North Fork 17 Sapphire Concession
Property Location:
The North Fork 17 sapphire concession is located in the renowned Ilakaka Sapphire producing region of southern Madagascar. The concession is 2.5 km by 2.5 km and has an area of 625 hectares (1,544 acres). The property is located approximately 2.5km south of the town of Ilakaka which is mid-distance between the cities of Fianarantsoa and Toliara. Road access from the capital city of Antananarivo (Tana) is via the city of Fianarantsoa, approximately a 12-hour drive on paved roads. Toliara is approximately a 3-hour (210km) drive from the project site and is serviced twice daily by air service from the capital.
The road from the capital to Fianarantsoa is black top; however, it is primarily a contour alignment with continuous curves. About one-third of the highway between the capital and Fianarantsoa has one-lane bridges. Approximately 100km of the road between the Fianarantsoa and the project site is an unimproved track across the flat savana.
Primary access to the project site is via Toliara which has two daily flights from the capital. Toliara is a major seaport for importing equipment; however, port facilities are lacking and ships' cranes must be used for unloading. The road is paved, but in poor condition and the bridges are all single lanes. The rivers can all be portaged for transporting heavy equipment to the project area except during the rainy season, from November to March.
Area Map and Location
Map of Madagascar with location of North Fork 17 Sapphire Concession
North Fork 17 Sapphire Concession
Google satilite picture of North Fork 17 Sapphire Concession
Ownership Chart
MineCore has a 100% indirect interest in Block 17. The mining concession is held in trust for MineCore by Les Pierres Precieuses De Madagascar S.A.R.L. (LPPM) through a Joint Venture Agreement with LPPM and Platinum Works Inc. (PWI) with PWI a 100% interest and LPPM a 0% interest.
PWI is a wholly owned subsidiary of MineCore.
Les Pierres Precieuses De Madagascar S.A.R.L. (LPPM) is owned 85% by Jerry G. Mikolajczyk and 15% by Mr. Chang, a local Malagasy holding the shares in trust for Mr. Mikolajczyk. LPPM is the legal owner of the concession and holds the concession in trust for PWI and MineCore. Madagascar law requires the ownership of the concession to be by a Malagasy resident or Malagasy corporation.
Property Tests
January 2000 to December 2001
Testing on the property was performed by local artisanal diggings. During 2000 Les Pierres Precieuses de Madagascar (LPPM) performed a series of bulk sample tests to confirm sapphire deposits in several pits on the concession. Sapphires were extracted and sold to cover exploration costs. During its first year of operation, the North Fork 17 Mining Joint Venture extracted over 50 kilograms of sapphires and other precious gemstones.
In 2001, the North Fork 17 Joint Venture commenced exploration operations. During a brief period of 6 months, over 50,000 grams of sapphires were extracted from the North Fork 17 Block. The operation failed as a result of under capitalization.
Proposed Exploration Plan
Exploration of the property will be conducted in two phases, Phase I - Probing and Phase II - Reserve Drilling and Calculation.
Phase I - Probing
Probe drilling will be conducted to establish depth and thickness of the overburden that will need to be stripped away and of the Raw Ore Material (ROM) which contains gem material. The valuable information will establish the criteria for Reserve Development and Calculations for mine planning. A Reverse Air Circulation (RAC) drill will be used for the drilling. Drill holes will be systematically dug at intervals of 100 meters and will use a drill size of 6-8 inches. It is estimated the mine-able area on Block 17 is approximately 6.25 km2. This would require 625 drill holes resulting in 62,500 meters of test holes dug.
Phase II - Reserve Development and Calculation
To calculate proven reserves, a systematic testing on a grid pattern with test hole spacing at 25-meter centers would discover and define the sinuous gravel channels, although field experience might later permit wider-spaced between sampling points. The 6.25 km2 area would require 10,000 sampling points and an estimated 1,000,000 meters of drill holes; a major exploration undertaking. Mining will begin on the tested part of the site, and testing will continue ahead of the operation at a rate of 2 holes per day.
Identification of the thicker gravel channels through Phase I probe drilling would significantly lower the cost and reduce the time required. Gemstone exploration in general is difficult because of the size of sample required to obtain a representative measure of gemstones for each sampling point. With few gemstones in each sample of mostly waste gravel, a large sample volume is required. A minimum sample size is a nominal 1.2 m3 based on a nominal ROM thickness of 1.0 meters.
For the exploration, the project will utilize a Mobile Drilling Rig capable of drilling sample holes up to 100 meters deep with a width of 2 meters. The rig will work with a mobile exploration test unit and a Backhoe.
History
1998 - Sapphire discovery in Ilakaka, Southern Madagascar
1998 - Block 17 staked and Permit number H56-98-47, Ilakaka/EIII IHOSY, Faribrany Fianarantsoa, Firondronana, IHOSY, Firaisana, Ilakaka was granted by the Minister of Mines and Energy, Madagascar to Gem Mining Corporation S.A.R.L.
