Urumalqui report 43101

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Urumalqui report 43101

  1. 1. MQes TECHNICAL REPORT URUMALQUI PROPERTYJULCÁN DISTRICT, DEPARTMENT OF LA LIBERTAD, PERU LATITUDE 8O 05’ SOUTH BY LONGITUDE 78O 29’ WEST Prepared by Mine and Quarry Engineering Services, Inc. For ANDEANGOLD LTD. and GITENNES EXPLORATION, INC. December 22, 2011
  2. 2. IMPORTANT NOTICEThis report was prepared as a National Instrument 43-101 Technical Report for AndeanGold Ltd. and Gitennes Exploration, Inc. by Mine andQuarry Engineering Services, Inc. (MQes). The quality of information, conclusions and estimates contained herein is consistent with the level ofeffort involved in MQes’ services, based on: i) information available at the time of preparation, ii) data supplied by outside sources, and iii) theassumptions, conditions and qualifications set forth in this report. This report is intended to be used by AndeanGold Ltd. and GitennesExploration, Inc., subject to the terms and conditions of its contract with MQes. This contract permits AndeanGold Ltd. and GitennesExploration, Inc. to file this report as a Technical Report with Canadian Securities Regulatory Authorities pursuant to National Instrument 43-101, Standards of Disclosure for Mineral Projects. Except for the purposes legislated under provincial securities law, any other use of this reportby any third party is at that party’s sole risk. MQes
  3. 3. DATE and SIGNATURE PAGEThe undersigned prepared this Technical Report titled ‘Technical Report on the UrumalquiProperty, Department of La Libertad, Peru’ and dated December 22, 2011, in support of thepublic disclosure of technical aspects for the Urumalqui Property by AndeanGold Ltd. andGitennes Exploration Inc. The format and content of the report are intended to conform to Form43-101F1 of National Instrument 43-101 of the Canadian Securities Administrators.Effective Date: November 8, 2011Signed on December 22, 2011 by, (Signed by C. Kaye) (Signed by J. A. McCrea) (signed copy on file) (signed and sealed copy on file)____________________________________ ____________________________________Chris Kaye, FAusIMM, B. Eng Chemical James A. McCrea, P. Geo.Principal Process Engineer Consulting Geologist (Signed by J. Douglas Blanchflower) (signed and sealed copy on file)____________________________________J. Douglas Blanchflower, P. Geo.Consulting Geologist MQes
  4. 4. CERTIFICATE OF QUALIFIED PERSON Christopher Kaye, FAusIMM 1730 S. Amphlett Blvd., Suite 200, San Mateo, CA 94402I, Christopher Edward Kaye am a Principal Process Engineer, with the firm of Mine and QuarryEngineering Services, Inc. (MQes) of 1730 S. Amphlett Blvd. Suite 200, San Mateo, CA 94402,USA. I carried out this assignment for MQes;  This certificate applies to the technical report entitled “Technical Report on the Urumalqui Property, Julcan District, Department of La Libertad, Peru” dated 22 December, 2011;  I am a Fellow of Australasian Institute of Mining and Metallurgy in Australia. I graduated from the University of Queensland, Australia, with a B. Eng. in Chemical Engineering in 1984;  I have worked as a process engineer in the minerals industry for over 25 years. I have been directly involved in the mining, exploration and evaluation of mineral properties internationally for precious and base metals;  I have not visited the Urumalqui Property site;  I am responsible for the preparation of Sections 1.3.2, 1.4.3, 1.4.4, 13, 25.3 and 25.4.3 of the “Technical Report on the Urumalqui Property, Julcan District, Department of La Libertad, Peru” dated 22 December, 2011;  I am independent of AndeanGold Ltd. and Gitennes Exploration, Inc. as independence is described by Section 1.5 of NI 43-101. I have not received, nor do I expect to receive, any interest, directly or indirectly, in AndeanGold Ltd. and Gitennes Exploration, Inc.;  MQes was retained by AndeanGold Ltd. and Gitennes Exploration, Inc. to prepare a resource estimate on the Urumalqui Property, Department of La Libertad, Peru in accordance with National Instrument 43-101. The report is based on our review of project files and information provided by AndeanGold Ltd. and Gitennes Exploration, Inc. and discussions with company personnel;  I have read National Instrument 43-101 and Form 43-101F1 and, by reason of education and past relevant work experience, I fulfill the requirements to be a “Qualified Person” for the purposes of NI 43-101. This technical report has been prepared in compliance with National Instrument 43-101 and Form 43-101F1;  As of the date of this certificate, to the best of my knowledge, information and belief, the technical report contains all scientific and technical information that is required to be disclosed to make the technical report not misleading.Signed by Christopher Kaye_______________________Christopher Edward Kaye, FAusIMMDated: 22 December, 2011 MQes
  5. 5. CERTIFICATE OF QUALIFIED PERSON James Albert McCrea, B.Sc, P.Geo (License # 21450) 306 – 10743 139 Street, Surrey, British Columbia, CanadaI, James Albert McCrea am a Professional Geoscientist. I carried out this assignment for Mineand Quarry Engineering Services, Inc. (MQes);  This certificate applies to the technical report entitled “Technical Report on the Urumalqui Property, Julcan District, Department of La Libertad, Peru” dated 22 December, 2011;  I am a Registered Professional Geoscientist (P. Geo.), Practising, with the Association of Professional Engineers and Geoscientists of British Columbia. (Licence # 21450). I graduated from the University of Alberta, Canada, with a B. Sc. in Geology in 1988;  I have worked as a geoscientist in the minerals industry for over 22 years. I have been directly involved in the mining, exploration and evaluation of mineral properties internationally for precious and base metals;  I visited the Urumalqui Property site from August 3, 2011 to August 4, 2011;  I am responsible for the preparation of Sections 4,5,6,7,8,9,10 and 11 of the “Technical Report on the Urumalqui Property, Julcan District, Department of La Libertad, Peru” dated 22 December, 2011;  I am independent of AndeanGold Ltd. and Gitennes Exploration, Inc. as independence is described by Section 1.5 of NI 43-101. I have not received, nor do I expect to receive, any interest, directly or indirectly, in AndeanGold Ltd. and Gitennes Exploration, Inc.;  MQes was retained by AndeanGold Ltd. and Gitennes Exploration, Inc. to prepare a resource estimate on the Urumalqui Property, Department of La Libertad, Peru in accordance with National Instrument 43-101. The report is based on our review of project files and information provided by AndeanGold Ltd. and Gitennes Exploration, Inc. and discussions with company personnel;  I have read National Instrument 43-101 and Form 43-101F1 and, by reason of education and past relevant work experience, I fulfill the requirements to be a “Qualified Person” for the purposes of NI 43-101. This technical report has been prepared in compliance with National Instrument 43-101 and Form 43-101F1;  As of the date of this certificate, to the best of my knowledge, information and belief, the technical report contains all scientific and technical information that is required to be disclosed to make the technical report not misleading.Signed By James A. McCrea_______________________James A. McCrea, B. Sc., P. Geo. Licence # 21450Dated: 22 December, 2011 MQes
  6. 6. CERTIFICATE OF QUALIFIED PERSON Douglas Blanchflower, P. Geo. 25856 – 28th Avenue, Aldergrove, British Columbia, V4W 2Z8I, Douglas Blanchflower am a Consulting Geologist and President, with the firm of MinorexConsulting Ltd. of 25856 – 28th Avenue, Aldergrove, British Columbia, V4W 2Z8. I carried outthis assignment for MQes;  This certificate applies to the technical report entitled “Technical Report on the Urumalqui Property, Julcan District, Department of La Libertad, Peru” dated 22 December, 2011;  I am a Registered Professional Geoscientist in good standing with the Association of Professional Engineers and Geoscientists of British Columbia (No. 19086) and the Association of Professional Geoscientists of Ontario (No. 1913). I graduated from the University of British Columbia, Canada, with a B. Sc. in Geology in 1971;  I have worked as a Geologist in the minerals industry for over 40 years. I have been directly involved in the mining, exploration and evaluation of mineral properties internationally for precious and base metals;  I have not visited the Urumalqui Property site;  I am responsible for the preparation of all or portions of Sections 1 to 12 and 14 to 27 of the “Technical Report on the Urumalqui Property, Julcan District, Department of La Libertad, Peru” dated 22 December, 2011;  I am independent of AndeanGold Ltd. and Gitennes Exploration, Inc. as independence is described by Section 1.5 of NI 43-101. I have not received, nor do I expect to receive, any interest, directly or indirectly, in AndeanGold Ltd. and Gitennes Exploration, Inc.;  MQes was retained by AndeanGold Ltd. and Gitennes Exploration, Inc. to prepare a resource estimate on the Urumalqui Property, Department of La Libertad, Peru in accordance with National Instrument 43-101. The report is based on our review of project files and information provided by AndeanGold Ltd. and Gitennes Exploration, Inc. and discussions with company personnel;  I have read National Instrument 43-101 and Form 43-101F1 and, by reason of education and past relevant work experience, I fulfill the requirements to be a “Qualified Person” for the purposes of NI 43-101. This technical report has been prepared in compliance with National Instrument 43-101 and Form 43-101F1;  As of the date of this certificate, to the best of my knowledge, information and belief, the technical report contains all scientific and technical information that is required to be disclosed to make the technical report not misleading.Signed By J. Douglas Blanchflower_______________________J. Douglas Blanchflower, P. Geo.Consulting GeologistDated: 22 December, 2011 MQes
