Rio Tinto Option Agreement

On February 23, 2020, Calibre and Rio Tinto Exploration (“Rio Tinto”) entered into an option earn-in agreement (the “Earn-in Agreement”), pursuant to which Rio Tinto can earn up to a 75% interest in Calibre’s 100%-owned Borosi Projects in Northeast Nicaragua. The Borosi Projects host both gold-silver and copper-gold resources in two areas as well as multiple lesser explored copper-gold skarns, low-sulphidation epithermal gold-silver vein systems and bulk tonnage copper-gold porphyry targets.

Furthermore, the Company and Rio Tinto have entered into a strategic exploration alliance agreement (the “Alliance Agreement”) under which we will work together to identify and acquire exploration concessions in Nicaragua, with a focus on copper-gold porphyry, skarn and epithermal precious metal systems.  All amounts below are expressed in US dollars.

 Earn-in Agreement Highlights:

  • First Option: Rio Tinto shall have a five-year option to acquire a 55% interest in the Borosi Projects by incurring $10,000,000 in qualifying expenditures, of which $3,000,000 is committed to be incurred within two years of obtaining the necessary permits and approvals.
  • Second Option: If Rio Tinto exercises the First Option and earns a 55% interest in the Borosi Projects, it has the right to earn an additional 10% interest (for an aggregate interest of 65%) by incurring an additional $15,000,000 over a three-year period.
  • Third Option: If Rio Tinto exercises the Second Option and earns a 65% interest in the Borosi Projects, it has the right to earn an additional 10% interest (for an aggregate interest of 75%) by incurring an additional $20,000,000 over a subsequent three-year period.
  • Calibre has been designated as the initial operator of the field work being completed under the Earn-in Agreement and will receive a fee equal to 10% of expenditures.

Alliance Agreement Highlights:

  • Calibre and Rio Tinto entered a five-year generative exploration and concession acquisition alliance under which we will work together to identify prospective mineral properties.
  • Rio Tinto has the right to instruct Calibre to acquire selected alliance properties and will fund the acquisition of those properties.
  • Calibre will receive a fee for acting as the operator of the alliance equal to 10% of qualifying expenditures.
  • Rio Tinto shall have the right to designate one or more blocks of the alliance properties (each such block not to exceed 40,000 hectares in the aggregate) and shall have the exclusive option to earn up to a 80% interest in each such block, on the following terms and conditions:
    • First Option: Rio Tinto shall have a five-year option to acquire a 55% interest in the applicable block by incurring $5,000,000 in qualifying expenditures.
    • Second Option: If Rio Tinto exercises the First Option and earns a 55% interest in the applicable block, it shall have the right to earn an additional 10% for an aggregate interest of 65%) by incurring an additional $5,000,000 over a five-year period.
    • Third Option: If Rio Tinto exercises the Second Option and earns a 65% interest in the applicable block, it shall have the right to earn an additional 15% for an aggregate interest of 80%) by incurring an additional $15,000,000 over a five-year period.

Borosi Projects

The Borosi concessions are located approximately 275 kilometres northeast of the capital city of Managua. The concessions cover a total of 667 km2 within Nicaragua’s Mining Triangle, an area defined by the historic mining towns of Bonanza, Rosita and Siuna. One of Central America’s most prolific mining regions, the Mining Triangle is reported to have produced 7.9 million ounces of gold, 4 million ounces of silver and 305 million pounds of copper.

Two historic mines operated on the Borosi concessions as recently as the early 1980s: the La Luz-Siuna mine, which produced approximately 2.3 million ounces of gold; and the Rosita mine, which produced approximately 305 million pounds of copper. Both deposits are skarn-type deposits which are commonly found in proximity to copper-gold porphyry systems. Several smaller past producing gold mines are also located on the Borosi concessions: the La Luna, Riscos de Oro and Blag mines, which are all currently held under the joint venture with Iamgold Corporation [click here for Iamgold Joint Venture].

Calibre’s 100%-owned concessions at Borosi, which total 667 km2, are the subject of the Earn-in Agreement. The concessions include the formerly producing La Luz-Siuna mine, the Santa Maria Gold-Silver project and the Primavera Gold-Copper Porphyry project.  The Borosi Projects host gold-silver and gold-copper NI 43-101 Resources at the Cerro Aeropuerto skarn and the Primavera gold-copper porphyry deposits [click here for Summary of Borosi Projects Inferred Resources].

Primavera Gold Project

The Primavera gold-copper porphyry project is located 7 kilometres south of the historic Santa Rita copper-gold skarn mine and is located within the southern portion of the Calibre-B2 JV concession area. The project is road accessible and is located 1.2 kilometres from the national power grid and is 8 kilometres south of the town of Rosita.

Primavera is located within a 5 kilometre by 7 kilometre area dominated by Tertiary volcanics and early Cretaceous aged calcareous sediments which have been intruded by multi-phase intermediate dikes and diorite intrusive rocks. Quartz veins have also been mapped on the property. The prospect area contains coincident gravity, magnetic and radiometric anomalies identified by various airborne geophysical surveys, which are believed to be related to a large underlying intrusive centre. The area is prospective for porphyry, skarn and epithermal vein deposit types.

In the Primavera main zone, drilling has focused on testing the strike and depth continuity of high grade Au-Cu mineralization intersecting wide intervals of porphyry style mineralization to depths of 250 metres. The drilling has been centered on a 250 metre x 350 metre area with subsequent step out drilling following the mineralization to the west-southwest. Major north-northeast and west-northwest oriented faults control and cut the mineralization in the main zone at Primavera. Drilling across these structures intersected porphyry style mineralization but has not yet located the offset portion of the higher grade zone.

