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Challacollo

Overview

Acquisition Terms

Location

130 km southeast of the port city of Iquique, 2.5 hours drive from Iquique airport. Project office is located in Pica. 30km east of the Pan American Highway, via the Quebrada Blanca copper mine access road. Last 20 km on gravel road. The Project comprises 98 individual mining exploitation concessions totaling 20,378 ha, which grant the owner the right to mine.

Deposit Type Low sulphidation epithermal Ag-Au bearing quartz veins.
Ownership Aftermath is buying in to 100% of the project by staged cash payments, subject to a 3% NSR to Mandalay Resources.

Infrastructure Power 15-30 km from the project. Water rights to 12l/sec located 10km west of the project.

Status Design of drill program underway. Aim of program is to drill possible hanging wall mineralization, infill the main vein and to test for footwall mineralization.

Geology and Mineralization

Challacollo is an epithermal silver deposit hosted by dacitic and rhyolitic volcanic and associated sedimentary rocks.  Mineralization is contained in a system of northeast- to north-trending epithermal quartz-carbonate-barite veins that have been oxidized to a depth of at least 250m.  The 3.5km long Lolón vein is the largest on the property and hosts the entire Historic Mineral Resource.

To the northwest of the Lolón vein, there are a number of veins hosted in propylitically altered rock which are interpreted to represent deeper exposures of the tilted terrane.  Veins cropping out in the original hanging wall southeast of the Lolón vein are hosted by variably silicified, bleached, and oxidized rocks and are interpreted to represent shallower exposures which may be prospective for further mineralization.

Project History

Historical records suggest that mining at Challacollo dates back to 1770. It was mined sporadically between 1896 and 1931 and again in the early 1980s. Silver Standard acquired the project in 1998, selling to Mandalay in 2013. Mandalay completed a significant program of drilling, metallurgy, and ground water investigations.

Historic Mineral Resource


Historic Mineral Resource

The Challacollo project hosts an Historic Mineral Resource. Please note, an independent Qualified Person, as defined in National Instrument 43-101 (“NI 43-101”), has not yet completed sufficient work on behalf of Aftermath to classify the historical estimate as a current Indicated or Inferred Mineral Resource, and Aftermath is not treating the historical estimate as a current Mineral Resource.

For full details of the Challacollo Mineral Resource please see the March 2015 43-101 Technical Report “NI 43-101 Technical Report for the Challacollo Silver Project, Region 1, Chile” QPs Mroczek, M., Collins, and M., Butler, S. of Mining Plus Canada Consulting Ltd. and Tapia, J.C., of Sedgeman S.A. Prepared for Mandalay Resources, available on the Mandalay Resources SEDAR profile.

Water Rights

Groundwater rights for 12 l/sec (sufficient for 1,800 tpd agitated leach), have been held since 2005 at Tamentica community which is 10km west of the property. Other water sources have been located and a developed bore producing 25 l/sec is located on nearby water concessions. Aftermath’s goal is to transfer the right to extract 12 l/sec to the water concessions bore.

Planned Work Program

Aftermath is planning the following work:

  • Resource development drilling on Lolón hangingwall and footwall parallel structures and low-grade halo mineralisation.
  • Advance the metallurgical vat leach test work on high grade material & dump/heap leach (column leach) on low grade halo material.
  • Lolón down dip (sulphide) drilling programs in a staged manner along with testing of sulphide metallurgy.
  • Continue with project development activities.

CHALLACOLLO Acquisition Terms
Under the terms of the Challacollo LOI, as amended, the Company may acquire MMC for an aggregate of:

  • CA$1,000,000 cash to be paid on or before February 28, 2019;
  • CA$1,000,000 cash to be paid on or before September 30, 2020;
  • CA$5,500,000 on or before February 28, 2021, to be paid, at Mandalay’s option, in Aftermath shares of up to a value of CA$2,750,000, and the balance in cash; provided that in no event shall the number of Aftermath shares issued represent more than 49% of Aftermath’s outstanding shares following such payment; and

Mandalay to retain a 3% Net Smelter Returns royalty on production, up to a maximum of CA$3,000,000. The Company, by making an additional CA$500,000 payment, shall have the right to vary the February 28, 2021 payment by paying CA$3,000,000 on or before February 28, 2021 and an additional CA$3,000,000 payment on or before February 28, 2022. In each case, Aftermath will have the option to pay up to 50% of each payment in Aftermath shares, subject to Mandalay holding no more than 49% of Aftermath’s outstanding shares following each such payment.