  7. 7. TABLE OF CONTENTSSECTION PAGE1.0  SUMMARY .................................................................................................................... 1-1  1.1  Introduction and Background ...................................................................................... 1-1  1.1.1  Property Description and Ownership ....................................................................... 1-1  1.1.2  Accessibility and Local Conditions ......................................................................... 1-2  1.1.3  History...................................................................................................................... 1-3  1.2  Deposit Summary ........................................................................................................ 1-3  1.2.1  Geology and Mineralization .................................................................................... 1-3  1.2.2  Exploration Status .................................................................................................... 1-4  1.2.3  Mineral Processing and Metallurgical Testing ........................................................ 1-4  1.2.4  Mineral Resource Estimate ...................................................................................... 1-5  1.2.5  Environmental and Permitting ................................................................................. 1-7  1.3  Conclusions and Recommendations ............................................................................ 1-7  1.3.1  Mineral Resource Estimate ...................................................................................... 1-7  1.3.2  Mineral Processing and Metallurgical Testing ........................................................ 1-8  1.4  Risks and Opportunities ............................................................................................... 1-9  1.4.1  Mineral Resource Estimate Risks ............................................................................ 1-9  1.4.2  Mineral Resource Estimate Opportunities ............................................................... 1-9  1.4.3  Mineral Processing and Metallurgical Testing – Risks ......................................... 1-10  1.4.4  Mineral Processing and Metallurgical Testing - Opportunities ............................. 1-10  1.5  Proposed Exploration Budget .................................................................................... 1-10 2.0  INTRODUCTION.......................................................................................................... 2-1  2.1  Project and Issuer ......................................................................................................... 2-1  2.2  Site Visit ...................................................................................................................... 2-1  2.3  Principal Sources of Information ................................................................................. 2-1  2.4  Standard Terms and Abbreviations.............................................................................. 2-2  2.5  Acknowledgements ...................................................................................................... 2-4 3.0  RELIANCE ON OTHER EXPERTS .......................................................................... 3-1 4.0  PROPERTY DESCRIPTION AND LOCATION ...................................................... 4-1  4.1  Project Location and Description ................................................................................ 4-1  4.2  Property Ownership ..................................................................................................... 4-1  4.3  Mineral Rights in Peru ................................................................................................. 4-3  4.4  Surface and Water Rights ............................................................................................ 4-5  4.5  Environmental Regulations, Liabilities and Permitting Issues .................................... 4-5 5.0  ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ......................................................................................................... 5-1  5.1  Accessibility................................................................................................................. 5-1  5.2  Climate and Vegetation ............................................................................................... 5-1  5.3  Local Resources and Infrastructure ............................................................................. 5-1  5.4  Physiography ............................................................................................................... 5-1 6.0  HISTORY ....................................................................................................................... 6-1  6.1  Regional Mining History ............................................................................................. 6-1  6.2  Property Exploration and Mining History ................................................................... 6-1 7.0  GEOLOGICAL SETTING AND MINERALIZATION............................................ 7-1  7.1  Regional Geology ........................................................................................................ 7-1  i MQes
  8. 8. 7.2  Property Geology ......................................................................................................... 7-2  7.2.1  Lithology .................................................................................................................. 7-2  7.2.2  Structure ................................................................................................................... 7-7  7.2.3  Alteration ................................................................................................................. 7-7  7.3  Mineralization .............................................................................................................. 7-7 8.0  DEPOSIT TYPES .......................................................................................................... 8-1 9.0  EXPLORATION ............................................................................................................ 9-1  9.1  Pre-2002 Exploration Work ......................................................................................... 9-1  9.2  2002 to 2009 Exploration Work .................................................................................. 9-1  9.3  2010 and 2011 Exploration Work ................................................................................ 9-3  9.3.1  Summary of 2011 Exploration Results .................................................................... 9-4 10.0  DRILLING ................................................................................................................... 10-1  10.1  Drilling 2003 - 2009 .................................................................................................. 10-1  10.2  Diamond Drilling 2011 .............................................................................................. 10-3  10.3  Drilling Conclusions and Recommendations ............................................................ 10-4  10.4  Risks and Opportunities ............................................................................................. 10-4 11.0  SAMPLE PREPARATION, ANALYSES AND SECURITY .................................. 11-1  11.1  2003 – 2009 Exploration Work ................................................................................. 11-1  11.1.1  2003 – 2009 Sample Preparation ....................................................................... 11-1  11.1.2  2003 – 2009 Sample Analyses and Assays ........................................................ 11-1  11.1.3  2003 – 2009 Sample Security ............................................................................ 11-2  11.2  2011 Diamond Drilling Program ............................................................................... 11-2  11.2.1  2011 Sample Preparation ................................................................................... 11-2  11.2.2  2011 Sample Analyses and Assays .................................................................... 11-3  11.2.3  2011 Sample Security ........................................................................................ 11-3 12.0  DATA VERIFICATION ............................................................................................. 12-1  12.1  Electronic Database Verification ............................................................................... 12-1  12.2  Quality Assurance/Quality Control Procedures and Results ..................................... 12-1  12.2.1  2011 Standard Reference Material..................................................................... 12-1  12.2.2  2011 Blank Material .......................................................................................... 12-5  12.2.3  2011 Field Duplicates ........................................................................................ 12-6  12.2.4  2011 Check Assays .......................................................................................... 12-10  12.2.5  2003 and 2004 Drilling Programs by Gitennes Exploration ............................ 12-11  12.2.6  2008 Drilling Program by Gitennes Exploration ............................................. 12-18  12.3  2011 Drilling Program by AndeanGold................................................................... 12-24  12.4  Independent Site Visit and Verification Sampling .................................................. 12-28  12.5  Conclusions and Recommendations ........................................................................ 12-29 13.0  MINERAL PROCESSING AND METALLURGICAL TESTING........................ 13-1  13.1  Introduction ................................................................................................................ 13-1  13.2  Metallurgical Testing ................................................................................................. 13-1  13.2.1  Test Work ASA 2661 – Alex Stewart [Assayers] del Perú S.R.L. .................... 13-1  13.2.2  Test Work ASA 3467 – Alex Stewart [Assayers] del Perú S.R.L. .................... 13-3  13.2.3  Test Work ASA 4425 – Alex Stewart [Assayers] del Perú S.R.L. .................... 13-3  13.2.4  Memo – Prueba de Flotacion – Alex Jaramillo Rosales .................................... 13-4  13.2.5  Test Work No. 7188 – Labotatorio Plenge ........................................................ 13-4  13.3  Mineral Processing .................................................................................................... 13-4  ii MQes