The main zone shows classic porphyry stockwork mineralization consisting of millimeter to centimeter scale quartz-pyrite-chalcopyrite-bornite-magnetite veins associated with potassic alteration of the host rock. Individual veins and quartz stockwork show a preferred northeast orientation in the southern portion of the zone but become dominantly northwest oriented in the northern zone.

The highest grades in drilling are associated with strong potassic alteration in the form of K-spar in diorite and secondary biotite in the andesite porphyry. Bornite is also commonly found in these zones. Multi-stage quartz veining indicates that the earliest mineralization predates intrusion of the diorite as the diorite unit cuts both the andesite porphyry and earliest quartz veins. “Ore grade” mineralization is hosted in both the andesite porphyry and later diorite.

A total of 13,413 metres has been completed at Primavera in 32 drill holes. Highlights of the drilling are shown in the table below. The results from preliminary metallurgical testing have also been included.

DRILL HOLE FROM
(M)
TO
(M)
LENGTH
(M)
GOLD
(G/T)
COPPER
(PPM)
AUEQ*
(G/T)
PR-11-001 0.00 276.80 276.80 0.50 2146 0.84
includes 0.00 103.00 103.00 0.85 3240 1.36
PR-11-002 1.50 263.20 261.70 0.78 2966 1.25
includes 1.50 209.00 207.50 0.89 3378 1.42
includes 74.50 209.00 134.50 1.01 3561 1.57
PR -11-003 4.00 327.20 323.20 0.41 1843 0.70
includes 4.00 150.50 146.50 0.65 2742 1.08
PR-12-005 207.50 372.50 165.00 0.31 1713 0.58
PR-12-006 12.00 102.00 90.00 0.21 1315 0.42
PR-12-007 7.70 255.00 247.30 0.22 1097 0.39
includes 156.00 197.00 41.00 0.34 1760 0.62
PR-12-008 107.65 280.00 172.35 0.48 2401 0.86
includes 131.50 187.00 55.50 0.67 3507 1.22
PR-12-10 79.00 94.40 15.40 0.59 4325 1.27
PR-12-11 6.95 166.48 159.53 0.46 2008 0.78
Includes 6.95 95.65 88.70 0.53 2225 0.88
PR-12-013 24.00 46.50 22.50 0.44 2090 0.77
PR-12-012 6.00 103.00 97.00 0.34 1646 0.60
PR-12-016 0.00 201.35 201.35 0.77 3567 1.34
includes 27.75 85.60 57.85 1.08 4915 1.86
PR-12-023 0.00 455.80 455.80 0.20 1138 0.39
PR-12-024 655.60 656.70 1.10 18.28 252 18.33
includes 673.00 674.50 1.50 11.95 2373 12.33

*AuEq (g/t) Gold Equivalent calculated using 1,300/oz gold and 43.00/lb copper and metallurgical recoveries and net smelter returns are assumed to be 100%

2017 - 2018 Drilling Program

The 2017-2018 drilling program at Primavera tested a series of high priority targets in two areas within the overall Primavera Gold-Copper Porphyry District:

  1. NE Trend (2km x 1km area) extending northeast from the existing deposit, and
  2. San Francisco Target (2km x 2km area) centered three kilometres southeast of the Primavera deposit.

This was the first drilling program at Primavera since 2012 and consisted of approximately 45 Reverse Circulation drill holes totaling 8200 metres. Drilling was in part be guided by a series of recommendations made by Dr. Richard Sillitoe, one of the world’s foremost porphyry experts, following his site visit and evaluation in February 2017. Numerous high priority drill targets prospective for further gold-copper porphyry mineralization exist within the 5.0 kilometre by 4.0 kilometre Primavera target area as defined by anomalous gold and copper in rock and soil samples, magnetic and radiometric geophysical anomalies, and targets where geological mapping has identified porphyry style mineralization or alteration.

Metallurgical Testing

In a report titled, “An Investigation into Scoping Level Testwork on Primavera Project Samples” dated February 8th, 2013 by SGS Canada Inc. of North Vancouver (“SGS Canada”), four composite samples of Primavera porphyry mineralization from drill hole PR-012-16 (201.35 m grading 0.77 g/t Au and 0.36% Cu) were submitted for initial metallurgical studies. Sample head assays are outlined in Table 1. Individual sample weights ranged from 18.6 kg to 30.3 kg. The metallurgical tests conducted on the Primavera project samples included rougher flotation kinetic and cleaner flotation tests and whole ore cyanide leach tests.

Summary of Head Assays

ELEMENT SAMPLE NUMBER
6261 6262 6263 6264
Au, g/t 0.98 1.26 0.52 0.86
Cu, % 0.52 0.70 0.26 0.27

In optimized rougher flotation tests on the four Primavera samples gold recoveries ranged from 86% to 91% and copper recoveries ranged from 94% to 98%. Initial metallurgical tests indicate that the recovery of gold, copper and sulphur are strongly related to each other and recovering sulphur by flotation will recover most of the copper and gold. Two different grind sizes were tested during the study with the finer grind returning the best recoveries. Additionally, whole ore leach tests on the four Primavera samples extracted 90.0% to 96.6% of the gold using 1.2 kg/t to 2.43 kg/t of NaCN. Gold kinetics on the leach tests are moderately fast reaching plateau within 30 hours and gold in all leach tests exhibited free milling qualities.


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