summer
rainfall and extreme weather variations (E. García, 1988).
Basic meteorological information is provided by three weather stations in the neighborhood.
TABLE 7.1
SUMMARY OF METEOROLOGICAL INFORMATION AND CLIMATE CLASSIFICATION
Altitude Rainfall Temperature
Station Latitude Longitude
(meters) (mm) (ºC)
Hostotipaquillo 1,291 21°03’ 104°03’ 790.7 22.1
Magdalena 1,401 20°55’ 103°59’ 996.8 21.1
La Quemada 1,400 20°58’ 104°03’ 858.7 22.1
Source: “Modificaciones al sistema de clasificación climática de Köppen”, Enriqueta García, México, 1988.
In the area of the concessions, the vegetation ground cover comprises mainly scrub trees and bushes. The
area is sparsely populated; cattle raising with some cultivation of market crops comprise the main district
land uses. Agricultural produce, for subsistence purposes, from the area comprises corn, beans, squash,
nuts, and avocado and a variety of other fruits and vegetables are grown on moderate slopes and the
limited flat ground available. The soil is not fertile and only supports subsistence farming.
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25. NI 43-101 Technical Report, Santo Domingo Silver-Gold Exploration Project, Jalisco, México
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Water is available throughout the year from the Rio Grande de Santiago, down slope to the northeast from
the main adit and showing area, a distance of approximately 500 vertical meters. SDR has established
pumping facilities for drilling purposes during previous campaigns and would have to acquire the
corresponding water permit from the Comisión Nacional del Agua (CNA) for a future campaign.
With the ongoing construction of the hydroelectric La Yesca Project dam, it is expected that the tail of the
reservoir will reach the lower part of the project area, at the approximate 580 masl curve, outside Stroud
boundaries.
A 22,860-volt electrical transmission line crosses the project site. A new 112.5 kvA sub-station with
voltage step-down from 22,860 volts to 480 volts, complete with 480 volt disconnects, was installed at the
river side on SDLE’s concessions. The remnants of other site buildings includes an old cyanide mill from
past underground mining programs; but none are in current use and it would not be feasible to re-use
them.
Stroud has carried out several exploration campaigns through the years 2002 to 2009 with the available
local work force from Santo Domingo de Guzman and nearby ranches, including help from Labor de
Guadalupe, where a warehouse/core house is maintained by the company. Technical personnel with
computer, electrical, plumbing, mechanical, carpentry, drilling and some heavy equipment skills can be
available in the Magdalena-Hostotipaquillo region due to the active opal mining activities. However,
more specialized mining and other professionals will have to be imported when required.
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8.0 HISTORY
Stroud has undertaken a considerable amount of research on the history of the Hostotipaquillo Mining
District and the Santo Domingo mine area, mainly through Dr. Derek McBride, P.Eng. The following
excerpt is taken from his work with some additions from Behre Dolbear, 2003:
“Mineral exploration and mining in the Hostotipaquillo region goes back to the early
sixteenth century. As a result of this activity the town of Hostotipaquillo was settled to
become the centre of mining activity. Few records exist of the mining activities and
boundaries of the active areas have changed. Santo Domingo seems to have been settled
about this time, but was considered part of the San Pedro Analco mining camp until the
1850s.
Prior to the 1850s, considerable mining took place at the present property. Remains of this
infrastructure can be seen as mine workings shown below (Table 8.1), roads and some
building sites. Initial prospecting identified high grade silver-gold veins made up of quartz,
calcite, galena, sphalerite and chalcopyrite. Barren iron sulphides are only present in minor
amounts. Over the next few decades, these high grade lenses were mined by hand; they can
be differentiated from later late-eighteenth century workings by the lack of drill holes or
blast patterns. Most of the investigated tunnels were excavated at this time. They followed
the known mineralized shoots or were crosscut into them to provide access and ventilation.
The Rayas vein system was followed from the Nombre de Dios Mine on the south
(Figure 8.1), to the Bella Vista on the north, a distance of 500 meters (Figure 8.2). Tunnels
show that the mineralizing system is continuous over this length. Individual lenses of high
grade material were mined in the San Salomón, San Pedro, San Pedro el Alto, La Bonita,
Rayas, and Bella Vista mines. Drilling by Stroud has intersected mine workings defined by
voids and wood in the drill core.