  9. 9. 14.0  MINERAL RESOURCE ESTIMATES..................................................................... 14-1  14.1  Introduction ................................................................................................................ 14-1  14.2  Drilling and Assay Database...................................................................................... 14-1  14.3  Sample Compositing .................................................................................................. 14-2  14.4  Grade Shell Calculations ........................................................................................... 14-2  14.5  Rock Code Determination ......................................................................................... 14-4  14.6  Three Dimensional Solid Modelling.......................................................................... 14-4  14.7  Topographic Control .................................................................................................. 14-6  14.8  Bulk Density Estimation ............................................................................................ 14-6  14.9  Grade Capping ........................................................................................................... 14-7  14.10  Semi-Variogram Analysis ...................................................................................... 14-9  14.11  Block Model........................................................................................................... 14-9  14.12  Interpolation ......................................................................................................... 14-10  14.13  Interpolation Validation ....................................................................................... 14-12  14.14  Mineral Resource Classification .......................................................................... 14-12  14.15  Mineral Resource Estimate .................................................................................. 14-13  14.16  Mineral Resource Estimate Validation ................................................................ 14-14 23.0  ADJACENT PROPERTIES ....................................................................................... 23-1 24.0  OTHER RELEVANT DATA AND INFORMATION ............................................. 24-1 25.0  INTERPRETATIONS AND CONCLUSIONS ......................................................... 25-1  25.1  Geology ...................................................................................................................... 25-1  25.2  Mineral Resource Estimate ........................................................................................ 25-1  25.3  Mineral Processing and Metallurgical Testing .......................................................... 25-2  25.4  Risks and Opportunities ............................................................................................. 25-3  25.4.1  Data Collection and QA/QC Procedures ........................................................... 25-3  25.4.2  Mineral Resource Estimate - Risks .................................................................... 25-3  25.4.3  Mineral Resource Estimate - Opportunities ....................................................... 25-4  25.4.4  Mineral Processing and Metallurgical Testing - Risks ...................................... 25-4  25.4.5  Mineral Processing and Metallurgical Testing - Opportunities ......................... 25-4  25.4.6  Environmental Impact and Permitting ............................................................... 25-5 26.0  RECOMMENDATIONS ............................................................................................. 26-1  26.1  Proposed Exploration Budget .................................................................................... 26-1 27.0  REFERENCES............................................................................................................. 27-1 Appendix 1 – Mineral Concession Documents Appendix 2 – Sample Preparation and Analytical Procedures  iii MQes
  10. 10. LIST OF TABLESTABLE PAGETable 1-1: Inferred Mineral Resource Estimate........................................................................... 1-6 Table 1-2: Proposed 2012 Exploration Budget .......................................................................... 1-11 Table 2-1: Standard Terms and Abbreviations ............................................................................ 2-2 Table 4-1: Mineral Concession Information (after Blackwell, 2009)......................................... 4-1 Table 10-1: 2003 to 2009 Diamond Drilling Data (after Blackwell, 2009)............................... 10-2 Table 10-2: 2011 Diamond Drilling Data .................................................................................. 10-3 Table 12-1: 2011 SRM Samples ................................................................................................ 12-2 Table 13-1: Assay Head Grades – Composites (A) and (B) ...................................................... 13-2 Table 13-2: Material Used in Preparation of Composite A ....................................................... 13-2 Table 13-3: Material Used in Preparation of Composite B ....................................................... 13-2 Table 13-4: Material Used in Preparation of Composite (B) Roca Caja ................................... 13-3 Table 14-1: Assay Sample Data for AgEQ60 Assay Domain Solid .......................................... 14-7 Table 14-2: Block Model Parameters ........................................................................................ 14-9 Table 14-3: Interpolation Data for Three Assay Domain Solids ............................................. 14-11 Table 14-4: Summary of ‘One Out’ Cross Validation Results ................................................ 14-12 Table 14-5: Inferred Mineral Resource Estimate..................................................................... 14-13 Table 25-1: Inferred Mineral Resources Estimated at Various Silver Cut-off Grades .............. 25-1 Table 26-1: Proposed 2012 Exploration Budget ........................................................................ 26-2  iv MQes
  11. 11. LIST OF FIGURESFIGURE PAGEFigure 4-1: Location Map ............................................................................................................ 4-2 Figure 4-2: Mineral Concession Map .......................................................................................... 4-4 Figure 7-1: Regional Geology Map (After Servicio de Geologia Y Mineria, 1980) ................... 7-2 Figure 7-2: Sample 1243, 52.25 to 53.80 m, PGUR-06 .............................................................. 7-4 Figure 7-3: Sample 1253, 74.50 to 75.05 m, PGUR-06 .............................................................. 7-4 Figure 7-4: Sample 1258, 80.35 to 80.55 m, PGUR-06 .............................................................. 7-5 Figure 7-5: Property Geology Map .............................................................................................. 7-6 Figure 7-6: View of the Urumalqui Vein on Surface Looking Northwestward. ......................... 7-8 Figure 7-7: Collecting Verification Sample from the Urumalqui Vein ..................................... 7-13 Figure 7-8: View of the Urumalqui Vein Structure #1 .............................................................. 7-13 Figure 7-9: View of Urumalqui Vein Structure #2 .................................................................... 7-14 Figure 8-1: Schematic Cross-Section of the Epithermal Deposit Model ..................................... 8-2 Figure 9-1: DE710 Sandvik Diamond Drilling Rig and Drilling Personnel ................................ 9-4 Figure 9-2: View of the Cemented Collar for DDH URU 03-02. ............................................... 9-5 Figure 9-3: View of the Cemented Collar for DDH PGUR 30 and 31 ........................................ 9-5 Figure 9-4: Drill Core Storage Building for the Urumalqui Project ............................................ 9-6 Figure 10-1: Diamond Drill Hole Plan – Urumalqui Vein Structure......................................... 10-5 Figure 10-2: Vertical Cross Section 1250 NW .......................................................................... 10-6 Figure 10-3: Vertical Cross Section 1550 NW .......................................................................... 10-7 Figure 10-4: Vertical Cross Section 2000 NW .......................................................................... 10-8 Figure 12-1: Standard PM436 – Au ppm Assay Results .......................................................... 12-3 Figure 12-2: Standard PM1129 – Au ppm Assay Results ........................................................ 12-3 Figure 12-3: Standard PM1129 – Ag ppm Assay Results ........................................................ 12-4 Figure 12-4: Standard PM1138 – Au ppm Assay Results ........................................................ 12-4 Figure 12-5: Standard PM1138 – Ag ppm Assay Results ........................................................ 12-5 Figure 12-6: Blank Materials – Au ppm Assay Results ........................................................... 12-5 Figure 12-7: Blank Materials – Ag ppm Assay Results ........................................................... 12-6 Figure 12-8: Field Duplicate Samples – Au ppm Scatter Plot ................................................... 12-7 Figure 12-9: Field Duplicate Samples – Ag ppm Scatter Plot ................................................... 12-7 Figure 12-10: Field Duplicate Samples – Au ppm Difference Chart ........................................ 12-8 Figure 12-11: Field Duplicate Samples – Ag ppm Difference Chart ........................................ 12-8 Figure 12-12: Thompson-Howarth Precision for Field Duplicates - Au ppm ........................... 12-9 Figure 12-13: Thompson-Howarth Precision for Field Duplicates - Ag ppm ........................... 12-9 Figure 12-14: Thompson-Howarth Duplicate Analysis for Field Duplicates - Au ppm ......... 12-10 Figure 12-15: Thompson-Howarth Duplicate Analysis for Field Duplicates - Ag ppm ......... 12-10 Figure 12-16: 2003/04 Pulp Duplicates ALS vs. CIMM – Au ppm Scatter Plot .................... 12-11 Figure 12-17: 2003/04 Pulp Duplicates ALS vs. CIMM – Ag ppm Scatter Plot .................... 12-11 Figure 12-18: 2003/04 Pulp Duplicates ALS vs. SGS – Au ppm Scatter Plot ........................ 12-12 Figure 12-19: 2003/04 Pulp Duplicates ALS vs. SGS – Ag ppm Scatter Plot ........................ 12-12 Figure 12-20: 2003/04 Pulp Duplicates ALS vs. CIMM – Au ppm Difference Chart ............ 12-13 Figure 12-21: 2003/04 Pulp Duplicates ALS vs. CIMM – Ag ppm Difference Chart ............ 12-13 Figure 12-22: 2003/04 Pulp Duplicates ALS vs. SGS – Au ppm Difference Chart ................ 12-14 Figure 12-23: 2003/04 Pulp Duplicates ALS vs. SGS – Ag ppm Difference Chart ................ 12-14 Figure 12-24: T-H Precision for 2003/04 Pulp Duplicates ALS vs. CIMM - Au ppm ........... 12-15  v MQes