1999 - LPPM sets up test jigs to test Block 17
2000 - Gem Mining Corporation S.A.R.L. assigns Permit H56-98-47 to Les Pierres Precieuses de Madagascar S.A.R.L. (LPPM)
2000 - International Mining Company of America, Inc. (IMCO) enters into agreement with LPPM to acquire Block 17.
2000 - IMCO forms North Fork 17 Mining Joint Venture with Canadian group, 910334 Alberta Limited, to explore and test concession for sapphires
2001 - North Fork 17 Mining Joint Venture begins testing
2003 - PWI acquires North Fork 17 Mining Joint Venture from IMCO and 910334 Alberta Limited
2004 - MineCore, formerly AGDM, acquires 100% of PWI
2004 to Present - Concession taxes current, no activity on property.
Formation and Mineralization
There are two distinct sapphire occurrences in the North Fork 17 area, the same as identified in North Fork 14, a primary deposit in the Carapace formation and a secondary deposit resulting from the erosion of the Carapace formation. More extensive geological mapping and study will be required to confirm the operator's opinion.
The wide range of gemstones (e.g. blue and pink sapphires) identified in the Ilakaka placer deposits indicate that the host gravels originated from several sources and were then introduced into a major drainage. The well-rounded pebbles and cobbles in the Carapace gravel suggest they were transported a substantial distance.
Primary Sapphire Deposits
The sapphire-bearing gravels of the Carapace formation occur as intermittent gravel layers. There appears to be two primary horizons, an upper gravel, Zone 1, which is lean in sapphires and worked by artisan miners, and a lower gravel, Zone 2, which has been explored by seven test pits on three concessions, North Fork 11, 14 and 17. The lower gravels contain varying amounts of gem-quality sapphires and other gemstones. The lower gravel varies from sand grading to pebbles to sand grading to cobbles and the gravel bars are reported to be discontinuous. Clay balls were not observed; however, the gravels have a high, 10 percent to 30 percent, moisture content. The lack of standing water in any of the open cuts indicates a lack of ground water transmisivity.
The gravel beds vary in thickness from a few centimeters to 5m in thickness and averages a nominal 1.5m. Occasionally, one may observe up to a 5.0m thickness. The gravel bed can be described as a braided flood plain deposit. In one pit which exposed over 3.0m of gravel, one side of the gravel bar had been eroded away and was replaced by fine sandy/silt.
A crude GPS survey of the exposures of the sapphire-bearing gravels indicates a gentle dip, approximately 4 degrees, to the south. Comments were made that several visiting geologists proposed the theory that the Malio River, which now flows toward the north, formerly flowed south. The test mine operator commented that this coincides with his belief that the sapphires' size decreases to the south. The extent of the gemstone-bearing gravels would suggest a much larger river system was present at the time of deposition.
The crude GPS survey of the water tables at each test pit indicate that the water table to be level with each test pit concluding that the test pits are connected by the same horizon or zone. Test Pits on the East of the Malio River had identical water table levels. Test Pits on the West side of the Malio River also had identical water table levels with each other on the West side. However, the water levels on the East side and the West side were not identical.
Secondary Sapphire Deposit
The test pit operator reportedly dug a pit along side the Malio River, which has been mapped as being in the basement Isalo II formation and found a sapphire-bearing channel. The shape of the excavation indicates that it may have been an oxbow. This main channel deposit was characterized as having large boulders, up to 1m in size and also containing above average size sapphires. A thin gravel extended a reported 10m outward from one side of the oxbow. The operator reportedly was able to follow the channel for only a short distance before it was truncated.
Behre Dolbear postulates that this secondary-type deposit is the result of erosion of the primary gravels in the Carapace formation with a concentration of sapphires in the main stream channel. If this theory is correct, then the secondary deposit could have significant economic value since an estimated 50 percent of the Carapace formation has been eroded away in the North Fork area. Additional exploration will be required to confirm this theory.
Testing on the Block 17 property confirms that the property has 3 gravel horizons or zones that have sapphire occurrences. The ravine created by the Malio River on Block 17 is smaller than that of Block 14. This results in Block having a greater mine able area for Zone 1 and 2.
A model, based on artisanal diggings, was developed which assumes that the 3 zones are throughout the whole property with the exception where the Islo River intersects the property and elevation. Based on this model, the indicated resources, as prepared by MineCore for the North Fork 17concession are estimated at:
MINECORE STRESSES THAT THE AVERAGE OF US$159 BCM VALUE PLACED PER CUBIC METER OF GRAVEL IS AN ESTIMATE BASED ON THE BULK SAMPLING TESTS COMPLETED BY BEHRE DOLBEAR FOR ZONE 2.