Approximately 100 meters southwest of the Rayas Vein System is the Socavon III-
Guadalupe Vein System. Multiple mines are located along this structure. The most easterly
is Socavon I; from it, the mineralization can be traced through Socavon II, Socavon
Intermedio (Figure 8.3), and Socavon III on the south side of the ridge. Caved tunnels and a
shaft trace the vein system over the ridge and down the north side of the hill through La
Española to the Guadalupe Mine, a horizontal distance of close to 900 meters.
Mineralization has been traced in these workings for depths of approximately 100 meters to
the end of the high grade mineralization or to where the weathered rock terminated and hand
mining was no longer possible. Many tunnels show timbering and stopes with timber
retaining walls and cribbing for on-going mining.
While many of the mine workings have collapsed, those that remain provide an estimate of
the mining carried out in the sixteenth and seventeenth centuries. McBride has calculated the
tonnes mined in those mines that he visited and mapped. He estimates that during the earliest
mining Period between 150,000 and 250,000 tonnes were mined.
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TABLE 8.1
EXISTING MINE WORKINGS ON SANTO DOMINGO PROJECT
Name Northing Easting Elevation Details
THE LOS REYES SYSTEM
entrance approximately 22 meters
Los Reyes* 2334370 606643 994
at 222°
entrance 7 meters at 33°, vein at
San Pedro* 2334259 606709 991
305° or 125°
entrance 9 meters at 213°, vein at
San Salomón* 2334259 606709 991
140°
Nombre des Dios* 2334201 606787 990 entrance 8 meters at 330°
El Mano 2333984 606928 897 small workings, road to Soc 11
estimated below cattle grate on
La Rosario*
road and above Camp
estimated location tunnel at 210°
El Mono 1 2335790 606225 600
for 28 meters
El Mono 2 2335818 606251 573 tunnel at 80° for 50 meters
estimated entrance, tunnel at
El Mono Abajo 2335775 606200 555
230° for 60 meters
Above San Salomón 2334240 606724 1,018 workings above San Salomón
Small Tunnel at 350 2334229 606621 1,048 on Mina Jasmine system?
Stope on Hill 2334288 606626 1,069 stope comes out cliff
Poss. Soc. 2334514 606432 921 below San Pedro
4 meters to tunnel at 160° for
La Bonita 2334233 606757 984
24 meters, raise up
Bella Vista 2334530 606577 948 entrance at 224° for 130 meters
JASMINE SYSTEM
Mina Jasmine 2334381 606354 1,066 0.5 meter stope on vein
Small Shaft and Tunnel 2334231 606570 1,116 on 10 cm vein
THE GUADALUPE SYSTEM
Socavon 111 2333991 606729 1,004 socavon at 330°
Socavon 11 2334028 606847 930 entrance at 280°
Socavon 1 2334016 606996 845 entrance at 260°
entrance here, behind caved
Socavon Intermedio 2333965 606783 960
entrance for 20 meters
El Zorro 2334101 606560 1,168 caved workings
La Española 2334551 606239 950 Entrance to mined lens
Monument, entrance, 20 meters at
Guadalupe 2334590 606219 917
215°
On Road to El Cobre 2334027 606853 952 possible entrance
Dump lowest 2333924 606888 901 possible entrance Soc 11
Poss. Soc. 2334028 606721 1,010 Above Soc. 111
Stope 2334058 606686 1,027
El Cobre 2334250 606828 926 entrance
La Esperanza 2334381 606893 841 entrance 240° for 6 meters
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TABLE 8.1
EXISTING MINE WORKINGS ON SANTO DOMINGO PROJECT
Name Northing Easting Elevation Details
El ZOPILOTE SYSTEM
tunnel at 240° stope in at
El Zopilote 2334456 606278 1,034
15 meters at 150, 60NE
El Zopilote West 2334692 606149 917 small tunnel at 150° 25 meters
SANTA CLARA SYSTEM
La Santa Clara
SANTA FE SYSTEM
La Santa Fe
Source: D. McBride, 2008
Figure 8.1. Nombre de Dios open stope
(B. Solano, 2009)
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Figure 8.2. Rayas Vein System in the Bellavista tunnel: timbering extends for 10 meters across
the vein system
(D. McBride, 2009)
Figure 8.3. Timber wall holding up rock fill in 6 meter-wide stope – Socavón Intermedio
(D. McBride, 2009)
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Further evidence of the extent of activity is seen in the infrastructure left behind. All present
roads follow old Spanish pathways or caminos. Stone walls and rock excavations attest to
the road system developed. A fortified compound approximately 25 by 40 meters seems to
have been the main control point. It has one and a half meter walls and two gates, which lead
to mine workings (Figure 8.4). Locally, small flat areas and stone walls may mark
habitations; pottery fragments show that some are from pre-Columbian Indian sites. There
does not seem to be any written records of this activity.