  12. 12. Figure 12-25: T-H Precision for 2003/04 Pulp Duplicates ALS vs. CIMM - Ag ppm ........... 12-15 Figure 12-26: T-H Precision for 2003/04 Pulp Duplicates ALS vs. SGS - Au ppm ............... 12-16 Figure 12-27: T-H Precision for 2003/04 Pulp Duplicates ALS vs. SGS - Ag ppm ............... 12-16 Figure 12-28: T-H Duplicate Analysis for 2003/04 Pulp Duplicates ALS vs. CIMM – Au ppm12-17 Figure 12-29: T-H Duplicate Analysis for 2003/04 Pulp Duplicates ALS vs. CIMM - Ag ppm 12-17 Figure 12-30: T-H Duplicate Analysis for 2003/04 Pulp Duplicates ALS vs. SGS - Au ppm 12-18 Figure 12-31: T-H Duplicate Analysis for 2003/04 Pulp Duplicates ALS vs. SGS - Ag ppm 12-18 Figure 12-32: Scatter Plot for 2008 Pulp Duplicates ALS vs. CIMM – Au ppm .................... 12-19 Figure 12-33: Scatter Plot for 2008 Pulp Duplicates ALS vs. CIMM – Ag ppm .................... 12-19 Figure 12-34: Scatter Plot for 2008 Pulp Duplicates ALS vs. SGS – Au ppm ....................... 12-20 Figure 12-35: Scatter plot for 2008 Pulp Duplicates ALS vs. SGS – Ag ppm ........................ 12-20 Figure 12-36: Difference Chart for 2008 Pulp Duplicates ALS vs. CIMM – Au ppm ........... 12-21 Figure 12-37: Difference Chart for 2008 Pulp Duplicates ALS vs. CIMM – Ag ppm ........... 12-21 Figure 12-38: Difference Chart for 2008 Pulp Duplicates ALS vs. SGS – Au ppm ............... 12-22 Figure 12-39: Difference Chart for 2008 Pulp Duplicates ALS vs. SGS – Ag ppm ............... 12-22 Figure 12-40: T-H Precision for 2008 Pulp Duplicates ALS vs. SGS - Au ppm .................... 12-23 Figure 12-41: T-H Precision for 2008 Pulp Duplicates ALS vs. SGS - Ag ppm .................... 12-23 Figure 12-42: T-H Duplicate Analysis for 2008 Pulp Duplicates ALS vs. SGS - Au ppm .... 12-24 Figure 12-43: Thompson-Howarth Duplicate Analysis for 2008 Pulp Duplicates ALS vs. SGS -Ag ppm..................................................................................................................................... 12-24 Figure 12-44: Scatter Plot of 2011 Pulp Duplicates Inspectorate vs. ALS – Au ppm............. 12-25 Figure 12-45: Scatter Plot of 2011 Pulp Duplicates Inspectorate vs. ALS – Ag ppm............. 12-25 Figure 12-46: Difference Chart for 2011 Pulp Duplicates Inspectorate vs. ALS – Au ppm ... 12-26 Figure 12-47: Difference Chart for 2011 Pulp Duplicates Inspectorate vs. ALS – Ag ppm ... 12-26 Figure 12-48: T-H Precision for 2011 Pulp Duplicates Inspectorate vs. ALS SGS - Au ppm 12-27 Figure 12-49: T-H Precision for 2011 Pulp Duplicates Inspectorate vs. ALS SGS - Ag ppm 12-27 Figure 12-50: T-H Duplicate Analysis for 2011 Pulp Duplicates Inspectorate vs. ALS SGS – Auppm .......................................................................................................................................... 12-28 Figure 12-51: T-H Duplicate Analysis for 2011 Pulp Duplicates Inspectorate vs. ALS SGS – Agppm .......................................................................................................................................... 12-28 Figure 14-1: Histogram of 475 Uncapped Silver Assays In AgEQ60 Assay Domain Solid ..... 14-3 Figure 14-2: Histogram of 475 Uncapped Gold Assays In AgEQ60 Assay Domain Solid ...... 14-3 Figure 14-3: View of AgEQ60 Assay Domain Solid Looking Northward ............................... 14-5 Figure 14-4: View of AgEQ60 Assay Domain Looking Northwestward.................................. 14-5 Figure 14-5: Cumulative Probability Plot of Silver Values Within Assay Domain Solid......... 14-8 Figure 14-6: Cumulative Probability of Gold Values Within Assay Domain Solid.................. 14-8 Figure 14-7: Histogram Plot of Capped Silver Composites .................................................... 14-10 Figure 14-8: Cumulative Probability Plot of Capped Silver Composites ................................ 14-11 Figure 14-9: Plot of Silver Composite Grade, Silver Block Grade and Tonnage.................... 14-15 Figure 14-10: Plot of Number of Silver Composite Samples Versus Tonnage ....................... 14-15 Figure 14-11: Plot of Tonnage Versus Resource Classification .............................................. 14-16 Figure 14-12: Plot of Silver Composite Grade, Silver Block Grade and Tonnage.................. 14-17 Figure 14-13: Plot of Number of Silver Composite Samples Versus Tonnage ....................... 14-18 Figure 14-14: Plot of Tonnage Versus Resource Classification .............................................. 14-18  vi MQes
  13. 13. SECTION 1 SUMMARY1.0 SUMMARY1.1 Introduction and BackgroundThe Urumalqui property (the ‘Property’) is situated in the District of Julcán, Department ofLibertad in northcentral Peru. It is comprised of four contiguous mineral concessions that arecurrently owned by Minera Corimalqui S.A. (‘Corimalqui’), an indirect Peruvian subsidiary ofGitennes Exploration Inc. (‘Gitennes’) which is a TSX Venture Exchange reporting publiccompany. On April 22, 2010, AndeanGold Ltd. (‘AndeanGold’), a TSX Venture Exchangereporting public company, entered into an Option Agreement with Gitennes wherebyAndeanGold has the right to acquire a 60% joint venture interest in the Property. PeruGoldResources S.A.C. ("PeruGold"), an indirect Peruvian subsidiary of AndeanGold, has carried outthe exploration work on behalf of AndeanGold since April 2010.The Urumalqui vein is the principal vein of eight known veins currently identified on theProperty. It crops out in a northwesterly direction for approximately 1,500 metres. Explorationdrilling on the Urumalqui vein has been carried out on relatively widely-spaced sections, from 45to over 100 metres apart, concentrating on the central and southeastern segments of theUrumalqui vein, which cover 1,000 metres of the 1,500 metres vein outcrop. Between Marchand July, 2011 AndeanGold completed a 31-hole (5,071 metres) infill drilling program to a depthof 200 metres so as to provide a drill spacing of approximately 50 metres along the central andsoutheastern segments. Drill core logging, analyses and drill site reclamation work were laterfinalized in August 2011. Following this work, Mine and Quarry Engineering Services, Inc. wasretained by AndeanGold and Gitennes to prepare a NI 43-101 compliant estimate of the mineralresources within the drill-tested portion Urumalqui vein structure. This report documents themineral resource estimate and supporting technical data.This Technical Report has been prepared by Mr. C. Kaye, FAusIMM, B. Eng Chemical, of Mineand Quarry Engineering Services, Inc (‘MQes’), Mr. James A. McCrea, P. Geo. And Mr. J.Douglas Blanchflower, P. Geo., of Minorex Consulting Ltd. (‘Minorex’), for AndeanGold andGitennes in compliance with the disclosure requirements of the Canadian National Instrument43-101.1.1.1 Property Description and OwnershipThe Urumalqui property is located about 70 kilometres by road east of the coastal city ofTrujillo within the District of Julcán, Department of La Libertad, Peru. The approximategeographic centre of the P r o p e r t y is at 8° 05’ South latitude, 78° 29’ West longitude, orUTM PSAD56, Datum 17S at 777500 m East by 9105150 m North.The Property is comprised of four mineral concessions, namely: Aurea Elisa 13, Morochas,Patientia and Philtrum, that cover a total of 2,700 hectares or 6,672 acres. The Property isowned by Minera Corimalqui S.A. On April 22, 2010 AndeanGold entered into an OptionAgreement with Gitennes that provides AndeanGold the right to acquire a 60% joint ventureinterest in the Property. In order to earn its 60% interest, AndeanGold must: 1-1 MQes
  14. 14.  Ensure that PeruGold expends CDN$3 million of qualifying expenditures on the Project over a four (4) year term (the ‘Term’), commencing July 8, 2010;  Ensure that PeruGold completes 3,000 metres of drilling by the end of the second year of the Term and 7,000 metres of cumulative drilling by the end of the third year of the Term; and  Issue Gitennes 20,000 common shares of AndeanGold as well as 20,000 common shares on each of the first, second and third year anniversaries of the agreements. Except for the first payment, Gitennes may elect to receive cash in lieu of shares, with the cash amounts not to exceed CDN$25,000, CDN$50,000 and CDN$100,000, respectively, with respect to the first, second and third year anniversary date payments. If the market value of the shares on the respective payment date exceeds the maximum cash payment amount on such date, the difference will be satisfied by the issuance of equivalent shares.Upon AndeanGold exercising its Option, Corimalqui will transfer the titles to the subject mineralconcessions to Newco, a joint venture Peruvian company to be owned by PeruGold (60%shareholder interest) and Corimalqui (40% shareholder interest). PeruGold would be theoperator of the joint venture.PeruGold has agreements in place with individual land owners to provide access to the lands fordrilling purposes in exchange for a modest fee. Most of these agreements also include a clausewhereby PeruGold would have the option to purchase the land in question after a certainperiod of time has elapsed. Adequate surface water is available for exploration purposes butadvanced development work would require negotiations with the affected land owners, thediscovery of additional adequate water resources and permitting from governmental agencies.1.1.2 Accessibility and Local ConditionsThe Property is readily accessible by vehicle from the coastal city of Turjillo, the nearest urbanand major commercial centre to the Property. Trujillo has regular daily 1-hour commercialflights from the capital city of Lima which is 480 kilometres to the south. A paved and hard-packed gravel road joins Trujillo with the village of Julcán to the east and hence by unimprovedgravel roads to the Property. The total driving time is approximately 2 to 3 hours.The Property is situated within the Pacific Ocean watershed of the Cordillera Occidental, part ofthe Andes Mountains. Elevations within the Property range from 3,400 to 3,700 metres A.M.S.L.with locally moderate relief. The climate is typical of the western portion of the AndesMountains with a rainy season from November to March and a dry season from April to October.Mineral exploration may be carried out year-round but best done during the dry season.There is an electrical transmission line to Julcán and the local villages adjacent to the Propertyreceive both electricity and cellular telephone service. Furthermore, labour and supplies forexploration work are readily available from both Trujillo and the local villages that have longmining histories. 1-2 MQes