"BEHRE DOLBEAR STRESSES THAT THE $159 PER BCM IS NOT NECESSARILY REPRESENTATIVE OF WHAT VALUE EXISTS ON THE NORTH FORK 14 PROPERTY AND IS NOT REPRESENTATIVE FOR BLOCK 17. A SAMPLING PROGRAM BASED ON SOLID GEOLOGIC PRINCIPLES IS REQUIRED TO DEFINE A RESOURCE AND THE REPRESENTATIVE VALUE OF A BCM OF SAMPLE ON THE PROPERTY. THIS VALUE COULD BE SIGNIFICANTLY LESS OR MORE THAN THE VALUES OBTAINED BY OUR LIMITED SAMPLING PROGRAM."
IT IS NOT REPRESENTATIVE OF THE GRADE OF SAPPHIRE (GRAMS/CUBIC METER), WHICH MAY BE EXPECTED IN THE PRODUCTIVE GRAVEL HORIZONS, WHICH EXISTS THROUGHOUT THE PROPERTY.
Monte Carlo Simulation
The simulation was designed to answer the question of what potentially could be the probable (indicated) reserves for the North Fork 17 Block. The simulation estimates that the probable (Indicated) reserves is between $84 Million and $59.8 Billion with a 90% likelihood that the probable (indicated) reserves would be approximately $1.9 Billion and a 0% probability that the probable (indicated) reserves would $59.8 Billion.
A Monte Carlo simulation calculates an end result based on the range of possible outcomes for key variables and the probabilities of those various outcomes. Assumptions are built into a model of the business and the accuracy of those assumptions and the model jointly determine the usefulness of the simulation. By running the simulation a large number of times, the confidence of achieving a desired result can be estimated. This is in contrast to planning with definitive numbers or with best case, likely case and worst-case scenarios. The Monte Carlo simulation covers all the possible cases.
The simulations were run 500,000 times with graphs and statistics produced to interpret the outcomes. The range of outcomes for yield was based on the Behre Dolbear samples taken in 2001, and the price range was taken from "The Guide to Wholesale Gem Pricing". The wholesale price based on the grade and yield is then reduced by 50% to establish the market value of the uncut rough stone.
There are 54 assumptions, 3 for each of the 18 variables that are used to produce probable (indicated) reserves for the North Fork 17 sapphire bearing block. Block 17 did not have the same amount of testing as did Block 14. MineCore has reduced the yield by 50% on the assumptions used on Block 17 to reflect a cautious and conservative yield pending further testing. The simulation random draws a number from a universe created. The universe is established by projecting the worst case, best case and most likely case assumption. The distribution of the universe is selected based on the sampling tests performed and the likely outcome of continued sampling. The Triangular distribution was chosen as it best reflects the range and the frequency of selection based on the tests providing an average result.
The following table has the assumptions used in running the Monte Carlo simulation:
North Fork 17 Probable (Indicated) Reserves
The simulation estimates that the probable (Indicated) reserves is between $84 Million and $59.8 Billion with a 90% likelihood that the probable (indicated) reserves would be approximately $1.9 Billion, a 10% likelihood that the probable (indicated) reserves would be approximately $13.8 Billion and a 0% probability that the probable (indicated) reserves would $59.8 Billion. The mean is estimated at $6.9 Billion and the median is estimated at $5.5 Billion.
MINECORE STRESSES THAT THE ASSUMPTIONS USED IN THE MONTE CARLO SIMULATION ARE NOT REPRESENTATIVE OF THE ROM, ROM THICKNESS, YIELD, SIZE, GRADE OF SAPPHIRE (GRAMS/CUBIC METER) OR VALUE WHICH MAY BE EXPECTED IN THE PRODUCTIVE GRAVEL HORIZONS, WHICH EXISTS THROUGHOUT THE PROPERTY.
North Fork 17 Zone 1 Probable (Indicated) Reserves
The simulation estimates that the probable (Indicated) reserves is between $9.6 Thousand and $1.2 Billion with a 90% likelihood that the probable (indicated) reserves would be approximately $20.2 Million, a 10% likelihood that the probable (indicated) reserves would be approximately $273.5 Million and a 0% probability that the probable (indicated) reserves would $1.2 Billion. The mean is estimated at $123.8 Million and the median is estimated at $89.1 Million.
The simulation estimates that the probable (Indicated) reserves is between $58.3 Thousand and $7.5 Billion with a 90% likelihood that the probable (indicated) reserves would be approximately $167.7 Million, a 10% likelihood that the probable (indicated) reserves would be approximately $21.9 Billion and a 0% probability that the probable (indicated) reserves would $7.5 Billion. The mean is estimated at $894.7 Million and the median is estimated at $698.5 Million.
North Fork 17 Zone 3 Probable (Indicated) Reserves
The simulation estimates that the probable (Indicated) reserves is between $551.2 Thousand and $58.9 Billion with a 90% likelihood that the probable (indicated) reserves would be approximately $1.0 Billion, a 10% likelihood that the probable (indicated) reserves would be approximately $12.8 Billion and a 0% probability that the probable (indicated) reserves would $58.9 Billion. The mean is estimated at $5.9 Billion and the median is estimated at $4.4 Billion.