Figure 8.4. View of the fortified compound that was probably the control center for the mining
operations – Opening in wall is for a road to El Zopilote Mine
(D. McBride, 2009)
A second period of exploration and mining is identified by the metal tools and drill holes. In
some cases, tunnels bypass the Spanish mines and attempted to explore deeper into the
mountain. Socavon III, Socavon Intermedio, and Socavon II have these tunnels. Two major
cross cut tunnels are thought to have been excavated at this time, El Cobre and La
Esperanza. El Cobre is at the same elevation as Socavon II and was designed to gain access
to the two vein systems deeper in the mountain. It crossed the Rayas system and intersects
the Soc. III – Guadalupe System. Some mining was carried out on the Raya system and the
Soc. III – Guadalupe System was followed for some distance. Approximately 85 meters
below this tunnel a parallel cross cut, La Esperanza, was driven as far as the Rayas system
and some mining carried out. A small processing plant was built on the road between El
Cobre and Socavon II. It has a stone grinding mill and some slag left over from attempts at
smelting. Metal objects date this activity from the late nineteenth or early twentieth
centuries. There is no evidence that significant production was achieved at this time”.
From the early 1900s to recent times, the history of mining in the district is incomplete and generalized.
The composite production during the early time is not known, but is inferred not to have been significant.
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In the period 1900 to 1940, North American interests were predominantly responsible for the financing
and progressive development of the mines of the district.
From the 1930s to the present, Mexican and foreign-based mining interests intermittently studied and
developed producing operations, most notably at or nearby the most prolific mines, such as Bolaños and
Cinco Minas. The record of precious metals production from the Bolaños area mines is not known with
confidence. Estimates of mining production at Bolaños vary widely; however, silver production is
suggested to have been in the order of 60 million troy ounces. The Cinco Minas mining operation is
reported to have produced approximately 15 million ounces of silver and 97,500 ounces of gold from
1.2 million tonnes of ore, mainly in the years 1920 to 1940.
Exploration up to the mid-1970s was carried out by Compañía Minera Las Cuevas S.A., then the Mexican
subsidiary of Noranda Mines Limited, which conducted mapping and sampling in 1954 and between 1973
and 1974. Recorded results show values of economic interest, however Noranda did not do any follow up
work.
A summary of results is presented in Table 8.2. These results are considered historic and not compliant
with NI 43-101 regulations.
TABLE 8.2
NORANDA DRILL PROGRAM RESULTS
Core Length Silver Gold
Drill Hole Location
(meters) (ppm) (ppm)
E-1 Top of Hill Above La Raya No Values No Values
E-2 Underground in La Esperanza 5 48 1
E-3 Underground in La Esperanza 6 86 1.5
37 47 Tr
E-4 Underground in La Esperanza
3 80 Tr
E-5 Location Unknown
E-6 Dump West of Lower Switch Back No Values No Values
E-7 Proximity to Mina Jasmine 10 44 0.3
2 1835 3.0
E-8 In Front of La Raya at 230º
19 467 0.7
E-8A In Front of La Raya at 280º 21 219 0.7
E-8B In Front of La Raya at 200º 13 242 0.8
E-9 North of La Raya Near Power Line 15 89 0.1
During the latter 1970s and in 1988, the Comisión de Fomento Minero completed various technical
studies in the area and conducted chip sampling in the concession adits. From this information, certain
tabulations of reserves and resources were made. Behre Dolbear considered the results not acceptable for
present resource/reserve standards. They were not considered in the 2003 report, nor herein.