  15. 15. Except for eucalyptus plantations, there is little standing timber. Most trees have been clearedcenturies ago for sheep and cattle grazing and/or various potato, tuber and grain farming byindividual land owners.1.1.3 HistoryThe original exploration of the Urumalqui property area, including old adits and pits, may dateback to the late 1800th century when mineralization was first reported at the nearby Quiruvilcamine site in 1789. During the 1980’s an exploration shaft was sunk on the central portion of theUrumalqui vein and drifting was carried out on the 28-metre level, with a 250-metre drift on the50-metre level and a winze to the 80 metre level. In 1996, Cambior del Peru S.A. completedfive widely-spaced drill holes on four vein structures within the Property.During the period of 2003 to 2008 Oromalqui Gold Corp, a company that was indirectly ownedequally by Meridian Gold Corp and Gitennes and later Corimalqui, on behalf of Gitennes,carried out various exploration programs that included: preparing topographic base maps,detailed geological mapping of the vein structures, property-wide geological mapping,establishing a picketed survey control grid, B-horizon soil geochemical sampling, two groundinduced polarization and magnetics geophysical surveys, three differential GPS surveys of thegrid and drill pads, rock geochemical sampling, three diamond drilling campaigns totalling 47holes, limited rehabilitation of the old exploration shaft, metallurgical testing of drill core androck samples, and environmental, archaeological and socioeconomic studies.1.2 Deposit Summary1.2.1 Geology and MineralizationThe local stratigraphy is dominated by rocks of the Cretaceous- to Tertiary-age Calipuy Group.This major stratigraphic unit overlies the pre-Cretaceous basement rocks as a relatively flat-lying, unconformable plate up to 1,500 metres in thickness that caps landforms in excess of3,200 metres. The group is comprised of subaerial andesitic flows, breccia and pyroclastic tuffs,with subordinate dacite and rhyodacite. These rocks are broadly warped and often transected bynortherly, northeasterly and easterly fault structures. Within the Property there is a possiblevolcanic source that may be one of the youngest in the region at 16.7 Ma.Volcanic rocks of the Calipuy Group underlie the Property. These rocks include green tomaroon, variably magnetic, porphyritic andesitic flows with plagioclase phenocrysts, volcanicglass and hornblende, interbedded with volcaniclastic rocks and brecciated andesitic lavas.These rocks are cut by a series of northwest-southeast, northeast-southwest and east-westtrending, normal faults showing evidence of sinistral strike-slip movement within a major,regional northerly trending lineament (Blackwell, 2009).The precious metal-bearing mineralization is typical of a ‘low sulphidation’ epithermal stylemineral deposit. There are two common vein orientations, a northwest-southeast set includingthe Urumalqui, La Mariscala West, La Mariscala South, and Penélope veins, and an east-west setincluding the La Mariscala East, Candual East, Candual West and Candual veins. 1-3 MQes
  16. 16. The Urumalqui vein has received most of the exploration work. In plan, it has a shallow arcuateshape, convex to the west, with a northwesterly trend (approximately 305o). In addition, the veindips sub-vertically to -70o southwesterly; is up to 20 metres wide; is comprised one or twocrustiform-banded quartz veins ranging from 0.5 to 11 metres in aggregate thickness; and cropsout over a strike length of 1,500 metres. There are a number of intersecting, perhaps conjugate,faults that have locally displaced the vein into segments ranging in length from 40 to 400 metres.The vein mineralogy includes crustiform and chalcedonic quartz with minor adularia. Nativegold, electrum and silver-bearing argentite are genetically and spatially associated with fine-grained pyrite (Blackwell, 2009).1.2.2 Exploration StatusThe Property has received detailed and property-wide geological mapping, soil and rockgeochemical sampling, two ground induced polarization and magnetics geophysical surveys anda variety of differential GPS surveys of topographic and drill hole collars. In addition, 78diamond drill holes, totalling 12,578.69 metres, have now tested the known vein mineralizationof which 66 holes, totalling 10,906 metres, have been completed along the main Urumalqui veinstructure.Exploration results to date indicate that the Urumalqui vein appears to be the dominant veinstructure of the eight known veins on the Property. The Urumalqui vein has now been tested byNQ- and HQ-size diamond drilling along a strike length of approximately 1,500 metres. Most ofthis drilling has intersected the vein between 70 and 150 metres downdip from its surfaceexposure but a few holes have penetrated the vein more than 200 metres vertically. There is stillgood vein continuity both in width and grade in the deepest vein intercepts. All of this drillinghas been carried out on relatively widely-spaced sections 45 to 100 metres apart. Detailed in-filldrilling along the central and southeastern segment, the higher grade portion of the veinstructure, would improve the interpretation of its local variance in tenor and intermittentdisplacements due to intersecting normal faulting.Drilling results indicate that the Urumalqui vein is open for extension both northwesterly andespecially southeasterly. Furthermore, its strong continuity at depth coupled with the texturalfeatures of the vein mineralogy indicates that it may have significant untested depth potential.1.2.3 Mineral Processing and Metallurgical TestingMetallurgical development of the Urumalqui project to date has been conducted by Gitennes;prior to 2009. AndeanGold did not conduct any metallurgical tests in connection with its 2011infill drill program. The metallurgical development has involved preliminary test workassessing:  Flotation.  Flotation plus cyanidation of concentrate.  Gravity separation.  Gravity Separation followed by flotation of gravity tails. 1-4 MQes
  17. 17.  Gravity separation followed by cyanidation of gravity tails.The results to date indicate that material from Urumalqui is likely to be amenable to treatment byeither flotation or cyanidation. Gravity concentration appears to improve recoveries of bothsilver and gold. Further metallurgical testwork is required to determine metallurgical processingcriteria and subsequently identify the economic processing route.Sample selection for metallurgical test work to date is not well documented and therepresentation of samples to the entire deposit is not known. It is recommended QA/QC isimproved for future preparation of metallurgical composites. Sample collection for futuremetallurgical test work needs to consider rock type, lithology, grade variations and spatialdistribution. A metallurgical sampling program needs to be developed with the objective ofdeveloping a geo-metallurgical model for the project.Ongoing metallurgical test work should include mineralogical analysis in order to give directionto grinding requirements, expected recoveries and preferred processing route. Comminution testwork such as Bond Work index, crusher index and abrasion index should also be included infuture test work programs.Tests results using gravity concentration and then cyanidation of the gravity tails indicates higherrecoveries for silver and gold than gravity concentration followed by flotation. Cyanideconsumption, however, was high. It is recommended metallurgical investigations are pursuedthat include the optimization of the processing route using gravity concentration followed bycyanidation of the gravity tailings.1.2.4 Mineral Resource EstimateThe Urumalqui vein structure has been explored by 66 of the 78 diamond drill holes of which 35holes were drilled by Corimalqui and 31 holes by PeruGold. This work has resulted in a drillingand assay database that includes multi-element analyses for 3,556 drill hole samples situatedalong a 1,500-metre section of the Urumalqui vein structure.A silver equivalent (‘AgEQ’) grade was only used when modelling the assay domains such thatthey incorporated both silver and gold values encountered within the Urumalqui Vein structure.The silver equivalent grade for each drill hole sample was a calculated combination of its goldvalue at a 3-year trailing average price of US$1,300/troy oz and 85% metallurgical recovery rate,and its silver value at a 3-year trailing average price of US$26/troy oz and 65% metallurgicalrecovery rate. Once the silver equivalent grades had been calculated one metre, equal lengthassay composites were calculated from the collar to the terminus of each drill hole intersectingthe Urumalqui vein structure.Polylines were plotted on SW-NE oriented vertical sections (parallel to the bearing of most ofthe exploration drill holes) spaced at 50-metre intervals to define the greater than or equal to 60gpt AgEQ assay boundary for the vein mineralization while maintaining zonal continuity alongstrike and downdip. One geometric solid was formed reflecting the three dimensionalboundaries of an assay grade domain called ‘AgEQ60’. 1-5 MQes
  18. 18. Using the constructed AgEQ60 domain solid as a constraint, statistical analyses were carried outon the assay samples and grade capping levels were determined at 8.60 gpt for gold and 850 gptfor silver. Once the raw assay data had been capped accordingly, 1 metre composites were re-calculated for block model grade interpolation.Following a preliminary interpolation run the one AgEQ60 assay domain was subdivided intothree distinct structurally unique parts to more accurately reflect the vein mineralization that hasa southeast-northwest trending, convex westward ‘bow’ shape in plan. Thus, the single assaydomain solid was subdivided into: a southeastern portion (Domain 1, Rock Code 15) that extendsfrom vertical section 1000NW to 1500NW with an average apparent strike of 318o and apparentdip of -90o; a central portion (Domain 2, Rock Code 25) that extends from vertical section1500NW to 2050NW with an average apparent strike of 325o and apparent dip of -75o SE; and anorthwestern portion (Domain 3, Rock Code 35) that extends from vertical section 2050NW to2650NW with an average apparent strike of 338o and apparent dip of -90o.The Urumalqui block model was created with 5 metre by 5 metre by 5 metre blocks for 400columns, 350 rows and 90 levels, it was not rotated, and it was coded to partial blocks with a 1%threshold. An Inverse Distance Squared procedure was used to interpolate grades for gold andsilver, and a bulk density of 2.37 tonnes/m3 was used for tonnage calculations of all mineralizedvein material.Mineral resources were estimated individually for each part of the Urumalqui assay domain andthen combined for tonnage and grades estimates at various cut-off grades. The reporting cut-offgrade of 90gpt silver was based upon reported incremental cut-off grades for similar gold-silvervein deposits in Peru.All of the mineral resources have been classified as ‘Inferred’. This classification may beupgraded with the results of future in-fill drilling, detailed surface channel sampling, resolutionof outstanding QA/QC issues, and a thorough geological and structural analysis of all explorationresults to date.The estimated undiluted and inferred mineral resources of the Urumalqui vein structure atvarious silver cut-off grades are shown in Table 1-1. Table 1-1: Inferred Mineral Resource Estimate Cut-Off Tonnes Gold Gold Silver Silver Ag (gpt) (000’s) Grade (gpt) (000’s oz) Grade (gpt) (000’s oz) 180.00 809 1.60 41.6 227.31 5,915 120.00 1,535 1.513 74.7 188.47 9,299 90.00 1,945 1.378 86.2 171.01 10,692 60.00 2,147 1.340 92.5 162.15 11,192 30.00 2,215 1.319 93.9 158.49 11,285 1-6 MQes
  19. 19. 1. An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. Due to the uncertainty that may be attached to Inferred Mineral Resources, it cannot be assumed that all or any part of an Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource as a result of continued exploration. 2. Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, socio-political, marketing, or other relevant issues. There is no guarantee that AndeanGold or Gitennes will be successful in obtaining any or all of the requisite consents, permits or approvals, regulatory or otherwise for the project or that the project will be placed into production.1.2.5 Environmental and PermittingDuring its 2002 to 2010 operatorship, Corimalqui held Category C exploration permits thatrequired two environmental evaluations. In addition, Corimalqui committed to reclamation andre-vegetation of all surface disturbances, safe disposal of all dangerous waste generated duringtheir exploration work and maintaining good community relations.Since assuming operatorship of the project PeruGold and AndeanGold have secured allnecessary permits to continue advanced exploration work and retained a community relationsconsultant, Mr. Roberto Condezo of SCA Consultores to maintain regular contact with the locallandowners, address any of their concerns and advise the companies on continued goodcommunity relations.1.3 Conclusions and RecommendationsConclusions and recommendations for the Urumalqui resource estimate presented in this reportinclude the following.1.3.1 Mineral Resource EstimateIt is estimated that the currently explored portion of the Urumalqui vein structure hosts undilutedand inferred mineral resources of 1.945 million tonnes grading 1.378 gpt gold and 171.01 gptsilver at a cut-off grade of 90 gpt silver.It is recommended that:  Detailed infill drilling should be carried out midway between drill sections that are currently spaced 45 to 100 metres apart. Such infill drilling would provide necessary geological and structural information to better interpret the vein geometry and grade continuity. 1-7 MQes
  20. 20.  Detailed surface bedrock channel samples should be collected at 25 metres intervals along the exposed sections of the vein structure. These samples should be well surveyed, documented and of similar volumes to be of equivalent quality to diamond drilling samples. The geological and grade information from such detailed sampling work may then be used to confirm the near-surface vein geometry and grade continuity for more definitive mineral resource classification.  Re-sampling and/or re-assaying of unresolved QA/QC samples must be undertaken to confirm the grades of drill samples that were batch assayed with standard reference material returning suspiciously erratic grades. Future sampling work, be it drilling, surface or underground sampling, should be conducted in conjunction with an industry standard, closely supervised and monitored QA/QC program with frequent, third-party check assaying.  A complete and thorough re-interpretation of the geological and structural setting of the Urumalqui vein structure should be undertaken to better understand the vein geometry within sections of apparent structural displacements.1.3.2 Mineral Processing and Metallurgical TestingMetallurgical test work performed to date on the Urumalqui project is preliminary. Additionalmetallurgical test work is required to better define the preferred processing flowsheet andsubsequently optimize the criteria for this flowsheet.The representativity of samples used in metallurgical test work performed to date is notidentified. It is recommended sample collection for future metallurgical test work considers rocktype, lithology, grade variations and spatial distribution. A metallurgical sampling programneeds to be developed with the objective of developing a geo-metallurgical model for the project.It is recommended a QA/QC program is included as part of this sampling program.No mineralogical analysis relevant to optimizing metallurgical treatment has been performed todate. This analysis can give direction to grinding requirements, expected recoveries andpreferred processing route. It is recommended mineralogical analyses are performed onrepresentative samples.Communition test work such as Bond Work index, crusher index and abrasion index has notbeen addressed to date. It is recommended this is included in future metallurgical test workprograms.Flotation test work results indicate gold and silver can be recovered to a concentrate. Evaluationof primary grind size, reagent scheme and assessment of regrinding needs performing tooptimize metallurgical responses.Bottle roll tests on material with crush sizes of 1/2 inch, 1/4 inch and 1/8 inch indicate that after72 hours of leaching, good gold recoveries but modest silver recoveries are realized. Cyanideconsumptions were reasonable. Optimization of crush size and leach time may improve silverrecoveries, however, test work assessing crushing/grinding followed by downstream processingare recommended in preference to assessing a heap leach processing route. 1-8 MQes
  21. 21. Test results on cyanidation of concentrates have resulted in high recoveries of gold and silver.Tests results using gravity concentration and then cyanidation of the gravity tails indicates higherrecoveries for silver and gold than gravity concentration followed by flotation. Cyanideconsumption, however, was high. It is recommended metallurgical investigations are pursued tooptimize the processing route using gravity concentration followed by cyanidation of the gravitytailings.1.4 Risks and OpportunitiesRisks and Opportunities associated with the Urumalqui project presented in this report includethe following.1.4.1 Mineral Resource Estimate Risks  Drilling is widely-spaced for such a long and relatively narrow vein deposit.  Current surface chip samples are not of comparable volume and quality with existing diamond drill samples to be considered for inclusion in the mineral resource estimation.  Drilling and surface geological mapping results indicate a number of intersecting and sub-parallel faults and shears that may or may not have influenced the apparent vein continuity and tenor along its known strike length.  Geological logs did not fully describe the oxidation state of the precious metal-bearing mineralization to quantify oxide, transitional and sulphide hosted mineralization for individual mineral resource estimation.  Some unresolved QA/QC results may or may not impact the grades of isolated drill core sample assay batches.  MQes is not aware of any known environmental, permitting, legal, title, taxation, socio- economic, marketing, political or other relevant factors that could materially affect the estimate of the stated mineral resources.1.4.2 Mineral Resource Estimate Opportunities  Most of the exploration drilling has focused on evaluating the Urumalqui vein structure at vertical depths less than 200m. A combination of in-fill drilling with both near surface and deeper drilling intercepts should improve the interpretation of the vein geometry and tenor, as well as identify any significant structural displacements that might influence inferred projections of mineralization.  A combination of high quality surface channel sampling, increased sample density from in-fill drilling and resolution of any QA/QC issues should lead to a classification upgrade of future estimated mineral resources.  Detailed identification and interpretation of the oxidation state of the mineralization to quantify mineralization for various recovery processes may positively influence the cut- off grades for future mineral resource estimates. 1-9 MQes