In 1994, the concessions owners requested the Consejo de Recursos Minerales, a government minerals
resources agency now Servicio Geológico Mexicano, to conduct a sampling program of existing mine
dumps, followed by a pitting and sampling program, which generated in the order of 77 samples for
assay. At the time of the study, the mine dumps reportedly contained 21,595 tonnes of rock at a grade of
308 g/t Ag and 1.53 g/t Au (Table 8.3).
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TABLE 8.3
DUMP SAMPLING PROGRAM
(CRM, 1994)
Number of Area Depth Ag Au
Dump Pits Tonnes S. G.
Samples (m2) (m) (g/t) (g/t)
Socavón No. 2 1st 16 29 2,686 1.85 7,950 273 1.38 1.6
Socavón No. 2 2nd 7 7 1,600 2.21 5,657 340 2.5 1.6
Española 17 17 976 1.57 2,452 380 0.78 1.6
Española Lower 11 11 1,144 1.36 2,451 325 1.08 1.58
Rayas 7 7 750 1.57 1,884 326 1.45 1.6
Socavón No. 3 6 6 537 1.57 1,201 179 0.6 1.42
Totals 64 77 21,595 308 1.53
The previous owners of SDLE, in an attempt to mine the Rayas Mine, in 1990 acquired an approximate
US$93,000 debt in principal plus interest mill construction loan with the Fideicomiso de Fomento Minero
(FIFOMI), a federal agency to the mining industry in México. Milling equipment was transported to the
site but never installed. Production was never achieved and the loan became a burden on the mining
claims. FIFOMI filed a lawsuit for payment and exerted its warranty upon SDLE claims with the
Dirección de Minas, which claims were frozen until payment of the debt was made by Stroud.
Stroud optioned the property in 1999 and conducted a limited program of check chip sampling in the
accessible adits and surface mineralized zones to initially substantiate the mineralization potential of the
concessions. Upon securing an agreement to purchase the concessions at that time, Stroud carried out
some tunnel and surface sampling which, along with previous Las Cuevas and CRM results, confirmed
the potential of the mining concessions.
Stroud then undertook an initial core drilling program in 1999, and a second drilling phase. In 2003,
followed by the most recent campaign between 2005 and 2008.
The reader is referred to Section 12.2 (Stroud Resources Exploration) for a detailed account of recent
exploration efforts.
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9.0 GEOLOGICAL SETTING
9.1 REGIONAL GEOLOGY
The Western part of México presents a stratigraphic succession, which includes a Cordilleran – equivalent
basement, Oligocene to middle Miocene Sierra Madre Occidental (SMO) volcanic rocks and a Late
Miocene to Quaternary Mexican Volcanic Belt (MVB) sequence (L. Ferrari, 1999). The oldest rocks in
the region are sedimentary and volcano-sedimentary units of the Guerrero Terrain overlain by volcano-
sedimentary rocks of the Cretaceous Tepalcatepec Formation locally affected by the Eocene Puerto
Vallarta batholith, approximately 54 million years old (54 Ma). None of these units outcrop in the project
area and are more typical of the area south of the MVB (SGM, 2004).
The SMO is a large Middle Tertiary volcanic province, which extends from the southwestern United
States to central Mexico (Figure 9.1). The average thickness of the SMO exceeds 1,000 meters and its
width averages 150 km. The study area encompasses the southernmost part of the SMO. The existence of
a pre-volcanic (Cretaceous?) basement as previously indicated, is substantiated by localized outcrops of
argillite and limestone which were exposed along the lower part of the Rio Grande de Santiago canyon.
The spatial association of these rocks with Late Oligocene to Early Miocene granite to granodiorite stocks
suggest that they were roof pendants uplifted by the plutons. Although Eocene rocks are reported about
50 km northeast of San Cristobal and in the central SMO in Durango, no pre-Oligocene volcanic rocks
have been found in the study region (L. Ferrari, 1999).
Figure 9.1. Sierra Madre Occidental Province and associated Mineral Districts
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North of the Project area, the SMO volcanic sequence is characterized by more than 400 m of regional
ash flow tuffs of early Miocene age, capped to the south by a basaltic sequence of 21.8 Ma age. The SMO
units are sub-horizontal and locally dipping as much as 25 degrees from horizontal; these units were later
covered in unconformity by the TMVB volcanism that ranged from 13 to 8.7 Ma basalts and up to 4.8 Ma
ignimbrites (A. Rossotti, 2002). The Santo Domingo Project is located in the Southern part of the SMO
Geological Province, which is one of the most extensive volcanic belts in the continent, some 25 km to
the North of its limit with the MVB (Figure 9.2).
SANTO DOMINGO
Figure 9.2. Regional tectonic map of the southwestern part of the Sierra Madre Occidental –
Shaded area is the late Miocene to Quaternary Trans-Mexican Volcanic Belt
The most widespread unit in the southern SMO is a succession of welded ash flow tuffs and minor
andesitic lava flows, which attain an aggregate thickness of 800 meters in the southeastern part of the
area. Oligocene ash flows (34-28 Ma) are found in the Santa Maria del Oro and Juchipila areas. In the
western part of the area, these rocks are interbedded with, and capped by, volcano-clastic sequences made
of clay, sandstone, and conglomerate. Most of the SMO, however, is covered by rhyolitic ash flow and
pumice-flow with common obsidian and minor domes with ages of 26-17 Ma and which are only found in
the southern SMO (L. Ferrari, 1999).
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Regionally, the SMO Province shows two differentiated volcanic Groups according to its composition
and age: the Lower Volcanic Group (LVG), forming the lowest part of the volcanic sequence of SMO,
exhibits more intermediate to mafic composition; and the Upper Volcanic Group (UVG) that is more
felsic than the LVG. The contact between these two units is commonly erosional with the local presence
of red conglomerates filling ancient topography.
The importance of the SMO Province is due to its being host to one of the largest epithermal precious
metal metallogenic provinces in the world which includes some of the well-known silver-gold (Ag-Au)
producing mining districts of Mexico. Figure 9.1 shows a map with the location of a number of Mineral
Districts, active mines, and advanced projects. From North to South, are the Mulatos, Dolores, Palmarejo,
Ocampo, Moris, Batopilas, El Sauzal, Guadalupe y Calvo, San Julián, San Dimas-Tayoltita, Bacis, Topia,
La Ciénega, Guanaceví, and Metates. Closer to the subject area, the Cinco Minas (Figure 9.3), Bolaños
and San Martin de Bolaños historic mines are also enclosed in LVG rocks, although there is evidence of
mineralization passing through into the lower part of the UVG, as in the case of La Ciénega in Durango
State.
Figure 9.3. Regional mineralized zones
The highly mineralized nature of the LVG is readily evident when a regional geology and topography
map of the SMO metallogenic province is observed. Most of the region is covered by sub-horizontal
UVG rocks and shows only a modest number of mineral deposit showings and mines. However, where a
river valley has incised through the ignimbrites and exposes LVG andesites, a large concentration of
mineral deposits is found. This is further enhanced by the fact that the SMO is generally characterized by
mountainous terrain with few roads and limited access, and has, therefore, been explored much less than
other, more accessible areas.
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The Mexican Volcanic Belt (MVB) is a 1,000-km-long volcanic arc formed in response to the subduction
along the Acapulco trench since the middle Miocene period (Figure 9.4). The western MVB has been
often regarded as mainly Plio-Quaternary in age but a large amount of mafic lavas were also emplaced in
Miocene time (L. Ferrari, et al., 1999, p. 11).
In the Guadalajara region, a monotonous sequence of thin basaltic lava flows is exposed along the Rio
Santiago east of Tequila. This succession has yielded rock ages of 10.2-8.5 Ma and the composition of the
rocks tend to evolve up-section from alkali-basalts to basaltic andesites. Individual flows range between
2 and 10 meters in thickness and the exposed succession is over 600 meters thick.
The Plio-Quaternary MVB consists mostly of basaltic cinder cones and shield volcanoes, andesitic to
dacitic stratovolcanoes and dacitic to rhyolitic domes. In the Guadalajara and Hostotipaquillo areas, a
peculiar variety of Early Pliocene porphyritic olivine-basalts with megacrysts of plagioclase are found
within this group but the rest of these rocks are microporphyritic to aphyric (L. Ferrari, et al., 1999, p. 15).