  22. 22.  The exploration potential of the Urumalqui vein is good. Exploration results show that the known vein mineralization may continue along its trend in both strike directions and to depth along its entire known length.  This project is still in the advanced exploration stage requiring significant additional work to better define the geometry and tenor of the vein deposit, and evaluate available mining and processing methods.1.4.3 Mineral Processing and Metallurgical Testing – Risks  Samples used in metallurgical test work to date are insufficient in number, may not be representative and it is possible certain mineral assemblages have not been identified and tested.  Successful treatment of material from the Urumalqui project will be dependent on developing an economic processing route. The metallurgical and processing parameters required to determine an economic processing route are not yet fully developed. Further metallurgical test work is required to determine these parameters, perform engineering evaluations and assess project economics.1.4.4 Mineral Processing and Metallurgical Testing - Opportunities  Metallurgical criteria such as primary grind size, reagent scheme, regrinding, etc are currently not optimized. Optimization of these criteria may improve recoveries of silver and gold.1.5 Proposed Exploration BudgetThe proposed 12 month exploration budget for the Urumalqui project is estimated at US$1.2million. Details of these costs are presented in Table 1-2. 1-10 MQes
  23. 23. Table 1-2: Proposed 2012 Exploration Budget Estimated Cost Description (US $)Exploration Manager – Project Management and Supervision ($7,000/month) 84,000Senior Geologists – Field Supervision, Mapping, Trenching, Logging(1X11 Months and 1X6 Months @ $4,500/Month, each) 76,500Junior Geologists – Field Assistance, Trenching (2 @ $2,500/Month) 60,000Project Assistant ($650/Month) 7,800Field Workers (6X6 Months ad 12X6 Months @ $300/Month, each) 32,400Field Office and Accommodations ($1,000/Month) 12,000Food ($600/Month) 7,200Truck Rental – 2 Trucks ($75/Month, each) 1,800Transportation ($5,000/Month) 60,000Field Camp Supplies, Fuel and General Expenses ($5,000/Month) 60,000Airfare – Peru ($1,000/Month) 12,000Offsite Lodging/Board (4 Days/Month @ $100/Day) 4,800Permitting – Phase II Drilling Program 50,000Community Relations – Consultants ($2,500/Month) 30,000Community Relations – Projects ($3,000/Month) 36,000Metallurgical Testwork on Urumalqui Vein Mineralization and Reporting 150,000Surveying – DDH Collar and Roads and Channel Sampling Site Surveying 11,000Diamond Drilling – 2,000 metres @ $150/metre Direct Drilling Costs 300,000Analyses – Core and Surface Samples (2,000 Samples @ $35/Sample) 70,000Drilling QA/QC and Check Assaying (200 Samples @ $35/Sample) 7,000Check Assaying of Select 2011 Samples (200 @$35/Sample) 7,000Data Plotting, Reporting and Documentation – Summary Report with Recommendations 15,000Contingency (~10%) 105,500Total Estimated Costs of Recommended 2012 Exploration Work $1,200,000 1-11 MQes
  24. 24. SECTION 2 INTRODUCTION2.0 INTRODUCTION2.1 Project and IssuerThe Urumalqui property (the ‘Property’) is situated in the District of Julcán, Department ofLibertad in northcentral Peru; approximately 70 kilometres by road east of the city of Trujillo.It is comprised of four contiguous mineral concessions covering 2,700 hectares or 6,672 acres.The mineral holdings are currently owned by Minera Corimalqui S.A. (‘Corimalqui’), an indirectPeruvian subsidiary of Gitennes Exploration Inc. (‘Gitennes’) which is a TSX Venture Exchangereporting public company. On April 22, 2010, AndeanGold Ltd. (‘AndeanGold’), a TSX VentureExchange reporting public company, entered into an Option Agreement with Gitennes wherebyAndeanGold has the right to acquire a 60% joint venture interest in the Property. AndeanGoldestablished PeruGold Resources S.A.C. (‘PeruGold’) in July, 2008 to administer its Peruvianinterests.This Technical Report has been prepared by Mr. C. Kaye, FAusIMM, B. Eng Chemical, of Mineand Quarry Engineering Services, Inc (‘MQes’), Mr. James A. McCrea, P. Geo., and Mr. J.Douglas Blanchflower, P. Geo., of Minorex Consulting Ltd. (‘Minorex’), for AndeanGold andGitennes in compliance with the disclosure requirements of the Canadian National Instrument43-101. The authors were retained by AndeanGold in August 2011 to qualify historic andcurrent exploration data and estimate the mineral resources of the Urumalqui vein structure.The authors have reviewed available exploration results and prepared this independent technicalreport (the ‘Report’) in accordance with the formatting requirements of National Instrument 43-101 (‘NI 43-101’) and Form 43-101F1 (Standards of Disclosure for Mineral Properties) to be acomprehensive review of the exploration activities and documentation of the mineral resourceestimate. It is intended to be read in its entirety.2.2 Site VisitMr. J. McCrea, an independent qualified person according to NI 43-101, visited the Property onAugust 3, 2011 during which time he examined and collected four (4) samples from the storedcore of four different diamond drill holes, and examined and collected four (4) samples of themineralization from outcrops of the Urumalqui vein structure. He also reviewed all aspects ofthe previous exploration work and that conducted since 2010 on behalf of AndeanGoldincluding: diamond drilling; geological mapping; sampling, security and shipping procedures;surveying methods and documentation procedures.2.3 Principal Sources of InformationAndeanGold and Gitennes provided the authors with all available exploration drilling, sampling,and assay and analytical results; plus maps, company reports and other public and privateinformation pertaining to the Property. In addition, AndeanGold provided geological plansidentifying lithological units, alteration facies and zones of mineralization, plus cross-sectionalinterpretations of drilling results. This information appears to be of good quality and the authorshave no reason to believe that any of the information is inaccurate. 2-1 MQes
  25. 25. Several published references on the regional geology and mineral deposits of Peru andspecifically the Department of La Libertad were reviewed by the authors, and additionalinformation was also obtained from several Internet sources. The authors have assumed that allof the referenced information and technical documents are accurate and complete in all materialaspects. Technical reports and other documents used in the preparation of this report are listed inSection 27 of this report.Documents pertaining to the subject mineral concessions were obtained from AndeanGold(2011) and Gitennes (2011). The authors has relied upon these documents for the verification oftitle for all of the subject mineral concessions and rights.2.4 Standard Terms and AbbreviationsUnits of measurement used in this report conform to the SI (metric) system unless otherwisenoted. All currency units are US dollars (US$) unless otherwise noted.Standard terms and abbreviations are as follows: Table 2-1: Standard Terms and Abbreviations Terms Description Terms Description AMSL above mean sea level µm micrometers (10-6m) A ampere um micron atmosphere (29.92in Hg, 760mm Hg, 101.3 atm mph miles per hour kPa) AA atomic absorption mg milligram (10-3g) Az azimuth mm millimetre (10-3m) b.y. billion years mm Hg millimetres mercury Wi Bond work index Mt million tonnes cal calorie Moz million troy ounces CAD$ Canadian dollar m.y. million years CIL carbon-in leach Ma million years ago milliounces (Troy) per short CIP carbon-in-pulp moz ton cm centimetre min minute 3 cm cubic centimetre mol mole ft3 cubic feet NI 43-101 National Instrument 43-101 cfm cubic feet per minute N newton 3 m cubic metre oz ounce (Troy) mm3 cubic millimetre opT ounces per short ton Hz cycles per second (Hertz) ppb parts per billion 2-2 MQes
  26. 26. Terms Description Terms Description d day ppm parts per million (by weight) °C degree Celsius Pa pascal °F degree Fahrenheit % per cent ° degree of arc lb pound (avoirdupois) deg degrees (angular) psi pounds per square inch dia diameter QA Quality AssuranceDDH diamond drill hole QC Quality Control dmt dry metric tonne RC reverse circulation drilling ft feet rpm revolutions per minute gal gallon (US) RQD rock quality descriptiongpm gallons per minute ROM run-of-mineGPS Global Positioning System s, sec second Au gold st short ton (2,000 pounds)AuEq gold equivalent grade Ag silver g gram SG specific gravity 2 gpt grams per tonne cm square centimetre 2 ha hectare ft square feet hp horsepower km2 square kilometre h hour m2 square metre in inch mm2 square millimetre standard cubic feet perin Hg inches mercury scfm minute standard cubic meters per ICP induced coupled plasma scmh hour tonne (1,000 kg or 2,204.6 J joule t lbs) kg kilogram TDS total dissolved solids km kilometre oz troy ounce (31.1035 grams)kVA kilovolt-ampere US$ United States dollar kW kilowatt vvh vessel volumes per hourLOM life-of-mine V volt l,L litre vol volume meshes (screen wires) per linear inch (Tylermesh vol % volume percent series, unless noted) m metre W watt µ micro (10-6) wt % weight % -6 µg microgram(10 g) y year 2-3 MQes
  27. 27. 2.5 AcknowledgementsThe authors wish to thank office and field personnel of AndeanGold and Gitennes for their helpwith this study. Mr. John Bolaños, former GM Latin America Exploration for AndeanGold,escorted Mr. McCrea during his property examination and was especially helpful with projectand exploration overviews, and data acquisition. 2-4 MQes
  28. 28. SECTION 3 RELIANCE ON OTHER EXPERTS3.0 RELIANCE ON OTHER EXPERTSThe authors were not involved in any exploration work on the subject property, and therefore thisreport has made extensive reference to the works undertaken by other qualified geologists andprofessional field personnel. Other non-project specific reports by qualified personnel have beenreferenced whenever possible. The information, conclusions, opinions and recommendations arebased upon:  Information available to the authors at the time of the preparation of this report;  Assumptions, conditions and qualifications as set forth in this report; and  Data, reports and other information provided by AndeanGold and Gitennes, and other third party sources.The authors have not carried out any independent exploration work, drilled any holes nor carriedout any sampling and assaying.Mr. John Bolaños, former GM Latin America Exploration for AndeanGold, accompanied Mr.McCrea during his property examination and provided information on all aspects of Property’shistorical and recent exploration work. The authors have reviewed the comprehensive reportsand data on the Property’s exploration history. This exploration information is of reasonable togood quality, and there is no reason to believe that any of the information is inaccurate.Mr. Anthony F. Ciali, President, CEO and Director of AndeanGold, provided the authors withsummaries of the corporate and legal documents pertaining to the acquisition of the Property forAndeanGold. Documents pertaining to the location, recording and current status of mineralconcessions were provided by AndeanGold (2011) and Gitennes (2011). The authors have reliedupon the legal due diligence or title opinion conducted by the legal counsel for AndeanGold andthese documents have not been investigated or confirmed by the authors. The description of theproperty, and ownership thereof, as set out in this report, is provided for general informationpurposes only.Gitennes provided the authors with the results of their 2008 preliminary metallurgical testworkcarried out in Peru at Laboratorio Plenge & CIA S.A. and Alex Stewart (Assayers) del PerúS.R.L. The information in these reports appears to be of reliable quality.This report has been prepared for use by AndeanGold Ltd. and Gitennes Exploration Inc. It isintended to be read as a whole, and sections or parts thereof should therefore not be read or reliedupon out of context.The authors are pleased to acknowledge the helpful cooperation of AndeanGold and Gitennesmanagement and staff, all of whom made any and all data requested available and respondedopenly and helpfully to all questions, queries and requests for material. 3-1 MQes