9.2 LOCAL GEOLOGY
9.2.1 Lithology
The Rio Santiago cuts through the Tertiary volcanic section and the oldest rocks are found along the river
at an elevation in the order of 500 masl. These rocks are commonly termed andesites, but may be more
basaltic (D. McBride, 2009). Mapping by Ferrari, et al. includes these rocks within their Tov unit
(Figure 9.4) formed of Oligocene andesites, basalts, and felsic ash fall and ash flow tuffs, belonging to the
SMO Group and reported, but not confirmed, as part of the UVG. However, it is believed that these rocks
belong to the LVG, probably close to the contact of both Groups. These rocks have been altered by the
granite-granodiorite stocks outcropping in the Río Grande, of a reported 35 to 17 Ma age, previous to the
Miocene age of the UVG.
Layering shows these rocks to be generally flat, but dips of up to 30 degrees have been measured locally.
Above the andesites, an essentially conformable sequence of rhyolitic rocks extends to just below Santo
Domingo’s football field (approximately at 1,200 masl). This sequence consists of local units that may or
may not be present. They include a hard, fine-grained porphyritic tuff, a similar cherty looking rock that
lacks the prophyritic character and rhyolite agglomerate. This last unit has an andesitic matrix but is
termed rhyolite by the preponderance of polymict rhyolitic volcanic clasts (D. McBride, 2009).
This rhyolitic agglomerate is the most important rock to date because most of the better mineralization
occurs within it (Figure 9.5). The Rayas, Jasmine, Guadalupe and El Zopilote veins seem to be capped by
a thick rhyolitic ash unit (Figure 9.6). This ash unit is a cliff-forming rock that is obvious south of the
camp. Similar cliff-forming ash sequences are common in this part of the Sierra Madre Occidental. Above
this unit, the Santa Fe and Santa Clara vein systems seem to occur in a second, and younger, rhyolite
agglomerate unit.
Above these rhyolites there are andesites that form the rocks near Santo Domingo de Guzman. Generally,
the individual units are flat but seem to regionally dip to the south. Along the road to La Labor, another
thick rhyolitic tuff-ash fall unit is exposed. It is capped on the height of land by a scoriaceous basalt to
ultramafic sequence. It is diagnostic by its deep, rusty weathering.
From the various bedding angles, the entire sequence is generally flat lying; however, local dips may be
as steep as 30 degrees.
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Figure 9.4. Regional geologic map of the late Miocene to Quaternary Mexican Volcanic Belt
(after L. Ferrari, et al., 1999 – modified by B. Solano and J. Solis)
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Figure 9.5. Local geology and drill hole location map – Rayas, Guadalupe, La Española, and Jasmine veins traces
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Figure 9.6. Cliff southwest of camp showing the thick capping rhyolite volcanic ash – El
Zopilote Abajo is at bottom of cliff at center of photo
(D. McBride, 2009)
9.2.2 Structure
Faulting has been widely quoted in the literature, but in the field it is much harder to document. Major
faulting is postulated along the Rio Santiago. It is difficult to see any regional structures in the river
because the thick ash fall tuff units are not displaced. To produce a fault pattern would require
complicated cross faulting that is not seen in the surrounding, well-exposed mountain ridges. Similarly,
the fresh, flat lying volcanic sequence eliminates the presence of shear zones. Mud seams are common in
the drill core and have been observed in the mine workings. They seem to represent minor normal faults;
displacement of a couple of meters was observed in the San Pedro Alto tunnel. These faults are post-
mineralization, having displaced individual veins. Minor faults have been seen in road outcrops near
Hostotipaquillo, with displacement of less than one meter. Parallel faults in close proximity suggest that
these are minor compaction structures (D. McBride, 2009).
A northwest-trending broad zone of fracturing and pervasive silicification hosts quartz-calcite veins and
veinlets with associated silver and secondary gold mineralization. The structural zone strikes N30° to
45 W and dips 70 degrees to 75 degrees northeast. The zone is exposed near the top of a hill, with steep
local topography. The mineralized zone has been prospected where readily exposed, accessed by 10 adits,
undergone small-scale test pitting with sampling programs and has been tested by core drilling programs
by Compañía Minera Las Cuevas (Noranda affiliate) in 1974 and subsequently by Stroud in a limited
program in 1999. The mineralized zone is established over a strike length of 900 meters and the width of
the fractured and silicified zone may vary from 20 to 30 meters. A more prominently mineralized area
within the structure has not been established (BDM, 2003, p. 15).
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