  29. 29. SECTION 4 PROPERTY DESCRIPTION AND LOCATION4.0 PROPERTY DESCRIPTION AND LOCATION4.1 Project Location and DescriptionThe Urumalqui property is located within the District of Julcán, Department of La Libertad, Peru;about 70 kilometres by road east of the coastal city of Trujillo (Figure 4 - 1). Theapproximate geographic centre of the Property is at 8° 05’ South latitude, 78° 29’ Westlongitude, or UTM PSAD56, Datum 17S at 777500 metres East by 9105150 metres North.The Property is comprised of four mineral concessions, namely: Aurea Elisa 13, Morochas,Patientia and Philtrum, that cover a total of 2,700 hectares or 6,672 acres. Table 4-1 documentsthe pertinent mineral concession information. Table 4-1: Mineral Concession Information (after Blackwell, 2009) Concession Ownership Codigo Status Area (ha) AUREA ELISA 13 Minera Corimalqui S.A 01-01513-02 Claim granted 1,000 MOROCHAS Minera Corimalqui S.A 01-02012-02 Claim granted 700 PATIENTIA Minera Corimalqui S.A 01-00746-03 Claim granted 600 PHILTRUM Minera Corimalqui S.A 01-01584-02 Claim granted 400 Area (Ha) 2,700Figure 4-1 and 4-2 of this report illustrate the location and configuration of the various mineralholdings comprising the Property.4.2 Property OwnershipThe Urumalqui property was first acquired in 2002, and explored initially as a joint venturebetween Peruvian companies affiliated with Gitennes and Meridian Gold Inc. (‘Meridian’), buton June 17, 2005 the companies terminated their agreement and Gitennes assumed fullownership (100%) of the project. The property is owned by Minera Corimalqui S.A., nowan indirect Peruvian subsidiary of Gitennes. AndeanGold entered into an Option Agreementwith Gitennes, dated April 22 2010, whereby AndeanGold has the right to acquire a 60% jointventure interest in the Property. In order to earn its 60% interest, AndeanGold must:  Ensure that PeruGold expends CDN$3 million of qualifying expenditures on the Project over a four (4) year term (the ‘Term’), commencing July 8, 2010;  Ensure that PeruGold completes 3,000 metres of drilling by the end of the second year of the Term and 7,000 metres of cumulative drilling by the end of the third year of the Term; and  Issue Gitennes 20,000 common shares of AndeanGold as well as 20,000 common shares on each of the first, second and third year anniversaries of the agreements. Except for the first payment, Gitennes may elect to receive cash in lieu of shares, with the cash amounts not to exceed CDN$25,000, CDN$50,000 and CDN$100,000, respectively, with respect to the first, second and third year anniversary date payments. If the market value of the 4-1 MQes
  30. 30. shares on the respective payment date exceeds the maximum cash payment amount on such date, the difference will be satisfied by the issuance of equivalent shares.Upon AndeanGold exercising its Option, Corimalqui will transfer the titles to the subject mineralconcessions to Newco, a joint venture Peruvian company to be owned by PeruGold (60%shareholder interest) and Corimalqui (40% shareholder interest). PeruGold would be theoperator of the joint venture. Figure 4-1: Location Map 4-2 MQes
  31. 31. 4.3 Mineral Rights in PeruThe ‘General Mining Law of Peru’ defines and regulates different categories of mining activities,ranging from sampling and prospecting to development, mining, and processing. Miningconcessions are granted using UTM coordinates to define areas generally ranging from 100ha to1,000ha in size. Mining titles are irrevocable and perpetual, as long as the titleholder maintainspayment of the “Derecho Vigencia” fees up to date to the Ministry of Energy and Mines. Aholder must pay a “vigencia” (annual maintenance fee) of US$3/ha (for metallic mineralconcessions) for each concession actually acquired, or for a pending application (petitorio orclaim), at the time of acquisition and then by June 30th of each subsequent year to maintain theconcession.The concession holder must sustain a minimum level of annual commercial production of greaterthan US$100/ha in gross sales before the end of the sixth year of the granting of a concession; or,if the concession has not been put into production within that period (by the first semester of theseventh year), the annual rental increases to US $9/ha (US$3 for vigencia plus a US$6 penalty)until the minimum production level is met. If by the start of the twelfth year the minimumproduction level has still not been achieved then the annual rental increases to US $23/hathereafter (US$3 for vigencia plus a US$20 penalty). The concession holder can be exoneratedfrom paying the penalty if he can demonstrate that during the previous year he has “invested” anequivalent of no less than ten times the penalty for the total concession. This investment must bedocumented along with the copy of the “declaración jurada de impuesto a la renta” (annual taxstatement) and the payment of the annual “Derecho Vigencia” fees. The concession willterminate if the annual rental is not paid for three years in total or for two consecutive years. Theterm of a concession is indefinite provided it is properly maintained by payment of rental fees.A Peruvian mining concession is a property-related right, distinct and independent from theownership of land on which it is located, even when both belong to the same person. The rightsgranted by a mining concession are defensible against third parties, are transferable andchargeable, and, in general, may be the subject of any transaction or contract. See:http://www.minera.gob.pe/mineria/legislacion/data/D.S.N_014-92-LSM.doc.To be enforceable, any and all transactions and contracts pertaining to a mining concession mustbe entered into a public deed and registered with the Public Mining Registry (Registro Publicode Mineria). Conversely, the holder of a mining concession must develop and operate his/herconcession in a progressive manner, in compliance with applicable safety and environmentalregulations and with all necessary steps to avoid third-party damages. The concession holdermust permit access to those mining authorities responsible for assessing that the concessionholder is meeting all obligations. 4-3 MQes
  32. 32. Figure 4-2: Mineral Concession Map 4-4 MQes
  33. 33. 4.4 Surface and Water RightsPeruGold has agreements with individual that provide access to the land and permission toestablish drill pads in exchange for a modest fee. Most of these agreements also include aclause whereby PeruGold has the option to purchase the land in question (Ciali 2011).The rights of title to the mineral concessions do not carry water rights which are available forexploration purposes but would have to be negotiated with the land owners and variousgovernmental agencies prior to any advanced development or mining operation on the Property.4.5 Environmental Regulations, Liabilities and Permitting IssuesAccording to Blackwell (2009), “Two environmental evaluations (Evaluación Ambiental deExploración) have been submitted by Corimalqui to the Ministerio de Energia y Minas of theRepublic of Perú in order to obtain Category C drilling permits. These reports describeenvironmental, archaeological and socio-economic conditions in the study area and state thatthe owner will return the land to its original condition and not affect the environment. Permitswere granted in both instances, as well as an earlier category B permit that did not require anenvironmental evaluation. These permits are referenced in the Ministry files as ResolucionesDirectorales Numbers 006-2003-MEM/AAM, 409-2004-MEM/AAM and 183-2007- MEM/AAM.Commitments made by Corimalqui as part of the permitting process included re-vegetation,safe disposal of dangerous waste and maintaining good community relations. Copies of allrelated agreements, from minutes of community meetings to stakeholder approvals to theagreement with the municipality of Julcán to use its waste disposal systems (i.e. garbage dump)were attached to the applications.”According to Ciali (2011), the 2011 diamond drilling program was carried out subject to anEnvironmental Impact Declaration permit which allowed the drilling from up to 20 drill padswithin a 5-hectare area. Future infill drilling along the central 1,000 metre portion of theUrumalqui vein structure may be undertaken using any of the 20 existing pads which can bemoved up to 50 metres from their permitted locations. Any other drilling outside of the 1,000metre central section of the vein, whether along the Urumalqui vein or on the other veinsidentified to date on the property, will require PeruGold to file an Environmental ImpactStatement which PeruGold is presently preparing. No bonding is required for an EnvironmentalImpact Declaration permit.PeruGold reclaimed all drill site access roads, drill pads and settling ponds immediatelyfollowing completion of each drill hole. A thorough report documenting this work has beenprepared by John Bolaños and Percy Espejo Rodríguez for PeruGold. Pending a site visit by thePeruGold environmental consultant, a final report will be prepared and submitted to thegovernmental authorities. 4-5 MQes

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